[The American Funds Group(r)]
ANNUAL REPORT
THE BOND FUND OF AMERICA
For the year ended December 31, 1998
[cover photo: various currency]
THE BOND FUND OF AMERICA(SM)
Seeks as high a level of current income as is consistent with preservation of
capital through a diversified portfolio of bonds and other fixed-income
obligations.
BFA is one of the 28 mutual funds in The American Funds Group,(r) managed by
Capital Research and Management Company. Since 1931, Capital has invested with
a long-term focus based on thorough research and attention to risk.
RESULTS AT A GLANCE
assuming distributions reinvested or interest compounded for periods ended
December 31, 1998
Average Annual Compound Returns
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Lifetime
1998 5 years 10 years (since 5/28/74)
The Bond Fund of America +5.2% +6.6% +9.2% +10.2%
Lehman Brothers Aggregate +8.7 +7.3 +9.3 +9.7/1/
Bond Index
Rank vs. comparable 144th of 158 33rd of 82 10th of 41 2nd of 17
funds/2/
Average savings +4.2 +4.0 +4.8 +6.6
institution/3/
Consumer Price Index/4/ +1.6 +2.4 +3.1 +5.1
</TABLE>
/1/The Lehman Brothers Aggregate Bond Index began on January 1, 1976. From May
31, 1974, through December 31, 1975, the Lehman Brothers Government/Corporate
Bond Index was used. These indexes serve as a proxy for the broad U.S.
investment-grade bond market and are unmanaged.
/2/BFA's rank based on total return vs. corporate A-rated bond funds, according
to Lipper Analytical Services. Lipper rankings do not include the effects of
sales charges.
/3/Based on figures from the U.S. League of Savings Institutions and the
Federal Reserve Board, reflecting all kinds of savings deposits (maximum
allowable interest rates imposed by law until 1983). Savings accounts are
guaranteed; the fund is not.
/4/Computed from data supplied by the U.S. Department of Labor, Bureau of Labor
Statistics.
Fund results in this report were computed without a sales charge unless
otherwise indicated. The fund's 30-day yield as of January 31, 1999, calculated
in accordance with the Securities and Exchange Commission formula, was 6.47%.
FIGURES SHOWN ARE PAST RESULTS. SHARE PRICE AND RETURN WILL VARY, SO YOU MAY
LOSE MONEY. INVESTING FOR SHORT PERIODS MAKES LOSSES MORE LIKELY. INVESTMENTS
ARE NOT FDIC-INSURED, NOR ARE THEY DEPOSITS OF OR GUARANTEED BY A BANK OR ANY
OTHER ENTITY.
PREPARING FOR THE YEAR 2000
The fund's key service providers - Capital Research and Management Company, the
investment adviser, and American Funds Service Company, the transfer agent -
have updated all significant computer systems to process date-related
information properly following the turn of the century. Testing of these and
other systems with business partners, vendors and other service providers will
continue through much of 1999. We will continue to keep you up to date in our
regular publications. If you'd like more detailed information, call Shareholder
Services at 800/421-0180, ext. 21, or visit our Web site at
www.americanfunds.com.
FELLOW SHAREHOLDERS:
Calendar 1998 was unusual for the wide range of returns among different types
of bonds. On the upside, U.S. Treasury securities were the darlings of
investors seeking the relative safety of dollar-denominated government bonds.
However, no other sector of the bond market - not even federal agency
obligations - was able to match Treasury gains. Mortgage-backed securities rose
modestly in price, but higher yielding bonds and emerging markets obligations
declined, reflecting the economic uncertainties generated by the economic
crises in Asia and Russia.
That disparity was reflected in The Bond Fund of America's 12-month results.
The fund, which invests in a wider range of securities than many of its peers,
had a 5.2% total return for the year. That lagged both the 8.7% increase in the
Lehman Brothers Aggregate Bond Index and the 7.5% average return of the 158
corporate A-rated bond funds tracked by Lipper Analytical Services. Over
longer, more meaningful periods, though, the fund has provided exceptional
returns for shareholders. Since beginning operations on May 28, 1974, The Bond
Fund of America's 989.5% total return - 10.2% annualized - has outpaced both
the Lehman index and the Lipper average for the same period. Over its lifetime,
it ranks second among comparable funds, as the table opposite shows.
As investors continued to bid up prices of U.S. Treasury securities, and with a
global financial crisis throwing business growth in doubt, many other issues -
particularly those at the lower end of the credit spectrum - retreated sharply.
(By way of comparison, the average high-yield bond fund declined 0.1% for the
year, according to Lipper.) The downturn was indiscriminate, taking many
fundamentally healthy issuers with it; matters worsened when a noted hedge fund
was forced to sell off large positions to cover its losses. After the Federal
Reserve cut short-term interest rates three times in the fall in an effort to
stabilize credit markets, most sectors of the bond market rallied in November,
recovering at least part of their earlier declines.
Throughout these market movements, your fund continued to produce a generous
stream of current income. Shareholders who reinvested their monthly dividends
totaling 95 cents a share had an income return of 7.0%. Due to the decline in
bond prices, however, the fund's net asset value fell to $13.61 from $14.00 a
year ago, resulting in the total return (dividends plus appreciation) of 5.2%.
At the end of 1998, BFA held securities worth $9.5 billion. Corporate issues
account for about 60% of the portfolio. Most are top-grade bonds, but roughly
24% of net assets are invested in lower rated instruments that offer higher
yields to compensate for greater risk. Over the years, these securities have
made important contributions to the fund's long-term results, and we believe
that they will continue to do so.
One of the advantages of a long-term perspective is that it allows us to make
carefully reasoned judgments about events that may influence different sectors
of the bond market. Our convictions are bolstered by considerable research into
the health and prospects of individual issuers. In a number of cases, the broad
declines in the fall brought promising securities within an attractive price
range. During the year, we also reduced our exposure to U.S. Treasury
securities and added to holdings in other sectors we believe offered better
value, such as mortgage- and asset-backed securities.
Looking forward, the U.S. economic expansion, now in its eighth year, shows few
signs of subsiding. While we are cautiously optimistic, the fits and starts of
the past year may have been a shot across the bow, a warning sign about what
lies ahead. It is also difficult to predict how other global events might
influence the economic outlook and the prospect for bonds. As always, we will
continue to monitor these events and ultimately act on what we believe is most
appropriate for shareholders.
On the following pages, we invite you to meet a BFA shareholder family making
the fund part of its long-term financial plans. We look forward to reporting to
you again in six months.
Cordially,
/s/Paul G. Haaga, Jr.
Paul G. Haaga, Jr.
Chairman of the Board
/s/Abner D. Goldstine
Abner D. Goldstine
President
February 16, 1999
[Begin Sidebar]
Here's how a $10,000 investment grew between May 28, 1974 - when The Bond Fund
of America began operations - and December 31, 1998, the end of its latest
fiscal year.
Unlike figures presented earlier in the report, the fund's results in this
chart reflect payment of the maximum sales charge of 4.75%, so the net amount
invested was $9,525 vs. $10,000 in the Lehman Brothers Aggregate Bond Index,
which is unmanaged and has no sales charges, commissions or expenses.
As you can see, the investment in The Bond Fund of America would have grown to
$103,771 vs. $97,410 in the Lehman index.
[End Sidebar]
HOW A $10,000 INVESTMENT HAS GROWN
OVER THE FUND'S 24-YEAR LIFETIME
From May 28, 1974, when the fund began operations, through December 31, 1998
Average Annual Compound Returns
(for periods ended December 31, 1998)
10 Years +8.66%
5 Years +5.58%
1 Year +0.16%
Assumes reinvestment of all distributions and
payment of the maximum 4.75% sales charge
at the beginning of the stated periods.
$103,771/1//2/
BFA with
dividends reinvested
$97,410/3/
Lehman Brothers
Aggregate Bond Index
$33,724/4/
Consumer Price Index
$10,000/1/
original investment
[chart]
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Year ended 1974* 1975 1976 1977 1978 1979 1980 1981 1982 1983
December 31
TOTAL VALUE
Dividends $413 897 1,010 1,114 1,198 1,387 1,706 2,096 2,408 2,529
Reinvested
Value at $9,884 11,137 13,154 13,831 14,112 14,556 15,072 16,073 21,361 23,382
Year-End/1/
BFA's Total (1.2)% 12.7 18.1 5.1 2.0 3.1 3.5 6.6 32.9 9.5
Return
Year ended 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993
December 31
TOTAL VALUE
Dividends 2,838 3,193 3,566 3,746 3,912 4,425 4,650 4,859 5,221 5,269
Reinvested
Value at 26,175 33,140 38,166 38,915 43,080 47,443 48,993 59,303 66,028 75,362
Year-End/1/
BFA's Total 11.9 26.6 15.2 2.0 10.7 10.1 3.3 21.0 11.3 14.1
Return
Year ended 1994 1995 1996 1997 1998
December 31
TOTAL VALUE
Dividends 5,673 6,112 6,405 6,635 6,933
Reinvested
Value at 71,582 84,645 90,323 98,670 103,771
Year-End/1/
BFA's Total (5.0) 18.2 6.7 9.2 5.2
Return
</TABLE>
<TABLE>
<CAPTION>
Year ended Dec. 31 Lehman Brothers Consumer Price
Aggregate Bond Index /3/ Index
<S> <C> <C>
May 28, 1974 10,000 10,000
1974* 10,318 10,679
1975 11,587 11,420
1976 13,395 11,975
1977 13,802 12,778
1978 13,994 13,930
1979 14,264 15,782
1980 14,650 17,757
1981 15,565 19,342
1982 20,643 20,082
1983 22,368 20,844
1984 25,756 21,667
1985 31,449 22,490
1986 36,251 22,737
1987 37,248 23,745
1988 40,186 24,794
1989 46,026 25,946
1990 50,149 27,531
1991 58,174 28,374
1992 62,480 29,197
1993 68,571 30,000
1994 66,571 30,802
1995 78,870 31,584
1996 81,733 32,634
1997 89,624 33,189
1998 97,410 33,724
</TABLE>
[end chart]
Average annual compound return for 24-1/2 years: 9.98%/1/
*For the period May 28 through December 31, 1974.
/1/Results reflect payment of the maximum sales charge of 4.75% on the $10,000
investment. Thus, the net amount invested was $9,525. As outlined in the
prospectus, the sales charge is reduced for larger investments.
/2/Includes reinvested dividends of $88,195 and reinvested capital gain
distributions of $4,524.
/3/From May 31, 1974, through December 31, 1975, the Lehman Brothers
Government/Corporate Bond Index was used because the Lehman Brothers Aggregate
Bond Index did not yet exist. Since January 1, 1976, the Lehman Brothers
Aggregate Bond Index has been used.
/4/Computed from data supplied by the U.S. Department of Labor, Bureau of Labor
Statistics.
Past results are not predictive of future results.
DEVELOPING A GAME PLAN
For one shareholder family, The Bond Fund of America plays many roles.
[photos: Matt Blundin holding a football and sitting on couch with Ethan; the
Blundin family and dog on a walk; mailbox]
BFA's large family of shareholder accounts - now nearly 300,000 strong -
comprises a diverse group of individuals, businesses, foundations and
charities. Each has unique circumstances, goals and objectives. Some invest in
the fund to finance future needs, such as a college education, a new home or
retirement. Some use all or part of the fund's current income to help meet
daily expenses. Many look to the relative stability of bonds to add balance to
a portfolio of stocks. Quite a few shareholders, in fact, rely on BFA to help
them fulfill multiple goals.
That's certainly the case with Matt and Amy Blundin, a young couple taking the
first steps down the path to investing.
The Blundins live in Crozet, Virginia, a quiet but rapidly growing town nestled
at the foot of the Blue Ridge Mountains. Notable for its winding roads,
striking vistas and an unusual pizza parlor with a two-day waiting list, it is
a landscape that Matt and Amy cherish. They met nearly 10 years ago in nearby
Charlottesville, as students at the University of Virginia. They recently
returned here with their son, Ethan, after Matt ended his six-year professional
football career.
These days, Matt is embarking on an arguably tougher job: working toward a
masters of teaching degree in high school math. Amy, meanwhile, tries to keep
up with Ethan, a rambunctious 16-month-old who seems to move at the speed of
light. She is also preparing for the imminent arrival of Ethan's new brother or
sister.
Once a quarterback for the Kansas City Chiefs and the Detroit Lions, Matt's
football salary provided Amy and him with a solid base from which to plan their
future. Because they are still young, they have several time frames to
consider. They have made BFA a part of their short-, intermediate- and
long-term game plans. Thus far, they have been pleased with the results.
SHORT-TERM GOAL: INVESTING FOR HIGH CURRENT INCOME
[photos: Matt and Amy Blundin; the Blundin family]
When Matt returned to student life last year, he and Amy needed a steady source
of income to tide them over. Although Matt volunteers as a football coach at a
new high school in Charlottesville, he is not earning a salary at the moment.
