SEC. FILE NOS. 2- 50700
811-2444
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
Registration Statement
Under
the Securities Act of 1933
Post-Effective Amendment No. 46
and
Registration Statement
Under
The Investment Company Act of 1940
Amendment No. 27
THE BOND FUND OF AMERICA, INC.
(Exact Name of Registrant as specified in charter)
333 South Hope Street
Los Angeles, California 90071
(Address of principal executive offices)
Registrant's telephone number, including area code:
(213) 486-9200
JULIE F. WILLIAMS, Secretary
The Bond Fund of America, Inc.
333 South Hope Street
Los Angeles, California 90071
(name and address of agent for service)
Copies to:
ROBERT E. CARLSON, ESQ.
PAUL, HASTINGS, JANOFSKY & WALKER LLP
555 S. Flower Street
Los Angeles, CA 90071-2371
(Counsel for the Registrant)
Approximate date of proposed public offering:
It is proposed that this filing become effective on March 15, 2000, pursuant to
paragraph (b) of rule 485.
<PAGE>
The Bond Fund of America/SM/
Prospectus
MARCH 15, 2000
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED
OR DISAPPROVED OF THESE SECURITIES. FURTHER, IT HAS NOT DETERMINED THAT THIS
PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
<PAGE>
---------------------------------------------------------
THE BOND FUND OF AMERICA, INC.
333 South Hope Street
Los Angeles, California 90071
<TABLE>
<CAPTION>
TABLE OF CONTENTS
-------------------------------------------------------
<S> <C>
Risk/Return Summary 2
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Fees and Expenses of the Fund 5
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Investment Objective, Strategies and Risks 6
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Management and Organization 9
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Shareholder Information 11
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Choosing a Share Class 12
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Purchase and Exchange of Shares 13
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Sales Charges 14
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Sales Charge Reductions and Waivers 16
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Plans of Distribution 17
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How to Sell Shares 18
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Distributions and Taxes 19
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Financial Highlights 20
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Appendix 21
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</TABLE>
1
THE BOND FUND OF AMERICA / PROSPECTUS
BFA-010-0300/B
<PAGE>
---------------------------------------------------------
RISK/RETURN SUMMARY
The fund seeks to maximize your level of current income and preserve your
capital by investing primarily in bonds. Normally, the fund invests the
majority of its assets in bonds rated A and above. The fund may also invest in
lower quality, lower rated bonds. It is the fund's current practice not to
invest more than 25% of its assets in lower quality, lower rated bonds.
The fund is designed for investors seeking income and more price stability than
stocks, and capital preservation over the long term. An investment in the fund
is subject to risks, including the possibility that the fund may decline in
value in response to economic, political or social events in the U.S. or
abroad. The values of debt securities may be affected by changing interest
rates and credit risk assessments. Lower quality and longer maturity bonds may
be subject to greater price fluctuations than higher quality and shorter
maturity bonds. Although all securities in the fund's portfolio may be
adversely affected by currency fluctuations or world political, social and
economic instability, investments outside the U.S. may be affected to a greater
extent.
Your investment in the fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency, entity or person.
YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS IS GREATER
IF YOU INVEST FOR A SHORTER PERIOD OF TIME.
2
THE BOND FUND OF AMERICA / PROSPECTUS
<PAGE>
INVESTMENT RESULTS
The following information provides some indication of the risks of investing in
the fund by showing changes in the fund's investment results from year to year
and by showing how the fund's average annual returns for various periods
compare with those of a broad measure of market performance. Past results are
not an indication of future results.
CALENDAR YEAR TOTAL RETURNS FOR CLASS A SHARES
(Results do not include a sales charge; if one were included, results would
be lower.)
------------------------------------------------------------------------------
[bar chart]
1990 3.27%
1991 21.04%
1992 11.34%
1993 14.14%
1994 -5.02%
1995 18.25%
1996 6.71%
1997 9.24%
1998 5.17%
1999 2.29%
[end bar chart]
The fund's highest/lowest quarterly results during this time period were:
<TABLE>
<CAPTION>
<S> <C> <C>
HIGHEST 6.06% (quarter ended June 30, 1995)
LOWEST -3.78% (quarter ended March 31, 1994)
</TABLE>
3
THE BOND FUND OF AMERICA / PROSPECTUS
<PAGE>
For periods ended December 31, 1999:
<TABLE>
<CAPTION>
AVERAGE ANNUAL
TOTAL RETURN ONE YEAR FIVE YEARS TEN YEARS LIFETIME
<S> <C> <C> <C> <C>
Class A/1/
(with the maximum sales charge -1.54% 7.38% 7.97% 9.71%
deducted)
------------------------------------------------------------------------------
Class B/2/ N/A N/A N/A N/A
------------------------------------------------------------------------------
Lehman Brothers Aggregate -0.82% 7.73% 7.70% N/A
Bond Index/3/
------------------------------------------------------------------------------
</TABLE>
Class A yield: 7.25%
(For current yield information, please call American FundsLine/r/ at
1-800-325-3590)
1 The fund began investment operations for Class A shares on May 28, 1974.
2 The fund is beginning investment operations for Class B shares on March 15,
2000.
3 The Lehman Brothers Aggregate Bond Index represents investment grade debt.
This index is unmanaged and does not reflect sales charges, commissions or
expenses. This index was not in existence as of the date the fund began
investment operations, therefore lifetime results are not available.
Unlike the bar chart on the previous page, this table reflects the fund's
investment results with the maximum initial or deferred sales charge deducted,
as required by Securities and Exchange Commission rules. Class A share results
are shown with the maximum initial sales charge of 3.75% deducted. Sales
charges are reduced for purchases of $100,000 or more. Results would be higher
if they were calculated at net asset value. All fund results reflect the
reinvestment of dividend and capital gain distributions.
Class B shares are subject to a maximum deferred sales charge of 5.00% if
shares are redeemed within the first year of purchasing them. The deferred
sales charge declines thereafter until it reaches 0% after six years. Class B
shares convert to Class A shares after eight years. Since the fund's Class B
shares begin investment operations on March 15, 2000, no results are available
as of the date of this prospectus.
4
THE BOND FUND OF AMERICA / PROSPECTUS
<PAGE>
---------------------------------------------------------
FEES AND EXPENSES OF THE FUND
<TABLE>
<CAPTION>
SHAREHOLDER FEES
(fees paid directly from your investment) CLASS A CLASS B
--------------------------------------------------------------------------
<S> <C> <C>
Maximum sales charge imposed on purchases 3.75%/1/ 0.00%
(as a percentage of offering price)
--------------------------------------------------------------------------
Maximum sales charge imposed on reinvested dividends 0.00% 0.00%
--------------------------------------------------------------------------
Maximum deferred sales charge 0.00%/2/ 5.00%/3/
--------------------------------------------------------------------------
Redemption or exchange fees 0.00% 0.00%
</TABLE>
1 Sales charges are reduced or eliminated for purchases of $100,000 or more.
2 A contingent deferred sales charge of 1% applies on certain redemptions made
within 12 months following purchases of $1 million or more made without a
sales charge.
3 Deferred sales charges are reduced after 12 months and eliminated after six
years.
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from fund assets) CLASS A CLASS B/1/
-----------------------------------------------
<S> <C> <C>
Management Fees 0.32% 0.32%
Distribution and/or Service (12b-1) Fees 0.25%/2/ 1.00%/3/
Other Expenses 0.12% 0.12%
Total Annual Fund Operating Expenses 0.69% 1.44%
</TABLE>
1 Based on estimated amounts for the current fiscal year.
2 Class A 12b-1 expenses may not exceed 0.25% of the fund's average net assets
annually.
3 Class B 12b-1 expenses may not exceed 1.00% of the fund's average net assets
annually.
EXAMPLE
This Example is intended to help you compare the cost of investing in the fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the fund for the time periods indicated, that your investment
has a 5% return each year and that the fund's operating expenses remain the
same as shown above. The Class A example reflects the maximum initial sales
charge in Year One. The Class B-assuming redemption example reflects applicable
contingent deferred sales charges through Year Six (after which time they are
eliminated). Both Class B examples reflect Class A expenses for Years 9 and 10
since Class B shares automatically convert to Class A after eight years.
Although your actual costs may be higher or lower, based on these assumptions
your cumulative expenses would be:
<TABLE>
<CAPTION>
YEAR YEAR YEAR YEAR
ONE THREE FIVE TEN
<S> <C> <C> <C> <C>
Class A $443 $587 $745 $1,201
----------------------------------------------------------------------------
Class B - assuming redemption $647 $856 $987 $1,520
Class B - assuming no redemption $147 $456 $787 $1,520
</TABLE>
5
THE BOND FUND OF AMERICA / PROSPECTUS
<PAGE>
---------------------------------------------------------
INVESTMENT OBJECTIVE, STRATEGIES AND RISKS
The fund's investment objective is to provide as high a level of current income
as is consistent with the preservation of capital. Normally, the fund invests
the majority of its assets in bonds and debt securities rated A and above,
including securities issued and guaranteed by the U.S. and other governments,
and securities backed by mortgages and other assets. The fund may also invest
significantly in lower quality, lower rated bonds.
The values of most debt securities held by the fund may be affected by changing
interest rates, and individual securities by changes in their effective
maturities and credit ratings. For example, the values of bonds in the fund's
portfolio generally will decline when interest rates rise and vice versa. Debt
securities are also subject to credit risk, which is the possibility that the
credit strength of an issuer will weaken and/or an issuer of a debt security
will fail to make timely payments of principal or interest and the security
will go into default. The values of lower quality and longer maturity bonds
will be subject to greater price fluctuations than higher quality and shorter
maturity bonds. The fund's investment adviser attempts to reduce these risks
through diversification of the portfolio and with ongoing credit analysis of
each issuer as well as by monitoring economic and legislative developments.
A security backed by the U.S. Treasury or the full faith and credit of the
United States is guaranteed only as to the timely payment of interest and
principal when held to maturity. Accordingly, the current market prices for
these securities will fluctuate with changes in interest rates. Many types of
debt securities, including mortgage-related securities, are subject to
prepayment risk. For example, when interest rates fall, homeowners are more
likely to refinance their home mortgages and "prepay" their principal earlier
than expected. The fund must then reinvest the prepaid principal in new
securities when interest rates on new mortgage investments are falling, thus
reducing the fund's income.
Investments outside the U.S. may be affected by these events to a greater
extent and may also be affected by differing securities regulations, higher
transaction costs, and administrative difficulties such as delays in clearing
and settling portfolio transactions.
The fund may also hold cash or money market instruments. The size of the fund's
cash position will vary and will depend on various factors, including market
conditions and purchases and redemptions of fund shares. A larger cash position
could detract from the achievement of the fund's objective, but it also would
reduce the fund's exposure in the event of a market downturn and provide
liquidity to make additional investments or to meet redemptions.
6
THE BOND FUND OF AMERICA / PROSPECTUS
<PAGE>
The fund relies on the professional judgment of its investment adviser, Capital
Research and Management Company, to make decisions about the fund's portfolio
securities. The basic investment philosophy of the investment adviser is to
seek undervalued securities that represent good long-term investment
opportunities. Securities may be sold when the investment adviser believes they
no longer represent good long-term value.
ADDITIONAL INVESTMENT RESULTS
For periods ended December 31, 1999:
<TABLE>
<CAPTION>
AVERAGE ANNUAL
TOTAL RETURN/1/ ONE YEAR FIVE YEARS TEN YEARS LIFETIME
<S> <C> <C> <C> <C>
Class A/2/ 2.29% 8.20% 8.39% 9.88%
(with no sales charge deducted)
----------------------------------------------------------------------------
Class B/3/ N/A N/A N/A N/A
----------------------------------------------------------------------------
Lipper Average of Corporate -2.61% 6.91% 7.31% 9.04%
Debt A-Rated Bond Funds/4/
----------------------------------------------------------------------------
Consumer Price Index/5/ 2.68% 2.37% 2.93% 4.97%
----------------------------------------------------------------------------
</TABLE>
Class A distribution rate/6/: 7.16%
1 These fund results were calculated at net asset value according to a formula
that is required for all stock and bond funds and include the reinvestment of
dividend and capital gain distributions.
2 The fund began investment operations for Class A shares on May 28, 1974.
3 The fund is beginning investment operations for Class B shares on March 15,
2000.
4 The Lipper Average of Corporate Debt A-Rated Bond Funds consists of funds
that invest at least 65% of their assets in corporate debt issues rated "A" or
better or government issues. The results of the underlying funds in the index
include the reinvestment of dividend and capital gain distributions but do not
reflect sales charges and commissions. The lifetime figure is from the date
the fund's Class A shares began investment operations.
5 The Consumer Price Index is a measure of inflation and is computed from data
supplied by the U.S. Department of Labor, Bureau of Labor Statistics. The
lifetime figure is from the date the fund's Class A shares began investment
operations.
6 The distribution rate represents actual distributions paid by the fund. It
was calculated at net asset value by annualizing dividends paid by the fund
over one month and dividing that number by the fund's average net asset value
for the month.
7
THE BOND FUND OF AMERICA / PROSPECTUS
<PAGE>
The following chart illustrates the asset mix of the fund's investment
portfolio as of the end of the fund's fiscal year, December 31, 1999
[pie chart]
Corporate Bonds 47.0%
Mortgage-/Asset-Backed Securities 25.6%
U.S. Treasury Securities 9.4%
Non-U.S. Government Bonds and Governmental Authorities 7.7%
Federal Agency Notes & Bonds* 2.7%
Stocks 0.6%
Cash & Cash Equivalents 7.0%
*Not including mortgage-backed securities by federal agencies.
[end pie chart]
<TABLE>
<CAPTION>
HOLDINGS BY QUALITY RATING PERCENT OF
SEE THE APPENDIX FOR A DESCRIPTION OF QUALITY RATINGS. NET ASSETS
---------------------------------------------------------------------
<S> <C>
U.S. Treasury and Agency 20.8%
---------------------------------------------------------------------
Money Market 7.0
---------------------------------------------------------------------
Aaa/AAA 14.2
---------------------------------------------------------------------
Aa/AA 3.7
---------------------------------------------------------------------
A/A 15.8
---------------------------------------------------------------------
Baa/BBB 14.6
---------------------------------------------------------------------
Ba/BB 6.6
---------------------------------------------------------------------
B/B 14.6
---------------------------------------------------------------------
Caa/CCC 2.0
---------------------------------------------------------------------
C/C 0.1
---------------------------------------------------------------------
Other 0.6
</TABLE>
Because the fund is actively managed, its holdings will change from time to
time.
8
THE BOND FUND OF AMERICA / PROSPECTUS
<PAGE>
---------------------------------------------------------
MANAGEMENT AND ORGANIZATION
INVESTMENT ADVISER
Capital Research and Management Company, an experienced investment management
organization founded in 1931, serves as investment adviser to the fund and
other funds, including those in The American Funds Group. Capital Research and
Management Company, a wholly owned subsidiary of The Capital Group Companies,
Inc., is headquartered at 333 South Hope Street, Los Angeles, CA 90071. Capital
Research and Management Company manages the investment portfolio and business
affairs of the fund. The total management fee paid by the fund, as a percentage
of average net assets, for the previous fiscal year is discussed earlier under
"Fees and Expenses of the Fund."
Capital Research and Management Company and its affiliated companies have
adopted a personal investing policy that is consistent with the recommendations
contained in the May 9, 1994 report issued by the Investment Company
Institute's Advisory Group on Personal Investing. This policy has also been
incorporated into the fund's code of ethics.
MULTIPLE PORTFOLIO COUNSELOR SYSTEM
Capital Research and Management Company uses a system of multiple portfolio
counselors in managing mutual fund assets. Under this approach the portfolio of
a fund is divided into segments which are managed by individual counselors.
Counselors decide how their respective segments will be invested, within the
limits provided by a fund's objective(s) and policies and by Capital Research
and Management Company's investment committee. In addition, Capital Research
and Management Company's research professionals may make investment decisions
with respect to a portion of a fund's portfolio. The primary individual
portfolio counselors for The Bond Fund of America are listed on the following
page.
9
THE BOND FUND OF AMERICA / PROSPECTUS
<PAGE>
<TABLE>
<CAPTION>
APPROXIMATE YEARS OF EXPERIENCE
AS AN INVESTMENT PROFESSIONAL
YEARS OF EXPERIENCE (INCLUDING THE LAST FIVE YEARS)
AS PORTFOLIO COUNSELOR -----------------------------------
(AND RESEARCH PROFESSIONAL, WITH CAPITAL
PORTFOLIO COUNSELORS FOR IF APPLICABLE) FOR RESEARCH AND
THE BOND FUND THE BOND FUND OF AMERICA MANAGEMENT
OF AMERICA PRIMARY TITLE(S) (APPROXIMATE) COMPANY
----------------------------------------------------------------------------------- OR AFFILIATES TOTAL YEARS
-----------------------------------
<S> <C> <C> <C> <C>
ABNER D. President and Director of 26 years (since the fund 33 years 48 years
GOLDSTINE the fund. Senior Vice began operations)
President and Director,
Capital Research and
Management Company
----------------------------------------------------------------------------------------------------------------------
DAVID C. Vice President of the 5 years 12 years 19 years
BARCLAY fund. Vice President,
Capital Research and
Management Company
----------------------------------------------------------------------------------------------------------------------
JOHN H. Vice President of the 11 years 17 years 18 years
SMET fund. Vice President,
Capital Research and
Management Company
----------------------------------------------------------------------------------------------------------------------
MARK H. Vice President - 6 years 12 years 22 years
DALZELL Investment Management
Group, Capital Research
and Management Company
----------------------------------------------------------------
------------------------------------------------------
MARK R. Vice President - 1 year 6 years 14 years
MACDONALD Investment Management
Group, Capital Research
and Management Company
----------------------------------------------------------------
------------------------------------------------------
SUSAN M. Senior Vice President, 2 years (plus 7 years as a 10 years 12 years
TOLSON Capital Research Company* research professional prior
to becoming a portfolio
counselor for the fund)
-----------------------------------
-----------------------------------------------------------------------------------
The fund began investment operations on May 28, 1974.
* Company affiliated with Capital Research and Management Company
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
10
THE BOND FUND OF AMERICA / PROSPECTUS
<PAGE>
---------------------------------------------------------
SHAREHOLDER INFORMATION
SHAREHOLDER SERVICES
American Funds Service Company, the fund's transfer agent, offers you a wide
range of services you can use to alter your investment program should your
needs and circumstances change. These services may be terminated or modified at
any time upon 60 days' written notice. For your convenience, American Funds
Service Company has four service centers across the country.
AMERICAN FUNDS SERVICE COMPANY SERVICE AREAS
Call toll-Free from anywhere in the U.S.
(8 a.m. to 8 p.m. ET):
800/421-0180
[map of the United States]
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Western Western Central Eastern Central Eastern
Service Center Service Center Service Center Service Center
American Funds American Funds American Funds American Funds
Service Company Service Company Service Company Service Company
P.O. Box 2205 P.O. Box 659522 P.O. Box 6007 P.O. Box 2280
Brea, California San Antonio, Texas Indianapolis, Indiana Norfolk, Virginia
92822-2205 78265-9522 46206-6007 23501-2280
Fax: 714/671-7080 Fax: 210/474-4050 Fax: 317/735-6620 Fax: 757/670-4773
</TABLE>
A COMPLETE DESCRIPTION OF THE SERVICES WE OFFER IS INCLUDED IN THE FUND'S
STATEMENT OF ADDITIONAL INFORMATION. In addition, an easy-to-read guide to
owning a fund in The American Funds Group titled "Welcome to the Family" is
sent to new shareholders and is available by writing or calling American Funds
Service Company.
You may invest in the fund through various retirement plans. However, Class B
shares generally are not available to certain retirement plans (for example,
group retirement plans such as 401(k) plans, employer-sponsored 403(b) plans,
and money purchase pension and profit sharing plans). Some retirement plans or
accounts held by investment dealers may not offer certain services. If you
have any questions, please contact American Funds Service Company, your plan
administrator/trustee or dealer.
11
THE BOND FUND OF AMERICA / PROSPECTUS
<PAGE>
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CHOOSING A SHARE CLASS
The fund offers both Class A and Class B shares. Each share class has its own
sales charge and expense structure, allowing you to choose the class that best
meets your situation.
Factors you should consider in choosing a class of shares include:
- How long you expect to own the shares
- How much you intend to invest
- The expenses associated with owning shares of each class
- Whether you qualify for any reduction or waiver of sales charges (for
example, Class A shares may be a less expensive option over time if you
qualify for a sales charge reduction or waiver)
EACH INVESTOR'S FINANCIAL CONSIDERATIONS ARE DIFFERENT. YOU SHOULD SPEAK WITH
YOUR FINANCIAL ADVISER TO HELP YOU DECIDE WHICH SHARE CLASS IS BEST FOR YOU.
Differences between Class A and Class B shares include:
<TABLE>
<CAPTION>
CLASS A CLASS B
------------------------------------------------------------------------------
<S> <S>
Initial sales charge of up to No initial sales charge.
3.75%. Sales charges are reduced
for purchases of $100,000 or more
(see "Sales Charges - Class A").
------------------------------------------------------------------------------
Distribution and service (12b-1) Distribution and service (12b-1) fees
fees of up to 0.25% annually. of up to 1.00% annually.
------------------------------------------------------------------------------
Higher dividends than Class B Lower dividends than Class A shares due
shares due to lower annual to higher distribution fees and other
expenses. expenses.
------------------------------------------------------------------------------
No contingent deferred sales charge A contingent deferred sales charge if
(except on certain redemptions on you sell shares within six years of
purchases of $1 million or more buying them. The charge starts at 5%
bought without an initial sales and declines thereafter until it
charge). reaches 0% after six years. (see "Sales
Charges - Class B").
------------------------------------------------------------------------------
No purchase maximum. Maximum purchase of $100,000.
------------------------------------------------------------------------------
Automatic conversion to Class A shares
after eight years, reducing future
annual expenses.
------------------------------------------------------------------------------
</TABLE>
12
THE BOND FUND OF AMERICA / PROSPECTUS
<PAGE>
---------------------------------------------------------
PURCHASE AND EXCHANGE OF SHARES
PURCHASE
Generally, you may open an account by contacting any investment dealer (who may
impose transaction charges in addition to those described in this prospectus)
authorized to sell the fund's shares. You may purchase additional shares using
various options described in the statement of additional information and
"Welcome to the Family."
EXCHANGE
You may exchange your shares into shares of the same class of other funds in
The American Funds Group generally without a sales charge. For purposes of
computing the contingent deferred sales charge on Class B shares, the length of
time you have owned your shares will be measured from the date of original
purchase and will not be affected by any exchange.
Exchanges of shares from the money market funds initially purchased without a
sales charge generally will be subject to the appropriate sales charge.
Exchanges have the same tax consequences as ordinary sales and purchases. See
"Transactions by Telephone..." for information regarding electronic exchanges.
THE FUND AND AMERICAN FUNDS DISTRIBUTORS, THE FUND'S PRINCIPAL UNDERWRITER,
RESERVE THE RIGHT TO REJECT ANY PURCHASE ORDER FOR ANY REASON. ALTHOUGH THERE
IS CURRENTLY NO SPECIFIC LIMIT ON THE NUMBER OF EXCHANGES YOU CAN MAKE IN A
PERIOD OF TIME, THE FUND AND AMERICAN FUNDS DISTRIBUTORS RESERVE THE RIGHT TO
REJECT ANY PURCHASE ORDER AND MAY TERMINATE THE EXCHANGE PRIVILEGE OF ANY
INVESTOR WHOSE PATTERN OF EXCHANGE ACTIVITY THEY HAVE DETERMINED INVOLVES
ACTUAL OR POTENTIAL HARM TO THE FUND.
<TABLE>
<CAPTION>
PURCHASE MINIMUMS FOR CLASS A AND B SHARES
<S> <C>
To establish an account (including retirement plan accounts) $ 250
For a retirement plan account through payroll deduction $ 25
To add to an account $ 50
For a retirement plan account through payroll deduction $ 25
PURCHASE MAXIMUM FOR CLASS B SHARES $100,000
</TABLE>
13
THE BOND FUND OF AMERICA / PROSPECTUS
<PAGE>
SHARE PRICE
The fund calculates its share price, also called net asset value, as of
approximately 4:00 p.m. New York time, which is the normal close of trading on
the New York Stock Exchange, every day the Exchange is open. In calculating net
asset value, market prices are used when available. If a market price for a
particular security is not available, the fund will determine the appropriate
price for the security.
Your shares will be purchased at the net asset value plus any applicable sales
charge in the case of Class A shares, or sold at the net asset value next
determined after American Funds Service Company receives and accepts your
request. Sales of certain Class A and B shares may be subject to contingent
deferred sales charges.
---------------------------------------------------------
SALES CHARGES
CLASS A
The initial sales charge you pay when you buy Class A shares differs depending
upon the amount you invest and may be reduced for larger purchases as indicated
below.
<TABLE>
<CAPTION>
SALES CHARGE AS A PERCENTAGE OF
----------------------------------
DEALER
NET COMMISSION
OFFERING AMOUNT AS % OF
INVESTMENT PRICE INVESTED OFFERING PRICE
------------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $100,000 3.75% 3.90% 3.00%
------------------------------------------------------------------------------
$100,000 but less than 3.50% 3.63% 2.75%
$250,000
------------------------------------------------------------------------------
$250,000 but less than 2.50% 2.56% 2.00%
$500,000
------------------------------------------------------------------------------
$500,000 but less than 2.00% 2.04% 1.60%
$750,000
------------------------------------------------------------------------------
$750,000 but less than $1
million 1.50% 1.52% 1.20%
------------------------------------------------------------------------------
$1 million or more and certain other
investments described below see below see below see below
</TABLE>
CLASS A PURCHASES NOT SUBJECT TO SALES CHARGE
Investments of $1 million or more are sold with no initial sales charge.
HOWEVER, A 1% CONTINGENT DEFERRED SALES CHARGE MAY BE IMPOSED IF REDEMPTIONS
ARE MADE WITHIN ONE YEAR OF PURCHASE. Employer-sponsored defined
contribution-type plans investing $1 million or more, or with 100 or more
eligible employees, and Individual Retirement Account rollovers involving
retirement plan assets invested in the American Funds, may invest with no sales
charge and are not
14
THE BOND FUND OF AMERICA / PROSPECTUS
<PAGE>
subject to a contingent deferred sales charge. Investments made through
retirement plans, endowments or foundations with $50 million or more in assets,
or through certain qualified fee-based programs may also be made with no sales
charge and are not subject to a contingent deferred sales charge. The fund may
pay a dealer concession of up to 1% under its Plan of Distribution on
investments made with no initial sales charge.
CLASS B
Class B shares are sold without any initial sales charge. However, a
contingent deferred sales charge may be applied to shares you redeem within six
years of purchase, as shown in the table below.
<TABLE>
<CAPTION>
Contingent deferred sales charge
on shares sold within year as a % of shares being sold
---------------------------------------------------------------
<S> <S>
1 5.00%
2 4.00%
3 4.00%
4 3.00%
5 2.00%
6 1.00%
</TABLE>
Shares acquired through reinvestment of dividends or capital gain distributions
are not subject to a contingent deferred sales charge. In addition, the
contingent deferred sales charge may be waived in certain circumstances. See
"Contingent Deferred Sales Charge Waivers for Class B Shares" below. The
contingent deferred sales charge is based on the original purchase cost or the
current market value of the shares being sold, whichever is less. For purposes
of determining the contingent deferred sales charge, if you sell only some of
your shares, shares that are not subject to any contingent deferred sales
charge will be sold first and then shares that you have owned the longest.
CLASS B CONVERSION TO A SHARES
Class B shares automatically convert to Class A shares in the first month of
the eight-year anniversary of the purchase date. The Internal Revenue Service
currently takes the position that this automatic conversion is not taxable.
Should their position change, shareholders would still have the option of
converting but may face certain tax consequences. Please see the statement of
additional information for more information.
15
THE BOND FUND OF AMERICA / PROSPECTUS
<PAGE>
---------------------------------------------------------
SALES CHARGE REDUCTIONS AND WAIVERS
You must let your investment dealer or American Funds Service Company know if
you qualify for a reduction in your Class A sales charge or waiver of your
Class B contingent deferred sales charge using one or any combination of the
methods described below, in the statement of additional information and
"Welcome to the Family."
REDUCING YOUR CLASS A SALES CHARGES
You and your "immediate family" (your spouse and your children under the age of
21) may combine investments to reduce your Class A sales charge.
AGGREGATING ACCOUNTS
To receive a reduced Class A sales charge, investments made by you and your
immediate family (see above) may be aggregated if made for their own account(s)
and/or:
- trust accounts established by the above individuals. However, if the
person(s) who established the trust is deceased, the trust account may be
aggregated with accounts of the person who is the primary beneficiary of
the trust.
- solely controlled business accounts.
- single-participant retirement plans.
Other types of accounts may also be aggregated. You should check with your
financial adviser or consult the statement of additional information or
"Welcome to the Family" for more information.
CONCURRENT PURCHASES
You may combine simultaneous purchases of Class A and/or B shares of two or
more American Funds, as well as individual holdings in various American Legacy
variable annuities or variable life insurance policies, to qualify for a
reduced Class A sales charge. Direct purchases of money market funds are
excluded.
RIGHTS OF ACCUMULATION
You may take into account the current value of your existing Class A and B
holdings in the American Funds, as well as individual holdings in various
American Legacy variable annuities or variable life insurance policies, to
determine your Class A sales charge. Direct purchases of money market funds are
excluded.
STATEMENT OF INTENTION
You can reduce the sales charge you pay on your Class A share purchases by
establishing a Statement of Intention. A Statement of Intention allows you to
16
THE BOND FUND OF AMERICA / PROSPECTUS
<PAGE>
combine all Class A and B share non-money market fund purchases, as well as
individual American Legacy variable annuity and life insurance policies you
intend to make over a 13-month period, to determine the applicable sales
charge. At your request purchases made during the previous 90 days may be
included; however, capital appreciation and reinvested dividends and capital
gains do not apply toward these combined purchases. A portion of your account
may be held in escrow to cover additional Class A sales charges which may be
due if your total investments over the 13-month period do not qualify for the
applicable sales charge reduction.
