[The American Funds Group(r)]
The Bond Fund of America
Semi-Annual Report For The Six Months Ended June 30, 2000
Twenty-Five Years
[cover: mutual fund stock certificates]
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 American Funds, the nation's
third-largest mutual fund family. For nearly seven 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
(assuming distributions reinvested or interest
compounded for periods ended June 30, 2000)
<TABLE>
<CAPTION>
Lifetime
(since May 28, 1974)
6-month 12-month Total compound
return return return return
<S> <C> <C> <C> <C>
The Bond Fund of America +1.9% +3.4% +1,035.2% +9.8%
Lehman Brothers Aggregate Bond Index/1/ +4.0 +4.6 +904.6 +9.2
Lipper Corporate A-Rated Bond Funds Average/2/ +3.0 +2.8 +848.1 +9.0
Average savings institution/3/ +1.8 +3.7 +401.7 +6.4
Consumer Price Index/4/ +2.4 +3.7 +254.5 +5.0
</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. The indexes serve as proxies for the broad U.S.
investment-grade bond market and are unmanaged.
/2/Source: Lipper, Inc. Lipper averages 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, which reflect 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 calculated for Class A shares at net asset
value (without a sales charge) unless otherwise indicated. Here are average
annual compound returns on a $1,000 investment for periods ended June 30, 2000,
with all distributions reinvested:
<TABLE>
<CAPTION>
10 years 5 years 1 year
<S> <C> <C> <C>
Class A Shares
reflecting 3.75% maximum sales charge +7.90% +5.61% -0.51%
</TABLE>
The fund's 30-day yield for Class A shares as of July 31, 2000, calculated in
accordance with the Securities and Exchange Commission formula, was 7.67%.
Results for Class B shares are not shown because of the brief time between
their introduction on March 15 and the end of the fund's reporting period.
Please see the back cover for important information about Class A and B shares.
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. High-yield bonds are
subject to greater default risk than investment-grade bonds. Investing outside
the United States is subject to additional risks, such as currency fluctuations
and differing securities regulations, which are detailed in the fund's
prospectus.
Fellow Shareholders:
The first half of 2000 was marked by strong cross currents in the bond market.
U.S. Treasury securities, particularly those with the longest maturities,
posted robust returns, while prices of investment-grade corporate bonds
retreated slightly; lower rated issues fell more sharply. Prices began to
improve toward the end of the period, however, amid signs that economic growth
and concerns about inflationary pressures were moderating.
Fund results
In this challenging six-month period, The Bond Fund of America continued to
generate attractive income for shareholders. Although sluggish bond prices hurt
the value of some of the holdings in the portfolio, these declines were more
than offset by generous monthly dividends totaling 46.5 cents a share. For
shareholders who reinvested those dividends, that resulted in an income return
of 3.6% (7.2% annualized) and a six-month total return of 1.9%.
The fund's 1.9% return trailed the unmanaged Lehman Brothers Aggregate Bond
Index, which rose 4.0% on a reinvested basis, and the 3.0% average return for
the 181 corporate A-rated bond funds tracked by Lipper, Inc. Over longer time
frames, though, The Bond Fund of America has continued to surpass relevant
benchmarks, as the table at left shows. Since beginning operations 26 years
ago, the fund has achieved a total return of 1,035.2% - an average compound
return of 9.8% - and outpaced inflation by a wide margin.
Prosperity's double edge
During the six months, the U.S. economy continued to roar ahead. On the heels
of an astounding annualized growth rate of 8.3% in the last quarter of 1999,
the nation's gross domestic product grew at a 4.8% annual rate for the first
quarter of this year and at 5.2% from April to June. With little to temper the
longest boom in U.S. history, bond investors grew concerned about the
increasing likelihood of inflation. And indeed, harbingers of higher prices may
have appeared, as wage pressures intensified and oil prices soared to levels
not seen for nearly a decade.
In an attempt to ward off a possibly overheating economy, the Federal Reserve
Board notched up short-term interest rates a quarter-point in February and
March and a half-point in May. The federal funds rate, the rate at which banks
lend each other money overnight, rose from 5.5% to 6.5%. Not surprisingly, the
moves jolted bond markets, although prices recovered a bit by the close of the
period. Stock prices were also affected.
[Begin Sidebar]
The fund's investment professionals cast a wide net throughout the bond market,
searching for securities they believe will benefit shareholders over the long
run.
[End Sidebar]
U.S. Treasury bonds proved to be the bright spot. An unusual confluence of
events-the rising federal surplus, a decline in government borrowing and the
repurchase of outstanding debt-left investors with a shrinking pool of
securities. The scramble for U.S. Treasuries sent prices higher even as other
types of fixed-income instruments languished.
A wide net and a long view
Regardless of market movements, your fund continued to generate a healthy
income stream throughout the half-year. In seeking to deliver generous
dividends consistent with preservation of principal, The Bond Fund of America
pursues a broad mandate and a long-term strategy. The fund's investment
professionals cast a wide net throughout the bond market, searching for
securities they believe will benefit shareholders over the long run.
Because we focus on the prospects of individual issues, the portfolio is very
well diversified. Corporate bonds, issued by a wide range of businesses based
in the U.S. and abroad, account for the lion's share of net assets. We recently
found unusually attractive values throughout the corporate sector, particularly
among high-grade bonds, and have added to our positions accordingly. Your fund
also holds a fair number of lower rated instruments, which typically pay higher
yields to compensate for a greater degree of risk.
The fund benefited from the rally in U.S. Treasuries, which represent about 10%
of net assets. Other holdings include foreign government bonds, mortgage- and
asset-backed securities and a comfortable reserve of cash and equivalents. (The
chart on page 4 provides a breakdown of the portfolio by sector.)
Whither interest rates?
At the moment, we are seeing glimmers of a slowdown in U.S. economic growth.
Rising oil prices and the recent stock market slump seem to have restrained
consumer spending; there are also indications that the labor shortage may be
easing. At their last meeting, in June, the Federal Reserve left rates
unchanged, although it remains to be seen how long the Fed will maintain a
"watch-and-wait" stance.
Finally, we would also note that the stock market shocks served as a useful
reminder of an often-overlooked principle: that balance is key to a sound
financial program. As many investors learned this past spring, a steady income
flow from a carefully managed portfolio of bonds can provide a welcome cushion
when stocks take their inevitable dips.
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
August 15, 2000
<TABLE>
THE BOND FUND OF AMERICA
INVESTMENT PORTFOLIO JUNE 30, 2000
<S> <C> <C> <C>
Principal Market Percent
Amount Value of Net
BONDS, NOTES & PREFERRED STOCKS (000)/Shares (000) Assets
INDUSTRIALS, SERVICES & UTILITIES
WIRELESS TELECOMMUNICATION SERVICES - 7.25%
Nextel Communications, Inc.:
0%/9.75% 2007(1) $66,450 $49,838
0%/10.65% 2007(1) 12,750 10,009
0%/9.95% 2008(1) 90,225 66,541
12.00% 2008 5,000 5,400
