CONFORMED
SEC. File Nos. 2- 50700
811-2444
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
Registration Statement
Under
the Securities Act of 1933
Post-Effective Amendment No. 39
and
Registration Statement
Under
The Investment Company Act of 1940
Amendment No. 20
THE BOND FUND OF AMERICA, INC.
(Exact Name of Registrant as specified in charter)
333 South Hope Street
Los Angeles, California 90071
(Address of principal executive offices)
Registrant's telephone number, including area code:
(213) 486-9200
JULIE F. WILLIAMS
333 South Hope Street
Los Angeles, California 90071
(name and address of agent for service)
Copies to:
Cary I. Klafter, Esq.
MORRISON & FOERSTER
345 California Street
San Francisco, California 94104
(Counsel for the Registrant)
The Registrant has filed a declaration pursuant to rule 24f-2
registering an indefinite number of shares under the Securities Act of 1933.
On February 23, 1996, it filed its 24f-2 notice for fiscal 1995.
Approximate date of proposed public offering:
It is proposed that this filing become effective on March 1, 1996, pursuant to
paragraph (b) of rule 485.
<PAGE>
THE BOND FUND OF AMERICA, INC.
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
Item Number of Captions in Prospectus (Part "A")
Part "A" of Form N-1A
<S> <C> <C>
1. Cover Page Cover Page
2. Synopsis Summary of Expenses
3. Condensed Financial Information Financial Highlights
4. General Description of Registrant Investment Objective and Policies
5. Management of the Fund Financial Highlights;
Fund Organization and Management
6. Capital Stock and Other Securities Investment Objective and Policies;
Certain Securities and Investment
Techniques; Fund Organization and
Management; Dividends, Distributions and
Taxes
7. Purchase of Securities Being Offered Purchasing Shares
8. Redemption or Repurchase Redeeming Shares
9. Legal Proceedings N/A
</TABLE>
<TABLE>
<CAPTION>
Item Number of Captions in Statement of
Part "B" of Form N-1A Additional Information (Part "B")
<S> <C> <C>
10. Cover Page Cover
11. Table of Contents Table of Contents
12. General Information and History Investment Restrictions; General
Information
13. Investment Objectives and Policies The Fund's Investment Objective and
Policies; Investment Restrictions
14. Management of the Registrant Fund Officers and Directors; Management
15. Control Persons and Principal Holders of Securities Fund Officers and Directors
16. Investment Advisory and Other Services Management
17. Brokerage Allocation and Other Practices Execution of Portfolio Transactions
18. Capital Stock and Other Securities None
19. Purchase, Redemption and Pricing of Purchase of Shares; Shareholder
Securities Being Offered Account Services and Privileges
20. Tax Status Dividends, Distributions and Federal Taxes
21. Underwriter Management -- Principal Underwriter
22. Calculation of Performance Data Investment Results
23. Financial Statements Financial Statements
</TABLE>
<TABLE>
<CAPTION>
Item in Part "C"
<S> <C>
24. Financial Statements and Exhibits
25. Persons Controlled by or under
Common Control with Registrant
26. Number of Holders of Securities
27. Indemnification
28. Business and Other Connections of
Investment Adviser
29. Principal Underwriters
30. Location of Accounts and Records
31. Management Services
32. Undertakings
Signature Page
</TABLE>
<PAGE>
March 1, 1996
THE BOND FUND OF AMERICA, INC.
333 South Hope Street
Los Angeles, CA 90071
The fund seeks to provide as high a level of current income as is consistent
with the preservation of capital by investing primarily in bonds.
This prospectus presents information you should know before investing in the
funds. It should be retained for future reference.
You may obtain the statement of additional information dated March 1, 1996,
which contains the fund's financial statements, without charge, by writing to
the Secretary of the fund at the above address or telephoning 800/421-0180.
These requests will be honored within three business days of receipt.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR INSURED OR GUARANTEED
BY, THE U.S. GOVERNMENT, ANY FINANCIAL INSTITUTION, THE FEDERAL DEPOSIT
INSURANCE CORPORATION, OR ANY OTHER AGENCY, ENTITY OR PERSON. THE PURCHASE OF
FUND SHARES INVOLVES INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF
PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
08-010-0396
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
Summary of Expenses.................. 3
Financial Highlights................. 4
Investment Objective and Policies.... 4
Certain Securities and Investment
Techniques.......................... 6
Investment Results................... 10
Dividends, Distributions and Taxes... 11
Fund Organization and Management..... 12
The American Funds Shareholder Guide. 15-23
Purchasing Shares.................. 15
Reducing Your Sales Charge......... 18
Shareholder Services............... 19
Redeeming Shares................... 21
Retirement Plans................... 23
</TABLE>
IMPORTANT PHONE NUMBERS
Shareholder Services...800/421-0180 ext. 1
Dealer Services.......800/421-9900 ext. 11
American FundsLine(R).........800/325-3590
(24-hour information)
<PAGE>
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SUMMARY
OF EXPENSES
Average annual
expenses paid over a
10-year period would
be approximately
$14 per year,
assuming a $1,000
investment and a 5%
annual return with a
maximum sales charge.
This table is designed to help you understand costs of investing in the fund.
These are historical expenses; your actual expenses may vary.
SHAREHOLDER TRANSACTION EXPENSES
Maximum sales charge on purchases (as a percentage of offering price)...4.75%/1/
The fund has no sales charge on reinvested dividends, deferred sales charge,/2/
redemption fees or exchange fees.
ANNUAL FUND OPERATING EXPENSES (as a percentage of average net assets)
Management fees....................................................... 0.37%
12b-1 expenses........................................................ 0.25%/3/
Other expenses (including audit, legal, shareholder services,
transfer agent and custodian expenses)............................... 0.12%
Total fund operating expenses......................................... 0.74%
<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following
cumulative expenses on a $1,000 $55 $70 $87 $135
investment, assuming a 5% annual
return./4/
</TABLE>
/1/ Sales charges are reduced for certain large purchases. (See "The American
Funds Shareholder Guide: Purchasing Shares--Sales Charges.")
/2/ Any employer-sponsored 403(b) plan or defined contribution plan qualified
under Section 401(a) of the Internal Revenue Code including a "401(k)" plan
with 200 or more eligible employees or any other purchaser investing at
least $1 million in shares of the fund (or in combination with shares of
other funds in The American Funds Group other than the money market funds)
may purchase shares at net asset value; however, a contingent deferred sales
charge of 1% applies on certain redemptions made within 12 months following
such purchases. (See "The American Funds Shareholder Guide: Redeeming
Shares--Contingent Deferred Sales Charge.")
/3/ These expenses may not exceed 0.25% of the fund's average net assets
annually. (See "Fund Organization and Management--Plan of Distribution.")
Due to these distribution expenses, long-term shareholders may pay more than
the economic equivalent of the maximum front-end sales charge permitted by
the National Association of Securities Dealers.
/4/ Use of this assumed 5% return is required by the Securities and Exchange
Commission; it is not an illustration of past or future investment results.
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES; ACTUAL EXPENSES MAY BE GREATER OR LESSER THAN THOSE SHOWN.
3
<PAGE>
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FINANCIAL The following information has been audited by Deloitte
HIGHLIGHTS & Touche LLP, independent accountants, whose unquali-
(For a share fied report covering each of the most recent five years
outstanding is included in the statement of additional information.
throughout the This information should be read in conjunction with the
fiscal year) financial statements and accompanying notes which are
included in the statement of additional information.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
----------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Begin-
ning of Year............ $12.69 $14.45 $13.99 $13.70 $12.39 $13.23 $13.24 $13.14 $14.21 $14.01
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income.. 1.05 1.05 1.09 1.15 1.21 1.24 1.31 1.28 1.28 1.38
Net realized and
unrealized gain (loss)
on investments........ 1.18 (1.76) .84 .34 1.28 (.84) (.02) .08 (1.02) .66
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total income from in-
vestment operations.. 2.23 (0.71) 1.93 1.49 2.49 .40 1.29 1.36 .26 2.04
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends from net in-
vestment income....... (1.04) (1.05) (1.08) (1.16) (1.18) (1.24) (1.30) (1.26) (1.23) (1.44)
Distributions from net
realized gains........ -- -- (.39) (.04) -- -- -- -- (.10)/1/ (.40)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total distributions... (1.04) (1.05) ( 1.47) (1.20) (1.18) (1.24) (1.30) (1.26) (1.33) (1.84)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net Asset Value, End of
Year.................... $13.88 $12.69 $14.45 $13.99 $13.70 $12.39 $13.23 $13.24 $13.14 $14.21
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Total Return/2/ 18.25% (5.02)% 14.14% 11.34% 21.04% 3.27% 10.13% 10.70% 1.96% 15.17%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year
(in millions).......... $6,290 $4,941 $5,285 $3,917 $2,859 $1,945 $1,481 $1,021 $ 825 $ 694
Ratio of expenses to
average net assets..... .74% .69% .71% .73% .77% .76% .76% .66% .59% .58%
Ratio of net income to
average net assets..... 7.87% 7.77% 7.53% 8.36% 9.28% 9.70% 9.73% 9.54% 9.45% 9.39%
Portfolio turnover
rate................... 43.80% 57.0% 44.7% 49.7% 56.5% 59.9% 64.2% 93.0% 93.0% 107.8%
</TABLE>
--------
/1/ Represents only net short-term realized gains.
/2/ This was calculated without deducting a sales charge. The maximum sales
charge is 4.75% of the fund's offering price.
INVESTMENT The fund's investment objective is to provide as high a
OBJECTIVE level of current income as is consistent with the pres-
AND POLICIES ervation of capital. The fund invests substantially all
of its assets in marketable corporate debt securities,
The fund's goal is U.S. Government securities, mortgage-related securi-
to provide you ties, other asset-backed securities and cash or money
with high current market instruments. Normally, at least 65% of the
incomeand fund's assets will be invested in bonds. (For this pur-
conservation of pose, bonds are considered any debt securities having
capital. initial maturities in excess of one year.)
At least 60% of the value of the fund's assets, mea-
sured at the time of any purchase, must be invested in
the following categories:
. marketable corporate debt securities such as bonds
rated at the time of purchase within the three
highest investment grade ratings (A or better)
assigned by Moody's Investors Service, Inc. or
Standard & Poor's Corporation (all ratings discussed
below refer to those assigned by these two rating
agencies) or, if not rated by either of these rating
agencies, determined by the fund's investment
adviser, Capital Research and Management Company, as
being of investment quality equivalent to securities
rated A or better;
4
<PAGE>
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. U.S. Government securities including (1) direct
obligations of the U.S. Treasury (such as Treasury
bills, notes and bonds), (2) obligations guaranteed
as to principal and interest by the U.S. Treasury
such as Government National Mortgage Association
certificates (described below) and Federal Housing
Administration debentures, and (3) securities issued
by U.S. Government instrumentalities and certain
federal agencies that are neither direct obligations
of, nor guaranteed by, the Treasury;
. mortgage-related securities rated A or better or
unrated securities that are determined to be of
equivalent quality of (1) governmental issuers,
including Government National Mortgage Association
certificates, which are securities representing part
ownership of a pool of mortgage loans on which timely
payment of interest and principal is guaranteed by
the U.S. Government, and securities issued and
guaranteed as to the payment of interest and
principal by the Federal National Mortgage
Association or the Federal Home Loan Mortgage
Corporation (but not backed by the U.S. Government);
(2) private issuers, including mortgage pass-through
certificates or mortgage-backed bonds; and (3) the
governmental issuers mentioned above or private
issuers, including collateralized mortgage
obligations and real estate mortgage investment
conduits which are issued in portions or tranches
with varying maturities and characteristics; some
tranches may only receive the interest paid on the
underlying mortgages (IOs) and others may only
receive the principal payments (POs); the values of
IOs and POs are extremely sensitive to interest rate
fluctuations and prepayment rates, and IOs are also
subject to the risk of early prepayment of the
underlying mortgages which will substantially reduce
or eliminate interest payments (see the statement of
additional information for more about these
securities);
. other asset-backed securities rated A or better or
unrated securities that are determined to be of
equivalent quality (unrelated to mortgage loans) such
as securities whose assets consist of a pool of motor
vehicle retail installment sales contracts and
security interests in the vehicles securing the
contracts or a pool of credit card loan receivables
(see the statement of additional information for more
about these securities);
. cash or money market instruments, including commercial
bank obligations (certificates of deposit, which are
interest-bearing time deposits; bankers acceptances,
which are time drafts on a commercial bank where the
bank accepts an irrevocable obligation to pay at
maturity; and demand or time deposits), and commercial
paper (short-term notes with maturities of up to nine
months issued by corporations or government bodies).
5
<PAGE>
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The remaining 40% of the fund's assets, measured at the
time of purchase, may be invested in debt securities
rated below A or unrated securities that are determined
to be of equivalent quality, including marketable cor-
porate debt securities, mortgage-related securities and
other asset-backed securities. These securities may be
rated as low as Ca by Moody's or CC by S&P. However,
securities rated Ba and BB or below or unrated securi-
ties that are determined to be of equivalent quality
(commonly known as "junk" or "high-yield, high-risk"
bonds) will represent less than 35% of the fund's net
assets and are subject to special review before pur-
chase.
In addition, the fund may from time to time invest in
fixed-income securities of corporations outside the
U.S. or governmental entities and may purchase or sell
various currencies and enter into forward currency con-
tracts in connection with these investments. The fund
may also invest up to 1% of its assets in inverse
floating rate notes (a type of derivative instrument).
The average monthly composition of the fund's portfolio
based on the higher of the Moody's or S&P ratings for
the fiscal year ended December 31, 1995 was as follows:
bonds--Aaa/AAA-42.84%; Aa/AA-3.49%; A/A-6.26%; Baa/BBB-
10.17%; Ba/BB-7.45%; B/B-11.95%, and Caa/CCC-1.41%.
Other investments, including non-rated investments,
equity-type securities and cash or cash equivalents
amounted to 1.74%, 3.34% and 11.35%, respectively.
The fund's investment restrictions (which are described
in the statement of additional information) and objec-
tive cannot be changed without shareholder approval.
All other investment practices may be changed by the
fund's board.
ACHIEVEMENT OF THE FUND'S INVESTMENT OBJECTIVE CANNOT,
OF COURSE, BE ASSURED DUE TO THE RISK OF CAPITAL LOSS
FROM FLUCTUATING PRICES INHERENT IN ANY INVESTMENT IN
SECURITIES.
CERTAIN SECURITIES RISKS OF INVESTING IN BONDS The market values of fixed-
AND INVESTMENT income securities generally vary inversely with the
TECHNIQUES level of interest rates--when interest rates rise,
their values will tend to decline and vice versa. The
Investing in bonds magnitude of these changes generally will be greater
involves certain the longer the remaining maturity of the security.
risks. Fluctuations in the value of the fund's investments
will be reflected in its net asset value per share;
typically declining when interest rates rise.
High-yield, high-risk bonds (bonds rated Ba and BB or
below) may be subject to greater market fluctuations
and to greater risk of loss of income and principal due
to default by the issuer than are higher-rated bonds.
Their values tend to reflect short-term corporate,
economic and
6
<PAGE>
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market developments and investor perceptions of the
issuer's credit quality to a greater extent than lower
yielding higher-rated bonds. In addition, it may be
more difficult to dispose of, or to determine the value
of, high-yield, high-risk bonds. Bonds rated Ca or CC
are described by the ratings agencies as "speculative
in a high degree; often in default or [having] other
marked shortcomings." See the statement of additional
information for a complete description of the bond
ratings.
Capital Research and Management Company attempts to
reduce the risks described above through diversification
of the portfolio and by credit analysis of each issuer
as well as by monitoring broad economic trends and
corporate and legislative developments.
INVESTING IN VARIOUS COUNTRIES The fund may invest in
securities which may be denominated in currencies other
than the U.S. dollar. The fund may also invest in secu-
rities of issuers located outside the United States.
Investing globally involves special risks, particularly
in certain developing countries, caused by, among other
things: trade balances and imbalances and related eco-
nomic policies; expropriation or confiscatory taxation;
limitations on the removal of funds or other assets;
political or social instability; the diverse structure
and liquidity of the various securities markets; and
nationalization policies of governments around the
world. Companies located outside the U.S. operate under
different accounting, auditing and financial reporting
standards and practices and regulatory requirements
that may be less rigorous than U.S. companies, and
frequently there may be less information publicly
available about such companies. However, investing out-
side the U.S. also can reduce certain of these risks
through greater diversification opportunities.
Transaction costs are generally higher outside the
U.S., and the fund will bear certain expenses in con-
nection with its currency transactions. Increased cus-
todian costs as well as administrative difficulties
(for example, delays in clearing and settling portfolio
transactions or in receiving payments of dividends) may
be associated with the maintenance of assets in certain
jurisdictions.
CURRENCY TRANSACTIONS The fund has the ability to pur-
chase and sell currencies to facilitate securities
transactions and to enter into forward currency con-
tracts to hedge against changes in currency exchange
rates. While entering into forward transactions could
minimize the risk of loss due to a decline in the value
of the hedged currency, it could also limit any poten-
tial gain which might result from an increase in the
value of the currency. (See "Currency Transactions" in
the statement of additional information.)
7
<PAGE>
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WHEN-ISSUED SECURITIES, FIRM COMMITMENT AGREEMENTS AND
"ROLL" TRANSACTIONS The fund may purchase securities on
a delayed delivery or "when-issued" basis and enter
into firm commitment agreements (transactions whereby
the payment obligation and interest rate are fixed at
the delayed). The fund as purchaser assumes the risk of
decline in value of the security beginning on the date
of the agreement or purchase. The fund also may enter
into "roll" transactions, which are the sale of GNMA
certificates or other securities together with a com-
mitment (for which the fund typically receives a fee)
to purchase similar, but not identical securities at a
later date. As the fund's aggregate commitments under
these transactions increase, the opportunity for lever-
age similarly may increase; however, it is not the in-
tent of the fund to engage in these transactions for
leveraging purposes. In addition, the fund may enter
into other purchase and sale transactions involving
securities which are not settled in the ordinary course
of business and under various terms when to do so is in
the best interest of the fund.
The fund will segregate liquid assets such as cash,
U.S. Government securities or other appropriate high-
grade debt obligations in an amount sufficient to meet
its payment obligations in these transactions. Although
these transactions will not be entered into for
leveraging purposes, to the extent the fund's aggregate
commitments under these transactions exceed its hold-
ings of cash and securities that do not fluctuate in
value (such as short-term money market instruments),
the fund temporarily will be in a leveraged position
(i.e., it will have an amount greater than its net as-
sets subject to market risk). Should market values of
the fund's portfolio securities decline while the fund
is in a leveraged position, greater depreciation of its
net assets would likely occur than were it not in such
a position. The fund will not borrow money to settle
these transactions and, therefore, will liquidate other
portfolio securities in advance of settlement if neces-
sary to generate additional cash to meet its obliga-
tions thereunder.
REPURCHASE AGREEMENTS The fund may enter into repur-
chase agreements, under which it buys a security and
obtains a simultaneous commitment from the seller to
repurchase the security at a specified time and price.
The seller must maintain with the fund's custodian col-
lateral equal to at least 100% of the repurchase price
including accrued interest as monitored daily by Capi-
tal Research and Management Company. If the seller
under the repurchase agreement defaults, the fund may
incur a loss if the value of the collateral securing the
repurchase agreement has declined and may incur dispo-
sition costs in connection with liquidating the collat-
eral. If bankruptcy proceedings are commenced with re-
spect to the seller, liquidation of the collateral by
the fund may be delayed or limited.
8
<PAGE>
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LOAN PARTICIPATIONS The fund may invest, subject to an
overall 10% limit on loans, in loan participations,
typically made by a syndicate of banks to U.S. and non-
U.S. corporate or governmental borrowers for a variety
of purposes. The underlying loans may be secured or
unsecured, and will vary in term and legal structure.
When purchasing such instruments the fund may assume
the credit risks associated with the original bank
lender as well as the credit risks associated with the
borrower. Investments in loan participations present
the possibility that the fund could be held liable as a
co-lender under emerging legal theories of lender lia-
bility. In addition, if the loan is foreclosed, the
fund could be part owner of any collateral, and could
bear the costs and liabilities of owning and disposing
of the collateral. Loan participations are generally
not rated by major rating agencies and may not be pro-
tected by the securities laws. Also, loan participa-
tions are generally considered to be illiquid.
PRIVATE PLACEMENTS Private placements may be either
purchased from another institutional investor that
originally acquired the securities in a private place-
ment or directly from the issuers of the securities.
Generally, securities acquired in private placements
are subject to contractual restrictions on resale and
may not be resold except pursuant to a registration
statement under the Securities Act of 1933 or in reli-
ance upon an exemption from the registration require-
ments under the Act, for example, private placements
sold pursuant to Rule 144A. Accordingly, any such obli-
gation will be deemed illiquid unless it has been spe-
cifically determined to be liquid under procedures
adopted by the fund's board of directors.
In determining whether these securities are liquid,
factors such as the frequency and volume of trading and
the commitment of dealers to make markets will be con-
sidered. Additionally, the liquidity of any particular
security will depend on such factors as the availabil-
ity of "qualified" institutional investors and the ex-
tent of investor interest in the security, which can
change from time to time.
MATURITY The maturity composition of the fund's portfo-
lio of fixed-income securities will be adjusted in re-
sponse to market conditions and expectations. There are
no restrictions on the maturity composition of the
portfolio, although it is anticipated that the fund
normally will be invested substantially in intermedi-
ate-term (3 to 10 years to maturity) and long-term
(over 10 years to maturity) securities.
MULTIPLE PORTFOLIO COUNSELOR SYSTEM The basic
investment philosophy of Capital Research and
Management Company is to seek fundamental values at
reasonable prices, using a system of multiple portfolio
counselors in managing mutual fund assets. Under this
system
9
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the portfolio of the fund is divided into segments
which are managed by individual counselors. Each
counselor decides how their segment will be invested
(within the limits provided by the fund's objective and
policies and by Capital Research and Management
Company's investment committee). In addition, Capital
Research and Management Company's research
professionals make investment decisions with respect to
a portion of the fund's portfolio. The primary
individual portfolio counselors for the fund are listed
below.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
YEARS OF EXPERIENCE AS
INVESTMENT PROFESSIONAL
(APPROXIMATE)
YEARS OF
EXPERIENCE AS WITH CAPITAL
PORTFOLIO RESEARCH AND
PORTFOLIO COUNSELOR FOR MANAGEMENT
COUNSELORS FOR THE BOND FUND COMPANY
THE BOND FUND OF AMERICA OR ITS TOTAL
OF AMERICA PRIMARY TITLE(S) (APPROXIMATE) AFFILIATES YEARS
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Abner D. Goldstine President and Director Since the fund began operations 29 years 44 years
of the fund. Senior Vice in 1974
President and Director,
Capital Research and
Management Company
- ----------------------------------------------------------------------------------------------------------------
Richard T. Schotte Senior Vice President of 18 years 18 years 29 years
the fund. Senior Vice
President, Capital
Research and Management
Company
- ----------------------------------------------------------------------------------------------------------------
John H. Smet Vice President of the 7 years 13 years 14 years
fund. Vice President,
Capital Research and
Management Company
- ----------------------------------------------------------------------------------------------------------------
Mark H. Dalzell Vice President, 2 years 8 years 18 years
Investment Management
Group, Capital Research
and Management Company
- ----------------------------------------------------------------------------------------------------------------
The fund began operations on May 28, 1974.
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
INVESTMENT The fund may from time to time compare its investment
RESULTS results to various unmanaged indices or other mutual
funds in reports to shareholders, sales literature and
The fund has advertisements. The results may be calculated on a to-
averaged a total tal return, yield and/or distribution rate basis for
return of 10.40% a various periods, with or without sales charges. Results
year (assuming the calculated without a sales charge will be higher. Total
maximum sales returns assume the reinvestment of all dividends and
charge was paid) capital gain distributions.
over its lifetime
(May 28, 1974 The fund's yield and the average annual total returns
through December are calculated in accordance with the Securities and
31, 1995). Exchange Commission requirements which provide that the
maximum sales charge be reflected. The fund's
distribution rate is calculated by annualizing the
current month's dividend and dividing by the average
price for the month. For the 30-day period ended
December 31, 1995, the fund's SEC yield was 6.18% and
the distribution rate was 6.84% at maximum offering
price. The SEC yield reflects income earned by the
fund, while the distribution rate reflects dividends
paid by the fund. The fund's total return over the past
12 months and average annual total returns over the
past five-year and
10
<PAGE>
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ten-year periods, as of December 31, 1995, were 12.66%,
10.47% and 9.30%, respectively. Of course, past results
are not an indication of future results. Further
information regarding the fund's investment results is
contained in the fund's annual report which may be
obtained without charge by writing to the Secretary of
the fund at the address indicated on the cover of this
prospectus.
DIVIDENDS, DIVIDENDS AND DISTRIBUTIONS The fund declares dividends
DISTRIBUTIONS AND from its net investment income daily and distributes
TAXES such accrued dividends to shareholders each month.
Dividends begin accruing one day after payment for
Income shares is received by the fund or American Funds
distributions are Service Company. All capital gains, if any, are
made each month. distributed annually, usually in December. When a
capital gain is distributed, the net asset value per
share is reduced by the amount of the payment.
FEDERAL TAXES The fund intends to operate as a "regu-
lated investment company" under the Internal Revenue
Code. In any fiscal year in which the fund so qualifies
and distributes to shareholders all of its net invest-
ment income and net capital gains, the fund itself is
relieved of federal income tax.
All dividends and capital gains are taxable whether
they are reinvested or received in cash--unless you are
exempt from taxation or entitled to tax deferral. Early
each year, you will be notified as to the amount and
federal tax status of all dividends and capital gains
paid during the prior year. Such dividends and capital
gains may also be subject to state or local taxes.
IF YOU HAVE NOT FURNISHED A CERTIFIED CORRECT TAXPAYER
IDENTIFICATION NUMBER (GENERALLY YOUR SOCIAL SECURITY
NUMBER) AND HAVE NOT CERTIFIED THAT WITHHOLDING DOES
NOT APPLY, OR IF THE INTERNAL REVENUE SERVICE HAS
NOTIFIED THE FUND THAT THE TAXPAYER IDENTIFICATION
NUMBER LISTED ON YOUR ACCOUNT IS INCORRECT ACCORDING TO
THEIR RECORDS OR THAT YOU ARE SUBJECT TO BACKUP
WITHHOLDING, FEDERAL LAW GENERALLY REQUIRES THE FUND TO
WITHHOLD 31% FROM ANY DIVIDENDS AND/OR REDEMPTIONS
(INCLUDING EXCHANGE REDEMPTIONS). Amounts withheld are
applied to your federal tax liability; a refund may be
obtained from the Service if withholding results in
overpayment of taxes. Federal law also requires the
fund to withhold 30% or the applicable tax treaty rate
from dividends paid to certain nonresident alien, non-
U.S. partnership and non-U.S. corporation shareholder
accounts.
THIS IS A BRIEF SUMMARY OF SOME OF THE TAX LAWS THAT
AFFECT YOUR INVESTMENT IN THE FUND. PLEASE SEE THE
STATEMENT OF ADDITIONAL INFORMATION AND YOUR TAX
ADVISER FOR FURTHER INFORMATION.
11
<PAGE>
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FUND FUND ORGANIZATION AND VOTING RIGHTS The fund, an open-
ORGANIZATION end, diversified management investment company, was or-
AND MANAGEMENT ganized as a Maryland corporation in 1973. The fund's
board supervises fund operations and performs duties
The fund is a required by applicable state and federal law. Members
member of The of the board who are not employed by Capital Research
American Funds and Management Company or its affiliates are paid cer-
Group, which is tain fees for services rendered to the fund as de-
managed by one of scribed in the statement of additional information.
the largest and They may elect to defer all or a portion of these fees
most experienced through a deferred compensation plan in effect for the
investment fund. Shareholders have one vote per share owned and,
advisers. at the request of the holders of at least 10% of the
shares, the fund will hold a meeting at which any mem-
ber of the board could be removed by a majority vote.
There will not usually be a shareholder meeting in any
year except, for example, when the election of the
board is required to be acted upon by shareholders un-
der the Investment Company Act of 1940.
THE INVESTMENT ADVISER Capital Research and Management
Company, a large and experienced investment management
organization founded in 1931, is the investment adviser
to the fund and other funds, including those in The
American Funds Group. Capital Research and Management
Company is located at 333 South Hope Street, Los Ange-
les, CA 90071 and at 135 South State College Boulevard,
Brea, CA 92621. (See "The American Funds Shareholder
Guide: Purchasing Shares-- Investment Minimums and Fund
Numbers" for a listing of funds in The American Funds
Group.) Capital Research and Management Company manages
the investment portfolio and business affairs of the
fund and receives a fee at the annual rate of 0.30% on
the first $60 million of the fund's net assets, plus
0.21% on net assets over $60 million to $1 billion,
plus 0.18% on assets over $1 billion to $3 billion,
plus 0.16% on assets over $3 billion, plus 3% of the
first $5.4 million of annual gross income, plus 2.25%
of annual gross income over $5.4 million. Assuming net
assets of $6 billion and gross investment income levels
of 6%, 7%, 8%, 9%, 10% and 11%, management fees would
be .31%, .33%, .36%, .38%, .40% and .42%, respectively.
Capital Research and Management Company is a wholly
owned subsidiary of The Capital Group Companies, Inc.