"We're not extravagant people," Amy stresses, "but we wanted to maintain a
reasonably comfortable lifestyle while Matt was studying and later on when he
starts teaching. Fortunately, we knew this day was coming, so we could
prepare."
The Blundins talk regularly with their financial adviser about their investment
goals. On his recommendation, they chose to invest a portion of their assets
in bonds for current income. He told them that the interest from bonds has
typically been more stable - and a good deal higher - than income from
short-term instruments such as CDs. Bond funds, meanwhile, offered the
convenience of monthly dividend payments and the benefits of a diversified,
actively managed portfolio. Of course, unlike bonds and bond funds, CDs offer a
guaranteed return of principal if held to maturity and a fixed rate of return
for a specified period.
The Blundins are currently taking their BFA dividends in cash. Like most bond
investments, nearly all of BFA's return over longer periods has come from
interest paid out as dividends - and for shareholders who reinvest their
dividends, the interest on that interest. As the table opposite shows,
dividends from BFA have generated a higher, more stable income stream than CDs.
The fund's income return has also comfortably outpaced the rate of inflation.
When Matt graduates next year, he and Amy plan to reinvest all of their
dividends in additional shares. That way, their future income can grow as the
number of shares working for them grows. There's an added benefit: Because the
fund also emphasizes capital preservation, shareholders have had a relatively
stable base of capital working for them over time. As a result, BFA has
delivered more income over the long haul than many funds that have at times
offered higher current yields.
BFA's dividends are not fixed in stone, of course. They change over time as the
bonds in the portfolio mature or are sold and replaced by bonds with different
yields. Nonetheless, the fund's managers strive to avoid short-run fluctuations
in dividends. That can be enormously reassuring for people relying on regular
payouts to help meet expenses.
[Begin Sidebar]
BFA'S ANNUAL INCOME
One of the rewards of investing for income is that it generates even more
income when it's reinvested regularly. This chart shows how much income was
produced in each of the past 24 years by a $10,000 investment in BFA and by
$10,000 in CDs* that were rolled over every six months. It assumes that all
dividends and interest were reinvested, so investors had more and more money
working for them as those payments compounded. As you can see, in most years
not only did investors receive more income from the fund, but the flow was much
more stable. By the end of 1998, the cumulative income from the BFA investment
totaled $88,820, while the income from CDs came to $52,745.
BFA VS. CDS
(annual income on $10,000 invested in 1974)
[Begin bar chart]
<TABLE>
<CAPTION>
<S> <C> <C>
Year BFA CDs
1975 907 767
1976 1,021 704
1977 1,126 604
1978 1,212 934
1979 1,402 1,420
1980 1,725 1,610
1981 2,122 2,772
1982 2,438 2,698
1983 2,560 2,007
1984 2,873 2,634
1985 3,232 2,192
1986 3,608 2,095
1987 3,792 2,026
1988 3,960 2,541
1989 4,476 3,289
1990 4,704 3,204
1991 4,915 2,934
1992 5,282 1,881
1993 5,332 1,614
1994 5,739 1,984
1995 6,185 3,188
1996 6,482 2,996
1997 6,712 3,200
1998 7,015 3,449
</TABLE>
[End chart]
($ in thousands)
*Although certificates of deposit offer no opportunity for growth, they do
offer a guaranteed return of principal and fixed rate of interest for specified
periods. The fund's share price, meanwhile, fluctuates, and there are no
guarantees that past results will be repeated in the future.
[End Sidebar]
INTERMEDIATE GOAL: CAPITALIZING ON THE "MAGIC" OF COMPOUNDING
[photos: Matt and Amy looking over their finances; Amy reading to Ethan]
In addition to using dividends to pay bills, the Blundins have also turned to
BFA to help them meet one of their intermediate goals: their children's
education. "Ethan's college tuition may be as high as $60,000 a year," notes
Matt, "so we knew we had to get an early start. We also wanted a fairly
conservative investment that could grow steadily until we were ready to begin
using the money." The Blundins have set up college funds for Ethan and his
future sibling, with BFA in the portfolio along with another American Fund that
invests in stocks. Planning ahead means that their investment can benefit from
compounding, which should make an enormous difference over time.
Albert Einstein is alleged to have called compounding interest "the eighth
wonder of the world." He was referring to the seemingly magical momentum built
up by interest earning interest over long periods. By way of example, a dollar
that earns 10% annually will grow to $1.61 in five years, $2.59 in 10 years and
$6.73 in 20 years, with the greatest part of the increase occurring in the last
few years. By contrast, if you had collected your interest in cash and not
spent it, your original dollar would have grown to a total of $3.00.
Shareholders who have reinvested their dividends, as most do, have seen their
income from BFA compound to create impressive long-term returns. Despite the
ups and downs of bond prices, an investment in the fund with dividends
reinvested over its lifetime has gone up in value every year but one, an
accomplishment illustrated by the mountain chart on page 2. It shows that
$10,000 invested at the fund's inception in May 1974 would have grown to
$103,771 at the end of 1998. Dividends, reinvested and compounded over time,
account for virtually all of that growth.
The "magic" of compounding is nothing more complicated than the combination of
time and a positive rate of return. Still, the longer the time frame or the
higher the return, the greater the ultimate impact. The Blundins have made both
time and BFA a part of their game plan to help offset the rising cost of
college.
"Then again," jokes Amy, watching Ethan roughhouse with their black Labrador,
Scout, "$football' was one of Ethan's first words, and he already knows the
hand signal for $touchdown.' Maybe we won't need to pay for college after all."
LONG-TERM GOAL: BALANCING AN OVERALL INVESTMENT PORTFOLIO
Unlike most working people, athletes tend to reach their peak earning years in
their 20s and 30s. "At my age, it's difficult to think about what you're going
to live on in your 60s and 70s," Matt admits, "but I've seen a lot of my former
colleagues squander their earnings when they were young, only to run into
trouble later on." Their examples motivated him to plan ahead.
Sports figures may be an extreme example, but with life expectancies on the
rise, most of us will have to plan for a retirement that may last considerably
longer than our earning years. While investors usually rely on stock funds for
their superior potential for long-term growth, they often choose to round out
their retirement portfolios with bond funds, a practice known as "asset
allocation."
Although a balance of stocks and bonds won't eliminate the risk that the value
of your account could go down, it can reduce the possibility that severe
fluctuations will impede the progress of your overall portfolio. Bond prices
typically fluctuate less than stock prices. What's more, because they respond
somewhat differently to economic circumstances, they frequently move in
different directions from stocks, reducing overall volatility.
Likewise, the Blundins are concentrating their retirement plan assets in stocks
and stock funds but are also keeping a fairly sizable portion in BFA. They
don't plan to touch the money for several decades, giving them the time - and
discipline - to take advantage of upswings in both stocks and bonds, as well as
ride out the inevitable dips along the way.
Keeping a long-term perspective is a lesson Matt learned well during his
football years. "A team's ultimate goal is winning the championship. When the
season starts, you know that you'll win some games and lose some. But you also
know that if you develop a sensible strategy and stay the course, you have a
good shot at that championship."
<TABLE>
<S> <C> <C> <C>
The Bond Fund of America Principal
INVESTMENT PORTFOLIO DECEMBER 31, 1998 Amount Market Percent of
or Shares Value Net Assets
BONDS, NOTES & PREFERRED STOCKS (000) (000)
INDUSTRIALS, SERVICES & UTILITIES
TELECOMMUNICATIONS
NEXTEL Communications, Inc.: 1.48%
0%/9.75% 2004 (1) $20,750 $20,128
0%/10.125% 2004 (1) 12,750 12,495
0%/9.75% 2007 (1) 64,500 39,345
0%/10.65% 2007 (1) 11,750 7,549
0%/9.95% 2008 (1) 19,750 11,850
12.00% 2008 (2) 5,000 5,450
Series D, 13.00% exchangeable preferred, redeemable 2009 (3) 15,762 SHARES 16,345
Series E, 11.25% exchangeable preferred, redeemable 2010 (3) 23,533 21,180
NEXTEL International, Inc. 0%/12.125% 2008 (1) $15,500 6,936
Omnipoint Corp.: .89
Units 12.00% 2000 (2) (4) (5) (6) 12,500 14,350
14.00% 2003 (2) (3) (5) 32,250 31,766
11.625% 2006 31,200 21,840
11.625% 2006 8,250 5,775
Loan Agreement, Tranche A, 8.66% 2006 (2) (6) 9,295 8,179
7.00% convertible preferred 120,000 SHARES 2,850
Bell Atlantic Financial Services, Inc.: (2) .70
5.75% convertible debentures 2003 $30,000 30,975
4.25% convertible debentures 2005 35,000 35,875
Centennial Cellular Corp.: .41
8.875% 2001 15,500 16,895
10.125% 2005 5,000 6,200
10.75% 2008 (2) 16,000 16,040
Clearnet Communications Inc.: (1) .39
0%/11.75% 2007 C$45,825 18,309
0%/10.40% 2008 53,500 18,758
Viatel, Inc.: .37
11.25% 2008 $15,000 15,000
0%/12.40% 2008 (1) DM4,500 1,538
0%/12.50% 2008 (1) $20,750 11,828
11.15% 2008 DM9,500 5,667
10.00% convertible subordinated debentures 2011 (2) (3) 742 507
Series A, 10.00% convertible preferred (3) 16,264 SHARES 1,073
Crown Castle International Corp.: .37
0%/10.625% 2007 (1) $17,000 11,815
12.75% preferred (2) (3) 23,500 SHARES 23,735
Comcast Cellular Corp., Series B, 9.50% 2007 $30,600 .34