Series E, 11.25% exchangeable preferred, 749 shares 727
redeemable 2010(3)
McCaw International, Ltd. , units, $34,381 26,354
0%/13.00% 2007(1),(4),(5)
Nextel International, Inc. 0%/12.125% 2008(1) 15,500 10,152
Nextel Partners, Inc.:
0%/14.00% 2009(1) 16,914 11,586
11.0% 2010(2) 8,900 8,811 2.08%
Omnipoint Corp.:
7.00% convertible preferred 90000 shares 15,120
11.625% 2006 $39,450 42,211
11.50% 2009(2) 13,650 14,878
VoiceStream Wireless Corp.:
10.375% 2009 32,236 33,364
0%/11.875% 2009(1) 17,000 11,475 1.28
Crown Castle International Corp.:
0%/10.625% 2007(1) 18,500 13,505
12.75% Senior Exchangeable Preferred 2010(3) 29770 shares 30,068
10.75% 2011 $17,500 17,675
0%/11.25% 2011(1) 7,500 4,650 .72
Clearnet Communications Inc.:
8.021% 2007(2),(6) 15,000 13,575
0%/11.75% 2007(1) C$50575 23,660
0%/10.40% 2008(1) 53,500 21,865 .65
Leap Wireless International, Inc.:(2)
12.50% 2010 $18,525 16,302
14.50% 2010(1) 65,000 28,600 .49
Dobson Communications Corp.:
12.25% exchangeable preferred, redeemable 2008(3) 23612 shares 23,731
10.875% 2010(2) $17,500 17,544 .45
PageMart Wireless, Inc.:(1)
0%/15.00% 2005 10,500 10,028
0%/11.25% 2008 31,500 12,600 .25
SpectraSite Holdings, Inc.:
Series B, 0%/12.00% 2008(1) 12,500 8,250
Series B, 0%/11.25% 2009(1) 6,750 3,915
10.75% 2010(2) 2,650 2,643
0%/12.875% 2010(1),(2) 11,000 6,050 .23
Comcast UK Cable Partners Ltd. 0%/11.20% 2007(1) 22,000 20,845 .23
Centennial Cellular Corp. 10.75% 2008 19,275 18,793 .21
Comunicacion Celular SA, units, 0%/14.125% 17,568 13,340 .15
2005(1),(2),(4),(5)
Vodafone AirTouch PLC:(2)
7.625% 2005 1,100 1,101
7.75% 2010 11,250 10,974 .13
Price Communications Wireless, Inc., 7,625 7,625 .08
Series B, 9.125% 2006
PanAmSat Corp.:
6.00% 2003 2,400 2,238
6.125% 2005 5,250 4,675 .08
Cellco Finance NV:
12.75% 2005(2) 6,000 6,270
15.00% 2005 500 539 .07
Dobson/Sygnet Communications Co. 12.25% 2008 4,500 4,781 .05
SBA Communications Corp. 0%/12.00% 2008(1) 6,525 4,567 .05
Telesystem International Wireless Inc. 0%/13.25% 2007(1) 6,000 4,320 .05
661,195 7.25
TRANSPORTATION - 4.07%
Continental Airlines, Inc., pass-through certificates:(8)
Series 1998-3, Class C-1, 7.08% 2004 2,666 2,601
Series 1998-3, Class C-2, 7.25% 2005 12,000 11,389
Series C-2, 7.434% 2006 2,000 1,926
Series 1997-1, Class C, 7.42% 2007(6) 2,219 2,163
Series 1998-3, Class A-2, 6.32% 2008 15,000 13,636
Series 1999-2, Class A-2, 7.056% 2011 2,000 1,875
Series 1997-1, Class B, 7.46% 2014 944 892
Series 1996-2, Class B, 8.56% 2014 1,811 1,800
Series 1999-1, 10.22% 2014 5,552 5,783
Series 1996, Class B, 7.82% 2015 11,977 11,823
Series 1997-1 Class A, 7.461% 2016 21,583 20,663
Series 1996-2, Class D, 11.50% 2016 3,025 3,164
Series 1997-4, Class A, 6.90% 2018 28,917 26,790
Series 1998-1, Class A, 6.648% 2019 35,595 32,201
Series 1999-1, Class A, 6.545% 2020 5,843 5,262
Series 1999-1, Class B, 6.795% 2020 16,953 15,485
Series 2000-1, Class A-1, 8.048% 2020 12,000 12,023
Series 2000-1, Class B, 8.388% 2020 4,500 4,553 1.91
Airplanes Pass Through Trust, pass-through 57,840 52,087 .57
certificates, Series 1, Class C, 8.15% 2019(8)
Atlas Air, Inc.:(8)
pass-through certificates, Series 2000-1, 4,000 4,050
Class B, 9.057% 2016(2)
Series 1991-1, Class A-1, 7.20% 2019 2,620 2,371
pass-through trusts, Series 1998-1, Class A, 7.38% 2019 41,572 38,262
pass-through certificates, Series 2000-1, 4,000 4,048 .53
Class A, 8.707% 2020(2)
Jet Equipment Trust:(2)
Series 1994-A, Class B1,11.79% 2013 4,000 4,523
Series 1995-B, 10.91% 2014 5,000 5,312
Series 1995-D, 11.44% 2014 10,000 11,064
Series 1995-B, Class A, 7.63% 2015 3,975 3,864
Series 1995-B, Class C, 9.71% 2015 5,500 5,657
Series 1995-A, Class C, 10.69% 2015 2,750 2,989 .37
Delta Air Lines, Inc.:
pass-through certificates, Series 1992-A2, 9.20% 2014(8) 11,500 11,062
1990 Equipment Trust Certificates:(2)
Series I, 10.00% 2014 5,000 5,004
Series J, 10.00% 2014 5,000 5,004
Series F, 10.79% 2014 1,700 1,819 .25
AIR 2 US, Series A, 8.027% 2020(2) 11,865 11,759 .13
United Air Lines, Inc., pass-through certificates, 8,000 8,056 .09
Series 1995-A2, 9.56% 2018(8)
American Airlines, Inc., pass-through certificates, 6,410 6,624 .07
Series 1991-C2, 9.73% 2014(8)
Eletson Holdings Inc. 9.25% 2003 5,250 4,961 .06
Union Pacific Capital Trust 6.25% TIDES 111100 shares 4,388 .05
convertible preferred(2)
USAir, Inc.:
1990 Equipment Trust Certificates:
Series A, 10.28% 2001 $754 746
Series B, 10.28% 2001 754 746
Series C, 10.28% 2001 530 524
pass-through trust, Series 1993-A3, 10.375% 2013(8) 2,250 2,002 .04
370,951 4.07
DIVERSIFIED MEDIA & CABLE TELEVISION - 3.17%
Charter Communications Holdings, LLC:
8.25% 2007 9,000 7,965
0%/11.75% 2010(1) 4,000 2,270
0%/9.92% 2011(1) 76,500 43,987
Avalon Cable Holdings LLC 0%/11.875% 2008(1) 3,625 2,356 .62
Fox/Liberty Networks, LLC, FLN Finance, Inc.:
8.875% 2007 24,250 24,129
0%/9.75% 2007(1) 36,325 29,605 .59
NTL Inc.:
0%/12.75% 2005(1) 17,750 18,149
Series B, 10.00% 2007 10,000 9,500
0%/9.75% 2008(1) 7,250 4,531
NTL Communications Corp.:
11.50% 2008 5,000 5,025
11.50% 2009(1) E15000 7,592 .49
Liberty Media Corp. :
7.875% 2009 $18,350 17,553
8.50% 2029 1,000 944 .20
Telemundo Holdings, Inc., Series A, 0%/11.50% 2008(1) 25,375 17,763 .20
TCI Communications, Inc.:
8.00% 2005 10,000 10,211
8.75% 2015 5,000 5,346 .17
British Sky Broadcasting Group PLC 8.20% 2009 15,500 14,565 .16
TeleWest PLC:
9.625% 2006 4,700 4,418
0%/11.00% 2007(1) 8,000 7,620 .13
Cablevision Industries Corp.:
8.125% 2009 9,250 8,992
9.875% 2013 2,000 2,053 .12
Globo Comunicacoes E Participacoes Ltd.:
10.50% 2006(2) 9,480 8,165
10.50% 2006 2,000 1,723 .11
Multicanal Participacoes SA, Series B, 12.625% 2004 6,875 7,133 .08
Lenfest Communications, Inc. 7.625% 2008 6,750 6,599 .07
Century Communications Corp. 8.75% 2007 2,200 1,980
Adelphia Communications Corp. 8.375% 2008 5,000 4,400 .07
V2 Music Holdings PLC:(1),(4),(5)
units, 0%/14.00% 2008 P7883 3,222
units, 0%/14.00% 2008(2) $9,259 2,498 .06
Citadel Broadcasting Co.:
9.25% 2008 1,000 975
Series B, 13.25% exchangeable preferred, 22624 shares 2,342 .04
redeemable 2009(3)
Clear Channel Communications, Inc., 7.875% 2005 $2,000 2,006 .02
TVN Entertainment Corp., Series B, units, 9,760 1,962 .02
14.00% 2008(4),(5)
News America Holdings Inc. 8.625% 2014 A$3250 1,939 .02
289,518 3.17
DIVERSIFIED TELECOMMUNICATION SERVICES - 2.80%
Bell Atlantic Financial Services, Inc., $30,000 29,885 .33
senior exchangeable notes, 5.75% 2003
Viatel, Inc.:
11.15% 2008 SM7000 2,854
11.25% 2008 $6,775 5,014
0%/12.40% 2008(1) DM3500 906
0%/12.50% 2008(1) $35,875 16,144
11.50% 2009 1,750 1,313 .29
Allegiance Telecom, Inc.:
0%/11.75% 2008(1) 21,000 15,435
12.875% 2008 9,210 9,970 .28
Versatel Telecom International NV:
4.00% 2005 E7825 7,099
13.25% 2008 $3,000 3,079
11.875% 2009 E3875 3,627
11.25% 2010 8,750 7,938 .24
NEXTLINK Communications, Inc.:
12.50% 2006 $3,000 3,165
9.625% 2007 3,000 2,820
9.00% 2008 1,250 1,150
0%/12.125% 2009(1),(2) 20,250 11,745
14.00% preferred 2009(3) shares 1,278 .22
COLT Telecom Group PLC:
0%/12.00% 2006(1) $5,250 4,620
8.875% 2007 DM9500 4,639
7.625% 2008 22,825 10,253 .21
Qwest Communications International Inc.:(1)
0%/9.47% 2007 $15,000 12,825
0%/8.29% 2008 7,500 5,813 .20
US Xchange, LLC 15.00% 2008(5) 16,750 15,611 .17
MGC Communications Inc. 13.00% 2010(2) 16,500 15,345 .17
BellSouth Capital Funding Corp., 7.75% 2010 12,000 12,000 .13
Loral Orion Network Systems, Inc. 11.25% 2007 20,760 11,729 .13
CEI Citicorp Holdings SA 11.25% 2007 ARP9500 9,173 .10
PTC International Finance BV 0%/10.75% 2007(1) $10,250 7,303 .08
Maxcom Telecomunicaciones, SA de CV 13.75% 2007(2) 8,000 7,080 .08
GT Group Telecom Inc., units, 0%/13.25% 2010(1),(2) 9,500 5,273 .06
Level 3 Communciations, Inc. 11.25% 2010 E4750 4,309 .05
Hyperion Telecommunications, Inc., Series B, $4,250 3,910 .04