(formerly "The Capital Group, Inc."), which is located
at 333 South Hope Street, Los Angeles, CA 90071. The
research activities of Capital Research and Management
Company are conducted by affiliated companies which
have offices in Los Angeles, San Francisco, New York,
Washington, D.C., London, Geneva, Singapore, Hong Kong
and Tokyo.
Capital Research and Management Company and its affili-
ated companies have adopted a personal investing policy
that is consistent with the
12
<PAGE>
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recommendations contained in the report dated May 9,
1994 issued by the Investment Company Institute's Advi-
sory Group on Personal Investing. (See the statement of
additional information.)
PORTFOLIO TRANSACTIONS Orders for the fund's portfolio
securities transactions are placed by Capital Research
and Management Company, which strives to obtain the
best available prices, taking into account the costs
and quality of executions. Fixed-income securities are
generally traded on a "net" basis with a dealer acting
as principal for its own account without a stated
commission, although the price of the security usually
includes a profit to the dealer. In underwritten
offerings, securities are usually purchased at a fixed
price which includes an amount of compensation to the
underwriter, generally referred to as the underwriter's
concession or discount. On occasion, securities may be
purchased directly from an issuer, in which case no
commissions or discounts are paid.
Subject to the above policy, when two or more brokers
are in a position to offer comparable prices and
executions, preference may be given to brokers that
have sold shares of the fund or have provided
investment research, statistical, and other related
services for the benefit of the fund and/or other funds
served by Capital Research and Management Company.
PRINCIPAL UNDERWRITER American Funds Distributors,
Inc., a wholly owned subsidiary of Capital Research and
Management Company, is the principal underwriter of the
fund's shares. American Funds Distributors is located
at 333 South Hope Street, Los Angeles, CA 90071, 135
South State College Boulevard, Brea, CA 92621, 8000 IH-
10 West, San Antonio, TX 78230, 8332 Woodfield Crossing
Boulevard, Indianapolis, IN 46240, and 5300 Robin Hood
Road, Norfolk, VA 23513. Telephone conversations with
American Funds Distributors may be recorded or
monitored for verification, recordkeeping and quality
assurance purposes.
PLAN OF DISTRIBUTION The fund has a plan of distribu-
tion or "12b-1 Plan" under which it may finance activi-
ties primarily intended to sell shares, provided the
categories of expenses are approved in advance by the
board and the expenses paid under the plan were in-
curred within the last 12 months and accrued while the
plan is in effect. Expenditures by the fund under the
plan may not exceed 0.25% of its average net assets an-
nually (all of which may be for service fees). See
"Purchasing Shares--Sales Charges" below.
13
<PAGE>
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TRANSFER AGENT American Funds Service Company, a wholly
owned subsidiary of Capital Research and Management
Company, is the transfer agent and performs shareholder
service functions. It was paid a fee of $4,205,000 for
the fiscal year ended December 31, 1995. Telephone con-
versations with American Funds Service Company may be
recorded or monitored for verification, recordkeeping
and quality assurance purposes.
AMERICAN FUNDS SERVICE COMPANY SERVICE AREAS
SERVICE ADDRESS AREAS SERVED
AREA
---------------------------------------------------------
WEST P.O. Box 2205 AK, AZ, CA, HI, ID,
Brea, CA 92622-2205 MT, NV, OR, UT, WA
Fax: 714/671-7080 and outside the U.S.
---------------------------------------------------------
CENTRAL- P.O. Box 659522 AR, CO, IA, KS, LA,
WEST San Antonio, MN, MO, ND, NE, NM,
TX 78265-9522 OK, SD, TX, and WY
Fax: 210/530-4050
---------------------------------------------------------
CENTRAL- P.O. Box 6007 AL, IL, IN, KY, MI,
EAST Indianapolis, MS, OH, TN and WI
IN 46206-6007
Fax: 317/735-6620
---------------------------------------------------------
EAST P.O. Box 2280 CT, DE, FL, GA, MA,
Norfolk, VA 23501-2280 MD, ME, NC, NH, NJ,
Fax: 804/670-4773 NY, PA, RI, SC, VA,
VT, WV and
Washington, D.C.
---------------------------------------------------------
ALL SHAREHOLDERS MAY CALL AMERICAN FUNDS SERVICE
COMPANY AT 800/421-0180 FOR SERVICE.
---------------------------------------------------------
[LOGO]
---------------------------------------------------------
West (light grey); Central-West (white); Central-East
(dark grey), East (green)
14
<PAGE>
- -------------------------------------------------------------------------------
THE AMERICAN FUNDS SHAREHOLDER GUIDE
---------------------------------------------------------
PURCHASING SHARES METHOD INITIAL INVESTMENT ADDITIONAL INVESTMENTS
---------------------------------------------------------
Your investment See "Investment $50 minimum (except
dealer can help Minimums and Fund where a lower
you establish your Numbers" for minimum is noted
account--and help initial investment under "Investment
you add to it minimums. Minimums and Fund
whenever you like. Numbers").
--------------------------------------------------------
By Visit any Mail directly to
contacting investment dealer your investment
your who is registered dealer's address
investment in the state printed on your
dealer where the account statement.
purchase is made
and who has a
sales agreement
with American
Funds
Distributors.
---------------------------------------------------------
By mail Make your check Fill out the account
payable to the additions form at the
fund and mail to bottom of a recent
the address account statement,
indicated on the make your check
account payable to the fund,
application. write your account
Please indicate number on your check,
an investment and mail the check
dealer on the and form in the
account envelope provided
application. with your account
statement.
---------------------------------------------------------
By wire Call 800/421-0180 Your bank should wire
to obtain your your additional
account number(s) investments in the
if necessary. same manner as
Please indicate an described under
investment dealer "Initial Investment."
on the account.
Instruct your
bank to wire
funds to:
Wells Fargo Bank
155 Fifth Street
Sixth Floor
San Francisco,
CA 94106
(ABA #121000248)
For credit to the
account of:
American Funds
Service Company
a/c #4600-076178
(fund name)
(your fund acct. no.)
---------------------------------------------------------
THE FUNDS AND AMERICAN FUNDS DISTRIBUTORS RESERVE
THE RIGHT TO REJECT ANY PURCHASE ORDER.
---------------------------------------------------------
SHARE PRICE Shares are purchased at the offering price
next determined after the order is received by the fund
or American Funds Service Company. In the case of orders
sent directly to the fund or American Funds Service
Company, an investment dealer MUST be indicated. This
price is the net asset value plus a sales charge, if
applicable. Dealers are responsible for promptly
transmitting orders. (See the statement of additional
information under "Purchase of Shares--Price of
Shares.")
The net asset value per share is determined as of the
close of trading (currently 4:00 p.m., New York time) on
each day the New York Stock Exchange is open. The
current value of the fund's total assets, less all
liabilities, is divided by the total number of shares
outstanding and the result, rounded to the nearer cent,
is the net asset value per share. The net asset value
per share of the money market funds normally will remain
constant at $1.00 based on the funds' current practice
of valuing their shares using the penny-rounding method
in accordance with rules of the Securities and Exchange
Commission.
SHARE CERTIFICATES Shares are credited to your account
and certificates are not issued unless specifically
requested. This eliminates the costly problem of lost or
destroyed certificates.
15
<PAGE>
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If you would like certificates issued, please request
them by writing to American Funds Service Company.
There is usually no charge for issuing certificates in
reasonable denominations. CERTIFICATES ARE NOT AVAIL-
ABLE FOR THE MONEY MARKET FUNDS.
INVESTMENT MINIMUMS AND FUND NUMBERS Here are the
minimum initial investments required by the funds in
The American Funds Group along with fund numbers for
use with our automated phone line, American
FundsLine(R) (see description below):
<TABLE>
<CAPTION>
MINIMUM
INITIAL FUND
FUND INVESTMENT NUMBER
---- ---------- ------
<S> <C> <C>
STOCK AND STOCK/BOND FUNDS
AMCAP Fund(R).......................................... $1,000 02
American Balanced Fund(R).............................. 500 11
American Mutual Fund(R)................................ 250 03
Capital Income Builder(R).............................. 1,000 12
Capital World Growth and Income Fund(SM)............... 1,000 33
EuroPacific Growth Fund(R)............................. 250 16
Fundamental Investors(SM).............................. 250 10
The Growth Fund of America(R).......................... 1,000 05
The Income Fund of America(R).......................... 1,000 06
The Investment Company of America(R)................... 250 04
The New Economy Fund(R)................................ 1,000 14
New Perspective Fund(R)................................ 250 07
SMALLCAP World Fund(SM)................................ 1,000 35
Washington Mutual Investors Fund(SM)................... 250 01
<CAPTION>
MINIMUM
INITIAL FUND
FUND INVESTMENT NUMBER
---- ---------- ------
<S> <C> <C>
BOND FUNDS
American High-Income Municipal Bond Fund(SM)........... $1,000 40
American High-Income Trust(R).......................... 1,000 21
The Bond Fund of America(SM)........................... 1,000 08
Capital World Bond Fund(R)............................. 1,000 31
Intermediate Bond Fund of America(R)................... 1,000 23
Limited Term Tax-Exempt Bond Fund of America(SM)....... 1,000 43
The Tax-Exempt Bond Fund of America(SM)................ 1,000 19
The Tax-Exempt Fund of California(R)*.................. 1,000 20
The Tax-Exempt Fund of Maryland(R)*.................... 1,000 24
The Tax-Exempt Fund of Virginia(R)*.................... 1,000 25
U.S. Government Securities Fund(SM).................... 1,000 22
MONEY MARKET FUNDS
The Cash Management Trust of America(R)................ 2,500 09
The Tax-Exempt Money Fund of America(SM)............... 2,500 39
The U.S. Treasury Money Fund of America(SM)............ 2,500 49
</TABLE>
--------
*Available only in certain states.
For retirement plan investments, the minimum is $250,
except that the money market funds have a minimum of
$1,000 for individual retirement accounts (IRAs). Mini-
mums are reduced to $50 for purchases through "Auto-
matic Investment Plans" (except for the money market
funds) or to $25 for purchases by retirement plans
through payroll deductions and may be reduced or waived
for shareholders of other funds in The American Funds
Group. TAX-EXEMPT FUNDS SHOULD NOT SERVE AS RETIREMENT
PLAN INVESTMENTS. The minimum is $50 for additional in-
vestments (except as noted above).
SALES CHARGES The sales charges you pay when purchasing
the stock, stock/bond, and bond funds of The American
Funds Group are set forth below. The money market funds
of The American Funds Group are offered at net asset
value. (See "Investment Minimums and Fund Numbers" for
a listing of the funds.)
16
<PAGE>
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DEALER
SALES CHARGE AS CONCESSION
PERCENTAGE OF THE: AS PERCENTAGE
------------------ OF THE
AMOUNT OF PURCHASE NET AMOUNT OFFERING OFFERING
AT THE OFFERING PRICE INVESTED PRICE PRICE
--------------------- ---------- -------- -------------
<S> <C> <C> <C>
STOCK AND STOCK/BOND FUNDS
Less than $50,000................. 6.10% 5.75% 5.00%
$50,000 but less than $100,000.... 4.71 4.50 3.75
BOND FUNDS
Less than $25,000................. 4.99 4.75 4.00
$25,000 but less than $50,000..... 4.71 4.50 3.75
$50,000 but less than $100,000.... 4.17 4.00 3.25
STOCK, STOCK/BOND, AND BOND FUNDS
$100,000 but less than $250,000... 3.63 3.50 2.75
$250,000 but less than $500,000... 2.56 2.50 2.00
$500,000 but less than $1,000,000. 2.04 2.00 1.60
$1,000,000 or more................ none none (see below)
</TABLE>
Commissions of up to 1% will be paid to dealers who
initiate and are responsible for purchases of $1
million or more, for purchases by any employer-
sponsored 403(b) plan or defined contribution plan
qualified under Section 401(a) of the Internal Revenue
Code including a "401(k)" plan with 200 or more
eligible employees (paid pursuant to the fund's plan of
distribution), and for purchases made at net asset
value by certain retirement plans of organizations with
collective retirement plan assets of $100 million or
more as set forth in the statement of additional
information (paid by American Funds Distributors).
American Funds Distributors, at its expense (from a
designated percentage of its income), will, during
calendar year 1996, provide additional compensation to
dealers. Currently these payments are limited to the
top one hundred dealers who have sold shares of the
fund or other funds in The American Funds Group. These
payments will be based on a pro rata share of a
qualifying dealer's sales. American Funds Distributors
will, on an annual basis, determine the advisability of
continuing these payments.
Any employer-sponsored 403(b) plan or defined
contribution plan qualified under Section 401(a) of the
Internal Revenue Code including a "401(k)" plan with
200 or more eligible employees or any other purchaser
investing at least $1 million in shares of the fund (or
in combination with shares of other funds in The
American Funds Group other than the money market funds)
may purchase shares at net asset value; however, a
contingent deferred sales charge of 1% is imposed on
certain redemptions made within twelve months of the
purchase. (See "Redeeming Shares--Contingent Deferred
Sales Charge.")
Qualified dealers currently are paid a continuing
service fee not to exceed 0.25% of average net assets
(0.15% in the case of the money market funds) annually
in order to promote selling efforts and to
17
<PAGE>
- -------------------------------------------------------------------------------
compensate them for providing certain services. (See
"Fund Organization and Management--Plan of
Distribution.") These services include processing
purchase and redemption transactions, establishing
shareholder accounts and providing certain information
and assistance with respect to the fund.
NET ASSET VALUE PURCHASES The stock, stock/bond and
bond funds may sell shares at net asset value to: (1)
current or retired directors, trustees, officers and
advisory board members of the funds managed by Capital
Research and Management Company, employees of
Washington Management Corporation, employees and
partners of The Capital Group Companies, Inc. and its
affiliated companies, certain family members of the
above persons, and trusts or plans primarily for such
persons; (2) current registered representatives,
retired registered representatives with respect to
accounts established while active, or full-time
employees (and their spouses, parents, and children) of
dealers who have sales agreements with American Funds
Distributors (or who clear transactions through such
dealers) and plans for such persons or the dealers; (3)
companies exchanging securities with the fund through a
merger, acquisition or exchange offer; (4) trustees or
other fiduciaries purchasing shares for certain
retirement plans of organizations with retirement plan
assets of $100 million or more; (5) insurance company
separate accounts; (6) accounts managed by subsidiaries
of The Capital Group Companies, Inc.; and (7) The
Capital Group Companies, Inc., its affiliated companies
and Washington Management Corporation. Shares are
offered at net asset value to these persons and
organizations due to anticipated economies in sales
effort and expense.
REDUCING AGGREGATION Sales charge discounts are available for
YOUR SALES certain aggregated investments. Qualifying investments
CHARGE include those by you, your spouse and your children
under the age of 21, if all parties are purchasing
You and your shares for their own account(s), which may include
immediate family purchases through employee benefit plan(s) such as an
may combine IRA, individual-type 403(b) plan or single-participant
investments to Keogh-type plan or by a business solely controlled by
reduce your costs. these individuals (for example, the individuals own the
entire business) or by a trust (or other fiduciary
arrangement) solely for the benefit of these
individuals. Individual purchases by a trustee(s) or
other fiduciary(ies) may also be aggregated if the
investments are (1) for a single trust estate or
fiduciary account, including an employee benefit plan
other than those described above or (2) made for two or
more employee benefit plans of a single employer or of
affiliated employers as defined in the Investment
Company Act of 1940, again excluding employee benefit
plans described above, or (3) for a diversified common
trust fund or other diversified pooled account not
specifically formed for the purpose of accumulating
fund shares. Purchases made for nominee or street name
accounts (securities held in the name of an investment
dealer or another nominee such as a bank trust
department instead of the customer) may not be
aggregated with those made for
18
<PAGE>
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other accounts and may not be aggregated with other
nominee or street name accounts unless otherwise
qualified as described above.
CONCURRENT PURCHASES To qualify for a reduced sales
charge, you may combine concurrent purchases of two or
more funds in The American Funds Group, except direct
purchases of the money market funds. (Shares of the
money market funds purchased through an exchange,
reinvestment or cross-reinvestment from a fund having a
sales charge do qualify.) For example, if you
concurrently invest $25,000 in one fund and $25,000 in
another, the sales charge would be reduced to reflect a
$50,000 purchase.
RIGHT OF ACCUMULATION The sales charge for your invest-
ment may also be reduced by taking into account the
current value of your existing holdings in The American
Funds Group. Direct purchases of the money market funds
are excluded. (See account application.)
STATEMENT OF INTENTION You may reduce sales charges on
all investments by meeting the terms of a statement of
intention, a non-binding commitment to invest a certain
amount in fund shares subject to a commission within a
13-month period. Five percent of the statement amount
will be held in escrow to cover additional sales
charges which may be due if your total investments over
the statement period are insufficient to qualify for a
sales charge reduction. (See account application and
the statement of additional information under "Purchase
of Shares--Statement of Intention.")
YOU MUST LET YOUR INVESTMENT DEALER OR AMERICAN FUNDS
SERVICE COMPANY KNOW IF YOU QUALIFY FOR A REDUCTION IN
YOUR SALES CHARGE USING ONE OR ANY COMBINATION OF THE
METHODS DESCRIBED ABOVE.
SHAREHOLDER AUTOMATIC INVESTMENT PLAN You may make regular monthly
SERVICES or quarterly investments through automatic charges to
your bank account. Once a plan is established, your ac-
The fund offers count will normally be charged by the 10th day of the
you a valuable month during which an investment is made (or by the
array of services 15th day of the month in the case of any retirement
designed to plan for which Capital Guardian Trust Company--another
increase the affiliate of The Capital Group Companies, Inc.--acts as
convenience and trustee or custodian).
flexibility of
your investment-- AUTOMATIC REINVESTMENT Dividends and capital gain dis-
services you can tributions are reinvested in additional shares at no
use to alter your sales charge unless you indicate otherwise on the
investment program account application. You also may elect to have divi-
as your needs and dends and/or capital gain distributions paid in cash by
circumstances informing the fund, American Funds Service Company or
change. your investment dealer.
CROSS-REINVESTMENT You may cross-reinvest dividends or
dividends and capital gain distributions paid by one
fund into another fund in The American Funds Group,
subject to conditions outlined in the statement of ad-
ditional information. Generally, to use this service
the value of your account in the paying fund must equal
at least $5,000.
19
<PAGE>
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EXCHANGE PRIVILEGE You may exchange shares into other
funds in The American Funds Group. Exchange purchases
are subject to the minimum investment requirements of
the fund purchased and no sales charge generally
applies. However, exchanges of shares from the money
market funds are subject to applicable sales charges on
the fund being purchased, unless the money market fund
shares were acquired by an exchange from a fund having
a sales charge, or by reinvestment or cross-
reinvestment of dividends or capital gain
distributions.
You may exchange shares by writing to American Funds
Service Company (see "Redeeming Shares"), by contacting
your investment dealer, by using American FundsLine(R)
(see "Shareholder Services--American FundsLine(R)" be-
low), or by telephoning 800/421-0180 toll-free, faxing
(see "Transfer Agent" above for the appropriate fax
numbers) or telegraphing American Funds Service Compa-
ny. (See "Telephone Redemptions and Exchanges" below.)
Shares held in corporate-type retirement plans for
which Capital Guardian Trust Company serves as trustee
may not be exchanged by telephone, fax or telegraph.
Exchange redemptions and purchases are processed simul-
taneously at the share prices next determined after the
exchange order is received. (See "Purchasing Shares--
Share Price.") THESE TRANSACTIONS HAVE THE SAME TAX
CONSEQUENCES AS ORDINARY SALES AND PURCHASES.
AUTOMATIC EXCHANGES You may automatically exchange
shares (in amounts of $50 or more) among any of the
funds in The American Funds Group on any day (or pre-
ceding business day if the day falls on a non-business
day) of each month you designate. You must either meet
the minimum initial investment requirement for the re-
ceiving fund OR the originating fund's balance must be
at least $5,000 and the receiving fund's minimum must
be met within one year.
AUTOMATIC WITHDRAWALS You may make automatic
withdrawals of $50 or more as follows: five or more
times per year if you have an account of $10,000 or
more, or four or fewer times per year if you have an
account of $5,000 or more. Withdrawals are made on or
about the 15th day of each month you designate, and
checks will be sent within seven days. (See "Other
Important Things to Remember.") Additional investments
in a withdrawal account must not be less than one
year's scheduled withdrawals or $1,200, whichever is
greater. However, additional investments in a
withdrawal account may be inadvisable due to sales
charges and tax liabilities.
THESE SERVICES ARE AVAILABLE ONLY IN STATES WHERE THE
FUND TO BE PURCHASED MAY BE LEGALLY OFFERED AND MAY BE
TERMINATED OR MODIFIED AT ANY TIME UPON 60 DAYS'
WRITTEN NOTICE.
ACCOUNT STATEMENTS Your account is opened in accordance
with your registration instructions. Transactions in
the account, such as additional investments and
dividend reinvestments, will be reflected on regular
confirmation statements from American Funds Service
Company. Purchases through automatic investment plans
will be confirmed at least quarterly.
20
<PAGE>
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AMERICAN FUNDSLINE(R) You may check your share balance,
the price of your shares, or your most recent account
transaction, redeem shares (up to $10,000 per fund, per
account each day), or exchange shares around the clock
with American FundsLine(R). To use this service, call
800/325-3590 from a TouchTone(TM) telephone.
Redemptions and exchanges through American FundsLine(R)
are subject to the conditions noted above and in
"Redeeming Shares--Telephone Redemptions and Exchanges"
below. You will need your fund number (see the list of
funds in The American Funds Group under "Purchasing
Shares--Investment Minimums and Fund Numbers"),
personal identification number (the last four digits of
your Social Security number or other tax identification
number associated with your account) and account
number.
--------------------------------------------------------
REDEEMING By writing to Send a letter of instruction
SHARES American specifying the name of the fund, the
Funds Service number of shares or dollar amount to
You may take money Company (at be sold, your name and account
out of your the number. You should also enclose any
account whenever appropriate share certificates you wish to
you please. address redeem. For redemptions over $50,000
indicated and for certain redemptions of
under "Fund $50,000 or less (see below), your
Organization signature must be guaranteed by a
and bank, savings association, credit
Management-- union, or member firm of a domestic
Transfer stock exchange or the National
Agent") Association of Securities Dealers,
Inc., that is an eligible guarantor
institution. You should verify with
the institution that it is an
eligible guarantor prior to signing.
Additional documentation may be
required for redemption of shares
held in corporate, partnership or
fiduciary accounts. Notarization by a
Notary Public is not an acceptable
signature guarantee.
--------------------------------------------------------
By contacting If you redeem shares through your
your invest- investment dealer, you may be charged
ment dealer for this service. SHARES HELD FOR YOU
IN YOUR INVESTMENT DEALER'S STREET
NAME MUST BE REDEEMED THROUGH THE
DEALER.
--------------------------------------------------------
You may have You may use this option, provided the
a redemption account is registered in the name of
check sent to an individual(s), a UGMA/UTMA
you by using custodian, or a non-retirement plan
American trust. These redemptions may not
FundsLine(R) exceed $10,000 per day, per fund
or by account and the check must be made
telephoning, payable to the shareholder(s) of
faxing, or record and be sent to the address of
telegraphing record provided the address has been
American used with the account for at least 10
Funds Service days. See "Transfer Agent" and
Company "Exchange Privilege" above for the
(subject to appropriate telephone or fax number.
the condi-
tions noted
in this sec-
tion and in
"Telephone
Redemptions
and Exchanges"
below)
--------------------------------------------------------
In the case Upon request (use the account
of the money application for the money market
market funds, funds) you may establish telephone
you may have redemption privileges (which will
redemptions enable you to have a redemption sent
wired to your to your bank account) and/or check
bank by writing privileges. If you request
telephoning check writing privileges, you will be
American provided with checks that you may use
Funds Service to draw against your account. These
Company checks may be made payable to anyone
($1,000 or you designate and must be signed by
more) or by the authorized number of registered
writing a shareholders exactly as indicated on
check ($250 your checking account signature card.
or more)
--------------------------------------------------------
A SIGNATURE GUARANTEE IS NOT CURRENTLY REQUIRED FOR ANY
REDEMPTION OF $50,000 OR LESS PROVIDED THE REDEMPTION
CHECK IS MADE PAYABLE TO THE REGISTERED SHAREHOLDER(S)
AND IS MAILED TO THE ADDRESS OF RECORD, PROVIDED THE
ADDRESS HAS BEEN USED WITH THE ACCOUNT FOR AT LEAST 10
DAYS.
21
<PAGE>
- -------------------------------------------------------------------------------
THE PRICE YOU RECEIVE FOR THE SHARES YOU REDEEM IS THE
NET ASSET VALUE NEXT DETERMINED AFTER YOUR ORDER AND
ALL REQUIRED DOCUMENTATION ARE RECEIVED BY THE FUND OR
AMERICAN FUNDS SERVICE COMPANY. (SEE "PURCHASING
SHARES--SHARE PRICE.")
TELEPHONE REDEMPTIONS AND EXCHANGES By using the
telephone (including American FundsLine(R)), fax or
telegraph redemption and/or exchange options, you agree
to hold the fund, American Funds Service Company, any
of its affiliates or mutual funds managed by such
affiliates, and each of their respective directors,
trustees, officers, employees and agents harmless from
any losses, expenses, costs or liability (including
attorney fees) which may be incurred in connection with
the exercise of these privileges. Generally, all
shareholders are automatically eligible to use these
options. However, you may elect to opt out of these
options by writing American Funds Service Company (you
may reinstate them at any time also by writing American
Funds Service Company). If American Funds Service
Company does not employ reasonable procedures to
confirm that the instructions received from any person
with appropriate account information are genuine, the
fund may be liable for losses due to unauthorized or
fraudulent instructions. In the event that shareholders
are unable to reach the fund by telephone because of
technical difficulties, market conditions, or a natural
disaster, redemption and exchange requests may be made
in writing only.
CONTINGENT DEFERRED SALES CHARGE A contingent deferred
sales charge of 1% applies to certain redemptions made
within twelve months of purchase on investments of $1
million or more and on any investment made with no
initial sales charge by any employer-sponsored 403(b)
plan or defined contribution plan qualified under
Section 401(a) of the Internal Revenue Code including a
"401(k)" plan with 200 or more eligible employees. The
charge is 1% of the lesser of the value of the shares
redeemed (exclusive of reinvested dividends and capital
gain distributions) or the total cost of such shares.
Shares held for the longest period are assumed to be
redeemed first for purposes of calculating this charge.
The charge is waived for exchanges (except if shares
acquired by exchange were then redeemed within 12
months of the initial purchase); for distributions from
qualified retirement plans and other employee benefit
plans; for redemptions resulting from participant-
directed switches among investment options within a
participant-directed employer-sponsored retirement
plan; for distributions from 403(b) plans or IRAs due
to death, disability or attainment of age 59 1/2; for
tax-free returns of excess contributions to IRAs; for
redemptions through certain automatic withdrawals not
exceeding 10% of the amount that would otherwise be
subject to the charge; and for redemptions in
connection with loans made by qualified retirement
plans.
REINSTATEMENT PRIVILEGE You may reinvest proceeds from
a redemption or a dividend or capital gain distribution
without a sales charge (any contingent deferred sales
charge paid will be credited to your
22
<PAGE>
- -------------------------------------------------------------------------------
account) in any fund in The American Funds Group. Send
a written request and a check to American Funds Service
Company within 90 days after the date of the redemption
or distribution. Reinvestment will be at the next
calculated net asset value after receipt. The tax
status of a gain realized on a redemption will not be
affected by exercise of the reinstatement privilege,
but a loss may be nullified if you reinvest in the same
fund within 30 days. If you redeem your shares within
90 days after purchase and the sales charge on the
purchase of other shares is waived under the
reinstatement privilege, the sales charge you
previously paid for the shares may not be taken into
account when you calculate your gain or loss on that
redemption.
OTHER IMPORTANT THINGS TO REMEMBER The net asset value
for redemptions is determined as indicated under
"Purchasing Shares--Share Price." Because each stock,
stock/bond and bond fund's net asset value fluctuates,
reflecting the market value of the fund's portfolio,
the amount a shareholder receives for shares redeemed
may be more or less than the amount paid for them.
Redemption proceeds will not be mailed until sufficient
time has passed to provide reasonable assurance that
checks or drafts (including certified or cashier's
checks) for shares purchased have cleared (which may
take up to 15 calendar days from the purchase date).
Except for delays relating to clearance of checks for
share purchases or in extraordinary circumstances (and
as permissible under the Investment Company Act of
1940), redemption proceeds will be paid on or before
the seventh day following receipt of a proper
redemption request.
A fund may, with 60 days' written notice, close your
account if, due to a redemption, the account has a
value of less than the minimum required initial
investment. (For example, a fund may close an account
if a redemption is made shortly after a minimum initial
investment is made.)
RETIREMENT You may invest in the funds through various retirement
PLANS plans including the following plans for which Capital
Guardian Trust Company acts as trustee or custodian:
IRAs, Simplified Employee Pension plans, 403(b) plans
and Keogh- and corporate-type business retirement
plans. For further information about any of the plans,
agreements, applications and annual fees, contact
American Funds Distributors or your investment dealer.
To determine which retirement plan is appropriate for
you, please consult your tax adviser. TAX-EXEMPT FUNDS
SHOULD NOT SERVE AS INVESTMENTS FOR RETIREMENT PLANS.
FOR MORE INFORMATION, PLEASE REFER TO THE ACCOUNT
APPLICATION OR THE STATEMENT OF ADDITIONAL INFORMATION.
