[THE AMERICAN FUNDS GROUP(R)]
SEMI-ANNUAL REPORT
THE BOND FUND
OF AMERICA
FOR THE SIX MONTHS ENDED JUNE 30, 1999
[cover: close-up of various paper 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.
The Bond Fund of America is one of the 29 mutual funds in The American Funds
Group,(r) the nation's third-largest mutual fund family. For more than six
decades, Capital Research and Management Company, the American Funds adviser,
has invested with a long-term focus based on thorough research and attention to
risk.
RESULTS AT A GLANCE(1)
assuming distributions reinvested or interest
compounded for periods ended June 30, 1999
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Lifetime
(since May 28, 1974)
6-month 12-month Total Average annual
return return return compound return
The Bond Fund of America +0.8% +2.2% +997.9% +10.0%
Lehman Brothers
Aggregate Bond Index -1.4 +3.1 +860.7(2) +9.4(2)
Lipper Corporate A-Rated
Bond Funds Average -2.4 +1.1 +815.4 +9.2
Average savings +2.3 +4.6 +399.1 +6.6
institution(3)
Consumer Price +1.4 +2.0 +242.0 +5.0
Index(4)
</TABLE>
(1) Neither fund results nor Lipper averages include the effects of sales
charges.
(2) The Lehman Brothers Aggregate Bond Index began on January 1, 1976. From the
fund's inception through December 31, 1975, the Lehman Brothers
Government/Corporate Bond Index was used. The indexes are unmanaged.
(3) Based on figures from 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. Here are the average annual compound returns with all
distributions reinvested for periods ended June 30, 1999, assuming payment of
the 4.75% maximum sales charge at the beginning of the stated periods (sales
charges are lower for accounts of $25,000 or more):
10 years: +7.97%; 5 years: +6.86%; 12 months: -2.70%
The fund's 30-day yield as of July 31, 1999, calculated in accordance with the
Securities and Exchange Commission formula, was 6.99%.
FIGURES SHOWN ARE PAST RESULTS AND ARE NOT PREDICTIVE OF FUTURE RESULTS. SHARE
PRICE AND RETURN WILL VARY, SO YOU MAY LOSE MONEY. INVESTING FOR SHORT PERIODS
MAKES LOSSES MORE LIKELY. INVESTMENTS ARE NOT FDIC-INSURED, NOR ARE THEY
DEPOSITS OF, OR GUARANTEED BY, A BANK OR ANY OTHER ENTITY.
FELLOW SHAREHOLDERS:
The U.S. economy continued to grow in the first half of 1999, feeding off a
heady combination of rising employment, wealth from a robust stock market and
remarkably quiescent inflation. Bond investors were less sanguine, however,
growing wary of a potentially overheating economy that could push inflation and
interest rates higher.
FUND RESULTS
Although sluggish bond prices during the period reduced the net asset value of
your shares, dividends paid to shareholders more than offset market dips,
resulting in a six-month total return of 0.8% and a 12-month return of 2.2%.
Your investment in The Bond Fund of America continued to produce a steady
stream of high current income. Shareholders who reinvested monthly dividends
totaling 46.5 cents a share received an income return of 3.5% for the six
months ended June 30 (7.0% annualized); the income return for those who took
dividends in cash was 3.4% (6.8% annualized).
While modest, the fund's 0.8% total return outpaced both the unmanaged Lehman
Brothers Aggregate Bond Index and the average return for the 164 corporate
A-rated bond funds tracked by Lipper, Inc. These declined 1.4% and 2.4%,
respectively.
[Begin Sidebar]
GOOD BOND SELECTION HAS BEEN KEY TO THE FUND'S LONG-TERM RECORD.
[End Sidebar]
Over longer, more meaningful periods, The Bond Fund of America has provided
shareholders with excellent returns, as the table at left shows. Since
beginning operations a quarter-century ago, the fund has achieved a total
return of 997.9% - an average compound return of 10.0% a year - and outpaced
relevant benchmarks.
ACTION BY THE FEDERAL RESERVE
The U.S. economic expansion, now in its ninth year, continues to confound
expectations. Nonetheless, worries about the pace of growth in the United
States raised the specter of higher inflation, leading the Federal Reserve
Board to raise the federal funds rate (the rate banks charge each other for
overnight loans) by a quarter-point at the end of June, to 5.0%. The move was
expected, and the anticipation of higher rates dampened market prices of
existing bonds during the six-month period.
A BROAD MANDATE
The Bond Fund of America concentrates its assets in good quality fixed-income
instruments, but it also has the flexibility to invest a portion in lower rated
bonds issued in the U.S. and around the world. We believe our broad mandate has
had important benefits for shareholders over the long term.
The portfolio is unusually well-diversified, with investments in hundreds of
carefully selected issues. About half of net assets are invested in corporate
bonds from a wide variety of issuers. Other holdings include: U.S. Treasuries
and other government bonds; mortgage- and asset-backed securities; and a
reserve of cash and equivalents. (The chart on page 4 provides a portfolio
breakdown by sector.)
[Begin Sidebar]
THE FUND'S BROAD MANDATE HAS HAD IMPORTANT LONG-TERM BENEFITS FOR SHAREHOLDERS.
[End Sidebar]
Although broad trends obviously influence results, we have always preferred to
set our sights on the merits of individual securities, regardless of sector.
Good bond selection has been key to the fund's long-term record, and we are
pleased to note that despite a generally weak bond environment, many holdings
appreciated in price during the period. These included a number of our
mortgage-backed positions, two large wireless holdings - Nextel Communications
and Omnipoint - and several sizable bank-related issues, to name a few.
The fund's security-by-security investment approach is supported by an
intensive research effort. That effort helps us uncover opportunities that
other investors may have overlooked; the continual monitoring of these
securities also bolsters our conviction that our decisions are the right ones
for shareholders, regardless of conventional market wisdom. Global research is
a hallmark of Capital Research and Management Company, investment adviser to
The Bond Fund of America and all of the American Funds.
LOOKING FORWARD
Despite the recent turbulence, the outlook for bonds appears quite favorable.
Inflationary pressures seem to be in check; global businesses are thriving and
expanding; and many of the world's troubled economies are taking the first
difficult steps toward recovery.
Market volatility such as we have seen over the last year or so makes the value
of a long-term perspective readily apparent. The Bond Fund of America marked
its 25th anniversary this past May; we believe that our long view has been an
important factor in the fund's lifetime success.
We look forward to reviewing the past quarter-century with you six months from
now, in the annual report.
Cordially,
/s/Paul G. Haaga, Jr. /s/Abner D. Goldstine
Paul G. Haaga, Jr. Abner D. Goldstine
Chairman of the Board President
August 13, 1999
<TABLE>
THE BOND FUND OF AMERICA
INVESTMENT PORTFOLIO JUNE 30, 1999
<S> <C> <C> <C> <C>
[begin pie chart]
Corporate Bonds 47.6%
Mortgage/Asset-Backed Securities 26.4%
U.S. Treasury Securities 11.2%
Non-U.S. Government Bonds & Governmental Authorities 7.4%
Federal Agency Notes & Bonds* 0.8%*
Stocks & Warrants 0.5%
Cash & Equivalents 6.1%
[end pie chart]
*Does not include mortgage-backed securities issued by federal agencies.
Shares or
Principal Market
Amount Value Percent of
BONDS, NOTES & PREFERRED STOCKS (000) (000)Net Assets
- --------------------------------------------------------------------------- --------------------
INDUSTRIALS, SERVICES & UTILITES
TELECOMMUNICATIONS
Nextel Communications, Inc.:
9.75% 2004 $19,000 19,285
10.125% 2004 12,750 12,941
0%/9.75% 2007(1) 64,500 44,989
0%/10.65% 2007(1) 11,750 8,519
0%/9.95% 2008(1) 19,750 13,627
12.00% 2008(2) 5,000 5,675
Series D, 13.00% exchangeable preferred, redeemable 2009 (3) 16,802share 17,768
Series E, 11.125% exchangeable preferred, redeemable 2010 (3) 24,860 25,108
McCaw International, Ltd. (owned by Nextel Communications, Inc. $39,381 24,473
units, 0%/13.00% 2007(1),(4),(5)
Nextel International, Inc. 0%/12.125% 2008(1) 15,500 7,982 1.87
Omnipoint Corp.:
Units 12.00% 2000(2),(4),(5),(6) 12,833 22,133
14.00% 2003(2),(3),(5) 32,250 33,862
11.625% 2006 39,450 40,239
Loan Agreement, Tranche A, 8.25% 2006(2),(6) 9,256 9,256
7.00% convertible preferred 120,000share 6,570 1.16
Bell Atlantic Financial Services, Inc.:(2)
5.75%, convertible debentures, 2003 $30,000 30,150
4.25% convertible debentures 2005 35,000 35,787 .69
Clearnet Communications Inc.:(1)
0%/11.75% 2007 C$45825 20,845
0%/10.40% 2008 53,500 21,794 .44
Viatel, Inc.:
11.15% 2008 DM9500 5,055
11.25% 2008 $7,000 7,105
0%/12.40% 2008(1) DM4500 1,541
0%/12.50% 2008(1) $34,250 22,006 .40
11.50% 2009(2) 2,750 2,832
Crown Castle International Corp.:
0%/10.625% 2007(1) 17,000 11,815
12.75% preferred 2010(3) 25,554share 26,577 .40
American Cellular Corp. 10.50% 2008 $30,425 31,034 .32
Global TeleSystems Group, Inc. 8.75% convertible 7,500 30,037 .31
debentures 2000(2)
COLT Telecom Group PLC:
Units 0%/12.00% 2006(1),(4) 5,255 7,644
8.875% 2007 DM9500 5,205
7.625% 2008 31,800 16,711 .31
Cable & Wireless Communications PLC:
6.75% 2008 $17,500 16,930
6.75% 2008 12,000 11,551 .30
Time Warner Telecom Inc. 9.75% 2008 26,650 27,316 .28
U S WEST Capital Funding, Inc.:
6.25% 2005 1,500 1,454
6.375% 2008 2,000 1,900
6.50% 2018 25,500 22,848 .27
Comcast Cellular Corp., Series B, 9.50% 2007 21,000 23,415 .24
PageMart Wireless, Inc.:(1)
0%/15.00% 2005 9,000 8,190
0%/11.25% 2008 34,250 14,727 .24
Esat Telecom Group PLC:
0%/12.50% 2007(1) 4,000 2,880
Units 0%/12.50% 2007(1),(4),(5) 4,504 3,575
11.875% 2008 13,750 14,162 .21
Loral Orion Network Systems, Inc. Units 11.25% 2007(4),(5) 23,290 20,558 .21
Dobson Communications Corp.:
11.75% 2007 1,000 1,050
12.25% exchangeable preferred, redeemable 2008(3) 20,887share 19,216 .21
US Xchange, LLC 15.00% 2008 $17,625 18,154 .19
Allegiance Telecom, Inc.:
0%/11.75% 2008(1) 21,000 12,967
12.875% 2008 4,450 4,717 .18
Qwest Communications International Inc.:(1)
0%/9.47% 2007 15,000 11,724
0%/8.29% 2008 7,500 5,647 .18
Centennial Cellular Corp. 10.75% 2008(2) 16,000 16,560 .17
NEXTLINK Communications, Inc.:
12.50% 2006 3,000 3,210
9.625% 2007 3,000 2,895
9.00% 2008 8,250 7,714
14.00% preferred 2009(3) 21,425share 1,076 .16
CCPR Services, Inc. 10.00% 2007 $12,000 12,720 .13
Comunicacion Celular SA, units, 0%/14.125% 2005(1),(2),(4) 17,568 11,693 .12
Sprint Capital Corp. 6.875% 2028 10,000 9,066 .10
TVN Entertainment Corp., units, 14.00% 2008(2),(4),(5) 13,263 9,010 .09
MobileTelecommunication Technologies Corp. 13.50% 2002 6,780 7,661 .08
PTC International Finance BV 0%/10.75% 2007(1) 9,450 6,804 .07
CEI Citicorp Holdings SA 11.25% 2007(2) ARP9500 6,295 .07
SpectraSite Holdings, Inc. 0%/12.00% 2008(1),(2) $9,500 5,795 .06
PanAmSat Corp.:
6.125% 2005 2,500 2,331
6.375% 2008 3,000 2,754 .05
Dobson/Sygnet Communications Co. 12.25% 2008 4,500 4,747 .05
Globalstar, LP, units, 11.375% 2004(4) 4,503 3,155 .03
Telesystem International Wireless Inc. 0%/13.25% 2007(1) 6,000 3,120 .03
IMPSAT Corp. 12.375% 2008 2,500 2,062 .02
Conecel Holdings Ltd., units, Series A, 14.00% 6,053 605 .01
2000(2),(4),(5),(7)
Cellco Finance NV 15.00% 2005(2) 500 516 .01
--------------------
931,335 9.66
--------------------
DIVERSIFIED MEDIA & CABLE TELEVISION
Liberty Media Corp.:
7.875% 2009(2) 49,400 49,105
8.50% 2029(2) 3,000 2,992 .54
Fox/Liberty Networks, LLC, FLN Finance, Inc.:
8.875% 2007 22,250 23,140
0%/9.75% 2007(1) 33,325 25,993 .51
NTL Inc.:
0%/12.75% 2005(1) 17,750 16,774
Series B, 10.00% 2007 10,000 10,300
0%/9.75% 2008(1) 12,500 8,375
11.50% 2008 11,000 12,045 .49
Charter Communications Holdings, LLC:(2)
8.25% 2007 5,000 4,762
0%/9.92% 2011(1) 56,500 35,030 .41
Lenfest Communications, Inc.:
8.375% 2005 11,000 11,489
7.625% 2008 6,750 6,799
8.25% 2008 3,250 3,331 .23
Comcast UK Cable Partners Ltd. 0%/11.20% 2007(1) 22,000 19,800 .21
TCI Communications, Inc.:
8.00% 2005 10,000 10,519
8.75% 2015 5,000 5,665 .17
Cablevision Industries Corp.:
8.125% 2009 9,250 9,299
9.875% 2013 5,000 5,400 .15
Comcast Corp. 10.25% 2001 13,000 13,725 .14
Telemundo Holdings, Inc. 0%/11.50% 2008(1) 25,375 13,131 .14
Adelphia Communications Corp.:
8.125% 2003 5,000 4,875
8.375% 2008 7,500 7,200 .13
TeleWest PLC:
9.625% 2006 4,700 4,841
0%/11.00% 2007(1) 8,000 7,120 .12
Falcon Holding Group, LP, Falcon Funding Corp. 8.375% 2010 12,000 11,850 .12
Century Communications, Corp.:
0% 2003 1,727 1,209
8.75% 2007 6,200 6,138
0% 2008 8,900 3,916 .12
Globo Comunicacoes e Partcipacoes Ltd.:
10.50% 2006(2) 9,480 6,849
10.50% 2006 2,000 1,445 .09
Cox Communications, Inc. 6.40% 2008 7,500 7,091 .07
V2 Music Holdings, units:(1),(2),(4)
0%/14.00% 2008 L7883 3,971
0%/14.00% 2008 $9,259 2,960 .07
Time Warner Companies Inc. 7.25% 2017 7,000 6,739 .07
Multicanal Participacoes SA, Series B, 12.625% 2004 6,875 6,583 .07
Coaxial Communications of Central Ohio, Inc. 10.00% 2006 5,750 5,865 .06
Viacom Inc. 7.75% 2005 5,000 5,121 .05
FrontierVision 11.00% 2006 2,500 2,775 .03
Avalon Cable Holdings LLC 0%/11.875% 2008(1),(2) 3,625 2,374 .02
News America Holdings Inc. 8.625% 2014 A$3250 2,132 .02
Grupo Televisa, SA 0%/13.25% 2008(1) $1,000 810 .01
--------------------
389,538 4.04
--------------------
TRANSPORTATION
Continental Airlines, Inc., pass-through certificates:(8)
Series 1998-3, Class C-1, 7.08% 2004 3,000 2,937
Series 1992-2, Class C-2, 7.434% 2004 2,000 2,008
Series 1998-3, Class C-2, 7.25% 2005 12,000 11,913
Series 1997-1, Class C, 7.42% 2007(6) 2,355 2,340
Series 1998-3, Class A-2, 6.32% 2008 15,000 14,093
Series 1999-2, Class A-2, 7.056% 2009 2,000 1,999
Series 1997-1, Class B, 7.461% 2014 957 947
Series 1996-2, Class B, 8.56% 2014 1,860 1,917
Series 1996-2, Class C, 10.22% 2014 5,703 6,179
Series 1996, Class C, 9.50% 2015 4,653 4,935
Series 1996, Class B, 7.82% 2015 12,562 12,591
Series 1997-1 Class A, 7.461% 2016 15,208 15,412
Series 1996-2, Class D, 11.50% 2016 3,932 4,158
Series 1997-4, Class A, 6.90% 2018 30,390 29,784
Series 1998-1, Class A, 6.648% 2019 36,621 35,005
Series 1999-1, Class B, 6.795% 2020 17,000 16,144 1.68
Jet Equipment Trust:(2),(8)
Series 1994-A, Class B1, 10.91% 2006 6,364 7,050
Series 1994-A, Class C1, 11.79% 2013 4,000 5,017
Series 1995-B, 10.91% 2014 5,000 5,900
Series 1995-D, 11.44% 2014 10,000 12,159
Series 1995-B, Class A, 7.63% 2015 4,088 4,081
Series 1995-B, Class C, 9.71% 2015 5,500 6,124
Series 1995-A, Class C, 10.69% 2015 10,500 12,422 .55
Airplanes Pass Through Trust, pass-through certificates, 41,051 39,717 .41
Series 1, Class C, 8.15% 2019(8)
Atlas Air, Inc., pass-through trusts, Series 1998-1, 40,661 38,546 .40
Class A, 7.38% 2019(8)
Delta Air Lines, Inc.:
pass-through certificates, Series 1992-A2, 9.20% 2014(8) 11,500 12,940
Equipment trust certificates:(2)
Series I, 10.00% 2014 5,000 5,795
Series J, 10.00% 2014 5,000 5,796
Series F, 10.79% 2014 1,700 2,077 .28
USAir, Inc.:
1990 Equipment Trust Certificates:
Series A, 10.28% 2001 754 778
Series B, 10.28% 2001 754 778
Series C, 10.28% 2001 530 547
Enhanced Equipment Notes:
Class B, 7.50% 2009 7,813 7,536
Class C, 8.93% 2009 7,538 7,654
Pass-through trust:(8)
Series 1993-A2, 9.625% 2003 2,500 2,555
Series 1993-A3, 10.375% 2013 2,250 2,388 .23
United Air Lines, Inc., pass-through certificates:(8)