0%/13.00% 2003(1)
IMPSAT Corp. 12.375% 2008 2,500 1,981 .02
255,286 2.80
GENERAL RETAILING & MERCHANDISING - 1.88%
J. C. Penney Co., Inc.:
7.375% 2004 5,000 4,555
6.50% 2007 3,750 3,031
7.60% 2007 16,000 13,979
7.625% 2007 10,380 7,175
7.375% 2008 3,975 3,369
6.875% 2015 1,500 1,097
7.65% 2016 12,800 10,052
7.95% 2017 38,325 30,788
8.25% 2022 4,000 3,114
7.125% 2023 1,250 886 .86
Hasbro, Inc.:
7.95% 2003 13,500 13,358
8.50% 2006 15,500 15,318 .31
Kmart Corp. 9.78% 2020 12,250 11,318
DR Securitized Lease Trust, pass-through 8,000 7,385 .21
certificates, Series 1994 K-2, 9.35% 2019(8)
Sears Roebuck Acceptance Corp. 6.25% 2009 19,900 17,541 .19
Dillard's, Inc.:
5.79% 2001 2,000 1,908
6.43% 2004 5,000 4,413
7.13% 2018 2,750 2,024 .09
Sunglass Hut International, Inc. 5.25% 11,150 8,028 .09
convertible debentures 2003
Saks Inc.:
7.00% 2004 5,000 4,485
7.25% 2004 3,500 3,177 .08
Federated Department Stores, Inc. 6.30% 2009 3,000 2,636 .03
Boyds Collection, Ltd.,Series B, 9.00% 2008 1,806 1,571 .02
171,208 1.88
LEISURE & TOURISM - 1.80%
Mirage Resorts, Inc.:
6.625% 2005 7,500 6,849
6.75% 2007 14,500 13,046
6.75% 2008 10,050 8,992 .32
Boyd Gaming Corp.:
9.25% 2003 13,475 13,374
9.50% 2007 5,500 5,280 .21
FelCor Suites LP 7.375% 2004 13,650 12,398 .14
William Hill Finance 10.625% 2008 P7243 11,470 .13
Premier Parks Inc.:
9.25% 2006 $7,000 6,633
9.75% 2007 1,250 1,244
0%/10.00% 2008(1) 4,500 3,060 .12
Royal Caribbean Cruises Ltd.:
7.00% 2007 2,900 2,475
6.75% 2008 9,383 7,829 .11
International Game Technology:
7.875% 2004 8,000 7,680
8.375% 2009 2,000 1,890 .10
CapStar Hotel Co. 8.75% 2007 9,770 8,671 .10
Friendly Ice Cream Corp. 10.50% 2007 10,340 8,272 .09
KSL Recreation Group, Inc. 10.25% 2007 7,100 6,781 .07
Carmike Cinemas, Inc., Series B, 9.375% 2009 12,375 6,683 .07
Harrah's Operating Co., Inc. 7.875% 2005 6,000 5,640 .06
Horseshoe Gaming Holding Corp., Series B:
9.375% 2007 2,000 1,960
8.625% 2009 3,000 2,820 .05
Six Flags Entertainment Corp. 8.875% 2006 5,000 4,763 .05
AMF Bowling Worldwide, Inc.:
10.875% 2006 3,239 875
0%/12.25% 2006(1) 13,550 2,710
0% convertible debentures 2018(2) 11,084 277 .04
Jupiters Ltd. 8.50% 2006 3,000 2,798 .03
Sun International Hotels Ltd., Sun 3,000 2,790 .03
International North America, Inc. 9.00% 2007
Station Casinos Inc. 9.875% 2010(2) 2,750 2,750 .03
Joseph E. Seagram & Sons, Inc. 6.80% 2008 2,500 2,351 .03
CKE Restaurants, Inc. 9.125% 2009 2,500 1,688 .02
164,049 1.80
CONSUMER & BUSINESS SERVICES - 1.61%
USA Waste Services, Inc.:
4.00% 2002 24,000 22,260
6.50% 2002 9,050 8,396
7.00% 2004 6,750 6,136
7.125% 2007 7,505 6,795
6.125% 2011(6) 8,078 7,801
Waste Management, Inc.:
6.00% 2001 750 732
7.70% 2002 6,161 6,011
WMX Technologies, Inc.:
6.375% 2003 3,706 3,431
7.00% 2006 4,000 3,633 .71
Allied Waste North America, Inc., Series B, 10.00% 2009 37,275 31,497 .34
Sotheby's Holdings, Inc. 6.875% 2009(5) 20,000 15,248 .17
Ingram Micro Inc. 0% convertible debentures 2018 40,000 15,000 .16
KinderCare Learning Centers, Inc., Series B, 9.50% 2009 7,000 6,440 .07
Protection One Alarm Monitoring, Inc.:
6.75% convertible debentures 2003 5,000 3,050
13.625% 2005(6) 3,560 2,528 .06
Exodus Communications Inc. 11.625% 2010(2) 5,000 5,025 .06
Stericycle, Inc., Series B, 12.375% 2009 2,250 2,295 .03
Teletrac, Inc.:(5)
units, 9.00% 2004(4) 1,351 737
12.00% 2004 49 39 .01
147,054 1.61
BROADCASTING & PUBLISHING - 1.53%
Chancellor Media Corp. of Los Angeles:
8.125% 2007 21,000 21,053
Series B, 8.75% 2007 8,625 8,636
9.00% 2008 7,000 7,123
Capstar Broadcasting Partners, Inc. 12.00% 2009(3) 7,542 8,749 .50
Young Broadcasting Inc.:
10.125% 2005 5,500 5,335
9.00% 2006 1,000 935
Series B, 8.75% 2007 14,250 13,039 .21
Cox Radio, Inc. 6.375% 2005 18,000 16,999 .19
Cumulus Media Inc.:
10.375% 2008 6,000 5,175
13.75% preferred 2009(3) 7262 shares 5,919 .12
Antenna TV SA 9.00% 2007 $9,750 8,994 .10
RBS Participacoes SA 11.00% 2007(2) 10,000 8,263 .09
TransWestern Publishing Co. LLC 9.625% 2007 7,250 7,069 .08
Hearst-Argyle Television, Inc. 7.00% 2018 6,050 5,124 .05
Sun Media Corp. 9.50% 2007 5,139 4,934 .05
American Media Operation 10.25% 2009 4,500 4,365 .05
STC Broadcasting, Inc. 11.00% 2007 3,250 3,185 .03
Muzak LP:
9.875% 2009 1,500 1,350
0%/13.00% 2010(1) 2,000 1,100 .03
Gray Communications Systems, Inc. 10.625% 2006 2,000 1,995 .02
Big City Radio, Inc. 0%/11.25% 2005(1) 1,000 550 .01
139,892 1.53
FOREST PRODUCTS & PAPER - 1.51%
Container Corp. of America:
10.75% 2002 4,800 4,800
9.75% 2003 30,865 30,711
Series A, 11.25% 2004 8,000 8,080 .48
Scotia Pacific Co. LLC, Series B:
Class A-1, 6.55% 2028 1,303 1,242
Class A-2, 7.11% 2028 31,400 24,806
Class A-3, 7.71% 2028 10,143 7,303 .37
Kappa Beheer BV:
10.625% 2009 E5500 5,358
0%/12.50% 2009(1) 9,500 5,942 .12
Grupo Industrial Durango, SA de CV:
12.00% 2001 $3,000 3,038
12.625% 2003 7,625 7,663 .12
Indah Kiat Finance Mauritius Ltd.:
11.875% 2002 $3,800 3,107
10.00% 2007 12,075 7,396 .12
Packaging Corp. of America, Series B, 9.625% 2009 8,750 8,663 .09
International Paper Co. 8.00% 2003(2) 8,000 8,032 .09
Pindo Deli Finance Mauritius Ltd.:
10.25% 2002 6,000 4,335
10.75% 2007 3,625 2,184 .07
Copamex Industrias, SA de CV, Series B, 11.375% 2004 4,870 4,675 .05
APP International Finance Co. BV 11.75% 2005 275 195 -
137,530 1.51
ENERGY & RELATED COMPANIES - 1.48%
Petrozuata Finance, Inc.:(2)
Series A, 7.63% 2009 24,530 20,658
Series B, 8.22% 2017 12,000 9,270 .33
PDVSA Finance Ltd.:
8.75% 2004 1,876 1,853
9.75% 2010 17,250 16,517
7.40% 2016 9,700 7,599
7.50% 2028 2,000 1,481 .30
Clark Oil & Refining Corp. 9.50% 2004 500 446
Clark Refining Term Loan 9.625% 11-15-04(5),(6) 18,000 14,986
Clark Refining & Marketing, Inc. 8.375% 2007 2,365 1,874 .18
Pemex Finance Ltd.:
8.875% 2010 7,000 6,972
Series 1999-2, Class A3, 10.61% 2017 8,000 9,093 .18
Pogo Producing Co. 10.375% 2009 11,000 11,275 .12
Louis Dreyfus Natural Gas Corp. 6.875% 2007 12,000 10,749 .12
McDermott Inc. 9.375% 2002 13,500 10,125 .11
OXYMAR 7.50% 2016(2) 8,500 6,113 .07
Cross Timbers Oil Co. 8.75% 2009 6,375 6,040 .07
135,051 1.48
HEALTH CARE - 1.44%
Columbia/HCA Healthcare Corp.:
6.125% 2000 8,500 8,444
7.60% 2001 1,750 1,728
7.15% 2004 1,500 1,395
6.91% 2005 22,910 20,791
7.00% 2007 12,750 11,188
8.85% 2007 24,105 23,201
8.70% 2010 4,250 4,085
9.00% 2014 5,650 5,283
7.69% 2025 5,000 4,037 .88
Lilly Del Mar, Inc. 7.80% 2029(2),(6) 18,000 18,020 .20
Concentra Operating Corp. 13.00% 2009 15,500 12,865 .14
Nationwide Health Properties, Inc., Series 100000 shares 5,700 .06
A, 7.677% preferred cumulative step-up premium rate
McKesson Corp. 6.40% 2008 $6,500 5,113 .05
Paracelsus Healthcare Corp. 10.00% 2006(7) 20,575 4,938 .05
Omnicare, Inc. 5.00% convertible debentures 2007 6,150 4,184 .05
Integrated Health Services, Inc.:(5),(7)
5.75% convertible debentures 2001 12,750 1
10.25% 2006(6) 9,350 94
Series A, 9.50% 2007 12,175 122
Series A, 9.25% 2008 32,657 327 .01
Mariner Health Group, Inc. 9.50% 2006(5),(7) 7,300 73 -
131,589 1.44
ELECTRICAL & GAS UTILITIES - 1.36%
Israel Electric Corp. Ltd.:(2)
7.25% 2006 7,165 6,943
7.75% 2009 44,500 43,214
8.25% 2009 3,600 3,629
7.70% 2018 8,500 7,673
7.875% 2026 15,000 13,465
7.75% 2027 13,000 11,431
8.10% 2096 14,405 12,236 1.08
Peco Energy Transition Trust, Series 1999-A, 17,500 16,352 .18
Class A6, 6.05% 2009
AES Corp. 9.50% 2009 5,000 4,900 .05
Transener SA:
8.625% 2003 1,000 955
9.25% 2008(2) 3,875 3,429 .05
124,227 1.36
ELECTRICAL & ELECTRONICS - 1.29%
Hyundai Semiconductor America, Inc.:(2)
8.25% 2004 7,705 6,835
8.625% 2007 20,700 17,313 .26
Zilog, Inc. 9.50% 2005 21,400 18,511 .20
EarthWatch Inc.:(2),(5)
0%/12.50% 2005(1) 17,280 12,271
Series B, 7.00% convertible preferred 2009(3) 942473 shares 3,250
Series C, 8.50% convertible preferred 2009(3) 79,923 137 .17