IF YOU HAVE ANY QUESTIONS ABOUT ANY OF THE SHAREHOLDER
SERVICES DESCRIBED HEREIN OR YOUR ACCOUNT, PLEASE
CONTACT YOUR INVESTMENT DEALER OR AMERICAN FUNDS
SERVICE COMPANY.
[RECYCLE LOGO] This prospectus has been printed on
recycled paper that meets the
guidelines of the United States
Environmental Protection Agency
23
<PAGE>
March 1, 1996
THE BOND FUND OF AMERICA, INC.
333 South Hope Street
Los Angeles, CA 90071
The fund seeks to provide as high a level of current income as is consistent
with the preservation of capital by investing primarily in bonds.
This prospectus relates only to shares of the fund offered without a sales
charge to eligible retirement plans. For a prospectus regarding shares of the
fund to be acquired otherwise, contact the Secretary of the fund at the
address indicated above.
This prospectus presents information you should know before investing in the
fund. It should be retained for future reference.
You may obtain the statement of additional information for the fund dated
March 1, 1996, which contains the fund's financial statements, without charge,
by writing to the Secretary of the fund at the above address or telephoning
800/421-0180. These requests will be honored within three business days of
receipt.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR INSURED OR
GUARANTEED BY THE U.S. GOVERNMENT, ANY FINANCIAL INSTITUTION, THE FEDERAL
DEPOSIT INSURANCE CORPORATION, OR ANY OTHER AGENCY, ENTITY OR PERSON. THE
PURCHASE OF FUND SHARES INVOLVES INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS
OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
08-010-0396 RP
<PAGE>
- -------------------------------------------------------------------------------
SUMMARY OF
EXPENSES
Average annual expenses
paid over a 10-year
period would be
approximately $9 per
year, assuming a $1,000
investment and a 5%
annual return with
no sales charge.
This table is designed to help you understand costs of investing in the fund.
These are historical expenses; your actual expenses may vary.
SHAREHOLDER TRANSACTION EXPENSES
Certain retirement plans may purchase shares of the fund with no sales
charge./1/ The fund also has no sales charge on reinvested dividends, deferred
sales charge, redemption fees or exchange fees.
ANNUAL FUND OPERATING EXPENSES (as a percentage of average net assets)
<TABLE>
<S> <C>
Management fees....................................................... 0.37%
12b-1 expenses........................................................ 0.25%/2/
Other expenses (including audit, legal, shareholder services, transfer
agent and custodian expenses)........................................ 0.12%
Total fund operating expenses......................................... 0.74%
</TABLE>
<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following cumulative
expenses on a $1,000 investment, assuming
a 5% annual return./3/ $8 $24 $41 $92
</TABLE>
/1/ Retirement plans of organizations with $100 million or more in collective
retirement plan assets may purchase shares of the fund with no sales charge.
In addition, 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 or any other plan that invests at least $1 million in
shares of the fund (or in combination with shares of other funds in The
American Funds Group other than the money market funds) may purchase shares
at net asset value; however, a contingent deferred sales charge of 1%
applies on certain redemptions made within 12 months following such
purchases. (See "Redeeming Shares--Contingent Deferred Sales Charge.")
/2/ These expenses may not exceed 0.25% of the fund's average net assets
annually. (See "Fund Organization and Management--Plan of Distribution.")
Due to these distribution expenses, long-term shareholders may pay more than
the economic equivalent of the maximum front-end sales charge permitted by
the National Association of Securities Dealers.
/3/ Use of this assumed 5% return is required by the Securities and Exchange
Commission; it is not an illustration of past or future investment results.
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES; ACTUAL EXPENSES MAY BE GREATER OR LESSER THAN THOSE SHOWN.
TABLE OF
CONTENTS
<TABLE>
<S> <C>
Summary of Expenses.......... 2
Financial Highlights......... 3
Investment Objective and
Policies.................... 3
Certain Securities and
Investment Techniques....... 5
Investment Results........... 9
Dividends, Distributions and
Taxes....................... 10
Fund Organization and
Management.................. 11
Purchasing Shares............ 13
Shareholder Services......... 14
Redeeming Shares............. 15
</TABLE>
2
<PAGE>
- -------------------------------------------------------------------------------
FINANCIAL The following information has been audited by Deloitte
HIGHLIGHTS & Touche LLP, independent accountants, whose unquali-
fied report covering each of the most recent five years
(For a share is included in the statement of additional information.
outstanding This information should be read in conjunction with the
throughout the financial statements and accompanying notes which are
fiscal year) included in the statement of additional information.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
----------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Begin-
ning of Year........... $12.69 $14.45 $13.99 $13.70 $12.39 $13.23 $13.24 $13.14 $14.21 $14.01
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income.. 1.05 1.05 1.09 1.15 1.21 1.24 1.31 1.28 1.28 1.38
Net realized and
unrealized gain (loss)
on investments........ 1.18 (1.76) .84 .34 1.28 (.84) (.02) .08 (1.02) .66
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total income from in-
vestment operations.. 2.23 (0.71) 1.93 1.49 2.49 .40 1.29 1.36 .26 2.04
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends from net in-
vestment income....... (1.04) (1.05) (1.08) (1.16) (1.18) (1.24) (1.30) (1.26) (1.23) (1.44)
Distributions from net
realized gains........ -- -- (.39) (.04) -- -- -- -- (.10)/1/ (.40)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total distributions... (1.04) (1.05) ( 1.47) (1.20) (1.18) (1.24) (1.30) (1.26) (1.33) (1.84)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net Asset Value, End of
Year................... $13.88 $12.69 $14.45 $13.99 $13.70 $12.39 $13.23 $13.24 $13.14 $14.21
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Total Return/2/ 18.25% (5.02)% 14.14% 11.34% 21.04% 3.27% 10.13% 10.70% 1.96% 15.17%
RATIOS/SUPPLEMENTAL
DATA:
Net assets, end of year
(in millions)......... $6,290 $4,941 $5,285 $3,917 $2,859 $1,945 $1,481 $1,021 $ 825 $ 694
Ratio of expenses to
average net assets.... .74% .69% .71% .73% .77% .76% .76% .66% .59% .58%
Ratio of net income to
average net assets.... 7.87% 7.77% 7.53% 8.36% 9.28% 9.70% 9.73% 9.54% 9.45% 9.39%
Portfolio turnover
rate.................. 43.80% 57.0% 44.7% 49.7% 56.5% 59.9% 64.2% 93.0% 93.0% 107.8%
</TABLE>
--------
/1/ Represents only net short-term realized gains.
/2/ Calculated with no sales charge.
INVESTMENT The fund's investment objective is to provide as high a
OBJECTIVE level of current income as is consistent with the pres-
AND POLICIES ervation of capital. The fund invests substantially all
of its assets in marketable corporate debt securities,
The fund's goal is U.S. Government securities, mortgage-related securi-
to provide you ties, other asset-backed securities and cash or money
with high current market instruments. Normally, at least 65% of the
incomeand fund's assets will be invested in bonds. (For this pur-
conservationof pose, bonds are considered any debt securities having
capital. initial maturities in excess of one year.)
At least 60% of the value of the fund's assets, mea-
sured at the time of any purchase, must be invested in
the following categories:
. marketable corporate debt securities such as bonds
rated at the time of purchase within the three
highest investment grade ratings (A or better)
assigned by Moody's Investors Service, Inc. or
Standard & Poor's Corporation (all ratings discussed
below refer to those assigned by these two rating
agencies) or, if not rated by either of these rating
agencies, determined by the fund's investment
adviser, Capital Research and Management Company, as
being of investment quality equivalent to securities
rated A or better;
3
<PAGE>
- -------------------------------------------------------------------------------
. U.S. Government securities including (1) direct
obligations of the U.S. Treasury (such as Treasury
bills, notes and bonds), (2) obligations guaranteed
as to principal and interest by the U.S. Treasury
such as Government National Mortgage Association
certificates (described below) and Federal Housing
Administration debentures, and (3) securities issued
by U.S. Government instrumentalities and certain
federal agencies that are neither direct obligations
of, nor guaranteed by, the Treasury;
. mortgage-related securities rated A or better or
unrated securities that are determined to be of
equivalent quality of (1) governmental issuers,
including Government National Mortgage Association
certificates, which are securities representing part
ownership of a pool of mortgage loans on which timely
payment of interest and principal is guaranteed by
the U.S. Government, and securities issued and
guaranteed as to the payment of interest and
principal by the Federal National Mortgage
Association or the Federal Home Loan Mortgage
Corporation (but not backed by the U.S. Government);
(2) private issuers, including mortgage pass-through
certificates or mortgage-backed bonds; and (3) the
governmental issuers mentioned above or private
issuers, including collateralized mortgage
obligations and real estate mortgage investment
conduits which are issued in portions or tranches
with varying maturities and characteristics; some
tranches may only receive the interest paid on the
underlying mortgages (IOs) and others may only
receive the principal payments (POs); the values of
IOs and POs are extremely sensitive to interest rate
fluctuations and prepayment rates, and IOs are also
subject to the risk of early prepayment of the
underlying mortgages which will substantially reduce
or eliminate interest payments (see the statement of
additional information for more about these
securities);
. other asset-backed securities rated A or better or
unrated securities that are determined to be of
equivalent quality (unrelated to mortgage loans) such
as securities whose assets consist of a pool of motor
vehicle retail installment sales contracts and security
interests in the vehicles securing the contracts or a
pool of credit card loan receivables (see the statement
of additional information for more about these
securities);
. cash or money market instruments, including commercial
bank obligations (certificates of deposit, which are
interest-bearing time deposits; bankers acceptances,
which are time drafts on a commercial bank where the
bank accepts an irrevocable obligation to pay at
maturity; and demand or time deposits), and commercial
paper (short-term notes with maturities of up to nine
months issued by corporations or government bodies).
4
<PAGE>
- -------------------------------------------------------------------------------
The remaining 40% of the fund's assets, measured at the
time of purchase, may be invested in debt securities
rated below A or unrated securities that are determined
to be of equivalent quality, including marketable cor-
porate debt securities, mortgage-related securities and
other asset-backed securities. These securities may be
rated as low as Ca by Moody's or CC by S&P. However,
securities rated Ba and BB or below or unrated securi-
ties that are determined to be of equivalent quality
(commonly known as "junk" or "high-yield, high-risk"
bonds) will represent less than 35% of the fund's net
assets and are subject to special review before pur-
chase.
In addition, the fund may from time to time invest in
fixed-income securities of corporations outside the
U.S. or governmental entities and may purchase or sell
various currencies and enter into forward currency con-
tracts in connection with these investments. The fund
may also invest up to 1% of its assets in inverse
floating rate notes (a type of derivative instrument).
The average monthly composition of the fund's portfolio
based on the higher of the Moody's or S&P ratings for
the fiscal year ended December 31, 1995 was as
follows: bonds--Aaa/AAA-42.84%; Aa/AA-3.49%; A/A-6.26%;
Baa/BBB-10.17%; Ba/BB-7.45%; B/B-11.95%, and Caa/
CCC-1.41%. Other investments, including non-rated
investments, equity-type securities and cash or cash
equivalents amounted to 1.74%, 3.34% and 11.35%,
respectively.
The fund's investment restrictions (which are described
in the statement of additional information) and objec-
tive cannot be changed without shareholder approval.
All other investment practices may be changed by the
fund's board.
ACHIEVEMENT OF THE FUND'S INVESTMENT OBJECTIVE CANNOT,
OF COURSE, BE ASSURED DUE TO THE RISK OF CAPITAL LOSS
FROM FLUCTUATING PRICES INHERENT IN ANY INVESTMENT IN
SECURITIES.
CERTAIN SECURITIES RISKS OF INVESTING IN BONDS The market values of fixed-
AND INVESTMENT income securities generally vary inversely with the
TECHNIQUES level of interest rates--when interest rates rise,
their values will tend to decline and vice versa. The
Investing in bonds magnitude of these changes generally will be greater
involves certain the longer the remaining maturity of the security.
risks. Fluctuations in the value of the fund's investments
will be reflected in its net asset value per share;
typically declining when interest rates rise.
High-yield, high-risk bonds (bonds rated Ba and BB or
below) may be subject to greater market fluctuations
and to greater risk of loss of income and principal due
to default by the issuer than are higher-rated bonds.
Their values tend to reflect short-term corporate,
economic and
5
<PAGE>
- -------------------------------------------------------------------------------
market developments and investor perceptions of the is-
suer's credit quality to a greater extent than lower
yielding higher-rated bonds. In addition, it may be
more difficult to dispose of, or to determine the value
of, high-yield, high-risk bonds. Bonds rated Ca or CC
are described by the ratings agencies as "speculative
in a high degree; often in default or [having] other
marked shortcomings." See the statement of additional
information for a complete description of the bond rat-
ings.
Capital Research and Management Company attempts to re-
duce the risks described above through diversification
of the portfolio and by credit analysis of each issuer
as well as by monitoring broad economic trends and cor-
porate and legislative developments.
INVESTING IN VARIOUS COUNTRIES The fund may invest in
securities which may be denominated in currencies
other than the U.S. dollar. The fund may also invest in
securities of issuers located outside the United
States. Investing globally involves special risks,
particularly in certain developing countries, caused
by, among other things: trade balances and imbalances
and related economic policies; expropriation or
confiscatory taxation; limitations on the removal of
funds or other assets; political or social instability;
the diverse structure and liquidity of the various
securities markets; and nationalization policies of
governments around the world. Companies located outside
the U.S. operate under different accounting, auditing
and financial reporting standards and practices and
regulatory requirements that may be less rigorous than
U.S. companies, and frequently there may be less
information publicly available about such companies.
However, investing outside the U.S. also can reduce
certain of these risks through greater diversification
opportunities.
Transaction costs are generally higher outside the
U.S., and the fund will bear certain expenses in con-
nection with its currency transactions. Increased cus-
todian costs as well as administrative difficulties
(for example, delays in clearing and settling portfolio
transactions or in receiving payments of dividends) may
be associated with the maintenance of assets in certain
jurisdictions.
CURRENCY TRANSACTIONS The fund has the ability to pur-
chase and sell currencies to facilitate securities
transactions and to enter into forward currency con-
tracts to hedge against changes in currency exchange
rates. While entering into forward transactions could
minimize the risk of loss due to a decline in the value
of the hedged currency, it could also limit any poten-
tial gain which might result from an increase in the
value of the currency. (See "Currency Transactions" in
the statement of additional information.)
6
<PAGE>
- -------------------------------------------------------------------------------
WHEN-ISSUED SECURITIES, FIRM COMMITMENT AGREEMENTS AND
"ROLL" TRANSACTIONS The fund may purchase securities on
a delayed delivery or "when-issued" basis and enter
into firm commitment agreements (transactions whereby
the payment obligation and interest rate are fixed at
the time of the transaction but the settlement is de-
layed). The fund as purchaser assumes the risk of any
decline in value of the security beginning on the date
of the agreement or purchase. The fund also may enter
into "roll" transactions, which are the sale of GNMA
certificates or other securities together with a com-
mitment (for which the fund typically receives a fee)
to purchase similar, but not identical, securities at a
later date. As the fund's aggregate commitments under
these transactions increase, the opportunity for lever-
age similarly may increase; however, it is not the in-
tent of the fund to engage in these transactions for
leveraging purposes. In addition, the fund may enter
into other purchase and sale transactions involving se-
curities which are not settled in the ordinary course
of business and under various terms when to do so is in
the best interest of the fund.
The fund will segregate liquid assets such as cash,
U.S. Government securities or other appropriate high-
grade debt obligations in an amount sufficient to meet
its payment obligations in these transactions. Although
these transactions will not be entered into for
leveraging purposes, to the extent the fund's aggregate
commitments under these transactions exceed its hold-
ings of cash and securities that do not fluctuate in
value (such as short-term money market instruments),
the fund temporarily will be in a leveraged position
(i.e., it will have an amount greater than its net as-
sets subject to market risk). Should market values of
the fund's portfolio securities decline while the fund
is in a leveraged position, greater depreciation of its
net assets would likely occur than were it not in such
a position. The fund will not borrow money to settle
these transactions and, therefore, will liquidate other
portfolio securities in advance of settlement if neces-
sary to generate additional cash to meet its obliga-
tions thereunder.
REPURCHASE AGREEMENTS The fund may enter into repur-
chase agreements, under which it buys a security and
obtains a simultaneous commitment from the seller to
repurchase the security at a specified time and price.
The seller must maintain with the fund's custodian col-
lateral equal to at least 100% of the repurchase price
including accrued interest as monitored daily by Capi-
tal Research and Management Company. If the seller
under the repurchase agreement defaults, the fund may
incur a loss if the value of the collateral securing the
repurchase agreement has declined and may incur dispo-
sition costs in connection with liquidating the collat-
eral. If bankruptcy proceedings are commenced with
respect to the seller, liquidation of the collateral by
the fund may be delayed or limited.
7
<PAGE>
- -------------------------------------------------------------------------------
LOAN PARTICIPATIONS The fund may invest, subject to an
overall 10% limit on loans, in loan participations,
typically made by a syndicate of banks to U.S. and non-
U.S. corporate or governmental borrowers for a variety
of purposes. The underlying loans may be secured or
unsecured, and will vary in term and legal structure.
When purchasing such instruments the fund may assume
the credit risks associated with the original bank
lender as well as the credit risks associated with the
borrower. Investments in loan participations present
the possibility that the fund could be held liable as a
co-lender under emerging legal theories of lender lia-
bility. In addition, if the loan is foreclosed, the
fund could be part owner of any collateral, and could
bear the costs and liabilities of owning and disposing
of the collateral. Loan participations are generally
not rated by major rating agencies and may not be pro-
tected by the securities laws. Also, loan participa-
tions are generally considered to be illiquid.
PRIVATE PLACEMENTS Private placements may be either
purchased from another institutional investor that
originally acquired the securities in a private place-
ment or directly from the issuers of the securities.
Generally, securities acquired in private placements
are subject to contractual restrictions on resale and
may not be resold except pursuant to a registration
statement under the Securities Act of 1933 or in reli-
ance upon an exemption from the registration require-
ments under the Act, for example, private placements
sold pursuant to Rule 144A. Accordingly, any such obli-
gation will be deemed illiquid unless it has been spe-
cifically determined to be liquid under procedures
adopted by the fund's board of directors.
In determining whether these securities are liquid,
factors such as the frequency and volume of trading and
the commitment of dealers to make markets will be con-
sidered. Additionally, the liquidity of any particular
security will depend on such factors as the availabil-
ity of "qualified" institutional investors and the ex-
tent of investor interest in the security, which can
change from time to time.
MATURITY The maturity composition of the fund's portfo-
lio of fixed-income securities will be adjusted in re-
sponse to market conditions and expectations. There are
no restrictions on the maturity composition of the
portfolio, although it is anticipated that the fund
normally will be invested substantially in intermedi-
ate-term (3 to 10 years to maturity) and long-term
(over 10 years to maturity) securities.
MULTIPLE PORTFOLIO COUNSELOR SYSTEM The basic
investment philosophy of Capital Research and
Management Company is to seek fundamental values at
reasonable prices, using a system of multiple portfolio
counselors in managing mutual fund assets. Under this
system
8
<PAGE>
- -------------------------------------------------------------------------------
the portfolio of the fund is divided into segments
which are managed by individual counselors. Each
counselor decides how their segment will be invested
(within the limits provided by the fund's objective and
policies and by Capital Research and Management
Company's investment committee). In addition, Capital
Research and Management Company's research
professionals make investment decisions with respect to
a portion of the fund's portfolio segments. The primary
individual portfolio counselors for the fund are listed
below.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
YEARS OF EXPERIENCE
AS INVESTMENT PROFESSIONAL
(APPROXIMATE)
YEARS OF EXPERIENCE
AS PORTFOLIO WITH CAPITAL
PORTFOLIO COUNSELOR FOR RESEARCH AND
COUNSELORS FOR THE BOND FUND MANAGEMENT
THE BOND FUND OF AMERICA COMPANY OR ITS TOTAL
OF AMERICA PRIMARY TITLE(S) (APPROXIMATE) AFFILIATES YEARS
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Abner D. Goldstine President and Director of Since the fund began 29 years 44 years
the fund. Senior Vice President operations in 1974
and Director, Capital Research
and Management Company
- -----------------------------------------------------------------------------------------------------------------------------
Richard T. Schotte Senior Vice President of 18 years 18 years 29 years
the fund. Senior Vice
President, Capital
Research and Management
Company
John H. Smet Vice President of the 7 years 13 years 14 years
fund. Vice President,
Capital Research and
Management Company
- -----------------------------------------------------------------------------------------------------------------------------
Mark H. Dalzell Vice President, Investment 2 years 8 years 18 years
Management Group, Capital
Research and Management
Company
- -----------------------------------------------------------------------------------------------------------------------------
The fund began operations on May 28, 1974.
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
INVESTMENT RESULTS The fund may from time to time compare its investment
results to various unmanaged indices or other mutual
The fund has funds in reports to shareholders, sales literature and
averaged a total advertisements. The results may be calculated on a to-
return (at no tal return, yield, and/or distribution rate basis for
sales charge) of various periods, with or without sales charges. Results
10.65% a year over calculated without a sales charge will be higher. Total
its lifetime returns assume the reinvestment of all dividends and
(May 28, 1974 capital gain distributions.
through December
31, 1995). The fund's yield and the average annual total returns
are calculated with no sales charge in accordance with
Securities and Exchange Commission requirements. The
fund's distribution rate is calculated by annualizing
the current month's dividend and dividing by the
average price for the month. For the 30-day period
ended December 31, 1995, the fund's SEC yield was 6.49%
and the distribution rate was 7.18% with no sales
charge. The SEC yield reflects income earned by the
fund, while the distribution rate reflects dividends
paid by the fund. The fund's total
9
<PAGE>
- -------------------------------------------------------------------------------
return over the past 12 months and average annual total
returns over the past five-year and ten-year periods,
as of December 31, 1995, were 18.25%, 11.56% and 9.83%,
respectively. Of course, past results are not an
indication of future results. Further information
regarding the fund's investment results is contained in
the fund's annual report which may be obtained without
charge by writing to the Secretary of the fund at the
address indicated on the cover of this prospectus.
DIVIDENDS, DIVIDENDS AND DISTRIBUTIONS The fund declares dividends
DISTRIBUTIONS AND from its net investment income daily and distributes
TAXES the accrued dividends to shareholders each month. Divi-
dends begin accruing one day after payment for shares
Income is received by the fund or American Funds Service Com-
distributions are pany. All capital gains, if any, are distributed annu-
made each month. ally, usually in December. When a capital gain is de-
clared, the net asset value per share is reduced by the
amount of the payment.
The terms of your plan will govern how your plan may
receive distributions from the fund. Generally,
periodic distributions from the fund to your plan are
reinvested in additional fund shares, although your
plan may permit fund distributions from net investment
income to be received by you in cash while reinvesting
capital gains distributions in additional shares or all
fund distributions to be received in cash. Unless you
select another option, all distributions will be
reinvested in additional fund shares.
FEDERAL TAXES The fund intends to operate as a "regu-
lated investment company" under the Internal Revenue
Code. For any fiscal year in which the fund so quali-
fies and distributes to shareholders all of its net in-
vestment income and net capital gains, the fund itself
is relieved of federal income tax. The tax treatment of
redemptions from a retirement plan may differ from re-
demptions from an ordinary shareholder account.
Please see the statement of additional information and
your tax adviser for further information.
10
<PAGE>
- -------------------------------------------------------------------------------
FUND FUND ORGANIZATION AND VOTING RIGHTS The fund, an open-
ORGANIZATION end, diversified management investment company, was
AND MANAGEMENT organized as a Maryland corporation in 1973. The fund's
board supervises fund operations and performs duties
The fund is a required by applicable state and federal law. Members
member of The of the board who are not employed by Capital Research
American Funds and Management Company or its affiliates are paid
Group, which is certain fees for services rendered to the fund as
managed by one of described in the statement of additional information.
the largest and They may elect to defer all or a portion of these fees
most experienced through a deferred compensation plan in effect for the
investment fund. Shareholders have one vote per share owned and,
advisers. at the request of the holders of at least 10% of the
shares, the fund will hold a meeting at which any
member of the board could be removed by a majority
vote. There will not usually be a shareholder meeting
in any year except, for example, when the election of
the board is required to be acted upon by shareholders
under the Investment Company Act of 1940.
THE INVESTMENT ADVISER Capital Research and Management
Company, a large and experienced investment management
organization founded in 1931, is the investment adviser
to the fund and other funds, including those in The
American Funds Group. Capital Research and Management
Company is located at 333 South Hope Street, Los
Angeles, CA 90071 and at 135 South State College
Boulevard, Brea, CA 92621. Capital Research and
Management Company manages the investment portfolio and
business affairs of the fund and receives a fee at the
annual rate of 0.30% on the first $60 million of the
fund's net assets, plus 0.21% on net assets in excess
of $60 million to $1 billion, plus 0.18% on assets over
$1 billion to $3 billion, plus 0.16% on assets over $3
billion, plus 3% of the first $5.4 million of annual
gross income, plus 2.25% of annual gross income over
$5.4 million. Assuming net assets of $6 billion and
gross investment income levels of 6%, 7%, 8%, 9%, 10%
and 11%, management fees would be .31%, .33%, .36%,
.38%, .40%, and .42%, respectively.
Capital Research and Management Company is a wholly
owned subsidiary of The Capital Group Companies, Inc.
(formerly "The Capital Group, Inc."), which is located
at 333 South Hope Street, Los Angeles, CA 90071. The
research activities of Capital Research and Management
Company are conducted by affiliated companies which
have offices in Los Angeles, San Francisco, New York,
Washington, D.C., London, Geneva, Singapore, Hong Kong
and Tokyo.
Capital Research and Management Company and its
affiliated companies have adopted a personal investing
policy that is consistent with the recommendations
contained in the report dated May 9, 1994 issued by the
Investment Company Institute's Advisory Group on
Personal Investing. (See the statement of additional
information.)
11
<PAGE>
- -------------------------------------------------------------------------------
PORTFOLIO TRANSACTIONS Orders for the fund's portfolio
securities transactions are placed by Capital Research
and Management Company, which strives to obtain the
best available prices, taking into account the costs
and quality of executions. Fixed-income securities are
generally traded on a "net" basis with a dealer acting
as principal for its own account without a stated com-
mission, although the price of the security usually in-
cludes a profit to the dealer. In underwritten offer-
ings, securities are usually purchased at a fixed price
which includes an amount of compensation to the under-
writer, generally referred to as the underwriter's con-
cession or discount. On occasion, securities may be
purchased directly from an issuer, in which case no
commissions or discounts are paid.
Subject to the above policy, when two or more brokers
are in a position to offer comparable prices and execu-
tions, preference may be given to brokers that have
sold shares of the fund or have provided investment re-
search, statistical, and other related services for the
benefit of the fund and/or other funds served by Capi-
tal Research and Management Company.
PRINCIPAL UNDERWRITER American Funds Distributors,
Inc., a wholly owned subsidiary of Capital Research and
Management Company, is the principal underwriter of the
fund's shares. American Funds Distributors is located
at 333 South Hope Street, Los Angeles, CA 90071, 135
South State College Boulevard, Brea, CA 92621, 8000 IH-
10 West, San Antonio, TX 78230, 8332 Woodfield Crossing
Boulevard, Indianapolis, IN 46240, and 5300 Robin Hood
Road, Norfolk, VA 23513. Telephone conversations with
American Funds Distributors may be recorded or moni-
tored for verification, recordkeeping and quality as-
surance purposes.
PLAN OF DISTRIBUTION The fund has a plan of distribu-
tion or "12b-1 Plan" under which it may finance activi-
ties primarily intended to sell shares, provided the
categories of expenses are approved in advance by the
board and the expenses paid under the plan were in-
curred within the last 12 months and accrued while the
plan is in effect. Expenditures by the fund under the
plan may not exceed 0.25% of its average net assets an-
nually (all of which may be for service fees).
TRANSFER AGENT American Funds Service Company, 800/421-
0180, a wholly owned subsidiary of Capital Research and
Management Company, is the transfer agent and performs
shareholder service functions. American Funds Service
Company is located at 333 South Hope Street, Los
Angeles, CA 90071, 135 South State College Boulevard,
Brea, CA 92621, 8000 IH-10 West, San Antonio, TX 78230,
8332 Woodfield Crossing Boulevard, Indianapolis, IN
46240, and 5300 Robin Hood Road, Norfolk, VA 23513. It
was paid a fee of $4,205,000 for the fiscal year ended
December 31, 1995. Telephone conversations with
American Funds Service Company may be recorded or
monitored for verification, recordkeeping and quality
assurance purposes.
12
<PAGE>
- -------------------------------------------------------------------------------
PURCHASING ALL ORDERS TO PURCHASE SHARES MUST BE MADE THROUGH YOUR
SHARES RETIREMENT PLAN. FOR MORE INFORMATION ABOUT HOW TO
PURCHASE SHARES OF THE FUND THROUGH YOUR PLAN OR
LIMITATIONS ON THE AMOUNT THAT MAY BE PURCHASED, PLEASE
CONSULT WITH YOUR EMPLOYER. Shares are sold to eligible
retirement plans at the net asset value per share next
determined after receipt of an order by the fund or
American Funds Service Company. Orders must be received
before the close of regular trading on the New York
Stock Exchange in order to receive that day's net asset
value. Plans of organizations with collective
retirement plan assets of $100 million or more may
purchase shares at net asset value. In addition, any
employer-sponsored 403(b) plan or defined contribution
plan qualified under Section 401(a) of the Internal
Revenue Code including a "401(k)" plan with 200 or more
eligible employees or any other plan that invests at
least $1 million in shares of the fund (or in
combination with shares of other funds in The American
Funds Group other than the money market funds) may
purchase shares at net asset value; however, a
contingent deferred sales charge of 1% is imposed on
certain redemptions made within twelve months of such
purchase. (See "Redeeming Shares--Contingent Deferred
Sales Charge.") Plans may also qualify to purchase
shares at net asset value by completing a statement of
intention to purchase $1 million in fund shares subject
to a commission over a maximum of 13 consecutive
months. Certain redemptions of such shares may also be
subject to a contingent deferred sales charge as
described above. (See the statement of additional
information.)