COLT Telecom Group PLC: .33
Units 0%/12.00% 2006 (1) (4) 5,250 6,484
8.875% 2007 DM9,500 5,974
7.625% 2008 31,800 18,779
Cable & Wireless Communications PLC: .31
6.75% 2008 $17,500 17,802
6.75% 2008 12,000 12,222
QWest Communications International Inc.: .27
0%/9.47% 2007 (1) 26,000 20,215
0%/8.29% 2008 (1) 7,500 5,625
Loral Orion Network Systems, Inc. (formerly Orion Network (4) 26,060 .26
Systems, Inc.) Units 11.25% 2007
U S WEST Capital Funding, Inc.: .25
6.25% 2005 3,250 3,361
6.50% 2018 20,000 20,466
PageMart Wireless, Inc.: .24
0%/15.00% 2005 (1) 8,000 7,040
0%/11.25% 2008 (1) 34,250 15,413
American Cellular Corp. 10.50% 2008 (2) 21,500 .22
Global TeleSystems Group, Inc. 8.75% convertible debentures 2000 (2) 7,500 .22
McCaw International, Ltd. (owned by NEXTEL (1) (4) 37,850 .22
Communications, Inc.) 0%/13.00% 2007
Time Warner Telecom Inc. 9.75% 2008 18,050 .20
US Xchange LLC 15.00% 2008 16,125 .18
Esat Telecom Group PLC: .16
0%/12.50% 2007 (1) 4,000 2,640
Units 0%/12.50% 2007 (1) (4) 4,500 3,282
11.875% 2008 (2) 9,750 9,848
Comuncacion Celular SA Units 0%/14.125% 2005 (1) (2) (4) 17,550 .15
NEXTLINK Communications, Inc.: .15
12.50% 2006 3,000 3,225
9.625% 2007 3,000 2,895
9.00% 2008 8,250 7,714
MCI Worldcom, Inc. (formerly WorldCom, Inc.): .14
6.40% 2005 8,250 8,574
8.875% 2006 4,796 5,242
CCPR Services, Inc. 10.00% 2007 13,750 .14
Sprint Capital Corp. 6.875% 2028 10,000 .11
MobileTelecommunication Technologies Corp. 13.50% 2002 8,530 .10
PTC International Finance BV 0%/10.75% 2007 (1) 9,450 .07
CEI Citicorp Holdings SA 11.25% 2007 (2) ARP9,500 .06
PanAmSat Corp.: .06
6.125% 2005 $2,500 2,426
6.375% 2008 3,000 2,929
SpectraSite Holdings, Inc. 0%/12.00% 2008 (1) (2) 9,500 .05
Dobson/Sygnet Communications Co. 12.25% 2008 (2) 4,500 .05
Price Communications Cellular Holdings, Inc. 11.25% 2008 (3) (6) 4,000 .04
Globalstar LP Units 11.375% 2004 (4) 4,500 .04
Hermes Euro Railtel BV 11.50% 2007 3,000 .03
Conecel Holdings Ltd. Units, Series A, 16.00% 2000 (2)(4)(5)(6) 5,900 .03
Telesystem International Wireless Inc. 0%/13.25% 2007 (1) 6,000 .03
Dobson Communications Corp. 12.25% exchangeable preferred, (3) 2,578 SHARES .02
redeemable 2008
IMPSAT Corp. 12.375% 2008 $2,500 .02
Level 3 Communications, Inc. 9.125% 2008 1,000 .01
9.11
TRANSPORTATION
Continental Airlines, Inc., pass-through certificates:(7) 1.68
Series 1998-3, Class C-1, 7.08% 2004 3,000 2,995
Series 1998-3, Class C-2, 7.25% 2005 12,000 12,072
Series 1997-1, Class C, 7.78% 2007(6) 2,454 2,478
Series 1998-3, Class A-2, 6.32% 2008 15,000 15,100
Series 1997-1, Class B, 7.461% 2014 989 1,017
Series 1996-2, Class B, 8.56% 2014 1,898 2,087
Series 1996, Class A, 6.94% 2015 3,816 3,928
Series 1996, Class B, 7.82% 2015 12,881 13,570
Series 1996, Class C, 9.50% 2015 4,771 5,382
Series 1997-1, Class A, 7.461% 2016 19,743 20,470
Series 1996-2, Class D, 11.50% 2016 4,361 4,726
Series 1997-4, Class A, 6.90% 2018 35,390 35,531
Series 1998-1, Class A, 6.648% 2019 41,500 40,841
Jet Equipment Trust:(2) .59
Series 1994-A, Class B1, 10.91% 2006 6,446 7,509
Series 1994-A, Class C1, 11.79% 2013 4,000 5,442
Series 1995-B, Class B2, 10.91% 2014 5,000 6,184
Series 1995-D, Class D, 11.44% 2014 10,000 12,849
Series 1995-B, Class A, 7.63% 2015 4,159 4,459
Series 1995-B, Class C, 9.71% 2015 5,500 6,458
Series 1995-A, Class C, 10.69% 2015 10,500 12,915
Airplanes Pass Through Trust, pass-through certificates, (7) 41,164 .44
Series 1, Class C, 8.15% 2019
Atlas Air, Inc., Pass-Through Trusts, Series 1998-1, (7) 41,000 .44
Class A, 7.38% 2018
USAir, Inc.: .36
9.625% 2001 3,996 4,149
1990 Equipment Trust Certificates:
Series A, 10.28% 2001 754 799
Series B, 10.28% 2001 754 799
Series C, 10.28% 2001 530 562
Enhanced Equipment Notes:
Class B, 7.50% 2009 9,057 8,813
Class C, 8.93% 2009 8,314 8,734
pass-through trust:
Series 1993-A2, 9.625% 2003 (7) 2,500 2,700
Series 1993-A3, 10.375% 2013 (7) 7,250 8,011
Delta Air Lines, Inc.: .34
pass-through certificates, Series 1992-A2, 9.20% 2014 (7) 11,500 12,746
1990 Equipment trust certificates: (2)
Series I, 10.00% 2014 5,000 5,893
Series J, 10.00% 2014 10,000 11,787
Series F, 10.79% 2014 1,700 2,114
United Air Lines, Inc., pass-through certificates: (7) .22
Series 1995-A1, 9.02% 2012 10,393 11,635
Series 1995-A2, 9.56% 2018 8,000 9,050
Alaska Airlines: .15
Series A, 9.50% 2010 2,168 2,578
Series B, 9.50% 2010 2,780 3,296
Series C, 9.50% 2010 2,659 3,198
Series D, 9.50% 2012 4,524 5,459
American Airlines, Inc., pass-through certificates, (7) 6,000 .08
Series 1991-C2, 9.73% 2014
Teekay Shipping Corp. 8.32% 2008 6,000 .06
Union Pacific Capital Trust 6.25% TIDES convertible preferred 111,100 SHARES .05
Southwest Airlines, pass-through certificates, $2,408 .03
Series 1994-A, 9.15% 2016 (7)
Canadian National Railway Company 6.45% 2036 (6) 2,750 .03
4.47
DIVERSIFIED MEDIA & CABLE TELEVISION
Fox/Liberty Networks, LLC, FLN Finance, Inc.: .50
0%/9.75% 2007 (1) 33,325 22,661
8.875% 2007 24,250 24,735
NTL Inc.: .48
0%/12.75% 2005 (1) 17,750 16,153
Series B, 10.00% 2007 10,000 10,200
0%/9.75% 2008 (1)(2) 12,500 7,750
11.50% 2008 (2) 11,000 11,990
Falcon Holding Group, LP, Falcon Funding Corp.: .34
0%/9.285% 2010 (1) 25,300 17,394
8.375% 2010 14,750 14,824
TCI Communications, Inc.: .31
8.00% 2005 10,000 11,258
8.75% 2015 7,500 9,317
Tele-Communications, Inc. 8.75% 2023 8,000 8,921
News America Holdings Inc.: .26
8.625% 2014 A$3,250 2,166
8.00% 2016 $1,000 1,102
7.43% 2026 20,500 21,332
Lenfest Communications, Inc.: .23
8.375% 2005 11,000 11,880
7.625% 2008 6,750 7,020
8.25% 2008 3,250 3,356
Comcast UK Cable Partners Ltd. 0%/11.20% 2007 (1) 22,000 .19
Comcast Cable Communications, Inc.: .19
8.375% 2007 5,000 5,801
8.875% 2017 10,000 12,345
Time Warner Companies, Inc.: .18
9.125% 2013 7,000 8,862
7.25% 2017 7,000 7,610
6.95% 2028 1,000 1,059
Cox Communications, Inc. 6.40% 2008 15,000 .16
Cablevision Industries Corp.: .16
8.125% 2009 9,250 9,912
9.875% 2013 5,000 5,575
Telemundo Holdings, Inc. 0%/11.50% 2008(1)(2) 25,375 .15
Comcast Corp. 10.25% 2001 13,000 .15
Adelphia Communications Corp.: .13
8.125% 2003 5,000 5,100
8.375% 2008 7,500 7,687
TVN Entertainment Corp. 14.00% 2008(2) 13,250 .13
V2 Music (Holdings) PLC Units: (1)(2)(4) .13
0%/14.00% 2008 9,250 4,995
0%/14.00% 2008 POUNDS7,875 7,054
TeleWest PLC: .12
9.625% 2006 $4,700 4,794
0%/11.00% 2007(1) 8,000 6,660
Century Communications Corp.: .12
8.75% 2007 6,200 6,820
0% 2008 8,900 4,561
Globo Comunicacoes E Partcipacoes Ltd.: .08
10.50% 2006(2) 9,480 6,115
10.50% 2006 2,000 1,290
Coaxial Communications of Central Ohio, Inc. 10.00% 2006(2) 6,750 .07
Multicanal Participacoes SA, Series B, 12.625% 2004 7,250 .07
Clear Channel Communications, Inc. 7.25% 2027 4,000 .04
Fox Family Worldwide, Inc.: .04
0%/10.25% 2007(1) 2,500 1,575
9.25% 2007 2,000 1,980
FrontierVision 11.00% 2006 2,500 .03
Avalon Cable Holdings LLC 0% 2008(1)(2) 3,125 .02
TV Azteca, SA de CV, Series B, 10.50% 2007 1,000 .01
4.29
LEISURE & TOURISM
Joseph E. Seagram & Sons, Inc.: .57
6.625% 2005 26,500 26,351
6.80% 2008 10,000 9,964
7.50% 2018 17,500 17,603
AMF Bowling Worldwide, Inc.: .22
0%/12.25% 2006 (formerly AMF Group Inc.)(1) 11,050 6,354
10.875% 2006 (formerly AMF Group Inc.) 13,839 11,279
0% convertible debentures 2018(2) 23,100 3,061
Mirage Resorts, Inc.: .21
6.625% 2005 7,500 7,281
6.75% 2007 6,500 6,295
6.75% 2008 6,750 6,507
Boyd Gaming Corp.: .21
9.25% 2003 13,725 14,308
9.50% 2007 5,500 5,500
Friendly Ice Cream Corp. 10.50% 2007 18,875 .21
William Hill Finance 10.625% 2008 POUNDS10,593 .19
FelCor Suites LP 7.375% 2004 $18,400 .18
Capstar Hotel Co. 8.75% 2007 12,020 .12
Punch Taverns 7.567% 2026 POUNDS5,000 .09
Premier Parks Inc.: .09
9.25% 2006 $5,000 5,213
0%/10.00% 2008(1) 4,500 3,060
Harrah's Operating Company, Inc. 7.875% 2005 6,000 .06
Royal Caribbean Cruises Ltd.: .06
7.25% 2018 2,000 1,926
7.50% 2027 4,000 3,939
Regal Cinemas, Inc. 9.50% 2008 (2) 5,000 .05
Six Flags Entertainment Corp. 8.875% 2006 5,000 .05
KSL Recreation Group, Inc. 10.25% 2007 5,000 .05
Sun International Hotels, Ltd., Sun International North 3,000 .03
America, Inc. 9.00% 2007
2.39
HEALTH & PERSONAL CARE
Columbia/HCA Healthcare Corp.: .90
6.50% 1999 9,500 9,489
6.125% 2000 8,500 8,392
6.41% 2000 1,000 986
7.60% 2001 1,750 1,763
7.15% 2004 1,500 1,463
6.91% 2005 11,410 11,055
7.00% 2007 12,750 12,163
8.85% 2007 24,105 25,369
8.70% 2010 4,250 4,450
9.00% 2014 5,650 5,993
7.69% 2025 5,000 4,635
Integrated Health Services, Inc.: .54
5.75% convertible debentures 2001 6,500 5,647
10.25% 2006 (6) 9,350 9,257
Series A, 9.50% 2007 11,175 10,616
Series A, 9.25% 2008 27,500 25,850
Paracelsus Healthcare Corp. 10.00% 2006 20,575 .20
Tenet Healthcare Corp.: .10
8.00% 2005 6,000 6,090
8.125% 2008 (2) 3,000 3,075
Nationwide Health Properties Inc., Series A, 7.677% 100,000 SHARES .09
preferred cumulative step-up premium rate
McKesson Corp.: .08
6.30% 2005 $1,750 1,783
6.40% 2008 5,500 5,661
Mariner Health Group, Inc. 9.50% 2006 6,500 .07
Unison HealthCare Corp. 13.00% 2006 (2)(5)(8) 5,000 .01
1.99
BROADCASTING & PUBLISHING
Chancellor Media Corp. of Los Angeles: .59
Chancellor Media Corp. of Los Angeles (formerly Chancellor
Radio Broadcasting Co.):
9.375% 2004 (formerly Chancellor Radio Broadcasting Co.) $12,500 13,125
8.125% 2007 (formerly Chancellor Radio Broadcasting Co.) 21,000 21,000
Series B, 8.75% 2007 15,125 15,503
9.00% 2008(2) 7,000 7,367
Hearst-Argyle Television, Inc.: .25
7.00% 2018 18,500 18,419
7.50% 2027 5,500 5,696
Young Broadcasting Inc.: .19
10.125% 2005 3,500 3,666
Series B, 8.75% 2007 14,250 14,321
Cox Radio, Inc.: .17
6.25% 2003 2,000 2,016
6.375% 2005 14,000 14,194
American Radio Systems Corp. 9.00% 2006 $10,080 .11
Ziff-Davis Inc. 8.50% 2008 9,500 .10
Antenna TV SA 9.00% 2007 9,750 .09
TransWestern Publishing Co. LLC: .08
9.625% 2007(2) 6,250 6,563
9.625% 2007 1,000 1,050
RBS Participacoes SA 11.00% 2007(2) 10,000 .06
Sun Media Corp.: .06
9.50% 2007 3,834 4,237
9.50% 2007 1,305 1,442