Advanced Micro Devices, Inc. 11.00% 2003 $15,265 15,647 .17
Fairchild Semiconductor Corp.:
10.125% 2007 9,595 9,667
10.375% 2007 2,000 2,035 .13
Flextronics International Ltd. 9.875% 2010(2) 9,000 9,090 .10
Adaptec, Inc. 4.75% convertible subordinated notes 2004 10,000 8,500 .09
SCG Holding Corp. 12.00% 2009 7,424 7,944 .09
First International Computer Corp. 1.00% 3,000 3,495 .04
convertible debentures 2004(2)
Micron Technology, Inc. 6.50% 2005(2) 4,000 3,330 .04
118,025 1.29
MULTI-INDUSTRY - 0.91%
Swire Pacific Capital Ltd. 8.84% cumulative 1670000 shares 32,565
guaranteed perpetual capital securities(2)
Swire Pacific Offshore Financing Ltd. 9.33% 230,000 4,715 .41
cumulative guaranteed perpetual capital securities(2)
Reliance Industries Ltd.:(2)
8.25% 2027 $10,000 9,306
10.50% 2046 250 226
10.25% 2097 10,750 9,290 .21
Federal-Mogul Corp.:
7.75% 2006 10,000 6,850
7.00% convertible preferred 2027 155000 shares 3,410 .11
Wharf International Finance Ltd., Series A, 7.625% 2007 $10,000 9,150 .10
Ford Motor Co. 7.45% 2031 6,500 6,147 .06
Tenneco Automotive Inc. 11.625% 2009 2,000 1,775 .02
83,434 .91
METALS - 0.65%
Freeport-McMoRan Copper & Gold Inc.:
7.50% 2006 34,000 22,525
7.20% 2026 18,000 12,130 .38
Inco Ltd. 9.60% 2022 16,000 15,669 .17
Doe Run Resources Corp., Series B:
12.653% 2003(6) 3,000 1,200
11.25% 2005 15,325 6,130 .08
Kaiser Aluminum & Chemical Corp. 12.75% 2003 2,000 1,835 .02
59,489 .65
FOOD & FOOD PRODUCTS - 0.57%
Nabisco, Inc.:
7.05% 2007 8,500 7,740
7.55% 2015 9,000 7,904
6.125% 2033(6) 2,500 2,359
6.375% 2035(6) 14,900 13,585 .35
Gruma, SA de CV 7.625% 2007 8,000 6,850 .07
Fage Dairy Industry SA 9.00% 2007 8,250 6,559 .07
Home Products International, Inc. 9.625% 2008 6,250 5,188 .06
New World Pasta Co. 9.25% 2009 3,750 2,175 .02
52,360 .57
MISCELLANEOUS MATERIALS & COMMODITIES - 0.40%
Printpack, Inc.:
Series B, 9.875% 2004 4,075 3,912
10.625% 2006 9,465 9,086 .14
Equistar Chemicals, LP:
6.50% 2006 7,800 6,873
8.75% 2009 5,000 4,775 .13
Graham Packaging Co.:
8.75% 2008 4,625 4,024
0%/10.75% 2009(1) 7,975 4,705 .10
Anchor Glass Container Corp. 11.25% 2005 4,000 3,120 .03
36,495 .40
INDUSTRIAL COMPONENTS - 0.24%
TRW Inc. 8.75% 2006 10,000 10,218 .11
Tekni-Plex, Inc. 12.75% 2010(2) 7,500 7,519 .08
Cooper Tire & Rubber Co. 7.25% 2002 4,000 3,917 .05
BREED Technologies, Inc. 9.25% 2008(5),(7) 32,000 320 -
21,974 .24
BEVERAGES & TOBACCO - 0.20%
Canandaigua Wine Co., Inc.:
Series C, 8.75% 2003 7,500 7,350
8.75% 2003 6,650 6,534 .15
Delta Beverage Group, Inc. 9.75% 2003 4,750 4,489 .05
18,373 .20
MACHINERY & ENGINEERING - 0.18%
John Deere Capital Corp. 8.625% 2019 16,850 16,829 .18
16,829 .18
OTHER - 0.09%
Salton/Maxim Housewares, Inc. 10.75% 2005 8,250 8,209 .09
8,209 .09
FINANCE
BANKS & THRIFTS - 9.67%
SocGen Real Estate Co. LLC, Series A, 7.64%/ 109,500 100,215 1.10
8.406% (undated)(2),(6)
HSBC Capital Funding 9.547% (undated)(2),(6) 62,750 65,326
Midland Bank 7.188% Eurodollar Note (undated)(6) 15,000 11,871 .85
Banque Nationale de Paris 7.40% (undated)(6) 12,500 11,798
BNP U.S. Funding LLC, Series A, 7.738% 65,000 60,486 .79
noncumulative preferred(2),(6)
Bank of Scotland 7.00% (undated)(2),(6) 30,000 27,420
National Westminster Bank PLC 7.75% (undated)(6) 23,000 22,049 .54
MBNA Corp., MBNA Capital:
A, Series A, 8.278% 2026 24,000 19,644
B, Series B, 7.191% 2027(6) 32,800 27,560 .52
Fuji JGB Investment LLC, Series A, 9.87% 42,500 41,035 .45
noncumulative preferred (undated)(2),(6)
Washington Mutual Finance, 8.25% 2005 12,000 12,105
Ahmanson Capital Trust I Capital Securities, 2,030 1,846 .42
Series A, 8.36% 2026(2)
Great Western Financial Trust II, Series A, 8.206% 2027 5,745 5,003
Washington Mutual Capital I Subordinated Capital 22,000 19,506
Income Securities 8.375% 2027
Skandinaviska Enskilda Banken AB:(6)
6.50% (undated)(2) 17,500 16,592
7.50% (undated) 23,000 20,795 .41
Tokai Preferred Capital Co. LLC, Series A, 36,675 35,627 .39
9.98%/11.091% noncumulative preferred(2),(6)
NB Capital Corp. 8.35% exchangeable depositary shares 1200000 shares 27,600
National Bank of Canada 6.175% (undated)(6) $5,000 3,729 .34
Royal Bank of Scotland Group PLC:
8.375% 2007 P4900 8,013
9.118% (undated) $20,000 20,639 .31
Capital One Bank 8.25% 2005 12,500 12,434
Capital One Capital I 7.941% 2027(2),(6) 10,000 8,579 .23
Chase Manhattan Corp., 7.875% 2010 12,000 12,018
Chase Capital III, floating rate capital 8,500 7,934 .22
securities, Series C, 7.39% 2027(6)
Canadian Imperial Bank of Commerce 6.50% 25,000 19,480 .21
Eurodollar Note (undated)(6)
Advanta Corp.:
Series B, 7.00% 2001 4,000 3,736
Series D, 6.833% 2002 5,000 4,360
Series D, 6.925% 2002 2,500 2,190
6.925% 2002 2,000 1,752
Advanta Capital Trust I 8.99% 2026 11,000 6,820 .21
Paribas, New York Branch 6.95% 2013 18,000 16,317 .18
HSBC America Capital 8.38% 2027(2) 17,000 14,743 .16
Standard Chartered Bank:(6)
7.15% (undated) 5,000 3,352
6.688% Eurodollar note (undated) 15,000 9,969 .15
Regional Diversified Funding Ltd. 9.25% 2030(2) 13,250 12,750 .14
Bayerische Vereinsbank AG 5.50% 2008 E13271 12,522 .14
IBJ Preferred Capital Co. LLC, Series A, 8.79% $13,700 12,431 .14
noncumulative preferred (undated)(2),(6)
Chevy Chase Preferred Capital Corp. 10.375% 242900 shares 12,388 .14
Imperial Capital Trust I, Imperial Bancorp 9.98% 2026 $15,000 12,150 .13
Bankers Trust New York Corp. 6.70% 2007 10,000 9,412
Deutsche Bank Capital Funding Trust I, 7.872% 2,500 2,322 .13
(undated)(2),(6)
Allegemeine Hypotheken Bank AG 5.00% 2009 E11000 9,893 .11
Allfirst Preferred Capital Trust 7.781% 2029(6) $10,000 9,785 .11
Riggs National Corp. 8.625% 2026 4,400 3,495
Riggs Capital Trust II 8.875% 2027 7,500 6,197 .11
J.P. Morgan & Co. Inc., Series A, 6.883% 2012(6) 10,000 8,466 .09
Abbey National PLC 6.70% (undated)(6) 9,375 8,354 .09
Bank of Nova Scotia 6.50% Eurodollar note (undated)(6) 10,000 7,757 .09
Komercni Finance BV:(1)
9.00% 2008 3,100 2,960
9.00%/10.75% 2008(2) 4,900 4,680 .08
Lloyds Bank (#2) 7.00% (undated)(6) 8,000 6,661 .07
Bank One Corp., Series A, 6.00% 2009 7,290 6,343 .07
Allied Irish Banks Ltd. 6.875% (undated)(6) 7,000 5,617 .06
Hypothekenbank in Essen AG 5.25% 2008 E6000 5,544 .06
BCI US Funding Trust I 8.01% (undated)(2),(6) $6,000 5,491 .06
Halifax Building Society 8.75% 2006 P3000 4,913 .05
Fleet Capital Trust 7.775% 2028(6) $5,000 4,809 .05
Corp. Andina de Fomento 8.875% 2005 4,300 4,449 .05
Bay View Capital Corp. 9.125% 2007 5,500 4,345 .05
Rheinische Hypothekenbank Eurobond 4.25% 2008 E5000 4,303 .05
Development Bank of Singapore Ltd. 7.875% 2010(2) $4,250 4,183 .04
Bergen Bank 6.50% (undated)(6) 5,000 3,815 .04
Christiana Bank Og Kreditkasse 7.125% (undated)(6) 4,000 3,161 .03
Banco General, SA 7.70% 2002(2) 500 480 .01
882,219 9.67
FINANCIAL SERVICES - 3.16%
Ford Motor Credit Co.:
7.25% 2003 20,000 19,861
5.25% 2008 DM32000 14,578
5.80% 2009 $37,500 32,625 .74
General Motors Acceptance Corp.:
0.211% 2002(6) Y3600000 33,901
5.85% 2009 $10,000 8,759 .47
Household Finance Corp.:
8.00% 2005 6,000 6,051
7.875% 2007 20,000 19,922
6.40% 2008 5,500 4,990
5.875% 2009 2,150 1,870 .36
BHP Finance Ltd.:
6.69% 2006 12,100 11,467
8.50% 2012 20,000 20,696 .35
Golden State Holdings, Inc. 7.00% 2003 10,450 9,546
GS Escrow Corp. 7.125% 2005 12,000 10,867 .22
AB Spintab:
6.00% 2009 SKr23000 2,600
6.80% (undated)(2),(6) $6,500 6,283
7.50% (undated)(2),(6) 11,000 10,459 .21
Providian Financial Corp. 9.525% 2027(2) 16,750 13,142 .14
Nykredit 6.00% 2029(8) DKr105259 12,375 .14
Associates Corp. of North America:
5.85% 2001 $2,500 2,483
5.80% 2004 10,000 9,366 .13
Heller Financial, Inc. 6.00% 2004 12,500 11,698 .13
BankUnited Capital Trust, BankUnited 10,000 8,512 .09
Financial Corp. 10.25% 2026
AT&T Capital Corp. 6.60% 2005 9,000 8,470 .09
Green Tree Financial Corp. 6.50% 2002 9,000 5,940 .07
Lend Lease (US) Finance Inc. 6.75% 2005 1,500 1,426 .02