The minimum initial investment is $250, except that the
money market funds have a minimum of $1,000 for
individual retirement accounts (IRAs). Minimums are
reduced to $50 for purchases through '"Automatic
Investment Plans" (except for the money market funds)
or to $25 for purchases by retirement plans through
payroll deductions and may be reduced or waived for
shareholders of other funds in The American Funds
Group.
American Funds Distributors, at its expense, (from a
designated percentage of its income), will, during
calendar year 1996, provide additional promotional
incentives to dealers. Currently these incentives are
limited to the top one hundred dealers who have sold
shares of the fund or other funds in The American Funds
Group. Such incentive payments will be based on a pro
rata share of a qualifying dealer's sales. American
Funds Distributors will, on an annual basis, determine
the advisability of continuing these payments.
Qualified dealers currently are paid a continuing serv-
ice fee not to exceed 0.25% of average net assets
(0.15% in the case of the money market funds) annually
in order to promote selling efforts and to compensate
13
<PAGE>
- -------------------------------------------------------------------------------
them for providing certain services. (See "Fund Organi-
zation and Management--Plan of Distribution.") These
services include processing purchase and redemption
transactions, establishing shareholder accounts and
providing certain information and assistance with re-
spect to the fund.
Shares of the fund are offered to other shareholders
pursuant to another prospectus at public offering
prices that may include an initial sales charge.
SHARE PRICE Shares are offered to eligible retirement
plans at the net asset value next determined after the
order is received by the fund or American Funds Service
Company. In the case of orders sent directly to the
fund or American Funds Service Company, an investment
dealer must be indicated. Dealers are responsible for
promptly transmitting orders. (See the statement of
additional information under "Purchase of Shares--Price
of Shares.")
The fund's net asset value per share is determined as
of the close of trading (currently 4:00 p.m., New York
time) on each day the New York Stock Exchange is open.
The current value of the fund's total assets, less all
liabilities, is divided by the total number of shares
outstanding and the result, rounded to the nearer cent,
is the net asset value per share.
SHAREHOLDER Subject to any restrictions contained in your plan, you
SERVICES can exchange your shares for shares of other funds in
The American Funds Group which are offered through the
plan at net asset value. In addition, again depending
on your plan, you may be able to exchange shares
automatically or cross-reinvest dividends in shares of
other funds. Contact your plan administrator/trustee
regarding how to use these services. Also, see the
fund's statement of additional information for a
description of these and other services that may be
available through your plan. These services are
available only in states where the fund to be purchased
may be legally offered and may be terminated or
modified at any time upon 60 days' written notice.
14
<PAGE>
- -------------------------------------------------------------------------------
REDEEMING SHARES Subject to any restrictions imposed by your plan, you
can sell your shares through the plan to the fund any
day the New York Stock Exchange is open. For more
information about how to sell shares of the fund
through your retirement plan, including any charges
that may be imposed by the plan, please consult with
your employer.
--------------------------------------------------------
By contact- Your plan administrator/trustee must
ing your plan send a letter of instruction
administrator/ specifying the name of the fund, the
trustee number of shares or dollar amount to
be sold, and, if applicable, your
name and account number. For your
protection, if you redeem more than
$50,000, the signatures of the
registered owners (i.e., trustees or
their legal representatives) must be
guaranteed by a bank, savings
association, credit union, or member
firm of a domestic stock exchange or
the National Association of
Securities Dealers, Inc., that is an
eligible guarantor institution. Your
plan administrator/trustee should
verify with the institution that it
is an eligible guarantor prior to
signing. Additional documentation may
be required to redeem shares from
certain accounts. Notarization by a
Notary Public is not an acceptable
signature guarantee.
--------------------------------------------------------
By contact- Shares may also be redeemed through
ing an in- an investment dealer; however, you or
vestment your plan may be charged for this
dealer service. SHARES HELD FOR YOU IN AN
INVESTMENT DEALER'S STREET NAME MUST
BE REDEEMED THROUGH THE DEALER.
--------------------------------------------------------
THE PRICE YOU RECEIVE FOR THE SHARES YOU REDEEM IS THE
NET ASSET VALUE NEXT DETERMINED AFTER YOUR ORDER AND ALL
REQUIRED DOCUMENTATION ARE RECEIVED BY THE FUND OR
AMERICAN FUNDS SERVICE COMPANY. (SEE "PURCHASING
SHARES--SHARE PRICE.")
CONTINGENT DEFERRED SALES CHARGE A contingent deferred
sales charge of 1% applies to certain redemptions made
within twelve months of purchase on investments of $1
million or more and on any investment made with no
initial sales charge by any employer-sponsored 403(b)
plan or defined contribution plan qualified under
Section 401(a) of the Internal Revenue Code including a
"401(k)" plan with 200 or more eligible employees. The
charge is 1% of the lesser of the value of the shares
redeemed (exclusive of reinvested dividends and capital
gain distributions) or the total cost of such shares.
Shares held for the longest period are assumed to be
redeemed first for purposes of calculating this charge.
The charge is waived for exchanges (except if shares
acquired by exchange were then redeemed within 12
months of the initial purchase); for distributions from
qualified retirement plans and other employee
15
<PAGE>
- -------------------------------------------------------------------------------
benefit plans; for redemptions resulting from
participant-directed switches among investment options
within a participant-directed employer-sponsored
retirement plan, and for redemptions in connection with
loans made by qualified retirement plans.
OTHER IMPORTANT THINGS TO REMEMBER The net asset value
for redemptions is determined as indicated under "Pur-
chasing Shares--Share Price." Because the fund's net
asset value fluctuates, reflecting the market value of
the portfolio, the amount you receive for shares re-
deemed may be more or less than the amount paid for
them.
Redemption proceeds will not be mailed until sufficient
time has passed to provide reasonable assurance that
checks or drafts (including certified or cashier's
checks) for shares purchased have cleared (which may
take up to 15 calendar days from the purchase date).
Except for delays relating to clearance of checks for
share purchases or in extraordinary circumstances (and
as permissible under the Investment Company Act of
1940), redemption proceeds will be paid on or before
the seventh day following receipt of a proper redemp-
tion request.
[RECYCLE LOGO] This prospectus has been printed on
recycled paper that meets the
guidelines of the United States
Environmental Protection Agency
THIS PROSPECTUS RELATES ONLY TO SHARES OF THE FUND
OFFERED WITHOUT A SALES CHARGE TO ELIGIBLE RETIREMENT
PLANS. FOR A PROSPECTUS REGARDING SHARES OF THE FUND
TO BE ACQUIRED OTHERWISE, CONTACT THE SECRETARY OF
THE FUND AT THE ADDRESS INDICATED ON THE FRONT.
16
<PAGE>
THE BOND FUND OF AMERICA, INC.
The Bond
Fund of
America, Inc.(R)
March 1, 1996
THE BOND FUND OF AMERICA, INC.(R)
Profile
333 South Hope Street March 1, 1996
Los Angeles, CA 90071
1. Goal
The fund seeks to provide you with high income while preserving your
investment.
2. Investment Strategies
The fund will invest at least 60% of its assets in higher quality bonds (rated
"A" or better). The fund may also hold lower rated bonds (including "junk
bonds"). In addition, the fund may invest in non-U.S. bonds to a limited
degree. The fund has no maturity limits.
3. Risks
Investing in bonds involves risk, including credit risk (the possibility that
the bond issuer will default on its obligation) and market risk (when interest
rates rise, bond prices fall and vice versa). Lower rated bonds are subject to
greater price fluctuations and risk of loss than higher rated bonds. Moreover,
investing outside the U.S. involves special risks, such as currency
fluctuations.
You can lose money by investing in the fund; your investment is not guaranteed.
The likelihood of loss is greater if you intend to invest for a shorter period
of time.
4. Appropriateness
If you are not a long-term investor seeking current income and are not willing
to accept the risks described above including the risks of investing in lower
rated bonds, this fund may not be appropriate for you. Please consult your
investment dealer.
5. Fees and Expenses
Shareholder transaction expenses are charges you pay when you buy or sell
shares of a fund. Annual fund operating expenses are paid out of the fund's
assets. The fund's expenses are factored into its share price and
distributions and are not charged directly to shareholder accounts.
Shareholder Transaction Expenses
<TABLE>
<CAPTION>
<S> <C>
Maximum sales charge
on purchases
(as a percentage of offering price) 4.75%
</TABLE>
SALES CHARGES ARE REDUCED OR ELIMINATED FOR LARGER PURCHASES. The fund has no
sales charge on reinvested dividends, and no deferred sales charge or
redemption or exchange fees. A contingent deferred sales charge of 1% applies
on certain redemptions made within 12 months following purchases without a
sales charge.
Annual Fund Operating Expenses
(as a percentage of average net assets)
<TABLE>
<CAPTION>
<S> <C>
Management fees 0.37%
12b-1 expenses 0.25%
Other expenses 0.12%
Total fund operating expenses 0.74%
</TABLE>
Example
You would pay the following cumulative expenses on a $1,000 investment,
assuming a 5% annual return. This example should not be considered a
representation of past or future expenses.
<TABLE>
<CAPTION>
<S> <C>
One year $ 55
Three years 70
Five years 87
Ten years 135
</TABLE>
6. Past Results
Here are the fund's annual total returns for each of the past 10 calendar
years:
[CHART]
<TABLE>
<CAPTION>
<S> <C>
1986 15.17
1987 1.96
1988 10.70
1989 10.13
1990 3.27
1991 21.04
1992 11.34
1993 14.14
1994 -5.02
1995 18.25
</TABLE>
[END CHART]
Sales charges have not been deducted from results shown above.
The fund's average annual total return* is +10.65% over its lifetime (May 28,
1974 through December 31, 1995). PAST RESULTS ARE NOT A GUARANTEE OF FUTURE
RESULTS.
<TABLE>
<CAPTION>
<S> <C>
Average Annual
Total Returns*
One year + 12.66%
Five years + 10.47%
Lifetime + 9.30%
30-Day Yield*
6.18%
</TABLE>
* These results were calculated for periods ended December 31, 1995 in
accordance with Securities and Exchange Commission rules which require that the
maximum sales charge be deducted.
7. Investment Adviser
Capital Research and Management Company, one of the world's largest and most
experienced investment advisers, manages the fund, which is a member of The
American Funds Group. Capital Research and Management Company manages this
diversified mutual fund using the multiple portfolio counselor system. Under
this system, the fund's assets are divided into several portions. Each portion
is independently managed by a portfolio counselor or a group of research
professionals, subject to oversight by the investment adviser's investment
committee.
8. Purchases
The fund's shares are sold through investment dealers. Your investment dealer
can help you with your account, or you may call American Funds Service Company
at 800/421-0180 with questions about your account. Generally, the minimum
initial investment is $1,000.
9. Redemptions
You may redeem shares through your investment dealer or by calling American
FundsLineR at 800/325-3590. (You will need the fund's number - 08 - if you use
this service.) Transactions will be processed as of the next close of the New
York Stock Exchange.
10. Distributions
Dividends and capital gain distributions are automatically reinvested unless
you notify American Funds Service Company that you would like to invest them in
another of the American Funds or receive payment in cash. Income distributions
are usually made monthly. Capital gains, if any, are usually distributed in
December.
11. Other Services
You may exchange your shares for any of the other American Funds or obtain
information about your investment any time by calling American FundsLineR. If
you purchase shares at net asset value through a retirement plan, some or all
of the services or features described may not be available. Contact your
employer for details.
This Profile contains key information about the fund. More details appear in
the fund's accompanying prospectus.
This profile has been printed on recycled
paper that meets the guidelines of the United
States Environmental Protection Agency.
<PAGE>
PART B
STATEMENT OF ADDITIONAL INFORMATION
MARCH 1, 1996
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, 1996. 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 17
EXECUTION OF PORTFOLIO TRANSACTIONS 18
GENERAL INFORMATION 18
INVESTMENT RESULTS 19
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 purchase and sell
currencies to facilitate securities transactions and to enter into forward
currency contracts to hedge against changes in currency exchange rates. THE
FUND PURCHASES OR SELLS CURRENCY IN CONNECTION WITH SETTLING TRANSACTIONS
INVOLVING SECURITIES DENOMINATED IN CURRENCIES OTHER THAN THE U.S. DOLLAR. A
forward currency contract is an obligation to purchase or sell a specific
currency at a future date and price, both of which are set at the time of the
contract. FOR EXAMPLE, THE FUND MIGHT SELL A CURRENCY ON A FORWARD BASIS TO
HEDGE AGAINST AN ANTICIPATED DECLINE IN THE CURRENCY IN WHICH A PORTFOLIO
SECURITY IS DENOMINATED. 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 in 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% 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 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 12/31/95
<S> <C> <C> <C> <C> <C>
++ H. Frederick Christie Director Private Investor. The Mission
P. O. Box 144 Group (non-utility holding $ 5,459/3/ $138,050 18
Palos Verdes, CA 90274 company, subsidiary of Southern
Age: 62 California Edison Company), former
President and Chief
Executive Officer
Diane C. Creel Director Chairwoman, CEO and President,
100 W. Broadway The Earth Technology Corporation 4,855 36,075 12
Suite 5000
Long Beach, CA 90802
Age: 47
Martin Fenton, Jr. Director Chairman, Senior Resource Group
4350 Executive Drive (management of senior living 5,072/3/ 112,550 16
Suite 101 centers)
San Diego, CA
92121-2116
Age: 60
Leonard R. Fuller Director President, Fuller & Company, Inc.
4333 Admiralty Way (financial management consulting 5,511 39,175 12
Suite 841 ETH firm)
Marina del Rey, CA
90292
Age: 49
+* Abner D. Goldstine President, PEO Capital Research and Management
Age: 66 and Director Company, Senior Vice President none/4/ none/4/ 12
and Director
+** Paul G. Haaga, Jr. Chairman of Capital Research and Management
Age: 47 the Board Company, Senior Vice President none/4/ none/4/ 14
and Director
Herbert Hoover III Director Private Investor
200 S. Los Robles 5,277 59,800 14
Avenue
Suite 520
Pasadena, CA
91101-2431
Age: 68
Richard G. Newman Director Chairman, President and CEO,
3250 Wilshire Boulevard AECOM Technology Corporation 5,091/3/ 39,000 12
Los Angeles, CA 90010- (architectural engineering)
1599
Age: 61
Peter C. Valli Director Chairman and CEO, BW/IP
200 Oceangate Boulevard International Inc. (industrial 5,000/3/ 37,000 12
Suite 900 manufacturing)
Long Beach, CA 90802
Age: 69
</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: H. Frederick Christie ($6,412), Martin Fenton, Jr. ($7,238), Richard
G. Newman ($12,661) and Peter C. Valli ($12,557). 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. HALL, 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, Assistant Vice President - Fund Business Management Group
** ANTHONY W. HYNES, JR., 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, 1996, 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 more than $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, 1996 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, 1995, 1994, and 1993, the
Investment Adviser's total fees amounted to $20,858,000, $18,755,000, and
$17,170,000, 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, 1995 amounted to $4,814,000 after allowance of $20,990,000 to
dealers. During the fiscal years ended December 31, 1994 and 1993 the
Principal Underwriter retained $4,561,902 and $8,418,631, 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
employer-sponsored 403(b) plan or 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, 1995, the fund
paid $13,834,000 under the Plan as compensation to dealers. As of December 31,
1995 accrued and unpaid distribution expenses were $926,000.
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 substantially identical
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 or 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
federal individual stated 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%. However, to eliminate the
benefit of lower marginal corporate income tax rates, 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 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,
American Funds Service Company, 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 subject to the following statement of intention (the
"Statement") terms . The Statement is not a binding obligation to purchase the
indicated amount. When a shareholder elects to utilize the 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 45 days after written
request by the Principal Underwriter or the securities dealer, the appropriate
number of shares held in escrow 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.
Existing holdings eligible for rights of accumulation (see the prospectus and
account application) may be credited toward satisfying the Statement. During
the Statement period reinvested dividends and capital gain distributions,
investments in money market funds, and investments made under a right of
reinstatement will not be credited toward satisfying the Statement.
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 regular monthly payroll
deduction investment will be multiplied by 13 and then multiplied by 1.5. The
current value of existing American Funds investments (other than money market
fund investments) and any rollovers or transfers reasonably anticipated to be
invested in non-money market American Funds during the 13-month period are
added to the figure determined above. The sum is the Statement amount and
applicable breakpoint level. 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.
Shareholders purchasing shares at a reduced sales charge under a Statement
indicate their acceptance of these terms with their first purchase.
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 employer-sponsored 403(b) plan or 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 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 at least quarterly. 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.
Brokerage commissions paid on portfolio transactions, including dealer
concessions on underwritings, for the fiscal years ended December 31, 1995,
1994, and 1993, amounted to $7,096,214, $6,647,968, and $8,431,663,
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, 1995
<S> <C>
Net asset value and redemption price $13.88
per share
(Net assets divided by shares
outstanding)
Maximum offering price per share $14.57
(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 6.18% based on a 30-day (or one month) period ended
December 31, 1995, 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 may also calculate a distribution rate on a taxable and tax
equivalent basis. The distribution rate is computed by annualizing the current
month's dividend and dividing by the average net asset value or maximum
offering price for the month. The distribution rate may differ from the yield.
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,
1995, were 12.66%, 10.47%, and 9.30%, 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 Brothers Savings
(1) (2) Deposit (3)
<S> <C> <C> <C> <C>
1986 - 1995 + 143% + 152% + 171% + 69%
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
(1/1/91-12/31/95) (1/1/86-12/31/95)
$12,845 $33,230
</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
this many years shares,
ago... your
investment would
have been
worth this
much at Dec.
31, 1995
| Period
|
Number of 1/1-12/31
Years Value
<S> <C> <C>
1 1995
$11,266
2 1994 - 1995
10,699
3 1993 - 1995
12,209
4 1992 - 1995
13,598
5 1991 - 1995
16,454
6 1990 - 1995
16,994
7 1989 - 1995
18,716
8 1988 - 1995
20,711
9 1987 - 1995
21,123
10 1986 - 1995
24,327
11 1985 - 1995
30,791
12 1984 - 1995
34,478
13 1983 - 1995
37,750
14 1982 - 1995
50,177
15 1981 - 1995
53,474
16 1980 - 1995
55,371
17 1979 - 1995
57,123
18 1978 - 1995
58,284
19 1977 - 1995
61,285
20 1976 - 1995
72,413
21 1975 - 1995
81,578
22 1974*- 1995
84,645
</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, 1995 (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, 1995)
<TABLE>
<CAPTION>
COST OF VALUE OF SHARES
SHARES
Annual Dividends Total From From From Total
Fisca Dividend (cumulati Investment Initial Capital Gains Dividends
l s ve) Cost Investment Reinvested Reinvested Value
Year
End
Dec.
31
<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
1995 6,112 68,222 78,222 9,632 3,363 71,650 84,645
</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
Corporate Bonds 41%
Mortgage and Asset-Backed Securities 23%
U.S. Treasury Securities 21%
Cash Equivalents 9%
Non-U.S. Government Bonds and
Development Agencies 6%
<TABLE>
<CAPTION>
Principal Market Percent of
INVESTMENT PORTFOLIO DECEMBER 31, 1995 Amount Value Net Assets
(000) (000)
<S> <C> <C> <C>
ELECTRICAL & GAS UTILITIES
UTILITIES: ELECTRICAL & GAS
Big Rivers Electric Corp. 10.70% 2017 17,000 19,156 .31%
CEZ Finance BV 8.875% 1999/1/ 7,000 7,656 .12
CMS Energy 0%/9.50% 1997/2/ 2,000 2,063 .03
Columbia Gas System:
Series A 6.39% 2000 10,000 10,152
Series C 6.80% 2005 22,000 22,629 1.16
Series D 7.05% 2007 5,000 5,181
Series F 7.42% 2015 35,000 35,437
Long Island Lighting Co.: .00
6.25% 2011 4,000 3,833 .06
8.90% 2019 5,000 5,050 .08
8.20% 2023 10,000 9,800 .16
United Illuminating Co. 9.76% 2006 5,388 5,658 .09
--------- --------
126,615 2.01
INDUSTRIAL & SERVICE --------- --------
AUTOMOBILES
General Motors Corp.:
9.45% 2011 20,000 25,164
8.80% 2021 52,000 64,092 1.42
--------- --------
89,256 1.42
--------- --------
BEVERAGES & TOBACCO
Canandaigua Wine Co., Inc. 8.75% 2003 2,000 2,010 .03
Dr Pepper Bottling Co. of Texas 10.25% 2000 8,500 8,967 .14
--------- --------
10,977 .17
--------- --------
BROADCASTING & PUBLISHING
American Media Operations, Inc. 11.625% 2004 11,500 11,615 .18
Infinity Broadcasting Corp. 10.375% 2002 10,500 11,287 .18
Marvel Holdings Inc. 0% 1998 55,250 39,780 .63
People's Choice TV Corp. 0%/13.125% 2004/2/ 23,250 13,543 .22
Univision Television Group, Inc.:
11.75% 2001 5,500 5,968 .09
7.00% 2002 3,498 2,217 .04
Young Broadcasting Inc. 10.125% 2005 3,000 3,165 .05
--------- --------
87,575 1.39
--------- --------
CONSTRUCTION & HOUSING
Del Webb Corp. 9.75% 2003 10,000 10,175 .17
Kaufman and Broad Home Corp. 10.375% 1999 7,500 7,650 .12
M.D.C. Holdings, Inc. 11.125% 2003 12,000 11,430 .18
--------- --------
29,255 .47
--------- --------
DATA PROCESSING & REPRODUCTION
AST Research, Inc. 0% 2013 31,500 10,710 .17
Data General Corp.:
7.75% convertible debentures 2001 8,000 7,840 .13
8.375% 2002 1,250 1,228 .02
Maxtor Corp. 5.75% convertible debentures 2012 2,000 1,550 .02
Neodata Services, Inc. 0%/12.00% 2003/2/ 13,000 11,960 .19
VLSI Technology, Inc. 8.25% convertible 4,000 3,670 .06
debentures 2005
--------- --------
36,958 .59
--------- --------
DIVERSIFIED MEDIA & CABLE TELEVISION
Adelphia Communications Corp. 9.50% 2004 2,498 1,980 .03
Bell Cablemedia PLC 0%/11.95% 2004/2/ 39,500 27,847 .44
Cablevision Industries Corp.:
10.75% 2004 1,000 1,055 .02
9.875% 2013 5,000 5,312 .08
CAI Wireless Systems, Inc. 12.25% 2002 5,250 5,604 .09
Century Communications Corp.:
9.50% 2000 3,500 3,631 .06
9.75% 2002 4,550 4,755 .08
Comcast Corp.:
10.25% 2001 13,000 14,072 .22
9.375% 2005 3,000 3,173 .05
1.125% convertible debentures 2007 25,000 12,687 .20
Continental Cablevision, Inc.:
8.50% 2001 22,050 22,877 .36
10.625% 2002 4,500 4,804 .08
8.625% 2003 4,000 4,160 .07
8.875% 2005 10,000 10,475 .17
8.30% 2006/1/ 15,750 15,809 .25
11.00% 2007 3,000 3,352 .05
9.00% 2008 9,000 9,450 .15
9.50% 2013 10,500 11,287 .18