STC Broadcasting, Inc. 11.00% 2007 3,250 .04
Newsquest Capital PLC 11.00% 2006 2,850 .03
EZ Communications, Inc. 9.75% 2005 1,250 .01
1.78
ENERGY & RELATED COMPANIES
McDermott Inc. 9.375% 2002 13,250 .25
J. Ray McDermott, SA 9.375% 2006 9,500 10,070
Petrozuata Finance, Inc., Series A, 7.63% 2009(2) 21,280 .17
Pioneer Natural Resources Co. 7.20% 2028 20,000 .15
CalEnergy Co., Inc. (formerly California Energy 11,000 .13
Co., Inc.) 9.875% 2003
PDVSA Finance Ltd.:(2) .12
7.40% 2016 10,000 8,427
7.50% 2028 4,000 3,255
Oil Co. Ltd. 8.90% 2000 10,652 .11
YPF SA 7.75% 2007 10,000 .09
OXYMAR 7.50% 2016(2) 8,500 .08
Ocean Energy, Inc. 8.875% 2007 8,000 .08
Kelley Oil & Gas Corp. 10.375% 2006 8,750 .07
Benton Oil and Gas Co.: .05
11.625% 2003 6,000 4,020
9.375% 2007 1,750 1,137
Cross Timbers Oil Co. 8.75% 2009 2,000 .02
Clark Refining & Marketing, Inc. 8.375% 2007 1,500 .01
Pogo Producing Co. 8.75% 2007 1,500 .01
1.34
METALS
BHP Finance Ltd.: .37
6.69% 2006 5,000 5,004
8.50% 2012 20,000 22,405
6.75% 2013 5,000 4,731
7.25% 2016 3,500 3,439
Freeport-McMoRan Copper & Gold Inc.: .35
7.50% 2006 34,000 21,590
7.20% 2026 18,000 11,700
Inco Ltd.: .27
9.875% 2019 7,500 7,842
9.60% 2022 16,000 17,854
Doe Run Resources Corp.: .16
11.696% 2003 (6) 3,000 2,400
11.25% 2005 16,000 12,960
AK Steel Corp. 9.125% 2006 5,000 .05
Pohang Iron & Steel Co., Ltd. 6.625% 2003 4,695 .04
Kaiser Aluminum and Chemical Corp. 12.75% 2003 2,000 .02
1.26
MULTI-INDUSTRY
Swire Pacific Capital Ltd. 8.84% cumulative guaranteed (2) 1,500,000 SHARES .36
perpetual capital securities
Swire Pacific Offshore Financing Ltd. 9.33% cumulative (2) 400,000 7,600
guaranteed perpetual capital securities
Wharf International Finance Ltd., Series A, 7.625% 2007 $25,000 .21
Hutchison Whampoa Finance Ltd.: (2) .20
7.45% 2017 3,000 2,598
Series D, 6.988% 2037 18,000 16,536
Reliance Industries Ltd.: (2) .18
8.25% 2027 10,000 8,525
10.50% 2046 250 198
10.25% 2097 10,750 8,063
Pan Pacific Industrial Investments PLC 0% 2007 (2) 33,500 .14
Federal-Mogul Corp. 7.75% 2006 10,000 .11
Tenneco Inc. 8.075% 2002 3,000 .03
1.23
FOREST PRODUCTS & PAPER
Container Corp. of America: .34
10.75% 2002 4,800 4,992
9.75% 2003 18,815 19,191
Series A, 11.25% 2004 8,000 8,320
Scotia Pacific Company LLC: (2) .19
Timber Collateralized Notes, Class A-1, 6.55% 2028 1,500 1,473
Class A-2, 7.11% 2028 18,000 17,096
Norampac Inc.: .14
9.375% 2008 C$5,000 3,343
9.50% 2008 $10,250 10,353
Fort James Corp.: .12
6.625% 2004 5,000 5,092
6.875% 2007 6,000 6,207
Copamex Industrias, SA de CV, Series B, 11.375% 2004 11,880 .12
Grupo Industrial Durango, SA de CV: .10
12.00% 2001 3,000 2,790
12.625% 2003 7,625 6,863
P.T. Indah Kiat Pulp & Paper Corp. 8.875% 2000 300 .08
Indah Kiat:
Finance Mauritius Ltd. 11.875% 2002 600 423
International Finance Co. B.V. 12.50% 2006 150 100
Finance Mauritius Ltd. 10.00% 2007 13,400 7,303
Pindo Deli Finance Mauritius Ltd.: .06
10.25% 2002 6,000 3,360
10.75% 2007 4,375 2,363
Paperboard Industries International Inc. 8.375% 2007 5,000 .05
James River Corp. 9.25% 2021 1,000 .01
APP International Finance Co. B.V. 11.75% 2005 525 .00
1.21
ELECTRICAL & GAS UTILITIES
The Israel Electric Corp. Ltd.: (2) .74
7.125% 2005 12,500 12,563
7.25% 2006 7,165 7,279
7.70% 2018 8,500 8,297
7.875% 2026 8,000 7,862
7.75% 2027 25,000 24,216
8.10% 2096 10,405 9,997
Williams Holdings of Delaware, Inc.: .08
6.125% 2003 2,000 1,983
6.25% 2006 5,000 4,950
6.50% 2008 1,000 987
United Utilities 6.875% 2028 7,500 .08
Energen Corp., Series B, 7.125% 2028 6,000 .06
Tennessee Gas Pipeline Co. 7.625% 2037 5,000 .06
Transener SA 9.25% 2008 (2) 4,250 .04
1.06
GENERAL RETAILING & MERCHANDISING
Sears Roebuck Acceptance Corp. 6.875% 2017 15,000 .16
Kmart Corp. 9.78% 2020 12,250 .14
Venator Group Inc.(formerly Woolworth Corp.): .13
6.98% 2001 9,000 8,510
Series A, 7.00% 2002 4,000 3,700
Federated Department Stores, Inc.: .10
8.125% 2002 5,000 5,390
7.45% 2017 2,000 2,153
7.00% 2028 2,000 2,027
DR Securitized Lease Trust Pass-Through Certificates, 8,000 .09
Series 1994 K-2, 9.35% 2019
Sunglass Hut International Ltd. 5.25% convertible debentures 2003 11,150 .08
Carr-Gottstein Foods Co. 12.00% 2005 3,500 .04
Randall's Food Markets, Inc. 9.375% 2007 3,500 .04
Boyds Collection 9.00% 2008 (2) 2,960 .03
Dillard's, Inc. 7.13% 2018 2,750 .03
Fred Meyer, Inc.: .02
7.375% 2005 1,000 1,058
7.45% 2008 1,000 1,079
.86
ELECTRICAL & ELECTRONICS
Micron Technology, Inc. 7.00% convertible subordinated notes 2004 24,000 .27
Hyundai Semiconductor America, Inc.: (2) .22
8.25% 2004 7,705 6,087
8.625% 2007 20,700 15,318
Zilog, Inc. 9.50% 2005 12,250 .10
Samsung Electronics Co., Ltd. 7.45% 2002 (2) 11,000 .10
Advanced Micro Devices, Inc. 11.00% 2003 8,000 .09
Maxtor Corp. 5.75% convertible debentures 2012 3,000 .02
.80
MISCELLANEOUS MATERIALS & COMMODITIES
Printpack, Inc.: .13
Series B, 9.875% 2004 2,775 2,775
10.625% 2006 9,465 9,465
Impress Metal Packaging Holdings BV 9.875% 2007 DM14,000 .10
Consumers International Inc. 10.25% 2005 (6) $8,125 .09
Anchor Glass Container Corp.: .09
11.25% 2005 7,000 7,315
9.875% 2008 1,000 945
Graham Packaging Co.: .08
8.75% 2008 3,625 3,661
0%/10.75% 2009 (1) 5,975 4,153
CellNet Data Systems, Inc. Units 0%/14.00% 2007 (1)(4) 26,561 .05
Ball Corp. 7.75% 2006 (2) 3,500 .04
Teletrac Holdings, Inc. Units 14.00% 2007 (4)(5) 6,850 .03
MC-Cuernavaca Trust 9.25% 2001 (1)(2) 3,109 .02
Key Plastics, Inc. 10.25% 2007 1,000 .01
.64
INDUSTRIAL COMPONENTS
BREED Technologies Inc. 9.25% 2008 (2) 28,750 .27
Hayes Wheels International Inc. 9.125% 2007 11,000 .12
Tekni-Plex, Inc. 9.25% 2008 7,500 .08
Hayes Lemmerz International, Inc. 8.25% 2008 (2) 5,000 .05
.52
FOOD & FOOD PRODUCTS
Nabisco, Inc.: .23
7.05% 2007 8,500 8,720
7.55% 2015 13,000 13,270
Fage Dairy Industry SA 9.00% 2007 10,000 .09
Gruma, SA de CV 7.625% 2007 8,000 .07
Home Products International, Inc. 9.625% 2008 6,000 .06
Favorite Brands International, Inc. 10.75% 2006 (2) 1,750 .02
.47
AUTOMOTIVE
Ford Motor Credit Co. 5.25% 2008 DM32,000 .21
General Motors Corp. 9.45% 2011 $12,000 .16
.37
BEVERAGES & TOBACCO
Canandaigua Wine Co., Inc.: .15
Series C, 8.75% 2003 7,500 7,725
8.75% 2003 6,000 6,150
Standard Commercial Tobacco Co., Inc. 8.875% 2005 11,750 .12
Delta Beverage Group, Inc. 9.75% 2003 $4,750 .05
Sparkling Spring Water Group Ltd. 11.50% 2007 3,750 .04
.36
MACHINERY & ENGINEERING
John Deere Capital Corp. 8.625% 2019 16,850 .20
United Defense 8.75% 2007 2,790 .03
.23
PROTECTION SERVICES
Protection One Alarm Monitoring, Inc.: .19
6.75% convertible debentures 2003 5,000 5,800
13.625% 2005 11,074 12,569
.19
APPLIANCES & HOUSEHOLD GOODS
Lifestyle Furnishings International Ltd. 10.875% 2006 9,250 .11
Salton/Maxim Housewares, Inc. 10.75% 2005 (2) 8,000 .08
.19
TEXTILES & APPAREL
Tultex Corp.: .10
10.625% 2005 11,500 5,175
9.625% 2007 11,500 4,830
WestPoint Stevens Inc. 7.875% 2005 1,000 .01
.11
DATA PROCESSING & REPRODUCTION
First International Computer Corp. 1.00% 3,000 .04
convertible debentures 2004 (2)
OTHER
Cendant Corp. 7.75% 2003 25,500 .27
EarthWatch Inc. Units 12.50% 2001 (2)(4)(5)(8) 12,000 .10
Allied Waste North America, Inc.: (2) .06
7.375% 2004 4,000 4,020
7.625% 2006 2,000 2,015
Safety-Kleen Services, Inc. 9.25% 2008 250 .00
.43
FINANCE
BANKS & THRIFTS
Capital One Bank: .72
6.97% 2002 5,000 5,001
6.375% 2003 15,000 14,700
6.40% 2003 5,600 5,509
6.78% 2005 10,000 9,828
7.15% 2006 11,000 11,057
6.70% 2008 10,000 9,670
Capital One Capital I 6.769% 2027 (2)(6) 10,000 8,454
Capital One Financial Corp. 7.25% 2003 5,000 4,952
Tokai Preferred Capital Co. LLC, Series A, 75,500 .67
9.98% noncumulative preferred (2)
BNP U.S. Funding LLC, Series A, 7.738% 64,000 .65
noncumulative preferred (2)
SocGen Real Estate Co. LLC, Series A, 62,500 .60
7.64%/8.406% 2049 (1) (2)
MBNA Corp., MBNA: .59
6.75% 2008 2,500 2,475
Capital A, Series A, 8.278% 2026 28,000 28,727
Capital B, Series B, 6.019% 2027(6) 30,000 24,924
Fuji JGB Investment LLC, Series A, 9.87% 56,000 .42
noncumulative preferred (2)
Bankers Trust New York Corp.:
8.25% 2005 10,000 .41
6.70% 2007 20,000 20,665
7.90% 2027 5,000 5,245
BT Preferred Capital Trust II 7.875% 2027 1,500 1,565
NB Capital: .36
Trust IV 8.25% 2027 3,000 3,401
Corp. 8.35% exchangeable depositary shares 1,200,000 SHARES 31,200
Skandinaviska Enskilda Banken: .33
6.875% 2009 $8,250 8,663
7.50% (undated) (6) 24,000 23,047
IBJ Preferred Capital Co. LLC, Series A, 35,450 .33
8.79% noncumulative preferred (2)
Advanta Corp.: .30
Series D, 6.54% 2000 10,600 10,070
Series D, 6.60% 2000 6,000 5,719
Series B, 7.00% 2001 4,000 3,709
Series D, 6.925% 2002 2,500 2,172
6.925% 2002 2,000 1,738
Advanta Capital Trust I 8.99% 2026 10,000 5,000
Washington Mutual Capital I Subordinated 22,000 .27
Capital Income Securities 8.375% 2027
Great Western Financial Trust II, Series A, 8.206% 2027 2,055 2,318
Paribas, New York Branch 6.95% 2013 25,000 .26
Barnett Capital I 8.06% 2026 20,000 .24
HSBC America Capital 8.38% 2027 (2) 19,375 .21
Royal Bank of Scotland 8.375% 2007 POUNDS9,400 .19
Imperial Capital Trust I, Imperial Bancorp 9.98% 2026 $15,000 .17
Riggs Capital TrustII 8.625% 2026 (2) 1,500 1,525 .17
Riggs National Corp.:
8.625% 2026 3,900 3,964
8.875% 2027 (2) 10,000 10,519
Bayerische Vereinsbank 5.50% 2008 DM24,000 .16
Chevy Chase Bank, FSB 9.25% 2005 $2,000 .15
Chevy Chase Preferred Capital Corp. 10.375% 242,900 SHARES 12,692
Dime Capital Trust I, Dime Bancorp, Inc., Series A, 9.33% 2027 $12,500 .14
Abbey National PLC 6.70% (undated) (6) 12,500 .13
Chase Capital I, Capital Securities, Series A, 7.67% 2026 6,000 6,457 .13
Chase Capital II, Global Floating Rate Capital Securities, (6) 6,000 5,672
Series B, 5.719% 2027
Fleet Financial Group, Inc. 6.375% 2008 1,000 .13
Fleet Capital Trust II 7.92% 2026 1,000 1,111
Fleet Capital Trust V 6.226% 2028 (6) 10,000 9,901
Bankunited Capital Trust, Bankunited Financial Corp., 10.25% 2026 10,000 .11
J.P. Morgan & Co. Inc., Series A, 5.861% 2012 (6) 10,000 .09