Series 1995-A1, 9.02% 2012 10,393 11,029
Series 1995-A2, 9.56% 2018 8,000 8,641 .20
American Airlines, Inc., pass-through certificates, 6,000 7,060 .07
Series 1991-C2, 9.73% 2014(8)
Union Pacific Capital Trust 6.25% TIDES convertible preferred(2 111,100share 5,708 .06
Teekay Shipping Corp. 8.32% 2008 $6,000 5,640 .06
Canadian National Railway Co. 6.45% 2036(6) 4,750 4,615 .05
Southwest Airlines, pass-through certificates, 2,408 2,737 .03
Series 1994-A4, 9.15% 2016(8)
--------------------
387,652 4.02
--------------------
ENERGY & RELATED COMPANIES
PDVSA Finance Ltd.:
8.75% 2004(2) 2,000 2,008
9.375% 2007(2) 20,000 19,637
9.75% 2010(2) 17,250 16,827
7.40% 2016 10,000 7,640
7.50% 2028 9,375 7,081 .55
Norcen Energy Resources Ltd. 7.375% 2006 17,500 17,113
Union Pacific Resources Group Inc. 7.30% 2009 17,500 16,842 .35
Petrozuata Finance, Inc.:(2)
Series A, 7.63% 2009 24,530 20,616
Series B, 8.22% 2017 2,000 1,545 .23
Conoco Inc. 6.35% 2009 17,500 16,797 .18
McDermott Inc. 9.375% 2002 13,500 14,059 .15
Pogo Producing Co.:
8.75% 2007 1,500 1,425
10.375% 2009 11,000 11,440 .13
Cross Timbers Oil Co.:
Series B, 9.25% 2007 2,000 2,000
8.75% 2009 9,025 8,754 .11
YPF SA 7.75% 2007 10,000 9,413 .10
Pioneer Natural Resources Co. 7.20% 2028 11,975 8,634 .09
Oil Co. Ltd. 8.90% 2000(2) 7,255 7,333 .08
OXYMAR 7.50% 2016(2) 8,500 7,065 .07
Pemex Finance Ltd. 8.875% 2007(2) 7,000 6,889 .07
Kelley Oil & Gas Corp. 10.375% senior subordinated notes 2006 6,750 3,848 .04
Benton Oil and Gas Co., 11.625% 2003 3,625 2,338 .03
Clark Refining & Marketing, Inc. 8.375% 2007 1,500 1,403 .01
--------------------
210,707 2.19
--------------------
LEISURE & TOURISM
AMF Bowling Worldwide, Inc.:
10.875% 2006 13,839 11,348
0%/12.25% 2006(1) 13,050 8,091
0% convertible debentures 2018(2) 23,100 3,234 .23
Mirage Resorts, Inc.:
6.625% 2005 7,500 7,167
6.75% 2007 6,500 6,057
6.75% 2008 6,750 6,270 .20
William Hill Finance 10.625% 2008 L10593 17,195 .18
Carmike Cinemas, Inc. 9.375% 2009(2) $15,875 15,399 .16
Boyd Gaming Corp.:
9.25% 2003 11,475 11,647
9.50% 2007 3,500 3,465 .16
FelCor Suites LP 7.375% 2004 13,650 12,670 .13
CapStar Hotel Co. 8.75% 2007 12,020 11,179 .12
Friendly Ice Cream Corp. 10.50% 2007 10,450 9,301 .10
Joseph E. Seagram & Sons, Inc.:
6.625% 2005 4,000 3,876
6.80% 2008 5,000 4,767 .09
Premier Parks Inc.:
9.25% 2006 5,000 4,950
0%/10.00% 2008(1) 4,500 2,993 .08
Punch Taverns 7.567% 2026 L5000 7,821 .08
Harrah's Operating Co., Inc. 7.875% 2005 $6,000 5,790 .06
KSL Recreation Group, Inc. 10.25% 2007 5,000 5,113 .05
Six Flags Entertainment Corp. 8.875% 2006 5,000 4,975 .05
Regal Cinemas, Inc. 9.50% 2008 5,000 4,700 .05
Royal Caribbean Cruises Ltd.:
7.25% 2018 2,000 1,861
7.50% 2027 3,000 2,813 .05
Sun International Hotels Ltd., Sun International 3,000 3,000 .03
NA, Inc. 9.00% 2007
Jupiters Ltd. 8.50% 2006(2) 3,000 2,970 .03
--------------------
178,652 1.85
--------------------
ELECTRICAL & GAS UTILITIES
Israel Electric Corp. Ltd.:(2)
7.25% 2006 7,165 6,868
7.75% 2009 44,500 44,031
7.70% 2018 8,500 7,761
7.875% 2026 13,000 12,027
7.75% 2027 20,000 17,841
8.10% 2096 11,905 10,494 1.03
PECO Energy Transition Trust, Series 1999-A, Class A6, 17,500 16,762 .17
6.05% 2009
Edison Mission Energy 7.73% 2009(2) 10,000 10,110 .11
The Williams Companies, Inc. 6.625% 2004 2,000 1,975
Williams Holdings of Delaware, Inc.:
6.125% 2003 2,000 1,955
6.25% 2006 5,000 4,758
6.50% 2008 1,000 956 .09
Tenaga Nasional Berhad 7.625% 2007(2) 9,000 8,071 .08
Coastal Corp.:
6.50% 2006 2,500 2,391
6.375% 2009 6,000 5,663 .08
United Utilities PLC 6.875% 2028 7,500 6,566 .07
Energen Corp., Series B, 7.125% 2028 6,000 5,422 .06
Tennessee Gas Pipeline Co. 7.625% 2037 5,110 5,077 .05
Transener SA 9.25% 2008(2) 4,250 3,597 .04
Enron Corp. 6.75% 2004 3,500 3,492 .04
Columbia Gas System, Inc., Series C, 6.80% 2005 796 789 .01
--------------------
176,606 1.83
--------------------
HEALTH & PERSONAL CARE
Columbia/HCA Healthcare Corp.:
6.125% 2000 8,500 8,267
6.41% 2000 1,000 987
7.60% 2001 1,750 1,713
7.15% 2004 1,500 1,414
6.91% 2005 16,410 14,966
7.00% 2007 12,750 11,425
8.85% 2007 24,105 24,107
8.70% 2010 4,250 4,083
9.00% 2014 5,650 5,355
7.69% 2025 5,000 4,159 .79
Integrated Health Services, Inc.:
5.75% convertible debentures 2001 12,750 8,861
10.25% 2006(6) 9,350 7,106
Series A, 9.50% 2007 12,175 8,827
Series A, 9.25% 2008 32,657 23,431 .50
Paracelsus Healthcare Corp. 10.00% 2006 20,575 16,049 .17
McKesson Corp.:
6.30% 2005 3,650 3,390
6.40% 2008 6,500 5,832 .09
Nationwide Health Properties, Inc., Series A, 7.677% 100,000share 7,425 .08
preferred cumulative step-up premium rate
Mariner Health Group, Inc. 9.50% 2006 $7,300 767 .01
--------------------
158,164 1.64
--------------------
BROADCASTING & PUBLISHING
Chancellor Media Corp. of Los Angeles:
9.375% 2004 7,500 7,650
8.125% 2007 21,000 20,475
Series B, 8.75% 2007 8,625 8,582
9.00% 2008 7,000 7,035 .45
Hearst-Argyle Television, Inc.:
7.00% 2018 18,500 16,830
7.50% 2027 5,500 5,170 .23
Young Broadcasting Inc.:
10.125% 2005 3,500 3,596
Series B, 8.75% 2007 14,250 13,965 .18
Cox Radio, Inc. 6.375% 2005 18,000 17,181 .18
Antenna TV SA 9.00% 2007 9,750 9,311 .10
Ziff-Davis Inc. 8.50% 2008 9,500 8,978 .09
Capstar Broadcasting Corp. 12.00% preferred 2009(3) 71,150share 8,325 .09
Transwestern Publishing Co. LLC 9.625% 2007 $7,250 7,105 .07
RBS Participacoes SA 11.00% 2007(2) 10,000 6,675 .07
Sun Media Corp. 9.50% 2007 5,139 5,319 .06
Muzak Holdings LLC:(2)
9.875% 2009 3,500 3,500
0%/13.00% 2010(1) 2,000 1,110 .05
STC Broadcasting, Inc. 11.00% 2007 3,250 3,413 .03
Newsquest Capital PLC 11.00% 2006 2,850 3,171 .03
--------------------
157,391 1.63
--------------------
GENERAL RETAILING & MERCHANDISING
J. C. Penney Co., Inc.:
7.60% 2007 15,000 15,234
7.95% 2017 31,500 32,059
7.65% 2016 4,000 3,966
7.625% (Undated) 5,880 5,222 .58
Sears Roebuck Acceptance Corp.:
6.25% 2009 2,000 1,875
6.875% 2017 22,150 20,910
6.50% 2028 10,000 8,729 .33
Federated Department Stores, Inc.:
10.00% 2001 2,000 2,110
8.125% 2002 5,000 5,230
6.30% 2009 15,500 14,525
7.45% 2017 2,000 1,984
7.00% 2028 2,000 1,854 .26
Kmart Corp. 9.78% 2020 12,250 12,526 .13
Sunglass Hut International, Ltd. 5.25% convertible debentures 2 11,150 9,422 .10
DR Securitized Lease Trust, pass-through certificates, 8,000 7,904 .08
Series 1994 K-2, 9.35% 2019(8)
Randall's Food Markets, Inc. 9.375% 2007 2,500 2,681 .03
Dillard's, Inc. 7.13% 2018 2,750 2,547 .03
Fred Meyer, Inc.:
7.375% 2005 1,000 1,014
7.45% 2008 1,000 1,009 .02
Boyds Collection, Ltd. 9.00% 2008(2) 1,806 1,770 .02
--------------------
152,571 1.58
--------------------
METALS
BHP Finance Ltd.:
6.69% 2006 21,800 21,257
8.50% 2012 20,000 21,728
6.75% 2013 10,000 9,318
7.25% 2016 3,500 3,385 .58
Freeport-McMoRan Copper & Gold Inc.:
7.50% 2006 34,000 25,430
7.20% 2026 18,000 13,522 .40
Doe Run Resources Corp.:
Series B, 11.354% 2003(6) 3,000 2,625
Series B, 11.25% 2005 16,000 14,560 .18
Inco Ltd. 9.60% 2022 16,000 15,542 .16
Pohang Iron & Steel Co., Ltd.:
7.50% 2002 1,000 986
6.625% 2003 2,500 2,367 .04
Kaiser Aluminum and Chemical Corp. 12.75% 2003 2,000 2,020 .02
--------------------
132,740 1.38
--------------------
MULTI-INDUSTRY
Swire Pacific Capital Ltd. 8.84% cumulative guaranteed 1,500,000share 31,500
perpetual capital securities(2)
Swire Pacific Offshore Financing Ltd. 9.33% cumulative 400,000 8,800 .42
guaranteed perpetual capital securities(2)
Wharf International Finance Ltd., Series A, 7.625% 2007 $25,000 21,948 .23
Hutchison Whampoa Finance (CD) Ltd.:(2)
7.45% 2017 3,000 2,630
Series D, 6.988% 2037 18,000 16,899 .20
Reliance Industries Ltd.:(2)
8.25% 2027 10,000 8,958
10.50% 2046 250 212
10.25% (Undated) 10,750 8,607 .19
Pan Pacific Industrial Investments PLC 0% 2007(2) 33,500 16,599 .17