Heartland Wireless Communications, Inc. 4,000 4,510 .07
13.00% 2003/1/
Insight Communications Co.,LP 8.25% 2000/3/ 11,250 11,137 .18
International CableTel Inc.:
0%/10.875% 2003/2/ 9,500 6,840 .11
0%/12.75% 2005/2/ 17,750 11,227 .18
News America Holdings Inc.:
10.125% 2012 26,000 31,465 .50
8.625% 2014 A$3,250 2,117 .03
8.45% 2034 10,000 11,537 .18
Rogers Communications Inc. 10.875% 2004 3,500 3,658 .06
Storer Communications, Inc. 10.00% 2003 11,087 11,156 .18
Tele-Communications, Inc. 9.25% 2023 7,500 8,187 .13
Time Warner Inc.:
9.625% 2002 15,000 17,376 .27
10.15% 2012 17,500 21,691 .34
0% convertible debentures 2013 40,000 16,500 .26
9.125% 2013 21,000 23,666 .38
TKR Cable I, Inc. 10.50% 2007 27,500 31,969 .51
Turner Broadcasting System, Inc. 0% 2007/1/ 15,000 6,863 .11
Viacom International Inc.:
9.125% 1999 5,000 5,225 .08
10.25% 2001 2,600 2,990 .05
Videotron Holdings PLC 0%/11.125% 2004/2/ 20,500 14,299 .23
--------- --------
404,743 6.43
--------- --------
ELECTRICAL & ELECTRONICS
General Electric Co. 8.625% 2008 3,000 3,617 .06
MagneTek, Inc. 10.75% 1998 7,500 7,706 .12
Samsung Electronics Co., Ltd. 8.50% 2002/1/ 27,850 30,983 .49
--------- --------
42,306 .67
--------- --------
ENERGY & RELATED COMPANIES
BP America Inc. 10.00% 2018 4,000 4,532 .07
California Energy Co., Inc.:
9.875% 2003 14,000 14,700 .23
0%/10.25% 2004/2/ 38,600 36,477 .58
Flores & Rucks, 13.50% 2004 4,300 4,880 .08
Global Marine, Inc. 12.75% 1999 4,250 4,696 .07
Mesa Capital Corp. 0%/12.75% 1998/2/ 7,500 6,637 .11
Midland Cogeneration Venture LP:
10.33% 2002 8,052 8,374 .13
secured lease obligation bonds, 10.33% 2002 7,398 7,694 .12
Mobil Corp. 8.00% 2032 10,000 11,058 .18
Occidental Petroleum Corp. 9.25% 2019 12,000 15,098 .24
Oil Co. Ltd. 8.90% 2000/1/ 20,000 20,800 .33
Oryx Energy Co. 9.50% 1999 3,500 3,765 .06
Parker & Parsley Petroleum 8.25% 2007 11,000 11,893 .19
Subic Power Corp. 9.50% 2008/1/ 7,845 7,394 .12
TransTexas Gas Corp. 11.50% 2002 15,000 15,488 .25
--------- --------
173,486 2.76
--------- --------
FOOD RETAILING
Allied Supermarkets Inc. 6.625% 1998 3,590 3,554 .06
Carr-Gottstein Co. 12.00% 2005 9,000 9,090 .14
Safeway Inc. 10.00% 2002 1,500 1,755 .03
Smith's Food & Drug Centers, Inc., Series 94A2,
0%/8.64% 2012/2/ 14,000 14,822 .24
Star Markets Co., Inc. 13.00% 2004 1,500 1,530 .02
Stater Bros. Holdings Inc. 11.00% 2001 9,500 9,453 .15
Vons Companies, Inc. 9.625% 2002 1,000 1,060 .02
--------- --------
41,264 .66
--------- --------
FOREST PRODUCTS & PAPER
Container Corp. of America:
10.75% 2002 4,300 4,364 .07
9.75% 2003 36,000 35,100 .56
11.25% 2004 2,500 2,575 .04
Fort Howard Corp.:
9.25% 2001 7,750 7,866 .13
11.00% 2002 3,746 3,915 .06
10.00% 2003 5,250 5,407 .09
Fort Howard Paper Co.:
8.25% 2002 3,000 2,925 .04
9.00% 2006 6,750 6,615 .11
Grupo Industrial Durango, SA de CV:
9.25% 1996/1/ /3/ 7,500 7,219 .11
12.00% 2001 3,000 2,655 .04
PT Indah Kiat Paper & Pulp Corp.:
8.875% 2000 2,000 1,890 .03
8.875% 2000/1/ 9,135 8,633 .13
11.875% 2002 2,000 2,020 .03
P.T. Inti Indorayon Utama 9.125% 2000 3,000 2,801 .04
Pacific Lumber Co. 10.50% 2003 500 474 .01
Repap Wisconsin 9.875% 2006 12,250 11,576 .18
Riverwood International Corp.:
10.75% 2000 4,500 4,838 .08
Series II 10.75% 2000 1,500 1,613 .03
11.25% 2002 1,000 1,085 .02
Tjiwi Kimia International Finance Co. 8,500 9,201 .15
13.25% 2001
--------- --------
122,772 1.95
--------- --------
GENERAL RETAILING & MERCHANDISING
Ann Taylor, Inc. 8.75% 2000 4,500 3,735 .06
Barnes & Noble, Inc. 11.875% 2003 10,000 11,100 .17
Dayton Hudson Corp.:
10.00% 2010 10,000 10,784 .17
8.50% 2022 5,000 6,244 .10
Levitz Furniture Corp. 12.375% 1997 425 385 .01
Thrifty PayLess, Inc.:
11.75% 2003 15,000 16,200 .26
12.25% 2004 16,500 17,573 .28
Units 12.25% 2004 5,000 5,750 .09
--------- --------
71,771 1.14
--------- --------
HEALTH & PERSONAL CARE
FHP International Corp. 7.00% 2003 5,000 4,934 .08
Merit Behaviorial Care Corp. 11.50% 2005/1/ 3,000 3,105 .05
--------- --------
8,039 .13
--------- --------
LEISURE & TOURISM
Discovery Zone 0% convertible debentures 2013 28,500 7,410 .12
Euro Disney SCA 6.75% convertible FF108,780 20,068 .32
debentures 2001
Foodmaker, Inc.:
9.25% 1999 12,200 11,712 .19
9.75% 2002 8,300 7,677 .12
Four Seasons Hotels Inc. 9.125% 2000 6,000 5,985 .09
Harrah's Jazz Finance Corp. 14.25% 2001 3,000 825 .01
Harrah's Jazz Co. 8.75% 2000 2,000 2,025 .03
Kloster Cruise Ltd. 13.00% 2003 25,750 19,570 .31
Plitt Theatres, Inc. 10.875% 2004 6,850 6,199 .10
Station Casinos, Inc. 9.625% 2003 1,000 993 .02
--------- --------
82,464 1.31
--------- --------
MACHINERY & ENGINEERING
Coltec Industries Inc.:
9.75% 1999 7,000 7,210 .11
9.75% 2000 7,500 7,725 .12
John Deere Capital Corp. 8.625% 2019 9,150 10,493 .17
NL Industries 11.75% 2003 1,000 1,067 .02
--------- --------
26,495 .42
--------- --------
METALS
Acme Metals Inc.:
0%/13.50% 2004/2/ 9,000 7,403 .12
12.50% 2004 4,500 4,545 .07
AK Steel Corp. 10.75% 2004 6,500 7,215 .12
Inco Ltd.:
9.875% 2019 7,500 8,413 .13
9.60% 2022 16,000 18,505 .30
ISPAT Mexicana:
(Euro) 10.375% 2001 4,650 4,266 .07
10.375% 2001/1/ 2,000 1,835 .03
Kaiser Aluminum and Chemical Corp.:
9.875% 2002 1,400 1,438 .02
12.75% 2003 18,500 20,257 .32
Tubos de Acero de Mexico, SA 13.750% 1999/1/ 2,500 2,531 .04
UCAR Global Enterprises Inc. 12.00% 2005 3,430 3,962 .06
USX Corp. 9.125% 2013 15,000 17,246 .27
--------- --------
97,616 1.55
--------- --------
MISCELLANEOUS MATERIALS & COMMODITIES
Building Materials Corp. of America 6,000 4,140 .07
0%/11.75% 2004/2/
Exide Corp. 10.00% 2005 5,500 5,967 .09
Owens-Illinois, Inc. 11.00% 2003 5,000 5,650 .09
Tolmex, SA de CV 8.375% 2003 5,500 4,441 .07
--------- --------
20,198 .32
--------- --------
Multi-Industry
Hanson America, Inc. 144A 2.39% convertible
debentures 2001/1/ 20,000 16,650 .26
Swire Pacific Ltd. 8.50% 2004/1/ 25,000 27,459 .44
Tenneco Inc. 7.875% 2002 3,000 3,277 .05
--------- --------
47,386 .75
--------- --------
OTHER
ADT Operations 9.25% 2003 2,500 2,681 .04
ASH Capital Finance, Ltd. 9.50% 2006 Pound4,500 4,997 .08
Protection One Alarm Monitoring, Inc. 17,000 14,185 .23
0%/13.625% 2005/2/
--------- --------
21,863 .35
--------- --------
TELECOMMUNICATIONS
CellNet Data Systems, Inc. 0%/13.00% 2005/1/ /2/ /4/ 40,750 24,654 .39
Cellular Communications International, 15,071 9,043 .14
Inc. 0% 2000
Cellular, Inc. 0%/11.75% 2003/2/ 10,500 8,347 .13
CenCall Communications Corp. 0%/10.125% 2004/2/ /5/ 26,500 14,972 .24
Centennial Cellular Corp. 8.875% 2001 19,000 18,715 .30
Comcast Cellular Corp.:
Series A, 0% 2000 22,500 17,325 .28
Series B, 0% 2000 18,400 14,168 .23
Comcast UK Cable Partners Ltd. 0%/11.20% 2007/2/ 18,000 10,530 .17
Commnet Cellular Inc. 11.25% 2005 5,500 5,803 .09
Comunicacion Celular S.A. Units 17,550 10,025 .16
0%/13.125% 2003/1/ /2/
Dial Call Communications, Inc. 0%/12.25% 2004/2/ /5/ 37,750 21,517 .34
Geotek Communications, Inc. 0%/15.00% 2005/2/ 8,750 4,134 .07
Horizon Cellular Telephone Co., LP 15,500 13,485 .21
0%/11.375% 2000/2/
IntelCom Group, Inc. 0%/13.50% 2005/1/ /2/ 16,250 9,466 .15
MFS Communications Co., Inc. 0%/9.375% 2004/2/ 42,500 34,319 .55
MobileMedia Communications, Inc. 0%/10.50% 2003/2/ 8,600 6,708 .11
NEXTEL Communications, Inc./5/:
0%/11.50% 2003/2/ 42,500 26,775 .42
0%/9.75% 2004/2/ 51,750 28,074 .45
Northern Telecom Ltd. 8.75% 2001 3,500 3,946 .06
Omnipoint Corp. 6.00%/12.00% 2000 /4/ 12,500 12,500 .20
Paging Network, Inc. 11.75% 2002 10,275 11,354 .18
PanAmSat, LP PanAmSat Capital Corp. 9.75% 2000 10,150 10,759 .17
PriCellular Wireless Corp.:
0%/14.00% 2001/2/ 6,000 5,295 .08
0%/12.25% 2003/2/ 12,200 9,425 .15
Rogers Cantel Mobile Communications Inc. 31,975 33,654 .53
10.75% 2001
TCI Communications, Inc Deb 8.75% 2015 10,000 11,087 .18
Telecom Argentina STET - France Telecom 5,500 5,871 .09
S. A. 12.00% 1999
Tele West plc:
9.625% 2006 3,000 3,060 .05
0%/11.00% 2007/2/ 16,000 9,660 .15
--------- --------
394,671 6.27
--------- --------
TEXTILES & APPAREL
Tultex Corp. 10.625% 2005 1,250 1,281 .02
WestPoint Stevens Inc. 8.75% 2001 2,500 2,500 .04
--------- --------
3,781 .06
--------- --------
TRANSPORTATION
Air Wis Services, Inc. 7.75% convertible 4,000 3,540 .06
debentures 2010
Alaska Airlines:
Series A, 9.50% 2010 2,397 2,548 .04
Series B, 9.50% 2010 3,024 3,214 .05
Series C, 9.50% 2010 2,927 3,128 .05
Series D, 9.50% 2012 4,889 5,219 .08
American Airlines Inc., 1991-C2, pass-through
certificates 9.73% 2014/6/ 6,000 7,080 .11
American Airlines, Inc., 1991-A, mortgage
pass-through
certificates, 9.71% 2007/6/ 9,244 10,734 .17
AMR Corp.:
10.40% 2011 13,000 16,043 .26
10.42% 2011 5,000 6,144 .10
Atlas Air,Inc., pass-through certificates, .00
12.25% 2002
Delta Air Lines, Inc.: 11,000 11,220 .18
9.875% 2000 2,000 2,261 .04
10.375% 2011 2,500 3,127 .05
9.25% 2022 5,000 5,906 .09
10.375% 2022 3,000 3,928 .06
pass-through certificates:
Series 1992-A2, 9.20% 2014/6/ 11,750 13,350 .21
Series 1992-B1, 9.375% 2007/6/ 9,200 10,451 .17
Series 1993-A2, 10.50% 2016/6/ 15,000 18,910 .30
Series 1993-B2, 10.06% 2016/6/ 2,000 2,445 .04
Series 1993-C2, 9.59% 2017/6/ 5,000 5,925 .09
1990 Equipment trust certificates:
Series J, 10.00% 2014/1/ 10,000 12,092 .19
Series I, 10.00% 2014/1/ 8,000 9,674 .15
Series F, 10.79% 2014/1/ 1,700 2,172 .04
Federal Express Corp. 8.40% 2010 10,000 10,875 .17
Jet Equipment Trust:
Series 1994-A, 10.91% 2006/1/ 6,989 8,186 .13
Series 1995-B 10.91% 2014/1/ 5,000 5,381 .09
Series 1995-A, 10.69% 2015/1/ 10,500 12,613 .20
Series 1995B-A, 7.63% 2015/1/ 23,500 24,704 .39
Series 1995B-C, 9.71% 2015/1/ 5,500 6,119 .10
MC-Cuernavaca Trust 9.25% 2001/1/ 5,161 3,529 .06
Northwest Airlines, Inc. 12.0916% 2000 8,015 8,366 .13
TNT Transport (Euro) PLC/TNT (USA) Inc. 4,750 4,964 .08
11.50% 2004
United Air Lines, Inc.:
10.67% 2004 9,000 10,857 .17
pass-through certificates:
Series 1993-A3, 8.39% 2011/6/ 7,500 8,008 .13
Series 1995-A1, 9.02% 2012/6/ 8,659 9,691 .15
USAir, pass-through trust, Series 2,000 1,880 .03
1993-A3, 10.375% 2013
Viking Star Shipping Inc. 9.625% 2003 4,000 4,100 .07
--------- --------
278,384 4.43
--------- --------
FINANCE
BANKING & THRIFTS
Bank of Scotland 8.80% 2004/1/ 16,000 18,362 .29
Den Danske Bank Aktieselskab 7.25% 2005/1/ 14,025 14,804 .24
First Nationwide 12.25% 2001 9,000 10,170 .16
Kansallis-Osak-Pankki 9.75% 1998 5,000 5,527 .09
Maybank-New York 7.125% 2005 10,000 10,505 .17
Midland American Capital 12.75% 2003 12,150 14,340 .23
New American Capital, Inc. 9.60% 1999/1/ 15,000 15,113 .24
Skandinaviska Enskilda Banken (N.Y. City) 14,000 14,083 .22
6.875% 2009
State Bank of New South Wales Euronotes 3,000 3,403 .05
10.375% 1999
--------- --------
106,307 1.69
--------- --------
FINANCIAL SERVICES
Beneficial Corp. 12.875% 2013 3,800 4,596 .07
Ford Motor Credit Co. 9.50% 2000 7,350 8,280 .13
General Electric Capital Corp. 8.875% 2009 8,000 10,043 .16
General Motors Acceptance Corp.:
7.00% 2000 5,000 5,193 .08
8.75% 2005 10,000 11,615 .19
8.875% 2010 2,500 3,043 .05
--------- --------
42,770 .68
--------- --------
INSURANCE
American Re Corp. 10.875% 2004 15,000 16,734 .27
CIGNA Corp. 6.375% 2006 15,000 14,782 .23
Fairfax Financial Holdings Ltd.:
7.75% 2003 7,750 8,145 .13
8.25% 2015 6,250 6,696 .11
Fidelity National Financial 0% 2009 20,000 9,150 .14
--------- --------
55,507 .88
--------- --------
REAL ESTATE
B.F. Saul REIT 11.625% 2002 20,000 20,400 .32
Beverly Finance Corp. 8.36% 2004/1/ 15,000 16,519 .26
Corporate Property Investors 9.00% 2002/1/ 2,000 2,274 .04
ERP Operating Limited Partnership 7.95% 2002 6,750 7,213 .11
IRVINE Co. 7.46% 2006 17,000 16,979 .27
Price REIT, Inc. 7.25% 2000 5,000 5,052 .08
Security Capital Industrial Trust 7.875% 2009 6,250 6,641 .10
Shopping Center Associates 6.75% 2004/1/ 12,000 12,015 .19
Wellsford Residential Property Trust:
7.75% 2005 1,000 1,064 .02
7.25% 2000 1,000 1,032 .02
Wharf Capital International, Ltd. 8.875% 2004 15,000 16,108 .26
--------- --------
105,297 1.67
--------- --------
COLLATERALIZED MORTGAGE/ASSET-
BACKED OBLIGATIONS/6/
(Excluding Those Issued by Federal Agencies)
Banco Nacional de Mexico 0% 2002/1/ 21,340 15,845 .25
Capstead Securities Corp. IV, collateralized
mortgage obligations, Series 1992-4, 8,750 9,625 .15
Class J, 18.3103% 2022/7/
Chase Manhattan Bank, N.A., Series 93-I, Class
2A5, 7.25% 2024 2024 10,000 9,987 .16
Countrywide Funding Corp., Series 94-2, Class
A-12,
5.6680% 2009/7/ 5,206 3,527 .06
CSFB Finance Co. Ltd. 7.00% 2005 30,000 29,797 .47
CS First Boston Mortgage Securities Corp.,
mortgage pass-through certificates:
Series 1995-AEW1, 6.665% 2027/3/ 997 1,006 .02
Series 1995-MBL1 Class A 6.425% 2030 17,922 18,012 .29
Electronic Transfer Master Trust 9.35% 2002/1/ 18,000 18,162 .29
GCC Home Equity Trust, asset-backed
certificates, Series 1990-1, 10.00% 2005 3,974 4,063 .06
G E Capital Mortgage Services:
Series 1994-15, Class A10, 6.00% 2009 16,376 15,230 .24
Series 1995-1, Class A8, 8.40% 2025 21,785 22,972 .37
Green Tree Financial Corp., pass-through
certificates:
Series 1994-A, Class NIM, 6.90% 2004 3,350 3,347 .05
Series 1995-A, Class NIM, 7.25% 2005 3,555 3,598 .06
Series 1993-2, Class B, 8.00% 2018 2,250 2,377 .04
Series 1995-9, Class A-5, 6.80% 2027 8,000 8,180 .13
J.P. Morgan Commercial Mortgage Finance Corp.,
pass-through certificates, Series 1995-C1,
Class A-2, 7.3517% 2010/3/ 1,000 1,054 .02
MBNA Credit Card Trust, asset-backed
certificates, Series 1991-1, 7.75% 1998 6,000 6,092 .10
Merrill Lynch Mortgage Investors, Inc.:
Seriies 1995-C2, Class D 8.0603% 2021/3/ 993 1,020 .02
Series 1995-C3, Class A1, 6.7889% 2025/3/ 1,993 2,035 .03
Morgan Stanley Capital Inc. Series 1995-GA1,
Class A1, 7.00% 2002/1/ 19,104 19,510 .31
Prudential Home Mortgage Securities Co., Inc.:
Series 1993-7, Class A-4, 8.00% 2003 9,323 9,416 .15
Series 1993-7, Class A-5, 8.00% 2003 5,406 5,413 .09
Series 1993-48, Class A-6, 6.25% 2008 4,466 4,318 .07
Series 1992-37, Class A-6, 7.00% 2022 2,460 2,457 .04
Series 1993-34, Class A-1, 7.00% 2023 16,910 17,021 .27
Residential Funding Mortgage Securities I, Inc.,
Series 1992-S6, Class A-10, 12.102% 2022/7/ 10,124 10,225 .16
Resolution Trust Corp.:
Series 1991-M5, Class B, 9.00% 2017 2,560 2,649 .04
Series 1992-6, Class A-2B, 8.40% 2024 9,062 9,175 .14
Series 1993-C1, Class D, 9.45% 2024 9,352 9,799 .16
Series 1993-C1, Class E, 9.50% 2024 755 750 .01
Series 1993-C2, Class C, 8.00% 2025 3,000 3,105 .05
Series 1993-C2, Class D, 8.50% 2025 3,290 3,422 .05
Series 1993-C2, Class E, 8.50% 2025 801 792 .01
Ryland Mortgage Securities Corp., Series 1991-14,
Class F, 21.528% 2021/7/ 1,070 1,113 .02
Structured Asset Securities Corp., pass-through
certificates, Series 1995-C1, Class A1A, 928 942 .01
7.375% 2024
SKW II Real Estate L.P.:
6.45% 2002/1/ 887 888 .01
6.90% 2002/1/ 4,646 4,658 .07
Standard Credit Card Master Trust I, credit card
participation certificates:
Series 1991-1A, 8.50% 1997 10,500 10,628 .17
Series 1994-2A, 7.25% 2008 5,000 5,389 .09
Standard Credit Card Trust, credit card
participation certificates:
Series 1990-3A, 9.50% 1998 5,000 5,245 .08
Series 1990-6A, 9.375% 1998 4,000 4,211 .07
Series 1991-3A, 8.875% 1999 11,000 11,839 .19
Travelers Mortgage Services, Inc., pass-through
certificates, Series 1989-9, Class Z-2, 802 815 .01
8.80% 2019
--------- --------
319,709 5.08
--------- --------
GOVERNMENTAL
GOVERNMENTS (EXCLUDING U.S. GOVERNMENT)
Argentina (Republic of):
8.375% 2003 15,000 12,638 .20
Eurobond 6.8125% 2005/3/ 30,500 21,731 .34
Eurobond 5.00% 2023/3/ 6,500 3,721 .06
Brazil (Republic of):
Debt Conversion Bond 6.875% 2012/3/ 2,000 1,148 .02
British Columbia Hydro & Power Authority:
15.50% 2011 17,000 18,979 .30
15.50% 2011 11,967 13,726 .22
12.50% 2013 4,000 4,806 .07
12.50% 2014 7,000 8,547 .14
Canadian Government:
10.50% 2001 C$5,000 4,277 .07
6.50% 2004 34,500 24,466 .39
9.00% 2004 37,750 31,201 .50
8.75% 2005 15,000 12,301 .19
4.524% 2021 2,000 1,514 .02
9.00% 2025 9,000 7,694 .12
Israel (State of) 6.375% 2005 13,000 13,130 .21
Italian Government National:
8.50% 2004 ITL7,200,000 4,033 .06
8.50% 2004 16,650,000 9,257 .15
Italy (Republic of) 6.875% 2023 38,000 37,109 .59
Netherlands Government DFL 7.50% 2023 FL41,300 28,167 .45
Nova Scotia (Province of):
7.25% 2013 4,000 4,192 .07
11.50% 2013 2,212 2,571 .04
Ontario (Province of):
7.75% 2002 3,500 3,810 .06
7.375% 2003 1,250 1,354 .02
7.625% 2004 5,000 5,497 .09
7.00% 2005 10,750 11,354 .18
17.00% 2011 11,250 12,979 .21
15.25% 2012 6,985 8,411 .13
11.50% 2013 5,000 5,793 .09
Panama Interest Reduction Bond 3.50% 2014 4,000 1,815 .03
Poland (Republic of):
7.75% 2000/1/ 3,000 3,069 .05
Discount Bond 7.125% 2024/3/ 750 568 .01
Past Due Interest Bond 3.75% 2014/3/ 2,000 1,300 .02
Quebec (Province of):
8.625% 2005 4,750 5,493 .09
13.25% 2014 5,500 7,006 .11
Queensland Global Treasury Note:
8.00% 2001 A$17,000 12,610 .20
12.00% 2001 5,000 4,384 .07
South Africa (Republic of) 13.00% 2010 ZAR24,500 6,192 .10
United Mexican States Government Eurobonds:
Series A, 6.25% 2019 1,000 656 .01
Series B, 6.25% 2019 6,500 4,266 .07
--------- --------
361,765 5.75
--------- --------
DEVELOPMENT AUTHORITIES
European Investment Bank 10.125% 2000 2,000 2,357 .04
Inter-American Development Bank 8.875% 2009 10,000 12,757 .20
International Bank for Reconstruction &
Development 14.90% 1997 2,500 2,816 .05
--------- --------
17,930 .29
--------- --------
FEDERAL AGENCY OBLIGATIONS - MORTGAGE
PASS-THROUGHS1/2
Federal Home Loan Mortgage Corp.:
8.00% 2003-2010 7,196 7,488 .12
8.25% 2007 3,386 3,529 .06
8.50% 2002-2020 43,350 45,234 .72
8.75% 2008 4,324 4,535 .07
9.00% 2021 1,338 1,408 .02
10.00% 2011-2019 2,020 744 .01
10.50% 2020 3,578 3,951 .06
10.75% 2010 148 164 .00
11.50% 2000 49 51 .00
12.00% 2010-2015 2,015 2,270 .04
12.50% 2009-2019 2,288 2,650 .04
12.75% 2015-2019 791 909 .02
13.00% 2014 78 91 .00
13.50% 2018 16 19 .00
13.75% 2014 28 32 .00
Federal National Mortgage Assn.:
7.50% 2009-2024 19,381 19,891 .32
8.00% 2023 3,666 3,797 .06
8.50% 2009-2023 16,433 17,215 .27
9.00% 2018-2025 9,194 9,695 .15
9.50% 2009-2019 1,372 1,472 .02
10.00% 2019 870 957 .02
10.50% 2012 4,566 5,086 .08
11.00% 2015-2020 4,395 4,924 .08
11.25% 2014 85 95 .00
11.50% 2010-2014 390 443 .01
12.00% 2015-2019 182 209 .00
12.50% 2015 390 456 .01
13.00% 2014 66 78 .00
13.25% 2015 28 33 .00
15.00% 2013 88 106 .00
Government National Mortgage Assn.:
5.00% 2024/3/ 2,000 1,973 .03
5.50% 2023-2024/3/ 151,765 153,444 2.44
6.00% 2022-2024/3/ 66,656 67,687 1.08
6.125% 2022/3/ 9,870 10,097 .16
6.50% 2008-2024/3/ 21,107 21,138 .34
7.00% 2008-2024/3/ 112,681 114,475 1.82
7.50% 2008-2024 85,223 87,774 1.40
8.00% 2023-2025 14,289 14,900 .24
8.50% 2020-2026 80,188 84,219 1.37
9.00% 2016-2025 24,683 26,145 .42
9.50% 2009-2020 19,485 20,964 .33
10.00% 2017-2019 3,069 3,380 .05
10.50% 2015-2019 976 1,092 .02
11.00% 2013-2016 1,715 1,941 .03
11.50% 2015 81 93 .00
12.00% 2014 167 192 .00
12.50% 2010-2015 1,165 1,373 .02
13.25% 2014 110 126 .00
--------- --------
748,545 11.91
--------- --------
FEDERAL AGENCY OBLIGATION - OTHER
Federal Home Loan Bank Bonds:
6.16% 2004 24,000 23,696 .38
6.27% 2004 5,000 4,938 .08
6.38% 2003 3,000 2,982 .05
6.41% 2003 18,580 18,455 .29
7.00% 2005 35,000 34,973 .56
8.23% 2004 5,000 5,070 .08
Federal Home Loan Mortgage Notes:
5.74% 2003 6,500 6,333 .10
5.78% 2003 12,175 11,762 .19
6.185% 2003 19,845 19,607 .31
6.19% 2004 11,000 10,849 .17
6.24% 2003 2,900 2,872 .05
6.27% 2004 2,500 2,471 .04
6.28% 2003 3,000 2,974 .05
6.30% 2003 2,000 1,988 .03
6.375% 2003 5,820 5,793 .09
6.39% 2003 10,330 10,269 .16
6.50% 2003 6,200 6,128 .10
7.00% 2002 25,000 25,098 .40
7.12% 2003 15,000 15,000 .24
7.29% 2004 6,000 6,103 .10
Federal National Mortgage Association Notes:
7.70% 2004 12,500 13,217 .21
medium-term note:
6.14% 2004 13,000 12,812 .20
7.43% 2005 30,000 30,225 .48
Callable Principal STRIPS 0%/8.25% 2022/2/ 4,500 3,764 .06
--------- --------
277,379 4.42
--------- --------
COLLATERALIZED MORTGAGE OBLIGATIONS - FEDERAL
AGENCIES/6/
Federal Home Loan Mortgage Corp.:
Series 1604, Class SA, 4.7763% 2008/7/ 2,000 1,411 .02
Series 1712, Class D, 6.00% 2009 7,500 7,024 .11
Series 1716, Class A, 6.50% 2009 4,750 4,596 .07
Series 1574, Class AB, 6.50% 2023 4,842 4,055 .07
Series 1657, Class SA, 5.9935% 2023/7/ 7,520 4,500 .07
Series 1673, Class SA, 4.4499% 2024/7/ 7,879 4,400 .07
Federal National Mortgage Assn.:
Series 90-142, Class J, 9.25% 2003 2,390 2,407 .04
Series 91-146, Class Z, 8.00% 2006 6,273 6,450 .10
Series 91-65, Class X, 6.50% 2019 19,711 19,169 .31
Series 90-93, Class G, 5.50% 2020 1,500 1,436 .02
Series 93-138, Class SA, 7.8532% 2023/7/ 3,758 2,691 .04
--------- --------
58,139 .92
--------- --------
U.S. TREASURY OBLIGATIONS
9.25% January 1996 15,000 15,021 .24
7.875% February 1996 14,250 14,292 .23
9.375% April 1996 10,000 10,114 .16
8.00% January 1997 53,000 54,449 .87
5.625% January 1998 3,500 3,529 .06
8.125% February 1998 130,750 138,268 2.20
5.375% May 1998 10,000 10,033 .16
9.25% August 1998 180,750 198,259 3.15
8.875% February 1999 43,500 47,959 .76
9.125% May 1999 20,750 23,156 .37
6.875% July 1999 58,000 60,900 .97
8.875% May 2000 10,000 11,350 .18
8.750% August 2000 25,000 28,394 .45
8.50% November 2000 63,000 71,269 1.13
7.75% February 2001 26,500 29,262 .47
13.125% May 2001 21,500 29,230 .46
14.25% February 2002 7,000 10,170 .16
6.375% August 2002 8,700 9,123 .15
11.625% November 2002 87,000 117,069 1.86
5.75% August 2003 10,000 10,120 .16
11.625% November 2004 78,500 111,102 1.77
6.50% August 2005 5,000 5,327 .08
10.375% November 2009 17,000 22,429 .36
12.75% November 2010 10,500 15,993 .25
10.375% November 2012 17,000 23,502 .37
12.00% August 2013 10,000 15,408 .24
11.25% February 2015 6,000 9,605 .15
10.625% August 2015 25,000 38,293 .61
8.875% August 2017 129,500 173,448 2.76
8.125% May 2021 8,000 10,116 .16
--------- --------
1,317,190 20.94
--------- --------
FLOATING RATE EURODOLLAR NOTES (UNDATED)/3/
Allied Irish Banks Ltd. 6.4375% 10,000 8,675 .14
Bank of Nova Scotia 6.00% 15,000 11,700 .19
Bergen Bank 6.00% 5,000 3,925 .06
Canadian Imperial Bank of Commerce 6.125% 25,000 19,625 .31
Christiana Bank Og Kreditkasse 6.0625% 11,000 8,745 .14
Financiere Credit Suisse 5.8125% 8,000 6,240 .10
Hongkong and Shanghai Banking Corp. 6.25% 10,000 8,013 .13
Lloyds Bank:
(#2) 6.062% 5,000 4,150 .07
(#3) 5.985% 5,000 4,125 .06
Midland Bank 5.8125% 5,000 4,010 .06
National Bank of Canada 3.03125% 5,000 3,250 .05
Standard Chartered Bank:
5.8125% 15,000 11,419 .18
5.775% 5,000 3,819 .06
--------- --------
97,696 1.55
--------- --------
EQUITY-TYPE SECURITIES & MISCELLANEOUS
EQUITY-TYPE SECURITIES
Dial Page, Inc., warrants/8/ 39 - .00
Geotek Comminications, Inc., warrants expire 263 656 .01
7/15/2005/8/
Glendale Federal Bank, FSB warrants expire 8 14 .00
3/10/00/8/
IntelCom Group Inc., warrants expire 8/8/05/8/ 48 215 .00
--------- --------
885 .01
--------- --------
MISCELLANEOUS
Investment securities in the initial period of 16,907 .28
acquisition
--------- --------
TOTAL BONDS, NOTES AND EQUITY-TYPE SECURITIES --------- --------
(cost: $5,585,511,000) 5,743,901 91.32
--------- --------
SHORT-TERM SECURITIES
COMMERCIAL PAPER
Albertson's Inc. 5.75% due 1/5/96 19,000 18,985 .30
American Express Credit Corp.:
5.78% due 1/18/96 15,900 15,855 .25
5.72% due 1/31/96 10,000 9,951 .16
Anhueuser-Busch Cos. 5.72% due 1/4/96 15,000 14,991 .24
Associates Corp. of North America 5.99% due 8,600 8,597 .14
1/2/96
Bayerische Landesbank Girozentrale 5.76% due 10,000 9,995 .16
1/3/96
Beneficial Corp.:
5.70% due 1/30/96 10,000 9,953 .16
5.71% due 2/9/96 28,500 28,321 .45
Chevron Oil Finance Co. 5.70% due 2/8/96 27,700 27,530 .44
CIT Group Holdings Inc.:
5.75% due 1/10/96 15,000 14,976 .24
5.73% due 2/2/96 10,000 9,948 .16
Ford Credit Europe PLC 5.76% due 1/11/96 25,000 24,956 .40
Gannett Co. 5.76% due 1/19/96 20,000 19,940 .32
General Electric Capital Corp. 5.73% due 2/2/96 25,000 24,870 .39
Haifax Building Society:
5.76% due 1/2/96 5,000 4,998 .08
5.77% due 1/10/96 15,000 14,976 .24
Hershey Foods Corp. 5.70% due 1/30/96 10,000 9,953 .16
H.J. Heinz Co. 5.79% due 1/5/96
5.79% due 1/5/96 22,000 21,983 .35
5.74% due 1/25/96 13,000 12,949 .20
5.76% due 1/29/96 10,000 9,954 .16
Motorola Inc. 5.70% due 1/11/96
5.70% due 1/11/96 18,000 17,969 .28
5.72% due 1/26/96 14,100 14,042 .22
PepsiCo, Inc. 5.72% due 1/19/96 5,500 5,484 .09
Sandoz Corp.:
5.73 due 2/5/96 3,500 3,480 .05
5.73 due 2/20/96 12,000 11,906 .19
Sony Capital Corp.:
5.80% due 1/12/96 5,591 5,580 .09
5.75% due 2/8/96 13,000 12,921 .20
--------- --------
385,063 6.12
--------- --------
Certificates of Deposit
ABN-AMRO Bank, NV (Netherlands) 5.72% due 2/1/96 30,000 30,001 .47
Bank of Montreal 5.76% due 1/17/96 20,000 20,000 .32
Bayer Landesbank 5.73% due 2/1/96 20,000 20,001 .32
National Westminster 5.82% due 1/12/96 25,000 25,000 .40
--------- --------
95,002 1.51
--------- --------
TOTAL SHORT-TERM SECURITIES (Cost $480,063,000) 480,065 7.63
--------- --------
TOTAL INVESTMENT SECURITIES (cost $6,065,574,000) 6,223,966 98.95
Excess of cash and receivables over payables 66,210 1.05
--------- --------
NET ASSETS 6,290,176 100.00%
========= ========
</TABLE>
/1/ Purchased in a private placement transaction; resale may be made to
qualified institutional buyers.