Korea Development Bank: .07
7.125% 2001 1,000 948
6.625% 2003 750 670
7.375% 2004 6,000 5,475
Fuji International Finance (Bermuda) Trust, 10,000 .07
Fuji Bank, Ltd. 7.30% (undated) (6)
Den Danske Bank 7.40%/7.961% 2010 (1)(2) 6,000 .07
SB Treasury Co. LLC, Series A, 9.40% noncumulative preferred (2) 6,000 .06
Bay View Capital 9.125% 2007 5,500 .06
MBI Finance 0% convertible debentures 2001 6,000 .04
PNC Institutional Capital B, PNC Financial Corp. 8.315% 2027 (2) 3,000 .04
Svenska Handelsbanken 8.125% 2007 1,000 .01
Kansallis-Osake-Pankki 10.00% 2002 1,000 .01
Banco General, SA 7.70% 2002 (2) 500 .00
8.36
REAL ESTATE
CarrAmerica Realty Corp.: .42
6.875% 2008 16,000 15,243
Series C, 8.55% cumulative redeemable preferred 400,000 SHARES 8,925
Series B, 8.57% cumulative redeemable preferred 700,000 15,750
Land Securities PLC 9.00% 2000 POUNDS12,000 .30
ProLogis Trust (formerly Secruity Capital Industrial Trust): .29
7.25% 2002 $1,000 995
7.05% 2006 5,000 4,879
7.875% 2009 7,500 7,498
Series D, 7.92% preferred 380,000 SHARES 9,358
Archstone Communities Trust (formerly Security .13
Capital Pacific Trust):
7.20% 2013 $13,500 12,380
Series C, 8.625% convertible preferred 200,000 SHARES 5,100
EOP Operating LP: .17
6.75% 2008 $11,500 11,308
7.25% 2018 5,000 4,723
Irvine Co. 7.46% 2006(5) 17,000 .17
ERP Operating LP: .13
7.57% 2026 8,000 8,228
7.95% 2002 3,750 3,890
Shopping Center Associates 6.75% 2004 (2) 12,000 .12
Irvine Apartment Communities, LP 7.00% 2007 9,500 .09
Beverly Finance Corp. 8.36% 2004 (2) 7,500 .09
IAC Capital Trust, Series A, 8.25% TOPRS preferred 300,000 SHARES .08
Simon DeBartolo Group, Inc., Series C, 7.89% preferred 150,000 .07
cumulative step-up premium rate
Duke Realty Investments, Inc., Series B, 7.99% preferred 150,000 .07
cumulative step-up premium rate
New Plan Realty Trust, Series A, 7.80% preferred 112,500 .06
cumulative step-up premium rate
Wellsford Residential Property Trust: .02
7.25% 2000 $1,000 1,009
7.75% 2005 1,000 1,043
2.21
FINANCIAL SERVICES
AT&T Capital Corp. 6.60% 2005 30,000 .30
Newcourt Credit Group Inc., Series A, 7.125% 2003 (2) 10,000 .10
Household Finance Corp.: .36
5.519% 2005 (6) 8,000 7,783
6.40% 2008 25,750 26,588
Nykredit 6.00% 2029 DKr107,685 .17
Wilshire Financial Services Group, Inc.: .17
13.00% 2004 $4,000 1,080
13.00% 2004 11,500 3,105
Series A, 13.00% 2004 (5) 20,000 12,000
AB Spintab: .12
6.00% 2009 SKr23,000 3,068
7.50% (Undated) (2)(6) $8,500 8,617
Halifax Building Society 8.75% 2006 POUNDS5,500 .11
Ocwen Financial Corp. 12.00% 2005 $6,000 .11
Ocwen Capital Trust I 10.875% 2027 6,500 5,005
Associates Corp. of North America 5.85% 2001 10,000 .11
Providian Financial Corp. 9.525% 2027(2) 7,000 .07
Wharf Capital International, Ltd. 8.875% 2004 7,457 .07
Amresco, Inc. 9.875% 2005 8,950 .07
Green Tree Financial Corp. 6.50% 2002 4,000 .04
Lend Lease (US) Finance Inc. 6.75% 2005 1,500 .02
1.82
INSURANCE
C$ C$16,000 .11
Jefferson Pilot Corp. 8.14% 2046(2) $6,000 .07
.18
COLLATERALIZED MORTGAGE/ASSET - BACKED OBLIGATIONS
(Excluding Those Issued by Federal Agencies)(7)
Morgan Stanley Capital I Inc.: 1.18
Series 1998-1, Class A-5, 6.75% 2013 17,449 17,449
Series 1995-GA1, Class A-1, 7.00% 2002(2) 5,441 5,502
Series 1998-HF1, Class A-1, 6.19% 2007(6) 34,447 35,039
Series 1996-WF1, Class A-1, 7.00% 2028(2)(6) 9,548 9,641
Series 1998-WF2, Class A-1, 6.34% 2030(6) 9,699 9,930
Series 1998-HF2, Class A-2, 6.48% 2030 34,000 35,295
Chase Commercial Mortgage Securities Corp.: .89
Series 1996-1, Class A1, 7.60% 2005 4,667 4,967
Series 1997-I, Class A1, 7.27% 2029 6,856 7,138
Series 1998-1, Class A1, 6.34% 2030 30,829 31,474
Series 1998-2, Class A-2, 6.39% 2030 32,000 32,954
Series 1998-2, Class E, 6.39% 2030 10,000 8,671
DLJ Mortgage Acceptance Corp.: .87
Series 1997-CF1, Class A1A, 7.40% 2006(2) 6,333 6,642
Series 1996-CF2, Class A1B, 7.29% 2021(2) 11,200 11,797
Series 1995-CF2, Class A1B, 6.85% 2027(2) 30,845 31,829
Series 1996-CF1, Class A1A, 7.28% 2028 9,428 9,755
Series 1998-CF1, Class A-1A, 6.14% 2006(6) 22,797 23,037
Green Tree Financial Corp, pass-through certificates: .75
Series 1994-A, Class NIM, 6.90% 2004 4,121 4,131
Series 1995-A, Class NIM, 7.25% 2005 8,845 8,885
Series 1993-2, Class B, 8.00% 2018 2,250 2,123
Series 1997-A, Class HI-M1, 7.47% 2023 1,000 1,027
Series 1995-8, Class B2, 7.65% 2026 4,000 3,430
Series 1995-6, Class B2, 8.00% 2026 2,450 2,239
Series 1995-9, Class A-5, 6.80% 2027 8,000 8,100
Series 1996-7, Class A6, 7.65% 2027 2,100 2,212
Series 1996-6, Class B2, 8.35% 2027 10,611 9,932
Series 1997-1, Class A-5, 6.86% 2028 1,500 1,538
Series 1996-10, Class A-6, 7.30% 2028 8,500 8,851
Series 1998-4, Class B2, 8.11% 2028 13,350 11,648
Series 1997-6, Class A6, 6.90% 2029 7,500 7,699
GMAC Commercial Mortgage Securities, Inc.: .66
Series 1997-C1, Class A1, 6.83% 2003 23,979 24,578
Series 1997-C1, Class A3, 6.869% 2007 35,000 37,079
Series 1996-C1, Class A2A, 6.79% 2028 866 885
CSFB Finance Co. Ltd., Series 1995-A, 7.142% 2005(2)(6) 36,775 .63
CSFB, Series 98-FL1, Class E, 6.397% 2013(2)(6) 10,000 9,739
CS First Boston Mortgage Securities Corp., Series 1998-C1, 16,295 16,629
Class A-1A, 6.26% 2040
Norwest Asset Securities Corp.: .46
Series 1998-8, Class A-1, 6.50% 2013 34,156 34,262
Series 1998-31, Class A-1, 6.25% 2014 9,775 9,761
Asset Securitization Corp.: .42
Series 1996-D3, Class A-1B, 7.21% 2026 3,000 3,147
Series 1997-D4, Class A-1A, 7.35% 2029 9,476 9,782
Series 1997-D5, Class A-PS1, interest only, 1.385% 2043(6) 277,376 26,905
Merrill Lynch Mortgage Investors, Inc., .41
Mortgage Pass-Through Certificates:(6)
Series 1995-C2, Class A-1, 7.189% 2021 5,770 5,866
Series 1995-C2, Class D, 7.959% 2021 579 593
Series 1995-C3, Class A-1, 6.762% 2025 2,283 2,332
Series 1995-C3, Clas A-3, 7.062% 2025 15,855 16,524
Series 1996-C2, Class A-1, 6.69% 2028 13,397 13,801
The Money Store Trust: .41
Series 1996-D, Class A-12, 6.37% 2011 20,000 20,012
Series 1997-1, Class A-2, 6.81% 2011 15,000 15,037
Series 1996-D, Class A-14, 6.985% 2016 4,000 4,062
Structured Asset Securities Corp., pass-through certificates: .37
Series 1998-RF2, Class A, 8.572% 2027(2)(6) 23,810 25,567
Series 1998-RF1, Class A, 8.696% 2027(2)(6) 3,992 4,303
Series 1996-CFL, Class A1C, 5.944% 2028(6) 1,942 1,938
Series 1996-CFL, Class D, 7.034% 2028 2,950 2,941
Series 1996-CFL, Class A2A, 7.75% 2028(6) 728 728
ComEd Transitional Funding Trust, Transitional .35
Funding Trust Note:
Series 1998, Class A-4, 5.39%, 2005 6,000 5,965
Series 1998, Class A-5, 5.44% 2007 21,500 21,334
Series 1998, Class A-6, 5.63% 2009 6,000 5,956
First USA Credit Card Master Trust, Class A .31
Floating Rate (2)(6)
Asset Backed Certificates:
Series 1998-7, 6.151% 2004 4,000 3,912
Series 1998-4, 6.051% 2008 15,000 14,511
Series 1998-8, 6.451% 2008 4,400 4,298
Series 1997-4, 6.274% 2010 6,630 6,543
Sears Credit Account Master Trust II, Series 25,300 .26
1998-2, Class A, 5.25% 2008
Deutsche Mortgage & Asset Receiving Corp., Series 1998-C1, 19,592 .21
Class A-1, 6.22% 2031
DLJ Commercial Mortage Corp., Commercial Mortgage .21
Pass-Through Certificates:
Series 1998-CF2, Class A-1B, 6.24% 2031 10,000 10,188
Series 1998-CF2, Class B-1, 7.066% 2031(6) 9,538 9,520
Structured Asset Notes Transaction, Ltd., Series 1996-A, (2) 17,891 .19
Class A1, 7.156% 2003
Commercial Mortgage Acceptance Corp.: .18
Series 1998-C2, Class A-1, 5.80% 2006 4,925 4,970
Series 1998-C1, Class A-1, 6.23% 2007 12,206 12,443
Resolution Trust Corp.: .18
Series 1991-M5, Class B, 9.00% 2017 1,683 1,683
Series 1993-C1, Class D, 9.45% 2024 9,352 9,352
Series 1993-C1, Class E, 9.50% 2024 155 155
Series 1993-C2, Class C, 8.00% 2025 3,000 2,999
Series 1993-C2, Class D, 8.50% 2025 2,732 2,724
Ocwen Residential MBS Corp., Series 1998-R1, 16,699 .18
Class AWAC, 1.083% 2027(2)(6)
Nomura Asset Securities Corp., Series 1998-D6, 15,905 .17
ClassA-A1, 6.28% 2030(6)
EquiCredit Funding Asset Backed Certificates, Series 1996-A, 15,790 .17
Class A2, 6.95% 2012
G E Capital Mortgage Services, Series 1994-15, 16,376 .17
Class A10, 6.00% 2009
IMC Home Equity Loan Trust, Series 1996-4, 15,585 .16
Class A3, 6.81% 2011
Chase Manhattan Credit Card Master Trust, Series 15,000 .16
1996-4, Class A, 6.73% 2003
FIRSTPLUS Home Loan Owner Trust: .16
Series 1997-1, Class A-7, 7.16% 2018 10,000 10,173
Series 1997-3, Class B-1, 7.79% 2023 5,000 4,764
Asset-Backed Securities Investment Trust, 10,534 .11
Series 1997-D, 6.79% 2003(2)
Grupo Financiero Banamex Accival, SA de CV 0% 2002 11,856 .11
LB Commerical Mortgage Trust, Series 1998-C1, 9,994 .11
Class A1, 6.33% 2030
Metris Master Trust, Series 1998-1A, Class C, 10,000 .10
6.412% 2005(2)(6)
Prudential Home Mortgage Securities Co., Inc.: .10
Series 1993-34, Class A-1, 7.00% 2023 5,216 5,206
Series 1993-48, Class A-6, 6.25% 2008 4,466 4,416
Residental Asset Securitization Trust, Series 1997-A3, 9,267 .10
Class B1, 7.75% 2027
PNC Mortgage Securities Corp., Series 1998-10, 9,597 .10
Class 1-B1, 6.50% 2028(2)
Ditech Home Loan Owner Trust, Series 1998-1, Class B1, 9.50% 2029 10,500 .10
Bear Stearns Commercial Mortgage Securities Inc., 8,767 .10
Series 1998-C1, Class A-1, 6.34% 2007
Mortgage Capital Funding, Inc., Series 1998-MC1, 8,158 .09
Class A-1, 6.417% 2030
Bear Asset Trust Securities, Series 1997-1, 7,853 .08
Class A, 6.686% 2006(2)
Green Tree Recreational, Equipment and Consumer Trust, 8,500 .08
Series 1997-D, Class CTFS, 7.25% 2029
Collateralized Mortgage Obligation Trust, 6,546 .07
Series 63, Class Z, 9.00% 2020
Residential Funding Mortgage Securities I, Inc.: .07
Series 1998-S17, Class M-1, 6.75% 2028 3,988 3,935
Series 1992-S6, Class A-10, 13.164% 2022(6)(9) 2,742 2,793
Travelers Mortgage Securities Corp., Series 1, 5,676 .07
Class Z2, 12.00% 2014
Capstead Securities Corp. IV, Series 1992-4, 5,945 .06
Class J, 19.277% 2022(6)(9)
Ryland Acceptance Corp. Four, Series 88, Class E, 5,455 .06
7.95% 2019
Chase Manhattan Bank, NA, Series 1993-I, 5,362 .06