CONTINGENT DEFERRED SALES CHARGE WAIVERS FOR CLASS B SHARES
The contingent deferred sales charge on Class B shares may be waived in the
following cases:
- to receive payments through systematic withdrawal plans (up to 12% of the
value of your account);
- to receive certain distributions, such as required minimum distributions,
from retirement accounts; or
- for redemptions due to death or post-purchase disability of the
shareholder.
For more information, please consult your financial adviser, the statement of
additional information or "Welcome to the Family."
---------------------------------------------------------
PLANS OF DISTRIBUTION
The fund has Plans of Distribution or "12b-1 Plans" under which it may finance
activities primarily intended to sell shares, provided the categories of
expenses are approved in advance by the fund's board of directors. The plans
provide for annual expenses of up to 0.25% for Class A shares and up to 1.00%
for Class B shares. Up to 0.25% of these payments are used to pay service fees
to qualified dealers for providing certain shareholder services. The remaining
0.75% expense for Class B shares is used for financing commissions paid to your
dealer. The 12b-1 fees paid by the fund, as a percentage of average net assets,
for the previous fiscal year is indicated above under "Fees and Expenses of the
Fund." Since these fees are paid out of the fund's assets or income on an
ongoing basis, over time they will increase the cost and reduce the return of
an investment. The higher fees for Class B shares may cost you more over time
than paying the initial sales charge for Class A shares.
OTHER COMPENSATION TO DEALERS
American Funds Distributors may provide additional compensation to, or sponsor
informational meetings for, dealers as described in the statement of additional
information.
17
THE BOND FUND OF AMERICA / PROSPECTUS
<PAGE>
---------------------------------------------------------
HOW TO SELL SHARES
Once a sufficient period of time has passed to reasonably assure that checks or
drafts (including certified or cashiers' checks) for shares purchased have
cleared (normally 15 calendar days), you may sell (redeem) those shares in any
of the following ways:
THROUGH YOUR DEALER (CERTAIN CHARGES MAY APPLY)
- Shares held for you in your dealer's name must be sold through the dealer.
WRITING TO AMERICAN FUNDS SERVICE COMPANY
- Requests must be signed by the registered shareholder(s).
- A signature guarantee is required if the redemption is:
-- Over $50,000;
-- Made payable to someone other than the registered shareholder(s); or
-- Sent to an address other than the address of record, or an address of
record which has been changed within the last 10 days.
- Additional documentation may be required for sales of shares held in
corporate, partnership or fiduciary accounts.
TELEPHONING OR FAXING AMERICAN FUNDS SERVICE COMPANY, OR BY USING AMERICAN
FUNDSLINE/(R)/ OR AMERICAN FUNDSLINE ONLINE/(R)/:
- Redemptions by telephone or fax (including American FundsLine and American
FundsLine OnLine) are limited to $50,000 per shareholder each day.
- Checks must be made payable to the registered shareholder.
- Checks must be mailed to an address of record that has been used with the
account for at least 10 days.
TRANSACTIONS BY TELEPHONE, FAX, AMERICAN FUNDSLINE OR FUNDSLINE ONLINE
Generally, you are automatically eligible to use these services for redemptions
and exchanges unless you notify us in writing that you do not want any or all
of these services. You may reinstate these services at any time.
Unless you decide not to have telephone, fax, or computer services on your
account(s), you agree to hold the fund, American Funds Service Company, any of
its affiliates or mutual funds managed by such affiliates, and each of their
respective directors, trustees, officers, employees and agents harmless from
any losses, expenses, costs or liabilities (including attorney fees) which may
be incurred in connection with the exercise of these privileges, provided
American Funds Service Company employs reasonable procedures to confirm that
the instructions received from any person with appropriate account information
are genuine. If reasonable procedures are not employed, the fund may be liable
for losses due to unauthorized or fraudulent instructions.
18
THE BOND FUND OF AMERICA / PROSPECTUS
<PAGE>
---------------------------------------------------------
DISTRIBUTIONS AND TAXES
DIVIDENDS AND DISTRIBUTIONS
The fund declares dividends from net investment income daily and distributes
the accrued dividends, which may fluctuate, to shareholders each month.
Dividends begin accruing one day after payment for shares is received by the
fund or American Funds Service Company. Capital gains, if any, are usually
distributed in December. When a capital gain is distributed, the net asset
value per share is reduced by the amount of the payment.
You may elect to reinvest dividends and/or capital gain distributions to
purchase additional shares of this fund or any other fund in The American Funds
Group or you may elect to receive them in cash. Most shareholders do not elect
to take capital gain distributions in cash because these distributions reduce
principal value.
TAXES ON DISTRIBUTIONS
Distributions you receive from the fund may be subject to income tax and may
also be subject to state or local taxes - unless you are exempt from taxation.
For federal tax purposes, any taxable dividends and distributions of short-term
capital gains are treated as ordinary income. The fund's distributions of net
long-term capital gains are taxable to you as long-term capital gains. Any
taxable distributions you receive from the fund will normally be taxable to you
when made, regardless of whether you reinvest distributions or receive them in
cash.
TAXES ON TRANSACTIONS
Your redemptions, including exchanges, may result in a capital gain or loss for
federal tax purposes. A capital gain or loss on your investment in the fund is
the difference between the cost of your shares, including any sales charges,
and the price you receive when you sell them.
Please see the statement of additional information, the "Welcome to the Family"
guide, and your tax adviser for further information.
19
THE BOND FUND OF AMERICA / PROSPECTUS
<PAGE>
---------------------------------------------------------
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the fund's
results for the past five years and is currently only shown for Class A shares.
A similar table will be shown for Class B shares beginning with the fund's
2000 fiscal year end. Certain information reflects financial results for a
single fund share. The total returns in the table represent the rate that an
investor would have earned or lost on an investment in the fund (assuming
reinvestment of all dividends and distributions). This information has been
audited by Deloitte & Touche LLP, whose report, along with the fund's financial
statements, is included in the statement of additional information, which is
available upon request.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
---------------------------
1999 1998 1997 1996 1995
---------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, $13.61 $14.00 $13.75 $13.88 $12.69
Beginning of Year
------------------------------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income (.93) .94 .98 1.02 1.05
Net gains or losses on
securities (both (.63) (.24) .25 (.13) 1.18
realized and unrealized)
------------------------------------------------------------------------------
Total from investment .30 .70 1.23 .89 2.23
operations
------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends (from net
investment income) (.93) (.95) (.98) (1.02) (1.04)
Distributions (from capital - (.14) - - -
gains)
------------------------------------------------------------------------------
Total distributions (.93) (1.09) (.98) (1.02) (1.04)
------------------------------------------------------------------------------
Net Asset Value, $12.98 $13.61 $14.00 $13.75 $13.88
End of Year
------------------------------------------------------------------------------
Total return* 2.29% 5.17% 9.24% 6.71% 18.25%
------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (in $9,585 $9,541 $8,176 $7,002 $6,290
millions)
------------------------------------------------------------------------------
Ratio of expenses to .69% .66% .68% .71% .74%
average net assets
------------------------------------------------------------------------------
Ratio of net income 6.96% 6.94% 6.95% 7.47% 7.87%
to average net assets
------------------------------------------------------------------------------
Portfolio turnover rate 46.71% 66.25% 51.96% 43.43% 43.80%
* Excludes maximum sales charge.
</TABLE>
20
THE BOND FUND OF AMERICA / PROSPECTUS
<PAGE>
---------------------------------------------------------
APPENDIX
Moody's Investors Service, Inc. rates the long-term debt securities issued by
various entities in categories ranging from "Aaa" to "C," according to quality
as described below.
"Aaa - Best quality. These securities carry the smallest degree of investment
risk and are generally referred to as "gilt edge." Interest payments are
protected by a large, or by an exceptionally stable margin and principal is
secure. While the various protective elements are likely to change, such
changes as can be visualized are most unlikely to impair the fundamentally
strong position of such shares."
"Aa - High quality by all standards. They are rated lower than the best bond
because margins of protection may not be as large as in Aaa securities,
fluctuation of protective elements may be of greater amplitude, or there may be
other elements present which make the long-term risks appear somewhat greater."
"A - Upper medium grade obligations. These bonds possess many favorable
investment attributes. Factors giving security to principal and interest are
considered adequate, but elements may be present which suggest a susceptibility
to impairment sometime in the future."
"Baa - Medium grade obligations. Interest payments and principal security
appear adequate for the present but certain protective elements may be lacking
or may be characteristically unreliable over any great length of time. Such
bonds lack outstanding investment characteristics and, in fact, have
speculative characteristics as well."
"Ba - Have speculative elements; future cannot be considered as well assured.
The protection of interest and principal payments may be very moderate and
thereby not well safeguarded during both good and bad times over the future.
Bonds in this class are characterized by uncertainty of position."
"B - Generally lack characteristics of the desirable investment; assurance of
interest and principal payments or of maintenance of other terms of the
contract over any long period of time may be small."
"Caa - Of poor standing. Issues may be in default or there may be present
elements of danger with respect to principal or interest."
"Ca - Speculative in a high degree; often in default or having other marked
shortcomings."
"C - Lowest rated class of bonds; can be regarded as having extremely poor
prospects of ever attaining any real investment standing."
21
THE BOND FUND OF AMERICA / PROSPECTUS
<PAGE>
Moody's supplies numerical indicators, 1, 2 and 3 to rating categories. The
modifier 1 indicates that the obligation ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and 3 indicates
a ranking toward the lower end of that generic category.
Standard & Poor's Corporation rates the long-term debt securities issued by
various entities in categories ranging from "AAA" to "D," according to quality
as described below.
"AAA - Highest rating. Capacity to pay interest and repay principal is
extremely strong."
"AA - High grade. Very strong capacity to pay interest and repay principal.
Generally, these bonds differ from AAA issues only in a small degree."
"A - Have a strong capacity to pay interest and repay principal, although they
are somewhat more susceptible to the adverse effects of change in circumstances
and economic conditions, than debt in higher rated categories."
"BBB - Regarded as having adequate capacity to pay interest and repay
principal. These bonds normally exhibit adequate protection parameters, but
adverse economic conditions or changing circumstances are more likely to lead
to a weakened capacity to pay interest and repay principal than for debt in
higher rated categories."
"BB, B, CCC, CC, C - Regarded, on balance, as predominantly speculative with
respect to capacity to pay interest and repay principal in accordance with the
terms of the obligation. BB indicates the lowest degree of speculation and C
the highest degree of speculation. While such debt will likely have some
quality protective characteristics, these are outweighed by large uncertainties
or major risk exposures to adverse conditions."
"C1 - Reserved for income bonds on which interest is being paid."
"D - In default and payment of interest and/or repayment of principal is in
arrears."
Standard & Poor's applies indicators "+", no character and "-" to its rating
categories. The indicators show relative standing within the major rating
categories.
22
THE BOND FUND OF AMERICA / PROSPECTUS
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
FOR SHAREHOLDER SERVICES American Funds Service Company
800/421-0180
FOR RETIREMENT PLAN SERVICES Call your employer or plan administrator
FOR DEALER SERVICES American Funds Distributors
800/421-9900 Ext. 11
FOR 24-HOUR INFORMATION American FundsLine(R)
800/325-3590
American FundsLine OnLine(R)
http://www.americanfunds.com
</TABLE>
Telephone conversations may be recorded or monitored for
verification, recordkeeping and quality assurance purposes.
* * * * *
MULTIPLE TRANSLATIONS This prospectus may be translated into other languages.
If there is any inconsistency or ambiguity as to the meaning of any word or
phrase in a translation, the English text will prevail.
ANNUAL/SEMI-ANNUAL REPORT TO SHAREHOLDERS Contains additional information
about the fund including financial statements, investment results, portfolio
holdings, a statement from portfolio management discussing market conditions
and the fund's investment strategies, and the independent accountants' report
(in the annual report).
STATEMENT OF ADDITIONAL INFORMATION (SAI) AND CODES OF ETHICS The SAI contains
more detailed information on all aspects of the fund, including the fund's
financial statements and is incorporated by reference into this prospectus.
The codes of ethics describe the personal investing policies adopted by the
fund and the fund's investment adviser and its affiliated companies.
The codes of ethics and current SAI have been filed with the Securities and
Exchange Commission ("SEC"). These and other related materials about the fund
are available for review or to be copied at the SEC's Public Reference Room in
Washington, D.C. (202/942-8090) or on the EDGAR database on the SEC's Internet
Web site at http://www.sec.gov, or, after payment of a duplicating fee, via
e-mail request to [email protected] or by writing the SEC's Public Reference
Section, Washington, D.C. 20549-0102.
HOUSEHOLD MAILINGS Each year you are automatically sent an updated
prospectus, annual and semi-annual report for the fund. In order to reduce the
volume of mail you receive, when possible, only one copy of these documents
will be sent to shareholders that are part of the same family and share the
same residential address.
If you would like to receive individual copies of these documents, or a free
copy of the SAI or Codes of Ethics, please call American Funds Service Company
at 800/421-0180 or write to the Secretary of the fund at 333 South Hope
Street, Los Angeles, California 90071.
Investment Company File No. 811-2444
Printed on recycled paper
THE FUND PROVIDES SPANISH TRANSLATIONS IN CONNECTION WITH THE PUBLIC OFFERING
AND SALE OF ITS SHARES. THE FOLLOWING IS A FAIR AND ACCURATE ENGLISH
TRANSLATION OF A SPANISH LANGUAGE PROSPECTUS FOR THE FUND.
/s/ Julie F. Williams
Julie F. Williams
Secretary
<PAGE>
The Bond Fund of America/SM/
Prospectus
MARCH 15, 2000
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED
OR DISAPPROVED OF THESE SECURITIES. FURTHER, IT HAS NOT DETERMINED THAT THIS
PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
<PAGE>
---------------------------------------------------------
THE BOND FUND OF AMERICA, INC.
333 South Hope Street
Los Angeles, California 90071
<TABLE>
<CAPTION>
TABLE OF CONTENTS
-------------------------------------------------------
<S> <C>
Risk/Return Summary 2
-------------------------------------------------------
Fees and Expenses of the Fund 5
-------------------------------------------------------
Investment Objective, Strategies and Risks 6
-------------------------------------------------------
Management and Organization 9
-------------------------------------------------------
Shareholder Information 11
-------------------------------------------------------
Choosing a Share Class 12
-------------------------------------------------------
Purchase and Exchange of Shares 13
-------------------------------------------------------
Sales Charges 14
-------------------------------------------------------
Sales Charge Reductions and Waivers 16
-------------------------------------------------------
Plans of Distribution 17
-------------------------------------------------------
How to Sell Shares 18
-------------------------------------------------------
Distributions and Taxes 19
-------------------------------------------------------
Financial Highlights 20
-------------------------------------------------------
Appendix 21
-------------------------------------------------------
</TABLE>
1
THE BOND FUND OF AMERICA / PROSPECTUS
BFA-010-0300/B
<PAGE>
---------------------------------------------------------
RISK/RETURN SUMMARY
The fund seeks to maximize your level of current income and preserve your
capital by investing primarily in bonds. Normally, the fund invests the
majority of its assets in bonds rated A and above. The fund may also invest in
lower quality, lower rated bonds. It is the fund's current practice not to
invest more than 25% of its assets in lower quality, lower rated bonds.
The fund is designed for investors seeking income and more price stability than
stocks, and capital preservation over the long term. An investment in the fund
is subject to risks, including the possibility that the fund may decline in
value in response to economic, political or social events in the U.S. or
abroad. The values of debt securities may be affected by changing interest
rates and credit risk assessments. Lower quality and longer maturity bonds may
be subject to greater price fluctuations than higher quality and shorter
maturity bonds. Although all securities in the fund's portfolio may be
adversely affected by currency fluctuations or world political, social and
economic instability, investments outside the U.S. may be affected to a greater
extent.
Your investment in the fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency, entity or person.
YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS IS GREATER
IF YOU INVEST FOR A SHORTER PERIOD OF TIME.
2
THE BOND FUND OF AMERICA / PROSPECTUS
<PAGE>
INVESTMENT RESULTS
The following information provides some indication of the risks of investing in
the fund by showing changes in the fund's investment results from year to year
and by showing how the fund's average annual returns for various periods
compare with those of a broad measure of market performance. Past results are
not an indication of future results.
CALENDAR YEAR TOTAL RETURNS FOR CLASS A SHARES
(Results do not include a sales charge; if one were included, results would
be lower.)
------------------------------------------------------------------------------
[bar chart]
1990 3.27%
1991 21.04%
1992 11.34%
1993 14.14%
1994 -5.02%
1995 18.25%
1996 6.71%
1997 9.24%
1998 5.17%
1999 2.29%
[end bar chart]
The fund's highest/lowest quarterly results during this time period were:
<TABLE>
<CAPTION>
<S> <C> <C>
HIGHEST 6.06% (quarter ended June 30, 1995)
LOWEST -3.78% (quarter ended March 31, 1994)
</TABLE>
3
THE BOND FUND OF AMERICA / PROSPECTUS
<PAGE>
For periods ended December 31, 1999:
<TABLE>
<CAPTION>
AVERAGE ANNUAL
TOTAL RETURN ONE YEAR FIVE YEARS TEN YEARS LIFETIME
<S> <C> <C> <C> <C>
Class A/1/
(with the maximum sales charge -1.54% 7.38% 7.97% 9.71%
deducted)
------------------------------------------------------------------------------
Class B/2/ N/A N/A N/A N/A
------------------------------------------------------------------------------
Lehman Brothers Aggregate -0.82% 7.73% 7.70% N/A
Bond Index/3/
------------------------------------------------------------------------------
</TABLE>
Class A yield: 7.25%
(For current yield information, please call American FundsLine/r/ at
1-800-325-3590)
1 The fund began investment operations for Class A shares on May 28, 1974.
2 The fund is beginning investment operations for Class B shares on March 15,
2000.
3 The Lehman Brothers Aggregate Bond Index represents investment grade debt.
This index is unmanaged and does not reflect sales charges, commissions or
expenses. This index was not in existence as of the date the fund began
investment operations, therefore lifetime results are not available.
Unlike the bar chart on the previous page, this table reflects the fund's
investment results with the maximum initial or deferred sales charge deducted,
as required by Securities and Exchange Commission rules. Class A share results
are shown with the maximum initial sales charge of 3.75% deducted. Sales
charges are reduced for purchases of $100,000 or more. Results would be higher
if they were calculated at net asset value. All fund results reflect the
reinvestment of dividend and capital gain distributions.
Class B shares are subject to a maximum deferred sales charge of 5.00% if
shares are redeemed within the first year of purchasing them. The deferred
sales charge declines thereafter until it reaches 0% after six years. Class B
shares convert to Class A shares after eight years. Since the fund's Class B
shares begin investment operations on March 15, 2000, no results are available
as of the date of this prospectus.
4
THE BOND FUND OF AMERICA / PROSPECTUS
<PAGE>
---------------------------------------------------------
FEES AND EXPENSES OF THE FUND
<TABLE>
<CAPTION>
SHAREHOLDER FEES
(fees paid directly from your investment) CLASS A CLASS B
--------------------------------------------------------------------------
<S> <C> <C>
Maximum sales charge imposed on purchases 3.75%/1/ 0.00%
(as a percentage of offering price)
--------------------------------------------------------------------------
Maximum sales charge imposed on reinvested dividends 0.00% 0.00%
--------------------------------------------------------------------------
Maximum deferred sales charge 0.00%/2/ 5.00%/3/
--------------------------------------------------------------------------
Redemption or exchange fees 0.00% 0.00%
</TABLE>
1 Sales charges are reduced or eliminated for purchases of $100,000 or more.
2 A contingent deferred sales charge of 1% applies on certain redemptions made
within 12 months following purchases of $1 million or more made without a
sales charge.
3 Deferred sales charges are reduced after 12 months and eliminated after six
years.
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from fund assets) CLASS A CLASS B/1/
-----------------------------------------------
<S> <C> <C>
Management Fees 0.32% 0.32%
Distribution and/or Service (12b-1) Fees 0.25%/2/ 1.00%/3/
Other Expenses 0.12% 0.12%
Total Annual Fund Operating Expenses 0.69% 1.44%
</TABLE>
1 Based on estimated amounts for the current fiscal year.
2 Class A 12b-1 expenses may not exceed 0.25% of the fund's average net assets
annually.
3 Class B 12b-1 expenses may not exceed 1.00% of the fund's average net assets
annually.
EXAMPLE
This Example is intended to help you compare the cost of investing in the fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the fund for the time periods indicated, that your investment
has a 5% return each year and that the fund's operating expenses remain the
same as shown above. The Class A example reflects the maximum initial sales
charge in Year One. The Class B-assuming redemption example reflects applicable
contingent deferred sales charges through Year Six (after which time they are
eliminated). Both Class B examples reflect Class A expenses for Years 9 and 10
since Class B shares automatically convert to Class A after eight years.
Although your actual costs may be higher or lower, based on these assumptions
your cumulative expenses would be:
<TABLE>
<CAPTION>
YEAR YEAR YEAR YEAR
ONE THREE FIVE TEN
<S> <C> <C> <C> <C>
Class A $443 $587 $745 $1,201
----------------------------------------------------------------------------
Class B - assuming redemption $647 $856 $987 $1,520
Class B - assuming no redemption $147 $456 $787 $1,520
</TABLE>
5
THE BOND FUND OF AMERICA / PROSPECTUS
<PAGE>
---------------------------------------------------------
INVESTMENT OBJECTIVE, STRATEGIES AND RISKS
The fund's investment objective is to provide as high a level of current income
as is consistent with the preservation of capital. Normally, the fund invests
the majority of its assets in bonds and debt securities rated A and above,
including securities issued and guaranteed by the U.S. and other governments,
and securities backed by mortgages and other assets. The fund may also invest
significantly in lower quality, lower rated bonds.
The values of most debt securities held by the fund may be affected by changing
interest rates, and individual securities by changes in their effective
maturities and credit ratings. For example, the values of bonds in the fund's
portfolio generally will decline when interest rates rise and vice versa. Debt
securities are also subject to credit risk, which is the possibility that the
credit strength of an issuer will weaken and/or an issuer of a debt security
will fail to make timely payments of principal or interest and the security
will go into default. The values of lower quality and longer maturity bonds
will be subject to greater price fluctuations than higher quality and shorter
maturity bonds. The fund's investment adviser attempts to reduce these risks
through diversification of the portfolio and with ongoing credit analysis of
each issuer as well as by monitoring economic and legislative developments.
A security backed by the U.S. Treasury or the full faith and credit of the
United States is guaranteed only as to the timely payment of interest and
principal when held to maturity. Accordingly, the current market prices for
these securities will fluctuate with changes in interest rates. Many types of
debt securities, including mortgage-related securities, are subject to
prepayment risk. For example, when interest rates fall, homeowners are more
likely to refinance their home mortgages and "prepay" their principal earlier
than expected. The fund must then reinvest the prepaid principal in new
securities when interest rates on new mortgage investments are falling, thus
reducing the fund's income.
Investments outside the U.S. may be affected by these events to a greater
extent and may also be affected by differing securities regulations, higher
transaction costs, and administrative difficulties such as delays in clearing
and settling portfolio transactions.
The fund may also hold cash or money market instruments. The size of the fund's
cash position will vary and will depend on various factors, including market
conditions and purchases and redemptions of fund shares. A larger cash position
could detract from the achievement of the fund's objective, but it also would
reduce the fund's exposure in the event of a market downturn and provide
liquidity to make additional investments or to meet redemptions.
6
THE BOND FUND OF AMERICA / PROSPECTUS
<PAGE>
The fund relies on the professional judgment of its investment adviser, Capital
Research and Management Company, to make decisions about the fund's portfolio
securities. The basic investment philosophy of the investment adviser is to
seek undervalued securities that represent good long-term investment
opportunities. Securities may be sold when the investment adviser believes they
no longer represent good long-term value.
ADDITIONAL INVESTMENT RESULTS
For periods ended December 31, 1999:
<TABLE>
<CAPTION>
AVERAGE ANNUAL
TOTAL RETURN/1/ ONE YEAR FIVE YEARS TEN YEARS LIFETIME
<S> <C> <C> <C> <C>
Class A/2/ 2.29% 8.20% 8.39% 9.88%
(with no sales charge deducted)
----------------------------------------------------------------------------
Class B/3/ N/A N/A N/A N/A
----------------------------------------------------------------------------
Lipper Average of Corporate -2.61% 6.91% 7.31% 9.04%
Debt A-Rated Bond Funds/4/
----------------------------------------------------------------------------
Consumer Price Index/5/ 2.68% 2.37% 2.93% 4.97%
----------------------------------------------------------------------------
</TABLE>
Class A distribution rate/6/: 7.16%
1 These fund results were calculated at net asset value according to a formula
that is required for all stock and bond funds and include the reinvestment of
dividend and capital gain distributions.
2 The fund began investment operations for Class A shares on May 28, 1974.
3 The fund is beginning investment operations for Class B shares on March 15,
2000.
4 The Lipper Average of Corporate Debt A-Rated Bond Funds consists of funds
that invest at least 65% of their assets in corporate debt issues rated "A" or
better or government issues. The results of the underlying funds in the index
include the reinvestment of dividend and capital gain distributions but do not
reflect sales charges and commissions. The lifetime figure is from the date
the fund's Class A shares began investment operations.
5 The Consumer Price Index is a measure of inflation and is computed from data
supplied by the U.S. Department of Labor, Bureau of Labor Statistics. The
lifetime figure is from the date the fund's Class A shares began investment
operations.
6 The distribution rate represents actual distributions paid by the fund. It
was calculated at net asset value by annualizing dividends paid by the fund
over one month and dividing that number by the fund's average net asset value
for the month.
7
THE BOND FUND OF AMERICA / PROSPECTUS
<PAGE>
The following chart illustrates the asset mix of the fund's investment
portfolio as of the end of the fund's fiscal year, December 31, 1999
[pie chart]
Corporate Bonds 47.0%
Mortgage-/Asset-Backed Securities 25.6%
U.S. Treasury Securities 9.4%
Non-U.S. Government Bonds and Governmental Authorities 7.7%
Federal Agency Notes & Bonds* 2.7%
Stocks 0.6%
Cash & Cash Equivalents 7.0%
*Not including mortgage-backed securities by federal agencies.
[end pie chart]
<TABLE>
<CAPTION>
HOLDINGS BY QUALITY RATING PERCENT OF
SEE THE APPENDIX FOR A DESCRIPTION OF QUALITY RATINGS. NET ASSETS
---------------------------------------------------------------------
<S> <C>
U.S. Treasury and Agency 20.8%
---------------------------------------------------------------------
Money Market 7.0
---------------------------------------------------------------------
Aaa/AAA 14.2
---------------------------------------------------------------------
Aa/AA 3.7
---------------------------------------------------------------------
A/A 15.8
---------------------------------------------------------------------
Baa/BBB 14.6
---------------------------------------------------------------------
Ba/BB 6.6
---------------------------------------------------------------------
B/B 14.6
---------------------------------------------------------------------
Caa/CCC 2.0
---------------------------------------------------------------------
C/C 0.1
---------------------------------------------------------------------
Other 0.6
</TABLE>
Because the fund is actively managed, its holdings will change from time to
time.
8
THE BOND FUND OF AMERICA / PROSPECTUS
<PAGE>
---------------------------------------------------------
MANAGEMENT AND ORGANIZATION
INVESTMENT ADVISER
Capital Research and Management Company, an experienced investment management
organization founded in 1931, serves as investment adviser to the fund and
other funds, including those in The American Funds Group. Capital Research and
Management Company, a wholly owned subsidiary of The Capital Group Companies,
Inc., is headquartered at 333 South Hope Street, Los Angeles, CA 90071. Capital
Research and Management Company manages the investment portfolio and business
affairs of the fund. The total management fee paid by the fund, as a percentage
of average net assets, for the previous fiscal year is discussed earlier under
"Fees and Expenses of the Fund."
Capital Research and Management Company and its affiliated companies have
adopted a personal investing policy that is consistent with the recommendations
contained in the May 9, 1994 report issued by the Investment Company
Institute's Advisory Group on Personal Investing. This policy has also been
incorporated into the fund's code of ethics.
MULTIPLE PORTFOLIO COUNSELOR SYSTEM
Capital Research and Management Company uses a system of multiple portfolio
counselors in managing mutual fund assets. Under this approach the portfolio of
a fund is divided into segments which are managed by individual counselors.
Counselors decide how their respective segments will be invested, within the
limits provided by a fund's objective(s) and policies and by Capital Research
and Management Company's investment committee. In addition, Capital Research
and Management Company's research professionals may make investment decisions
with respect to a portion of a fund's portfolio. The primary individual
portfolio counselors for The Bond Fund of America are listed on the following
page.
9
THE BOND FUND OF AMERICA / PROSPECTUS
<PAGE>
<TABLE>
<CAPTION>
APPROXIMATE YEARS OF EXPERIENCE
AS AN INVESTMENT PROFESSIONAL
YEARS OF EXPERIENCE (INCLUDING THE LAST FIVE YEARS)
AS PORTFOLIO COUNSELOR -----------------------------------
(AND RESEARCH PROFESSIONAL, WITH CAPITAL
PORTFOLIO COUNSELORS FOR IF APPLICABLE) FOR RESEARCH AND
THE BOND FUND THE BOND FUND OF AMERICA MANAGEMENT
OF AMERICA PRIMARY TITLE(S) (APPROXIMATE) COMPANY
----------------------------------------------------------------------------------- OR AFFILIATES TOTAL YEARS
-----------------------------------
<S> <C> <C> <C> <C>
ABNER D. President and Director of 26 years (since the fund 33 years 48 years
GOLDSTINE the fund. Senior Vice began operations)
President and Director,
Capital Research and
Management Company
----------------------------------------------------------------------------------------------------------------------
DAVID C. Vice President of the 5 years 12 years 19 years
BARCLAY fund. Vice President,
Capital Research and
Management Company
----------------------------------------------------------------------------------------------------------------------
JOHN H. Vice President of the 11 years 17 years 18 years
SMET fund. Vice President,
Capital Research and
Management Company
----------------------------------------------------------------------------------------------------------------------
MARK H. Vice President - 6 years 12 years 22 years
DALZELL Investment Management
Group, Capital Research
and Management Company
----------------------------------------------------------------
------------------------------------------------------
MARK R. Vice President - 1 year 6 years 14 years
MACDONALD Investment Management
Group, Capital Research
and Management Company
----------------------------------------------------------------
------------------------------------------------------
SUSAN M. Senior Vice President, 2 years (plus 7 years as a 10 years 12 years
TOLSON Capital Research Company* research professional prior
to becoming a portfolio
counselor for the fund)
-----------------------------------
-----------------------------------------------------------------------------------
The fund began investment operations on May 28, 1974.