287,887 3.16
INSURANCE - 2.05%
Allstate Corp.:
7.875% 2005 9,000 9,003
7.20% 2009 73,000 69,782 .86
ReliaStar Financial Corp.:
8.625% 2005 5,000 5,182
8.00% 2006 23,250 23,399 .31
Royal & Sun Alliance Insurance Group PLC 8.95% 2029(2) 28,000 27,749 .30
Conseco, Inc. 9.00% 2006 2,000 1,360
Conseco Financing Trust II, Capital Trust 44,725 19,232
Pass-Through Securities (TRUPS), 8.70% 2026(8)
Conseco Financing Trust III 8.796% 2027 6,525 2,806 .26
Jefferson-Pilot Corp. 8.14% 2046(2) 6,000 5,416
Jefferson-Pilot Capital Trust 8.285% 2046(2) 8,500 7,805 .15
Aflac Inc. 6.50% 2009 8,750 7,935 .09
Lindsey Morden Group Inc., Series B, 7.00% 2008 C$13000 7,313 .08
186,982 2.05
REAL ESTATE - 1.13%
CarrAmerica Realty Corp.:
Series B, 8.57% cumulative redeemable preferred 710100 shares 14,735
Series C, 8.55% cumulative redeemable preferred 413,100 8,520 .25
Irvine Co. 7.46% 2006(2),(5) $15,000 13,824
Irvine Apartment Communities, LP 7.00% 2007 5,000 4,520 .20
ERP Operating LP:
7.95% 2002 3,750 3,749
7.57% 2026 8,000 7,820 .13
EOP Operating LP 6.75% 2008 11,500 10,535 .12
ProLogis Trust:
7.05% 2006 2,500 2,358
Series D, 7.92% preferred 380000 shares 7,695 .11
Archstone Communities Trust:
7.20% 2013 $4,000 3,553
Series C, 8.625% convertible preferred 200000 shares 4,312 .09
Duke-Weeks Realty Corp., Series B, 7.99% 150,000 6,019 .07
preferred cumulative step-up premium rate
Simon DeBartolo Group, Inc., Series C, 7.89% preferred 150,000 5,925 .06
cumulative step-up premium rate
IAC Capital Trust, Series A, 8.25% TOPRS preferred 220,000 4,675 .05
New Plan Realty Trust, Series D, 7.80% preferred 112,500 4,500 .05
cumulative step-up premium rate
102,740 1.13
COLLATERALIZED MORTGAGE-/ASSET-BACKED OBLIGATIONS
(EXCLUDING THOSE ISSUED BY FEDERAL AGENCIES) (8) - 6.40%
Green Tree Financial Corp., pass-through certificates:
Series 1995-A, Class NIM, 7.25% 2005 $3,652 3,546
Series 1993-2, Class B, 8.00% 2018 2,250 1,942
Series 1997-A, Class HI-M1, 7.47% 2023 1,000 968
Series 1995-3, Class B-2, 8.10% 2025 5,000 3,057
Series 1995-8, Class B2, 7.65% 2026 4,000 2,267
Series 1995-6, Class B2, 8.00% 2026 2,450 1,455
Series 1996-7, Class A6, 7.65% 2027 2,100 2,035
Series 1996-6, Class B2, 8.35% 2027 10,309 6,205
Series 1996-5, Class B-2, 8.45% 2027 1,229 749
Series 1997-1, Class A-5, 6.86% 2028 1,500 1,467
Series 1996-10, Class A-6, 7.30% 2028 8,500 8,013
Series 1998-4, Class B2, 8.11% 2028 13,350 8,373
Series 1997-6, Class A7, 7.14% 2029 15,700 15,082
Green Tree Recreational, Equipment & Consumer Trust:
Series 1999-A, Class A-6, 6.84% 2010 5,000 4,907
Series 1997-D, Class CTFS, 7.25% 2029 8,500 5,269 .72
Pegasus Aviation Lease Securitization, Series 51,000 51,413 .56
2000-1, Class A2, 8.37% 2030(2)
CSFB Finance Co. Ltd., Series 1995-A, 10.00% 2005(2),(6) 42,400 37,842 .41
Garanti Trade Payment Rights Master Trust, 33,351 33,321 .37
Series 1999-B, Class 1, 10.81% 2004(2)
First Consumer Master Trust, Series 1999-A, 35,000 33,309 .37
Class A, 5.80% 2005(2)
Structured Asset Securities Corp.:(2),(6)
Series 1998-RF2, Class A, 8.542% 2027 28,990 29,525
Series 1998-RF1, Class A, 8.669% 2027 2,887 2,949 .36
Metris Master Trust:(2),(6)
Series 1998-1A, Class C, 7.459% 2005 15,000 14,765
Series 1997-2, Class C, 7.659% 2006 14,400 14,227 .32
PP&L Transition Bond Co. LLC, Series 1999-1, 27,500 27,289 .30
Class A-7, 7.05% 2009
H.S. Receivables Corp.:(2)
Series 1999-1, Class A, 8.13% 2006 21,094 20,805
Series 1999-3, Class A, 9.60% 2006 2,000 1,972 .25
NPF VI, Inc., Series 1999-1, Class A, 6.25% 2003(2) 5,000 4,873
NPF XII, Inc.:(2)
Series 1999-2, Class A, 7.05% 2003 15,000 14,812
Series 1999-3, Class B, 7.638% 2003(6) 3,000 2,998 .25
GE Capital Mortgage Services, Inc.:
Series 1994-15, Class A10, 6.00% 2009 16,376 15,045
Series 1994-9, Class A9, 6.50% 2024 5,097 4,500 .21
Puerto Rico Public Financing Corp., Series 1, 20,301 19,093 .21
Class A, 6.15% 2008
Structured Asset Notes Transaction, Ltd., 15,073 14,633 .16
Series 1996-A, Class A1, 7.156% 2003(2)
FIRSTPLUS Home Loan Owner Trust:
Series 1997-1, Class A-7, 7.16% 2018 10,000 9,804
Series 1997-3, Class B-1, 7.79% 2023 5,000 4,216 .15
Ocwen Residential MBS Corp., Series 1998-R1, 13,823 10,505 .12
Class AWAC, 4.857% 2040(2),(6)
Morgan Stanley Aircraft Finance, Series 2, 10,000 10,010 .11
Class B2, 7.701% 2025(2),(6)
Ditech Home Loan Owner Trust, Series 1998-1, 10,500 9,167 .10
Class B1, 9.50% 2029
MBNA Master Credit Card Trust:(2)
Series 1999-D, Class B, 6.95% 2008 4,700 4,463
Series 1998-E, Class C, 6.60% 2010 5,000 4,627 .10
Residential Asset Securitization Trust, Series 9,073 8,828 .10
1997-A3, Class B1, 7.75% 2027
Capital One:(2)
Secured Note Trust, Series 1999-2, 7.251% 2005(6) 6,250 6,219
Master Trust, Series 1999-1, Class C, 6.60% 2007 2,500 2,410 .09
PNC Mortgage Securities Corp., Series 1998-10, 9,436 8,485 .09
Class 1-B1, 6.50% 2028(2)
Norwest Asset Securities Corp., Series 1998-31, 8,139 7,749 .08
Class A-1, 6.25% 2014
Security National Mortgage Loan Trust, Series 6,800 6,730 .07
2000-1, Class A-2, 8.75% 2024(2)
Sears Credit Account Master Trust:
II, Series 1998-2, Class A, 5.25% 2008 2,000 1,877
Series 1999-1, Class A, 5.65% 2009 5,000 4,772 .07
First USA Credit Card Master Trust, Class A 6,630 6,480 .07
floating rate asset-backed certificates,
Series 1997-4, 7.649% 2010(2),(6)
Grupo Financiero Banamex Accival, SA de CV 0% 2002(2) 7,113 6,467 .07
BA Master Credit Card Trust, Series 1998-A, 6,000 5,987 .07
Class B, 6.921% 2005(6)
Class A, 8.00% 2004 3,638 3,632
Class B, 8.96% 2004 2,181 2,177 .06
First Nationwide, Series 1999-2, Class 1PA1, 6.50% 2029 5,401 5,008 .06
EQCC Home Equity Loan Trust, asset-backed 5,000 4,944 .05
certificates, Series 1999-3, Class A-3F, 7.067% 2024
Ryland Acceptance Corp. Four, Series 88, 4,424 4,430 .05
Class E, 7.95% 2019
Prudential Home Mortgage Securities Co., Inc., 4,466 4,342 .05
Series 1993-48, Class A-6, 6.25% 2008
Collateralized Mortgage Obligation Trust, 4,106 4,221 .05
Series 63, Class Z, 9.00% 2020
Money Store Trust, Series 1996-D, Class A-14, 4,000 3,947 .04
6.985% 2016
Travelers Mortgage Securities Corp., Series 1, 3,608 3,904 .04
Class Z2, 12.00% 2014
Residential Funding Mortgage Securities I, Inc., 3,926 3,606 .04
Series 1998-S17, Class M-1, 6.75% 2028
ComEd Transitional Funding Trust, Transitional 3,500 3,362 .04
Funding Trust Note, Series 1998, Class A-4, 5.39%, 2005
Triad Auto Receivables Owner Trust, Series 1999-1, 3,000 2,934 .03
Class A2, 6.09% 2005
1997-NAM1, Class B1, 7.75% 2027 2,524 2,454 .03
Nationsbanc Montgomery Funding Corp., Series 1998-5 2,538 2,400 .03
, Class A-1, 6.00% 2013
Bear Stearns Structured Securities Inc., Series 2,137 2,156 .02
1997-2, Class AWAC, 5.053% 2036(2),(6)
Chase Manhattan Bank, NA, Series 1993-I, 1,809 1,800 .02
Class 2A5, 7.25% 2024
GS Mortgage Securities Corp., Series 1998-2, 1,147 1,139 .01
Class M, 7.75% 2027(2)
583,958 6.40
COMMERCIAL MORTGAGE-BACKED OBLIGATIONS (8) - 5.59%
DLJ Commercial Mortgage Corp.:
Series 1997-CF1, Class A1A, 7.40% 2006(2) 5,609 5,613
Series 1996-CF2, Class A1B, 7.29% 2021(2) 11,200 11,153
Series 1995-CF2, Class A1B, 6.85% 2027(2) 35,845 35,417
Series 1998-CF1, Class A-1A, 6.14% 2031 20,117 19,341
Series 1998-CF2, Class A-1B, 6.24% 2031 10,000 9,233 .89
GMAC Commercial Mortgage Securities, Inc.:
Series 1997-C1, Class A1, 6.83% 2003 7,401 7,393
Series 1997-C1, Class A3, 6.869% 2007 20,000 19,375
Series 1997-C2, Class C, 6.50% 2008 9,000 8,295
Series 1997-C1, Class D, 6.997% 2008 8,300 7,897
Series 1997-C2, Class E, 7.624% 2011 27,703 24,544
Series 1997-C2, Class C, 6.91% 2021 8,900 8,384 .83
Chase Commercial Mortgage Securities Corp.:
Series 1996-1, Class A1, 7.60% 2005 2,986 3,006
Series 1999-1, Class B, 7.619% 2009 7,000 6,988
pass-through certificates, Series 1999-1, 5,000 4,914
Class C, 7.625% 2009