/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/ Valued under procedures established by the Board of Directors
/5/ CenCall Communications merged with NEXTEL on July 28, 1995, and Dial Call
is expected to merge with NEXTEL 1/19/96. After their repective closings, the
securities of Cencall and Dial Call will become obligations of NEXTEL.
/6/ 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
/7/ Represents an inverse floater, which is a floating rate note whose
interest rate moves in the opposite direction of prevailing interest rates.
/8/ Non-income-producing security.
See Notes to Financial Statements
<PAGE>
The Bond Fund of America
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
December 31, 1995 (dollars in thousands)
Assets:
Investment securities at market
(cost: $6,065,574) $6,223,966
Cash 2,703
Prepaid expense
Receivables for--
Sales of investments $3,090
Sales of Fund's shares 15,065
Dividends and accrued interest 97,066 115,221
------------ ---------------
6,341,890
Liabilities:
Payables for--
Purchases of investments 35,924
Repurchases of fund's shares 10,815
Forward currency contracts 1,864
Dividends on Fund's shares 2
Management services 1,884
Accrued expenses 1,225 51,714
------------ ---------------
Net Assets at December 31, 1995--
Equivalent to $13.88 per share on
453,215,186 shares of $1 par value
capital stock outstanding (authorized
capital stock - 500,000,000 shares) $6,290,176
===============
STATEMENT OF OPERATIONS
for the year ended December 31, 1995 (dollars in thousands)
Investment Income:
Income:
Interest 482,948
Dividends from investment in stocks 1,001 $483,949
------------
Expenses:
Management services fee 20,858
Distribution expenses 13,834
Transfer agent fee 4,205
Reports to shareholders 487
Registration statement and prospectus 411
Postage, stationery and supplies 1,270
Directors' fees 36
Auditing and legal fees 51
Custodian fee 268
Taxes other than federal income tax 68
Other expense 43 41,531
------------ ---------------
Net investment income $442,418
===============
Realized Loss and Unrealized
Appreciation on Investments:
Net realized loss (13,362)
Net change in unrealized appreciation
(depreciation) on:
Investments 506,688
Open forward currency contracts (461)
------------
Net unrealized appreciation 506,227
---------------
Net realized loss and
unrealized appreciation
on investments 492,865
---------------
Net Increase in Net Assets Resulting $935,283
from Operations ===============
STATEMENT OF CHANGES IN NET ASSETS (dollars in thousands)
Year ended Year ended
December 31, December 31,
1995 1994
Operations:
Net investment income $442,418 $395,207
Net realized loss on investments (13,362) (36,092)
Net unrealized appreciation
(depreciation) on investments 506,227 (626,541)
------------ ---------------
Net increase (decrease) in net assets
resulting from operations 935,283 (267,426)
------------ ---------------
Dividends and Distributions Paid to
Shareholders:
Dividends from net
investment income (438,147) (396,205)
------------ ---------------
Capital Share Transactions:
Proceeds from shares sold:
119,215,625 and 99,296,409
shares, respectively 1,591,640 1,337,647
Proceeds from shares issued in
reinvestment of net investment
income dividends and distributions
of net realized gain on investments:
23,407,092 and 20,827,138 shares,
respectively 312,925 277,618
Cost of shares repurchased:
78,844,004 and 96,388,393
shares, respectively (1,052,675) (1,295,101)
------------ ---------------
Net increase in net assets
resulting from capital share
transactions 851,890 320,164
------------ ---------------
Total Increase (Decrease) in Net Assets 1,349,026 (343,467)
Net Assets:
Beginning of year 4,941,150 5,284,617
------------ ---------------
End of year (including
undistributed net investment
income: $14,704 and $10,433
respectively) $6,290,176 $4,941,150
============ ===============
</TABLE>
See Notes to Financial Statements
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. Bond Fund of America, Inc. (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 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. 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, upon last-reported bid prices
on that date. Securities traded in the over-the-counter market are valued at
the last available sale price prior to the time of valuation, or, lacking any
sales, at the last reported bid price. 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 and other assets and liabilities, including forward
currency contracts, denominated in non-U.S. currencies are recorded in the
financial statements after translation into U.S. dollars utilizing rates of
exchange on the last business day of the year. Interest income from such
investments is calculated using the approximate exchange rate as accrued or
when received. Purchases and sales of investment securities, income, and
expenses are calculated at the rates of exchange prevailing on the respective
dates of such transactions. 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 Appreciation 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 $268,000 includes $107,000 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, 1995, net unrealized appreciation on investments,
excluding forward currency contracts, for book and federal income tax purposes
aggregated $158,387,000, of which $229,379,000 related to appreciated
securities and $70,992,000 related to depreciated securities. During the year
ended December 31, 1995, the fund realized, on a tax basis, a net capital loss
of $13,362,000 on securities transactions. The fund has available at December
31, 1995 a net capital loss carryforward of $49,122,000 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 the capital gains that are so offset. It is the intention of the
fund not to make distributions from capital gains while there is a capital loss
carryforward. The cost of portfolio securities, excluding foreign currency
contracts, for book and federal income tax purposes was $6,067,241,000 at
December 31, 1995.
3. The fee of $20,858,0000 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; and 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, 1995,
distribution expenses under the Plan were $13,834,000. As of December 31,
1995, accrued and unpaid distribution expenses were $926,000.
American Funds Service Company (AFS), the transfer agent for the fund, was
paid a fee of $4,205,000. American Funds Distributors, Inc. (AFD), the
principal underwriter of the fund's shares, received $4,814,000 (after
allowances to dealers) as its portion of the sales charges paid by purchasers
of the fund's shares. Such sales charges are not an expense of the fund and,
hence, are not reflected in the accompanying statement of operations.
Directors of the fund who are unaffiliated with CRMC may elect to defer part
or all of the fees earned for services as members of the Board. Amounts
deferred are not funded and are general unsecured liabilities of the fund. As
of December 31, 1995, aggregate amounts deferred and earnings thereon were
$38,868.
CRMC is owned by The Capital Group Companies, 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
such persons received any remuneration directly from the fund
4. As of December 31, 1995, accumulated net realized loss on investments was
$42,020,000 and paid-in capital was $5,714,717,000.
The fund made purchases and sales of investment securities, excluding
short-term securities, of $2,995,429,000 and $2,209,896,000, respectively,
during the year ended December 31, 1995.
The fund purchases forward currency contracts in anticipation of, or to
protect itself against, fluctuations in exchange rates. The contracts are
recorded in the statement of assets and liabilities at their net unrealized
value; the fund$s maximum potential liability in these contracts is equal to
the full contract amounts. Risk 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.
- -----
<TABLE>
<CAPTION>
Contract Amount U.S. Valuations at 12/31/95
------------ --------- ---------- ---------
Unrealized
<S> <C> <C> <C> <C>
Appreciation
NON-U.S. CURRENCY SALES CONTRACTS Non-U.S. U.S. Amount (Depreciation)
French Francs expiring FF70,000,000 $12,091,000 $14,294,000 ($2,203,000)
11/25/96 to 9/9/98
Great Britain Pounds Pound2,000,000 3,082,000 3,101,000 (19,000)
expiring 3/19/96
Netherland Guilders expiring FL46,487,000 29,726,000 29,368,000 358,000
1/16/96 to 12/9/96
--------- ---------- ---------
$44,899,000 $46,763,000 ($1,864,000)
=========== ========== =========
</TABLE>
- -------
<PAGE>
PER-SHARE DATA AND RATIOS
<TABLE>
<CAPTION>
Year Ended December 31
1995 1994 1993 1992 1991
Net asset value, beginning of year $12.69 $14.45 $13.99 $13.70 $12.39
------- ------- ------ ------- -------
<S> <C> <C> <C> <C> <C>
Income from investment operations:
Net investment income 1.05 1.05 1.09 1.15 1.21
Net realized and unrealized gain(loss) 1.18 (1.76) 0.84 0.34 1.28
ON INVESTMENTS
------- ------- ------ ------- -------
Total income (loss) from investment 2.23 (0.71) 1.93 1.49 2.49
OPERATIONS
------- ------- ------ ------- -------
Less distributions:
Dividends from net investment income (1.04) (1.05) (1.08) (1.16) (1.18)
Distributions from net realized gains -- -- (0.39) (0.04) --
-- -- -- -- --
------- ------- ------ ------- -------
Total distributions (1.04) (1.05) (1.47) (1.20) (1.18)
------- ------- ------ ------- -------
Net Asset Value, end of year $13.88 $12.69 $14.45 $13.99 $13.70
======= ======= ====== ======= =======
Total Return/1/ 18.25% (5.02%) 14.14% 11.34% 21.04%
Ratios/supplemental data:
Net assets, end of year (in millions) $6,290 $4,941 $5,285 $3,917 $2,859
Ratio of expenses to average net assets .74% .69% .71% .73% .77%
Ratio of net income to average net 7.87% 7.77% 7.53% 8.36% 9.28%
assets
Portfolio turnover rate 43.80% 56.98% 44.68% 49.70% 56.47%
</TABLE>
/1/ This was calculated without deducting a sales charge. The maximum sales
charge is 4.75% of the fund's offering price.
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.
(A) FINANCIAL STATEMENTS.
Included in Prospectus - Part A
Financial Highlights
Included in Statement of Additional Information - Part B
Statement of Assets and Liabilities NOTES TO FINANCIAL STATEMENTS
Statement of Operations PER-SHARE DATA AND RATIOS
Statement of Changes in Net Assets INDEPENDENT AUDITORS' REPORT
(B) EXHIBITS.
1. On file (see SEC files nos. 811-2444 and 2-50700)
2. On file (see SEC files nos. 811-2444 and 2-50700)
3. None.
4. On file (see SEC files nos. 811-2444 and 2-50700)
5. On file (see SEC files nos. 811-2444 and 2-50700)
6. On file (see SEC files nos. 811-2444 and 2-50700)
7. None.
8. On file (see SEC files nos. 811-2444 and 2-50700)
9. Form of Shareholder Service Agreement between Registrant and American
Funds Service Company, as amended 1/1/95.
10. Not applicable to this filing.
11. Consent of Independent Accountants
12. None.
13. None.
14. On file (see SEC files nos. 811-2444 and 2-50700)
15. On file (see SEC files nos. 811-2444 and 2-50700)
16. Updates to previously filed schedule for computation of each performance
quotation provided in the Registration Statement in response to Item 22 (see
SEC file nos. 811-2444 and 2-50700)
17. Financial data schedule (EDGAR)
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
None.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES.
<TABLE>
<CAPTION>
As of December 31, 1995
<S> <C>
Title of Class Number of
Record Holders
Capital Stock 296,820
($1.00 par value)
</TABLE>
ITEM 27. INDEMNIFICATION.
Registrant is a joint-insured under an Investment Advisor/Mutual fund
Errors and Omissions Policy written by American International Surplus Lines
Insurance Company, Chubb Custom Insurance Company, and ICI Mutual Insurance
Company which insures its officers and directors against certain liabilities.
Article VIII of the Articles of Incorporation of the Fund provides that "The
Corporation shall indemnify (1) its directors to the full extent provided by
the general laws of the State of Maryland now or hereafter in force, including
the advance of expenses under the procedures provided by such laws; (2) its
officers to the same extent it shall indemnify its directors; and (3) its
officers who are not directors to such further extent as shall be authorized by
the Board of Directors and be consistent with law. The foregoing shall not
limit the authority of the Corporation to indemnify other employees and agents.
Any indemnification by the Corporation shall be consistent with the
requirements of law, including the Investment Company Act of 1940."
Subsection (b) of Section 2-418 of the General Corporation Law of Maryland
empowers a corporation to indemnify any person who was or is party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the
corporation or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation or enterprise,
against reasonable expenses (including attorneys' fees), judgments, penalties,
fines and amounts paid in settlement actually incurred by him in connection
with such action, suit or proceeding unless it is proved that: (i) the act or
omission of the person was material to the cause of action adjudicated in the
proceeding and was committed in bad faith or was the result of active and
deliberate dishonesty; (ii) the person actually received an improper personal
benefit of money, property or services; or (iii) with respect to any criminal
action or proceeding, the person had reasonable cause to believe his act or
omission was unlawful.
Indemnification under subsection (b) of Section 2-418 may not be made by a
corporation unless authorized for a specific proceeding after a determination
has been made that indemnification is permissible in the circumstances because
the party to be indemnified has met the standard of conduct set forth in
subsection (b). This determination shall be made (i) by the Board of Directors
by a majority vote of a quorum consisting of directors not, at the time,
parties to the proceeding, or, if such quorum cannot be obtained, then by a
majority vote of a committee of the Board consisting solely of two or more
directors not, at the time, parties to such proceeding and who were duly
designated to act in the matter by a majority vote of the full Board in which
the designated directors who are parties may participate; (ii) by special legal
counsel selected by the Board of Directors of a committee of the Board by vote
as set forth in subparagraph (i), or, if the requisite quorum of the full Board
cannot be obtained therefor and the committee cannot be established, by a
majority vote of the full Board in which any director who is a party may
participate; or (iii) by the stockholders (except that shares held by any party
to the specific proceeding may not be voted). A court of appropriate
jurisdiction may also order indemnification if the court determines that a
person seeking indemnification is entitled to reimbursement under subsection
(b).
Section 2-418 further provides that indemnification provided for by Section
2-418 shall not be deemed exclusive of any rights to which the indemnified
party may be entitled; that the scope of indemnification extends to directors,
officers, employees or agents of a constituent corporation absorbed in a
consolidation or merger and persons serving in that capacity at the request of
the constituent corporation for another; and empowers the corporation to
purchase and maintain insurance on behalf of a director, officer, employee or
agent of the corporation against any liability asserted against or incurred by
such person in any such capacity or arising out of such person's status as such
whether or not the corporation would have the power to indemnify such person
against such liabilities under Section 2-418.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.
None.
ITEM 29. PRINCIPAL UNDERWRITERS.
(a) American Funds Distributors, Inc. is also the Principal Underwriter of
shares of: AMCAP Fund, Inc., American Balanced Fund, Inc., The American Funds
Income Series, The American Funds Tax-Exempt Series I, The American Funds
Tax-Exempt Series II, American High-Income Municipal Bond Fund, Inc., American
High-Income Trust, American Mutual Fund, Inc., Capital Income Builder, Inc.,
Capital World Bond Fund, Inc., Capital World Growth and Income Fund, Inc., The
Cash Management Trust of America, 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 Money Fund of America, The U. S. Treasury Money
Fund of America and Washington Mutual Investors Fund, Inc.
<TABLE>
<CAPTION>
(B) (1) (2) (3)
NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS AND OFFICES
BUSINESS ADDRESS WITH UNDERWRITER WITH REGISTRANT
<S> <C> <C> <C>
# David L. Abzug Assistant Vice President None
John A. Agar Regional Vice President None
1501 N. University Drive
Little Rock, AR 72207
Robert B. Aprison Regional Vice President None
2983 Bryn Wood Drive
Madison, WI 53711
# Richard Armstrong Assistant Vice President None
* William W. Bagnard Vice President None
Steven L. Barnes Vice President None
8000 Town Line Avenue South
Suite 204
Minneapolis, MN 55438
Michelle A. Bergeron Regional Vice President None
1190 Rockmart Circle
Kennesaw, GA 30144
Joseph T. Blair Vice President None
27 Drumlin Road
West Simsbury, CT 06092
John A. Blanchard Regional Vice President None
6421 Aberdeen Road
Mission Hills, KS 66208
Ian B. Bodell Senior Vice President None
3100 West End Ave., Suite 870
Nashville, TN 37215
Michael L. Brethower Vice President None
108 Hagen Court
Georgetown, TX 78628
C. Alan Brown Regional Vice President None
4619 McPherson Avenue
St. Louis, MO 63108
* Daniel C. Brown Director, Sr. Vice President None
@ J. Peter Burns Vice President None
Brian C. Casey Regional Vice President None
9508 Cable Drive
Kensington, MD 20895
Victor C. Cassato Vice President None
999 Green Oaks Drive
Littleton, CO 80121
Christopher J. Cassin Regional Vice President None
231 Burlington
Clarendon Hills, IL 60514
Denise M. Cassin Regional Vice President None
1425 Vallejo, #203
San Francisco, CA 94109
* Larry P. Clemmensen Director, Treasurer None
* Kevin G. Clifford Senior Vice President None
Ruth M. Collier Vice President None
145 West 67th St., Ste. 12K
New York, NY 10023
Thomas E. Cournoyer Vice President None
2333 Granada Boulevard
Coral Gables, FL 33134
Douglas A. Critchell Vice President None
4116 Woodbine st.
Chevy Chase, MD 20815
* Carl D. Cutting Vice President None
Michael A. Dilella Vice President None
P. O. Box 661
Ramsey, NJ 07446
G. Michael Dill Senior Vice President None
3622 E. 87th Street
Tulsa, OK 74137
Kirk D. Dodge Regional Vice President None
2617 Salisbury Road
Ann Arbor, MI 48103
Peter J. Doran Senior Vice President None
1205 Franklin Avenue
Garden City, NY 11530
* Michael J. Downer Secretary Vice President
Robert W. Durbin Vice President None
74 Sunny Lane
Tiffin, OH 44883
% Lloyd G. Edwards Vice President None
* Paul H. Fieberg Sr. Vice President None
John R. Fodor Regional Vice President None
15 Latisquama Road
Southborough, MA 01772
Steven S. Fogerty Regional Vice President None
535 Spring Club Drive
Altamonte Springs, FL 32714
* Mark P. Freeman, Jr. Director, President None
Clyde E. Gardner Vice President None
Route 2, Box 3162
Osage Beach, MO 65065
# Evelyn K. Glassford Vice President None
Jeffrey J. Greiner Regional Vice President None
5898 Heather Glen Court
Dublin, OH 43017
* Paul G. Haaga, Jr. Director Chairman of the Board
David E. Harper Vice President None
R.D. 1, Box 210, Rte 519
Frenchtown, NJ 08825
Ronald R. Hulsey Regional Vice President None
6744 Avalon
Dallas, TX 75214
* Robert L. Johansen Vice President, Controller None
Michael J. Johnston Chairman of the Board None
630 Fifth Ave., 36th Floor
New York, NY 10111-0121
V. John Kriss, Sr. Vice President None
P.O. Box 274
Surfside, CA 90743
Arthur J. Levine Vice President None
12558 Highlands Place
Fishers, IN 46038
# Karl A. Lewis Assistant Vice President None
T. Blake Liberty Regional Vice President None
12585-E East Tennessee Circle
Aurora, CO 80012
* Susan G. Lindgren Vice President - Institutional None
Investment Services Division
Stephen A. Malbasa Regional Vice President None
13405 Lake Shore Blvd.
Cleveland, OH 44110
Steven M. Markel Vice President None
5575 S. Sycamore
Littleton, CO 80120
* John C. Massar Senior Vice President None
* E. Lee McClennahan Senior Vice President None
Laurie B. McCurdy Regional Vice President None
6008 E. Anderson Drive
Scottsdale, AZ 85255
& John V. McLaughlin Senior Vice President None
Terry W. McNabb Vice President None
2002 Barrett Station Road
St. Louis, MO 63131
* R. William Melinat Vice President - Institutional None
Investment Services Division
David R. Murray Regional Vice President None
25701 S.E. 32nd Place
Issaquah, WA 98027
Stephen S. Nelson Vice President None
7215 Trevor Court
Charlotte, NC 28226
* Barbara G. Nicholich Assistant Vice President - None
Institutional Investment
Services Division
William E. Noe Regional Vice President None
304 River Oaks Road
Brentwood, TN 37207
Peter A. Nyhus Regional Vice President None
3084 Wilds Ridge Court
Prior Lake, MN 55372
Eric P. Olson Regional Vice President None
62 Park Drive
Glenview, IL 60025
Fredric Phillips Regional Vice President None
32 Ridge Avenue
Newton Centre, MA 02159
# Candance D. Pilgrim Assistant Vice President None
Carl S. Platou Regional Vice President None
4021 96th Avenue, SE
Mercer Island, WA 98040
* John O. Post, Jr. Vice President None
Steven J. Reitman Vice President None
212 The Lane
Hinsdale, IL 60521
Brian A. Roberts Regional Vice President None
12025 Delmahoy Drive
Charlotte, NC 28277
George S. Ross Vice President None
55 Madison Avenue
Morristown, NJ 07962
* Julie D. Roth Vice President None
* James F. Rothenberg Director None
Douglas F. Rowe Regional Vice President None
30309 Oak Tree Drive
Georgetown, TX 78628
Christopher Rowey Regional Vice President None
9417 Beverlywood Street
Los Angeles, CA 90034
Dean B. Rydquist Vice President None
1080 Bay Pointe Crossing
Alpharetta, GA 30202
Richard R. Samson Vice President None
4604 Glencoe Avenue, No. 4
Marina del Rey, CA 90292
Joe D. Scarpitti Regional Vice President None
25760 Kensington Drive
Westlake, OH 44145
* R. Michael Shanahan Director None
David W. Short Senior Vice President None
Suite 212, 1000 RIDC Plaza
Pittsburgh, PA 15238-2941
* Victor S. Sidhu Vice President - Institutional None
Investment Services Division
William P. Simon, Jr. Vice President None
554 Canterbury Lane
Berwyn, PA 19312
* John C. Smith Assistant Vice President - None
Institutional Investment
Services Division
* Mary E. Smith Assistant Vice President - None
Institutional Investment
Services Division
Rodney G. Smith Regional Vice President None
2350 Lakeside Blvd., #850
Richardson, TX 75082
Nicholas D. Spadaccini Regional Vice President None
855 Markley Woods Way
Cincinnati, OH 45230
Daniel S. Spradling Senior Vice President None
#4 West Fourth Avenue, Suite 406
San Mateo, CA 94402
Thomas A. Stout Regional Vice President None
2603 Kresson Place
Bowie, MD 20715
Craig R. Strauser Regional Vice President None
17040 Summer Place
Lake Oswego, OR 97035
Francis N. Strazzeri Regional Vice President None
31641 Saddletree Drive
Westlake Village, CA 91361
& James P. Toomey Assistant Vice President None
% Christopher E. Trede Assistant Vice President None
George F. Truesdail Vice President None
400 Abbotsford Court
Charlotte, NC 28270
Scott W. Ursin-Smith Regional Vice President None
606 Glenwood Avenue
Mill Valley, CA 94941
@ Andrew J. Ward Vice President None
* David M. Ward Assistant Vice President - None
Institutional Investment
Services Division
Thomas E. Warren Regional Vice President None
4001 Crockers Lake Blvd., #1012
Sarasota, FL 34238
# J. Kelly Webb Sr. Vice President None
Gregory J. Weimer Regional Vice President None
125 Surrey Drive
Canonsburg, PA 15317
# Timothy W. Weiss Director None
** N. Dexter Williams Vice President None
Timothy J. Wilson Regional Vice President None
113 Farmview Place
Venetia, PA 15367
@ Marshall D. Wingo Sr. Vice President None
* Robert L. Winston Director, Sr. Vice President None
William R. Yost Regional Vice President None
9320 Overlook Trail
Eden Prairie, MN 55347
Janet M. Young Regional Vice President None
1616 Vermont
Houston, TX 77006
</TABLE>
[/R]
____________
* Business Address, 333 South Hope Street, Los Angeles, CA 90071
** Business Address, Four Embarcadero, Suite 1800, San Francisco, CA 94111
# Business Address, 135 South State College Boulevard, Brea, CA 92621
& Business Address, 8000 IH-10, Suite 1400, San Antonio, TX 78230
@ Business Address, 5300 Robin Hood Road, Norfolk, VA 23513
% Business Address, 8332 Woodfield Crossing Blvd., Indianapolis, IN 46240
(c) None.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS.
Accounts, books and other records required by Rules 31a-1 and 31a-2 under the
Investment Company Act of 1940, as amended, are maintained and kept in the
offices of the Fund and its investment adviser, Capital Research and Management
Company, 333 South Hope Street, Los Angeles, CA 90071. Certain accounting
records are maintained and kept in the offices of the Fund's accounting
department, 135 South State College Blvd., Brea, CA 92621.
Records covering shareholder accounts are maintained and kept by the transfer
agent, American Funds Service Company, 135 South State College Blvd., Brea, CA
92621, 8000 IH-10 Suite 1400, San Antonio, TX 78230, 8332 Woodfield Crossing
Blvd., Indianapolis, IN 46240 and 5300 Robin Hood Road, Norfolk, VA 23514.
Records covering portfolio transactions are also maintained and kept by the
custodian, The Chase Manhattan Bank, N.A., One Chase Manhattan Plaza, New York,
New York, 10081.
ITEM 31. MANAGEMENT SERVICES.
None.
ITEM 32. UNDERTAKINGS.
As reflected in the prospectus, the fund undertakes to provide each person to
whom a prospectus is delivered with a copy of the fund's latest annual report
to shareholders, upon request and without charge.
<PAGE>
SIGNATURE OF REGISTRANT
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant certifies that it meets all of the
requirements for effectiveness of this Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933 and has duly caused this amended
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Los Angeles, and State of California, on the
23rd day of February, 1996.
THE BOND FUND OF AMERICA, INC.
By /s/ Paul G. Haaga, Jr.
(Paul G. Haaga, Jr., Chairman of the Board)
Pursuant to the requirements of the Securities Act of 1933, this amendment to
Registration Statement has been signed below on February 23, 1996, by the
following persons in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE
<S> <C> <C>
(1) Principal Executive Officer:
/s/ Abner D. Goldstine President and Director
(Abner D. Goldstine)
(2) Principal Financial Officer and
Principal Accounting Officer:
/s/ Mary C. Hall Vice President and Treasurer
(Mary C. Hall)
(3) Directors:
H. Frederick Christie* Director
Diane C. Creel* Director
Martin Fenton, Jr.* Director
Leonard R. Fuller* Director
/s/ Paul G. Haaga, Jr. Chairman and Director
Paul G. Haaga, Jr.*
Herbert Hoover III* Director
Richard G. Newman* Director
Peter C. Valli* Director
</TABLE>
*By /s/ Julie F. Williams
(Julie F. Williams, Attorney-in-Fact)
Counsel represents that this amendment does not contain disclosures that
would make the amendment ineligible for effectiveness under the provisions of
Rule 485(b).
/s/ Michael J. Downer
(Michael J. Downer)
C-12
SHAREHOLDER SERVICES AGREEMENT
1. The parties to this Agreement, which is effective as of January 1, 1995,
are THE BOND FUND OF AMERICA, INC., a Maryland corporation (hereinafter called
"the Fund"), and American Funds Service Company, a California corporation
(hereinafter called "AFS"). AFS is a wholly owned subsidiary of Capital
Research and Management Company (hereinafter called "CRMC"). This Agreement
will continue in effect until amended or terminated in accordance with its
terms.
2. The Fund hereby employs AFS, and AFS hereby accepts such employment by the
Fund, as its transfer agent. In such capacity AFS will provide the services of
stock transfer agent, dividend disbursing agent, redemption agent, and such
additional related services as the Fund may from time to time require, all of
which services are sometimes referred to herein as "shareholder services."
3. AFS has entered into substantially identical agreements with other
investment companies for which CRMC serves as investment adviser. (For the
purposes of this Agreement, such investment companies, including the Fund, are
called "participating investment companies.")
4. AFS has entered into an agreement with DST Systems, Inc. (hereinafter
called "DST"), to provide AFS with electronic data processing services
sufficient for the performance of the shareholder services referred to in
paragraph 2.
5. The Fund, together with the other participating companies, will maintain a
Review and Advisory Committee, which Committee will review and may make
recommendations to the boards of the participating investment companies
regarding all fees and charges provided for in this Agreement, as well as
review the level and quality of the shareholder services rendered to the
participating investment companies and their shareholders. Each participating
investment company may select one director or trustee who is not affiliated
with CRMC, or any of its affiliated companies, or with Washington Management
Corporation or any of its affiliated companies, to serve on the Review and
Advisory Committee.