* Company affiliated with Capital Research and Management Company
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
10
THE BOND FUND OF AMERICA / PROSPECTUS
<PAGE>
---------------------------------------------------------
SHAREHOLDER INFORMATION
SHAREHOLDER SERVICES
American Funds Service Company, the fund's transfer agent, offers you a wide
range of services you can use to alter your investment program should your
needs and circumstances change. These services may be terminated or modified at
any time upon 60 days' written notice. For your convenience, American Funds
Service Company has four service centers across the country.
AMERICAN FUNDS SERVICE COMPANY SERVICE AREAS
Call toll-Free from anywhere in the U.S.
(8 a.m. to 8 p.m. ET):
800/421-0180
[map of the United States]
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Western Western Central Eastern Central Eastern
Service Center Service Center Service Center Service Center
American Funds American Funds American Funds American Funds
Service Company Service Company Service Company Service Company
P.O. Box 2205 P.O. Box 659522 P.O. Box 6007 P.O. Box 2280
Brea, California San Antonio, Texas Indianapolis, Indiana Norfolk, Virginia
92822-2205 78265-9522 46206-6007 23501-2280
Fax: 714/671-7080 Fax: 210/474-4050 Fax: 317/735-6620 Fax: 757/670-4773
</TABLE>
A COMPLETE DESCRIPTION OF THE SERVICES WE OFFER IS INCLUDED IN THE FUND'S
STATEMENT OF ADDITIONAL INFORMATION. In addition, an easy-to-read guide to
owning a fund in The American Funds Group titled "Welcome to the Family" is
sent to new shareholders and is available by writing or calling American Funds
Service Company.
You may invest in the fund through various retirement plans. However, Class B
shares generally are not available to certain retirement plans (for example,
group retirement plans such as 401(k) plans, employer-sponsored 403(b) plans,
and money purchase pension and profit sharing plans). Some retirement plans or
accounts held by investment dealers may not offer certain services. If you
have any questions, please contact American Funds Service Company, your plan
administrator/trustee or dealer.
11
THE BOND FUND OF AMERICA / PROSPECTUS
<PAGE>
---------------------------------------------------------
CHOOSING A SHARE CLASS
The fund offers both Class A and Class B shares. Each share class has its own
sales charge and expense structure, allowing you to choose the class that best
meets your situation.
Factors you should consider in choosing a class of shares include:
- How long you expect to own the shares
- How much you intend to invest
- The expenses associated with owning shares of each class
- Whether you qualify for any reduction or waiver of sales charges (for
example, Class A shares may be a less expensive option over time if you
qualify for a sales charge reduction or waiver)
EACH INVESTOR'S FINANCIAL CONSIDERATIONS ARE DIFFERENT. YOU SHOULD SPEAK WITH
YOUR FINANCIAL ADVISER TO HELP YOU DECIDE WHICH SHARE CLASS IS BEST FOR YOU.
Differences between Class A and Class B shares include:
<TABLE>
<CAPTION>
CLASS A CLASS B
------------------------------------------------------------------------------
<S> <S>
Initial sales charge of up to No initial sales charge.
3.75%. Sales charges are reduced
for purchases of $100,000 or more
(see "Sales Charges - Class A").
------------------------------------------------------------------------------
Distribution and service (12b-1) Distribution and service (12b-1) fees
fees of up to 0.25% annually. of up to 1.00% annually.
------------------------------------------------------------------------------
Higher dividends than Class B Lower dividends than Class A shares due
shares due to lower annual to higher distribution fees and other
expenses. expenses.
------------------------------------------------------------------------------
No contingent deferred sales charge A contingent deferred sales charge if
(except on certain redemptions on you sell shares within six years of
purchases of $1 million or more buying them. The charge starts at 5%
bought without an initial sales and declines thereafter until it
charge). reaches 0% after six years. (see "Sales
Charges - Class B").
------------------------------------------------------------------------------
No purchase maximum. Maximum purchase of $100,000.
------------------------------------------------------------------------------
Automatic conversion to Class A shares
after eight years, reducing future
annual expenses.
------------------------------------------------------------------------------
</TABLE>
12
THE BOND FUND OF AMERICA / PROSPECTUS
<PAGE>
---------------------------------------------------------
PURCHASE AND EXCHANGE OF SHARES
PURCHASE
Generally, you may open an account by contacting any investment dealer (who may
impose transaction charges in addition to those described in this prospectus)
authorized to sell the fund's shares. You may purchase additional shares using
various options described in the statement of additional information and
"Welcome to the Family."
EXCHANGE
You may exchange your shares into shares of the same class of other funds in
The American Funds Group generally without a sales charge. For purposes of
computing the contingent deferred sales charge on Class B shares, the length of
time you have owned your shares will be measured from the date of original
purchase and will not be affected by any exchange.
Exchanges of shares from the money market funds initially purchased without a
sales charge generally will be subject to the appropriate sales charge.
Exchanges have the same tax consequences as ordinary sales and purchases. See
"Transactions by Telephone..." for information regarding electronic exchanges.
THE FUND AND AMERICAN FUNDS DISTRIBUTORS, THE FUND'S PRINCIPAL UNDERWRITER,
RESERVE THE RIGHT TO REJECT ANY PURCHASE ORDER FOR ANY REASON. ALTHOUGH THERE
IS CURRENTLY NO SPECIFIC LIMIT ON THE NUMBER OF EXCHANGES YOU CAN MAKE IN A
PERIOD OF TIME, THE FUND AND AMERICAN FUNDS DISTRIBUTORS RESERVE THE RIGHT TO
REJECT ANY PURCHASE ORDER AND MAY TERMINATE THE EXCHANGE PRIVILEGE OF ANY
INVESTOR WHOSE PATTERN OF EXCHANGE ACTIVITY THEY HAVE DETERMINED INVOLVES
ACTUAL OR POTENTIAL HARM TO THE FUND.
<TABLE>
<CAPTION>
PURCHASE MINIMUMS FOR CLASS A AND B SHARES
<S> <C>
To establish an account (including retirement plan accounts) $ 250
For a retirement plan account through payroll deduction $ 25
To add to an account $ 50
For a retirement plan account through payroll deduction $ 25
PURCHASE MAXIMUM FOR CLASS B SHARES $100,000
</TABLE>
13
THE BOND FUND OF AMERICA / PROSPECTUS
<PAGE>
SHARE PRICE
The fund calculates its share price, also called net asset value, as of
approximately 4:00 p.m. New York time, which is the normal close of trading on
the New York Stock Exchange, every day the Exchange is open. In calculating net
asset value, market prices are used when available. If a market price for a
particular security is not available, the fund will determine the appropriate
price for the security.
Your shares will be purchased at the net asset value plus any applicable sales
charge in the case of Class A shares, or sold at the net asset value next
determined after American Funds Service Company receives and accepts your
request. Sales of certain Class A and B shares may be subject to contingent
deferred sales charges.
---------------------------------------------------------
SALES CHARGES
CLASS A
The initial sales charge you pay when you buy Class A shares differs depending
upon the amount you invest and may be reduced for larger purchases as indicated
below.
<TABLE>
<CAPTION>
SALES CHARGE AS A PERCENTAGE OF
----------------------------------
DEALER
NET COMMISSION
OFFERING AMOUNT AS % OF
INVESTMENT PRICE INVESTED OFFERING PRICE
------------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $100,000 3.75% 3.90% 3.00%
------------------------------------------------------------------------------
$100,000 but less than 3.50% 3.63% 2.75%
$250,000
------------------------------------------------------------------------------
$250,000 but less than 2.50% 2.56% 2.00%
$500,000
------------------------------------------------------------------------------
$500,000 but less than 2.00% 2.04% 1.60%
$750,000
------------------------------------------------------------------------------
$750,000 but less than $1
million 1.50% 1.52% 1.20%
------------------------------------------------------------------------------
$1 million or more and certain other
investments described below see below see below see below
</TABLE>
CLASS A PURCHASES NOT SUBJECT TO SALES CHARGE
Investments of $1 million or more are sold with no initial sales charge.
HOWEVER, A 1% CONTINGENT DEFERRED SALES CHARGE MAY BE IMPOSED IF REDEMPTIONS
ARE MADE WITHIN ONE YEAR OF PURCHASE. Employer-sponsored defined
contribution-type plans investing $1 million or more, or with 100 or more
eligible employees, and Individual Retirement Account rollovers involving
retirement plan assets invested in the American Funds, may invest with no sales
charge and are not
14
THE BOND FUND OF AMERICA / PROSPECTUS
<PAGE>
subject to a contingent deferred sales charge. Investments made through
retirement plans, endowments or foundations with $50 million or more in assets,
or through certain qualified fee-based programs may also be made with no sales
charge and are not subject to a contingent deferred sales charge. The fund may
pay a dealer concession of up to 1% under its Plan of Distribution on
investments made with no initial sales charge.
CLASS B
Class B shares are sold without any initial sales charge. However, a
contingent deferred sales charge may be applied to shares you redeem within six
years of purchase, as shown in the table below.
<TABLE>
<CAPTION>
Contingent deferred sales charge
on shares sold within year as a % of shares being sold
---------------------------------------------------------------
<S> <S>
1 5.00%
2 4.00%
3 4.00%
4 3.00%
5 2.00%
6 1.00%
</TABLE>
Shares acquired through reinvestment of dividends or capital gain distributions
are not subject to a contingent deferred sales charge. In addition, the
contingent deferred sales charge may be waived in certain circumstances. See
"Contingent Deferred Sales Charge Waivers for Class B Shares" below. The
contingent deferred sales charge is based on the original purchase cost or the
current market value of the shares being sold, whichever is less. For purposes
of determining the contingent deferred sales charge, if you sell only some of
your shares, shares that are not subject to any contingent deferred sales
charge will be sold first and then shares that you have owned the longest.
CLASS B CONVERSION TO A SHARES
Class B shares automatically convert to Class A shares in the first month of
the eight-year anniversary of the purchase date. The Internal Revenue Service
currently takes the position that this automatic conversion is not taxable.
Should their position change, shareholders would still have the option of
converting but may face certain tax consequences. Please see the statement of
additional information for more information.
15
THE BOND FUND OF AMERICA / PROSPECTUS
<PAGE>
---------------------------------------------------------
SALES CHARGE REDUCTIONS AND WAIVERS
You must let your investment dealer or American Funds Service Company know if
you qualify for a reduction in your Class A sales charge or waiver of your
Class B contingent deferred sales charge using one or any combination of the
methods described below, in the statement of additional information and
"Welcome to the Family."
REDUCING YOUR CLASS A SALES CHARGES
You and your "immediate family" (your spouse and your children under the age of
21) may combine investments to reduce your Class A sales charge.
AGGREGATING ACCOUNTS
To receive a reduced Class A sales charge, investments made by you and your
immediate family (see above) may be aggregated if made for their own account(s)
and/or:
- trust accounts established by the above individuals. However, if the
person(s) who established the trust is deceased, the trust account may be
aggregated with accounts of the person who is the primary beneficiary of
the trust.
- solely controlled business accounts.
- single-participant retirement plans.
Other types of accounts may also be aggregated. You should check with your
financial adviser or consult the statement of additional information or
"Welcome to the Family" for more information.
CONCURRENT PURCHASES
You may combine simultaneous purchases of Class A and/or B shares of two or
more American Funds, as well as individual holdings in various American Legacy
variable annuities or variable life insurance policies, to qualify for a
reduced Class A sales charge. Direct purchases of money market funds are
excluded.
RIGHTS OF ACCUMULATION
You may take into account the current value of your existing Class A and B
holdings in the American Funds, as well as individual holdings in various
American Legacy variable annuities or variable life insurance policies, to
determine your Class A sales charge. Direct purchases of money market funds are
excluded.
STATEMENT OF INTENTION
You can reduce the sales charge you pay on your Class A share purchases by
establishing a Statement of Intention. A Statement of Intention allows you to
16
THE BOND FUND OF AMERICA / PROSPECTUS
<PAGE>
combine all Class A and B share non-money market fund purchases, as well as
individual American Legacy variable annuity and life insurance policies you
intend to make over a 13-month period, to determine the applicable sales
charge. At your request purchases made during the previous 90 days may be
included; however, capital appreciation and reinvested dividends and capital
gains do not apply toward these combined purchases. A portion of your account
may be held in escrow to cover additional Class A sales charges which may be
due if your total investments over the 13-month period do not qualify for the
applicable sales charge reduction.
CONTINGENT DEFERRED SALES CHARGE WAIVERS FOR CLASS B SHARES
The contingent deferred sales charge on Class B shares may be waived in the
following cases:
- to receive payments through systematic withdrawal plans (up to 12% of the
value of your account);
- to receive certain distributions, such as required minimum distributions,
from retirement accounts; or
- for redemptions due to death or post-purchase disability of the
shareholder.
For more information, please consult your financial adviser, the statement of
additional information or "Welcome to the Family."
---------------------------------------------------------
PLANS OF DISTRIBUTION
The fund has Plans of Distribution or "12b-1 Plans" under which it may finance
activities primarily intended to sell shares, provided the categories of
expenses are approved in advance by the fund's board of directors. The plans
provide for annual expenses of up to 0.25% for Class A shares and up to 1.00%
for Class B shares. Up to 0.25% of these payments are used to pay service fees
to qualified dealers for providing certain shareholder services. The remaining
0.75% expense for Class B shares is used for financing commissions paid to your
dealer. The 12b-1 fees paid by the fund, as a percentage of average net assets,
for the previous fiscal year is indicated above under "Fees and Expenses of the
Fund." Since these fees are paid out of the fund's assets or income on an
ongoing basis, over time they will increase the cost and reduce the return of
an investment. The higher fees for Class B shares may cost you more over time
than paying the initial sales charge for Class A shares.
OTHER COMPENSATION TO DEALERS
American Funds Distributors may provide additional compensation to, or sponsor
informational meetings for, dealers as described in the statement of additional
information.
17
THE BOND FUND OF AMERICA / PROSPECTUS
<PAGE>
---------------------------------------------------------
HOW TO SELL SHARES
Once a sufficient period of time has passed to reasonably assure that checks or
drafts (including certified or cashiers' checks) for shares purchased have
cleared (normally 15 calendar days), you may sell (redeem) those shares in any
of the following ways:
THROUGH YOUR DEALER (CERTAIN CHARGES MAY APPLY)
- Shares held for you in your dealer's name must be sold through the dealer.
WRITING TO AMERICAN FUNDS SERVICE COMPANY
- Requests must be signed by the registered shareholder(s).
- A signature guarantee is required if the redemption is:
-- Over $50,000;
-- Made payable to someone other than the registered shareholder(s); or
-- Sent to an address other than the address of record, or an address of
record which has been changed within the last 10 days.
- Additional documentation may be required for sales of shares held in
corporate, partnership or fiduciary accounts.
TELEPHONING OR FAXING AMERICAN FUNDS SERVICE COMPANY, OR BY USING AMERICAN
FUNDSLINE/(R)/ OR AMERICAN FUNDSLINE ONLINE/(R)/:
- Redemptions by telephone or fax (including American FundsLine and American
FundsLine OnLine) are limited to $50,000 per shareholder each day.
- Checks must be made payable to the registered shareholder.
- Checks must be mailed to an address of record that has been used with the
account for at least 10 days.
TRANSACTIONS BY TELEPHONE, FAX, AMERICAN FUNDSLINE OR FUNDSLINE ONLINE
Generally, you are automatically eligible to use these services for redemptions
and exchanges unless you notify us in writing that you do not want any or all
of these services. You may reinstate these services at any time.
Unless you decide not to have telephone, fax, or computer services on your
account(s), you agree to hold the fund, American Funds Service Company, any of
its affiliates or mutual funds managed by such affiliates, and each of their
respective directors, trustees, officers, employees and agents harmless from
any losses, expenses, costs or liabilities (including attorney fees) which may
be incurred in connection with the exercise of these privileges, provided
American Funds Service Company employs reasonable procedures to confirm that
the instructions received from any person with appropriate account information
are genuine. If reasonable procedures are not employed, the fund may be liable
for losses due to unauthorized or fraudulent instructions.
18
THE BOND FUND OF AMERICA / PROSPECTUS
<PAGE>
---------------------------------------------------------
DISTRIBUTIONS AND TAXES
DIVIDENDS AND DISTRIBUTIONS
The fund declares dividends from net investment income daily and distributes
the accrued dividends, which may fluctuate, to shareholders each month.
Dividends begin accruing one day after payment for shares is received by the
fund or American Funds Service Company. Capital gains, if any, are usually
distributed in December. When a capital gain is distributed, the net asset
value per share is reduced by the amount of the payment.
You may elect to reinvest dividends and/or capital gain distributions to
purchase additional shares of this fund or any other fund in The American Funds
Group or you may elect to receive them in cash. Most shareholders do not elect
to take capital gain distributions in cash because these distributions reduce
principal value.
TAXES ON DISTRIBUTIONS
Distributions you receive from the fund may be subject to income tax and may
also be subject to state or local taxes - unless you are exempt from taxation.
For federal tax purposes, any taxable dividends and distributions of short-term
capital gains are treated as ordinary income. The fund's distributions of net
long-term capital gains are taxable to you as long-term capital gains. Any
taxable distributions you receive from the fund will normally be taxable to you
when made, regardless of whether you reinvest distributions or receive them in
cash.
TAXES ON TRANSACTIONS
Your redemptions, including exchanges, may result in a capital gain or loss for
federal tax purposes. A capital gain or loss on your investment in the fund is
the difference between the cost of your shares, including any sales charges,
and the price you receive when you sell them.
Please see the statement of additional information, the "Welcome to the Family"
guide, and your tax adviser for further information.
19
THE BOND FUND OF AMERICA / PROSPECTUS
<PAGE>
---------------------------------------------------------
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the fund's
results for the past five years and is currently only shown for Class A shares.
A similar table will be shown for Class B shares beginning with the fund's
2000 fiscal year end. Certain information reflects financial results for a
single fund share. The total returns in the table represent the rate that an
investor would have earned or lost on an investment in the fund (assuming
reinvestment of all dividends and distributions). This information has been
audited by Deloitte & Touche LLP, whose report, along with the fund's financial
statements, is included in the statement of additional information, which is
available upon request.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
---------------------------
1999 1998 1997 1996 1995
---------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, $13.61 $14.00 $13.75 $13.88 $12.69
Beginning of Year
------------------------------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income (.93) .94 .98 1.02 1.05
Net gains or losses on
securities (both (.63) (.24) .25 (.13) 1.18
realized and unrealized)
------------------------------------------------------------------------------
Total from investment .30 .70 1.23 .89 2.23
operations
------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends (from net
investment income) (.93) (.95) (.98) (1.02) (1.04)
Distributions (from capital - (.14) - - -
gains)
------------------------------------------------------------------------------
Total distributions (.93) (1.09) (.98) (1.02) (1.04)
------------------------------------------------------------------------------
Net Asset Value, $12.98 $13.61 $14.00 $13.75 $13.88
End of Year
------------------------------------------------------------------------------
Total return* 2.29% 5.17% 9.24% 6.71% 18.25%
------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (in $9,585 $9,541 $8,176 $7,002 $6,290
millions)
------------------------------------------------------------------------------
Ratio of expenses to .69% .66% .68% .71% .74%
average net assets
------------------------------------------------------------------------------
Ratio of net income 6.96% 6.94% 6.95% 7.47% 7.87%
to average net assets
------------------------------------------------------------------------------
Portfolio turnover rate 46.71% 66.25% 51.96% 43.43% 43.80%
* Excludes maximum sales charge.
</TABLE>
20
THE BOND FUND OF AMERICA / PROSPECTUS
<PAGE>
---------------------------------------------------------
APPENDIX
Moody's Investors Service, Inc. rates the long-term debt securities issued by
various entities in categories ranging from "Aaa" to "C," according to quality
as described below.
"Aaa - Best quality. These securities carry the smallest degree of investment
risk and are generally referred to as "gilt edge." Interest payments are
protected by a large, or by an exceptionally stable margin and principal is
secure. While the various protective elements are likely to change, such
changes as can be visualized are most unlikely to impair the fundamentally
strong position of such shares."
"Aa - High quality by all standards. They are rated lower than the best bond
because margins of protection may not be as large as in Aaa securities,
fluctuation of protective elements may be of greater amplitude, or there may be
other elements present which make the long-term risks appear somewhat greater."
"A - Upper medium grade obligations. These bonds possess many favorable
investment attributes. Factors giving security to principal and interest are
considered adequate, but elements may be present which suggest a susceptibility
to impairment sometime in the future."
"Baa - Medium grade obligations. Interest payments and principal security
appear adequate for the present but certain protective elements may be lacking
or may be characteristically unreliable over any great length of time. Such
bonds lack outstanding investment characteristics and, in fact, have
speculative characteristics as well."
"Ba - Have speculative elements; future cannot be considered as well assured.
The protection of interest and principal payments may be very moderate and
thereby not well safeguarded during both good and bad times over the future.
Bonds in this class are characterized by uncertainty of position."
"B - Generally lack characteristics of the desirable investment; assurance of
interest and principal payments or of maintenance of other terms of the
contract over any long period of time may be small."
"Caa - Of poor standing. Issues may be in default or there may be present
elements of danger with respect to principal or interest."
"Ca - Speculative in a high degree; often in default or having other marked
shortcomings."
"C - Lowest rated class of bonds; can be regarded as having extremely poor
prospects of ever attaining any real investment standing."
21
THE BOND FUND OF AMERICA / PROSPECTUS
<PAGE>
Moody's supplies numerical indicators, 1, 2 and 3 to rating categories. The
modifier 1 indicates that the obligation ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and 3 indicates
a ranking toward the lower end of that generic category.
Standard & Poor's Corporation rates the long-term debt securities issued by
various entities in categories ranging from "AAA" to "D," according to quality
as described below.
"AAA - Highest rating. Capacity to pay interest and repay principal is
extremely strong."
"AA - High grade. Very strong capacity to pay interest and repay principal.
Generally, these bonds differ from AAA issues only in a small degree."
"A - Have a strong capacity to pay interest and repay principal, although they
are somewhat more susceptible to the adverse effects of change in circumstances
and economic conditions, than debt in higher rated categories."
"BBB - Regarded as having adequate capacity to pay interest and repay
principal. These bonds normally exhibit adequate protection parameters, but
adverse economic conditions or changing circumstances are more likely to lead
to a weakened capacity to pay interest and repay principal than for debt in
higher rated categories."
"BB, B, CCC, CC, C - Regarded, on balance, as predominantly speculative with
respect to capacity to pay interest and repay principal in accordance with the
terms of the obligation. BB indicates the lowest degree of speculation and C
the highest degree of speculation. While such debt will likely have some
quality protective characteristics, these are outweighed by large uncertainties
or major risk exposures to adverse conditions."
"C1 - Reserved for income bonds on which interest is being paid."
"D - In default and payment of interest and/or repayment of principal is in
arrears."
Standard & Poor's applies indicators "+", no character and "-" to its rating
categories. The indicators show relative standing within the major rating
categories.
22
THE BOND FUND OF AMERICA / PROSPECTUS
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
FOR SHAREHOLDER SERVICES American Funds Service Company
800/421-0180
FOR RETIREMENT PLAN SERVICES Call your employer or plan administrator
FOR DEALER SERVICES American Funds Distributors
800/421-9900 Ext. 11
FOR 24-HOUR INFORMATION American FundsLine(R)
800/325-3590
American FundsLine OnLine(R)
http://www.americanfunds.com
</TABLE>
Telephone conversations may be recorded or monitored for
verification, recordkeeping and quality assurance purposes.
* * * * *
MULTIPLE TRANSLATIONS This prospectus may be translated into other languages.
If there is any inconsistency or ambiguity as to the meaning of any word or
phrase in a translation, the English text will prevail.
ANNUAL/SEMI-ANNUAL REPORT TO SHAREHOLDERS Contains additional information
about the fund including financial statements, investment results, portfolio
holdings, a statement from portfolio management discussing market conditions
and the fund's investment strategies, and the independent accountants' report
(in the annual report).
STATEMENT OF ADDITIONAL INFORMATION (SAI) AND CODES OF ETHICS The SAI contains
more detailed information on all aspects of the fund, including the fund's
financial statements and is incorporated by reference into this prospectus.
The codes of ethics describe the personal investing policies adopted by the
fund and the fund's investment adviser and its affiliated companies.
The codes of ethics and current SAI have been filed with the Securities and
Exchange Commission ("SEC"). These and other related materials about the fund
are available for review or to be copied at the SEC's Public Reference Room in
Washington, D.C. (202/942-8090) or on the EDGAR database on the SEC's Internet
Web site at http://www.sec.gov, or, after payment of a duplicating fee, via
e-mail request to [email protected] or by writing the SEC's Public Reference
Section, Washington, D.C. 20549-0102.
HOUSEHOLD MAILINGS Each year you are automatically sent an updated
prospectus, annual and semi-annual report for the fund. In order to reduce the
volume of mail you receive, when possible, only one copy of these documents
will be sent to shareholders that are part of the same family and share the
same residential address.
If you would like to receive individual copies of these documents, or a free
copy of the SAI or Codes of Ethics, please call American Funds Service Company
at 800/421-0180 or write to the Secretary of the fund at 333 South Hope
Street, Los Angeles, California 90071.
Investment Company File No. 811-2444
Printed on recycled paper
<PAGE>
THE BOND FUND OF AMERICA, INC.
Part B
Statement of Additional Information
March 15, 2000
This document is not a prospectus but should be read in conjunction with the
current prospectus of The Bond Fund of America (the "fund" or "BFA") dated March
15, 2000. The prospectus may be obtained from your investment dealer or
financial planner or by writing to the fund at the following address:
The Bond Fund of America, Inc.
Attention: Secretary
333 South Hope Street Los Angeles, California 90071
(213) 486-9200
Shareholders who purchase shares at net asset value through eligible retirement
plans should note that not all of the services or features described below may
be available to them, and they should contact their employer for details.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Item Page No.
- ---- --------
<S> <C>
Certain Investment Limitations and Guidelines . . . . . . . . . . . 2
Description of Certain Securities and Investment Techniques . . . . 2
Fundamental Policies and Investment Restrictions. . . . . . . . . . 9
Fund Organization and Voting Rights . . . . . . . . . . . . . . . . 10
Fund Directors and Officers . . . . . . . . . . . . . . . . . . . . 12
Management. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Dividends, Distributions and Taxes. . . . . . . . . . . . . . . . . 18
Purchase of Shares. . . . . . . . . . . . . . . . . . . . . . . . . 23
Sales Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Sales Charge Reductions and Waivers . . . . . . . . . . . . . . . . 27
Individual Retirement Account (IRA) Rollovers . . . . . . . . . . . 30
Price of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Selling Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Shareholder Account Services and Privileges . . . . . . . . . . . . 33
Execution of Portfolio Transactions . . . . . . . . . . . . . . . . 36
General Information . . . . . . . . . . . . . . . . . . . . . . . . 37
Class A Share Investment Results and Related Statistics . . . . . . 38
Appendix. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Financial Statements
</TABLE>
The Bond Fund of America - Page 1
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CERTAIN INVESTMENT LIMITATIONS AND GUIDELINES
The following limitations and guidelines are considered at the time of purchase,
under normal market conditions, and are based on a percentage of the fund's net
assets unless otherwise noted. This summary is not intended to reflect all of
the fund's investment limitations.
. The fund will invest at least 65% of its assets in bonds (any debt
securities, including convertible securities and non-voting,
non-convertible preferred securities having initial maturities in excess of
one year).
. The fund will invest at least 60% of its assets in debt securities rated A
or better by Moody's Investors Service, Inc. (Moody's) or Standard & Poor's
Corporation (S&P) or in unrated securities that are determined to be of
comparable quality at time of purchase, including U.S. Government
securities, and cash or money market instruments.
. The fund may invest up to 40% of its assets in debt securities rated below
A by Moody's or S&P or in unrated securities that are determined to be of
comparable quality.
. The fund may invest up to 35% of its assets in debt securities rated Ba and
BB by Moody's or S&P or below or in unrated securities determined to be of
comparable quality.
. The fund may purchase lower quality, lower rated debt securities rated as
low as Ca or CC by Moody's or S&P or unrated but determined to be of
comparable quality.
. The fund is not normally required to dispose of a security in the event
that its rating is reduced below the current minimum rating for its
purchase (or it is not rated and its quality becomes equivalent to such a
security).
. The fund may invest up to 10% of its assets in preferred stocks.
. The fund may invest up to 25% of its assets in securities of issuers
domiciled outside the U.S.
. While the fund may not make direct purchases of common stocks or warrants
or rights to acquire common stocks, the fund may invest in debt securities
that are issued together with common stock or other equity interests or
have equity conversion, exchange, or purchase rights. The fund may hold up
to 5% of its assets in common stock, warrants and rights acquired after
sales of the corresponding debt securities.
. The fund may invest up to 5% of its assets in IOs and POs.
The fund may experience difficulty liquidating certain portfolio securities
during significant market declines or periods of heavy redemptions.
DESCRIPTION OF CERTAIN SECURITIES AND INVESTMENT TECHNIQUES
The descriptions below are intended to supplement the material in the prospectus
under "Investment Objective, Strategies and Risks."
DEBT SECURITIES - Bonds and other debt securities are used by issuers to borrow
money. Issuers pay investors interest and generally must repay the amount
borrowed at maturity. Some debt securities, such as zero coupon bonds, do not
pay current interest, but are purchased at a discount from their face values.
The prices of debt securities fluctuate depending on such factors as interest
rates, credit quality, and maturity. In general their prices decline when
interest rates rise and vice versa.