Series 1998-1, Class A1, 6.34% 2030 17,116 16,595
Series 1998-2, Class A-2, 6.39% 2030 8,000 7,482
Series 1998-2, Class E, 6.39% 2030 10,000 8,614
pass-through certificates, Series 2000-1, 9,913 10,036 .63
Class A-1, 7.656% 2032
Morgan Stanley Capital I Inc.:
Series 1998-HF1, Class A-1, 6.19% 2007 23,609 22,782
Series 1998-WF2, Class A-1, 6.34% 2030 8,705 8,422
Series 1998-HF2, Class A-2, 6.48% 2030 17,000 16,026
Series 1999-FNV1, Class A-1 6.12% 2031 9,215 8,773 .62
Merrill Lynch Mortgage Investors, Inc.,
pass-through certificates:(6)
Series 1995-C2, Class D, 7.755% 2021 418 407
Series 1995-C3, Class A-1, 6.767% 2025 966 954
Series 1995-C3, Class A-3, 7.067% 2025 25,555 25,135
Series 1996-C2, Class A-1, 6.69% 2028 9,508 9,387 .39
L.A. Arena Funding, LLC, Series 1, Class A, 7.656% 2026(2) 35,375 33,100 .36
GS Mortgage Securities Corp. II, pass-through
certificates, Series 1998-C1:(6)
Class D, 7.45% 2030 3,750 3,429
Class E, 7.45% 2030 31,076 27,366 .34
Asset Securitization Corp.:
Series 1996-D3, Class A-1B, 7.21% 2026 3,000 2,981
Series 1997-D4, Class A-1A, 7.35% 2029 1,091 1,097
Series 1997-D5, Class A-PS1, interest only, 1.413% 2043(6) 279,773 23,986 .31
Nationslink Funding Corp., Series 1999-1, 27,718 25,550 .28
Class D, 7.10% 2031(6)
Bear Stearns Commercial Mortgage Securities Inc.:
Series 1998-C1, Class A-1, 6.34% 2030 7,843 7,559
Series 1999-C1, Class X, interest only, 1.289% 2031(6) 170,869 10,991 .20
Prudential Securities Secured Financing Corp., 18,000 16,727 .18
pass-through certificates, Series 1999-NRF1,
Class C, 6.746% 2009
Commercial Mortgage Acceptance Corp.:
Series 1998-C1, Class A-1, 6.23% 2007 9,530 9,192
Series 1998-C2, Class A-1, 5.80% 2030 4,188 3,990 .15
Starwood Asset Receivables Trust, Series 2000-1, 10,000 9,945 .11
Class D, 8.06% 2022(2),(6)
Nomura Asset Securities Corp., Series 1998-D6, 9,797 9,456 .10
Class A-A1, 6.28% 2030
Mortgage Capital Funding, Inc., Series 1998-MC1, 7,232 7,009 .08
Class A-1, 6.417% 2030
Government Lease Trust, Series 1999-GSA1, 3,648 3,573 .04
Class A1, 5.86% 2003(2)
Structured Asset Securities Corp., pass-through 2,950 2,934 .03
certificates, Series 1996-CFL, Class D, 7.034% 2028
Resolution Trust Corp.:
Series 1993-C1, Class D, 9.45% 2024 2,242 2,233
Series 1993-C2, Class D, 8.50% 2025 286 284 .03
J.P. Morgan Commercial Mortgage Finance Corp.:
Series 1995-C1, Class A-2, 7.440% 2010(6) 1,000 993
Series 1996-C3, Class A-1, 7.33% 2028 1,089 1,085 .02
509,646 5.59
U.S. GOVERNMENT
U.S. TREASURY OBLIGATIONS - 9.43%
13.125% May 2001 11,500 12,138
6.50% May 2002 8,000 8,010
3.625% July 2002(10) 3,744 3,716
11.625% November 2002 92,000 102,120
5.50% February 2003 10,000 9,784
6.25% February 2003 9,845 9,810
10.75% May 2003 7,500 8,324
11.875% November 2003 37,100 43,164
7.25% May 2004 7,000 7,220
11.625% November 2004 91,500 109,800
7.50% February 2005 15,000 15,722
3.375% January 2007(10) 67,563 64,791
4.75% November 2008 8,500 7,719
9.125% May 2009 18,000 19,569
6.00% August 2009 9,000 8,928
10.375% November 2009 12,500 14,314
10.00% May 2010 12,500 14,299
10.375% November 2012 24,500 30,123
12.00% August 2013 10,000 13,500
Strip Principal 0% 2015(9) 50,050 20,255
8.875% August 2017 207,720 264,779
8.875% February 2019 20,515 26,403
8.125% May 2021 19,250 23,488
Strip Principal 0% 2027(9) 15,295 3,029
5.25% November 2028 21,350 18,905 9.43
859,910 9.43
FEDERAL AGENCY OBLIGATIONS
MORTGAGE PASS-THROUGHS (8) - 9.33%
Government National Mortgage Assn.:
6.00% 2028 - 2029 105,292 96,965
6.50% 2008 - 2029 44,292 42,148
7.00% 2008 - 2029 192,730 187,397
7.50% 2007 - 2029 59,556 59,300
8.00% 2017 - 2030 125,094 126,452
8.50% 2020 - 2029 14,224 14,590
9.00% 2009 - 2022 10,880 11,317
9.50% 2009 - 2021 7,894 8,319
10.00% 2017 - 2022 30,567 32,293
10.50% 2015 - 2019 147 158
12.00% 2015 1,675 1,859 6.37
Fannie Mae:
6.00% 2029 10,572 9,673
6.50% 2028 - 2029 13,382 12,609
7.00% 2009 - 2029 46,516 45,185
7.50% 2009 - 2029 10,087 9,987
7.779% 2026(6) 6,010 6,211
8.00% 2023 - 2030 25,544 92,453
8.315% 2002(6) 4,474 4,483
8.50% 2009 - 2030 2,116 3,983
9.00% 2018 - 2025 2,097 2,159
9.50% 2009 - 2025 2,050 2,148
10.00% 2018 - 2025 5,972 6,310
10.50% 2012 - 2019 1,756 1,884
11.00% 2015 - 2020 2,047 2,221
11.25% 2014 19 20
11.50% 2014 79 87
12.00% 2015 - 2029 4,043 4,463
12.50% 2015 - 2019 2,860 3,215
13.00% 2015 - 2028 6,084 6,835
15.00% 2013 27 31
Federal Housing Administration/Veterans 868 966 2.36
Affairs 12.50% 2015
Freddie Mac:
6.00% 2029 951 871
6.50% 2029 14,249 13,448
7.00% 2015 8,141 7,991
8.00% 2003 - 2026 3,937 3,956
8.25% 2007 1,144 1,156
8.50% 2002 - 2027 11,179 11,392
8.75% 2008 1,449 1,473
9.00% 2021 361 373
10.00% 2011 - 2019 124 129
10.50% 2020 1,579 1,689
10.75% 2010 45 47
11.00% 2018 2,698 2,906
12.00% 2016 - 2017 5,284 5,825
12.50% 2015 - 2019 1,226 1,363
12.75% 2019 257 286
13.00% 2014 - 2015 1,785 2,007
13.50% 2018 5 6
13.75% 2014 7 8 .60
850,647 9.33
OTHER - 2.35%
Fannie Mae:
5.125% 2004 15,000 14,079
5.75% 2005 10,000 9,475
5.25% 2009 107,965 95,161
Medium Term Note, 6.75% 2028 15,000 12,952 1.44
Freddie Mac: 5.125% 2008 55,350 48,440 .53
Federal Home Loan Bank Bonds:
5.625% 2001 25,000 24,781
7.013% 2007 10,000 9,594 .38
214,482 2.35
COLLATERALIZED MORTGAGE OBLIGATIONS - 0.35%(8)
Freddie Mac:
Series 1849, Class Z, 6.00% 2008 6,384 5,802
Series 41, Class F, 10.00% 2020 1,866 1,952
Series 178, Class Z, 9.25% 2021 1,404 1,445
Series 1657, Class SA, 6.10% 2023(6),(11) 7,520 5,529
Series 1673, Class SA, 4.579% 2024(6),(11) 7,879 4,538 .21
Fannie Mae:
Series 90-93, Class G, 5.50% 2020 509 473
Series 93-247, Class Z, 7.00% 2023 4,697 4,478
Series 1994-4, Class ZA, 6.50% 2024 4,169 3,765
Series 1998-W5, Class B3, 6.50% 2028(2) 4,810 3,988 .14
31,970 .35
TAXABLE MUNICIPAL BONDS - 0.05%
California Maritime Infrastructure Authority, 4,820 4,606 .05
Taxable Lease Revenue Bonds (San Diego Unified
Port District-South Bay Plant Acquisition),
Series 1999, 6.63% 2009(2)
GOVERNMENTS & GOVERNMENTAL BODIES
(EXCLUDING U.S.) - 7.33%
Bundesobligation Eurobond 5.00% 2002 E48000 45,777
Bundesrepublik:
7.125% 2002 12,271 12,263
6.00% 2007 5,827 5,809
Deutschland Republic:
8.00% 2002 29,250 29,499
5.25% 2008 37,000 35,397
Treuhandanstalt:
7.125% 2003 22,376 22,381
7.50% 2004 - - 1.66
Canadian Government:
9.00% 2004 C$10000 7,524
4.25% 2026(10) 75,057 55,285 .69
Hellenic Republic:
8.90% 2004 GRD4900000 15,166
2.90% 2007 Y1270000 12,638
6.95% 2008 $4,500 4,375
8.60% 2008 GRD7500000 24,461
7.50% 2013 620,000 1,964 .64
The Japan Development Bank 6.50% 2001 Y4300000 43,510
Japanese Government 1.50% 2008 927,250 8,660 .57
KfW International Finance Inc. 1.00% 2004 4,750,000 44,981 .49
United Kingdom:
6.50% 2003 P11750 18,152
8.50% 2005 12,000 20,611 .42
Spanish Government 6.00% 2008 E36061 35,336 .39
Polish Government:
12.00% 2001 PLZ20000 4,352
13.00% 2001 13,750 3,046
12.00% 2002 8,375 1,766
12.00% 2003 81,000 16,727
8.50% 2004 15,000 2,759 .31
French Treasury Note 4.50% 2003 E28000 26,325 .29
Kingdom of Denmark 6.00% 2009 DKr190000 24,900 .27
Norwegian Government:
6.75% 2007 NOK90000 10,704
5.50% 2009 124,500 13,851 .27
Netherlands Government Eurobond 5.75% 2002 E23000 22,239 .24
Argentina (Republic of):
Series C, 0% 2001 $9,450 8,363
Series E, 0% 2003 5,500 3,864
11.00% 2005 3,000 2,850
11.75% 2009 830 774
11.375% 2017 2,000 1,795
12.00% 2020 975 912 .20
New South Wales Treasury Corp. 8.00% 2008 A$26000 16,971 .19
Italian Government BTPS Eurobond 6.00% 2007 E16204 15,908 .18
United Mexican States Government Eurobonds, Global:
11.375% 2016 $9,015 10,322
11.50% 2026 2,625 3,163 .15
Panama (Republic of):
Interest Reduction Bond 4.25% 2014(2),(6) 6,500 5,200
Past Due Interest Eurobond 7.063% 2016(6) 820 675
Past Due Interest Bond, 7.063% 2016(2),(3),(6) 1,640 1,349
8.875% 2027 250 211 .08
Brazil (Federal Republic of):
14.50% 2009 2,000 2,140