6. AFS will provide to the participating investment companies the shareholder
services referred to herein in return for the following fees:
ANNUAL ACCOUNT MAINTENANCE FEE (PAID MONTHLY):
$.67 per month for each open account on AFS books or in Level 2 or 4
Networking ($8.04 per year)
$.09 per month for each open account maintained in Street Name or
Level 1 or 3 Networking ($1.08 per year)
EXHIBIT 9
No annual fee will be charged for a participant account underlying a 401(k) or
other defined contribution plan where the plan maintains a single account on
AFS books and responds to all participant inquiries
TRANSACTION FEES:
$2.00 per non-automated transaction
$0.50 per automated transaction
For this purpose, "transactions" shall include all types of transactions
included in an "activity index" as reported to the Review and Advisory
Committee at least annually. AFS will bill the Fund monthly, on or shortly
after the first of each calendar month, and the Fund will pay to AFS within
five business days of such billing.
Any revision of the schedule of charges set forth herein shall require the
affirmative vote of a majority of the members of the board of
directors/trustees of the Fund.
7. All fund-specific charges from third parties -- including DST charges,
payments described in the next sentence, postage, NSCC transaction charges and
similar out-of-pocket expenses -- will be passed through directly to the Fund
or other participating investment companies, as applicable. AFS, subject to
approval of its board of directors, is authorized in its discretion to
negotiate payments to third parties for account maintenance and/or transaction
processing services provided such payments do not exceed the anticipated
savings to the Fund, either in fees payable to AFS hereunder or in other direct
Fund expenses, that AFS reasonably anticipates would be realized by the Fund
from using the services of such third party rather than maintaining the
accounts directly on AFS' books and/or processing non-automated transactions.
8. It is understood that AFS may have income in excess of its expenses and may
accumulate capital and surplus. AFS is not, however, permitted to distribute
any net income or accumulated surplus to its parent, CRMC, in the form of a
dividend without the affirmative vote of a majority of the members of the
boards of directors/trustees of the Fund and all participating investment
companies.
9. This Agreement may be amended at any time by mutual agreement of the
parties, with agreement of the Fund to be evidenced by affirmative vote of a
majority of the members of the board of directors/trustees of the Fund.
10. This Agreement may be terminated on 180 days' written notice by either
party. In the event of a termination of this Agreement, AFS and the Fund will
each extend full cooperation in effecting a conversion to whatever successor
shareholder service provider(s) the Fund may select, it being understood that
all records relating to the Fund and its shareholders are property of the Fund.
11. In the event of a termination of this Agreement by the Fund, the Fund will
pay to AFS as a termination fee the Fund's proportionate share of any costs of
conversion of the Fund's shareholder service from AFS to a successor. In the
event of termination of this Agreement and all corresponding agreements with
all the participating investment companies, all assets of AFS will be sold or
otherwise converted to cash, with a view to the liquidation of AFS when it
ceases to provide shareholder services for the participating investment
companies. To the extent any such assets are sold by AFS to CRMC and/or any of
its affiliates, such sales shall be at fair market value at the time of sale as
agreed upon by AFS, the purchasing company or companies, and the Review and
Advisory Committee. After all assets of AFS have been converted to cash and
all liabilities of AFS have been paid or discharged, an amount equal to any
capital or paid-in surplus of AFS that shall have been contributed by CRMC or
its affiliates shall be set aside in cash for distribution to CRMC upon
liquidation of AFS. Any other capital or surplus and any assets of AFS
remaining after the foregoing provisions for liabilities and return of capital
or paid-in surplus to CRMC shall be distributed to the participating investment
companies in such proportions as may be determined by the Review and Advisory
Committee.
12. In the event of disagreement between the Fund and AFS, or between the Fund
and other participating investment companies as to any matter arising under
this Agreement, which the parties to the disagreement are unable to resolve,
the question shall be referred to the Review and Advisory Committee for
resolution. If the Review and Advisory Committee is unable to resolve the
question to the satisfaction of both parties, either party may elect to submit
the question to arbitration; one arbitrator to be named by each party to the
disagreement and a third arbitrator to be selected by the two arbitrators named
by the original parties. The decision of a majority of the arbitrators shall
be final and binding on all parties to the arbitration. The expenses of such
arbitration shall be paid by the party electing to submit the question to
arbitration.
13. The obligations of the Fund under this Agreement are not binding upon any
of the directors, trustees, officers, employees, agents or shareholders of the
Fund individually, but bind only the Fund itself. AFS agrees to look solely to
the assets of the Fund for the satisfaction of any liability of the Fund in
respect to this Agreement and will not seek recourse against such directors,
trustees, officers, employees, agents or shareholders, or any of them or their
personal assets for such satisfaction.
AMERICAN FUNDS SERVICE COMPANY THE BOND FUND OF AMERICA, INC.
By /s/ Don R. Conlan By /s/ Paul G. Haaga, Jr.
Don R. Conlan, Chairman Paul G. Haaga, Jr., Chairman
By /s/ Kenneth R. Gorvetzian By /s/ Julie F. Williams
Kenneth R. Gorvetzian, Secretary Julie F. Williams, Secretary
CONSENT OF INDEPENDENT AUDITORS
The Bond Fund of America, Inc.:
We consent to (a) the use in this Post-Effective Amendment No. 39 to
Registration Statement
No. 2-50700 on Form N-1A of our report dated January 26, 1996 appearing in the
Financial Statements, which are included in Part B, the Statement of Additional
Information of such Registration Statement; (b) the references to us under the
heading "General Information" in such Statement of Additional Information; and
(c) the reference to us under the heading "Financial Highlights" in the
Prospectus, which is a part of such Registration Statement.
Deloitte & Touche llp
February 26, 1996
SCHEDULE FOR COMPUTATION OF EACH PERFORMANCE QUOTATION
PROVIDED IN THE REGISTRATION STATEMENT
(1) ENDING REDEMPTION VALUE AND TOTAL RETURN
Value of an initial investment at the end of a period and total return for the
period are computed as set forth below.
(A) Initial investment DIVIDED BY
Public offering price for one share at
beginning of period EQUALS
Number of shares initially purchased
(B) Number of shares initially purchased PLUS
Number of shares acquired at net asset
value through reinvestment of dividends
and capital gain distributions during period EQUALS
Number of shares purchased during period
(C) Number of shares purchased during period MULTIPLIED BY
Net asset value of one share as of the last day
of the period EQUALS
Value of investment at end of period
(D) Value of investment at end of period DIVIDED BY
Initial investment
minus one and then multiplied by 100 EQUALS
Total return for the period expressed as a
percentage
EXHIBIT 16
(2) AVERAGE ANNUAL TOTAL RETURN
Average annual total return quotations for the 1-, 5- and 10-year periods ended
December 31, 1995 are computed according to the formula set forth below.
P(1+T)/n/ = ERV
WHERE: P= a hypothetical initial investment of $1,000
T= average annual total return
n= number of years
ERV= ending redeemable value of a hypothetical $1,000 investment as of
the end of 1 year and lifetime periods (computed in accordance with the formula
shown in (1), above)
THUS:
AVG. ANNUAL TOTAL RETURN AT PUBLIC OFFERING PRICE:
1 Year Total Return 1,000(1+T)/1/ = 1,126.57
T = + 12.66
5 Year Average Annual Total Return 1,000(1+T)/5/ = 1,645.42
T = +10.47%
10 Year Average Annual Total Return 1,000(1+T)/10/ = 2,432.65
T = +9.30%
Hypothetical illustrations which are based on $1,000 and $10,000 initial
investments used to obtain ending values over various time periods are
attached. Illustrations of $2,000 per year which show the benefits of
systematic investing are also included.
(3) YIELD
Yield is computed as set forth below.
(A) Dividends and interest earned during the period MINUS
Expenses accrued for the period EQUALS
Net investment income
(B) Net income investment DIVIDED BY
Average daily number of shares
outstanding during the period that
were entitled to receive dividends EQUALS
Net investment income per share earned
during the period
(C) Net investment income per share earned
during the period DIVIDED BY
Maximum offering price per share on
last day of the period EQUALS
Current month's yield
(D) Current months yield PLUS ONE RAISED
TO THE SIXTH
POWER EQUALS
Semiannual compounded yield
(E) Semiannual compounded yield MINUS ONE
MULTIPLIED
BY TWO EQUALS
Annualized rate
<PAGE>
<TABLE>
<CAPTION>
THE BOND FUND OF AMERICA, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/95 1000.00 13.32 4.75 % 75.075 12.690 953
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/95 1000 84 84 1084 0 1042 0 1042 84 1126.57 81.165
TOTAL $ 0
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE BOND FUND OF AMERICA, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/91 1000.00 13.01 4.75 % 76.864 12.390 952
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/91 1000 96 96 1096 0 1053 0 1053 99 1152.77 84.144
12/31/92 1000 100 196 1196 4 1075 4 1079 204 1283.48 91.743
12/31/93 1000 106 302 1302 38 1111 42 1153 311 1464.94 101.380
12/31/94 1000 109 411 1411 0 975 37 1012 379 1391.47 109.651
12/31/95 1000 121 532 1532 0 1067 40 1107 538 1645.42 118.546
TOTAL $ 42
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE BOND FUND OF AMERICA, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/86 1000.00 14.71 4.75 % 67.981 14.010 952
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/86 1000 103 103 1103 30 966 30 996 100 1096.88 77.191
12/31/87 1000 108 211 1211 0 893 28 921 197 1118.40 85.114
12/31/88 1000 112 323 1323 0 900 28 928 310 1238.11 93.513
12/31/89 1000 127 450 1450 0 899 28 927 436 1363.55 103.065
12/31/90 1000 134 584 1584 0 842 26 868 540 1408.10 113.648
12/31/91 1000 140 724 1724 0 931 29 960 744 1704.39 124.408
12/31/92 1000 150 874 1874 5 951 35 986 911 1897.62 135.641
12/31/93 1000 153 1027 2027 56 982 92 1074 1091 2165.85 149.886
12/31/94 1000 163 1190 2190 0 863 81 944 1113 2057.24 162.115
12/31/95 1000 175 1365 2365 0 944 89 1033 1399 2432.65 175.263
TOTAL $ 91
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE BOND FUND OF AMERICA, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
5/28/74 1000.00 14.41 4.75 % 69.396 13.725 952
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/74 1000 41 41 1041 0 947 0 947 41 988.37 72.408
12/31/75 1000 89 130 1130 0 980 0 980 133 1113.73 78.876
12/31/76 1000 101 231 1231 13 1056 13 1069 246 1315.45 86.486
12/31/77 1000 112 343 1343 12 1012 24 1036 347 1383.10 94.798
12/31/78 1000 119 462 1462 6 944 28 972 439 1411.24 103.768
12/31/79 1000 139 601 1601 0 885 26 911 544 1455.64 114.168
12/31/80 1000 170 771 1771 0 815 24 839 668 1507.18 128.380
12/31/81 1000 210 981 1981 0 756 22 778 829 1607.30 147.459
12/31/82 1000 241 1222 2222 0 880 26 906 1230 2136.12 168.464
12/31/83 1000 253 1475 2475 0 861 25 886 1452 2338.24 188.416
12/31/84 1000 284 1759 2759 0 856 25 881 1736 2617.50 212.115
12/31/85 1000 320 2079 3079 0 972 29 1001 2312 3313.98 236.544
12/31/86 1000 357 2436 3436 104 986 133 1119 2697 3816.64 268.588
12/31/87 1000 375 2811 3811 0 912 123 1035 2856 3891.46 296.154
12/31/88 1000 392 3203 4203 0 919 123 1042 3265 4307.97 325.375
12/31/89 1000 442 3645 4645 0 918 123 1041 3703 4744.30 358.602
12/31/90 1000 464 4109 5109 0 860 116 976 3923 4899.34 395.427
12/31/91 1000 486 4595 5595 0 951 128 1079 4851 5930.31 432.869
12/31/92 1000 523 5118 6118 19 971 149 1120 5482 6602.75 471.962
12/31/93 1000 527 5645 6645 196 1003 350 1353 6183 7536.21 521.537
12/31/94 1000 567 6212 7212 0 881 307 1188 5970 7158.20 564.082
12/31/95 1000 611 6823 7823 0 963 336 1299 7165 8464.54 609.837
TOTAL $ 350
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE BOND FUND OF AMERICA, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/95 1000.00 12.69 0.00 % 78.802 12.690 1000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/95 1000 86 86 1086 0 1094 0 1094 88 1182.53 85.197
TOTAL $ 0
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE BOND FUND OF AMERICA, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/91 1000.00 12.39 0.00 % 80.710 12.390 1000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/91 1000 97 97 1097 0 1106 0 1106 104 1210.44 88.353
12/31/92 1000 108 205 1205 4 1129 4 1133 214 1347.68 96.332
12/31/93 1000 106 311 1311 40 1166 44 1210 328 1538.19 106.449
12/31/94 1000 116 427 1427 0 1024 39 1063 398 1461.01 115.131
12/31/95 1000 123 550 1550 0 1120 42 1162 565 1727.63 124.469
TOTAL $ 44
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE BOND FUND OF AMERICA, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/86 1000.00 14.01 0.00 % 71.378 14.010 1000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/86 1000 108 108 1108 31 1014 31 1045 106 1151.68 81.047
12/31/87 1000 113 221 1221 0 938 29 967 207 1174.30 89.368
12/31/88 1000 119 340 1340 0 945 29 974 325 1299.98 98.186
12/31/89 1000 134 474 1474 0 944 29 973 458 1431.63 108.211
12/31/90 1000 140 614 1614 0 884 27 911 567 1478.40 119.322
12/31/91 1000 147 761 1761 0 978 30 1008 781 1789.47 130.618
12/31/92 1000 159 920 1920 6 999 36 1035 957 1992.39 142.415
12/31/93 1000 159 1079 2079 59 1031 97 1128 1146 2274.08 157.376
12/31/94 1000 171 1250 2250 0 906 85 991 1168 2159.99 170.212
12/31/95 1000 185 1435 2435 0 991 93 1084 1470 2554.16 184.017
TOTAL $ 96
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE BOND FUND OF AMERICA, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
5/28/74 1000.00 13.73 0.00 % 72.860 13.725 1000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/74 1000 43 43 1043 0 995 0 995 42 1037.70 76.022
12/31/75 1000 95 138 1138 0 1029 0 1029 140 1169.31 82.812
12/31/76 1000 106 244 1244 13 1108 13 1121 260 1381.10 90.802
12/31/77 1000 117 361 1361 13 1063 25 1088 364 1452.13 99.529
12/31/78 1000 126 487 1487 6 991 29 1020 461 1481.65 108.945
12/31/79 1000 146 633 1633 0 929 27 956 572 1528.27 119.864
12/31/80 1000 179 812 1812 0 855 25 880 702 1582.35 134.783
12/31/81 1000 221 1033 2033 0 794 23 817 870 1687.45 154.812
12/31/82 1000 253 1286 2286 0 924 27 951 1291 2242.64 176.864
12/31/83 1000 265 1551 2551 0 904 27 931 1523 2454.82 197.810
12/31/84 1000 298 1849 2849 0 899 26 925 1822 2747.99 222.690
12/31/85 1000 336 2185 3185 0 1021 30 1051 2428 3479.23 248.339
12/31/86 1000 375 2560 3560 109 1035 139 1174 2832 4006.95 281.981
12/31/87 1000 393 2953 3953 0 957 129 1086 2999 4085.53 310.923
12/31/88 1000 410 3363 4363 0 965 130 1095 3427 4522.78 341.600
12/31/89 1000 465 3828 4828 0 964 130 1094 3886 4980.95 376.489
12/31/90 1000 487 4315 5315 0 903 121 1024 4119 5143.67 415.147
12/31/91 1000 510 4825 5825 0 998 134 1132 5094 6226.05 454.456
12/31/92 1000 549 5374 6374 20 1019 157 1176 5756 6932.03 495.499
12/31/93 1000 554 5928 6928 206 1053 368 1421 6491 7912.01 547.544
12/31/94 1000 595 6523 7523 0 925 323 1248 6267 7515.17 592.212
12/31/95 1000 642 7165 8165 0 1011 353 1364 7522 8886.64 640.248
TOTAL $ 367
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE BOND FUND OF AMERICA, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/86 10000.00 14.71 4.75 % 679.810 14.010 9524
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/86 10000 1025 1025 11025 298 9660 297 9957 1011 10968.76 771.904
12/31/87 10000 1078 2103 12103 0 8933 275 9208 1975 11183.82 851.128
12/31/88 10000 1124 3227 13227 0 9001 277 9278 3102 12380.83 935.108
12/31/89 10000 1272 4499 14499 0 8994 277 9271 4363 13634.90 1030.605
12/31/90 10000 1336 5835 15835 0 8423 259 8682 5398 14080.49 1136.440
12/31/91 10000 1396 7231 17231 0 9313 287 9600 7443 17043.42 1244.045
12/31/92 10000 1501 8732 18732 54 9511 347 9858 9117 18975.99 1356.397
12/31/93 10000 1514 10246 20246 564 9823 922 10745 10913 21658.69 1498.871
12/31/94 10000 1630 11876 21876 0 8627 809 9436 11136 20572.37 1621.148
12/31/95 10000 1759 13635 23635 0 9436 885 10321 14005 24326.66 1752.641
TOTAL $ 916
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AVERAGE FIXED INCOME ACCOUNT
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/86 10000.00 10.00 0.00 % 1000.000 10.000 10000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/86 10000 692 692 10692 0 10000 0 10000 692 10692.28 1069.228
12/31/87 10000 660 1352 11352 0 10000 0 10000 1352 11352.87 1135.287
12/31/88 10000 742 2094 12094 0 10000 0 10000 2095 12095.88 1209.588
12/31/89 10000 908 3002 13002 0 10000 0 10000 3003 13003.35 1300.335
12/31/90 10000 936 3938 13938 0 10000 0 10000 3937 13937.76 1393.776
12/31/91 10000 850 4788 14788 0 10000 0 10000 4788 14788.67 1478.867
12/31/92 10000 611 5399 15399 0 10000 0 10000 5399 15399.81 1539.981
12/31/93 10000 490 5889 15889 0 10000 0 10000 5889 15889.09 1588.909
12/31/94 10000 506 6395 16395 0 10000 0 10000 6393 16393.92 1639.392
12/31/95 10000 514 6909 16909 0 10000 0 10000 6908 16908.07 1690.807
TOTAL $ 0
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AVERAGE FIXED INCOME ACCOUNT
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/85 10000.00 10.00 0.00 % 1000.000 10.000 10000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/85 10000 812 812 10812 0 10000 0 10000 810 10810.53 1081.053
12/31/86 10000 749 1561 11561 0 10000 0 10000 1558 11558.93 1155.893
12/31/87 10000 715 2276 12276 0 10000 0 10000 2273 12273.07 1227.307
12/31/88 10000 803 3079 13079 0 10000 0 10000 3076 13076.31 1307.631
12/31/89 10000 981 4060 14060 0 10000 0 10000 4057 14057.33 1405.733
12/31/90 10000 1010 5070 15070 0 10000 0 10000 5067 15067.48 1506.748
12/31/91 10000 920 5990 15990 0 10000 0 10000 5987 15987.34 1598.734
12/31/92 10000 661 6651 16651 0 10000 0 10000 6648 16648.03 1664.803
12/31/93 10000 530 7181 17181 0 10000 0 10000 7176 17176.97 1717.697
12/31/94 10000 546 7727 17727 0 10000 0 10000 7722 17722.71 1772.271
TOTAL $ 0
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AVERAGE FIXED INCOME ACCOUNT
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/84 10000.00 10.00 0.00 % 1000.000 10.000 10000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/84 10000 956 956 10956 0 10000 0 10000 956 10956.52 1095.652
12/31/85 10000 889 1845 11845 0 10000 0 10000 1844 11844.59 1184.459
12/31/86 10000 820 2665 12665 0 10000 0 10000 2664 12664.57 1266.457
12/31/87 10000 782 3447 13447 0 10000 0 10000 3447 13447.01 1344.701
12/31/88 10000 880 4327 14327 0 10000 0 10000 4327 14327.09 1432.709
12/31/89 10000 1074 5401 15401 0 10000 0 10000 5401 15401.95 1540.195
12/31/90 10000 1107 6508 16508 0 10000 0 10000 6508 16508.71 1650.871
12/31/91 10000 1008 7516 17516 0 10000 0 10000 7516 17516.56 1751.656
12/31/92 10000 724 8240 18240 0 10000 0 10000 8240 18240.44 1824.044
12/31/93 10000 579 8819 18819 0 10000 0 10000 8819 18819.97 1881.997
TOTAL $ 0
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AVERAGE FIXED INCOME ACCOUNT
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/83 10000.00 10.00 0.00 % 1000.000 10.000 10000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/83 10000 918 918 10918 0 10000 0 10000 918 10918.02 1091.802
12/31/84 10000 1044 1962 11962 0 10000 0 10000 1962 11962.34 1196.234
12/31/85 10000 970 2932 12932 0 10000 0 10000 2931 12931.93 1293.193
12/31/86 10000 895 3827 13827 0 10000 0 10000 3827 13827.18 1382.718
12/31/87 10000 854 4681 14681 0 10000 0 10000 4681 14681.44 1468.144
12/31/88 10000 961 5642 15642 0 10000 0 10000 5642 15642.31 1564.231
12/31/89 10000 1173 6815 16815 0 10000 0 10000 6815 16815.84 1681.584
12/31/90 10000 1208 8023 18023 0 10000 0 10000 8024 18024.22 1802.422
12/31/91 10000 1100 9123 19123 0 10000 0 10000 9124 19124.60 1912.460
12/31/92 10000 792 9915 19915 0 10000 0 10000 9914 19914.92 1991.492
TOTAL $ 0
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AVERAGE FIXED INCOME ACCOUNT
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/82 10000.00 10.00 0.00 % 1000.000 10.000 10000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/82 10000 1086 1086 11086 0 10000 0 10000 1085 11085.58 1108.558
12/31/83 10000 1018 2104 12104 0 10000 0 10000 2103 12103.25 1210.325
12/31/84 10000 1158 3262 13262 0 10000 0 10000 3260 13260.94 1326.094
12/31/85 10000 1075 4337 14337 0 10000 0 10000 4335 14335.78 1433.578
12/31/86 10000 992 5329 15329 0 10000 0 10000 5328 15328.22 1532.822
12/31/87 10000 947 6276 16276 0 10000 0 10000 6275 16275.23 1627.523
12/31/88 10000 1065 7341 17341 0 10000 0 10000 7340 17340.41 1734.041
12/31/89 10000 1300 8641 18641 0 10000 0 10000 8641 18641.34 1864.134
12/31/90 10000 1340 9981 19981 0 10000 0 10000 9980 19980.88 1998.088
12/31/91 10000 1220 11201 21201 0 10000 0 10000 11200 21200.71 2120.071
TOTAL $ 0
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AVERAGE FIXED INCOME ACCOUNT
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/81 10000.00 10.00 0.00 % 1000.000 10.000 10000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/81 10000 1098 1098 11098 0 10000 0 10000 1098 11098.56 1109.856
12/31/82 10000 1205 2303 12303 0 10000 0 10000 2303 12303.40 1230.340
12/31/83 10000 1129 3432 13432 0 10000 0 10000 3432 13432.87 1343.287
12/31/84 10000 1284 4716 14716 0 10000 0 10000 4717 14717.74 1471.774
12/31/85 10000 1193 5909 15909 0 10000 0 10000 5910 15910.66 1591.066
12/31/86 10000 1101 7010 17010 0 10000 0 10000 7012 17012.12 1701.212
12/31/87 10000 1052 8062 18062 0 10000 0 10000 8063 18063.16 1806.316
12/31/88 10000 1183 9245 19245 0 10000 0 10000 9245 19245.35 1924.535
12/31/89 10000 1444 10689 20689 0 10000 0 10000 10689 20689.19 2068.919
12/31/90 10000 1486 12175 22175 0 10000 0 10000 12175 22175.89 2217.589
TOTAL $ 0
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AVERAGE FIXED INCOME ACCOUNT
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/80 10000.00 10.00 0.00 % 1000.000 10.000 10000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/80 10000 891 891 10891 0 10000 0 10000 891 10891.33 1089.133
12/31/81 10000 1197 2088 12088 0 10000 0 10000 2087 12087.80 1208.780
12/31/82 10000 1312 3400 13400 0 10000 0 10000 3400 13400.05 1340.005
12/31/83 10000 1230 4630 14630 0 10000 0 10000 4630 14630.20 1463.020
12/31/84 10000 1400 6030 16030 0 10000 0 10000 6029 16029.59 1602.959
12/31/85 10000 1299 7329 17329 0 10000 0 10000 7328 17328.84 1732.884
12/31/86 10000 1198 8527 18527 0 10000 0 10000 8528 18528.48 1852.848
12/31/87 10000 1145 9672 19672 0 10000 0 10000 9673 19673.20 1967.320
12/31/88 10000 1287 10959 20959 0 10000 0 10000 10960 20960.76 2096.076
12/31/89 10000 1574 12533 22533 0 10000 0 10000 12533 22533.29 2253.329
TOTAL $ 0
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AVERAGE FIXED INCOME ACCOUNT
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/79 10000.00 10.00 0.00 % 1000.000 10.000 10000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/79 10000 743 743 10743 0 10000 0 10000 742 10742.84 1074.284
12/31/80 10000 958 1701 11701 0 10000 0 10000 1700 11700.39 1170.039
12/31/81 10000 1285 2986 12986 0 10000 0 10000 2985 12985.74 1298.574
12/31/82 10000 1410 4396 14396 0 10000 0 10000 4395 14395.45 1439.545
12/31/83 10000 1322 5718 15718 0 10000 0 10000 5716 15716.97 1571.697
12/31/84 10000 1503 7221 17221 0 10000 0 10000 7220 17220.32 1722.032
12/31/85 10000 1395 8616 18616 0 10000 0 10000 8616 18616.08 1861.608
12/31/86 10000 1288 9904 19904 0 10000 0 10000 9904 19904.84 1990.484
12/31/87 10000 1230 11134 21134 0 10000 0 10000 11134 21134.60 2113.460
12/31/88 10000 1384 12518 22518 0 10000 0 10000 12517 22517.82 2251.782
TOTAL $ 0
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AVERAGE FIXED INCOME ACCOUNT
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/78 10000.00 10.00 0.00 % 1000.000 10.000 10000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/78 10000 642 642 10642 0 10000 0 10000 641 10641.90 1064.190
12/31/79 10000 790 1432 11432 0 10000 0 10000 1432 11432.42 1143.242
12/31/80 10000 1019 2451 12451 0 10000 0 10000 2451 12451.43 1245.143
12/31/81 10000 1367 3818 13818 0 10000 0 10000 3819 13819.30 1381.930
12/31/82 10000 1501 5319 15319 0 10000 0 10000 5319 15319.51 1531.951
12/31/83 10000 1406 6725 16725 0 10000 0 10000 6725 16725.85 1672.585
12/31/84 10000 1599 8324 18324 0 10000 0 10000 8325 18325.70 1832.570
12/31/85 10000 1486 9810 19810 0 10000 0 10000 9811 19811.06 1981.106
12/31/86 10000 1372 11182 21182 0 10000 0 10000 11182 21182.53 2118.253
12/31/87 10000 1310 12492 22492 0 10000 0 10000 12491 22491.24 2249.124
TOTAL $ 0
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE BOND FUND OF AMERICA, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/91 2000.00 13.01 4.75 % 153.728 12.390 1905
ANNUAL INVESTMENTS OF $ 2000.00 -- SAME DAY AS INITIAL INVESTMENT
DIVIDENDS AND CAPITAL GAINS REINVESTED
RIGHT OF ACCUMULATION DISCOUNT REFLECTED WHERE APPLICABLE IN THIS ILLUSTRATION
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/91 2000 188 188 2188 0 2106 0 2106 199 2305.49 168.284
12/31/92 4000 370 558 4558 13 4096 13 4109 579 4688.41 335.126
12/31/93 6000 525 1083 7083 196 6198 210 6408 1117 7525.20 520.775
12/31/94 8000 710 1793 9793 0 7116 184 7300 1657 8957.30 705.855
12/31/95 10000 926 2719 12719 0 9868 201 10069 2776 12845.09 925.439
TOTAL $ 209