Lower quality, lower rated bonds rated Ba or below by Standard & Poor's
Corporation and BB or below by Moody's Investors Services, Inc. (or unrated but
considered to be of equivalent quality) are described by the rating agencies as
speculative and involve greater risk of default or price
The Bond Fund of America - Page 2
<PAGE>
changes due to changes in the issuer's creditworthiness than higher rated bonds,
or they may already be in default. The market prices of these securities may
fluctuate more than higher quality securities and may decline significantly in
periods of general economic difficulty. It may be more difficult to dispose of,
or to determine the value of, lower quality, lower rated bonds.
Certain risk factors relating to "lower quality, lower rated bonds" are
discussed below.
SENSITIVITY TO INTEREST RATE AND ECONOMIC CHANGES - Lower quality, lower
rated bonds can be sensitive to adverse economic changes and political and
corporate developments and may be less sensitive to interest rate changes.
During an economic downturn or substantial period of rising interest rates,
highly leveraged issuers may experience financial stress that would
adversely affect their ability to service their principal and interest
payment obligations, to meet projected business goals, and to obtain
additional financing. In addition, periods of economic uncertainty and
changes can be expected to result in increased volatility of market prices
and yields of lower quality, lower rated bonds.
PAYMENT EXPECTATIONS - Lower quality, lower rated bonds, like other bonds,
may contain redemption or call provisions. If an issuer exercises these
provisions in a declining interest rate market, the fund would have to
replace the security with a lower yielding security, resulting in a
decreased return for investors. If the issuer of a bond defaults on its
obligations to pay interest or principal or enters into bankruptcy
proceedings, the fund may incur losses or expenses in seeking recovery of
amounts owed to it.
LIQUIDITY AND VALUATION - There may be little trading in the secondary
market for particular bonds, which may affect adversely the fund's ability
to value accurately or dispose of such bonds. Adverse publicity and
investor perceptions, whether or not based on fundamental analysis, may
decrease the values and liquidity of lower quality, lower rated bonds,
especially in a thin market.
The Investment Adviser attempts to reduce the risks described above through
diversification of the portfolio and by credit analysis of each issuer as well
as by monitoring broad economic trends and corporate and legislative
developments, but there can be no assurance that it will be successful in doing
so.
INFLATION-INDEXED BONDS - The fund may invest in inflation-indexed bonds issued
by governments, their agencies or instrumentalities, and corporations. The
principal value of this type of bond is periodically adjusted according to
changes in the rate of inflation. The interest rate is generally fixed at
issuance; however, interest payments are based on an inflation adjusted
principal value. For example, in a period of deflation, principal value will be
adjusted downward, reducing the interest payable.
Repayment of the original bond principal upon maturity (as adjusted for
inflation) is guaranteed in the case of U.S. Treasury inflation indexed bonds,
even during a period of deflation. However, the current market value of the
bonds is not guaranteed, and will fluctuate. The fund may also invest in other
bonds which may or may not provide a similar guarantee. If a guarantee of
principal is not provided, the adjusted principal value of the bond repaid at
maturity may be less than the original principal.
The Bond Fund of America - Page 3
<PAGE>
SECURITIES WITH EQUITY AND DEBT CHARACTERISTICS - The fund may invest in
securities that have a combination of equity and debt characteristics such as
non-convertible preferred stocks and convertible securities. These securities
may at times resemble equity more than debt and vice versa. The risks of
convertible preferred stock may be similar to those of equity securities. Some
types of convertible preferred stock automatically convert into common stock.
Non-convertible preferred stock with stated redemption rates are similar to debt
in that they have a stated dividend rate akin to the coupon of a bond or note
even though they are often classified as equity securities. The prices and
yields of non-convertible preferred stock generally move with changes in
interest rates and the issuer's credit quality, similar to the factors affecting
debt securities.
Bonds, convertible preferred stock, and other securities may sometimes be
converted into common stock or other securities at a stated conversion ratio.
These securities prior to conversion pay a fixed rate of interest or a dividend.
Because convertible securities have both debt and equity characteristics, their
value varies in response to many factors, including the value of the underlying
equity, general market and economic conditions, convertible market valuations,
as well as changes in interest rates, credit spreads, and the credit quality of
the issuer.
U.S. GOVERNMENT SECURITIES - Securities guaranteed by the U.S. Government
include direct obligations of the U.S. Treasury (such as Treasury bills, notes
and bonds). For these securities, the payment of principal and interest is
unconditionally guaranteed by the U.S. Government, and thus they are of the
highest possible credit quality. Such securities are subject to variations in
market value due to fluctuations in interest rates, but, if held to maturity,
will be paid in full.
Certain securities issued by U.S. Government instrumentalities and certain
federal agencies are neither direct obligations of, nor guaranteed by, the
Treasury. However, they generally involve federal sponsorship in one way or
another; some are backed by specific types of collateral; some are supported by
the issuer's right to borrow from the Treasury; some are supported by the
discretionary authority of the Treasury to purchase certain obligations of the
issuer; and others are supported only by the credit of the issuing government
agency or instrumentality. These agencies and instrumentalities include, but are
not limited to, Farmers Home Administration, Federal Home Loan Bank, Federal
Home Loan Mortgage Corporation, Federal National Mortgage Association, Tennessee
Valley Authority, and Federal Farm Credit Bank System.
PASS-THROUGH SECURITIES - The fund may invest in various debt obligations backed
by a pool of mortgages or other assets including loans on single family
residences, home equity loans, mortgages on commercial buildings, credit card
receivables, and leases on airplanes or other equipment. Principal and interest
payments made on the underlying asset pools backing these obligations are
typically passed through to investors. Pass-through securities may have either
fixed or adjustable coupons. These securities include those discussed below.
"Mortgage-backed securities" are issued both by U.S. government agencies,
including the Government National Mortgage Association (GNMA), the Federal
National Mortgage Association (FNMA), and the Federal Home Loan Mortgage
Corporation (FHLMC), and by private entities. The payment of interest and
principal on securities issued by U.S. government agencies is guaranteed by the
full faith and credit of the U.S. government (in the case of GNMA securities) or
the issuer (in the case of FNMA and FHLMC securities). However, the guarantees
do not apply to the market prices and yields of these securities, which vary
with changes in interest rates.
The Bond Fund of America - Page 4
<PAGE>
Mortgage-backed securities issued by private entities are structured similarly
to mortgage-backed securities issued by GNMA, FNMA, and FHLMC. These securities
and the underlying mortgages are not guaranteed by government agencies. In
addition, these securities generally are structured with one or more types of
credit enhancement. Mortgage-backed securities generally permit borrowers to
prepay their underlying mortgages. Prepayments can alter the effective maturity
of these instruments.
"Collateralized mortgage obligations" (CMOs) are also backed by a pool of
mortgages or mortgage loans, which are divided into two or more separate bond
issues. CMOs issued by U.S. government agencies are backed by agency mortgages.
Payments of principal and interest are passed-through to each bond at varying
schedules resulting in bonds with different coupons, effective maturities, and
sensitivities to interest rates. In fact, some CMOs may be structured in a way
that when interest rates change the impact of changing prepayment rates on these
securities' effective maturities is magnified.
"Commercial mortgage-backed securities" are backed by mortgages of commercial
property, such as hotels, office buildings, retail stores, hospitals, and other
commercial buildings. These securities may have a lower prepayment uncertainty
than other mortgage-related securities because commercial mortgage loans
generally prohibit or impose penalties on prepayments of principal. In addition,
commercial mortgage-related securities often are structured with some form of
credit enhancement to protect against potential losses on the underlying
mortgage loans. Many of the risks of investing in commercial mortgage-backed
securities reflect the risks of investing in the real estate securing the
underlying mortgage loans, including the effects of local and other economic
conditions on real estate markets, the ability of tenants to make loan payments,
and the ability of a property to attract and retain tenants.
"Asset-backed securities" are backed by other assets such as credit card,
automobile or consumer loan receivables, retail installment loans, or
participations in pools of leases. Credit support for these securities may be
based on the underlying assets and/or provided through credit enhancements by a
third party. The values of these securities are sensitive to changes in the
credit quality of the underlying collateral, the credit strength of the credit
enhancement, changes in interest rates, and at times the financial condition of
the issuer. Some asset-backed securities also may receive prepayments which can
change the securities' effective maturities.
"IOs and POs" are issued in portions or tranches with varying maturities and
characteristics; some tranches may only receive the interest paid on the
underlying mortgages (IOs) and others may only receive the principal payments
(POs); the values of IOs and POs are extremely sensitive to interest rate
fluctuations and prepayment rates, and IOs are also subject to the risk of early
repayment of the underlying mortgages which will substantially reduce or
eliminate interest payments.
INVESTING IN VARIOUS COUNTRIES - Investing outside the U.S. involves special
risks, caused by, among other things: currency controls, fluctuating currency
values; different accounting, auditing, and financial reporting regulations and
practices in some countries; changing local and regional economic, political,
and social conditions; expropriation or confiscatory taxation; greater market
volatility; differing securities market structures; and various administrative
difficulties such as delays in clearing and settling portfolio transactions or
in receiving payment of dividends. However, in the opinion of Capital Research
and Management Company, investing outside the U.S. also can reduce certain
portfolio risks due to greater diversification opportunities.
The Bond Fund of America - Page 5
<PAGE>
The risks described above are potentially heightened in connection with
investments in developing countries. Although there is no universally accepted
definition, a developing country is generally considered to be a country which
is in the initial stages of its industrialization cycle with a low per capita
gross national product. For example, political and/or economic structures in
these countries may be in their infancy and developing rapidly. Historically,
the markets of developing countries have been more volatile than the markets of
developed countries. The fund may only invest in securities of issuers in
developing countries to a limited extent.
Additional costs could be incurred in connection with the fund's investment
activities outside the U.S. Brokerage commissions may be higher outside the
U.S., and the fund will bear certain expenses in connection with its currency
transactions. Furthermore, increased custodian costs may be associated with the
maintenance of assets in certain jurisdictions.
CURRENCY TRANSACTIONS - The fund can purchase and sell currencies to facilitate
securities transactions and enter into forward currency contracts to protect
against changes in currency exchange rates. A forward currency contract is an
obligation to purchase or sell a specific currency at a future date, which may
be any fixed number of days from the date of the contract agreed upon by the
parties, at a price set at the time of the contract. Forward currency contracts
entered into by the fund will involve the purchase or sale of one currency
against the U.S. dollar. While entering into forward currency transactions could
minimize the risk of loss due to a decline in the value of the hedged currency,
it could also limit any potential gain which might result from an increase in
the value of the currency. The fund will not generally attempt to protect
against all potential changes in exchange rates. The fund will segregate liquid
assets which will be marked to market daily to meet its forward contract
commitments to the extent required by the Securities and Exchange Commission.
Certain provisions of the Internal Revenue Code may affect the extent to which
the fund may enter into forward contracts. Such transactions may also affect,
for U.S. federal income tax purposes, the character and timing of income, gain
or loss recognized by the fund.
FORWARD COMMITMENTS - The fund may enter into commitments to purchase or sell
securities at a future date. When the fund agrees to purchase such securities it
assumes the risk of any decline in value of the security beginning on the date
of the agreement. When the fund agrees to sell such securities it does not
participate in further gains or losses with respect to the securities beginning
on the date of the agreement. If the other party to such a transaction fails to
deliver or pay for the securities, the fund could miss a favorable price or
yield opportunity, or could experience a loss.
As the fund's aggregate commitments under these transactions increase, the
opportunity for leverage similarly increases. The fund will not use these
transactions for the purpose of leveraging and will segregate liquid assets
which will be marked to market daily in an amount sufficient to meet its payment
obligations in these transactions. Although these transactions will not be
entered into for leveraging purposes, to the extent the fund's aggregate
commitments under these transactions exceed its segregated assets, the fund
temporarily could be in a leveraged position (because it may have an amount
greater than its net assets subject to market risk). Should market values of the
fund's portfolio securities decline while the fund is in a leveraged position,
greater depreciation of its net assets would likely occur than were it not in
such a position. The fund will not borrow money to settle these transactions and
therefore, will liquidate other portfolio securities in advance of settlement if
necessary to generate additional cash to meet its obligations thereunder.
The Bond Fund of America - Page 6
<PAGE>
The fund may also enter into "roll" transactions which are the sale of
mortgage-backed or other securities together with a commitment to purchase
similar, but not identical, securities at a later date. The fund assumes the
rights and risks of ownership, including the risk of price and yield
fluctuations as of the time of the agreement. The fund intends to treat roll
transactions as two separate transactions: one involving the purchase of a
security and a separate transaction involving the sale of a security. Since the
fund does not intend to enter into roll transactions for financing purposes, it
may treat these transactions as not falling within the definition of "borrowing"
set forth in Section 2(a)(23) of the Investment Company Act of 1940 (the "1940
Act"). The fund will segregate liquid assets which will be marked to market
daily in an amount sufficient to meet its payment obligations in these
transactions.
REPURCHASE AGREEMENTS - The fund may enter into repurchase agreements, under
which it buys a security and obtains a simultaneous commitment from the seller
to repurchase the security at a specified time and price. Repurchase agreements
permit the fund to maintain liquidity and earn income over periods of time as
short as overnight. The seller must maintain with the fund's custodian
collateral equal to at least 100% of the repurchase price, including accrued
interest, as monitored daily by the Investment Adviser. The fund will only enter
into repurchase agreements involving securities in which it could otherwise
invest and with selected banks and securities dealers whose financial condition
is monitored by the Investment Adviser. If the seller under the repurchase
agreement defaults, the fund may incur a loss if the value of the collateral
securing the repurchase agreement has declined and may incur disposition costs
in connection with liquidating the collateral. If bankruptcy proceedings are
commenced with respect to the seller, realization upon the collateral by the
fund may be delayed or limited.
REAL ESTATE INVESTMENT TRUSTS - The fund may invest in debt securities issued by
real estate investment trusts (REITs), which are pooled investment vehicles that
primarily invest in real estate or real estate related loans. REITs are not
taxed on income distributed to shareholders provided they meet requirements
imposed by the Internal Revenue Code. The risks associated with REIT debt
investments are similar to the risks of investing in corporate-issued debt. In
addition, the return on REITs is dependent on such factors as the skill of
management and the real estate environment in general. Debt that is issued by
REITs is typically rated by the credit rating agencies as investment grade or
above.
CASH AND CASH EQUIVALENTS - These securities include (i) commercial paper
(e.g.,short-term notes up to 9 months in maturity issued by corporations,
governmental bodies or bank/ corporation sponsored conduits (asset backed
commercial paper)), (ii) commercial bank obligations (e.g., certificates of
deposit, bankers' acceptances (time drafts on a commercial bank where the bank
accepts an irrevocable obligation to pay at maturity)), (iii) savings
association and savings bank obligations (e.g., bank notes and certificates of
deposit issued by savings banks or savings associations), (iv) securities of the
U.S. Government, its agencies or instrumentalities that mature, or may be
redeemed, in one year or less, and (v) corporate bonds and notes that mature, or
that may be redeemed, in one year or less.
LOAN PARTICIPATIONS AND ASSIGNMENTS - The fund may invest, subject to an overall
10% limit on loans, in loan participations or assignments. Loan participations
are loans or other direct debt instruments which are interests in amounts owed
by a corporate, governmental or other borrower to another party. They may
represent amounts owed to lenders or lending syndicates to suppliers of goods or
services, or to other parties. The fund will have the right to receive payments
of principal, interest and any fees to which it is entitled only from the lender
selling the participation and only upon receipt by the lender of the payments
from the borrower. In connection with
The Bond Fund of America - Page 7
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purchasing participations, the fund generally will have no right to enforce
compliance by the borrower with the terms of the loan agreement relating to
loan, nor any rights of set-off against the borrower, and the fund may not
directly benefit from any collateral supporting the loan in which it has
purchased the participation. As a result, the fund will assume the credit risk
of both the borrower and the lender that is selling the participation. In the
event of the insolvency of the lender selling a participation, a fund may be
treated as a general creditor of the lender and may not benefit from any set-off
between the lender and the borrower.
When the fund purchases assignments from lenders it will acquire direct rights
against the borrower on the loan. However, because assignments are arranged
through private negotiations between potential assignees and potential
assignors, the rights and obligations acquired by a fund as the purchaser of an
assignment may differ from, and be more limited than, those held by the
assigning lender. Investments in loan participations and assignments present the
possibility that the fund could be held liable as a co-lender under emerging
legal theories of lender liability. In addition, if the loan is foreclosed, the
fund could be part owner of any collateral and could bear the costs and
liabilities of owning and disposing of the collateral. Because there is no
liquid market for such securities, the fund anticipates that such securities
could be sold only to a limited number of institutional investors. In addition,
loan participation and assignments are generally not rated by major rating
agencies and may not be protected by the securities laws.
INVERSE FLOATING RATE NOTES - The fund may invest to a very limited extent (no
more than 1% of its assets) in inverse floating rate notes (a type of derivative
instrument). These notes have rates that move in the opposite direction of
prevailing interest rates. A change in prevailing interest rates will often
result in a greater change in the instruments' interest rates. As a result,
these instruments may have a greater degree of volatility than other types of
interest-bearing securities.
RESTRICTED SECURITIES AND LIQUIDITY - The fund may purchase securities subject
to restrictions on resale. All such securities not actively traded will be
considered illiquid unless they have been specifically determined to be liquid
under procedures which have been adopted by the fund's board of directors,
taking into account factors such as the frequency and volume of trading, the
commitment of dealers to make markets and the availability of qualified
investors, all of which can change from time to time. The fund may incur certain
additional costs in disposing of illiquid securities.
MATURITY - There are no restrictions on the maturity composition of the
portfolio, although it is anticipated that the fund normally will be invested
substantially in securities with maturities in excess of three years. Under
normal market conditions, longer term securities yield more than shorter term
securities, but are subject to greater price fluctuations.
The fund may also engage in the following investment practices, although it has
no current intention to do so over the next twelve months:
LOANS OF PORTFOLIO SECURITIES - The fund is authorized to lend portfolio
securities to selected securities dealers or other institutional investors whose
financial condition is monitored by the Investment Adviser. The borrower must
maintain with the fund's custodian collateral consisting of cash, cash
equivalents or U.S. Government securities equal to at least 100% of the value of
the borrowed securities, plus any accrued interest. The Investment Adviser will
monitor the adequacy of the collateral on a daily basis. The fund may at any
time call a loan of its portfolio securities and obtain the return of the loaned
securities. The fund will receive any interest paid
The Bond Fund of America - Page 8
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on the loaned securities and a fee or a portion of the interest earned on the
collateral. The fund will limit its loans of portfolio securities to an
aggregate of 33 1/3% of the value of its total assets, measured at the time any
such loan is made.
* * * * * *
PORTFOLIO TURNOVER - Portfolio changes will be made without regard to the length
of time particular investments may have been held. Short-term trading profits
are not the fund's objective and changes in its investments are generally
accomplished gradually, though short-term transactions may occasionally be made.
High portfolio turnover (100% or more) involves correspondingly greater
transaction costs in the form of dealer spreads or brokerage commissions, and
may result in the realization of net capital gains, which are taxable when
distributed to shareholders.
Fixed-income securities are generally traded on a net basis and usually neither
brokerage commissions nor transfer taxes are involved.
The fund's portfolio turnover rate would equal 100% if each security in the
fund's portfolio were replaced once per year. See "Financial Highlights" in the
prospectus for the fund's annual portfolio turnover for each of the last five
fiscal periods.
FUNDAMENTAL POLICIES AND INVESTMENT RESTRICTIONS
FUNDAMENTAL POLICIES - The fund has adopted the following fundamental policies
and investment restrictions which may not be changed without approval by holders
of a majority of its outstanding shares. Such majority is defined in the
Investment Company Act of 1940 ("1940 Act") as the vote of the lesser of (i) 67%
or more of the outstanding voting securities present at a meeting, if the
holders of more than 50% of the outstanding voting securities are present in
person or by proxy, or (ii) more than 50% of the outstanding voting securities.
All percentage limitations are considered at the time securities are purchased
and are based on the fund's net assets unless otherwise indicated. None of the
following investment restrictions involving a maximum percentage of assets will
be considered violated unless the excess occurs immediately after, and is caused
by, an acquisition by the fund.
These restrictions provide that the fund may not:
1. With respect to 75% of the fund's total assets, purchase the security of
any issuer (other than securities issued or guaranteed by the U.S. Government or
its agencies or instrumentalities), if as a result, (a) more than 5% of the
fund's total assets would be invested in securities of that issuer, or (b) the
fund would hold more than 10% of the outstanding voting securities of that
issuer.
Concentrate its investments in a particular industry, as that term is used
in the Investment Company Act of 1940, as amended, and as interpreted or
modified by regulatory authority having jurisdiction, from time to time.
2. Invest in companies for the purpose of exercising control or management;
The Bond Fund of America - Page 9
<PAGE>
3. Buy or sell real estate in the ordinary course of its business; however,
the fund may invest in debt securities secured by real estate or interests
therein or issued by companies, including real estate investment trusts, which
invest in real estate or interests therein;
4. Buy or sell commodities or commodity contracts in the ordinary course of
its business, provided, however, that this shall not prohibit the fund from
purchasing or selling currencies including forward currency contracts;
5. Invest more than 15% of the value of its net assets in securities that are
illiquid;
6. Engage in the business of underwriting of securities of other issuers,
except to the extent that the disposal of an investment position may technically
constitute the fund an underwriter as that term is defined under the Securities
Act of 1933;
7. Make loans in an aggregate amount in excess of 10% of the value of the
fund's total assets, taken at the time any loan is made, provided, (i) that the
purchase of debt securities pursuant to the fund's investment objectives and
entering into repurchase agreements maturing in seven days or less shall not be
deemed loans for the purposes of this restriction, and (ii) that loans of
portfolio securities as described under "Loans of Portfolio Securities," shall
be made only in accordance with the terms and conditions therein set forth;
8. Sell securities short, except to the extent that the fund contemporaneously
owns or has the right to acquire at no additional cost securities identical to
those sold short;
9. Purchase securities at margin;
10. Borrow money except from banks for temporary or emergency purposes, not in
excess of 5% of the value of the fund's total assets.
Notwithstanding Investment Restriction #8, the fund has no current intention (at
least during the next 12 months) to sell securities short to the extent the fund
contemporaneously owns or has the right to acquire at no additional cost
securities identical to those sold short.
The fund has adopted the following non-fundamental investment policy, which may
be changed by action of the Board of Directors without shareholder approval: the
fund may not invest in securities of other investment companies, except as
permitted by the Investment Company Act of 1940, as amended.
FUND ORGANIZATION AND VOTING RIGHTS
The fund, an open-end, diversified management investment company, was organized
as a Maryland corporation on December 3, 1973.
All fund operations are supervised by the fund's Board of Directors which meets
periodically and performs duties required by applicable state and federal laws.
Members of the board who are not employed by Capital Research and Management
Company or its affiliates are paid certain fees for services rendered to the
fund as described in "Directors and Director Compensation" below.
The Bond Fund of America - Page 10
<PAGE>
They may elect to defer all or a portion of these fees through a deferred
compensation plan in effect for the fund.
The fund has two classes of shares - Class A and Class B. The shares of each
class represent an interest in the same investment portfolio. Each class has
equal rights as to voting, redemption, dividends and liquidation, except that
each class bears different distribution expenses and may bear different transfer
agent fees and other expenses properly attributable to the particular class as
approved by the Board of Directors. Class A and Class B shareholders have
exclusive voting rights with respect to the rule 12b-1 Plans adopted in
connection with the distribution of shares and on other matters in which the
interests of one class are different from interests in another class. Shares of
all classes of the fund vote together on matters that affect all classes in
substantially the same manner. Each class votes as a class on matters that
affect that class alone.
The fund does not hold annual meetings of shareholders. However, significant
matters which require shareholder approval, such as certain elections of board
members or a change in a fundamental investment policy, will be presented to
shareholders at a meeting called for such purpose. Shareholders have one vote
per share owned. At the request of the holders of at least 10% of the shares,
the fund will hold a meeting at which any member of the board could be removed
by a majority vote.
The Bond Fund of America - Page 11
<PAGE>
FUND DIRECTORS AND OFFICERS
Directors and Director Compensation
<TABLE>
<CAPTION>
AGGREGATE
COMPENSATION
(INCLUDING VOLUNTARILY
DEFERRED
COMPENSATION/1/)
FROM THE FUND
POSITION DURING FISCAL YEAR
WITH PRINCIPAL OCCUPATION(S) DURING ENDED
NAME, ADDRESS AND AGE REGISTRANT PAST 5 YEARS DECEMBER 31, 1999
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Richard G. Capen, Jr. Director Corporate Director and author; former $200/3//,//4/
6077 San Elijo, Box 2494 United States Ambassador to Spain;
Rancho Santa Fe, CA 92067 former Vice Chairman of the Board;
Age: 65 Knight Ridder, Inc., former Chairman
and Publisher, The Miami Herald
----------------
- --------------------------------------------------------------------------------------------------------------
H. Frederick Christie Director Private Investor. Former President $11,600/4/
P. O. Box 144 and Chief Executive Officer, The
Palos Verdes, CA 90274 Mission Group (non-utility holding
Age: 66 company, subsidiary of Southern
California Edison Company)
- --------------------------------------------------------------------------------------------------------------
+ Don R. Conlan Director President (retired), The Capital none/5/
1630 Milan Avenue Group Companies, Inc.
South Pasadena, CA 91030
Age: 64
- --------------------------------------------------------------------------------------------------------------
Diane C. Creel Director CEO and President, The Earth $11,200/4/
100 W. Broadway Technology Corporation (international
Suite 5000 consulting engineering)
Long Beach, CA 90802
Age: 51
- --------------------------------------------------------------------------------------------------------------
Martin Fenton Director Managing Director, Senior Resource $11,200/4/
4660 La Jolla Village Group LLC (development and management
Drive of senior living communities)
Suite 725
San Diego, CA 92121-2116
Age:64
- --------------------------------------------------------------------------------------------------------------
Leonard R. Fuller Director President, Fuller Consulting $11,600/4/
4333 Admiralty Way (financial management consulting
Suite 841 ETH firm)
Marina del Rey, CA 90292
Age: 53
- --------------------------------------------------------------------------------------------------------------
+* Abner D. Goldstine President, Senior Vice President and Director, none/5/
Age: 70 PEO and Capital Research and Management
Director Company
- --------------------------------------------------------------------------------------------------------------
+** Paul G. Haaga, Jr. Chairman of Executive Vice President and none/5/
Age: 51 the Board Director, Capital Research and
Management Company
- --------------------------------------------------------------------------------------------------------------
Richard G. Newman Director Chairman, President and CEO, AECOM $11,200/4/
3250 Wilshire Boulevard Technology Corporation (architectural
Los Angeles, CA 90010-1599 engineering)
Age: 65
- --------------------------------------------------------------------------------------------------------------
Frank M. Sanchez Director President, The Sanchez Family $ 200/3/
5234 Via San Delarro, #1 Corporation dba McDonald's
Los Angeles, CA 90022 Restaurants (McDonald's licensee)
Age: 55
- --------------------------------------------------------------------------------------------------------------
<CAPTION>
TOTAL COMPENSATION
(INCLUDING VOLUNTARILY
DEFERRED
COMPENSATION/1/) FROM TOTAL NUMBER
ALL FUNDS MANAGED BY OF FUND
CAPITAL RESEARCH AND BOARDS
MANAGEMENT COMPANY ON WHICH
OR ITS AFFILIATES/2/ FOR THE DIRECTOR
NAME, ADDRESS AND AGE YEAR ENDED DECEMBER 31, 1999 SERVES/2/
- --------------------------------------------------------------------------
<S> <C> <C>
Richard G. Capen, Jr. $53,133/4/ 14
6077 San Elijo, Box 2494
Rancho Santa Fe, CA 92067
Age: 65
- --------------------------------------------------------------------------
H. Frederick Christie $206,300/4/ 19
P. O. Box 144
Palos Verdes, CA 90274
Age: 66
- --------------------------------------------------------------------------
+ Don R. Conlan none/5/ 12
1630 Milan Avenue
South Pasadena, CA 91030
Age: 64
- --------------------------------------------------------------------------
Diane C. Creel $45,600/4/ 12
100 W. Broadway
Suite 5000
Long Beach, CA 90802
Age: 51
- --------------------------------------------------------------------------
Martin Fenton $124,800/4/ 15
4660 La Jolla Village
Drive
Suite 725
San Diego, CA 92121-2116
Age:64
- --------------------------------------------------------------------------
Leonard R. Fuller $71,967/4/ 12
4333 Admiralty Way
Suite 841 ETH
Marina del Rey, CA 90292
Age: 53
- --------------------------------------------------------------------------
+* Abner D. Goldstine none/5/ 12
Age: 70
- --------------------------------------------------------------------------
+** Paul G. Haaga, Jr. none/5/ 15
Age: 51
- --------------------------------------------------------------------------
Richard G. Newman $99,800/4/ 13
3250 Wilshire Boulevard
Los Angeles, CA 90010-1599
Age: 65
- --------------------------------------------------------------------------
Frank M. Sanchez $ 13,733 12
5234 Via San Delarro, #1
Los Angeles, CA 90022
Age: 55
- --------------------------------------------------------------------------
</TABLE>
The Bond Fund of America - Page 12
<PAGE>
The Bond Fund of America - Page 13
<PAGE>
+ "Interested persons" within the meaning of the 1940 Act on the basis of their
affiliation with the fund's Investment Adviser, Capital Research and
Management Company, or the parent company of the Investment Adviser, The
Capital Group Companies, Inc.
* Address is 11100 Santa Monica Boulevard, Los Angeles, CA 90025
** Address is 333 South Hope Street, Los Angeles, CA 90071
1 Amounts may be deferred by eligible Directors under a non-qualified deferred
compensation plan adopted by the fund in 1993. Deferred amounts accumulate at
an earnings rate determined by the total return of one or more funds in The
American Funds Group as designated by the Directors.