Bearer 8.00% 2014(3) 4,293 3,166
12.25% 2030 425 391 .06
Qatar (State of) 9.75% 2030(2) 5,000 4,944 .06
Croatian Government, Series B, 7.063% 2006(6) 3,383 3,209 .04
Columbia (Republic of) 7.625% 2007 3,600 2,619 .03
Venezuela (Republic of):(6)
Eurobond 7.875% 2007 1,250 1,017
Front Loaded Interest Reduction Bond:
Series A, 7.438% 2007 667 547
Series B, 7.438% 2007 167 137 .02
New Zealand Government 4.50% 2016(10) NZ$3179 1,433 .02
Bulgaria (Republic of), Front Loaded $1,770 1,309 .01
Interest Reduction Bond, 2.75% 2012(6)
Malaysia 8.75% 2009 1,250 1,287 .01
MC-Cuernavaca Trust 9.25% 2001(2) 1,347 1,261 .01
Turkey (Republic of):
12.375% 2009 500 531
11.875% 2030 500 533 .01
South Africa (Republic of) 12.00% 2005 ZAR5100 713 .01
Peru (Republic of), Past Due Interest $750 500 .01
Eurobond 4.50% 2017(6)
Philippines (Republic of) 9.875% 2019 500 410 -
668,962 7.33
EQUITY-RELATED SECURITIES SHARES
STOCKS & WARRANTS - 0.27%
Global TeleSystems, Inc.(9) 750,000 9,047 .10
Price Communications Corp.(9) 313,053 7,376 .08
VoiceStream Wireless Corp.(9) 27,415 3,188 .03
Wilshire Financial Services Group, Inc.(9),(12) 1,601,967 2,403 .03
NTL Inc., warrants, expire 2008(2),(5),(9) 26,362 1,809 .02
Viatel, Inc.(9) 32,363 924 .01
ICG Holdings, Inc., warrants, expire 2005(2),(5),(9) 19,800 224 -
Protection One Alarm Monitoring, Inc., 54,400 23 -
warrants, expire 2005(2),(5),(9)
Teletrac Holdings, Inc. warrants, expire 194,624 20 -
2004(5),(9),(12)
Globalstar Telecommunications Ltd., 2,500 3 -
warrants, expire 2004(9)
Tultex Corp., warrants, expire 2007(5),(9) 1,867,700 - -
25,017 .27
OTHER SECURITIES & MISCELLANEOUS
MISCELLANEOUS
Investment securities in initial period of acquisition 2 -
TOTAL BONDS, NOTES AND EQUITY SECURITIES 8,351,766 91.54
(cost: $8,994,133,000)
Principal
Amount
Short-Term Securities (000)
CORPORATE SHORT-TERM NOTES - 6.18%
Associates First Capital Corp.:
6.85% due 7/3/2000 $28,800 28,784
6.35% due 7/7/2000 15,615 15,596
6.53% due 7/24/2000 34,385 34,235 .86
AT&T Corp.:
6.60% due 7/24/2000 20,000 19,912
6.57% due 7/25/2000 18,500 18,416
6.52% due 8/4/2000 21,500 21,364 .65
Heinz (H.J.) Co.:
6.51% due 7/5/2000 10,700 10,690
6.54% due 7/12/2000 33,000 32,928
6.52% due 7/26/2000 8,900 8,858 .57
Ford Motor Credit Co.:
6.52% due 7/17/2000 30,000 29,908
6.52% due 7/20/2000 20,000 19,927 .55
General Motors Acceptance Corp.:
6.48% due 7/11/2000 20,000 19,960
6.54%-6.56% due 7/14/2000 26,600 26,532 .51
Lucent Technologies Inc.:
6.60% due 8/1/2000 25,000 24,853
6.52% due 8/2/2000 20,500 20,378 .50
Motiva Enterprises LLC:
6.53% due 7/13/2000 10,000 9,976
6.56% due 8/15/2000 30,000 29,748 .43
Corporate Asset Funding Co. Inc.:
6.55% due 7/18/2000 13,800 13,755
6.60% due 8/1/2000 25,500 25,350 .43
Eastman Kodak Co.:
6.35% due 7/24/2000 12,000 11,948
6.60% due 8/14/2000 4,300 4,265
6.62% due 8/21/2000 6,500 6,438
6.63% due 8/25/2000 10,000 9,898 .36
Bestfoods:
6.08% due 7/5/2000 5,120 5,115
6.52% due 7/12/2000 11,000 10,976
6.62% due 8/15/2000 12,000 11,899 .31
Alcoa Inc. 6.55%-6.57% due 7/28/2000 25,250 25,121 .28
Scripps (E.W.) Co.:
6.56% due 7/19/2000 14,950 14,898
6.58% due 8/11/2000 10,000 9,923 .27
Yale University 6.12% due 7/5/2000 22,000 21,981 .24
John Hancock Capital Corp. 6.10% due 7/13/2000 20,000 19,953 .22
563,585 6.18
FEDERAL AGENCY SHORT-TERM OBLIGATIONS - 1.00%
Fannie Mae:
6.05% due 7/13/2000 25,000 24,942
6.395% due 8/03/2000 21,000 20,872
6.45% due 8/31/2000 9,500 9,394 .61
Freddie Mac 6.021% due 7/6/2000 22,000 21,977 .24
Federal Home Loan Banks 6.435%-6.46% due 9/6/2000 14,250 14,076 .15
91,261 1.00
TOTAL SHORT-TERM SECURITIES (cost: $654,857,000) 654,846 7.18
TOTAL INVESTMENT SECURITIES (cost:$9,648,990,000) 9,006,612 98.72
Excess of cash and receivables over payables 116,645 1.28
NET ASSETS $9,123,257 100.00%
1 Step bond; coupon rate will increase at a later date.
2 Purchased in a private placement
transaction; resale to the public
may require registration or sale only to
qualified buyers.
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 maturity is shorter
than the stated maturity.
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 moves in the opposite
direction of prevailing interest rates.
12 The fund owns 8.00% and 5.29% of the outstanding
securities of Wilshire Financial Services Group,
Inc. and Teletrac, Inc., respectively, which are
investments in affiliates as defined in the
Investment Act of 1940.
</TABLE>
<TABLE>
The Bond Fund of America
FINANCIAL STATEMENTS
(Unaudited)
STATEMENT OF ASSETS AND LIABILITIES
at June 30, 2000 (dollars in thousands)
<S> <C> <C>
Assets:
Investment securities at market
(cost: $9,648,990) $9,006,612
Cash 22,440
Receivables for--
Sales of investments $ 25,419
Sales of fund's shares 18,756
Forward currency contracts - net 99
Dividends and accrued interest 134,217 178,491
9,207,543
Liabilities:
Payables for--
Purchases of investments 37,777
Repurchases of fund's shares 23,493
Forward currency contracts - net 5,291
Dividends on fund's shares 12,139
Management services 2,515
Other expenses 3,071 84,286
Net Assets at June 30, 2000 $9,123,257
Total authorized capital stock-2,500,000,000 shares
Class A shares, $.001 par value:
Net assets $9,096,487
Shares outstanding 713,333,440
Net asset value per share $12.75
Class B shares, $.001 par value:
Net assets $26,770
Shares outstanding 2,099,410
Net asset value per share $12.75
STATEMENT OF OPERATIONS (Unaudited)
for the six months ended June 30, 2000 (dollars in thousands)
Investment Income:
Income:
Interest $362,444
Dividends 7,800 $370,244
Expenses:
Management services fee 15,160
Distribution expenses - Class A 11,399
Distribution expenses - Class B 36
Transfer agent fee - Class A 4,970
Transfer agent fee - Class B 3
Reports to shareholders 367
Registration statement and prospectus 347
Postage, stationery and supplies 800
Directors' fees 40
Auditing and legal fees 68
Custodian fee 277
Taxes other than federal income tax 123
Other expenses 451 34,041
Net investment income 336,203
Realized Gain and Unrealized
Depreciation on Investments:
Net realized gain 11,124
Net change in unrealized depreciation on:
Investments (157,440)
Open forward currency contracts (8,700)
Net unrealized depreciation (166,140)
Net realized gain and
unrealized depreciation
on investments (155,016)
Net Increase in Net Assets Resulting
from Operations $181,187
STATEMENT OF CHANGES IN NET ASSETS (dollars in thousands)
Six months ended Year ended
June 30, December 31,
2000* 1999
Operations:
Net investment income $ 336,203 $ 667,232
Net realized gain (loss) on investments 11,124 (38,387)
Net unrealized depreciation
on investments (166,140) (411,293)
Net increase in net assets
resulting from operations 181,187 217,552
Dividends and Distributions Paid to
Shareholders:
Dividends from net investment income:
Class A (344,946) (671,007)
Class B (227) -
Distributions from net realized gains on investments:
Class A - -
Class B - -
Total Dividends and Distributions (345,173) (671,007)
Capital Share Transactions:
Proceeds from shares sold 1,059,019 2,473,751
Proceeds from shares issued in reinvestment
of net investment income dividends and
distributions of net realized gain on investments 264,236 536,631
Cost of shares repurchased (1,513,346) (2,620,186)
Net (decrease) increase in net assets resulting from (190,091) 390,196
capital share transactions
Total Decrease in Net Assets (354,077) (63,259)
Net Assets:
Beginning of period 9,477,334 9,540,593
End of period (including
undistributed net investment
income of: $(5,616) and $3,354,
respectively) $9,123,257 $9,477,334
*Unaudited
See Notes to Financial Statements
</TABLE>
The Bond Fund of America
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. The fund offers Class A and Class B
shares. Class A shares are sold with an initial sales charge of up to 3.75%.