Class 2A5, 7.25% 2024
Standard Credit Card Master Trust I, 5,000 .06
Series 1994-2, Class A, 7.25% 2008
Chase Credit Card Master Trust, Series 1996-4, 5,000 .05
Class A, 5.665% 2006(6)
MBNA Master Credit Card Trust, Series 1998-E, 5,000 4,958 .05
Class C, 6.60% 2010(2)
GE Capital Mortgage Services, Inc., 4,628 4,483 .05
Series 1994-9, Class A9, 6.50% 2024
Bear Stearns Structured Securities Inc., Series 1997-2, (2)(6) 3,859 .04
Class AWAC, 4.028% 2036
J.P. Morgan Commercial Mortgage Finance Corp.: .04
Series 1995-C1, Class A-2, 7.395% 2010(6) 1,000 1,021
Series 1996-C3, Class A-1, 7.33% 2028 1,550 1,621
Series 1997-C4, Class A-1, 6.939% 2028 1,137 1,152
Nationsbanc Montgomery Funding Corp., Series 1998-5, 3,000 .03
Class A-1, 6.00% 2013
Aames Mortgage Trust, Series 1996-D, Class A-1B, 6.34% 2012 2,623 .03
Financial Asset Securitization, Inc., Series 1997-NAM1, 2,564 .03
Class B1, 7.75% 2027
UCFC Acceptance Corp., Series 1996-D1, Class A-4, 6.776% 2016 2,400 .03
Bombardier Capital Mortgage Securitization Corp., 2,000 .02
Series 1998-A, Class A-3, 6.23% 2008
GS Mortgage Securities Corp., Series 1998-2, 1,187 .01
Class M, 7.75% 2027 (2)
Blackrock Capital Finance LP, Series 1996-C2, 1,000 .01
Class C, 7.888% 2026
GCC Home Equity Trust, Series 1990-1, Class A, 10.00% 2005 927 .01
1,15 12.14
GOVERNMENTAL
U.S. TREASURY OBLIGATIONS
9.125% May 1999 7,750 .08
6.875% July 1999 6,000 .06
6.00% August 2000 5,000 .05
7.75% February 2001 27,500 .31
13.125% May 2001 21,500 .27
3.625% July 2002(10) 51,197 .53
11.625% November 2002 92,000 1.20
6.25% February 2003 1,250 .01
10.75% May 2003 7,500 .10
11.875% November 2003 10,000 .14
7.25% May 2004 185,820 2.18
11.625% November 2004 106,175 1.50
7.50% February 2005 27,730 .33
6.50% May 2005 9,000 .10
7.00% July 2006 465 .01
6.50% October 2006 27,000 .31
3.375% January 2007(10) 46,577 .47
6.125% August 2007 8,515 .10
5.625% May 2008 40,000 .45
8.75% November 2008 7,500 .09
9.125% May 2009 18,000 .23
10.375% November 2009 12,500 .17
10.00% May 2010 7,500 .10
10.375% November 2012 15,000 .22
12.00% August 2013 10,000 .16
7.50% November 2016 32,000 .42
8.875% August 2017 194,350 2.87
8.750% May 2020 4,270 .06
7.875% February 2021 19,250 .27
8.125% May 2021 98,000 1.39
6.375% August 2027 20,750 .25
1,37 14.43
FEDERAL AGENCY OBLIGATIONS
Mortgage Pass-Throughs(7)
Government National Mortgage Assn.: 5.31
6.00% 2028 1,968 1,951
6.50% 2008-2028 31,879 32,240
6.63% 2022-2023(6) 10,297 10,450
6.88% 2022-2024(6) 82,636 83,660
7.00% 2008-2026(6) 194,238 198,480
7.50% 2007-2028 82,094 84,683
8.00% 2017-2026 26,535 27,648
8.50% 2020-2028 22,285 23,696
9.00% 2009-2022 17,907 19,269
9.50% 2009-2021 14,756 12,746
10.00% 2017-2019 6,384 6,931
10.50% 2015-2019 291 319
11.00% 2013-2016 729 815
12.00% 2014-2015 3,027 3,405
12.50% 2010-2015 582 663
13.25% 2014 77 88
Fannie Mae: 2.27
6.00% 2013-2014 40,435 40,536
6.16% 2033(6) 28,243 28,411
6.50% 2013-2028 29,356 29,762
7.00% 2009-2028 46,845 47,799
7.50% 2009-2028 8,062 8,289
7.69% 2026(6) 9,562 9,794
8.00% 2023 1,889 1,965
8.28% 2002(6) 6,992 7,245
8.50% 2009-2027 6,663 6,979
9.00% 2018-2025 3,247 3,450
9.50% 2009-2025 2,895 3,096
10.00% 2018-2025 9,101 9,803
10.50% 2012-2019 2,893 3,161
11.00% 2015-2020 1,875 2,070
11.25% 2014 31 34
11.50% 2010-2014 147 165
12.00% 2015-2028 985 1,126
12.50% 2015 1,178 1,362
13.00% 2015-2028 9,432 11,215
15.00% 2013 45 54
Freddie Mac: .68
6.00% 2013 13,959 14,007
7.50% 2012 15,919 16,367
8.00% 2003-2010 2,776 2,836
8.25% 2007 1,753 1,818
8.50% 2002-2020 18,411 19,222
8.75% 2008 2,176 2,283
9.00% 2021 574 612
10.00% 2011-2019 147 158
10.50% 2020 1,839 2,038
10.75% 2010 66 72
11.50% 2000 18 20
12.00% 2016-2017 2,189 2,493
12.50% 2015-2019 1,985 2,288
12.75% 2019 359 414
13.00% 2014 30 35
13.50% 2018 10 12
13.75% 2014 12 14
8.26
Collateralized Mortgage Obligations (7)
Fannie Mae: .43
Series 1991-146, Class Z, 8.00% 2006 4,771 4,923
Series 1990-93, Class G, 5.50% 2020 887 871
Series 1991-2, Class Z, 6.50% 2021 15,584 15,662
Series 1993-247, Class Z, 7.00% 2023 4,230 4,281
Series 1994-4, Class ZA, 6.50% 2024 3,782 3,726
Series 1997-28, Class C, 7.00% 2027 7,000 7,168
Series 1998-W5, Class B3, 6.50% 2028(2) 4,900 4,318
Freddie Mac: .36
Series 1849, Class Z, 6.00% 2008 5,836 5,794
Series 1716, Class A, 6.50% 2009 4,750 4,772
Series 41, Class F, 10.00% 2020 3,168 3,440
Series 178, Class Z, 9.25% 2021 2,704 2,854
Series 1657, Class SA, 6.988% 2023(6)(9) 7,520 6,535
Series 1673, Class SA, 5.245% 2024(6)(9) 7,879 6,224
Series 1948, Class PJ, 6.65% 2027 3,000 3,019
Series 2030, Class F, 6.035% 2028(6) 2,152 2,161
.79
Other
Fannie Mae:
7.70% 2004 12,500 .29
Medium-Term Note, 6.75% 2028 15,000 15,005
Federal Home Loan Bank Bonds:
6.27% 2004 5,000 .16
7.013% 2007 10,000 10,080
.45
GOVERNMENT & GOVERNMENTAL BODIES (EXCLUDING U.S. GOVERNMENT)
Hellenic Republic: 1.22
8.90% 2004 GRD4,900,000 18,759
2.90% 2007 YEN1,270,000 11,439
8.80% 2007 GRD6,500,000 25,835
6.95% 2008 $4,500 4,830
8.60% 2008 GRD13,320,000 52,966
7.50% 2013 620,000 2,344
Canadian Government: 1.06
9.00% 2004 C$20,000 15,806
4.25% 2021(10) 23,229 15,426
4.25% 2026(10) 105,154 69,936
Deutschland Republic: .87
8.00% 2002 DM34,050 23,541
5.25% 2008 90,000 59,595
Bundesrepublik: .78
7.125% 2003 22,250 15,201
7.50% 2004 32,000 22,997
Treuhandanstalt:
7.125% 2002 24,000 16,377
6.00% 2007 29,000 19,990
Japanese Government 1.50% 2008 YEN7,300,000 .64
Spanish Government 6.00% 2008 Pta6,000,000 .51
United Kingdom: .49
8.50% 2005 POUNDS17,000 35,013
8.00% 2015 $5,000 11,782
Polish Government: .38
12.00% 2001 PLZ20,000 5,792
13.00% 2001 25,000 7,340
12.00% 2002 8,375 2,443
12.00% 2003 70,000 20,870
Norwegian Government 6.75% 2007 NOK155,000 .23
Italian Government BTPS 6.00% 2007 Lr31,375,000 .23
Netherland Government 5.50% 2028 NLG34,000 .21
Kingdom of Denmark 6.00% 2009 DKr90,000 .17
Ontario (Province of): .15
7.75% 2002 $3,500 3,773
5.50% 2008 10,750 10,791
New Zealand Government 4.50% 2016(10) NZ$27,210 .15
United Mexican States Government Eurobonds: .13
Global, 11.375% 2016 $9,015 9,493
Series A, 6.25% 2019 1,000 778
Global, 11.50% 2026 2,125 2,274
Argentina (Republic of): .12
Eurobonds, Series L, 6.188% 2005(6) 235 199
Units 11.00% 2005(4) 5,000 5,011
11.00% 2006 1,500 1,485
11.75% 2007 ARP2,650 2,255
11.375% 2017 $1,500 1,504
9.75% 2027 1,050 937
Swedish Government 6.50% 2008 SKr60,000 .09
Quebec (Province of): .09
8.625% 2005 $2,250 2,587
13.25% 2014 5,500 6,035
Hungarian Government 13.00% 2003 HUF1,800,000 .09
Panama (Republic of):(6) .07
Interest Reduction Bond 4.00% 2014(2) $6,500 4,908
Past Due Interest Bond, 6.688% 2016(2) 1,582 1,186
Past Due Interest Eurobond 6.688% 2016 264 198
Venezuela (Republic of):(6) .03
Front Loaded Interest Reduction Bonds:
Series A, 6.125% 2007 810 514
Series B, 6.125% 2007 202 129
Eurobond 5.9375% 2007 4,071 2,606
Mendoza (Province of) 10.00% 2007(2) 4,150 .03
Philippines (Republic of): .03
8.875% 2008 1,750 1,748
8.75% 2016 1,000 991
Manitoba (Province of) 9.625% 1999 2,000 .02
Poland (Republic of) Past Due Interest 2,000 .02
Registered Bond 5.00% 2014
Peru (Republic of) Past Due Interest Eurobond 4.00% 2017(6) 750 .00
Ecuador (Republic of) Past Due Interest:(6) .00
Registered Bond 6.625% 2015 283 115
Bearer Bond 6.625% 2015 424 173
Discount Bond 6.625% 2025 250 130
Brazil (Federal Republic of), Debt Conversion 500 .00
Bond, Series L, 6.188% 2012(6)
7.81
FLOATING RATE EURODOLLAR NOTES (UNDATED)(6)
Bank of Scotland 7.00% (2) 30,000 .31
National Westminster Bank PLC 7.75% 23,000 .26
Canadian Imperial Bank of Commerce 5.813% 25,000 .20
Standard Chartered Bank:
5.275% 5,000 .13
5.625% 15,000 9,050
Bank of Nova Scotia 5.813% 10,000 .08
BCI U.S. Funding Trust I 8.01% (2) 8,000 .08
Hongkong and Shanghai Banking Corp. 6.06% 10,000 .08
Lloyds Bank (#2) 5.438% 8,000 .07
Allied Irish Banks Ltd. 5.75% 7,000 .06
Merita Bank Ltd. 7.15% (2) 4,000 .04
Midland Bank 5.375% 5,000 .04
Bergen Bank 5.813% 5,000 .04
National Bank of Canada 5.047% 5,000 .04
Christiana Bank Og Kreditkasse 5.625% 4,000 .03
1.46
OTHER SECURITIES & MISCELLANEOUS Shares
STOCKS AND WARRANTS
NEXTEL Communications, Inc., Class A(11) 122,392 .03
NEXTEL Communications, Inc. warrants, expire 1999 (5)(11) 38,750
Verio Inc., warrants, expire 2004 (11) 52,200 .03
Cellular Communications International, Inc. 15,071 .02
warrants, expire 2003 (11)
CellNet Data Systems, Inc. (11) 219,400 .01
NTL Inc., warrants, expire 2008 (2)(5)(11) 26,362 .01
Protection One Alarm Monitoring, Inc. warrants, expire 2005 (2)(11) 54,400 .01
ICG Communications, Inc. (formerly IntelCom Group, 19,800 .00
Inc.), warrants, expire 2005 (2)(11)
Discovery Zone, Inc. (5)(8) 13,966 .00
.11
MISCELLANEOUS
Investment securities in initial period of acquisition .17
TOTAL BONDS, NOTES AND EQUITY SECURITIES (cost: $8,993,173,000) 8,922,440 93.53
Principal Market
Amount Value Percent of
SHORT-TERM SECURITIES (000) (000) Net Assets
COMMERCIAL PAPER
Associates First Capital Corp.:
5.125 due 1/4/99 25,000 .67
5.31% due 1/14/99 38,700 38,620
A .I. Credit Corp.:
5.05% due 1/5/99 7,600 .53
5.02% due 1/6/99 10,000 9,991
5.13%-5.15% due 1/14/99 33,500 33,433
Johnson & Johnson 5.00% due 1/4/99(2) 50,000 .52
Commercial Credit Co. 5.16% due 1/21/99 37,500 .39
Ameritech Corp.:
5.00% due 1/11/99 (2) 25,000 .39
5.04% due 1/12/99 (2) 12,000 11,980
American General Finance Corp. 5.32% due 1/19/99 36,500 .38
Household Finance Corp. 5.03 due 1/22/99 36,000 .38
Xerox Capital (Europe) PLC 5.27% due 1/14/99 30,500 .32
Amoco Co. 5.12% due 2/8/99 30,000 .31
Eastman Kodak Co.:
5.26% due 5.26% 1/12/99 20,000 .30
5.45% due 1/28/99 9,000 8,962
Gillette Co. 5.10% due 1/4/99(2) 25,000 .26
Lucent Technologies Inc. 5.03% due 1/8/99 25,000 .26
St. Paul Companies Inc. 5.32% due 1/12/99(2) 25,000 .26
Arco British Ltd. 5.14% due 1/15/99(2) 21,000 .22
National Rural Utilities Cooperative Finance Corp.:
5.00% due 1/11/99 1,500 .22
5.00% due 2/11/99 19,400 19,285
Chevron Transport Corp. 5.20% due 1/21/99(2) 20,000 .21