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE BOND FUND OF AMERICA, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/86 2000.00 14.71 4.75 % 135.962 14.010 1905
ANNUAL INVESTMENTS OF $ 2000.00 -- SAME DAY AS INITIAL INVESTMENT
DIVIDENDS AND CAPITAL GAINS REINVESTED
RIGHT OF ACCUMULATION DISCOUNT REFLECTED WHERE APPLICABLE IN THIS ILLUSTRATION
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/86 2000 205 205 2205 60 1932 59 1991 202 2193.78 154.383
12/31/87 4000 403 608 4608 0 3548 55 3603 575 4178.99 318.036
12/31/88 6000 612 1220 7220 0 5494 55 5549 1185 6734.43 508.643
12/31/89 8000 888 2108 10108 0 7393 55 7448 2066 9514.58 719.167
12/31/90 10000 1118 3226 13226 0 8708 52 8760 3032 11792.75 951.796
12/31/91 12000 1358 4584 16584 0 11735 57 11792 4787 16579.77 1210.202
12/31/92 14000 1629 6213 20213 58 13929 117 14046 6535 20581.23 1471.139
12/31/93 16000 1795 8008 24008 669 16354 788 17142 8522 25664.88 1776.116
12/31/94 18000 2075 10083 28083 0 16040 692 16732 9459 26191.93 2063.982
12/31/95 20000 2401 12484 32484 0 19632 757 20389 12841 33230.00 2394.092
TOTAL $ 787
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE BOND FUND OF AMERICA, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
5/28/74 10000.00 14.41 4.75 % 693.963 13.725 9525
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/74 10000 413 413 10413 0 9473 0 9473 410 9883.72 724.082
12/31/75 10000 897 1310 11310 0 9799 0 9799 1338 11137.22 788.755
12/31/76 10000 1010 2320 12320 126 10555 126 10681 2473 13154.47 864.857
12/31/77 10000 1114 3434 13434 121 10125 240 10365 3466 13831.03 947.980
12/31/78 10000 1198 4632 14632 57 9438 278 9716 4396 14112.38 1037.675
12/31/79 10000 1387 6019 16019 0 8848 260 9108 5448 14556.41 1141.679
12/31/80 10000 1706 7725 17725 0 8147 240 8387 6684 15071.79 1283.798
12/31/81 10000 2096 9821 19821 0 7564 222 7786 8286 16072.97 1474.584
12/31/82 10000 2408 12229 22229 0 8799 259 9058 12303 21361.26 1684.642
12/31/83 10000 2529 14758 24758 0 8612 253 8865 14517 23382.36 1884.155
12/31/84 10000 2838 17596 27596 0 8563 252 8815 17359 26174.88 2121.141
12/31/85 10000 3193 20789 30789 0 9722 286 10008 23131 33139.70 2365.432
12/31/86 10000 3566 24355 34355 1036 9861 1325 11186 26980 38166.23 2685.871
12/31/87 10000 3746 28101 38101 0 9119 1225 10344 28570 38914.60 2961.537
12/31/88 10000 3912 32013 42013 0 9188 1235 10423 32656 43079.54 3253.742
12/31/89 10000 4425 36438 46438 0 9181 1234 10415 37028 47443.11 3586.025
12/31/90 10000 4650 41088 51088 0 8598 1155 9753 39240 48993.45 3954.274
12/31/91 10000 4859 45947 55947 0 9507 1277 10784 48519 59303.03 4328.688
12/31/92 10000 5221 51168 61168 186 9709 1491 11200 54827 66027.50 4719.621
12/31/93 10000 5269 56437 66437 1964 10028 3501 13529 61833 75362.02 5215.365
12/31/94 10000 5673 62110 72110 0 8806 3075 11881 59701 71582.09 5640.827
12/31/95 10000 6112 68222 78222 0 9632 3363 12995 71650 84645.32 6098.366
TOTAL $ 3490
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE BOND FUND OF AMERICA, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/75 10000.00 14.33 4.75 % 697.837 13.650 9525
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/75 10000 865 865 10865 0 9853 0 9853 880 10733.54 760.166
12/31/76 10000 974 1839 11839 121 10614 122 10736 1941 12677.72 833.512
12/31/77 10000 1073 2912 12912 117 10181 231 10412 2917 13329.76 913.623
12/31/78 10000 1155 4067 14067 55 9491 268 9759 3841 13600.92 1000.068
12/31/79 10000 1337 5404 15404 0 8897 251 9148 4880 14028.86 1100.303
12/31/80 10000 1644 7048 17048 0 8193 231 8424 6101 14525.59 1237.273
12/31/81 10000 2020 9068 19068 0 7606 214 7820 7670 15490.45 1421.142
12/31/82 10000 2321 11389 21389 0 8849 249 9098 11489 20587.08 1623.587
12/31/83 10000 2437 13826 23826 0 8660 244 8904 13630 22534.93 1815.869
12/31/84 10000 2736 16562 26562 0 8611 243 8854 16372 25226.24 2044.266
12/31/85 10000 3077 19639 29639 0 9777 276 10053 21885 31938.63 2279.702
12/31/86 10000 3438 23077 33077 999 9916 1277 11193 25590 36783.01 2588.530
12/31/87 10000 3612 26689 36689 0 9170 1181 10351 27153 37504.23 2854.203
12/31/88 10000 3770 30459 40459 0 9239 1190 10429 31089 41518.27 3135.821
12/31/89 10000 4265 34724 44724 0 9232 1189 10421 35302 45723.67 3456.060
12/31/90 10000 4480 39204 49204 0 8646 1113 9759 37458 47217.86 3810.965
12/31/91 10000 4682 43886 53886 0 9560 1231 10791 46362 57153.78 4171.809
12/31/92 10000 5032 48918 58918 180 9763 1437 11200 52434 63634.51 4548.571
12/31/93 10000 5079 53997 63997 1893 10084 3374 13458 59172 72630.70 5026.346
12/31/94 10000 5467 59464 69464 0 8856 2963 11819 57168 68987.78 5436.389
12/31/95 10000 5893 65357 75357 0 9686 3241 12927 68650 81577.55 5877.345
TOTAL $ 3365
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE BOND FUND OF AMERICA, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/76 10000.00 14.82 4.75 % 674.764 14.120 9528
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/76 10000 864 864 10864 108 10263 108 10371 882 11253.42 739.870
12/31/77 10000 952 1816 11816 104 9845 205 10050 1782 11832.20 810.980
12/31/78 10000 1025 2841 12841 49 9177 237 9414 2658 12072.88 887.712
12/31/79 10000 1186 4027 14027 0 8603 223 8826 3626 12452.75 976.686
12/31/80 10000 1459 5486 15486 0 7922 205 8127 4766 12893.65 1098.267
12/31/81 10000 1793 7279 17279 0 7355 190 7545 6205 13750.12 1261.479
12/31/82 10000 2061 9340 19340 0 8556 221 8777 9497 18274.16 1441.180
12/31/83 10000 2164 11504 21504 0 8374 217 8591 11412 20003.17 1611.859
12/31/84 10000 2429 13933 23933 0 8327 215 8542 13850 22392.13 1814.597
12/31/85 10000 2733 16666 26666 0 9453 245 9698 18652 28350.40 2023.583
12/31/86 10000 3051 19717 29717 887 9588 1134 10722 21928 32650.53 2297.715
12/31/87 10000 3208 22925 32925 0 8866 1048 9914 23376 33290.73 2533.541
12/31/88 10000 3347 26272 36272 0 8934 1056 9990 26863 36853.80 2783.520
12/31/89 10000 3785 30057 40057 0 8927 1055 9982 30604 40586.76 3067.782
12/31/90 10000 3977 34034 44034 0 8360 988 9348 32565 41913.05 3382.813
12/31/91 10000 4156 38190 48190 0 9244 1093 10337 40395 50732.73 3703.119
12/31/92 10000 4465 42655 52655 160 9440 1276 10716 45769 56485.35 4037.552
12/31/93 10000 4507 47162 57162 1680 9750 2995 12745 51725 64470.91 4461.655
12/31/94 10000 4853 52015 62015 0 8563 2630 11193 50044 61237.27 4825.632
12/31/95 10000 5231 57246 67246 0 9366 2877 12243 60169 72412.63 5217.048
TOTAL $ 2988
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE BOND FUND OF AMERICA, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/77 10000.00 15.97 4.75 % 626.174 15.210 9524
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/77 10000 806 806 10806 88 9136 86 9222 791 10013.95 686.357
12/31/78 10000 868 1674 11674 41 8516 119 8635 1582 10217.67 751.299
12/31/79 10000 1004 2678 12678 0 7984 112 8096 2443 10539.14 826.599
12/31/80 10000 1235 3913 13913 0 7351 103 7454 3458 10912.29 929.497
12/31/81 10000 1518 5431 15431 0 6825 96 6921 4716 11637.15 1067.628
12/31/82 10000 1745 7176 17176 0 7940 111 8051 7415 15466.00 1219.716
12/31/83 10000 1831 9007 19007 0 7771 109 7880 9049 16929.32 1364.168
12/31/84 10000 2055 11062 21062 0 7727 108 7835 11116 18951.17 1535.751
12/31/85 10000 2312 13374 23374 0 8773 123 8896 15097 23993.82 1712.621
12/31/86 10000 2582 15956 25956 750 8898 874 9772 17861 27633.14 1944.626
12/31/87 10000 2712 18668 28668 0 8228 808 9036 19138 28174.95 2144.212
12/31/88 10000 2833 21501 31501 0 8291 814 9105 22085 31190.46 2355.775
12/31/89 10000 3200 24701 34701 0 8284 814 9098 25251 34349.75 2596.353
12/31/90 10000 3368 28069 38069 0 7758 762 8520 26952 35472.22 2862.972
12/31/91 10000 3518 31587 41587 0 8579 843 9422 33514 42936.55 3134.055
12/31/92 10000 3779 35366 45366 135 8760 996 9756 38049 47805.17 3417.096
12/31/93 10000 3818 39184 49184 1422 9048 2448 11496 43067 54563.52 3776.022
12/31/94 10000 4106 43290 53290 0 7946 2150 10096 41730 51826.77 4084.064
12/31/95 10000 4426 47716 57716 0 8691 2352 11043 50241 61284.79 4415.331
TOTAL $ 2436
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE BOND FUND OF AMERICA, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/78 10000.00 15.32 4.75 % 652.742 14.590 9523
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/78 10000 825 825 10825 39 8877 37 8914 803 9717.24 714.503
12/31/79 10000 956 1781 11781 0 8322 35 8357 1665 10022.99 786.117
12/31/80 10000 1175 2956 12956 0 7663 32 7695 2682 10377.87 883.975
12/31/81 10000 1443 4399 14399 0 7115 30 7145 3922 11067.23 1015.342
12/31/82 10000 1659 6058 16058 0 8277 35 8312 6396 14708.56 1159.981
12/31/83 10000 1742 7800 17800 0 8101 34 8135 7965 16100.21 1297.358
12/31/84 10000 1955 9755 19755 0 8055 34 8089 9934 18023.04 1460.538
12/31/85 10000 2199 11954 21954 0 9145 38 9183 13635 22818.75 1628.747
12/31/86 10000 2455 14409 24409 714 9275 751 10026 16253 26279.83 1849.390
12/31/87 10000 2580 16989 26989 0 8577 695 9272 17523 26795.09 2039.200
12/31/88 10000 2693 19682 29682 0 8642 700 9342 20320 29662.95 2240.404
12/31/89 10000 3047 22729 32729 0 8636 700 9336 23331 32667.52 2469.200
12/31/90 10000 3201 25930 35930 0 8087 655 8742 24993 33735.05 2722.764
12/31/91 10000 3345 29275 39275 0 8943 725 9668 31165 40833.85 2980.573
12/31/92 10000 3595 32870 42870 128 9132 868 10000 35464 45464.04 3249.753
12/31/93 10000 3631 36501 46501 1352 9432 2247 11679 40212 51891.41 3591.101
12/31/94 10000 3906 40407 50407 0 8283 1974 10257 39031 49288.67 3884.056
12/31/95 10000 4211 44618 54618 0 9060 2159 11219 47064 58283.51 4199.100
TOTAL $ 2233
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE BOND FUND OF AMERICA, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/79 10000.00 14.28 4.75 % 700.280 13.600 9524
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/79 10000 935 935 10935 0 8929 0 8929 894 9823.47 770.468
12/31/80 10000 1152 2087 12087 0 8221 0 8221 1950 10171.28 866.378
12/31/81 10000 1415 3502 13502 0 7633 0 7633 3213 10846.90 995.128
12/31/82 10000 1626 5128 15128 0 8880 0 8880 5535 14415.73 1136.887
12/31/83 10000 1707 6835 16835 0 8690 0 8690 7089 15779.67 1271.529
12/31/84 10000 1916 8751 18751 0 8641 0 8641 9023 17664.23 1431.461
12/31/85 10000 2155 10906 20906 0 9811 0 9811 12553 22364.46 1596.321
12/31/86 10000 2407 13313 23313 699 9951 698 10649 15107 25756.63 1812.571
12/31/87 10000 2530 15843 25843 0 9202 646 9848 16413 26261.66 1998.604
12/31/88 10000 2641 18484 28484 0 9272 651 9923 19149 29072.43 2195.803
12/31/89 10000 2986 21470 31470 0 9265 650 9915 22102 32017.17 2420.043
12/31/90 10000 3138 24608 34608 0 8676 609 9285 23778 33063.41 2668.556
12/31/91 10000 3279 27887 37887 0 9594 673 10267 29753 40020.84 2921.229
12/31/92 10000 3523 31410 41410 126 9797 814 10611 33947 44558.84 3185.049
12/31/93 10000 3556 34966 44966 1325 10119 2164 12283 38575 50858.25 3519.602
12/31/94 10000 3830 38796 48796 0 8887 1900 10787 37520 48307.35 3806.726
12/31/95 10000 4126 42922 52922 0 9720 2079 11799 45324 57123.13 4115.499
TOTAL $ 2150
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE BOND FUND OF AMERICA, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/80 10000.00 13.39 4.75 % 746.826 12.750 9522
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/80 10000 1116 1116 11116 0 8768 0 8768 1091 9859.17 839.793
12/31/81 10000 1371 2487 12487 0 8140 0 8140 2374 10514.06 964.593
12/31/82 10000 1577 4064 14064 0 9470 0 9470 4503 13973.41 1102.004
12/31/83 10000 1655 5719 15719 0 9268 0 9268 6027 15295.51 1232.515
12/31/84 10000 1857 7576 17576 0 9216 0 9216 7906 17122.24 1387.540
12/31/85 10000 2089 9665 19665 0 10463 0 10463 11215 21678.26 1547.342
12/31/86 10000 2333 11998 21998 678 10612 677 11289 13677 24966.40 1756.960
12/31/87 10000 2451 14449 24449 0 9813 626 10439 15016 25455.95 1937.287
12/31/88 10000 2559 17008 27008 0 9888 631 10519 17661 28180.52 2128.438
12/31/89 10000 2894 19902 29902 0 9881 630 10511 20523 31034.92 2345.799
12/31/90 10000 3041 22943 32943 0 9253 590 9843 22206 32049.09 2586.690
12/31/91 10000 3176 26119 36119 0 10232 653 10885 27908 38793.08 2831.612
12/31/92 10000 3415 29534 39534 122 10448 789 11237 31954 43191.89 3087.340
12/31/93 10000 3447 32981 42981 1285 10792 2097 12889 36409 49298.04 3411.629
12/31/94 10000 3710 36691 46691 0 9477 1842 11319 35506 46825.41 3689.946
12/31/95 10000 4001 40692 50692 0 10366 2015 12381 42989 55370.71 3989.244
TOTAL $ 2085
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE BOND FUND OF AMERICA, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/81 10000.00 12.33 4.75 % 811.030 11.740 9521
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/81 10000 1324 1324 11324 0 8840 0 8840 1313 10153.96 931.556
12/31/82 10000 1522 2846 12846 0 10284 0 10284 3210 13494.80 1064.259
12/31/83 10000 1598 4444 14444 0 10065 0 10065 4706 14771.61 1190.299
12/31/84 10000 1794 6238 16238 0 10008 0 10008 6527 16535.79 1340.015
12/31/85 10000 2018 8256 18256 0 11363 0 11363 9572 20935.76 1494.344
12/31/86 10000 2252 10508 20508 655 11525 654 12179 11932 24111.19 1696.776
12/31/87 10000 2368 12876 22876 0 10657 605 11262 13321 24583.92 1870.922
12/31/88 10000 2471 15347 25347 0 10738 609 11347 15868 27215.10 2055.521
12/31/89 10000 2796 18143 28143 0 10730 609 11339 18632 29971.73 2265.437
12/31/90 10000 2936 21079 31079 0 10049 570 10619 20332 30951.14 2498.074
12/31/91 10000 3069 24148 34148 0 11111 630 11741 25723 37464.09 2734.605
12/31/92 10000 3299 27447 37447 118 11346 762 12108 29604 41712.19 2981.572
12/31/93 10000 3329 30776 40776 1241 11719 2026 13745 33864 47609.17 3294.752
12/31/94 10000 3584 34360 44360 0 10292 1779 12071 33150 45221.26 3563.535
12/31/95 10000 3863 38223 48223 0 11257 1946 13203 40270 53473.81 3852.580
TOTAL $ 2014
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE BOND FUND OF AMERICA, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/82 10000.00 11.44 4.75 % 874.126 10.900 9528
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/82 10000 1428 1428 11428 0 11084 0 11084 1578 12662.84 998.647
12/31/83 10000 1500 2928 12928 0 10848 0 10848 3012 13860.94 1116.917
12/31/84 10000 1683 4611 14611 0 10787 0 10787 4729 15516.33 1257.401
12/31/85 10000 1894 6505 16505 0 12247 0 12247 7398 19645.03 1402.215
12/31/86 10000 2114 8619 18619 614 12421 614 13035 9589 22624.75 1592.171
12/31/87 10000 2222 10841 20841 0 11486 567 12053 11015 23068.36 1755.583
12/31/88 10000 2319 13160 23160 0 11573 572 12145 13392 25537.35 1928.803
12/31/89 10000 2623 15783 25783 0 11565 571 12136 15988 28124.02 2125.776
12/31/90 10000 2756 18539 28539 0 10830 535 11365 17678 29043.06 2344.073
12/31/91 10000 2879 21418 31418 0 11976 592 12568 22586 35154.53 2566.024
12/31/92 10000 3094 24512 34512 111 12229 715 12944 26196 39140.73 2797.765
12/31/93 10000 3124 27636 37636 1164 12631 1901 14532 30142 44674.18 3091.639
12/31/94 10000 3365 31001 41001 0 11093 1669 12762 29671 42433.49 3343.853
12/31/95 10000 3628 34629 44629 0 12133 1826 13959 36218 50177.30 3615.079
TOTAL $ 1889
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE BOND FUND OF AMERICA, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/83 10000.00 13.31 4.75 % 751.315 12.680 9527
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/83 10000 1128 1128 11128 0 9324 0 9324 1104 10428.02 840.292
12/31/84 10000 1266 2394 12394 0 9271 0 9271 2402 11673.43 945.983
12/31/85 10000 1425 3819 13819 0 10526 0 10526 4253 14779.60 1054.932
12/31/86 10000 1592 5411 15411 462 10676 462 11138 5883 17021.31 1197.840
12/31/87 10000 1670 7081 17081 0 9872 427 10299 7056 17355.01 1320.777
12/31/88 10000 1745 8826 18826 0 9947 430 10377 8835 19212.55 1451.099
12/31/89 10000 1974 10800 20800 0 9940 430 10370 10788 21158.58 1599.288
12/31/90 10000 2073 12873 22873 0 9309 402 9711 12138 21849.98 1763.517
12/31/91 10000 2166 15039 25039 0 10293 445 10738 15709 26447.78 1930.495
12/31/92 10000 2328 17367 27367 83 10511 538 11049 18397 29446.71 2104.840
12/31/93 10000 2351 19718 29718 876 10856 1430 12286 21323 33609.69 2325.930
12/31/94 10000 2531 22249 32249 0 9534 1256 10790 21133 31923.95 2515.678
12/31/95 10000 2727 24976 34976 0 10428 1374 11802 25947 37749.87 2719.731
TOTAL $ 1421
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE BOND FUND OF AMERICA, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/84 10000.00 13.03 4.75 % 767.460 12.410 9524
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/84 10000 1155 1155 11155 0 9470 0 9470 1191 10661.64 863.990
12/31/85 10000 1302 2457 12457 0 10752 0 10752 2746 13498.56 963.495
12/31/86 10000 1458 3915 13915 422 10906 422 11328 4218 15546.01 1094.019
12/31/87 10000 1528 5443 15443 0 10084 390 10474 5376 15850.83 1206.304
12/31/88 10000 1597 7040 17040 0 10161 393 10554 6993 17547.33 1325.327
12/31/89 10000 1803 8843 18843 0 10153 393 10546 8778 19324.69 1460.672
12/31/90 10000 1894 10737 20737 0 9509 368 9877 10079 19956.20 1610.670
12/31/91 10000 1979 12716 22716 0 10514 406 10920 13235 24155.51 1763.176
12/31/92 10000 2127 14843 24843 76 10737 491 11228 15666 26894.54 1922.412
12/31/93 10000 2146 16989 26989 800 11090 1306 12396 18300 30696.70 2124.339
12/31/94 10000 2311 19300 29300 0 9739 1147 10886 18271 29157.04 2297.639
12/31/95 10000 2491 21791 31791 0 10652 1255 11907 22570 34477.96 2484.003
TOTAL $ 1298
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE BOND FUND OF AMERICA, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/85 10000.00 12.96 4.75 % 771.605 12.340 9522
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/85 10000 1162 1162 11162 0 10810 0 10810 1245 12055.18 860.470
12/31/86 10000 1297 2459 12459 377 10965 377 11342 2541 13883.71 977.038
12/31/87 10000 1362 3821 13821 0 10139 348 10487 3668 14155.93 1077.316
12/31/88 10000 1423 5244 15244 0 10216 351 10567 5104 15671.04 1183.613
12/31/89 10000 1606 6850 16850 0 10208 351 10559 6699 17258.35 1304.486
12/31/90 10000 1691 8541 18541 0 9560 328 9888 7934 17822.32 1438.444
12/31/91 10000 1767 10308 20308 0 10571 363 10934 10638 21572.61 1574.643
12/31/92 10000 1902 12210 22210 68 10795 439 11234 12784 24018.77 1716.853
12/31/93 10000 1919 14129 24129 714 11150 1166 12316 15098 27414.37 1897.188
12/31/94 10000 2063 16192 26192 0 9792 1024 10816 15223 26039.32 2051.956
12/31/95 10000 2225 18417 28417 0 10710 1120 11830 18961 30791.32 2218.395
TOTAL $ 1159
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE BOND FUND OF AMERICA, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/86 10000.00 14.71 4.75 % 679.810 14.010 9524
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/86 10000 1025 1025 11025 298 9660 297 9957 1011 10968.76 771.904
12/31/87 10000 1078 2103 12103 0 8933 275 9208 1975 11183.82 851.128
12/31/88 10000 1124 3227 13227 0 9001 277 9278 3102 12380.83 935.108
12/31/89 10000 1272 4499 14499 0 8994 277 9271 4363 13634.90 1030.605
12/31/90 10000 1336 5835 15835 0 8423 259 8682 5398 14080.49 1136.440
12/31/91 10000 1396 7231 17231 0 9313 287 9600 7443 17043.42 1244.045
12/31/92 10000 1501 8732 18732 54 9511 347 9858 9117 18975.99 1356.397
12/31/93 10000 1514 10246 20246 564 9823 922 10745 10913 21658.69 1498.871
12/31/94 10000 1630 11876 21876 0 8627 809 9436 11136 20572.37 1621.148
12/31/95 10000 1759 13635 23635 0 9436 885 10321 14005 24326.66 1752.641
TOTAL $ 916
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE BOND FUND OF AMERICA, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/87 10000.00 14.92 4.75 % 670.241 14.210 9524
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/87 10000 934 934 10934 0 8807 0 8807 903 9710.87 739.031
12/31/88 10000 977 1911 11911 0 8874 0 8874 1876 10750.19 811.948
12/31/89 10000 1104 3015 13015 0 8867 0 8867 2972 11839.09 894.867
12/31/90 10000 1161 4176 14176 0 8304 0 8304 3921 12225.98 986.762
12/31/91 10000 1214 5390 15390 0 9182 0 9182 5616 14798.64 1080.193
12/31/92 10000 1302 6692 16692 47 9377 47 9424 7052 16476.67 1177.746
12/31/93 10000 1316 8008 18008 490 9685 537 10222 8584 18806.02 1301.455
12/31/94 10000 1416 9424 19424 0 8505 472 8977 8885 17862.77 1407.626
12/31/95 10000 1526 10950 20950 0 9303 516 9819 11303 21122.60 1521.801
TOTAL $ 537
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE BOND FUND OF AMERICA, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/88 10000.00 13.80 4.75 % 724.638 13.140 9522
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/88 10000 957 957 10957 0 9594 0 9594 946 10540.85 796.137
12/31/89 10000 1083 2040 12040 0 9587 0 9587 2021 11608.54 877.441
12/31/90 10000 1138 3178 13178 0 8978 0 8978 3009 11987.92 967.548
12/31/91 10000 1190 4368 14368 0 9928 0 9928 4582 14510.53 1059.163
12/31/92 10000 1276 5644 15644 46 10138 46 10184 5971 16155.89 1154.817
12/31/93 10000 1289 6933 16933 481 10471 527 10998 7441 18439.92 1276.119
12/31/94 10000 1388 8321 18321 0 9196 463 9659 7856 17515.00 1380.221
12/31/95 10000 1496 9817 19817 0 10058 506 10564 10147 20711.32 1492.170
TOTAL $ 527
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE BOND FUND OF AMERICA, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/89 10000.00 13.90 4.75 % 719.424 13.240 9525
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/89 10000 979 979 10979 0 9518 0 9518 971 10489.99 792.894
12/31/90 10000 1027 2006 12006 0 8914 0 8914 1918 10832.80 874.318
12/31/91 10000 1075 3081 13081 0 9856 0 9856 3256 13112.30 957.102
12/31/92 10000 1154 4235 14235 41 10065 41 10106 4493 14599.14 1043.541
12/31/93 10000 1165 5400 15400 434 10396 476 10872 5791 16663.05 1153.152
12/31/94 10000 1255 6655 16655 0 9129 418 9547 6280 15827.30 1247.226
12/31/95 10000 1352 8007 18007 0 9986 457 10443 8272 18715.68 1348.392
TOTAL $ 475
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE BOND FUND OF AMERICA, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/90 10000.00 13.89 4.75 % 719.942 13.230 9525
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/90 10000 934 934 10934 0 8920 0 8920 916 9836.09 793.873
12/31/91 10000 975 1909 11909 0 9863 0 9863 2042 11905.89 869.043
12/31/92 10000 1048 2957 12957 37 10072 37 10109 3146 13255.94 947.530
12/31/93 10000 1058 4015 14015 394 10403 432 10835 4294 15129.97 1047.057
12/31/94 10000 1139 5154 15154 0 9136 380 9516 4855 14371.10 1132.474
12/31/95 10000 1227 6381 16381 0 9993 415 10408 6585 16993.71 1224.331
TOTAL $ 431
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE BOND FUND OF AMERICA, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/91 10000.00 13.01 4.75 % 768.640 12.390 9523
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/91 10000 945 945 10945 0 10530 0 10530 997 11527.44 841.419
12/31/92 10000 1016 1961 11961 36 10753 36 10789 2045 12834.57 917.410
12/31/93 10000 1024 2985 12985 382 11107 419 11526 3123 14649.03 1013.774
12/31/94 10000 1103 4088 14088 0 9754 368 10122 3792 13914.27 1096.475
12/31/95 10000 1189 5277 15277 0 10669 402 11071 5382 16453.52 1185.412
TOTAL $ 418
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE BOND FUND OF AMERICA, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/92 10000.00 14.38 4.75 % 695.410 13.700 9527
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/92 10000 838 838 10838 30 9729 30 9759 848 10607.43 758.215
12/31/93 10000 846 1684 11684 316 10049 346 10395 1712 12107.00 837.855
12/31/94 10000 912 2596 12596 0 8825 304 9129 2370 11499.75 906.206
12/31/95 10000 982 3578 13578 0 9652 332 9984 3614 13598.36 979.709
TOTAL $ 346
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE BOND FUND OF AMERICA, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/93 10000.00 14.69 4.75 % 680.735 13.990 9523
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/93 10000 759 759 10759 283 9837 283 10120 749 10869.84 752.238
12/31/94 10000 818 1577 11577 0 8639 248 8887 1437 10324.65 813.605
12/31/95 10000 882 2459 12459 0 9449 272 9721 2487 12208.82 879.598
TOTAL $ 283
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE BOND FUND OF AMERICA, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/94 10000.00 15.17 4.75 % 659.196 14.450 9525
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/94 10000 718 718 10718 0 8365 0 8365 682 9047.60 712.971
12/31/95 10000 773 1491 11491 0 9150 0 9150 1548 10698.70 770.800
TOTAL $ 0
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE BOND FUND OF AMERICA, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/95 10000.00 13.32 4.75 % 750.751 12.690 9527
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/95 10000 814 814 10814 0 10420 0 10420 845 11265.65 811.646
TOTAL $ 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-1-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 6,065,574
<INVESTMENTS-AT-VALUE> 6,223,966
<RECEIVABLES> 115,221
<ASSETS-OTHER> 2,703
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 6,341,890
<PAYABLE-FOR-SECURITIES> 35,924
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 15,790
<TOTAL-LIABILITIES> 51,714
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 5,714,717
<SHARES-COMMON-STOCK> 453,215,186
<SHARES-COMMON-PRIOR> 389,436,473
<ACCUMULATED-NII-CURRENT> 14,704
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (42,020)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 158,392
<NET-ASSETS> 6,290,176
<DIVIDEND-INCOME> 1,001
<INTEREST-INCOME> 482,948
<OTHER-INCOME> 0
<EXPENSES-NET> 41,531
<NET-INVESTMENT-INCOME> 442,418
<REALIZED-GAINS-CURRENT> (13,362)
<APPREC-INCREASE-CURRENT> 506,227
<NET-CHANGE-FROM-OPS> 492,865
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 438,147
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 119,215,625
<NUMBER-OF-SHARES-REDEEMED> 78,844,004
<SHARES-REINVESTED> 23,407,092
<NET-CHANGE-IN-ASSETS> 63,778,713
<ACCUMULATED-NII-PRIOR> 10,433
<ACCUMULATED-GAINS-PRIOR> (35,644)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 20,858
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 41,531
<AVERAGE-NET-ASSETS> 5,620,886
<PER-SHARE-NAV-BEGIN> 12.69
<PER-SHARE-NII> 1.05
<PER-SHARE-GAIN-APPREC> 1.18
<PER-SHARE-DIVIDEND> 1.04
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.88
<EXPENSE-RATIO> .007
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