Class B shares are sold without an initial sales charge but are subject to a
contingent deferred sales charge paid upon redemption. This charge declines
from 5% to zero over a period of six years. Class B shares have higher
distribution expenses and transfer agent fees than Class A shares. Class B
shares are automatically converted to Class A shares eight years after the date
of purchase. Holders of both classes of shares have equal pro rata rights to
assets and identical voting, dividend, liquidation and other rights, except
that each class bears different distribution and transfer agent expenses, and
each class shall have exclusive rights to vote on matters affecting only their
class.
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. 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. 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.
NON-U.S. CURRENCY TRANSLATION - Assets and 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-issued'' 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 manage 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 having the same settlement date and broker are offset and presented
net in the statement of assets and liabilities.
ALLOCATIONS - Income, expenses (other than class-specific expenses) and
realized and unrealized gains and losses are allocated daily between the share
classes based on their relative net asset values. Distribution expenses,
transfer agent fees and any other class-specific expenses, are accrued daily
and charged to the applicable share class.
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.
CURRENCY GAINS AND LOSSES - Net realized currency gains on dividends, interest,
sales of non-U.S. bonds and notes, forward contracts, and other receivables and
payables, on a book basis, were $9,678,000 for the six months ended June 30,
2000.
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 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, 2000, net unrealized depreciation on investments, excluding
forward currency contracts, for book and federal income tax purposes aggregated
$642,378,000; $137,405,000 related to appreciated securities and $779,783,000
related to depreciated securities. During the six months ended June 30, 2000,
the fund realized, on a tax basis, a net capital loss of $27,697,000 on
securities transactions. The fund had available at December 31, 1999 a net
capital loss carryforward totaling $24,539,000 which may be used to offset
capital gains realized during subsequent years through 2008 and thereby relieve
the fund and its shareholders of any federal income tax liability with respect
to the capital gains that are so offset. The fund will not make distributions
from capital gains while a capital loss carryforward remains. In addition, the
fund has recognized, for tax purposes, capital losses totaling $22,135,000
which were realized during the period November 1, 1999 through December 31,
1999. Net gains incurred during the period related to non-U.S. currency
transactions of $17,444,000 are 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
$9,648,990,000 at June 30, 2000.
4. FEES AND TRANSACTIONS WITH RELATED PARTIES
INVESTMENT ADVISORY FEE - The fee of $15,160,000 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 the following rates and net asset levels:
<TABLE>
<CAPTION>
Net Asset Level
Rate In Excess of Up to
<S> <C> <C>
0.30% $0 60 million
0.21% 60 million 1 billion
0.18% 1 billion 3 billion
0.16% 3 billion 6 billion
0.15% 6 billion 10 billion
0.14% 10 billion
</TABLE>
The agreement also provides for fees based on monthly gross investment income
at the following rates:
<TABLE>
<CAPTION>
Monthly Gross Investment Income
Rate In Excess of Up to
<S> <C> <C>
2.25% $0 $8,333,333
2.00 8,333,333
</TABLE>
DISTRIBUTION EXPENSES - Pursuant to a Plan of Distribution for Class A shares,
the fund may expend up to 0.25% of Class A daily 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 in advance
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. Pursuant
to a Plan of Distribution for Class B shares, the fund may expend 1.00% of
Class B daily net assets annually to compensate dealers for their selling and
servicing efforts. During the six months ended June 30, 2000, distribution
expenses under the Plan of Distribution for Class A were limited to $11,399,000
on Class A shares. Had no limitation been in effect, the fund would have paid
$13,018,000 in distribution expenses for Class A shares under the Plan. Some or
all of the amounts not paid by the fund may be recovered by the distributor in
the future. During the six months ended June 30, 2000, distribution expenses
under the Plan of Distribution for Class B were $36,000. As of June 30, 2000,
accrued and unpaid distribution expenses for Class A and Class B shares were
$1,563,000 and $18,000, respectively.
American Funds Distributors, Inc. (AFD), the principal underwriter of the
fund's Class A shares, received $2,140,266 (after allowances to dealers) during
the six months ended June 30, 2000, 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 $4,973,000.
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, 2000, aggregate deferred amounts and earnings thereon
since the deferred compensation plan's adoption (1993), net of any payments to
Directors, were $217,000.
AFFILIATED DIRECTORS AND OFFICERS - 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 $2,628,000 and $2,940,000, respectively, during the
six months ended June 30, 2000.
As of June 30, 2000, net assets consisted of the following:
Capital share transactions in the fund were as follows:
<TABLE>
<S> <C>
(dollars in
thousands)
Capital paid in on shares of benefici $9,812,198
Undistributed net investment income (5,616)
Accumulated net realized loss (35,550)
Net unrealized depreciation (647,775)
Net Assets $9,123,257
</TABLE>
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 $277,000 includes $150,000 that was paid by these credits
rather than in cash.
At June 30, 2000, the fund had outstanding forward currency contracts to buy or
sell non-U.S. currencies as follows:
<TABLE>
U.S.
Contract Amount Valuations
<S> <C> <C> <C> <C> <C>
Unrealized
Non-U.S. Currency Contracts Non-U.S. U.S. Amount (Depreciation)
Sales:
Euros expiring 7/20-11/22/2000 Euro 166,378,000 $154,724,000 $159,460,000 ($4,736,000)
British Pounds expiring Pounds 22,439,000 34,334,000 34,484,000 (150,000)
7/26-9/22/2000
Japanese Yen expiring 8/10/2000 Yen 2,863,000 26,852,000 27,158,000 (306,000)
----------- ----------- -----------
215,910,000 221,102,000 (5,192,000)
----------- ----------- -----------
Buys:
British Pounds expiring 8/09/2000 Pounds 5,115,000 8,189,000 8,189,000 -
----------- ----------- -----------
(5,192,000)
===========
</TABLE>
<TABLE>
PER-SHARE DATA AND RATIOS (1)
<S> <C> <C>
Net
Net asset gains/(losses)
value, Net on securities
beginning investment (both realized
Period ended of period income and unrealized)
Class A:
2000 $12.98 $.47 (2) $(.22) (2)
1999 13.61 .93 (0.63)
1998 14.00 .94 (0.24)
1997 13.75 .98 0.25
1996 13.88 1.02 (0.13)
1995 12.69 1.05 1.18
Class B:
2000 12.92 .20 (2) (0.13) (2)
Dividends
Total from (from net Distributions
investment investment (from capital
Period ended operations income) gains)
Class A:
2000 $.25 $(.48) -
1999 0.30 (.93) -
1998 0.70 (.95) (.14)
1997 1.23 (.98) -
1996 0.89 (1.02) -
1995 2.23 (1.04) -
Class B:
2000 0.07 (.24) -
Net asset
Total value, end
Period ended distributions of period
Class A:
2000 $(.48) $12.75
1999 (.93) 12.98
1998 (1.09) 13.61
1997 (.98) 14.00
1996 (1.02) 13.75
1995 (1.04) 13.88
Class B:
2000 (.24) 12.75
Net assets,
Total end of period
Period ended return (in millions)
Class A:
2000 1.86% $9,096
1999 2.29 9,477
1998 5.17 9,541
1997 9.24 8,176
1996 6.71 7,002
1995 18.25 6,290
Class B:
2000 0.46 27
Ratio of Ratio of
expenses net income Portfolio
to average to average turnover
Period ended net assets net assets rate
Class A:
2000 .74% (3) 7.32% (3) 31.06% (4)
1999 .69 6.96 46.71
1998 .66 6.94 66.25
1997 .68 6.95 51.96
1996 .71 7.47 43.43
1995 .74 7.87 43.80
Class B:
2000 1.44 (3) 6.62 (3) 31.06 (4)
(1) The periods 1995 through 1999 represent
fiscal years ended December 31. The periods ended
2000 (unaudited) represent, for Class A
shares, the six month period ended June 30, 2000,
and, for Class B shares, the 107-day period
ended June 30, 2000. Class B shares were not
offered before March 15, 2000. Total returns
for such periods are based on activity during
the period and thus are not representative of
a full year. Total returns exclude all sales
charges, including contingent deferred sales charges.
(2) Based on average shares outstanding.
(3) Annualized.
(4) Represents portfolio turnover rate
(equivalent for all share classes) for the
six months ended June 30, 2000.
</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, or for a
prospectus for any of the American Funds, 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. Please read
the prospectus carefully before you invest or send money.
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, 2000, this report must be accompanied by an American Funds Group
Statistical Update for the most recently completed calendar quarter.
There are two ways to invest in The Bond Fund of America. Class A shares are
subject to a 3.75% maximum up-front sales charge that declines for accounts of
$100,000 or more. Class B shares, which are not available for certain
employer-sponsored retirement plans, have no up-front sales charge. They are,
however, subject to additional expenses of approximately 0.75% a year over the
first eight years of ownership. If redeemed within six years, they may also be
subject to a contingent deferred sales charge (5% maximum) that declines over
time. Because expenses are first deducted from income, dividends for Class B
share accounts will be lower.
Printed on recycled paper
Litho in USA SI/AL/4643
Lit. No. BFA-013-0800