Federal-Mogul Corp.:
7.75% 2006 10,000 9,575
7.50% 2009(2) 3,000 2,769 .13
Tenneco Inc. 8.075% 2002 3,000 3,101 .03
--------------------
131,598 1.37
--------------------
FOREST PRODUCTS & PAPER
Container Corp. of America:
10.75% 2002 4,800 5,052
9.75% 2003 18,815 19,474
Series A, 11.25% 2004 8,000 8,300 .34
Scotia Pacific Co. LLC, Timber Collateralized Notes:
Series B, Class A-1, 6.55% 2028 1,450 1,334
Series B, Class A-2, 7.11% 2028 26,400 22,044
Series B, Class A-3, 7.71% 2028 10,143 7,455 .32
Copamex Industrias, SA de CV, Series B, 11.375% 2004 11,880 10,573 .11
Grupo Industrial Durango, SA de CV:
12.00% 2001 3,000 2,970
12.625% 2003 7,625 7,415 .11
Indah Kiat Finance Mauritius Ltd.:
11.875% 2002 300 244
10.00% 2007 12,075 8,362 .09
Pindo Deli Finance Mauritius Ltd.:
10.25% 2002 6,000 4,395
10.75% 2007 3,625 2,528 .07
Paperboard Industries International Inc. 8.375% 2007 5,000 4,700 .05
Norampac Inc. 9.50% 2008 4,400 4,488 .05
Pacifica Papers Inc. 10.00% 2009(2) 4,000 4,040 .04
APP International Finance Co. 11.75% 2005 275 215 .00
--------------------
113,589 1.18
--------------------
INDUSTRIAL COMPONENTS & MACHINERY
TRW Inc. 7.125% 2009(2) 32,375 31,443 .33
John Deere Capital Corp. 8.625% 2019 16,850 18,027 .19
Delphi Automotive Systems Corp. 6.50% 2009 12,750 12,046 .12
Hayes Wheels International, Inc. 9.125% 2007 9,000 9,045 .09
Tekni-Plex, Inc. 9.25% 2008 7,500 7,388 .08
BREED Technologies, Inc. 9.25% 2008 32,000 5,440 .06
--------------------
83,389 .87
--------------------
ELECTRICAL & ELECTRONICS
Hyundai Semiconductor America, Inc.:(2)
8.25% 2004 7,705 6,667
8.625% 2007 20,700 16,515 .24
Samsung Electronics Co., Ltd.:(2)
7.45% 2002 11,000 10,606
9.75% 2003 7,000 7,140 .19
Earthwatch Inc.:(2),(5)
0%/12.50% 2005(1) 17,280 10,869
Series B, 7.00% convertible preferred 2009(3)(9) 928,571share 3,250
Series C, 8.50% convertible preferred 2009(3) (9) 78,496 196 .15
Zilog, Inc. 9.50% 2005 $12,250 10,903 .11
Advanced Micro Devices, Inc. 11.00% 2003 4,000 4,040
First International Computer Corp. 1.00% convertible 3,000 3,450 .08
debentures 2004(2)
Maxtor Corp. 5.75% convertible debentures 2012 3,000 2,160 .02
--------------------
75,796 .79
--------------------
FOOD & FOOD PRODUCTS
Nabisco, Inc.:
7.05% 2007 8,500 8,333
7.55% 2015 9,000 8,970
6.375% 2035(6) 17,900 17,141 .36
Fage Dairy Industry SA 9.00% 2007 10,000 9,250 .09
Gruma, SA de CV 7.625% 2007 8,000 7,140 .07
Home Products International, Inc. 9.625% 2008 6,000 5,460 .06
New World Pasta Co. 9.25% 2009(2) 3,000 2,940 .03
--------------------
59,234 .61
--------------------
MISCELLANEOUS MATERIALS & COMMODITIES
Equistar Chemicals LP:
6.50% 2006 7,800 7,028
8.75% 2009(2) 7,500 7,597 .15
Printpack, Inc.:
Series B, 9.875% 2004 2,775 2,789
10.625% 2006 9,465 9,110 .13
Graham Packaging Co.:
8.75% 2008 3,625 3,444
0%/10.75% 2009(1) 5,975 4,003 .08
Impress Metal Packaging Holdings BV 9.875% 2007 DM12000 7,017 .07
Anchor Glass Container Corp. 11.25% 2005 $4,750 4,821 .05
Key Plastics Inc. 10.25% 2007 1,000 980 .01
--------------------
46,789 .49
--------------------
CONSUMER & BUSINESS SERVICES
Sotheby's Holdings, Inc. 6.875% 2009 20,000 18,632 .20
CellNet Data Systems, Inc., units, 0%/14.00% 2007(1),(4),(5) 19,708 9,893 .10
Protection One Alarm Monitoring, Inc.:
6.75% convertible debentures 2003 5,000 4,463
13.625% 2005(5) 4,560 5,107 .10
The Hertz Corp. 6.25% 2009 4,000 3,727 .04
Teletrac Holdings, Inc., units, 14.00% 2007(4),(5) 6,857 2,192 .02
Safety-Kleen Services, Inc. 9.25% 2008 250 261 .00
--------------------
44,275 0.46
--------------------
BEVERAGES & TOBACCO
Canandaigua Wine Co., Inc.:
Series C, 8.75% 2003 7,500 7,425
8.75% 2003 6,650 6,584 .15
Standard Commercial Tobacco Co., Inc. 8.875% 2005 6,750 5,603 .06
Delta Beverage Group, Inc. 9.75% 2003 4,750 4,988 .05
--------------------
24,600 .26
--------------------
OTHER
Salton/Maxim Housewares, Inc. 10.75% 2005 8,250 8,642 .09
Tultex Corp.:
10.625% 2005 6,891 2,756
9.625% 2007 6,891 2,756 .06
--------------------
14,154 .15
--------------------
FINANCE
BANKS & THRIFTS
SocGen Real Estate Co. LLC, Series A, 7.64%/8.406% 99,000 93,421 .97
(undated)(1),(2)
Tokai Preferred Capital Co. LLC, Series A, 9.98% 94,500,000share 87,180 .90
noncumulative preferred(2)
BNP U.S. Funding LLC, Series A, 7.738% noncumulative 64,000,000 60,193
preferred(2)
Banque Nationale de Paris 5.80% (undated)(6) $12,500 12,026 .75
Fuji JGB Investment LLC, Series A, 9.87% noncumulative 67,250,000share 58,844
preferred(2)
Fuji International Finance (Bermuda) Trust, Fuji Bank, Ltd. $10,000 8,350 .70
7.30% Eurodollar Note (undated)(6)
MBNA Corp., MBNA:
Capital A, Series A, 8.278% 2026 28,000 25,853
Capital B, Series B, 5.795% 2027(6) 30,000 26,108 .54
Bankers Trust New York Corp.:
6.70% 2007 20,000 19,309
7.50% 2015 18,500 17,758
7.90% 2027 5,000 4,789
Deutsche Bank Capital Funding Trust I 7.872% (undated)(2),(6) 7,000 6,751 .50
Capital One Bank:
6.375% 2003 5,000 4,924
6.40% 2003 2,000 1,955
6.78% 2005 10,000 9,792
7.15% 2006 11,000 10,776
6.70% 2008 10,000 9,551
Capital One Capital I 6.545% 2027(2),(6) 10,000 8,870 .48
Advanta Corp.:
Series D, 6.54% 2000 10,600 10,478
Series D, 6.60% 2000 6,000 5,936
Series B, 7.00% 2001 4,000 3,694
Series D, 6.925% 2002 2,500 2,222
6.925% 2002 2,000 1,777
Advanta Capital Trust I 8.99% 2026 11,000 7,370 .33
NB Capital Corp. 8.35% exchangeable depositary shares 1,200,000share 30,374 .32
Skandinaviska Enskilda Banken AB:
6.875% 2009 $8,250 8,039
7.50% (Undated)(6) 23,000 21,541 .31
Bank of Scotland 7.00% (Undated)(2),(6) 30,000 28,679 .30
Paribas, New York Branch 6.95% 2013 30,000 28,196 .29
Washington Mutual Capital I, Subordinated Capital Income 22,000 22,231
Securities, 8.375% 2027
Ahmanson Capital Trust I, Capital Securities, 2,030 2,063
Series A, 8.36% 2026(2)
Great Western Financial Trust II, Series A, 8.206% 2027 2,055 2,032 .27
IBJ Preferred Capital Co. LLC, Series A, 8.79% 27,450,000share 22,921 .24
noncumulative preferred(2)
National Westminster Bank PLC 7.75% (undated)(6) $23,000 22,846 .24
BankAmerica Corp. 5.875% 2009 22,500 20,657 .21
HSBC America Capital 8.38% 2027(2) 19,375 19,459 .20
Canadian Imperial Bank of Commerce 5.25% Eurodollar Note 25,000 19,313 .20
(undated)(6)
Dime Capital Trust I, Dime Bancorp, Inc., Series A, 9.33% 2027 16,000 16,643 .17
Imperial Capital Trust I, Imperial Bancorp 9.98% 2026 15,000 14,472 .15
Bayerische Vereinsbank AG 5.50% 2008 E13271 14,452 .15
Standard Chartered Bank:(6)
Series 3, 5.463% (Undated) $5,000 3,311
Series 1, 5.50% Eurodollar Note (Undated) 15,000 9,875 .14
Chevy Chase Preferred Capital Corp. 10.375% 242,900share 13,026 .14
Hypothekenbank in Essen AG 5.25% 2008 E12000 12,757 .13
Riggs Capital Trust II 8.875% 2027 $7,500 7,272
Riggs National Corp. 8.625% 2026 5,400 5,102 .13
Fleet Financial Group, Inc. 6.375% 2008 1,000 952
Fleet Capital Trust II 7.92% 2026 1,000 982
Fleet Capital Trust V 6.176% 2028(6) 10,000 10,045 .12
Abbey National PLC 6.70% (Undated)(6) 12,500 11,872 .12
J.P. Morgan & Co. Inc.:
Series A, 6.00% 2009 1,650 1,527
Series A, 5.302% 2012(10) 10,000 8,743 .11
Bankunited Capital Trust, AG, Bankunited 10,000 10,000 .10
Financial Corp., 10.25% 2026
Rheinische Hypothekenbank Eurobonds 4.25% 2008 E10000 9,893 .10
Royal Bank of Scotland 8.375% 2007 L4900 8,524 .10
SB Treasury Co. LLC, Series A, 9.40% noncumulative preferred(2) 8,500,000share 8,350 .09
Bank of Nova Scotia 5.25% Eurodollar Note (undated)(6) $10,000 7,800 .08
Korea Development Bank:
7.125% 2001 1,000 998
6.625% 2003 750 721
7.375% 2004 6,000 5,899 .08
Hongkong and Shanghai Banking Corp. Ltd. 5.438% (undated)(6) 10,000 7,588 .08
Lloyds Bank (#2) 5.25% (undated)(6) 8,000 6,779 .07