2 Capital Research and Management Company manages The American Funds Group
consisting of 29 funds: AMCAP Fund, Inc., American Balanced Fund, Inc.,
American High-Income Municipal Bond Fund, Inc., American High-Income Trust,
American Mutual Fund, Inc., The Bond Fund of America, Inc., The Cash
Management Trust of America, Capital Income Builder, Inc., Capital World
Growth and Income Fund, Inc., Capital World Bond Fund, Inc., EuroPacific
Growth Fund, Fundamental Investors, Inc., The Growth Fund of America, Inc.,
The Income Fund of America, Inc., Intermediate Bond Fund of America, The
Investment Company of America, Limited Term Tax-Exempt Bond Fund of America,
The New Economy Fund, New Perspective Fund, Inc., New World Fund, Inc.,
SMALLCAP World Fund, Inc., The Tax-Exempt Bond Fund of America, Inc., The
Tax-Exempt Fund of California, The Tax-Exempt Fund of Maryland, The Tax-Exempt
Fund of Virginia, The Tax-Exempt Money Fund of America, The U. S. Treasury
Money Fund of America, U.S. Government Securities Fund and Washington Mutual
Investors Fund, Inc. Capital Research and Management Company also manages
American Variable Insurance Series and Anchor Pathway Fund, which serve as the
underlying investment vehicle for certain variable insurance contracts; and
Endowments, whose shareholders are limited to (i) any entity exempt from
taxation under Section 501(c)(3) of the Internal Revenue Code of 1986, as
amended ("501(c)(3) organization"); (ii) any trust, the present or future
beneficiary of which is a 501(c)(3) organization, and (iii) any other entity
formed for the primary purpose of benefiting a 501(c)(3) organization. An
affiliate of Capital Research and Management Company, Capital International,
Inc., manages Emerging Markets Growth Fund, Inc.
3 Richard G. Capen, Jr. and Frank M. Sanchez were elected by shareholders on
November 22, 1999.
4 Since the deferred compensation plan's adoption, the total amount of deferred
compensation accrued by the fund (plus earnings thereon) during the 1999
fiscal year for participating Directors is as follows: Richard G. Capen, Jr.
($221), H. Frederick Christie ($14,185), Diane C. Creel ($26,104), Martin
Fenton ($36,601), Leonard R. Fuller ($37,146) and Richard G. Newman ($81,179).
Amounts deferred and accumulated earnings thereon are not funded and are
general unsecured liabilities of the fund until paid to the Directors.
5 Don R. Conlan, Abner D. Goldstine, Paul G. Haaga, Jr. are affiliated with the
Investment Adviser and, accordingly, receive no compensation from the fund.
The Bond Fund of America - Page 14
<PAGE>
OFFICERS
<TABLE>
<CAPTION>
POSITION(S) PRINCIPAL OCCUPATION(S) DURING
NAME AND ADDRESS AGE WITH REGISTRANT PAST 5 YEARS#
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
David C. Barclay 43 Vice President Vice President, Capital Research
11100 Santa Monica and Management Company
Blvd.
Los Angeles, CA 90025
- -------------------------------------------------------------------------------
Michael J. Downer 45 Vice President Senior Vice President - Fund
333 South Hope Street Business
Los Angeles, CA 90071 Management Group, Capital
Research
and Management Company
- -------------------------------------------------------------------------------
John H. Smet 43 Vice President Vice President, Capital Research
11100 Santa Monica and Management Company
Blvd.
Los Angeles, CA 90025
- -------------------------------------------------------------------------------
Julie F. Williams 51 Secretary Vice President - Fund Business
333 South Hope Street Management Group, Capital
Los Angeles, CA 90071 Research and Management Company
- -------------------------------------------------------------------------------
Anthony W. Hynes, Jr. 37 Treasurer Vice President - Fund Business
135 South State Management Group, Capital
College Blvd. Research
Brea, CA 92821 and Management Company
- -------------------------------------------------------------------------------
Kimberly S. Verdick 35 Assistant Assistant Vice President - Fund
333 South Hope Street Secretary Business Management Group,
Los Angeles, CA 90071 Capital
Research and Management Company
- -------------------------------------------------------------------------------
Todd L. Miller 41 Assistant Assistant Vice President - Fund
135 South State Treasurer Business Management Group,
College Blvd. Capital
Brea, CA 92821 Research and Management Company
- -------------------------------------------------------------------------------
</TABLE>
# Positions within the organizations listed may have changed during this period.
All of the officers listed are officers, and/or directors/trustees of one or
more of the other funds for which Capital Research and Management Company serves
as Investment Adviser.
No compensation is paid by the fund to any officer or Director who is a
director, officer or employee of the Investment Adviser or affiliated companies.
The fund pays annual fees of $10,000 to Directors who are not affiliated with
the Investment Adviser, plus $200 for each Board of Directors meeting attended,
plus $200 for each meeting attended as a member of a committee of the Board of
Directors. No pension or retirement benefits are accrued as part of fund
expenses. The Directors may elect, on a voluntary basis, to defer all or a
portion of their fees through a deferred compensation plan in effect for the
fund. The fund also reimburses certain expenses of the Directors who are not
affiliated with the Investment Adviser. As of February 15, 2000 the officers and
Directors of the fund and their families, as a group, owned beneficially or of
record less than 1% of the outstanding shares of the fund.
The Bond Fund of America - Page 15
<PAGE>
MANAGEMENT
INVESTMENT ADVISER - The Investment Adviser, founded in 1931, maintains research
facilities in the U.S. and abroad (Los Angeles, San Francisco, New York,
Washington, D.C., London, Geneva, Hong Kong, Singapore and Tokyo), with a staff
of professionals, many of whom have a number of years of investment experience.
The Investment Adviser is located at 333 South Hope Street, Los Angeles, CA
90071, and at 135 South State College Boulevard, Brea, CA 92821. The Investment
Adviser's research professionals travel several million miles a year, making
more than 5,000 research visits in more than 50 countries around the world. The
Investment Adviser believes that it is able to attract and retain quality
personnel. The Investment Adviser is a wholly owned subsidiary of The Capital
Group Companies, Inc.
The Investment Adviser is responsible for managing more than $300 billion of
stocks, bonds and money market instruments and serves over 11 million
shareholder accounts of all types throughout the world. These investors include
privately owned businesses and large corporations as well as schools, colleges,
foundations and other non-profit and tax-exempt organizations.
INVESTMENT ADVISORY AND SERVICE AGREEMENT - The Investment Advisory and Service
Agreement (the "Agreement") between the fund and the Investment Adviser will
continue in effect until October 31, 2000, unless sooner terminated, and may be
renewed from year to year thereafter, provided that any such renewal has been
specifically approved at least annually by (i) the Board of Directors, or by the
vote of a majority (as defined in the 1940 Act) of the outstanding voting
securities of the fund, and (ii) the vote of a majority of Directors who are not
parties to the Agreement or interested persons (as defined in the 1940 Act) of
any such party, cast in person at a meeting called for the purpose of voting on
such approval. The Agreement provides that the Investment Adviser has no
liability to the fund for its acts or omissions in the performance of its
obligations to the fund not involving willful misconduct, bad faith, gross
negligence or reckless disregard of its obligations under the Agreement. The
Agreement also provides that either party has the right to terminate it, without
penalty, upon 60 days' written notice to the other party, and that the Agreement
automatically terminates in the event of its assignment (as defined in the 1940
Act).
The Investment Adviser, in addition to providing investment advisory services,
furnishes the services and pays the compensation and travel expenses of persons
to perform the executive, administrative, clerical and bookkeeping functions of
the fund, and provides suitable office space, necessary small office equipment
and utilities, general purpose accounting forms, supplies, and postage used at
the offices of the fund. The fund pays all expenses not assumed by the
Investment Adviser, including, but not limited to, custodian, stock transfer and
dividend disbursing fees and expenses; costs of the designing, printing and
mailing of reports, prospectuses, proxy statements, and notices to its
shareholders; taxes; expenses of the issuance and redemption of shares of the
fund (including stock certificates, registration and qualification fees and
expenses); expenses pursuant to the fund's Plans of Distribution (described
below); legal and auditing expenses; compensation, fees, and expenses paid to
directors unaffiliated with the Investment Adviser; association dues; costs of
stationery and forms prepared exclusively for the fund; and costs of assembling
and storing shareholder account data.
The management fee is based upon the net assets of the fund and monthly gross
investment income. Gross investment income means gross income, computed without
taking account of gains or losses from sales of capital assets, but including
original issue discount as defined for
The Bond Fund of America - Page 16
<PAGE>
federal income tax purposes. The Internal Revenue Code in general defines
original issue discount to mean the difference between the issue price and the
stated redemption price at maturity of certain debt obligations. The holder of
such indebtedness is in general required to treat as ordinary income the
proportionate part of the original issue discount attributable to the period
during which the holder held the indebtedness.
The Investment Adviser receives a fee at an annual rate of 0.30% of the first
$60 million of the fund's average net assets, 0.21% on average net assets in
excess of $60 million but not exceeding $1 billion, 0.18% on average net assets
in excess of $1 billion but not exceeding $3 billion, plus 0.16% on average net
assets in excess of $3 billion but not exceeding $6 billion, plus 0.15% on
average net assets over $6 billion but not exceeding $10 billion, plus 0.14% on
average net assets in excess of $10 billion, plus 2.25% of the first $8,333,333
of the fund's monthly gross investment income for the preceding month plus 2% of
monthly gross income exceeding $8,333,333. Assuming net assets of $9 billion
and gross investment income levels of 5%, 6%, 7%, 8% and 9%, management fees
would be .27%, .29%, .31%, .33% and .35%, respectively.
The Investment Adviser has agreed to reduce the fee payable to it under the
agreement by (a) the amount by which the ordinary operating expenses of the fund
for any fiscal year of the fund, excluding interest, taxes and extraordinary
expenses such as litigation, exceed the greater of (i) 1% of the average
month-end net assets of the fund for such fiscal year, or (ii) 10% of the fund's
gross investment income, and (b) by any additional amount necessary to assure
that such ordinary operating expenses of the fund in any year after such
reduction do not exceed the lesser of (i) 1 1/2% of the first $30 million of
average month-end net assets of the fund, plus 1% of the average month-end net
assets in excess thereof, or (ii) 25% of the fund's gross investment income. To
the extent the fund's management fee must be waived due to Class A share expense
ratios exceeding these limits, management fees will be reduced similarly for all
classes of shares of the fund or other Class A fees will be waived in lieu of
management fees.
For the fiscal years ended December 31, 1999, 1998, and 1997, the Investment
Adviser received advisory fees of $30,826,000, $28,879,000, and $24,460,000,
respectively.
PRINCIPAL UNDERWRITER - American Funds Distributors, Inc. (the "Principal
Underwriter") is the principal underwriter of the fund's shares. The Principal
Underwriter is located at 333 South Hope Street, Los Angeles, CA 90071, 135
South State College Boulevard, Brea, CA 92821, 3500 Wiseman Boulevard, San
Antonio, TX 78251, 8332 Woodfield Crossing Boulevard, Indianapolis, IN 46240,
and 5300 Robin Hood Road, Norfolk, VA 23513. The fund has adopted Plans of
Distribution (the Plans), pursuant to rule 12b-1 under the 1940 Act. The
Principal Underwriter receives amounts payable pursuant to the Plans (see below)
and commissions consisting of that portion of the sales charge remaining after
the discounts which it allows to investment dealers. Commissions retained by the
Principal Underwriter on sales of Class A shares during the 1999 fiscal year
amounted to $6,279,000 after allowance of $26,010,000 to dealers. During the
fiscal years ended 1998 and 1997 the Principal Underwriter retained $7,117,000
and $5,397,000, respectively on sales of Class A shares after an allowance of
$36,612,000 and $22,564,000 to dealers, respectively.
As required by rule 12b-1 and the 1940 Act, the Plans (together with the
Principal Underwriting Agreement) have been approved by the full Board of
Directors and separately by a majority of the directors who are not "interested
persons" of the fund and who have no direct or indirect financial interest in
the operation of the Plans or the Principal Underwriting Agreement. The
The Bond Fund of America - Page 17
<PAGE>
officers and directors who are "interested persons" of the fund may be
considered to have a direct or indirect financial interest in the operation of
the Plans due to present or past affiliations with the Investment Adviser and
related companies. Potential benefits of the Plans to the fund include
shareholder services, savings to the fund in transfer agency costs, savings to
the fund in advisory fees and other expenses, benefits to the investment process
from growth or stability of assets and maintenance of a financially healthy
management organization. The selection and nomination of directors who are not
"interested persons" of the fund are committed to the discretion of the
directors who are not "interested persons" during the existence of the Plans.
Plan expenses are reviewed quarterly and the Plans must be renewed annually by
the Board of Directors.
Under the Plans the fund may expend up to 0.25% of its net assets annually for
Class A shares and up to 1.00% of its net assets annually for Class B shares to
finance any activity which is primarily intended to result in the sale of fund
shares, provided the fund's Board of Directors has approved the category of
expenses for which payment is being made. For Class A shares these include up to
0.25% in service fees for qualified dealers and dealer commissions and
wholesaler compensation on sales of shares exceeding $1 million purchased
without a sales charge (including purchases by employer-sponsored defined
contribution-type retirement plans investing $1 million or more or with 100 or
more eligible employees, rollover IRA accounts as described in "Individual
Retirement Account (IRA) Rollovers" below, and retirement plans, endowments or
foundations with $50 million or more in assets). For Class B shares these
include 0.25% in service fees for qualified dealers and 0.75% in payments to the
Principal Underwriter for financing commissions paid to qualified dealers
selling Class B shares.
Commissions on sales of Class A shares exceeding $1 million (including purchases
by any employer-sponsored 403(b) plan or purchases by any defined contribution
plan qualified under Section 401(a) of the Internal Revenue Code, including any
"401(k)" plan with 100 or more eligible employees) in excess of the Class A Plan
limitation not reimbursed during the most recent fiscal quarter are recoverable
for five quarters, provided that such commissions do not exceed the annual
expense limit. After five quarters, these commissions are not recoverable.
During the 1999 fiscal year, distribution expenses under the Plan for Class A
shares were limited to $23,847,000 for compensation to dealers or the Principal
Underwriter. Had no limitation been in effect, the fund would have paid
$28,360,000 in distribution expenses under the Plan for Class A shares. As of
December 31, 1999 accrued and unpaid distribution expenses were $1,588,000.
OTHER COMPENSATION TO DEALERS - The Principal Underwriter, at its expense (from
a designated percentage of its income), currently provides additional
compensation to dealers. Currently these payments are limited to the top 100
dealers who have sold shares of the fund or other funds in The American Funds
Group. These payments will be based principally on a pro rata share of a
qualifying dealer's sales. The Principal Underwriter will, on an annual basis,
determine the advisability of continuing these payments.
DIVIDENDS, DISTRIBUTIONS AND TAXES
DIVIDENDS - The fund intends to follow the practice of distributing
substantially all of its investment company taxable income which includes any
excess of net realized short-term gains over net realized long-term capital
losses. Additional distributions may be made, if necessary. The fund also
intends to follow the practice of distributing the entire excess of net realized
long-term capital gains over net realized short-term capital losses. However,
the fund may retain all or
The Bond Fund of America - Page 18
<PAGE>
part of such gain for reinvestment, after paying the related federal taxes for
which shareholders may then be able to claim a credit against their federal tax
liability. If the fund does not distribute the amount of capital gain and/or net
investment income required to be distributed by an excise tax provision of the
Code, the fund may be subject to that excise tax. In certain circumstances, the
fund may determine that it is in the interest of shareholders to distribute less
than the required amount. In this case, the fund will pay any income or excise
taxes due.
Dividends will be reinvested in shares of the fund unless shareholders indicate
in writing that they wish to receive them in cash or in shares of other American
Funds, as provided in the prospectus.
TAXES - The fund has elected to be treated as a regulated investment company
under Subchapter M of the Code. A regulated investment company qualifying under
Subchapter M of the Code is required to distribute to its shareholders at least
90% of its investment company taxable income (including the excess of net
short-term capital gain over net long-term capital losses) and generally is not
subject to federal income tax to the extent that it distributes annually 100% of
its investment company taxable income and net realized capital gains in the
manner required under the Code. The fund intends to distribute annually all of
its investment company taxable income and net realized capital gains and
therefore does not expect to pay federal income tax, although in certain
circumstances the fund may determine that it is in the interest of shareholders
to distribute less than that amount.
Under the Code, a nondeductible excise tax of 4% is imposed on the excess of a
regulated investment company's "required distribution" for the calendar year
ending within the regulated investment company's taxable year over the
"distributed amount" for such calendar year. The term "required distribution"
means the sum of (i) 98% of ordinary income (generally net investment income)
for the calendar year, (ii) 98% of capital gain (both long-term and short-term)
for the one-year period ending on October 31 (as though the one-year period
ending on October 31 were the regulated investment company's taxable year), and
(iii) the sum of any untaxed, undistributed net investment income and net
capital gains of the regulated investment company for prior periods. The term
"distributed amount" generally means the sum of (i) amounts actually distributed
by the fund from its current year's ordinary income and capital gain net income
and (ii) any amount on which the fund pays income tax during the periods
described above. The fund intends to distribute net investment income and net
capital gains so as to minimize or avoid the excise tax liability.
Investment company taxable income generally includes dividends, interest, net
short-term capital gains in excess of net long-term capital losses, and certain
foreign currency gains, if any, less expenses and certain foreign currency
losses, if any. Net capital gains for a fiscal year are computed by taking into
account any capital loss carry-forward of the fund.
If any net long-term capital gains in excess of net short-term capital losses
are retained by the fund for reinvestment, requiring federal income taxes to be
paid thereon by the fund, the fund intends to elect to treat such capital gains
as having been distributed to shareholders. As a result, each shareholder will
report such capital gains as long-term capital gains taxable to individual
shareholders at a maximum 20% capital gains rate, will be able to claim a pro
rata share of federal income taxes paid by the fund on such gains as a credit
against personal federal income tax liability, and will be entitled to increase
the adjusted tax basis on fund shares by the difference between a pro rata share
of the retained gains and their related tax credit.
The Bond Fund of America - Page 19
<PAGE>
Distributions of investment company taxable income are taxable to shareholders
as ordinary income.
Distributions of the excess of net long-term capital gains over net short-term
capital losses which the fund properly designates as "capital gain dividends"
generally will be taxable to individual shareholders at a maximum 20% capital
gains rate, regardless of the length of time the shares of the fund have been
held by such shareholders. Such distributions are not eligible for the
dividends-received deduction. Any loss realized upon the redemption of shares
held at the time of redemption for six months or less from the date of their
purchase will be treated as a long-term capital loss to the extent of any
amounts treated as distributions of long-term capital gain during such six-month
period.
Distributions of investment company taxable income and net realized capital
gains to individual shareholders will be taxable as described above, whether
received in shares or in cash. Shareholders electing to receive distributions in
the form of additional shares will have a cost basis for federal income tax
purposes in each share so received equal to the net asset value of a share on
the reinvestment date.
All distributions of investment company taxable income and net realized capital
gain, whether received in shares or in cash, must be reported by each
shareholder subject to tax on his or her federal income tax return. Dividends
and capital gains distributions declared in October, November or December and
payable to shareholders of record in such a month will be deemed to have been
received by shareholders on December 31 if paid during January of the following
year. Redemptions of shares, including exchanges for shares of another American
Fund, may result in tax consequences (gain or loss) to the shareholder and must
also be reported on the shareholder's federal income tax return.
Dividends from domestic corporations are expected to comprise some portion of
the fund's gross income. To the extent that such dividends constitute any of the
fund's gross income, a portion of the income distributions of the fund will be
eligible for the deduction for dividends received by corporations. Shareholders
will be informed of the portion of dividends which so qualify. The
dividends-received deduction is reduced to the extent that either the fund
shares, or the underlying shares of stock held by the fund, with respect to
which dividends are received, are treated as debt-financed under federal income
tax law and is eliminated if the shares are deemed to have been held by the
shareholder or the fund, as the case may be, for less than 46 days.
Distributions by the fund result in a reduction in the net asset value of the
fund's shares. Should a distribution reduce the net asset value below a
shareholder's cost basis, such distribution would nevertheless be taxable to the
shareholder as ordinary income or capital gain as described above, even though,
from an investment standpoint, it may constitute a partial return of investment
capital. For this reason, investors should consider the tax implications of
buying shares just prior to a distribution. The price of shares purchased at
that time includes the amount of the forthcoming distribution. Those purchasing
just prior to a distribution will then receive a partial return of investment
capital upon the distribution, which will nevertheless be taxable to them.
A portion of the difference between the issue price of zero coupon securities
and their face value ("original issue discount") is considered to be income to
the fund each year, even though the fund will not receive cash interest payments
from these securities. This original issue discount (imputed income) will
comprise a part of the investment company taxable income of the fund
The Bond Fund of America - Page 20
<PAGE>
which must be distributed to shareholders in order to maintain the qualification
of the fund as a regulated investment company and to avoid federal income tax at
the level of the fund. Shareholders will be subject to income tax on such
original issue discount, whether or not they elect to receive their
distributions in cash.
The fund will be required to report to the IRS all distributions of investment
company taxable income and capital gains as well as gross proceeds from the
redemption or exchange of fund shares, except in the case of certain exempt
shareholders. Under the backup withholding provisions of Section 3406 of the
Code, distributions of investment company taxable income and capital gains and
proceeds from the redemption or exchange of the shares of a regulated investment
company may be subject to withholding of federal income tax at the rate of 31%
in the case of non-exempt U.S. shareholders who fail to furnish the investment
company with their taxpayer identification numbers and with required
certifications regarding their status under the federal income tax law.
Withholding may also be required if the fund is notified by the IRS or a broker
that the taxpayer identification number furnished by the shareholder is
incorrect or that the shareholder has previously failed to report interest or
dividend income. If the withholding provisions are applicable, any such
distributions and proceeds, whether taken in cash or reinvested in additional
shares, will be reduced by the amounts required to be withheld.
Shareholders of the fund may be subject to state and local taxes on
distributions received from the fund and on redemptions of the fund's shares.
Each distribution is accompanied by a brief explanation of the form and
character of the distribution. In January of each year fund shareholders will
receive a statement of the federal income tax status of all distributions.
Dividend and interest income received by the fund from sources outside the U.S.
may be subject to withholding and other taxes imposed by such foreign
jurisdictions. Tax conventions between certain countries and the U.S. may reduce
or eliminate these foreign taxes, however. Most foreign countries do not impose
taxes on capital gains in respect of investments by foreign investors.
The fund may make the election permitted under Section 853 of the Code so that
shareholders may (subject to limitations) be able to claim a credit or deduction
on their federal income tax returns for, and will be required to treat as part
of the amounts distributed to them, their pro rata portion of qualified taxes
paid by the Fund to foreign countries (which taxes relate primarily to
investment income). The fund may make an election under Section 853 of the Code,
provided that more than 50% of the value of the total assets of the fund at the
close of the taxable year consists of securities in foreign corporations. The
foreign tax credit available to shareholders is subject to certain limitations
imposed by the Code.
Under the Code, gains or losses attributable to fluctuations in exchange rates
which occur between the time the fund accrues receivables or liabilities
denominated in a foreign currency and the time the fund actually collects such
receivables, or pays such liabilities, generally are treated as ordinary income
or ordinary loss. Similarly, on disposition of debt securities denominated in a
foreign currency and on disposition of certain futures contracts, forward
contracts and options, gains or losses attributable to fluctuations in the value
of foreign currency between the date of acquisition of the security or contract
and the date of disposition are also treated as ordinary gain or loss. These
gains or losses, referred to under the Code as "Section
The Bond Fund of America - Page 21
<PAGE>
988" gains or losses, may increase or decrease the amount of the fund's
investment company taxable income to be distributed to its shareholders as
ordinary income.
If the fund invests in stock of certain passive foreign investment companies,
the fund may be subject to U.S. federal income taxation on a portion of any
"excess distribution" with respect to, or gain from the disposition of, such
stock. The tax would be determined by allocating such distribution or gain
ratably to each day of the fund's holding period for the stock. The distribution
or gain so allocated to any taxable year of the fund, other than the taxable
year of the excess distribution or disposition, would be taxed to the fund at
the highest ordinary income rate in effect for such year, and the tax would be
further increased by an interest charge to reflect the value of the tax deferral
deemed to have resulted from the ownership of the foreign company's stock. Any
amount of distribution or gain allocated to the taxable year of the distribution
or disposition would be included in the fund's investment company taxable income
and, accordingly, would not be taxable to the fund to the extent distributed by
the fund as a dividend to its shareholders.
To avoid such tax and interest, the fund intends to elect to treat these
securities as sold on the last day of its fiscal year and recognize any gains
for tax purposes at that time. Under this election, deductions for losses are
allowable only to the extent of any prior recognized gains, and both gains and
losses will be treated as ordinary income or loss. The fund will be required to
distribute any resulting income, even though it has not sold the security and
received cash to pay such distributions.
The foregoing discussion of U.S. federal income tax law relates solely to the
application of that law to U.S. persons, i.e., U.S. citizens and residents and
U.S. corporations, partnerships, trusts and estates. Each shareholder who is not
a U.S. person should consider the U.S. and foreign tax consequences of ownership
of shares of the fund, including the possibility that such a shareholder may be
subject to a U.S. withholding tax at a rate of 30% (or at a lower rate under an
applicable income tax treaty) on dividend income received by him or her.
Shareholders should consult their tax advisers about the application of the
provisions of tax law described in this statement of additional information in
light of their particular tax situations.
The Bond Fund of America - Page 22
<PAGE>
PURCHASE OF SHARES
<TABLE>
<CAPTION>
METHOD INITIAL INVESTMENT ADDITIONAL INVESTMENTS
- -------------------------------------------------------------------------------
<S> <C> <C>
See "Purchase $50 minimum (except where a
Minimums" for initial lower minimum is noted under
investment minimums. "Purchase Minimums").
- -------------------------------------------------------------------------------
By contacting Visit any investment Mail directly to your
your investment dealer dealer who is investment dealer's address
registered in the printed on your account
state where the statement.
purchase is made and
who has a sales
agreement with
American Funds
Distributors.
- -------------------------------------------------------------------------------
By mail Make your check Fill out the account additions
payable to the fund form at the bottom of a recent
and mail to the account statement, make your
address indicated on check payable to the fund,
the account write your account number on
application. Please your check, and mail the check
indicate an investment and form in the envelope
dealer on the account provided with your account
application. statement.
- -------------------------------------------------------------------------------
By telephone Please contact your Complete the "Investments by
investment dealer to Phone" section on the account
open account, then application or American
follow the procedures FundsLink Authorization Form.
for additional Once you establish the
investments. privilege, you, your financial
advisor or any person with your
account information can call
American FundsLine(R) and make
investments by telephone
(subject to conditions noted in
"Shareholder Account Services
and Privileges - Telephone and
Computer Purchases, Redemptions
and Exchanges" below).
- -------------------------------------------------------------------------------
By computer Please contact your Complete the American FundsLink
investment dealer to Authorization Form. Once you
open account, then established the privilege, you,
follow the procedures your financial advisor or any
for additional person with your account
investments. information may access American
FundsLine OnLine(R) on the
Internet and make investments
by computer (subject to
conditions noted in
"Shareholder Account Services
and Privileges - Telephone and
Computer Purchases, Redemptions
and Exchanges" below).
- -------------------------------------------------------------------------------
By wire Call 800/421-0180 to Your bank should wire your
obtain your account additional investments in the
number(s), if same manner as described under
necessary. Please "Initial Investment."
indicate an investment
dealer on the account.
Instruct your bank to
wire funds to:
Wells Fargo Bank
155 Fifth Street,
Sixth Floor
San Francisco, CA
94106
(ABA#121000248)
For credit to the
account of:
American Funds Service
Company a/c#
4600-076178
(fund name)
(your fund acct. no.)
- -------------------------------------------------------------------------------
THE FUNDS AND AMERICAN FUNDS DISTRIBUTORS RESERVE THE RIGHT TO REJECT ANY
PURCHASE ORDER.
- -------------------------------------------------------------------------------
</TABLE>
PURCHASE MINIMUMS - The minimum initial investment for all funds in The American
Funds Group, except the money market funds and the state tax-exempt funds, is
$250. The minimum initial investment for the money market funds (The Cash
Management Trust of America, The Tax--
The Bond Fund of America - Page 23
<PAGE>
Exempt Money Fund of America, and The U.S. Treasury Money Fund of America) and
the state tax-exempt funds (The Tax-Exempt Fund of California, The Tax-Exempt
Fund of Maryland, and The Tax-Exempt Fund of Virginia) is $1,000. Purchase
minimums are reduced to $50 for purchases through "Automatic Investment Plans"
(except for the money market funds) or to $25 for purchases by retirement plans
through payroll deductions and may be reduced or waived for shareholders of
other funds in The American Funds Group. TAX-EXEMPT FUNDS SHOULD NOT SERVE AS
RETIREMENT PLAN INVESTMENTS. The minimum is $50 for additional investments
(except as noted above).
PURCHASE MAXIMUM FOR CLASS B SHARES - The maximum purchase order for Class B
shares for all American Funds is $100,000. For investments above $100,000 Class
A shares are generally a less expensive option over time due to sales charge
reductions or waivers.