TOTAL SHORT-TERM SECURITIES (COST $537,004,000) 5.62
TOTAL INVESTMENT SECURITIES (COST $9,530,177,000) 9,45 99.15
Excess of cash and receivables over payables .85
NET ASSETS $ 9,540 100.00%
1 Step bond; coupon rate will increase at a later date.
2 Purchased in a private placement transaction; resale
may be limited to qualified institutional buyers;
resale to the public may require registration.
3 Payment in kind; the issuer has the option of
paying additional securities in lieu of cash.
4 Purchased as a unit; issue was separated but
reattached for reporting purposes.
5 Valued under procedures established by the Board of Directors.
6 Coupon rate may change periodically.
7 Pass-through security backed by a pool of mortgages or other
loans on which principal payments are periodically made.
Therefore, the effective maturities is shorter
than the stated maturity.
8 Company not making interest or dividend payments;
bankruptcy proceedings pending.
9 Inverse floater, which is a floating-rate note whose
interest rate moves in the opposite direction of
prevailing interest rates.
10 Index-linked bond whose principal amount moves
with a government retail price index.
11 Non-income-producing security.
See Notes to Financial Statements
</TABLE>
<TABLE>
The Bond Fund of America
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
at December 31,1998 (dollars in thousands)
<S> <C> <C>
Assets:
Investment securities at market
(cost: $9,530,177) $9,459,447
Cash 12,038
Receivables for--
Sales of investments $41,851
Sales of fund's shares 23,979
Dividends and accrued interest 138,030 203,860
------------ ---------------
9,676,206
Liabilities:
Payables for--
Purchases of investments 105,630
Repurchases of fund's shares 22,385
Forward currency contracts 3,243
Management services 2,641
Accrued expenses 1,714 135,613
------------ ---------------
Net Assets at at December 31,1998--
Equivalent to $13.61 per share on
701,079,276 shares of $1 par value
capital stock outstanding (authorized
capital stock - 1,000,000,000 shares) $9,540,593
===============
STATEMENT OF OPERATIONS
for the year ended at December 31,1998 (dollars in thousands)
Investment Income:
Income:
Interest $666,776
Dividends from investment in stocks 13,913 $680,689
------------
Expenses:
Management services fee 28,879
Distribution expenses 22,380
Transfer agent fee 5,411
Reports to shareholders 173
Registration statement and prospectus 452
Postage, stationery and supplies 770
Directors' fees 69
Auditing and legal fees 58
Custodian fee 522
Taxes other than federal income tax 60
Other expenses 62 58,836
------------ ---------------
Net investment income 621,853
---------------
Realized Gain and Unrealized
Depreciation on Investments:
Net realized gain 45,203
Net change in unrealized
appreciation (depreciation) on:
Investments (217,264)
Open forward currency contracts (8,303)
------------
Net unrealized depreciation (225,567)
---------------
Net realized gain and
unrealized depreciation
on investments (180,364)
---------------
Net Increase in Net Assets Resulting $441,489
from Operations ===============
STATEMENT OF CHANGES IN NET ASSETS (dollars in thousands)
Year ended December 31
1998 1997
Operations:
Net investment income $621,853 $520,154
Net realized gain on investments 45,203 99,025
Net unrealized (depreciation) appreciation
on investments (225,567) 44,044
------------ ---------------
Net increase in net assets
resulting from operations 441,489 663,223
------------ ---------------
Dividends and Distributions Paid to
Shareholders:
Dividends from net
investment income (612,126) (526,643)
Distributions from net realized gain
on investments (92,338) -
------------ ---------------
Total dividends and distributions (704,464) (526,643)
------------ ---------------
Capital Share Transactions:
Proceeds from shares sold:
219,927,964 and 159,869,358
shares, respectively 3,045,786 2,214,949
Proceeds from shares issued in
reinvestment of net investment
income dividends:
40,515,125 and 28,414,675 shares,
respectively 559,111 393,612
Cost of shares repurchased:
143,192,216 and 113,580,749
shares, respectively (1,977,460) (1,571,399)
------------ ---------------
Net increase in net assets
resulting from capital share
transactions 1,627,437 1,037,162
------------ ---------------
Total Increase in Net Assets 1,364,462 1,173,742
Net Assets:
Beginning of year 8,176,131 7,002,389
------------ ---------------
End of year (including
undistributed net investment
income: $(1,158) and $11,969
respectively) $9,540,593 $8,176,131
============ ===============
See Notes to Financial Statements
</TABLE>
Notes To Financial Statements
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION - The 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 fund seeks as high a level of current income as is
consistent with preservation of capital through a diversified portfolio of
bonds and other fixed-income obligations.
SIGNIFICANT ACCOUNTING POLICIES - The following is a summary of the
significant accounting policies consistently followed by the fund in the
preparation of its financial statements:
SECURITY VALUATION - Equity securities, including depositary receipts, are
valued at the last reported sale price on the exchange or market on which such
securities are traded, as of the close of business on the day the securities
are being valued or, lacking any sales, at the last available bid price. In
cases where equity securities are traded on more than one exchange, the
securities are valued on the exchange or market determined by the investment
adviser to be the broadest and most representative market, which may be either
a securities exchange or the over-the- counter market. Fixed-income securities
are valued at prices obtained from a pricing service, when such prices are
available; however, in circumstances where the investment adviser deems it
appropriate to do so, such securities will be valued at the mean quoted bid and
asked prices or at prices for securities of comparable maturity, quality and
type. Securities with original maturities of one year or less having 60 days
or less to maturity are amortized to maturity based on their cost if acquired
within 60 days of maturity or, if already held on the 60th day, based on the
value determined on the 61st day. Forward currency contracts are valued at the
mean of their representative quoted bid and asked prices. Securities and
assets for which representative market quotations are not readily available are
valued at fair value as determined in good faith by a committee appointed by
the Board of Directors.
NON-U.S. CURRENCY TRANSLATION - Assets or liabilities initially expressed in
terms of non-U.S. currencies are translated into U.S. dollars at the prevailing
market rates at the end of the reporting period. Purchases and sales of
securities and income and expenses are translated into U.S. dollars at the
prevailing market rates on the dates of such transactions. The effects of
changes in non-U.S. currency exchange rates on investment securities are
included with the net realized and unrealized gain or loss on investment
securities.
SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME - As is customary in the
mutual fund industry, securities transactions are accounted for on the date the
securities are purchased or sold. In the event the fund purchases securities on
a delayed delivery or "when-issued" basis, it will segregate with its custodian
liquid assets in an amount sufficient to meet its payment obligations in these
transactions. Realized gains and losses from securities transactions are
reported on an identified cost basis. Interest and dividend income is reported
on the accrual basis. Discounts and premiums on securities purchased are
amortized.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS - Dividends to shareholders are
declared daily after the determination of the fund's net investment income and
are paid to shareholders monthly. Distributions paid to shareholders are
recorded on the ex-dividend date.
FORWARD CURRENCY CONTRACTS - The fund may enter into forward currency
contracts, which represent agreements to exchange currencies of different
countries at specified future dates at specified rates. The fund enters into
these contracts to reduce its exposure to fluctuations in foreign exchange
rates arising from investments denominated in non-U.S. currencies. The fund's
use of forward currency contracts involves market risk in excess of the amount
recognized in the statement of assets and liabilities. The contracts are
recorded in the statement of assets and liabilities at their net unrealized
value. The fund records realized gains or losses at the time the forward
contract is closed or offset by a matching contract. The face or contract
amount in U.S. dollars reflects the total exposure the fund has in that
particular contract. Risks may arise upon entering these contracts from the
potential inability of counterparties to meet the terms of their contracts and
from possible movements in non-U.S. exchange rates and securities values
underlying these instruments.
2. FEDERAL INCOME TAXATION - 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, 1998, net unrealized depreciation on investments, excluding
forward currency contracts, for book and federal income tax purposes aggregated
$70,730,000, of which $284,851,000 related to appreciated securities and
$355,581,000 related to depreciated securities. During the year ended December
31, 1998, the fund realized, on a tax basis, a net capital gain of $60,804,000
on securities transactions. Net losses related to non-U.S. currency
transactions of $23,368,000 were treated as an adjustment to ordinary income
for federal income tax purposes. The cost of portfolio securities, excluding
forward currency contracts, for book and federal income tax purposes was
$9,530,177,000 at December 31, 1998.