Den Danske Bank 7.40%/7.961% 2010(2),(6) 6,000 6,091 .06
Allied Irish Banks PLC. 5.50% (undated)(6) 7,000 6,024 .06
Chase Capital I, Capital Securities, Series A, 7.67% 2026 6,000 5,790 .06
BCI US Funding Trust I 8.01% (Undated)(2),(6) 6,000 5,716 .06
Bay View Capital Corp. 9.125% 2007 5,500 5,170 .05
Midland Bank 5.75% Eurodollar Note (undated)(6) 5,000 4,054 .04
MBI Finance 0% convertible debentures 2001 6,000 4,800 .05
Merita Bank Ltd. 7.15% (undated)(2),(6) 4,000 3,974 .04
National Bank of Canada 4.516% (undated)(6) 5,000 3,778 .04
Bergen Bank 5.188% (undated)(6) 5,000 3,746 .04
Christiana Bank Og Kreditkasse 5.313% (undated)(6) 4,000 3,042 .03
Komercni Finance BV 9.00%/10.75% 2008(2),(6) 2,000 1,735 .02
Kansallis-Osake-Pankki 10.00% 2002 1,000 1,084 .01
Svenska Handelsbanken 8.125% 2007 1,000 1,065 .01
Banco General SA 7.70% 2002(2) 500 476 .00
--------------------
1,000,406 10.38
--------------------
FINANCIAL SERVICES
Ford Motor Credit Co.:
5.25% 2008 DM32000 16,894
5.80% 2009 $44,000 40,212 .59
Household Finance Corp.:
6.00% 2004 10,000 9,721
5.455% 2005(6) 6,000 5,980
6.40% 2008 21,750 20,668 .38
Providian:
National Bank 6.65% 2004 10,000 9,667
Financial Corp. 9.525% 2027(2) 16,750 15,888 .27
AT&T Capital Corp. 6.60% 2005 18,000 17,283 .18
Associates Corp. of North America:
5.85% 2001 2,500 2,491
6.25% 2008 15,000 14,314 .17
Wilshire Real Estate Investment Trust 19.00% 11/12/1999(5),(6) 18,130 14,504 .15
Nykredit A/S 6.00% 2029 DKr106920 14,132 .15
AB Spintab:
6.00% 2009 SKr23000 2,736
6.80% (undated)(2),(6) $1,500 1,457
7.50% (undated)(2),(6) 8,500 8,279 .13
Ocwen Financial Corp. 12.00% 2005 6,000 5,880
Ocwen Capital Trust I 10.875% 2027 6,500 5,086 .11
Newcourt Credit Group 6.875% 2005(2) 10,000 9,786 .10
General Motors Acceptance Corp. 5.85% 2009 10,000 9,175 .10
Wharf Capital International, Ltd. 8.875% 2004 7,457 7,262 .08
Heller Financial, Inc. 6.00% 2004 7,500 7,260 .08
Ford Credit Auto Owner Trust, Series 1999-B, Class C, 6.65% 200 7,000 6,974 .07
AMRESCO, INC., Series 1998-A, 9.875% 2005 8,150 6,846 .07
Halifax Building Society 8.75% 2006 L3000 5,320 .05
Green Tree Financial Corp. 6.50% 2002 $4,000 3,792 .04
Triad Auto Receivables Owner Trust, Series 1999-1, 3,000 2,977 .03
Class A2, 6.09% 2005
Lend Lease (US) Finance Inc. 6.75% 2005 1,500 1,493 .01
--------------------
266,077 2.76
--------------------
REAL ESTATE
ProLogis Trust:
7.25% 2002 $750 751
7.05% 2006 8,000 7,704
7.20% 2013 $13,500 12,402
Series D, 7.92% preferred 380,000share 9,120
Series C, 8.625% convertible preferred 200,000share 4,913 .36
CarrAmerica Realty Corp.:
Series B, 8.57% cumulative redeemable preferred 700,000share 16,538
Series C, 8.55% cumulative redeemable preferred 400,000 9,250 .27
EOP Operating LP:
6.763% 2007 $5,000 4,753
6.75% 2008 11,500 10,874 .16
Irvine Co. 7.46% 2006(2),(5) 15,000 14,127 .15
ERP Operating LP:
7.95% 2002 3,750 3,854
7.57% 2026 8,000 8,036 .12
Beverly Finance Corp. 8.36% 2004(2) 7,500 7,795 .08
Irvine Apartment Communities, LP 7.00% 2007 8,250 7,501 .08
IAC Capital Trust, Series A, 8.25% TOPRS preferred 300,000share 7,219 .07
Duke Realty Investments, Inc., Series B, 7.99% 150,000 6,713 .07
preferred cumulative step-up premium rate
Simon DeBartolo Group, Inc., Series C, 7.89% 150,000 6,450 .07
preferred cumulative step-up premium rate
New Plan Realty Trust, Series A, 7.80% preferred cumulative 112,500 5,006 .05
step-up premium rate
Wellsford Residential Property Trust:
7.25% 2000 $1,000 999
7.75% 2005 1,000 1,017 .02
--------------------
145,022 1.50
--------------------
INSURANCE
Jefferson Pilot Corp.:
8.14% 2046 (2) 6,000 5,930
Capital Trust 8.285% 2046 8,500 8,546 .15
Lindsey Morden Group Inc., Series B, 7.00% 2008(2) C$16000 10,126 .11
Aflac Inc. 6.50% 2009(2) $10,000 9,527 .10
ReliaStar Financial Corp. 8.625% 2005 5,000 5,362 .05
--------------------
39,491 .41
--------------------
COLLATERALIZED MORTGAGE/ASSET - BACKED OBLIGATIONSAgencies) (8)
(Excluding Those Issued by Federal
GMAC Commercial Mortgage Securities, Inc.:
Series 1997-C1, Class A1, 6.83% 2003 20,796 21,014
Series 1997-C1, Class A3, 6.869% 2007 20,000 19,566
Series 1997-C2, Class E, 7.624% 2011 27,703 24,110
Series 1996-C1, Class A2A, 6.79% 2028 819 825
Series 1999-C1, Class D, 7.073% 2033(6) 17,500 16,359
Series 1999-C1, Class E, 7.073% 2033(6) 8,500 7,426 .93
DLJ Commercial Mortgage Corp.:
Series 1997-CF1, Class A1A, 7.40% 2006(2) 6,102 6,147
Series 1996-CF2, Class A1B, 7.29% 2021(2) 11,200 11,423
Series 1995-CF2, Class A1B, 6.85% 2027(2) 30,845 31,039
Series 1996-CF1, Class A1A, 7.28% 2028 8,972 9,102
Series 1998-CF1, Class A1A, 6.14% 2031(6) 21,921 21,445
Series 1998-CF2, Class A1B, 6.24% 2031 10,000 9,544 .92
Morgan Stanley Capital I Inc.:
Series 1995-GA1, Class A-1, 7.00% 2002(2) 4,680 4,708
Series 1998-HF1, Class A-1, 6.19% 2007(6) 30,364 29,717
Series 1996-WF1, Class A-1, 6.599% 2028(2),(6) 8,533 8,581
Series 1998-WF2, Class A-1, 6.34% 2030(6) 9,375 9,223
Series 1998-MC1, Class A-1 6.417% 2030 7,884 7,814
Series 1998-HF2, Class A-2, 6.48% 2030 17,000 16,525
Series 1999-FNV1, Class A-1 6.12% 2032 9,892 9,650 .89
Green Tree Financial Corp., pass-through certificates:(8)
Series 1994-A, Class NIM, 6.90% 2004 2,623 2,618
Series 1995-A, Class NIM, 7.25% 2005 8,551 8,505
Series 1993-2, Class B, 8.00% 2018 2,250 2,081
Series 1997-A, Class HI-M1, 7.47% 2023 1,000 1,004
Series 1995-8, Class B2, 7.65% 2026 4,000 3,146
Series 1995-6, Class B2, 8.00% 2026 2,450 1,994
Series 1995-9, Class A-5, 6.80% 2027 8,000 8,010
Series 1996-7, Class A6, 7.65% 2027 2,100 2,122
Series 1996-6, Class B2, 8.35% 2027 10,583 8,939
Series 1997-1, Class A-5, 6.86% 2028 1,500 1,487
Series 1996-10, Class A-6, 7.30% 2028 8,500 8,357
Series 1998-4, Class B2, 8.11% 2028 13,350 10,442
Series 1997-6, Class A7, 7.14% 2029 15,700 15,818 .77
CS First Boston:
Finance Co. Ltd., Series 1995-A, 5.970% 2005(2),(6) 42,400 38,160
Series 1998-FL1, Class E, 5.768% 2013(2),(6) 12,080 11,814
Mortgage Securities Corp., Series 1998-C1, Class A-1A, 6.26% 20 15,703 15,484 .68
Chase Commercial Mortgage Securities Corp.:
Series 1996-1, Class A1, 7.60% 2005 4,031 4,126
Series 1997-I, Class A1, 7.27% 2029 6,516 6,652
Series 1998-1, Class A1, 6.34% 2030 30,166 29,881
Series 1998-2, Class A-2, 6.39% 2030 8,000 7,707
Series 1998-2, Class E, 6.39% 2030 10,000 8,541 .59
First Consumer Master Trust, Series 1999-A, Class A, 5.80% 2005 51,000 48,450 .50
Structured Asset Securities Corp.:
Series 1998-RF2, Class A, 8.567% 2022(2),(6) 35,312 36,593
Series 1998-RF1, Class A, 8.692% 2027(2),(6) 3,555 3,699
Series 1996-CFL, Class D, 7.034% 2028 2,950 2,950
Series 1996-CFL, Class A2A, 7.75% 2028(6) 218 219 .45
Merrill Lynch Mortgage Investors, Inc.:
Seller Manufactured Housing Contracts, Series 1995-C2, 4,641 4,646
Class A-1, 7.175% 2021(6)
Mortgage Pass-Through Certificates:
Series 1995-C2, Class D, 7.945% 2021(6) 516 518
Series 1995-C3, Class A-1, 6.759% 2025(6) 2,094 2,105
Series 1995-C3, Class A-3, 7.059% 2025(6) 15,855 15,968
Series 1996-C2, Class A-1, 6.69% 2028(6) 12,470 12,527
Series 1998-C3, Class A1, 5.65% 2030 2,908 2,800 .40
Asset Securitization Corp.:
Series 1996-D3, Class A-1B, 7.21% 2026 3,000 3,065
Series 1997-D4, Class A-1A, 7.35% 2029 8,651 8,840
Series 1997-D5, Class A-PS1, interest only, 1.586% 2043(6) 275,593 25,494 .39
Garanti Trade Payment Rights Master Trust, Series 1999-B, 35,000 34,958 .36
Class 1, 10.81% 2004(2)
First USA Credit Card Master Trust:
Series 1999-1, Class C, 6.42% 2006(2) 2,500 2,423
Class A Floating-Rate Asset-Backed Certificates:(2),(6)
Series 1998-7 5.624% 2004 4,000 3,986
Series 1998-4, 5.524% 2008 15,000 14,771
Series 1998-8, 5.924% 2008 5,626 5,597
Series 1997-4, 5.90% 2010 6,630 6,526 .35
GS Mortgage Securities Corp.:
Series 1998-2, Class M, 7.75% 2027(2) 1,173 1,179
Series 1998-C1, Class D, 7.45% 2030(6) 3,750 3,424
Series 1998-C1, Class E, 7.45% 2030(6) 31,076 27,390 .33
L.A. Arena Funding, LLC, Series 1, Class A, 7.656% 2026(2) 32,625 30,426 .32
NationsLink Funding Corp., Series 1999-1, Class D, 6.6365% 2031 27,718 26,263 .27
H.S. Receivables Corp., Series 1999-1, Class A, 8.13% 2004(2) 22,500 22,725 .24
Metris Master Trust, Series 1998-1A, Class C, 5.874% 2005(2),(6 23,645 22,706 .23
Sears Credit Account Master Trust:
Series 1998-2, Class A, 5.25% 2008 12,300 11,747
Series 1999-1, Class A, 5.65% 2009 10,000 9,659 .22
Puerto Rico Public Financing Corp., Series 1999-1, 21,017 20,555 .21
Class A, 6.15% 2008
Bear Stearns Commercial Mortgage Securities Inc.:
Series 1998-C1, Class A-1, 6.34% 2007 8,465 8,345
Series 1999-C1, Class X, interest only, 1.054% 2031(6) 173,027 12,043 .21
GE Capital Mortgage Services, Inc.:
Series 1994-15, Class A10, 6.00% 2009 16,376 15,393
Series 1994-9, Class A9, 6.50% 2024 4,779 4,507 .21
Deutsche Mortgage & Asset Receiving Corp., Series 1998-C1, 19,014 18,549 .19
Class A-1, 6.22% 2031
Prudential Securities Secured Financing Corp.,1999-NRF1, 18,000 17,123 .18
Class C, 6.746% 2009 Commercial Mortgage Pass-Through
Certificates, Series
Structured Asset Notes Transaction, Ltd., Series 1996-A, 16,781 16,366 .17
Class A1, 7.156% 2003(2)
Commercial Mortgage Acceptance Corp.:
Series 1998-C1, Class A-1, 6.23% 2007 11,714 11,528
Series 1998-C2, Class A-1, 5.80% 2030 4,728 4,614 .17
Ocwen Residential MBS Corp., Series 1998-R1, 16,377 15,485 .16
Class AWAC, .284% 2040(2),(6)
Nomura Asset Securities Corp., Series 1998-D6, 15,275 15,108 .16
Class A-A1, 6.28% 2030(6)
Health Care Securitization Program, Series 1999-3, 15,000 14,948 .15
Class A, 7.05% 2003(2)
FIRSTPLUS Home Loan Owner Trust:
Series 1997-1, Class A-7, 7.16% 2018 10,000 9,862
Series 1997-3, Class B-1, 7.79% 2023 5,000 4,388 .15
Resolution Trust Corp.:
Series 1991-M5, Class B, 9.00% 2017 1,557 1,557
Series 1993-C1, Class D, 9.45% 2024 9,352 9,325
Series 1993-C1, Class E, 9.50% 2024 70 70
Series 1993-C2, Class C, 8.00% 2025 777 774
Series 1993-C2, Class D, 8.50% 2025 2,499 2,494 .15
Green Tree Recreational, Equipment & Consumer Trust:
Series 1999-A, Class A-6, 6.84% 2029 5,000 4,992
Series 1997-D, Class CTFS, 7.25% 2029 8,500 7,075 .13
ComEd Transitional Funding Trust, Transitional
Funding Trust Note:
Series 1998, Class A-4, 5.39%, 2005 6,000 5,807
Series 1998, Class A-6, 5.63% 2009 6,000 5,631 .12
The Money Store Trust:
Series 1997-1, Class A-2, 6.81% 2011 6,304 6,337
Series 1996-D, Class A-14, 6.985% 2016 4,000 4,021 .11
Residential Asset Securitization Trust, Series 1997-A3 9,225 9,330 .10
, Class B1, 7.75% 2027
MBNA Master Credit Card Trust:
Series 1999-D, Class B, 6.95% 1 6.95% 2008 4,700 4,577
Series 1998-E, Class C, 6.60% 2010(2) 5,000 4,747 .10
LB Commerical Mortgage Trust, Series 1998-C1, 9,361 9,270 .10
Class A1, 6.33% 2030
Government Lease Trust:(2)
Series 1999-GSA1, Class A1, 5.86% 2003 4,806 4,750
Series 1999-C1A, Class B3, 4.00% 2011 6,500 4,498 .10
Grupo Financiero Banamex Accival, SA de CV 0% 2002(2) 10,275 9,141 .09
Norwest Asset Securities Corp., Series 1998-31, 9,086 8,927 .09
Class A-1, 6.25% 2014
PNC Mortgage Securities Corp., Series 1998-10, 9,541 8,720 .09
Class 1-B1, 6.50% 2028(2)
Ditech Home Loan Owner Trust, Series 1998-1, 10,500 8,656 .09
Class B1, 9.50% 2029
Capital One Secured Note Trust Series 1992-2, 6.60% 2005(2) 6,250 6,250
Capital One Master Trust Series 1999-1, Class C, 6.60% 2005 (2) 2,500 2,439 .08
First Union Commercial Mortgage Trust, Series 1999-C1, 7,000 6,043 .06
Class E, 7.166% 2035(6)
First Nationwide, Series 1999-2, Class 1PA1, 6.50% 2029 5,745 5,517 .06
Collateralized Mortgage Obligation Trust, Series 63, 5,271 5,492 .06
Class Z, 9.00% 2020
Travelers Mortgage Securities Corp., Series 1, 4,820 5,302 .05
Class Z2, 12.00% 2014
Standard Credit Card Master Trust I, Series 1994-2A, 5,000 5,119 .05
Class A, 7.25% 2008
Ryland Acceptance Corp. Four, Series 88, Class E, 7.95% 2019 4,524 4,605 .05
Prudential Home Mortgage Securities Co., Inc.:
Series 1993-48, Class A-6, 6.25% 2008 4,466 4,411
Series 1993-34, Class A-1, 7.00% 2023 172 172 .05
Residential Funding Mortgage Securities I, Inc.:
Series 1992-S6, Class A-10, 13.980% 2022(9),(11) 642 647
Series 1998-S17, Class M-1, 6.75% 2028 3,972 3,782 .05
Bear Stearns Structured Securities Inc., Series 1997-2, 3,291 3,169 .03
Class AWAC, 4.242% 2036(2),(6)
Nationsbanc Montgomery Funding Corp., Series 1998-5, 2,874 2,784 .03
Class A-1, 6.00% 2013
Chase Manhattan Bank, NA, Series 1993-I, Class 2A5, 7.25% 2024 2,625 2,629 .03
Financial Asset Securitization, Inc., Series 1997-NAM1, 2,551 2,580 .03
Class B1, 7.75% 2027
UCFC Acceptance Corp., Series 1996-D1, Class A-4, 6.776% 2016 2,400 2,414 .02
J.P. Morgan Commercial Mortgage Finance Corp.:
Series 1995-C1, Class A-2, 7.431% 2010(6) 1,000 1,005
Series 1996-C3, Class A-1, 7.33% 2028 1,227 1,232
Series 1997-C4, Class A-1, 6.939% 2028 131 131 .02
EquiCredit Funding, Asset Backed Certificates, 1,253 1,259 .01
Series 1996-A, Class A2, 6.95% 2012
Citicorp Mortgage Securities, Inc. Series 1988-16, Class A1, 632 635 .01
10.00% 2018
--------------------
1,229,890 12.76
--------------------
U.S. GOVERNMENT & FEDERAL AGENCY SECURITIES
U.S. TREASURY OBLIGATIONS
6.00% August 2000 5,000 5,032
13.125% May 2001 21,500 24,349
5.875% November 2001 16,565 16,669
3.682% July 2002(10) 3,500 3,594
11.625% November 2002 92,000 108,345
10.75% May 2003 7,500 8,777
5.75% August 2003 9,505 9,511
11.875% November 2003 10,000 12,291
7.25% May 2004 197,885 210,128
7.25% August 2004 7,500 7,978
7.875% November 2004 19,000 20,781
11.625% November 2004 106,175 134,029
7.50% February 2005 20,000 21,531
6.50% May 2005 4,750 4,895
6.50% October 2006 36,000 37,170
3.465% January 2007(10) 45,000 45,262
6.125% August 2007 10,015 10,123
4.75% November 2008 3,000 2,755
9.125% May 2009 18,000 20,295
10.375% November 2009 12,500 14,930
10.00% May 2010 7,500 8,934
10.375% November 2012 15,000 19,113
12.00% August 2013 10,000 14,041
7.50% November 2016 32,500 36,628
8.875% August 2017 119,100 152,150
7.875% February 2021 19,250 22,850
8.125% May 2021 65,000 79,158
7.625% November 2022 9,500 11,075
7.125% February 2023 1,900 2,106
6.375% August 2027 12,250 12,552 11.18
--------------------
1,077,052 11.18
--------------------
FEDERAL AGENCY OBLIGATIONS
Mortgage Pass-Throughs(8)
Government National Mortgage Assn.:
6.00% 2028-2029 106,151 99,185
6.50% 2008-2029 40,614 39,206
7.00% 2008-2029 160,112 158,092
7.50% 2007-2028 70,486 71,301
8.00% 2017-2026 34,414 35,435
8.50% 2020-2029 17,596 18,461
9.00% 2009-2022 14,471 15,442
9.50% 2009-2021 9,920 10,677
10.00% 2017-2019 5,204 5,562
10.50% 2015-2019 215 232
11.00% 2029 725 802
12.00% 2014-2015 2,410 2,732 4.74
Fannie Mae:
5.25% 2009 15,000 13,702
5.625% 2004 10,000 9,691
5.858% 2033(6) 25,954 25,484
6.00% 2013-2029 43,640 41,859
6.50% 2013-2029 53,139 52,089
7.00% 2009-2029 66,734 66,280
7.404% 2026(6) 7,419 7,615
7.50% 2009-2028 6,932 7,034
8.00% 2023-2028 2,829 2,915
8.273% 2002(6) 6,653 6,751
8.50% 2009-2027 5,502 5,754
9.00% 2018-2025 2,640 2,794
9.50% 2009-2025 2,666 2,844
10.00% 2018-2025 7,835 8,385
10.50% 2012-2019 2,395 2,596
11.00% 2015-2020 1,460 1,598
11.25% 2014 25 27
11.50% 2010-2014 144 160
12.00% 2015-2029 1,314 1,486
12.50% 2015-2019 3,652 4,177
13.00% 2015-2028 7,912 9,084
15.00% 2013 39 46
Federal Housing Administration/Veterans Affairs 12.50% 2029 1,167 1,335 2.84
Freddie Mac:
5.125% 2008 100,000 89,609
6.00% 2014-2029 14,613 14,102
7.50% 2012 12,380 12,597
8.00% 2003-2026 5,377 5,501
8.25% 2007 1,472 1,518
8.50% 2002-2027 15,320 15,961
8.75% 2008 1,919 1,996