FUND NUMBERS - Here are the fund numbers for use with our automated phone line,
American FundsLine/(R)/ (see description below):
<TABLE>
<CAPTION>
FUND FUND
NUMBER NUMBER
FUND CLASS A CLASS B
---- ------- -------
<S> <C> <C>
STOCK AND STOCK/BOND FUNDS
AMCAP Fund/(R)/ . . . . . . . . . . . . . . . . . . . . 02 202
American Balanced Fund/(R)/ . . . . . . . . . . . . . . 11 211
American Mutual Fund/(R)/ . . . . . . . . . . . . . . . 03 203
Capital Income Builder/(R)/ . . . . . . . . . . . . . . 12 212
Capital World Growth and Income Fund/SM/ . . . . . . . 33 233
EuroPacific Growth Fund/(R)/ . . . . . . . . . . . . . 16 216
Fundamental Investors/SM/ . . . . . . . . . . . . . . . 10 210
The Growth Fund of America/(R)/ . . . . . . . . . . . . 05 205
The Income Fund of America/(R)/ . . . . . . . . . . . . 06 206
The Investment Company of America/(R)/ . . . . . . . . 04 204
The New Economy Fund/(R)/ . . . . . . . . . . . . . . . 14 214
New Perspective Fund/(R)/ . . . . . . . . . . . . . . . 07 207
New World Fund/SM/ . . . . . . . . . . . . . . . . . . 36 236
SMALLCAP World Fund/(R)/ . . . . . . . . . . . . . . . 35 235
Washington Mutual Investors Fund/SM/ . . . . . . . . . 01 201
BOND FUNDS
American High-Income Municipal Bond Fund/(R)/ . . . . . 40 240
American High-Income Trust/SM/ . . . . . . . . . . . . 21 221
The Bond Fund of America/SM/ . . . . . . . . . . . . . 08 208
Capital World Bond Fund/(R)/ . . . . . . . . . . . . . 31 231
Intermediate Bond Fund of America/SM/ . . . . . . . . . 23 223
Limited Term Tax-Exempt Bond Fund of America/SM/ . . . 43 243
The Tax-Exempt Bond Fund of America/(R)/ . . . . . . . 19 219
The Tax-Exempt Fund of California/(R)/* . . . . . . . . 20 220
The Tax-Exempt Fund of Maryland/(R)/* . . . . . . . . . 24 224
The Tax-Exempt Fund of Virginia/(R)/* . . . . . . . . . 25 225
U.S. Government Securities Fund/SM/ . . . . . . . . . . 22 222
MONEY MARKET FUNDS
The Cash Management Trust of America/(R)/ . . . . . . . 09 209
The Tax-Exempt Money Fund of America/SM/ . . . . . . . 39 N/A
The U.S. Treasury Money Fund of America/SM/ . . . . . . 49 N/A
___________
*Available only in certain states.
</TABLE>
The Bond Fund of America - Page 24
<PAGE>
SALES CHARGES
CLASS A SALES CHARGES - The sales charges you pay when purchasing Class A shares
of stock, stock/bond, and bond funds of The American Funds Group are set forth
below. The money market funds of The American Funds Group are offered at net
asset value. (See "Fund Numbers" for a listing of the funds.)
<TABLE>
<CAPTION>
DEALER
SALES CHARGE AS CONCESSION
PERCENTAGE OF THE: AS PERCENTAGE
------------------ OF THE
AMOUNT OF PURCHASE
AT THE OFFERING PRICE NET AMOUNT OFFERING OFFERING
-INVESTED- PRICE PRICE
- ------------------------------------------ -------- ----- -----
<S> <C> <C> <C>
STOCK AND STOCK/BOND FUNDS
Less than $25,000 . . . . . . . . . 6.10% 5.75% 5.00%
$25,000 but less than $50,000 . . . 5.26 5.00 4.25
$50,000 but less than $100,000. . 4.71 4.50 3.75
BOND FUNDS
Less than $100,000 . . . . . . . . 3.90 3.75 3.00
STOCK, STOCK/BOND, AND BOND FUNDS
$100,000 but less than $250,000 . 3.63 3.50 2.75
$250,000 but less than $500,000 . 2.56 2.50 2.00
$500,000 but less than $750,000 . 2.04 2.00 1.60
$750,000 but less than $1 million 1.52 1.50 1.20
$1 million or more . . . . . . . . . . none none (see below)
- -----------------------------------------------------------------------------
</TABLE>
CLASS A PURCHASES NOT SUBJECT TO SALES CHARGES - Investments of $1 million or
more are sold with no initial sales charge. HOWEVER, A 1% CONTINGENT DEFERRED
SALES CHARGE (CDSC) MAY BE IMPOSED IF REDEMPTIONS ARE MADE WITHIN ONE YEAR OF
PURCHASE. Employer-sponsored defined contribution-type plans investing $1
million or more, or with 100 or more eligible employees, and Individual
Retirement Account rollovers from retirement plan assets invested in the
American
The Bond Fund of America - Page 25
<PAGE>
Funds (see "Individual Retirement Account (IRA) Rollovers" below) may invest
with no sales charge and are not subject to a contingent deferred sales charge.
Investments made by investors in certain qualified fee-based programs, and
retirement plans, endowments or foundations with $50 million or more in assets
may also be made with no sales charge and are not subject to a CDSC. A dealer
concession of up to 1% may be paid by the fund under its Plan of Distribution on
investments made with no initial sales charge.
In addition, Class A shares of the stock, stock/bond and bond funds may be sold
at net asset value to:
(1) current or retired directors, trustees, officers and advisory board members
of, and certain lawyers who provide services to, the funds managed by Capital
Research and Management Company, current or retired employees of Washington
Management Corporation, current or retired employees and partners of The Capital
Group Companies, Inc. and its affiliated companies, certain family members and
employees of the above persons, and trusts or plans primarily for such persons;
(2) current registered representatives, retired registered representatives with
respect to accounts established while active, or full-time employees (and their
spouses, parents, and children) of dealers who have sales agreements with the
Principal Underwriter (or who clear transactions through such dealers) and plans
for such persons or the dealers;
(3) companies exchanging securities with the fund through a merger, acquisition
or exchange offer;
(4) trustees or other fiduciaries purchasing shares for certain retirement
plans of organizations with retirement plan assets of $50 million or more;
(5) insurance company separate accounts;
(6) accounts managed by subsidiaries of The Capital Group Companies, Inc.; and
(7) The Capital Group Companies, Inc., its affiliated companies and Washington
Management Corporation. Shares are offered at net asset value to these persons
and organizations due to anticipated economies in sales effort and expense.
CONTINGENT DEFERRED SALES CHARGE ON CLASS A SHARES - A contingent deferred
sales charge of 1% applies to redemptions made from funds, other than the money
market funds, within 12 months following Class A share purchases of $1 million
or more made without an initial sales charge. The charge is 1% of the lesser of
the value of the shares redeemed (exclusive of reinvested dividends and capital
gain distributions) or the total cost of such shares. Shares held the longest
are assumed to be redeemed first for purposes of calculating this CDSC. The CDSC
may be waived in certain circumstances. See "CDSC Waivers for Class A Shares"
below.
DEALER COMMISSIONS ON CLASS A SHARES - The following commissions (up to 1%) will
be paid to dealers who initiate and are responsible for purchases of $1 million
or more, for purchases by any employer-sponsored defined contribution plan
investing $1 million or more, or with 100 or more eligible employees, IRA
rollover accounts (as described in "Individual Retirement Account (IRA)
Rollovers" below), and for purchases made at net asset value by certain
retirement plans, endowments and foundations with collective assets of $50
million or more: 1.00% on amounts of
The Bond Fund of America - Page 26
<PAGE>
$1 million to $4 million, 0.50% on amounts over $4 million to $10 million, and
0.25% on amounts over $10 million.
CLASS B SALES CHARGES - Class B shares are sold without any initial sales
charge. However, a CDSC may be applied to shares you sell within six years of
purchase, as shown in the table below:
<TABLE>
<CAPTION>
CONTINGENT DEFERRED SALES CHARGE ON
SHARES SOLD WITHIN YEAR AS A % OF SHARES BEING SOLD
------------------------------------------------------------------------------
<S> <C>
1 5.00%
2 4.00%
3 4.00%
4 3.00%
5 2.00%
6 1.00%
</TABLE>
There is no CDSC on appreciation in share value above the initial purchase price
or on shares acquired through reinvestment of dividends or capital gain
distributions. In addition, the CDSC may be waived in certain circumstances.
See "CDSC Waivers for Class B shares" below. The CDSC is based on the original
purchase cost or the current market value of the shares being sold, whichever is
less. In processing redemptions of Class B shares, shares that are not subject
to any CDSC will be redeemed first and then shares that you have owned the
longest during the six-year period. CLASS B SHARES ARE NOT AVAILABLE TO CERTAIN
RETIREMENT PLANS, INCLUDING GROUP RETIREMENT PLANS SUCH AS 401(K) PLANS,
EMPLOYER-SPONSORED 403(B) PLANS, AND MONEY PURCHASE PENSION AND PROFIT SHARING
PLANS.
Compensation equal to 4% of the amount invested is paid by the Principal
Underwriter to dealers who sell Class B shares.
CONVERSION OF CLASS B SHARES TO CLASS A SHARES - Class B shares automatically
convert to Class A shares in the month of the eight-year anniversary of the
purchase date. The conversion of Class B shares to Class A shares after eight
years is subject to the Internal Revenue Service's continued position that the
conversion of Class B shares is not subject to federal income tax. In the event
the Internal Revenue Service no longer takes this position, the automatic
conversion feature may be suspended, in which event no further conversions of
Class B shares would occur while such suspension remained in effect. At your
option, Class B shares may still be exchanged for Class A shares on the basis of
relative net asset value of the two classes, without the imposition of a sales
charge or fee; HOWEVER, SUCH AN EXCHANGE COULD CONSTITUTE A TAXABLE EVENT FOR
YOU, AND ABSENT SUCH AN EXCHANGE, CLASS B SHARES WOULD CONTINUE TO BE SUBJECT TO
HIGHER EXPENSES FOR LONGER THAN EIGHT YEARS.
SALES CHARGE REDUCTIONS AND WAIVERS
REDUCING YOUR CLASS A SALES CHARGE - You and your "immediate family" (your
spouse and your children under age 21) may combine investments to reduce your
costs. You must let your investment dealer or American Funds Service Company
(the "Transfer Agent") know if you
The Bond Fund of America - Page 27
<PAGE>
qualify for a reduction in your sales charge using one or any combination of the
methods described below.
STATEMENT OF INTENTION - You may enter into a non-binding commitment to
purchase shares of a fund(s) over a 13-month period and receive the same
sales charge as if all shares had been purchased at once. This includes
purchases made during the previous 90 days, but does not include
appreciation of your investment or reinvested distributions. The reduced
sales charges and offering prices set forth in the Prospectus apply to
purchases of $25,000 or more made within a 13-month period subject to the
following statement of intention (the "Statement"). The Statement is not a
binding obligation to purchase the indicated amount. When a shareholder
elects to use a Statement in order to qualify for a reduced sales charge,
shares equal to 5% of the dollar amount specified in the Statement will be
held in escrow in the shareholder's account out of the initial purchase (or
subsequent purchases, if necessary) by the Transfer Agent. All dividends
and any capital gain distributions on shares held in escrow will be
credited to the shareholder's account in shares (or paid in cash, if
requested). If the intended investment is not completed within the
specified 13-month period, the purchaser will remit to the Principal
Underwriter the difference between the sales charge actually paid and the
sales charge which would have been paid if the total of such purchases had
been made at a single time. If the difference is not paid by the close of
the period, the appropriate number of shares held in escrow will be
redeemed to pay such difference. If the proceeds from this redemption are
inadequate, the purchaser will be liable to the Principal Underwriter for
the balance still outstanding. The Statement may be revised upward at any
time during the 13-month period, and such a revision will be treated as a
new Statement, except that the 13-month period during which the purchase
must be made will remain unchanged. Existing holdings eligible for rights
of accumulation (see below), as well as purchases of Class B shares, and
any individual investments in American Legacy variable annuities and
variable life insurance policies (American Legacy, American Legacy II and
American Legacy III variable annuities, American Legacy Life, American
Legacy Variable Life, and American Legacy Estate Builder) may be credited
toward satisfying the Statement. During the Statement period reinvested
dividends and capital gain distributions, investments in money market
funds, and investments made under a right of reinstatement will not be
credited toward satisfying the Statement.
When the trustees of certain retirement plans purchase shares by payroll
deduction, the sales charge for the investments made during the 13-month
period will be handled as follows: The regular monthly payroll deduction
investment will be multiplied by 13 and then multiplied by 1.5. The current
value of existing American Funds investments (other than money market fund
investments) and any rollovers or transfers reasonably anticipated to be
invested in non-money market American Funds during the 13-month period, and
any individual investments in American Legacy variable annuities and
variable life insurance policies are added to the figure determined above.
The sum is the Statement amount and applicable breakpoint level. On the
first investment and all other investments made pursuant to the Statement,
a sales charge will be assessed according to the sales charge breakpoint
thus determined. There will be no retroactive adjustments in sales charges
on investments made during the 13-month period.
Shareholders purchasing shares at a reduced sales charge under a Statement
indicate their acceptance of these terms with their first purchase.
The Bond Fund of America - Page 28
<PAGE>
AGGREGATION - Sales charge discounts are available for certain aggregated
investments. Qualifying investments include those by you, your spouse and
your children under the age of 21, if all parties are purchasing shares for
their own accounts and/or:
.
employee benefit plan(s), such as an IRA, individual-type 403(b) plan,
or single-participant Keogh-type plan;
.
business accounts solely controlled by these individuals (for example,
the individuals own the entire business);
. trust accounts established by the above individuals. However, if the
person(s) who established the trust is deceased, the trust account may
be aggregated with accounts of the person who is the primary
beneficiary of the trust.
Individual purchases by a trustee(s) or other fiduciary(ies) may also be
aggregated if the investments are:
. for a single trust estate or fiduciary account, including an employee
benefit plan other than those described above;
.
made for two or more employee benefit plans of a single employer or of
affiliated employers as defined in the 1940 Act, again excluding
employee benefit plans described above; or
. for a diversified common trust fund or other diversified pooled
account not specifically formed for the purpose of accumulating fund
shares.
Purchases made for nominee or street name accounts (securities held in the
name of an investment dealer or another nominee such as a bank trust
department instead of the customer) may not be aggregated with those made
for other accounts and may not be aggregated with other nominee or street
name accounts unless otherwise qualified as described above.
CONCURRENT PURCHASES - You may combine purchases of Class A and/or B shares
of two or more funds in The American Funds Group, as well as individual
holdings in American Legacy variable annuities and variable life insurance
policies. Direct purchases of the money market funds are excluded. Shares
of money market funds purchased through an exchange, reinvestment or
cross-reinvestment from a fund having a sales charge do qualify.
RIGHTS OF ACCUMULATION - You may take into account the current value of
your existing Class A and B holdings in The American Funds Group, as well
as your holdings in Endowments (shares of which may be owned only by
tax-exempt organizations), to determine your sales charge on investments in
accounts eligible to be aggregated, or when making a gift to an individual
or charity. When determining your sales charge, you may also take into
account the value of your individual holdings, as of the end of the week
prior to your investment, in various American Legacy variable annuities and
variable life insurance policies. Direct purchases of the money market
funds are excluded.
CDSC WAIVERS FOR CLASS A SHARES - Any CDSC on Class A shares may be waived in
the following cases:
The Bond Fund of America - Page 29
<PAGE>
(1) Exchanges (except if shares acquired by exchange are then redeemed within
12 months of the initial purchase).
(2) Distributions from 403(b) plans or IRAs due to death, post-purchase
disability or attainment of age 59-1/2.
(3) Tax-free returns of excess contributions to IRAs.
(4) Redemptions through systematic withdrawal plans (see "Automatic
Withdrawals" below), not exceeding 12% of the net asset value of the account
each year.
CDSC WAIVERS FOR CLASS B SHARES - Any CDSC on Class B shares may be waived in
the following cases:
(1) Systematic withdrawal plans (SWPs) - investors who set up a SWP (see
"Automatic Withdrawals" below) may withdraw up to 12% of the net asset value of
their account each year without incurring any CDSC. Shares not subject to a
CDSC (such as shares representing reinvestment of distributions) will be
redeemed first and will count toward the 12% limitation. If there are
insufficient shares not subject to a CDSC, shares subject to the lowest CDSC
will be redeemed next until the 12% limit is reached.
The 12% fee from CDSC limit is calculated on a pro rata basis at the time the
first payment is made and is recalculated thereafter on a pro rata basis at the
time of each SWP payment. Shareholders who establish a SWP should be aware that
the amount of that payment not subject to a CDSC may vary over time depending on
fluctuations in net asset value of their account. This privilege may be revised
or terminated at any time.
(2) Required minimum distributions taken from retirement accounts upon the
attainment of age 70-1/2.
(3) Distributions due to death or post-purchase disability of a shareholder. In
the case of joint tenant accounts, if one joint tenant dies, the surviving joint
tenant(s), at the time they notify the Transfer Agent of the decedent's death
and remove his/her name from the account, may redeem shares from the account
without incurring a CDSC. Redemptions subsequent to the notification to the
Transfer Agent of the death of one of the joint owners will be subject to a
CDSC.
INDIVIDUAL RETIREMENT ACCOUNT (IRA) ROLLOVERS
Assets from an employer-sponsored retirement plan (plan assets) may be invested
in any class of shares of the American Funds (except as described below) through
an IRA rollover plan. All such rollover investments will be subject to the terms
and conditions for Class A and B shares contained in the fund's current
prospectus and statement of additional information. In the case of an IRA
rollover involving plan assets from a plan that offered the American Funds, the
assets may only be invested in Class A shares of the American Funds. Such
investments will be at net asset value and will not be subject to a contingent
deferred sales charge. Dealers who initiate and are responsible for such
investments will be compensated pursuant to the schedule applicable to
investments of $1 million or more (see "Dealer Commissions on Class A Shares"
above).
The Bond Fund of America - Page 30
<PAGE>
PRICE OF SHARES
Shares are purchased at the offering price next determined after the purchase
order is received and accepted by the fund or the Transfer Agent; this offering
price is effective for orders received prior to the time of determination of the
net asset value and, in the case of orders placed with dealers, accepted by the
Principal Underwriter prior to its close of business. In the case of orders sent
directly to the fund or the Transfer Agent, an investment dealer MUST be
indicated. The dealer is responsible for promptly transmitting purchase orders
to the Principal Underwriter. Orders received by the investment dealer, the
Transfer Agent, or the fund after the time of the determination of the net asset
value will be entered at the next calculated offering price. Prices which appear
in the newspaper do not always indicate prices at which you will be purchasing
and redeeming shares of the fund, since such prices generally reflect the
previous day's closing price whereas purchases and redemptions are made at the
next calculated price.
The price you pay for shares, the offering price, is based on the net asset
value per share which is calculated once daily as of approximately 4:00 p.m. New
York time, which is the normal close of trading on the New York Stock Exchange
each day the Exchange is open. If, for example, the Exchange closes at 1:00
p.m., the fund's share price would still be determined as of 4:00 p.m. New York
time. The New York Stock Exchange is currently closed on weekends and on the
following holidays: New Year's Day, Martin Luther King, Jr. Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving and
Christmas Day.
All portfolio securities of funds managed by Capital Research and Management
Company (other than money market funds) are valued, and the net asset value per
share is determined as follows:
1. 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.
Assets or liabilities initially expressed in terms of non-U.S. currencies are
translated prior to the next determination of the net asset value of the fund's
shares into U.S. dollars at the prevailing market rates.
Securities and assets for which representative market quotations are not readily
available are valued at fair value as determined in good faith under policies
approved by the fund's Board. The fair value of all other assets is added to the
value of securities to arrive at the total assets;
2. Liabilities, including accruals of taxes and other expense items, are
deducted from total assets; and
The Bond Fund of America - Page 31
<PAGE>
3. Net assets so obtained are then divided by the total number of shares
outstanding, and the result, rounded to the nearer cent, is the net asset value
per share
Any purchase order may be rejected by the Principal Underwriter or by the fund.
The Principal Underwriter will not knowingly sell shares of the fund directly or
indirectly to any person or entity, where, after the sale, such person or entity
would own beneficially directly or indirectly more than 3% of the outstanding
shares of the fund without the consent of a majority of the fund's Board of
Directors.
SELLING SHARES
Shares are sold at the net asset value next determined after your request is
received in good order by the Transfer Agent. Sales of certain Class A and B
shares may be subject to deferred sales charges. You may sell (redeem) shares
in your account in any of the following ways:
THROUGH YOUR DEALER (certain charges may apply)
- Shares held for you in your dealer's street name must be sold through
the dealer.
WRITING TO AMERICAN FUNDS SERVICE COMPANY
- Requests must be signed by the registered shareholder(s)
- A signature guarantee is required if the redemption is:
- Over $50,000;
- Made payable to someone other than the registered
shareholder(s); or
- Sent to an address other than the address of record, or an
address of record which has been changed within the last 10 days.
Your signature may be guaranteed by a domestic stock exchange or the National
Association of Securities Dealers, Inc., bank, savings association or credit
union that is an eligible guarantor institution.
- Additional documentation may be required for sales of shares held in
corporate, partnership or fiduciary accounts.
- You must include any shares you wish to sell that are in certificate
form.
TELEPHONING OR FAXING AMERICAN FUNDS SERVICE COMPANY, OR BY USING AMERICAN
FUNDSLINE/(R)/ OR AMERICAN FUNDSLINE ONLINE/(R)/
- Redemptions by telephone or fax (including American FundsLine/(R)/ and
American FundsLine OnLine/(R)/) are limited to $50,000 per shareholder each
day.
- Checks must be made payable to the registered shareholder(s).
The Bond Fund of America - Page 32
<PAGE>
- Checks must be mailed to an address of record that has been used with
the account for at least 10 days.
MONEY MARKET FUNDS
- You may have redemptions of $1,000 or more wired to your bank by writing
American Funds Service Company.
- You may establish check writing privileges (use the money market funds
application).
- If you request check writing privileges, you will be provided with
checks that you may use to draw against your account. These checks may
be made payable to anyone you designate and must be signed by the
authorized number or registered shareholders exactly as indicated on
your checking account signature card.
- Check writing is not available for Class B shares of The Cash
Management Trust.
If you sell Class B shares and request a specific dollar amount to be sold, we
will sell sufficient shares so that the sale proceeds, after deducting any
contingent deferred sales charge, equals the dollar amount requested.
Redemption proceeds will not be mailed until sufficient time has passed to
provide reasonable assurance that checks or drafts (including certified or
cashier's checks) for shares purchased have cleared (which may take up to 15
calendar days from the purchase date). Except for delays relating to clearance
of checks for share purchases or in extraordinary circumstances (and as
permissible under the 1940 Act), sale proceeds will be paid on or before the
seventh day following receipt and acceptance of an order. Interest will not
accrue or be paid on amounts that represent uncashed distribution or redemption
checks.
You may reinvest proceeds from a redemption or a dividend or capital gain
distribution of Class A or Class B shares without a sales charge in the Class A
shares of any fund in The American Funds Group within 90 days after the date of
the redemption or distribution (any contingent deferred sales charge on Class A
shares will be credited to your account). Redemption proceeds of shares
representing direct purchases in the money market funds are excluded. Proceeds
will be reinvested at the next calculated net asset value after your request is
received and accepted by the Transfer Agent.
SHAREHOLDER ACCOUNT SERVICES AND PRIVILEGES
AUTOMATIC INVESTMENT PLAN - An automatic investment plan enables you to make
monthly or quarterly investments into The American Funds through automatic
debits from your bank account. To set up a plan you must fill out an account
application and specify the amount you would like to invest ($50 minimum) and
the date on which you would like your investments to occur. The plan will begin
within 30 days after your account application is received. Your bank account
will be debited on the day or a few days before your investment is made,
depending on the bank's capabilities. The Transfer Agent will then invest your
money into the fund you specified on or around the date you specified. For
example, if the date you specified falls on a
The Bond Fund of America - Page 33
<PAGE>
weekend or holiday, your money will be invested on the next business day. If
your bank account cannot be debited due to insufficient funds, a stop-payment or
the closing of the account, the plan may be terminated and the related
investment reversed. You may change the amount of the investment or discontinue
the plan at any time by writing to the Transfer Agent.
AUTOMATIC REINVESTMENT - Dividends and capital gain distributions are reinvested
in additional shares of the same class at no sales charge unless you indicate
otherwise on the account application. You also may elect to have dividends
and/or capital gain distributions paid in cash by informing the fund, the
Transfer Agent or your investment dealer.
If you have elected to receive dividends and/or capital gain distributions in
cash, and the postal or other delivery service is unable to deliver checks to
your address of record, or you do not respond to mailings from American Funds
Service Company with regard to uncashed distribution checks, your distribution
option will automatically be converted to having all dividends and other
distributions reinvested in additional shares.
CROSS-REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS - You may cross-reinvest
dividends and capital gains ("distributions") of the same share class into any
other fund in The American Funds Group at net asset value, subject to the
following conditions:
(a) The aggregate value of your account(s) in the fund(s) paying distributions
equals or exceeds $5,000 (this is waived if the value of the account in the fund
receiving the distributions equals or exceeds that fund's minimum initial
investment requirement),
(b) If the value of the account of the fund receiving distributions is below
the minimum initial investment requirement, distributions must be automatically
reinvested,
(c) If you discontinue the cross-reinvestment of distributions, the value of
the account of the fund receiving distributions must equal or exceed the minimum
initial investment requirement. If you do not meet this requirement within 90
days of notification, the fund has the right to automatically redeem the
account.
EXCHANGE PRIVILEGE - You may only exchange shares into other funds in The
American Funds Group within the same class. However, exchanges from Class A
shares of The Cash Management Trust of America may be made to Class B shares of
any other American Fund for dollar cost averaging purposes. Exchange purchases
are subject to the minimum investment requirements of the fund purchased and no
sales charge generally applies. However, exchanges of shares from the money
market funds are subject to applicable sales charges on the fund being
purchased, unless the money market fund shares were acquired by an exchange from
a fund having a sales charge, or by reinvestment or cross-reinvestment of
dividends or capital gain distributions.
You may exchange shares by writing to the Transfer Agent (see "Redeeming
Shares"), by contacting your investment dealer, by using American FundsLine and
American FundsLine OnLine (see "American FundsLine and American FundsLine
OnLine" below), or by telephoning 800/421-0180 toll-free, faxing (see "Principal
Underwriter and Transfer Agent" in the prospectus for the appropriate fax
numbers) or telegraphing the Transfer Agent. (See "Telephone and Computer
Purchases, Redemptions and Exchanges" below.) Shares held in corporate-type
retirement plans for which Capital Guardian Trust Company serves as trustee may
not be exchanged by telephone, computer, fax or telegraph. Exchange redemptions
and purchases are
The Bond Fund of America - Page 34
<PAGE>
processed simultaneously at the share prices next determined after the exchange
order is received. (See "Purchase of Shares--Price of Shares.") THESE
TRANSACTIONS HAVE THE SAME TAX CONSEQUENCES AS ORDINARY SALES AND PURCHASES.
AUTOMATIC EXCHANGES - You may automatically exchange shares of the same class in
amounts of $50 or more among any of the funds in The American Funds Group on any
day (or preceding business day if the day falls on a non-business day of each
month you designate.
AUTOMATIC WITHDRAWALS - Withdrawal payments are not to be considered as
dividends, yield or income. Automatic investments may not be made into a
shareholder account from which there are automatic withdrawals. Withdrawals of
amounts exceeding reinvested dividends and distributions and increases in share
value would reduce the aggregate value of the shareholder's account. The
Transfer Agent arranges for the redemption by the fund of sufficient shares,
deposited by the shareholder with the Transfer Agent, to provide the withdrawal
payment specified.
ACCOUNT STATEMENTS - Your account is opened in accordance with your registration
instructions. Transactions in the account, such as additional investments will
be reflected on regular confirmation statements from the Transfer Agent.
Dividend and capital gain reinvestments and purchases through automatic
investment plans and certain retirement plans will be confirmed at least
quarterly.
AMERICAN FUNDSLINE AND AMERICAN FUNDSLINE ONLINE - You may check your share
balance, the price of your shares, or your most recent account transaction,
redeem shares (up to $50,000 per shareholder each day), or exchange shares
around the clock with American FundsLine and American FundsLine OnLine. To use
these services, call 800/325-3590 from a TouchTone(TM) telephone or access the
American Funds Web site on the Internet at www.americanfunds.com. Redemptions
and exchanges through American FundsLine and American FundsLine OnLine are
subject to the conditions noted above and in "Shareholder Account Services and
Privileges - Telephone and Computer Purchases, Redemptions and Exchanges" below.
You will need your fund number (see the list of funds in The American Funds
Group under "Purchase of Shares - Purchase Minimums" and "Purchase of Shares -
Fund Numbers"), personal identification number (generally the last four digits
of your Social Security number or other tax identification number associated
with your account) and account number.
TELEPHONE AND COMPUTER PURCHASES, REDEMPTIONS AND EXCHANGES - By using the
telephone (including American FundsLine) or computer (including American
FundsLine OnLine), fax or telegraph purchase, redemption and/or exchange
options, you agree to hold the fund, the Transfer Agent, any of its affiliates
or mutual funds managed by such affiliates, and each of their respective
directors, trustees, officers, employees and agents harmless from any losses,
expenses, costs or liability (including attorney fees) which may be incurred in
connection with the exercise of these privileges. Generally, all shareholders
are automatically eligible to use these options. However, you may elect to opt
out of these options by writing the Transfer Agent (you may also reinstate them
at any time by writing the Transfer Agent). If the Transfer Agent does not
employ reasonable procedures to confirm that the instructions received from any
person with appropriate account information are genuine, the fund may be liable
for losses due to unauthorized or fraudulent instructions. In the event that
shareholders are unable to reach the fund by telephone because of technical
difficulties, market conditions, or a natural disaster, redemption and exchange
requests may be made in writing only.
The Bond Fund of America - Page 35
<PAGE>
REDEMPTION OF SHARES - The fund's Articles of Incorporation permits the fund to
direct the Transfer Agent to redeem the shares of any shareholder for their then
current net asset value per share if at such time the shareholder owns of record
shares having an aggregate net asset value of less than the minimum initial
investment amount required of new shareholders as set forth in the fund's
current registration statement under the 1940 Act, and subject to such further
terms and conditions as the Board of Directors of the fund may from time to time
adopt.
While payment of redemptions normally will be in cash, the fund's articles of
incorporation permit payment of the redemption price wholly or partly in
securities or other property included in the assets belonging to the fund when
in the opinion of the fund's Board of Directors, which shall be conclusive,
conditions exist which make payment wholly in cash unwise or undesirable.
SHARE CERTIFICATES - Shares are credited to your account and certificates are
not issued unless you request them by writing to the Transfer Agent.
EXECUTION OF PORTFOLIO TRANSACTIONS
The Investment Adviser places orders for the fund's portfolio securities
transactions. The Investment Adviser strives to obtain the best available prices
in its portfolio transactions taking into account the costs and quality of
executions. When, in the opinion of the Investment Adviser, two or more brokers
(either directly or through their correspondent clearing agents) are in a
position to obtain the best price and execution, preference may be given to
brokers who have sold shares of the fund or who have provided investment
research, statistical, or other related services to the Investment Adviser. The
fund does not consider that it has an obligation to obtain the lowest available
commission rate to the exclusion of price, service and qualitative
considerations.