3. FEES AND TRANSACTIONS WITH RELATED PARTIES -
INVESTMENT ADVISORY FEE - The fee of $28,879,000 for management services was
incurred pursuant to an agreement with Capital Research and Management Company
(CRMC), with which certain officers and Directors of the fund are affiliated.
The Investment Advisory and Service Agreement 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; 0.16% of such assets in excess of $3 billion but not
exceeding $6 billion; 0.15% of such assets in excess of $6 billion but not
exceeding $10 billion; and 0.14% of such assets in excess of $10 billion; plus
2.25% on the first $8,333,333 of the fund's monthly gross investment income;
and 2.00% of such income in excess of $8,333,333. The Board of Directors
approved this amended agreement effective November 1, 1998, which reduced the
income-based fee from 3.00% on the first $450,000 of the fund's monthly gross
investment income; 2.25% of such income in excess of $450,000 but not exceeding
$8,333,333; and 2.00% of such income in excess of $8,333,333. In addition,
CRMC agreed, effective September 1, 1998, to waive any fees in excess of what
it would have received under the new fee schedule. Had such a waiver not taken
place, the fee for management services would have been $28,886,000.
DISTRIBUTION EXPENSES - 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, 1998, distribution expenses under the Plan were limited to
$22,380,000. Had no limitation been in effect, the fund would have paid
$23,472,000 in distribution expenses under the Plan. As of December 31, 1998,
accrued and unpaid distribution expenses were $1,714,000.
American Funds Distributors, Inc. (AFD), the principal underwriter of the
fund's shares, received $7,117,000 (after allowances to dealers) as its portion
of the sales charges paid by purchasers of the fund's shares. Such sales
charges are not an expense of the fund and, hence, are not reflected in the
accompanying statement of operations.
TRANSFER AGENT FEE - American Funds Service Company (AFS), the transfer agent
for the fund, was paid a fee of $5,411,000.
DEFERRED DIRECTORS' FEES - Directors who are unaffiliated with CRMC may elect
to defer part or all of the fees earned for services as members of the Board.
Amounts deferred are not funded and are general unsecured liabilities of the
fund. As of December 31, 1998, aggregate amounts deferred and earnings thereon
were $130,000.
CRMC is owned by The Capital Group Companies, Inc. AFS and AFD are both wholly
owned subsidiaries of CRMC. Certain Directors and officers of the fund are or
may be considered to be affiliated with CRMC, AFS and AFD. No such persons
received any remuneration directly from the fund.
4. INVESTMENT TRANSACTIONS AND OTHER DISCLOSURES -
The fund made purchases and sales of investment securities, excluding
short-term securities, of $7,141,553,000 and $5,478,437,000, respectively,
during the year ended December 31, 1998.
As of December 31, 1998, there was no accumulated undistributed net realized
gain on investments and additional paid-in capital was $8,911,014,000. The
fund reclassified $15,601,000 of realized currency losses from accumulated net
realized losses to undistributed net investment income in the year ended
December 31, 1998. The fund also reclassified $9,242,000 and $7,253,000 from
accumulated net realized losses and undistributed net investment income,
respectively, to additional paid-in capital in the year ended December 31,
1998.
Pursuant to the custodian agreement, the fund receives credits against its
custodian fee for imputed interest on certain balances with the custodian bank.
The custodian fee of $522,000 includes $315,000 that was paid by these credits
rather than in cash.
Net realized currency losses on interest and sales of non-U.S. bonds and
notes, on a book basis, were $24,085,000 for the year ended December 31, 1998.
At December 31, 1998, the fund had outstanding forward currency contracts to
sell non-U.S. currencies as follows:
<TABLE>
Contract Amount
----------- ----------
<S> <C> <C> <C>
Non-U.S. Currency Sales Contracts Non-U.S. U.S.
Australian Dollars A$ 2,489,000 $1,557,000
expiring 1/27/1999
British Pounds expiring Pounds 50,459,000 84,120,000
1/15/1999 to 8/10/1999
German Deutsche Marks DM 91,333,000 54,885,000
expiring 1/28/1999 to 3/11/1999
Japanese Yen expiring 2/24/1999 Yen 1,000,000,000 8,403,000
New Zealand Dollars expiring NZ$ 25,798,000 13,557,000
1/15/1999 to 1/27/1999
----------
$162,522,000
=========
U.S. Valuations at 12/31/98
---------- ----------
Unrealized
Appreciation
Amount (Depreciation)
Non-U.S. Currency Sales Contracts $1,525,000 $32,000
Australian Dollars 83,596,000 524,000
expiring 1/27/1999
British Pounds expiring 54,865,000 20,000
1/15/1999 to 8/10/1999
German Deutsche Marks 8,861,000 (458,000)
expiring 1/28/1999 to 3/11/1999 13,580,000 (23,000)
Japanese Yen expiring 2/24/1999
New Zealand Dollars expiring ---------- ----------
1/15/1999 to 1/27/1999
$162,427,000 $95,000
========= =========
</TABLE>
<TABLE>
Per-Share Data and Ratios
Year ended December 31
1998 1997 1996 1995 1994
Net Asset Value, Beginning of Year $14.00 $13.75 $13.88 $12.69 $14.45
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Income from Investment Operations:
Net investment income 0.94 0.98 1.02 1.05 1.05
Net gains or losses on securities (both (0.24) 0.25 (0.13) 1.18 (1.76)
realized and unrealized) ------- ------- ------- ------- -------
Total from investment operations 0.70 1.23 0.89 2.23 (0.71)
------- ------- ------- ------- -------
Less Distributions:
Dividends (from net investment income) (0.95) (0.98) (1.02) (1.04) (1.05)
Distributions (from capital gains) (0.14) - - - -
------- ------- ------- ------- -------
Total distributions (1.09) (0.98) (1.02) (1.04) (1.05)
------- ------- ------- ------- -------
Net Asset Value, End of Year $13.61 $14.00 $13.75 $13.88 $12.69
======= ======= ======= ======= =======
Total Return* 5.17% 9.24% 6.71% 18.25% (5.02%)
Ratios/Supplemental Data:
Net assets, end of year (in millions) $9,541 $8,176 $7,002 $6,290 $4,941
Ratio of expenses to average net assets 0.66% 0.68% .71% .74% .69%
Ratio of net income to average net assets 6.94% 6.95% 7.47% 7.87% 7.77%
Portfolio turnover rate 66.25% 51.96% 43.43% 43.80% 56.98%
*Excludes maximum sales charge of 4.75%
</TABLE>
Independent Auditors' Report
To the Board of Directors and Shareholders of The Bond Fund of America, Inc.:
We have audited the accompanying statement of assets and liabilities of The
Bond Fund of America, Inc. (the "fund"), including the investment portfolio as
of December 31,1998, and the related statement of operations for the year then
ended, the statement of changes in net assets for each of the two years in the
period then ended, and per-share data and ratios for each of the five years in
the period then ended. These financial statements and per-share data and
ratios are the responsibility of the fund's management. Our responsibility is
to express an opinion on these financial statements and per-share data and
ratios based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
per-share data and ratios are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned at December 31, 1998 by correspondence with the custodian and brokers;
where replies were not received from brokers, we performed other procedures.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and per-share data and ratios referred
to above present fairly, in all material respects, the financial position of
The Bond Fund of America, Inc. as of December 31, 1998, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and per-share data and ratios for each
of the five years in the period then ended, in conformity with generally
accepted accounting principles.
DELOITTE & TOUCHE LLP
Los Angeles, California
January 29, 1999
Tax Information (unaudited)
We are required to advise you within 60 days of the fund's fiscal year-end
regarding the federal tax status of distributions received by shareholders
during such fiscal year.
Corporate shareholders may exclude up to 70% of qualifying dividends received
during the year. For purposes of computing this exclusion, 2% of the dividends
paid by the fund from net investment income represent qualifying dividends.
Certain states may exempt from income taxation that portion of the dividends
paid from net investment income that was derived from direct U.S. Treasury
obligations. For purposes of computing this exclusion, 15% of the dividends
paid by the fund from net investment income were derived from interest on
direct U.S. Treasury obligations.
Dividends and distributions received by retirement plans such as IRAs,
Keogh-type plans and 403(b) plans need not be reported as taxable income.
However, many retirement plan trusts may need this information for their annual
information reporting.
The fund designates as a capital gain distribution a portion of earnings and
profits paid to shareholders in redemption of their shares.
Shareholders should consult their tax advisers.
BOARD OF DIRECTORS
H. FREDERICK CHRISTIE
Rolling Hills Estates, California
Private investor; former President and
Chief Executive Officer, The Mission Group;
former President, Southern California
Edison Company
DON R. CONLAN
South Pasadena, California
President (retired), The Capital Group
Companies, Inc.
DIANE C. CREEL
Long Beach, California
President and Chief Executive Officer,
The Earth Technology Corporation
(international consulting engineering)
MARTIN FENTON
San Diego, California
Chairman of the Board,
Senior Resource Group, Inc.
(senior living centers management)
LEONARD R. FULLER
Marina del Rey, California
President, Fuller Consulting
(management consultants)
ABNER D. GOLDSTINE
Los Angeles, California
President of the fund
Senior Vice President and Director,
Capital Research and
Management Company
PAUL G. HAAGA, JR.
Los Angeles, California
Chairman of the Board of the fund
Executive Vice President and Director,
Capital Research and
Management Company
HERBERT HOOVER III
San Marino, California
Private investor
RICHARD G. NEWMAN
Los Angeles, California
Chairman of the Board, President and
Chief Executive Officer, AECOM Technology
Corporation (architectural engineering)
OTHER OFFICERS
DAVID C. BARCLAY
Los Angeles, California
Vice President of the fund
Senior Vice President,
Capital Research Company;
Vice President, Capital Research
and Management Company
MICHAEL J. DOWNER
Los Angeles, California
Vice President of the fund
Senior Vice President - Fund Business
Management Group,
Capital Research and
Management Company
JOHN H. SMET
Los Angeles, California
Vice President of the fund
Vice President, Capital Research
and Management Company
JULIE F. WILLIAMS
Los Angeles, California
Secretary of the fund
Vice President - Fund Business
Management Group,
Capital Research and
Management Company
ANTHONY W. HYNES, JR.
Brea, California
Treasurer of the fund
Vice President - Fund Business
Management Group,
Capital Research and
Management Company
KIMBERLY S. VERDICK
Los Angeles, California
Assistant Secretary of the fund
Assistant Vice President - Fund
BusinessManagement Group,
Capital Research and
Management Company
TODD L. MILLER
Brea, California
Assistant Treasurer of the fund
Assistant Vice President - Fund
Business Management Group,
Capital Research and
Management Company
PETER C. VALLI
retired from the Board of Directors
effective March 17, 1998. He had been
a Director of the fund since 1991.
The Directors thank him for his many
contributions to the fund.
OFFICES OF THE FUND AND
OF THE INVESTMENT ADVISER,
CAPITAL RESEARCH AND
MANAGEMENT COMPANY
333 South Hope Street
Los Angeles, California 90071-1443
135 South State College Boulevard
Brea, California 92821-5823
TRANSFER AGENT FOR
SHAREHOLDER ACCOUNTS
American Funds Service Company
(Please write to the address nearest you.)
P.O. Box 2205
Brea, California 92822-2205
P.O. Box 659522
San Antonio, Texas 78265-9522
P.O. Box 6007
Indianapolis, Indiana 46206-6007
P.O. Box 2280
Norfolk, Virginia 23501-2280
CUSTODIAN OF ASSETS
The Chase Manhattan Bank
One Chase Manhattan Plaza
New York, New York 10081-0001
COUNSEL
Paul, Hastings, Janofsky & Walker LLP
555 South Flower Street
Los Angeles, California 90071-2371
INDEPENDENT AUDITORS
Deloitte & Touche LLP
1000 Wilshire Boulevard
Los Angeles, California 90017-2472
PRINCIPAL UNDERWRITER
American Funds Distributors, Inc.
333 South Hope Street
Los Angeles, California 90071-1462
This report is for the information of shareholders of The Bond Fund of America,
but it may also be used as sales literature when preceded or accompanied by the
current prospectus, which gives details about charges, expenses, investment
objectives and operating policies of the fund. If used as sales material after
March 31, 1999, this report must be accompanied by an American Funds Group
Statistical Update for the most recently completed calendar quarter.
FOR INFORMATION ABOUT YOUR ACCOUNT OR ANY OF THE FUND'S SERVICES, PLEASE
CONTACT YOUR FINANCIAL ADVISER. YOU MAY ALSO CALL AMERICAN FUNDS SERVICE
COMPANY, TOLL-FREE, AT 800/421-0180 OR VISIT WWW.AMERICANFUNDS.COM ON THE WORLD
WIDE WEB.
Printed on recycled paper
Litho in USA CD/GRS/3914
Lit. No. BFA-011-0299
[back cover photo: various currency]