9.00% 2021 471 499
10.00% 2011-2020 2,653 2,853
10.50% 2020 1,765 1,902
10.75% 2010 59 63
11.00% 2018 2,248 2,432
11.50% 2000 12 13
12.00% 2016-2017 7,136 7,936
12.50% 2015-2019 1,654 1,845
12.75% 2019 287 321
13.00% 2014-2015 2,349 2,654
13.50% 2018 7 8
13.75% 2014 11 12 1.68
--------------------
892,655 9.26
--------------------
Collateralized Mortgage Obligations(8)
Freddie Mac:
Series 1849, Class Z, 6.00% 2008 6,013 5,630
Series 1716, Class A, 6.50% 2009 4,750 4,683
Series 178, Class Z, 9.25% 2021 2,095 2,188
Series 1657, Class SA, 7.775% 2023(11) 7,520 5,774
Series 1673, Class SA, 5.818% 2024(11) 7,879 5,779
Series 2030, Class F, 5.488% 2028(6) 1,660 1,673 .27
Fannie Mae:
Series 91-146, Class Z, 8.00% 2006 3,852 3,961
Series 90-93, Class G, 5.50% 2020 726 694
Series 93-247, Class Z, 7.00% 2023 4,380 4,276
Series 1994-4, Class ZA, 6.50% 2024 3,907 3,617
Series 1997-28, Class C, 7.00% 2027 7,000 6,832 .20
Series 1998 W-5, Class B3, 6.50% 2028(2) 4,872 4,019 .04
--------------------
49,126 .51
--------------------
Taxable Municipal Bonds
Alameda Corridor Transportation Authority:
Series D, 5.77% 2006 8,715 8,293
Series D, 5.82% 2007 10,360 9,807
Series D, 5.92% 2009 9,555 8,960 .28
Philadelphia PA Authority for Industrial Development $10,000 9,617 .10
Pension Funding Bonds, Series 1999A, 5.59% 2005
California Maritime Infrastructure Authority 6.63% 2009(2) 5,000 4,853 .05
--------------------
41,530 .43
--------------------
Other - 0.82%
Federal Home Loan Banks:
5.625% 2001 25,000 24,942
7.013% 2007 10,000 9,855 .36
Fannie Mae:
7.70% 2004 12,500 12,523
Medium Term Note, 6.75% 2028 15,000 13,692 .27
U.S. Treasury Obligation Strip Prinicpal:
0% 2007 19,040 12,177
0% 2027 30,390 5,578 .19
--------------------
78,767 .82
--------------------
GOVERNMENT & GOVERNMENTAL BODIES (EXCLUDING U.S. GOVERNMENT)
Hellenic Republic:
8.90% 2004 GRD4900000 17,157
2.90% 2007 Y1270000 10,853
6.95% 2008 $4,500 4,505
8.60% 2008 GRD18295000 66,757
7.50% 2013 620,000 2,171 1.05
Canadian Government:
9.00% 2004 C$20000 15,691
4.756% 2021(10) 10,000 7,815
4.499% 2026(10) 92,000 68,299 .95
Bundesrepublik:
5.00% 2002 E48000 51,517
7.125% 2002 12,271 14,027
6.00% 2007 14,827 16,803 .85
United Kingdom:
6.50% 2003 L11750 19,305
8.50% 2005 12,000 22,015
7.50% 2006 6,500 11,550 .55
Japanese Government:
6.50% 2001 Y4300000 40,231
1.50% 2008 927,250 7,495 .50
Spanish Government 6.00% 2008 E36061 40,501 .42
Polish Government:
12.00% 2001 PLZ20000 5,120
13.00% 2001 25,000 6,454
12.00% 2002 8,375 2,157
12.00% 2003 81,000 21,468 .37
Treuhandanstalt:
7.125% 2003 E11376 13,024
7.50% 2004 16,361 19,526 .34
French Treasury Note 4.50% 2003 28,000 29,565 .31
Norwegian Government:
6.75% 2007 NOK90000 12,208
5.50% 2009 124,500 15,663 .29
Netherlands Government Eurobond 5.75% 2002 E23000 25,171 .26
Hungarian Government:
15.00% 2001 HUF1440000 6,059
12.50% 2002 1,860,000 7,446
13.00% 2003 2,200,000 9,069
10.50% 2004 500,000 1,935 .25
New South Wales Treasury Corp. 8.00% 2008 A$26000 18,666 .19
Italian Government BTPS Eurobonds 6.00% 2007 E16204 18,196 .19
Kingdom of Denmark 6.00% 2009 DKr90000 13,537 .14
United Mexican States Government Eurobonds:
Global, 11.375% 2016 $9,015 9,488
Series A, 6.25% 2019 1,000 735
Global, 11.50% 2026 2,625 2,894 .14
Philippines (Republic of):
8.875% 2008 1,750 1,713
9.875% 2019 9,750 9,567 .12
Argentina (Republic of):
Series L, 5.938% Eurobonds 2005(6) 233 197
Units, 11.00% 2005(4) 5,005 4,604
11.00% 2006 1,500 1,393
11.75% 2007(2) ARP2650 2,104
11.375% 2017 $2,000 1,725
9.75% 2027 1,050 803 .11
Malaysia 8.75% 2009 8,500 8,504 .09
Panama (Republic of):(6)
Interest Reduction Bond 4.00% 2014(2) 6,500 4,778
Past Due Interest Eurobond 5.934% 2016 267 197
Past Due Interest Bond, 5.934% 2016(2),(3) 1,604 1,181 .06
Ontario (Province of):
7.75% 2002 3,500 3,645
5.50% 2008 1,000 920 .05
Venezuela (Republic of):(6)
Front Loaded Interest Reduction Bond:
Series B, 6.00% 2007 190 145
Series A, 6.00% 2007 762 578
Eurobond 6.313% 2007 3,845 2,932 .04
Croatian Government, Series B, 5.813% 2006(6) 3,540 2,947 .03
Columbia (Republic of) 7.625% 2007 3,600 2,781 .03
Mendoza (Province of) 10.00% 2007(2) 4,150 2,749 .03
Quebec (Province of) 8.625% 2005 2,250 2,450 .02
MC-Cuernavaca Trust 9.25% 2001(2) 2,614 1,830 .02
Brazil (Federal Republic of):
Debt Conversion Bond, Series L, 5.938% 2012(6) 500 302
Debt Conversion Bond, Series L, 5.938% 2012(6) 1,500 906
Bearer 8.00% 2014(3) 747 486 .02
New Zealand Government 4.723% 2016(10) NZ$3000 1,602 .02
Bulgaria (Republic of) Front-Loaded Interest Reduction $1,770 1,059 .01
Bond, 2.50% 2012(6)
Peru (Republic of), Past Due Interest Eurobonds 4.50% 2017(6) 750 456 .00
--------------------
717,627 7.45
--------------------
OTHER SECURITIES & MISCELLANEOUS Shares
- -------------------------------------------------------------------------- --------------------
STOCK AND WARRANTS
Viatel, Inc. (USA) 161,582 9,069 .10
Verio Inc., warrants, expire 2004 (USA)(2),(9) 52,200 6,006 .06
PRICE Communications Corp. (USA)(9) 344,908 5,174 .05
NTL Inc., warrants, expire 2008 (USA)(2),(5),(9) 26,362 1,714 .02
RainTree Healthcare Corp. (USA)(7),(5),(9) 348,886 1,221 .01
ICG Holdings, Inc., warrants, expire 2005 (USA)(2),(9) 19,800 495 .01
Protection One Alarm Monitoring, Inc., warrants, 54,400 321 .00
expire 2005 (USA)(2),(9)
Discovery Zone, Inc., units (USA)(4),(5),(9) 15,517 71 .00
--------------------
24,071 .25
--------------------
MISCELLANEOUS
Investment securities in initial period of acquisition 21,36 .22
--------------------
TOTAL BONDS, NOTES AND EQUITY SECURITIES (cost: $9,400,493,000) 9,051,86 93.93
--------------------
Principal Market
Amount Value Percent of
SHORT-TERM SECURITIES (000) (000)Net Assets
- -------------------------------------------------------------------------- --------------------
COMMERCIAL PAPER
American Home Products Corp.:(2)
4.78% due 7/15/99 20,000 19,960
4.84% due 8/17/99 42,000 41,720
5.07% due 9/13/99 30,000 29,670 .95
Coca-Cola Co.:
5.00%-5.02% due 8/5/99 40,300 40,098
4.99% due 8/18/99 8,200 8,144
5.00% due 9/7/99 25,000 24,752 .76
Ameritech Corp.:(2)
4.87% due 7/12/99 20,000 19,968
4.91% due 7/13/99 7,400 7,387
4.82% due 7/26/99 40,900 40,758 .70
Xerox Corp:
4.82% due 7/20/99 38,700 38,596
5.03% due 8/4/99 21,300 21,196 .62
E.W. Scripps Co.:(2)
5.07% due 7/8/1999 13,000 12,985
4.79% due 7/13/99 15,000 14,974
4.80% due 8/11/99 15,000 14,914
5.04% due 9/9/99 7,000 6,928 .52
Fortune Brands Inc.:(2)
4.78% due 7/13/99 5,000 4,991
4.79% due 7/22/99 9,000 8,973
5.00% due 8/3/99 21,000 20,901
5.03% due 8/9/99 11,500 11,436 .48
Johnson & Johnson:(2)
20,800 20,745
4.77% due 8/17/99 5,000 4,967
5.02% due 10/15/99 14,200 13,976 .41
General Electric Capital Corp. 5.625% due 7/1/99 39,400 39,394 .41
A.I. Credit Corp. 4.77% due 7/6/99 25,000 24,980 .26
--------------------
TOTAL SHORT-TERM SECURITIES (cost $492,462,000) 492,413 5.11
--------------------
TOTAL INVESTMENT SECURITIES (cost $9,892,955,000)
Excess of cash and receivables over payables $92,847 .96
--------------------
NET ASSETS $9,637,12 100.00
====================
(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) Company not making interest or dividend payments; bankruptcy
proceedings pending.
(8) Pass-through securities backed by a pool of mortgages or other
assets on which principal payments are periodically made.
Therefore, the effective maturities are shorter than the stated
maturities.
(9) Non-income-producing security.
(10) Index-linked bond whose principal amount moves with a
government retail price index.
(11) Inverse floater, which is a floating-rate note whose interest
rate note whose interest rate moves in the opposite direction of
prevailing interest rates.