There are occasions on which portfolio transactions for the fund may be executed
as part of concurrent authorizations to purchase or sell the same security for
other funds served by the Investment Adviser, or for trusts or other accounts
served by affiliated companies of the Investment Adviser. Although such
concurrent authorizations potentially could be either advantageous or
disadvantageous to the fund, they are effected only when the Investment Adviser
believes that to do so is in the interest of the fund. When such concurrent
authorizations occur, the objective is to allocate the executions in an
equitable manner. The fund will not pay a mark-up for research in principal
transactions.
Dealer concessions paid on underwriting transactions for the fiscal years ended
December 31, 1999, 1998 and 1997, amounted to $10,164,000, $11,959,000 and
$58,367,000, respectively.
The fund is required to disclose information regarding investments in the
securities of broker-dealers (or parents of broker-dealers that derive more than
15% of their revenue from broker-dealer activities) which have certain
relationships with the fund. During the last fiscal year, J.P. Morgan
Securities, Inc. was among the top 10 dealers that received the largest amount
of brokerage commissions and that acted as principals in portfolio transactions.
The fund held debt securities of J.P. Morgan & Co. in the amount of $10,121,000
as of the close of its most recent fiscal year.
The Bond Fund of America - Page 36
<PAGE>
GENERAL INFORMATION
CUSTODIAN OF ASSETS - Securities and cash owned by the fund, including proceeds
from the sale of shares of the fund and of securities in the fund's portfolio,
are held by The Chase Manhattan Bank, One Chase Manhattan Plaza, New York, NY
10081, as Custodian. If the fund holds non-U.S. securities, the Custodian may
hold these securities pursuant to sub-custodial arrangements in non-U.S. banks
or non-U.S. branches of U.S. banks.
TRANSFER AGENT - American Funds Service Company, a wholly owned subsidiary of
the Investment Adviser, maintains the records of each shareholder's account,
processes purchases and redemptions of the fund's shares, acts as dividend and
capital gain distribution disbursing agent, and performs other related
shareholder service functions. American Funds Service Company was paid a fee of
$7,361,000 for the 1999 fiscal year.
INDEPENDENT AUDITORS - Deloitte & Touche LLP, 1000 Wilshire Boulevard, 15th
Floor, Los Angeles, CA 90017, serves as the fund's independent auditors
providing audit services, preparation of tax returns and review of certain
documents to be filed with the Securities and Exchange Commission. The financial
statements included in this Statement of Additional Information from the Annual
Report have been so included in reliance on the report of Deloitte & Touche LLP,
independent auditors, given on the authority of said firm as experts in
accounting and auditing. The selection of the fund's independent auditors is
reviewed and determined annually by the Board of Directors.
PROSPECTUSES AND REPORTS TO SHAREHOLDERS - The fund's fiscal year ends on
December 31. Shareholders are provided updated prospectuses annually. In
addition, shareholders are provided at least semiannually with reports showing
the investment portfolio, financial statements and other information. The fund's
annual financial statements are audited by the fund's independent auditors,
Deloitte & Touche LLP. In an effort to reduce the volume of mail shareholders
receive from the fund when a household owns more than one account, the Transfer
Agent has taken steps to eliminate duplicate mailings of prospectuses and
shareholder reports. To receive additional copies of a prospectus or report,
shareholders should contact the Transfer Agent.
PERSONAL INVESTING POLICY - The fund, Capital Research and Management Company
and its affiliated companies, including the fund's principal underwriter, have
adopted codes of ethics which allow for personal investments. The personal
investing policy is consistent with Investment Company Institute guidelines.
This policy includes: a ban on acquisitions of securities pursuant to an initial
public offering; restrictions on acquisitions of private placement securities;
pre-clearance and reporting requirements; review of duplicate confirmation
statements; annual recertification of compliance with codes of ethics; blackout
periods on personal investing for certain investment personnel; ban on
short-term trading profits for investment personnel; limitations on service as a
director of publicly traded companies; and disclosure of personal securities
transactions.
OTHER INFORMATION - The financial statements including the investment portfolio
and the report of Independent Auditors contained in the Annual Report are
included in this Statement of Additional Information. The following information
is not included in the Annual Report:
The Bond Fund of America - Page 37
<PAGE>
DETERMINATION OF NET ASSET VALUE, REDEMPTION PRICE AND
MAXIMUM OFFERING PRICE PER SHARE FOR CLASS A SHARES -- DECEMBER 31, 1999
<TABLE>
<CAPTION>
<S> <C>
Net asset value and redemption price per share
(Net assets divided by shares outstanding) . . . . . . . . . $12.98
Maximum offering price per share
(100/96.25 of net asset value per share,
which takes into account the fund's current maximum
sales charge). . . . . . . . . . . . . . . . . . . . . . . . $13.49
</TABLE>
CLASS A SHARE INVESTMENT RESULTS AND RELATED STATISTICS
The fund's yield was 7.25% based on a 30-day (or one month) period ended
December 31, 1999, computed by dividing the net investment income per share
earned during the period by the maximum offering price per share on the last day
of the period, according to the following formula:
YIELD = 2[( a-b/cd + 1)/6/ -1]
Where: a = dividends and interest earned during the period.
b = expenses accrued for the period (net of reimbursements).
c = the average daily number of shares outstanding during the
period that were entitled to receive dividends.
d = the maximum offering price per share on the last day of the
period.
The fund may also calculate a distribution rate on a taxable and tax equivalent
basis. The distribution rate is computed by dividing the dividends paid by the
fund over the last 12 months by the sum of the month-end net asset value or
maximum offering price and the capital gains paid over the last 12 months. The
distribution rate may differ from the yield.
The fund's one year total return and average annual total return for the five-
and ten-year periods ended December 31, 1999 were -1.54%, 7.38% and 7.97%,
respectively. The fund's average annual total return at net asset value for the
one-, five- and ten-year periods ended on December 31, 1999 were 2.29%, 8.20%
and 8.39%, respectively.
The average total return ("T") is computed by equating the value at the end of
the period ("ERV") with a hypothetical initial investment of $1,000 ("P") over a
period of years ("n") according to the following formula as required by the
Securities and Exchange Commission: P(1+T)/n/ = ERV.
In calculating average annual total return, the fund assumes: (1) deduction of
the maximum sales load of 3.75% from the $1,000 initial investment; (2)
reinvestment of dividends and distributions at net asset value on the
reinvestment date determined by the Board; and (3) a complete redemption at the
end of any period illustrated. In addition, the fund will provide lifetime
average
The Bond Fund of America - Page 38
<PAGE>
total return figures. From time to time, the fund may calculate investment
results for Class B shares.
The fund may also, at times, calculate total return based on net asset value per
share (rather than the offering price), in which case the figure would not
reflect the effect of any sales charges which would have been paid if shares
were purchased during the period reflected in the computation. Consequently,
total return calculated in this manner will be higher. These total returns may
be calculated over periods in addition to those described above. Total return
for the unmanaged indices will be calculated assuming reinvestment of dividends
and interest, but will not reflect any deductions for advisory fees, brokerage
costs or administrative expenses.
The fund may include information on its investment results and/or comparisons of
its investment results to various unmanaged indices (such as the Dow Jones
Average of 30 Industrial Stocks and the Standard and Poor's 500 Composite Stock
Index) or results of other mutual funds or investment or savings vehicles in
advertisements or in reports furnished to present or prospective shareholders.
The fund may also, from time to time, combine its results with those of other
funds in The American Funds Group for purposes of illustrating investment
strategies involving multiple funds.
The fund may refer to results and surveys compiled by organizations such as CDA/
Wiesenberger, Ibbotson Associates, Lipper Analytical Services, Morningstar,
Inc., and by the U.S. Department of Commerce. Additionally, the fund may refer
to results published in various newspapers and periodicals, including Barron's,
Forbes, Fortune, Institutional Investor, Kiplinger's Personal Finance Magazine,
Money, U.S. News and World Report and The Wall Street Journal.
The fund may illustrate the benefits of tax-deferral by comparing taxable
investments to investments made through tax-deferred retirement plans.
The fund may compare its investment results with the Consumer Price Index, which
is a measure of the average change in prices over time in a fixed market basket
of goods and services (e.g. food, clothing, and fuels, transportation, and other
goods and services that people buy for day-to-day living).
The Bond Fund of America - Page 39
<PAGE>
APPENDIX
Description of Bond Ratings
BOND RATINGS - The ratings of Moody's Investors Service, Inc. (Moody's) and
Standard & Poor's Corporation (S&P) represent their opinions as to the quality
of the municipal bonds which they undertake to rate. It should be emphasized,
however, that ratings are general and are not absolute standards of quality.
Consequently, municipal bonds with the same maturity, coupon and rating may
have different yields, while municipal bonds of the same maturity and coupon
with different ratings may have the same yield.
Moody's rates the long-term debt securities issued by various entities from
- -------
"Aaa" to "C." Moody's applies the numerical modifiers 1, 2, and 3 in each
generic rating classification from Aa through B in its corporate bond rating
system. The modifier 1 indicates that the security ranks in the higher end of
its generic rating category; the modifier 2 indicates a mid-range ranking; and
the modifier 3 indicates that the issue ranks in the lower end of its generic
rating category. Ratings are described as follows:
"Bonds which are rated Aaa are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as 'gilt edge.'
Interest payments are protected by a large or by an exceptionally stable
margin, and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues."
"Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group, they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities, or fluctuation of
protective elements may be of greater amplitude, or there may be other elements
present which make the long-term risks appear somewhat larger than the Aaa
securities."
"Bonds which are rated A possess many favorable investment attributes and are to
be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future."
"Bonds which are rated Baa are considered as medium grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and, in
fact, have speculative characteristics as well."
"Bonds which are rated Ba are judged to have speculative elements; their future
cannot be considered as well assured. Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded during
both good and bad times over the future. Uncertainty of position characterizes
bonds in this class."
"Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small."
The Bond Fund of America - Page 40
<PAGE>
"Bonds which are rated Caa are of poor standing. Such issues may be in default
or there may be present elements of danger with respect to principal or
interest."
"Bonds which are rated Ca represent obligations which are speculative in a high
degree. Such issues are often in default or have other marked shortcomings."
"Bonds which are rated C are the lowest rated class of bonds, and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing."
S & P rates the long-term securities debt of various entities in categories
- -----
ranging from "AAA" to "D" according to quality. The ratings from "AA" to "CCC"
may be modified by the addition of a plus (+) or minus (-) sign to show relative
standing within the major rating categories. Ratings are described as follows:
"Debt rated 'AAA' has the highest rating assigned by S & P. Capacity to pay
interest and repay principal is extremely strong."
"Debt rated 'AA' has a very strong capacity to pay interest and repay principal
and differs from the higher rated issues only in small degree."
"Debt rated 'A' has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories."
"Debt rated 'BBB' is regarded as having an adequate capacity to pay interest and
repay principal. Whereas it normally exhibits adequate protection parameters,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity to pay interest and repay principal for debt in this
category than in higher rated categories."
"Debt rated 'BB' has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure
to adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The 'BB'
rating category is also used for debt subordinated to senior debt that is
assigned an actual or impled 'BBB-' rating.
"Debt rated 'B' has a greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse business,
financial, or economic conditions will likely impair capacity or willingness to
pay interest and repay principal. The 'B' rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied 'BB' or 'BB-'
rating."
"The rating 'CC' is typically applied to debt subordinated to senior debt that
is assigned an actual or implied 'CCC' rating."
"The rating 'C' is typically applied to debt subordinated to senior debt which
is assigned an actual or implied 'CCC-' debt rating. The 'C' rating may be used
to cover a situation where a bankruptcy petition has been filed, but debt
service payments are continued."
"The rating 'C1' is reserved for income bonds on which no interest is being
paid."
The Bond Fund of America - Page 41
<PAGE>
"Debt rated 'D' is in payment default. The 'D' rating category is used when
interest payments or principal payments are not made on the date due even if the
applicable grace period has not expired, unless S&P believes that such payments
will be made during such grace period. The 'D' rating also will be used upon
the filing of a bankruptcy petition if debt service payments are jeopardized."
The Bond Fund of America - Page 42
<TABLE>
THE BOND FUND OF AMERICA
INVESTMENT PORTFOLIO DECEMBER 31, 1999
[pie chart]
<S> <C>
Stocks .6%
Corporate Bonds 50.3%
Mortgage-/Asset-Backed Securities 23.0%
U.S. Treasuries 9.4%
Non-U.S. Government Bonds and Governmental Authorities 7.0%
Federal Agency Notes & Bonds* 2.7%
Cash & Equivalents 7.0%
[end pie chart]
* Not including mortgage-backed securities issued by federal agencies.
</TABLE>
<TABLE>
THE BOND FUND OF AMERICA
INVESTMENT PORTFOLIO DECEMBER 31, 1999
Shares or
Principal Market
Amount Value Percent of
BONDS, NOTES & PREFERRED STOCKS (000) (000)Net Assets
- ---------------------------------------------------------------------- -------------------------------------------
<S> <C> <C> <C> <C>
INDUSTRIALS, SERVICES & UTILITIES
WIRELESS TELECOMMUNICATION SERVICES - 6.60%
Nextel Communications, Inc.:
10.125% 2004 $12,750 13,196
0%/9.75% 2007(1) 66,450 47,346
0%/10.65% 2007(1) 12,750 9,531
0%/9.95% 2008(1) 92,725 65,139
12.00% 2008 5,000 5,600
Series E, 11.25% exchangeable preferred, redeemable 2010 (3) 710share 710
McCaw International, Ltd., units, 0%/13.00% 2007(1),(4),(5) $39,381 27,228
Nextel International, Inc. 0%/12.125% 2008(1) 15,500 9,145
Nextel Partners Inc. 0%/14.00% 2009(1) 16,850 11,037 1.99
Omnipoint Corp.:
14.00% 2003(2),(3),(5) 36,843 38,611
11.625% 2006 31,200 33,072
11.625% 2006 8,250 8,745
11.50% 2009(2) 4,000 4,320
7.00% convertible preferred 106 17,702
Omnipoint Midwest Holdings, LLC 9.608%-10.479% 2008 29,750 29,602 1.39
OMNIPOINT MWST HLD FRN PP OMHA03 9.8175% 12-31-06-2 5198 5172
OMPT FCLTY A-1 9.8175% 12-31-06-2 1865 1856
OMNIPOINT MWST HLD FRN PP OMHA04 9.8175% 3-31-08-2 9112 9066
OMNIPOINT MWST HLD FRN PP OMHA03 9.8175% 03-31-08-2 7488 7450
OMNIPOINT MWST HLD FRN PP OMHA05 9.8175% 03-31-08-2 2648 2635
OMNIPOINT MWST HLD FRN PP OMHA04 9.8175% 03-31-08-2 2314 2303
OMNIPOINT MWST HLD FRN PP OMHA03 9.8175% 03-31-08-2 843 839
OMNIPOINT MWST HLD FRN PP OMHA05 9.8175% 03-31-08-2 282 281
Clearnet Communications Inc.:(1)
0%/11.75% 2007 C$45,825 22,580
0%/10.40% 2008 53,500 23,402 .49
Crown Castle International Corp.:
0%/10.625% 2007(1) $17,000 12,835
12.75% senior exchangeable preferred 2010(3) 27,209share 28,162
0%/11.25% 2011(1) $7,500 4,688 .48
American Cellular Corp. 10.50% 2008 30,425 33,696 .36
Dobson Communications Corp.:
11.75% 2007 1,000 1,127
12.25% exchangeable preferred, redeemable 2008(3) 22,208share 22,208 .25
Esat Telecom Group PLC:
units, 0%/12.50% 2007(1),(4),(5) $4,900 4,559
0%/12.50% 2007(1) 4,000 3,400
11.875% 2008 13,750 15,297 .25
Comcast UK Cable Partners Ltd. 0%/11.20% 2007(1) 22,000 20,900 .22
PageMart Wireless, Inc.:(1)
0%/15.00% 2005 9,000 7,897
0%/11.25% 2008 34,250 11,645 .21
Centennial Cellular Corp. 10.75% 2008 16,000 17,200 .18
VoiceStream Wireless Corp.:(2)
10.375% 2009 5,000 5,150
0%/11.875% 2009(1) 17,000 10,285 .16
Cable & Wireless Communications PLC 6.75% 2008 12,500 12,315 .13
SpectraSite Holdings, Inc., Series B:(1)
0%/12.00% 2008 12,500 7,375
0%/11.25% 2009 4,750 2,541 .10
Cellco Finance NV:
12.75% 2005(2) 8,725 9,063
15.00% 2005 500 545 .10
PanAmSat Corp.:
6.00% 2003 2,400 2,226
6.125% 2005 5,250 4,652
6.375% 2008 3,000 2,558 .10
Comunicacion Celular SA, units, 0%/14.125% 2005(1),(2),(4),(5) 17,568 8,404 .09
Dobson/Sygnet Communications Co. 12.25% 2008 4,500 4,995 .05
Telesystem International Wireless Inc. 0%/13.25% 2007(1) 6,000 3,840 .04
Conecel Holdings Ltd., Series A, units, 14.00% 2000(2),(4),(5),(7) 6,053 605 .01
-------------------
625,134 6.60
-------------------
TRANSPORTATION - 3.88%
Continental Airlines, Inc., pass-through certificates:(8)
Series 1998-3, Class C-1, 7.08% 2004 3,000 2,932
Series C-2, 7.434% 2004 2,000 1,952
Series 1998-3, Class C-2, 7.25% 2005 12,000 11,487
Series 1997-1, Class C, 7.42% 2007(6) 2,350 2,297
Series 1998-3, Class A-2, 6.32% 2008 15,000 13,610
Series 1999-2, Class A-2, 7.056% 2009 2,000 1,901
Series 1997-1, Class B, 7.46% 2014 955 915
Series 1996-2, Class B, 8.56% 2014 1,860 1,886
Series 1999-1, 10.22% 2014 5,703 6,007
Series 1996, Class B, 7.82% 2015 12,304 12,016
Series 1996, Class C, 9.50% 2015 4,557 4,691
Series 1997-1 Class A, 7.461% 2016 12,464 12,002
Series 1996-2, Class D, 11.50% 2016 3,905 4,191
Series 1997-4, Class A, 6.90% 2018 29,758 27,549
Series 1998-1, Class A, 6.648% 2019 36,204 32,844
Series 1999-1, Class B, 6.795% 2020 17,000 15,451 1.60
Airplanes Pass Through Trust, pass-through certificates, 58,913 54,783 .58
Series 1, Class C, 8.15% 2019(8)
Jet Equipment Trust:(2)
Series 1994-A, Class B1, 10.91% 2006 6,364 6,841
Series 1994-A, Class B1,11.79% 2013 4,000 4,674
Series 1995-B, 10.91% 2014 5,000 5,469
Series 1995-D, 11.44% 2014 10,000 11,270
Series 1995-B, Class A, 7.63% 2015 4,051 3,964
Series 1995-B, Class C, 9.71% 2015 5,500 5,714
Series 1995-A, Class C, 10.69% 2015 10,500 11,581 .52
Atlas Air, Inc. Pass-Through Trusts, Series 1998-1, Class A, 7.38% 2019(8 40,295 36,545 .39
Delta Air Lines:
7.70% 2005(2) 2,000 1,976
7.90% 2009(2) 3,000 2,952
pass-through certificates, Series 1992-A2, 9.20% 2014(8) 11,500 11,919
1990 Equipment trust certificates:(2)
Series I, 10.00% 2014 5,000 5,430
Series J, 10.00% 2014 5,000 5,430
Series F, 10.79% 2014 1,700 1,946 .31
United Air Lines, Inc., pass-through certificates:(8)
Series 1995-A1, 9.02% 2012 10,126 10,168
Series 1995-A2, 9.56% 2018 8,000 8,307 .20
American Airlines, Inc., pass-through certificates, 6,000 6,387 .07
Series 1991-C2, 9.73% 2014(8)
AIR 2 US, Series A, 8.027% 2020 6,000 6,015 .06
Teekay Shipping Corp. 8.32% 2008 6,000 5,505 .06
Union Pacific Capital Trust 6.25% TIDES convertible preferred(2) 111 4,527 .05
USAir, Inc.:
1990 Equipment Trust Certificates:
Series A, 10.28% 2001 754 761
Series B, 10.28% 2001 754 761
Series C, 10.28% 2001 530 535
pass-through trust, Series 1993-A3, 10.375% 2013(8) 2,250 2,160 .04
-------------------
367,351 3.88
-------------------
DIVERSIFIED MEDIA & CABLE TELEVISION - 3.87%
NTL Inc.:
0%/12.75% 2005(1) 17,750 17,750
Series B, 10.00% 2007 10,000 10,250
0%/9.75% 2008(1) 12,500 8,719
11.50% 2008 11,000 11,880
0%/11.50% 2009(1),(2) P 15000 8,752 .60
Fox/Liberty Networks, LLC, FLN Finance, Inc.:
8.875% 2007 $24,250 24,674
0%/9.75% 2007(1) 36,325 29,060 .57
Charter Communications Holdings, LLC:
8.25% 2007(6) 5,000 4,650
0%/9.92% 2011(1) 61,500 35,978 .43
Liberty Media Corp.:(2)
7.875% 2009 37,400 37,228
8.50% 2029 1,000 1,019 .40
British Sky Broadcasting Group PLC 8.20% 2009 30,000 29,008 .31
Lenfest Communications, Inc.:
8.375% 2005 11,000 11,197
7.625% 2008 6,750 6,563 .19
TCI Communications, Inc.:
8.00% 2005 10,000 10,296
8.75% 2015 5,000 5,455 .17
Telemundo Holdings, Inc., Series A, 0%/11.50% 2008(1) 25,375 15,098 .16
TeleWest PLC:
9.625% 2006 4,700 4,782
0%/11.00% 2007(1) 8,000 7,460 .13
Cablevision Industries Corp.:
8.125% 2009 9,250 9,088
9.875% 2013 2,000 2,110 .12
Century Communications Corp. 8.75% 2007 6,200 5,906
Adelphia Communications Corp. 8.375% 2008 5,000 4,650 .11
Falcon Holding Group, LP, Falcon Funding Corp. 8.375% 2010 10,000 10,075 .11
Globo Comunicacoes E Partcipacoes Ltd.:
10.50% 2006(2) 9,480 8,224
10.50% 2006 2,000 1,735 .11
Multicanal Participacoes SA, Series B, 12.625% 2004 6,875 6,944 .07
Time Warner Companies Inc. 7.25% 2017 7,000 6,534 .07
Cox Communications, Inc.:
7.75% 2006 4,000 4,039
6.80% 2028 2,500 2,192 .07
V2 Music Holdings PLC:(1),(2),(4),(5)
units, 0%/14.00% 2008 L 7883 3,435
units, 0%/14.00% 2008 $9,259 2,498 .06
Viacom Inc. 7.75% 2005 5,000 5,033 .05
TVN Entertainment Corp., units, 14.50% 2008(2),(4),(5),(6) 13,263 3,710 .04
Avalon Cable Holdings LLC 0%/11.875% 2008(1) 3,625 2,365 .02
News America Holdings Inc. 8.625% 2014 A$ 3250 2,013 .02
Coaxial Communications of Central Ohio, Inc. 10.00% 2006 $2,000 1,980 .02
FrontierVision 11.00% 2006 1,750 1,846 .02
Sun Media Corp. 9.50% 2007 1,305 1,292 .01
Grupo Televisa, SA 0%/13.25% 2008(1) 1,000 910 .01
-------------------
366,398 3.87
-------------------
DIVERSIFIED TELECOMMUNICATION SERVICES - 3.29%
Bell Atlantic Financial Services, Inc., senior exchangeable notes:
5.75% 2003 30,000 30,300
4.25% 2005 30,350 37,331 .71
Viatel, Inc.:
11.15% 2008 DM 7000 3,610
11.25% 2008 $6,775 6,741
0%/12.40% 2008(1) DM 3500 1,170
0%/12.50% 2008(1) $35,875 22,512
11.50% 2009 1,750 1,750 .38
COLT Telecom Group PLC:
units, 0%/12.00% 2006(1),(4) 5,291 12,974
8.875% 2007 DM 9500 5,253
7.625% 2008 31,800 16,357 .37
NEXTLINK Communications, Inc.:
12.50% 2006 $3,000 3,240
9.625% 2007 3,000 2,948
9.00% 2008 8,250 7,817
0%/12.125% 2009(1),(2) 30,250 17,621
14.00% preferred 2009(3) 22,950share 1,228 .35
Time Warner Telecom Inc. 9.75% 2008 $26,650 27,316 .29
Global TeleSystems Group, Inc. 8.75% convertible debentures 2000(2) 7,500 24,750 .26
Allegiance Telecom, Inc.:
0%/11.75% 2008(1) 21,000 14,989
12.875% 2008 4,450 5,029 .21
Qwest Communications International Inc.:(1)
0%/9.47% 2007 15,000 12,170
0%/8.29% 2008 7,500 5,884 .19
Loral Orion Network Systems, Inc. 11.25% 2007 23,260 17,445 .18
US Xchange, LLC 15.00% 2008 16,750 13,065 .14
CEI Citicorp Holdings SA 11.25% 2007(2) ARP 9500 7,768 .08
PTC International Finance BV 0%/10.75% 2007(1) $9,450 6,355 .07
Versatel Telecom International NV 11.875% 2009 P 3875 4,171 .04
IMPSAT Corp. 12.375% 2008 $2,500 2,231 .02
-------------------
312,025 3.29
-------------------
ENERGY & RELATED COMPANIES - 2.10%
PDVSA Finance Ltd.:
8.75% 2004(2) 2,000 1,957
9.375% 2007(2) 20,000 18,991