See Notes to Financial Statements
</TABLE>
<TABLE>
The Bond Fund of America
FINANCIAL STATEMENTS
<S> <C> <C>
STATEMENT OF ASSETS AND LIABILITIES (Unaudited)
June 30,1999 (dollars in thousands)
Assets:
Investment securities at market
(Cost: $9,892,955) $9,544,273
Cash 12,264
Receivables for--
Sales of investments $49,062
Forward currency contracts 9,746
Sales of fund's shares 20,844
Dividends and accrued interest 139,157
Other 4 218,813
------------ ---------------
9,775,350
Liabilities:
Payables for--
Purchases of investments 102,349
Repurchases of fund's shares 21,534
Dividends on fund's shares 10,065
Management services 2,584
Accrued expenses 1,698 138,230
------------ ---------------
Net Assets at June 30, 1999--
Equivalent to $13.25 per share
on 727,122,761 shares of $1 par
value capital stock outstanding
(authorized capital stock--
1,000,000,000 shares) $9,637,120
===============
STATEMENT OF OPERATIONS (Unaudited)
for the six months ended June 30,1999 (dollars in thousands)
Investment Income:
Income:
Interest $352,448
Dividends from investment in stocks 8,409 $360,857
------------ ---------------
Expenses:
Management services fee 15,269
Distribution expenses 11,911
Transfer agent fee 3,351
Reports to shareholders 229
Registration statement and prospectus 563
Postage, stationery and supplies 662
Directors' fees 32
Auditing and legal fees 62
Custodian fee 392
Taxes other than federal income tax 98
Other expenses 139 32,708
------------ ---------------
Net investment income 328,149
---------------
Realized Gain and Unrealized
Depreciation on Investments:
Net realized gain 27,909
Net change in unrealized (depreciation)
appreciation on:
Investments (279,050)
Open forward currency contracts 10,433
------------
Net unrealized depreciation (268,617)
---------------
Net realized gain and
unrealized depreciation
on investments (240,708)
---------------
Net Increase in Net Assets Resulting
from Operations $87,441
===============
STATEMENT OF CHANGES IN NET ASSETS (dollars in thousands)
Six months Year ended
ended December 31,
June 30, 1999* 1998
------------ ---------------
Operations:
Net investment income $328,149 $621,853
Net realized gain on investments 27,909 45,203
Net unrealized depreciation
on investments (268,617) (225,567)
------------ ---------------
Net increase in net assets
resulting from operations 87,441 441,489
------------ ---------------
Dividends and Distributions Paid to
Shareholders:
Dividends from net
investment income (341,758) (612,126)
Distributions from net realized gains
on investments 0 (92,338)
------------ ---------------
Total dividends and distributions (341,758) (704,464)
------------ ---------------
Capital Share Transactions:
Proceeds from shares sold:
104,332,712 and 219,927,964 1,405,907 3,045,786
shares, respectively
Proceeds from shares issued in
reinvestment of net investment
income dividends and distributions
of net realized gain on investments:
19,755,422 and 40,515,125 shares,
respectively 265,231 559,111
Cost of shares repurchased:
98,044,649 and 143,192,216
shares, respectively (1,320,294) (1,977,460)
------------ ---------------
Net increase in net assets
resulting from capital share
transactions 350,844 1,627,437
------------ ---------------
Total Increase in Net Assets 96,527 1,364,462
Net Assets:
Beginning of period 9,540,593 8,176,131
------------ ---------------
End of period (including
undistributed net investment
income: $(14,767) and $(1,158)
respectively) $9,637,120 $9,540,593
============ ===============
* Unaudited
See Notes to Financial Statements
</TABLE>
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
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 financial statements have been
prepared in conformity with generally accepted accounting principles which
require management to make estimates and assumptions that affect the reported
amounts and disclosures in the financial statements. Actual results could
differ from those estimates. The following is a summary of the significant
accounting policies consistently followed by the fund in the preparation of its
financial statements:
SECURITY VALUATION - 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. The ability of the issuers of the debt securities held by the fund to
meet their obligations may be affected by economic developments in a specific
industry, state or region. Short-term securities maturing within 60 days are
valued at amortized cost, which approximates market value. Forward currency
contracts are valued at the mean of their representative quoted bid and asked
prices. Securities and assets for which representative market quotations are
not readily available are valued at fair value as determined in good faith by a
committee appointed by the Board of Directors.
NON-U.S. CURRENCY TRANSLATION - Assets 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 and other
assets and liabilities are included with the net realized and unrealized gain
or loss on investment securities.
SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME - Security
transactions are accounted for as of the trade date. Realized gains and losses
from securities transactions are determined based on specific identified cost.
In the event securities are purchased on a delayed delivery or "when-issues"
basis, the fund will instruct the custodian to segregate liquid assets
sufficient to meet its payment obligations in these transactions. Dividend
income is recognized on the ex-dividend date, and interest income is recognized
on an accrual basis. Market discounts, premiums, and original issue discounts
on securities purchased are amortized daily over the expected life of the
security.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS - Dividends 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. Purchases and sales of forward currency exchange
contracts are presented net in the statement of assets and liabilities.
2. NON-U.S. INVESTMENTS
INVESTMENT RISK - Investments in securities of non-U.S. issuers in certain
countries involve special investment risks. These risks may include, but are
not limited to, investment and repatriation restrictions, revaluation of
currencies, adverse political, social, and economic developments, government
involvement in the private sector, limited and less reliable investor
information, lack of liquidity, certain local tax law considerations, and
limited regulation of the securities markets.
NON-U.S. CURRENCY GAINS AND LOSSES - Net realized currency losses on
interest, sales of non-U.S. bonds and notes and other receivables and payables,
on a book basis, were $18,007,000 for the six months ended June 30,1999.
3. FEDERAL INCOME TAXATION
The fund complies with the requirements of the Internal Revenue Code
applicable to regulated investment companies and intends to distribute all of
its net taxable income and net capital gains for the fiscal year. As a
regulated investment company, the fund is not subject to income taxes if such
distributions are made. Required distributions are determined on a tax basis
and may differ from net investment income and net realized gains for financial
reporting purposes. In addition, the fiscal year in which amounts are
distributed may differ from the year in which the net investment income and net
realized gains are recorded by the fund.
As of June 30, 1999, net unrealized depreciation on investments, excluding
forward currency contracts, for book and federal income tax purposes aggregated
$348,682,000, of which $161,287,000 related to appreciated securities and
$509,969,000 related to depreciated securities. During the six months ended
June 30, 1999, the fund realized, on a tax basis, a net capital gain of
$23,707,000 on securities transactions. Net gains related to non-U.S. currency
transactions of $4,202,000 are treated as ordinary income for federal income
tax purposes. The cost of portfolio securities, excluding forward currency
contracts, for book and federal income tax purposes was $9,892,955,000 at June
30, 1999.
4. FEES AND TRANSACTIONS WITH RELATED PARTIES
INVESTMENT ADVISORY FEE - The fee of $15,269,000 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.
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 six months
ended June 30, 1999, distribution expenses under the Plan were limited to
$11,911,000. Had no limitation been in effect, the fund would have paid
$15,482,000 in distribution expenses under the Plan. As of June 30, 1999,
accrued and unpaid distribution expenses were $1,547,000.
American Funds Distributors, Inc. (AFD), the principal underwriter of the
fund's shares, received $3,682,000 (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 $3,351,000.
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 June 30, 1999, aggregate deferred compensation and earnings
thereon since the plan's adoption (1993), net of any payments to Directors,
were $158,000.
CRMC is owned by The Capital Group Companies, Inc. AFS and AFD are both
wholly owned subsidiaries of CRMC. Certain Directors and officers of the fund
are or may be considered to be affiliated with CRMC, AFS and AFD. No such
persons received any remuneration directly from the fund.
5. INVESTMENT TRANSACTIONS AND OTHER DISCLOSURES
The fund made purchases and sales of investment securities, excluding
short-term securities, of $2,964,028,000 and $2,602,542,000, respectively,
during the six months ended June 30, 1999.
As of June 30, 1999, accumulated net realized gain on investments was
$45,916,000 and additional paid-in capital was $9,235,814,000.
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 $392,000 includes $182,000 that was paid by these credits
rather than in cash.
At June 30, 1999, the fund had outstanding forward currency contracts to
sell non-U.S. currencies as follows:
<TABLE>
<S> <c<C> <C> <C> <C>
Contract Amount U.S. Valuatioat 6/30/1999
---------------------------------------------------
Unrealized
Appreciation
Non-U.S. Currency Sales Contracts Non-U.S. U.S. Amount (Depreciation)
European Monetary Unit expiring 7/28 to
12.1.1999 Euro245,766,000 $264,743,000$254,828,000 $9,915,000
British Pound expiring 8/10 to 12/2/99 Pound28,579,000 45,684,000 45,110,000 574,000
Japanese Yen expiring 7/26 to 10/1/99 Yen2,730,600,00 22,866,000 22,827,000 39,000
---------------------------------------
$333,293,000$322,765,000 $10,528,000
=======================================
</TABLE>
<TABLE>
PER-SHARE DATA AND RATIOS
<S> <C> <C> <C> <C> <C>
Six months
ended Year endedDecember 31
6/30/99/1/ 1998 1997 1996
Net Asset Value, Beginning of Period $13.61 $14.00 $13.75 $13.88
----------------------------------------
Income from Investment Operations:
Net investment income 0.46 0.94 0.98 1.02
Net gains or losses on securities (both (0.34) (0.24) 0.25 (0.13)
realized and unrealized) ----------------------------------------
Total from investment operations 0.12 0.70 1.23 0.89
----------------------------------------
Less Distributions:
Dividends (from net investment income) (0.48) (0.95) (0.98) (1.02)
Distributions (from capital gains) - (0.14) - -
Total distributions (0.48) (1.09) (0.98) (1.02)
----------------------------------------
Net Asset Value, End of Period $13.25 $13.61 $14.00 $13.75
=========================================
Total Return/2/ .77%/3/ 5.17% 9.24% 6.71%
Ratios/Supplemental Data:
Net assets, end of period (in millions) $9,637.00 $9,541.00 $8,176.00 $7,002.00
Ratio of expenses to average net assets .34%/3/ .66% .68% .71%
Ratio of net income to average net assets 3.40%/3/ 6.94% 6.95% 7.47%
Portfolio turnover rate 28.81%/3/ 66.25% 51.96% 43.43%
1995 1994
Net Asset Value, Beginning of Period $12.69 $14.45
--------------------
Income from Investment Operations:
Net investment income 1.05 1.05
Net gains or losses on securities (both 1.18 (1.76)
realized and unrealized) --------------------
Total from investment operations 2.23 (0.71)
--------------------
Less Distributions:
Dividends (from net investment income) (1.04) (1.05)
-- --
Distributions (from capital gains) - -
Total distributions (1.04) (1.05)
--------------------
Net Asset Value, End of Period $13.88 $12.69
========= =========
Total Return/2/ 18.25% (5.02)%
Ratios/Supplemental Data:
Net assets, end of period (in millions) $6,290.00 $4,941.00
Ratio of expenses to average net assets .74% .69%
Ratio of net income to average net assets 7.87% 7.77%
Portfolio turnover rate 43.80% 56.98%
/1/Unaudited.
/2/Excludes maximum slaes charge of 4.75%
/3/Based on operations for the period shown, and
accordingly, not representative of a full year
</TABLE>
[The American Funds Group(r)]
OFFICES OF THE FUND AND
OF THE INVESTMENT ADVISER,
CAPITAL RESEARCH AND
MANAGEMENT COMPANY
333 South Hope Street
Los Angeles, California 90071-1443
135 South State College Boulevard
Brea, California 92821-5823
TRANSFER AGENT FOR
SHAREHOLDER ACCOUNTS
American Funds Service Company
(Please write to the address nearest you.)
P.O. Box 2205
Brea, California 92822-2205
P.O. Box 659522
San Antonio, Texas 78265-9522
P.O. Box 6007
Indianapolis, Indiana 46206-6007
P.O. Box 2280
Norfolk, Virginia 23501-2280
CUSTODIAN OF ASSETS
The Chase Manhattan Bank
One Chase Manhattan Plaza
New York, New York 10081-0001
COUNSEL
Paul, Hastings, Janofsky & Walker LLP
555 South Flower Street
Los Angeles, California 90071-2371
PRINCIPAL UNDERWRITER
American Funds Distributors, Inc.
333 South Hope Street
Los Angeles, California 90071-1462
FOR INFORMATION ABOUT YOUR ACCOUNT OR ANY OF THE FUND'S SERVICES, 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.
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
September 30, 1999, this report must be accompanied by an American Funds Group
Statistical Update for the most recently completed calendar quarter.
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 would like more detailed information, call
Shareholder Services at 800/421-0180, ext. 21, or visit our Web site at
www.americanfunds.com.
Printed on recycled paper
Litho in USA CD/L/4234
Lit. No. BFA-013-0899