9.75% 2010(2) 17,250 16,278
7.40% 2016 9,700 7,144
7.50% 2028 2,000 1,404 .48
Union Pacific Resources Group Inc. 7.30% 2009 19,500 18,726
Norcen Energy Resources Ltd. 7.375% 2006 17,500 17,036 .38
Petrozuata Finance, Inc.:(2)
Series A, 7.63% 2009 24,530 19,741
Series B, 8.22% 2017 12,000 8,940 .30
Pemex Finance Ltd.:
8.875% 2010 7,000 6,929
Series 1999-2, Class A3, 10.61% 2017 8,000 8,828 .17
McDermott Inc. 9.375% 2002 13,500 13,492 .14
Pogo Producing Co. 10.375% 2009 11,000 11,440 .12
Louis Dreyfus Natural Gas Corp. 6.875% 2007 12,000 10,864 .11
Conoco Inc. 6.35% 2009 10,000 9,265 .10
Cross Timbers Oil Co. 8.75% 2009 7,025 6,639 .07
OXYMAR 7.50% 2016(2) 8,500 5,649 .06
Husky Terra Nova Finance 8.45% 2012(2) 5,000 4,882 .05
Pioneer Natural Resources Co. 7.20% 2028 6,375 4,647 .05
Oil Co. Ltd. 8.90% 2000(2) 3,706 3,716 .04
Apache Finance Pty Ltd. 7.00% 2009 2,000 1,901 .02
Clark Refining & Marketing, Inc. 8.375% 2007 1,500 930 .01
-------------------
199,399 2.10
-------------------
BROADCASTING & PUBLISHING - 1.74%
Chancellor Media Corp. of Los Angeles:
9.375% 2004 7,500 7,744
8.125% 2007 21,000 21,053
Series B, 8.75% 2007 8,625 8,798
9.00% 2008 7,000 7,280
Capstar Broadcasting Corp. 12.00% preferred 2009(3) 75,419share 8,522 .56
Hearst-Argyle Television, Inc.:
7.00% 2018 $18,500 16,437
7.50% 2027 5,500 5,083 .23
Young Broadcasting Inc.:
10.125% 2005 3,500 3,561
Series B, 8.75% 2007 14,250 13,644 .18
Cox Radio, Inc. 6.375% 2005 18,000 16,788 .18
Ziff-Davis Inc. 8.50% 2008 9,500 9,892 .11
Antenna TV SA 9.00% 2007 9,750 8,970 .09
RBS Participacoes SA 11.00% 2007(2) 10,000 8,475 .09
Transwestern Publishing Co. LLC 9.625% 2007 7,250 7,196 .08
Cumulus Media Inc. 13.75% preferred 2009 (3) 4,563share 5,133 .05
Muzak LLC: 9.875% 2009
9.875% 2009 3,500 3,404
0%/13.00% 2010 (1) 2,000 1,190 .05
Sun Media Corp. 9.50% 2007 3,834 3,796 .04
STC Broadcasting, Inc. 11.00% 2007 3,250 3,226 .03
American Media Operation 10.25% 2009 3,000 3,038 .03
Gray Communication Systems, Inc. 10.625% 2006 2,000 2,065 .02
-------------------
165,295 1.74
-------------------
ELECTRICAL & GAS UTILITIES - 1.69%
Israel Electric Corp. Ltd.:(2)
7.25% 2006 7,165 6,775
7.75% 2009 44,500 42,960
8.25% 2009 3,600 3,589
7.70% 2018 8,500 7,549
7.875% 2026 13,000 11,411
7.75% 2027 20,000 17,283
8.10% 2096 14,405 11,848 1.07
Peco Energy Transition Trust, Series 1999-A, Class A6, 6.05% 2009 17,500 16,417 .17
Edison Mission Energy 7.73% 2009(2) 10,000 9,893 .10
The Williams Companies, Inc. 6.625% 2004 2,000 1,930
Williams Holdings of Delaware, Inc.:
6.125% 2003 2,000 1,897
6.25% 2006 5,000 4,651
6.50% 2008 1,000 916 .10
The Coastal Corp.:
6.50% 2006 2,500 2,351
6.375% 2009 3,550 3,230
6.95% 2028 2,675 2,331 .08
Energen Corp., Series B, 7.125% 2028 6,000 5,299 .06
Tennessee Gas Pipeline Co. 7.625% 2037 5,110 4,766 .05
Transener SA:
8.625% 2003 1,000 938
9.25% 2008(2) 4,250 3,708 .05
Columbia Gas System, Inc., Series C, 6.80% 2005 796 755 .01
-------------------
160,497 1.69
-------------------
LEISURE & TOURISM - 1.60%
William Hill Finance 10.625% 2008 L 11243 18,616 .20
Mirage Resorts, Inc.:
6.625% 2005 $7,500 6,858
6.75% 2007 6,500 5,729
6.75% 2008 6,750 5,930 .19
Boyd Gaming Corp.:
9.25% 2003 13,475 13,643
9.50% 2007 3,500 3,465 .18
FelCor Suites LP 7.375% 2004 13,650 12,416 .13
Premier Parks Inc.:
9.25% 2006 7,000 6,895
9.75% 2007 1,250 1,278
0%/10.00% 2008(1) 4,500 3,083 .12
Capstar Hotel Co. 8.75% 2007 12,020 10,818 .11
Carmike Cinemas, Inc., Series B, 9.375% 2009 11,375 9,953 .11
Friendly Ice Cream Corp. 10.50% 2007 10,125 8,606 .09
AMF Bowling Worldwide, Inc.:
10.875% 2006 8,339 3,502
0%/12.25% 2006(1) 13,050 4,176
0% convertible debentures 2018(2) 11,084 471 .09
Harrah's Operating Co., Inc. 7.875% 2005 6,000 5,775 .06
KSL Recreation Group, Inc. 10.25% 2007 5,600 5,600 .06
Six Flags Entertainment Corp. 8.875% 2006 5,000 4,888 .05
Horseshoe Gaming, LLC, Series B:
9.375% 2007 2,000 2,000
8.625% 2009 3,000 2,865 .05
Joseph E. Seagram & Sons, Inc. 6.80% 2008 5,000 4,685 .05
Jupiters Ltd. 8.50% 2006 3,000 2,910 .03
International Game Technology 7.875% 2004 3,000 2,895 .03
Sun International Hotels Ltd., Sun International North America, Inc. 9.00 3,000 2,895 .03
Royal Caribbean Cruises Ltd. 7.25% 2018 2,000 1,786 .02
-------------------
151,738 1.60
-------------------
HEALTH CARE - 1.47%
Columbia/HCA Healthcare Corp.:
6.125% 2000 8,500 8,276
6.41% 2000 1,000 992
7.60% 2001 1,750 1,717
7.15% 2004 1,500 1,410
6.91% 2005 16,410 15,015
7.00% 2007 12,750 11,379
8.85% 2007 24,105 23,563
8.70% 2010 4,250 4,038
9.00% 2014 5,650 5,452
7.69% 2025 5,000 4,100 .80
Lilly Del Mar Inc. 7.355% 2029 (2)(6) 18,000 18,017 .19
Concentra Operating Corp., Series A, 13.00% 2009(2) 15,500 13,950 .15
Paracelsus Healthcare Corp. 10.00% 2006 20,575 11,934 .13
McKesson Corp.:
6.30% 2005 3,050 2,632
6.40% 2008 6,500 5,328 .08
Nationwide Health Properties, Inc., Series A, 7.677% 100,000share 6,267 .07
preferred cumulative step-up premium rate(1)
Integrated Health Services, Inc.:(7)
5.75% convertible debentures 2001 $12,750 255
10.25% 2006(6) 9,350 771
Series A, 9.50% 2007 12,175 1,004
Series A, 9.25% 2008 32,657 2,694 .05
Mariner Health Group, Inc. 9.50% 2006(7) 7,300 73 .00
-------------------
138,867 1.47
-------------------
MULTI-INDUSTRY - 1.39%
Swire Pacific Capital Ltd. 8.84% cumulative guaranteed 1,670,000share 33,818
perpetual capital securities(2)
Swire Pacific Offshore Financing Ltd. 9.33% cumulative 230,000 5,003 .41
guaranteed perpetual capital securities(2)
Wharf International Finance Ltd., Series A, 7.625% 2007 $25,000 23,213 .25
Federal-Mogul Corp.:
7.75% 2006 10,000 9,259
7.50% 2009 12,500 11,079 .21
Reliance Industries Ltd.:(2)
8.25% 2027 10,000 9,506
10.50% 2046 250 238
10.25% 2097 10,750 9,465 .20
Tyco International Group SA 6.875% 2002(2) 18,000 17,750 .19
Hutchison Whampoa Finance Ltd.:(2)
7.45% 2017 3,000 2,674
Series D, 6.988% 2037 10,000 9,381 .13
-------------------
131,386 1.39
-------------------
FOREST PRODUCTS & PAPER - 1.28%
Container Corp. of America:
10.75% 2002 4,800 4,968
9.75% 2003 18,815 19,191
Series A, 11.25% 2004 8,000 8,280 .34
Scotia Pacific Co. LLC, Series B:
Class A-1, 6.55% 2028 1,424 1,342
Class A-2, 7.11% 2028 31,400 27,455 .30
Kappa Beheer BV:(2)
10.625% 2009 P 5500 5,837
0%/12.50% 2009(1) 9,500 5,997 .12
Copamex Industrias, SA de CV, Series B, 11.375% 2004 $11,880 10,781 .11
Grupo Industrial Durango, SA de CV:
12.00% 2001 3,000 3,008
12.625% 2003 7,625 7,587 .11
Indah Kiat Finance Mauritius Ltd.:
11.875% 2002 300 266
10.00% 2007 12,075 8,996 .10
Pindo Deli Finance Mauritius Ltd.:
10.25% 2002 6,000 4,755
10.75% 2007 3,625 2,637 .08
Scotia Pacific Co. LLC, Series B, Class A-3, 7.71% 2014 10,143 7,303 .08
Paperboard Industries International Inc. 8.375% 2007 1,700 1,615 .02
Pacifica Papers 10.00% 2009 1,475 1,523 .02
APP International Finance Co. BV 11.75% 2005 275 232 .00
-------------------
121,773 1.28
-------------------
ELECTRICAL & ELECTRONICS - 1.05%
Hyundai Semiconductor America, Inc.:(2)
8.25% 2004 7,705 6,800
8.625% 2007 20,700 17,207 .25
Zilog, Inc. 9.50% 2005 22,750 20,930 .22
Advanced Micro Devices, Inc.:
11.00% 2003 13,265 13,066
6.00% convertible subordinated notes 2005 7,500 7,650 .22
EarthWatch Inc.:(2),(5)
0%/12.50% 2005(1) 17,280 11,548
Series B, 7.00% convertible preferred 2009(3) 942 3,250
Series C, 8.50% convertible preferred 2009(3) 80 137 .16
Samsung Electronics Co., Ltd. 7.45% 2002(2) 11,000 10,820 .11
Fairchild Semiconductor Corp.:
10.125% 2007 3,000 3,060
10.375% 2007 2,000 2,040 .05
First International Computer Corp. 1.00% convertible debentures 2004(2) 3,000 3,360 .04
-------------------
99,868 1.05
-------------------
CONSUMER & BUSINESS SERVICES - 1.01%
USA Waste Services, Inc.:
6.50% 2002 9,050 8,381
7.00% 2004 6,750 6,118
7.125% 2007 4,000 3,499
6.125% 2011(6) 8,078 7,688
Waste Management, Inc.:
6.00% 2001(2) 750 718
7.70% 2002 5,161 4,942
WMX Technologies, Inc.:
6.375% 2003 3,706 3,339
7.00% 2006 4,000 3,498 .40
Allied Waste North America, Inc. 10.00% 2009(2) 29,500 26,329 .28
Sotheby's Holdings, Inc. 6.875% 2009 20,000 17,865 .19
Kindercare Learning Centers, Inc., Series B, 9.50% 2009 5,000 4,813 .05
Protection One Alarm Monitoring, Inc.:
6.75% convertible debentures 2003 5,000 2,500
13.625% 2005(6) 3,560 2,207 .05
Stericycle, Inc. 12.375% 2009(2) 2,250 2,295 .02
Polestar Corp. PLC 10.50% 2008 L 900 1,394 .01
Teletrac Inc.:(5)
10.00% 2000 $195.00 195
units, 9.00% 2004(4),(12) 1351 737 .01
Safety-Kleen Services, Inc. 9.25% 2008 250 242 .00
-------------------
96,760 1.01
-------------------
GENERAL RETAILING & MERCHANDISING - 1.01%
J. C. Penney Co., Inc.:
7.60% 2007 15,000 13,943
7.625% 2007 5,880 4,577
7.65% 2016 4,000 3,451
7.95% 2017 36,500 32,453 .58
Kmart Corp. 9.78% 2020 12,250 12,572 .13
Sunglass Hut International Ltd. 5.25% convertible debentures 2003 11,150 8,976 .10
DR Securitized Lease Trust, pass-through certificates, 8,000 7,860 .08
Series 1994 K-2, 9.35% 2019(8)
Federated Department Stores, Inc.:
8.125% 2002 5,000 5,080
6.30% 2009 3,000 2,728 .08
Dillard's, Inc. 7.13% 2018 2,750 2,357 .02
The Boyds Collection, Ltd.,Series B, 9.00% 2008 1,806 1,716 .02
-------------------
95,713 1.01
-------------------
METALS - .82%
Freeport-McMoRan Copper & Gold Inc.:
7.50% 2006 34,000 24,942
7.20% 2026 18,000 13,597 .41
Doe Run Resources Corp., Series B:
12.231% 2003(6) 3,000 2,760
11.25% 2005 16,000 15,160 .19
Inco Ltd. 9.60% 2022 16,000 15,502 .16
Pohang Iron & Steel Co., Ltd.:
7.50% 2002 1,000 989
6.625% 2003 2,500 2,386 .04
Kaiser Aluminum and Chemical Corp. 12.75% 2003 2,000 2,000 .02
-------------------
77,336 .82
-------------------
FOOD & FOOD PRODUCTS - .64%
Nabisco, Inc.:
7.05% 2007 8,500 7,863
7.55% 2015 9,000 8,312
6.125% 2033(6) 2,500 2,386
6.375% 2035(6) 19,900 18,482 .39
Fage Dairy Industry SA 9.00% 2007 8,250 7,260 .08
Gruma, SA de CV 7.625% 2007 8,000 6,960 .07
Home Products International, Inc. 9.625% 2008 6,250 5,703 .06
New World Pasta Co. 9.25% 2009 4,000 3,700 .04
-------------------
60,666 .64
-------------------
MISCELLANEOUS MATERIALS & COMMODITIES - .46%
Equistar Chemicals LP:
6.50% 2006 7,800 6,917
8.75% 2009 7,500 7,412 .15
Printpack, Inc.:
Series B, 9.875% 2004 4,075 4,075
10.625% 2006 9,465 9,134 .14
Graham Packaging Co.:
8.75% 2008 3,625 3,480
0%/10.75% 2009(1) 7,975 5,423 .10
Anchor Glass Container Corp. 11.25% 2005 4,000 3,600 .04
Impress Metal Packaging Holdings BV 9.875% 2007 DM C5596500 3,243 .03
-------------------
43,284 .46
-------------------
INDUSTRIAL COMPONENTS - .31%
TRW Inc. 7.125% 2009 $12,375 11,717 .12
Tekni-Plex, Inc. 9.25% 2008 8,250 8,456 .09
Hayes Wheels International, Inc. 9.125% 2007 4,500 4,354 .05
Cooper Tire & Rubber Co. 7.25% 2002 4,000 3,956 .04
BREED Technologies, Inc. 9.25% 2008(7) 32,000 480 .01
-------------------
28,963 .31
-------------------
BEVERAGES & TOBACCO - .20%
Canandaigua Wine Co., Inc.:
Series C, 8.75% 2003 7,500 7,481
8.75% 2003 6,650 6,500 .15
Delta Beverage Group, Inc. 9.75% 2003 4,750 4,750 .05
-------------------
18,731 .20
-------------------
MACHINERY & ENGINEERING - .18%
John Deere Capital Corp. 8.625% 2019 16,850 17,427 .18
-------------------
17,427 .18
-------------------
OTHER - .09%
Salton/Maxim Housewares, Inc. 10.75% 2005 8,250 8,498 .09
-------------------
8,498 .09
-------------------
FINANCE
BANKS & THRIFTS - 9.27%
SocGen Real Estate Co. LLC, Series A, 7.64%/8.406% (undated)(2),(6) 100,000 90,241 .95
Fuji International Finance (Bermuda) Trust, Fuji Bank, 7,500 7,266
Ltd. 7.30% Eurodollar Note (undated)
Fuji JGB Investment LLC, Series A, 9.87% noncumulative preferred(2),(6) 65,750 65,750 .77
Banque Nationale de Paris 6.765% (undated)(6) 12,500 12,109
BNP U.S. Funding LLC, Series A, 7.738% noncumulative preferred(2) 64,000 59,583 .76
Bankers Trust New York Corp.:
6.70% 2007 20,000 18,804
7.50% 2015 18,500 17,533
Deutsche Bank Capital Funding Trust I, 7.872% (undated)(2),(6) 19,500 18,499 .58
Tokai Preferred Capital Co. LLC, Series A, 9.98%/ 50,500 50,313 .53
11.091% noncumulative preferred(2)
MBNA Corp., MBNA Capital:
A, Series A, 8.278% 2026 24,000 20,886
B, Series B, 7.005% 2027(6) 32,800 27,035 .51
Advanta Corp.:
Series D, 6.54% 2000 10,600 10,588
Series D, 6.60% 2000 6,000 5,995
Series B, 7.00% 2001 4,000 3,750
Series D, 6.925% 2002 2,500 2,280
6.925% 2002 2,000 1,824
Advanta Capital Trust I 8.99% 2026 11,000 7,590 .34
NB Capital Corp. 8.35% exchangeable depositary shares 1,200,000share 25,800
National Bank of Canada 5.456% (undated)(6) $5,000 3,836 .31
Bank of Scotland 7.00% (undated)(2),(6) 30,000 27,755 .29
Ahmanson Capital Trust I Capital Securities, Series A, 8.36% 2026(2) 2,030 1,930
Great Western Financial Trust II, Series A, 8.206% 2027 2,055 1,921
Washington Mutual Capital I Subordinated Capital Income Securities 8.375% 22,000 20,939 .26
Capital One Bank:
6.375% 2003 5,000 4,795
6.40% 2003 2,000 1,914
6.70% 2008 5,000 4,573
Capital One Financial Corp. 7.25% 2006 2,500 2,360
Capital One Capital I 7.755% 2027(2),(6) 10,000 8,634 .24
IBJ Preferred Capital Co. LLC, Series A, 8.79% noncumulative preferred(2) 23,450 22,160 .23
National Westminster Bank PLC 7.75% (undated)(6) 23,000 22,101 .23
Paribas, New York Branch 6.95% 2013 24,000 21,682 .23
Skandinaviska Enskilda Banken 7.50% (undated)(6) 23,000 20,384 .22
Canadian Imperial Bank of Commerce 6.063% Eurodollar Note (undated)(6) 25,000 19,933 .21
HSBC America Capital 8.38% 2027(2) 19,375 18,455 .20
Standard Chartered Bank:(6)
6.25% Eurodollar Note (undated) 15,000 10,096
6.275% (undated) 5,000 3,527 .14
Imperial Capital Trust I, Imperial Bancorp 9.98% 2026 15,000 13,326 .14
Bayerische Vereinsbank 5.50% 2008 P 13271 13,278 .14
Chevy Chase Preferred Capital Corp. 10.375% 242,900share 11,811 .12
Riggs National Corp. 8.625% 2026 $5,400 4,668
Riggs Capital Trust II 8.875% 2027 7,500 6,687 .12
Chase Capital III, floating rate capital securities, Series C, 6.66% 2027 8,500 7,987
Chase Capital II, global floating rate capital securities, Series B, 6.70 3,500 3,308 .12
Abbey National PLC 6.70% (undated)(6) 12,500 11,273 .12
Allegemeine Hypotheken Bank AG 5.00% 2009 (2) P 11000 10,492 .11
J.P. Morgan & Co. Inc., Series A.:
6.00% 2009 $1,650 1,477
6.783% 2012(6) 10,000 8,644 .11
Dime Capital Trust I, Dime Bancorp, Inc., Series A, 9.33% 2027 10,500 10,037 .11
Allfirst Preferred Capital Trust 7.678% SKATES 2029 (6) 10,000 9,900 .10
Fleet Capital Trust 7.14% 2028(6) 10,000 9,880 .10
Royal Bank of Scotland 8.375% 2007 L 4900 8,403 .09
Bank of Nova Scotia 6.063% Eurodollar note (undated)(6) $10,000 8,053 .09
Hongkong and Shanghai Banking Corp. 6.188% (undated)(6) 10,000 8,051 .08
Bank One Corp., Series A, 6.00% 2009 8,500 7,560 .08
Lloyds Bank (#2) 6.313% (undated)(6) 8,000 6,856 .07
Allied Irish Banks Ltd. 6.75% (undated)(6) 7,000 6,070 .06
Hypothekenbank in Essen AG 5.25% 2008 P 6000 5,924 .06
BCI U.S. Funding Trust I 8.01% (undated)(2),(6) $6,000 5,474 .06
Halifax Building Society 8.75% 2006 L 3000 5,256 .06
SB Treasury Co. LLC, Series A, 9.40% noncumulative preferred(2) $5,000 4,975 .05
Bay View Capital 9.125% 2007 5,500 4,675 .05
Rheinische Hypothekenbank Eurobond 4.25% 2008 P 5000 4,565 .05
Midland Bank 6.438% Eurodollar note (undated)(6) $5,000 4,213 .04
Bergen Bank 6.00% (undated)(6) 5,000 3,857 .04
Christiana Bank Og Kreditkasse 6.25%(6) 4,000 3,080 .03
Sovereign Bancorp, Inc. 10.50% 2006 2,500 2,550 .03
Komercni Finance BV 9.00%/10.75% 2008(2),(6) 2,000 1,865 .02
Korea Development Bank 6.625% 2003 750 722 .01
Banco General, SA 7.70% 2002(2) 500 475 .01
-------------------
878,233 9.27
-------------------
FINANCIAL SERVICES - 3.27%
Ford Motor Credit Co.:
5.25% 2008 DM 32000 15,640
5.80% 2009 $30,000 26,588
7.375% 2009 42,250 41,711 .89
BHP Finance Ltd.:
6.69% 2006 21,800 20,673
8.50% 2012 20,000 20,760
6.75% 2013 10,000 8,924 .53
General Motors Acceptance Corp.:
0.34% 2002(6) Y 3600000 35,204
5.85% 2009 $10,000 8,835 .46
Household Finance Corp.:
6.00% 2004 10,000 9,423
6.44% 2005(6) 6,000 5,978
7.20% 2006 5,000 4,911
6.40% 2008 11,000 10,169 .32
Providian National Bank 6.65% 2004 10,000 9,441
Providian Financial Corp. 9.525% 2027(2) 16,750 14,195 .25
AB Spintab:
6.00% 2009 SKR 23000 2,637
6.80% (undated)(2),(6) $6,500 6,287
7.50% (undated)(2),(6) 11,000 10,532 .20
Nykredit 6.00% 2029(8) DKR 105954 13,350 .14
Bankunited Capital Trust, Bankunited Financial Corp., 10.25% 2026 $10,000 8,700 .09
AT&T Capital Corp. 6.60% 2005 9,000 8,655 .09
Wharf Capital International, Ltd. 8.875% 2004 7,457 7,478 .08
Heller Financial, Inc. 6.00% 2004 7,500 7,121 .08
Wilshire Real Estate Investment Trust 24.00% 2000(6) 6,496 5,197 .05
Green Tree Financial Corp. 6.50% 2002 4,000 3,783 .04
Associates Corp. of North America 5.85% 2001 2,500 2,478 .03
Lend Lease (US) Finance Inc. 6.75% 2005 1,500 1,442 .02
-------------------
310,112 3.27
-------------------
REAL ESTATE - 1.29%
Irvine Co. 7.46% 2006(2),(5) 15,000 13,759
Irvine Apartment Communities, LP 7.00% 2007 5,875 5,216 .20
CarrAmerica Realty Corp:
Series B, 8.57% cumulative redeemable preferred 710,100share 11,450
Series C, 8.55% cumulative redeemable preferred 413,100 6,610 .19
ProLogis Trust:
7.25% 2002 $750 741
7.05% 2006 8,000 7,538
Series D, 7.92% preferred 380,000share 6,935 .16
EOP Operating LP:
6.763% 2007 $5,000 4,629
6.75% 2008 11,500 10,576 .16
Archstone Communities Trust:
7.20% 2013 9,000 7,990
Series C, 8.625% convertible preferred 200,000share 3,950 .13
ERP Operating LP:
7.95% 2002 $3,750 3,766
7.57% 2026 8,000 7,829 .12
Beverly Finance Corp. 8.36% 2004(2) 7,500 7,591 .08
Duke-Weeks Realty Corp., Series B, 7.99% preferred 150,000share 6,563 .07
cumulative step-up premium rate(1)
Simon DeBartolo Group, Inc., Series C, 7.89% preferred 150,000 6,300 .07
cumulative step-up premium rate(1)
New Plan Realty Trust, Series D, 7.80% preferred 112,500 4,922 .05
cumulative step-up premium rate(1)
IAC Capital Trust, Series A, 8.25% TOPRS preferred 220,000 4,070 .04
Wellsford Residential Property Trust:
7.25% 2000 $1,000 997
7.75% 2005 1,000 989 .02
-------------------
122,421 1.29
-------------------
INSURANCE - 1.06%
Royal and Sun Alliance Insurance Group PLC 8.95% 2029(2) 33,000 33,700 .36
ReliaStar Financial Corp.:
8.625% 2005 5,000 5,172
8.00% 2006 23,250 23,380 .30
Jefferson-Pilot Corp. 8.14% 2046(2) 6,000 5,529
Jefferson-Pilot Capital Trust 8.285% 2046(2) 8,500 7,968 .14
Conseco, Inc. 9.00% 2006 10,000 10,305 .11
Lindsey Morden Group Inc., Series B, 7.00% 2008(2) C$ 16000 9,901 .10
Aflac Inc. 6.50% 2009 $5,000 4,588 .05
-------------------
100,543 1.06
-------------------
COLLATERALIZED MORTGAGE/ASSET-BACKED OBLIGATIONS
(EXCLUDING THOSE ISSUED BY FEDERAL AGENCIES) - 7.64%(8)
Green Tree Financial Corp., pass-through certificates:
Series 1994-A, Class NIM, 6.90% 2004 1,158 1,150
Series 1995-A, Class NIM, 7.25% 2005 8,362 7,847
Series 1993-2, Class B, 8.00% 2018 2,250 1,979
Series 1997-A, Class HI-M1, 7.47% 2023 1,000 979
Series 1995-3, Class B-2, 8.10% 2025 5,000 4,058
Series 1995-8, Class B2, 7.65% 2026 4,000 3,128
Series 1995-6, Class B2, 8.00% 2026 2,450 1,939
Series 1995-9, Class A-5, 6.80% 2027 8,000 7,957
Series 1996-7, Class A6, 7.65% 2027 2,100 2,099
Series 1996-6, Class B2, 8.35% 2027 10,540 8,752
Series 1996-5, Class B-2, 8.45% 2027 1,246 1,036
Series 1997-1, Class A-5, 6.86% 2028 1,500 1,480
Series 1996-10, Class A-6, 7.30% 2028 8,500 8,167
Series 1998-4, Class B2, 8.11% 2028 13,350 10,734
Series 1997-6, Class A7, 7.14% 2029 15,700 15,489
Green Tree Recreational, Equipment and Consumer Trust:
Series 1999-A, Class A-6, 6.84% 2029 5,000 4,919
Series 1997-D, Class CTFS, 7.25% 2029 8,500 7,004 .94
PP&L Transition Bond Co. LLC:
Series 1999-1, Class A-5, 6.83% 2007 22,000 21,882
Series 1999-1, Class A-7, 7.05% 2009 27,500 27,473
Series 1999-1, Class A-8, 7.05% 2009 17,225 17,146 .70
First Consumer Master Trust, Series 1999-A, Class A, 5.80% 2005(2) 51,000 48,940 .52
Residential Funding Mortgage Securities I, Inc.:
pass-through certificates, Series 1999-S17, Class A-1, 6.50% 2014 41,687 39,602
Series 1998-S17, Class M-1, 6.75% 2028 3,948 3,598 .46
Metris Master Trust:(2),(6)
Series 1998-1A, Class C, 6.443% 2005 23,645 23,281
Series 1997-2, Class C, 7.511% 2006 14,400 14,080 .39
CSFB Finance Co. Ltd., Series 1995-A, 5.977% 2005(2),(6) 42,400 36,464 .38
Structured Asset Securities Corp.:(2),(6),(8)
Series 1998-RF2, Class A, 8.549% 2022 31,764 32,488
Series 1998-RF1, Class A, 8.676% 2027 3,179 3,267 .38
Garanti Trade Payment Rights Master Trust, Series 35,000 34,892 .37
1999-B, Class 1, 10.81% 2004(2)
First USA Credit Card Master Trust, Class A, floating
rate asset-backed certificates:(2)
Series 1998-7 7.061% 2004(6) 4,000 3,973
Series 1999-1, Class C, 6.42% 2006 2,500 2,382
Series 1998-4, 6.961% 2008(6) 15,000 14,720
Series 1998-8, 7.361% 2008(6) 5,626 5,599
Series 1997-4, 7.46% 2010(6) 6,630 6,465 .35
H. S. Receivables Corp.:(2)
Series 1999-1, Class A, 8.13% 2004 22,500 22,275
Series 1999-3, Class A, 9.60% 2006 2,000 2,000 .26
Puerto Rico Public Financing Corp., Series 1, Class A, 6.15% 2008 20,768 20,145 .21
GE Capital Mortgage Services Inc.:
Series 1994-15, Class A10, 6.00% 2009 16,376 14,743
Series 1994-9, Class A9, 6.50% 2024 4,935 4,368 .20
Structured Asset Notes Transaction, Ltd., Series 1996-A, 15,940 15,706 .16
Class A1, 7.156% 2003(2)
NPF XII, Inc., Series 1999-2, Class A, 7.05% 2003(2) 15,000 14,745 .15
Boston Edison Co., Series 1999-1, Class A-5, 7.03% 2012 14,800 14,451 .15
Ocwen Residential MBS Corp., Series 1998-R1, 15,063 14,242 .15
Class AWAC, 3.985% 2027(2),(6)
FIRSTPLUS Home Loan Owner Trust:
Series 1997-1, Class A-7, 7.16% 2018 10,000 9,850
Series 1997-3, Class B-1, 7.79% 2023 5,000 4,135 .15
Sears Credit Account Master Trust:
II, Series 1998-2, Class A, 5.25% 2008 9,000 8,435
Series 1999-1, Class A, 5.65% 2009 5,000 4,733 .14
MBNA Master Credit Card Trust:(2)
Series 1999-D, Class B, 6.95% 2008 4,700 4,469
Series 1998-E, Class C, 6.60% 2010 5,000 4,501 .09
ComEd Transitional Funding Trust, Transitional Funding Trust Note:
Series 1998, Class A-4, 5.39%, 2005 3,500 3,358
Series 1998, Class A-6, 5.63% 2009 6,000 5,563 .09
Residential Asset Securitization Trust, Series 1997-A3, Class B1, 7.75% 2 9,134 8,905 .09
Ditech Home Loan Owner Trust, Series 1998-1, Class B1, 9.50% 2029 10,500 8,768 .09
Capital One:(2)
Secured Note Trust, Series 1999-2, 6.028% 2005(6) 6,250 6,209
Master Trust, Series 1999-1, Class C, 6.60% 2007 2,500 2,390 .09
PNC Mortgage Securities Corp., Series 1998-10, Class 1-B1, 6.50% 2028(2) 9,488 8,468 .09
Norwest Asset Securities Corp., Series 1998-31, Class A-1, 6.25% 2014 8,595 8,149 .09
NPF VI, Inc., Series 1999-1, Class A, 6.25% 2003(2) 5,000 4,888
NPF XII, Inc., Series 1999-3, Class B, 6.54% 2003(2),(6) 3,000 2,999 .08
Grupo Financiero Banamex Accival, SA de CV 0% 2002(2) 8,694 7,828 .08
Providian Master Trust, Series 1999-2, Class A, 6.60% 2007 7,500 7,446 .08
The Money Store Trust:
Series 1997-1, Class A-2, 6.81% 2011 2,654 2,651
Series 1996-D, Class A-14, 6.985% 2016 4,000 3,949 .07
GS Escrow Corp. 7.125% 2005 5,000 4,494
GS Mortgage Securities Corp., Series 1998-2, Class M, 7.75% 2027(2) 1,162 1,125 .06
First Nationwide, Series 1999-2, Class 1PA1, 6.50% 2029 5,585 5,231 .06
EquiCredit Funding asset-backed certificates, Series 1996-A, Class A2, 6. 253 253
EQCC Home Equity Loan Trust, asset-backed certificates, 5,000 4,948 .05
Series 1999-3, Class A-3F, 7.067% 2024
Standard Credit Card Master Trust I, Series 1994-2A, Class A, 7.25% 2008 5,000 4,945 .05
Collateralized Mortgage Obligation Trust, Series 63, Class Z, 9.00% 2020 4,555 4,671 .05
Travelers Mortgage Securities Corp., Series 1, Class Z2, 12.00% 2014 4,116 4,491 .05
Ryland Acceptance Corp. Four, Series 88, Class E, 7.95% 2019 4,424 4,420 .05
Prudential Home Mortgage Securities Co., Inc., Series 1993-48, 4,466 4,354 .05
Class A-6, 6.25% 2008
Merrill Lynch Mortgage Investors, Inc., Seller Manufactured Housing 3,973 3,955 .04
Contracts, Series 1995-C2, Class A-1, 6.911% 2021(6)
Triad Auto Receivables Owner Trust, Series 1999-1, Class A2, 6.09% 2005 3,000 2,930 .03
Bear Stearns Structured Securities Inc., Series 1997-2, 2,665 2,644 .03
Class AWAC, 4.521% 2036(2),(6)
Nationsbanc Montgomery Funding Corp., Series 1998-5, Class A-1, 6.00% 201 2,697 2,533 .03
Financial Asset Securitization, Inc., Series 1997-NAM1, Class B1, 7.75% 2 2,538 2,473 .03
UCFC Acceptance Corp., Series 1996-D1, Class A-4, 6.776% 2016 2,400 2,396 .03
Chase Manhattan Bank, NA, Series 1993-I, Class 2A5, 7.25% 2024 2,093 2,082 .02
Citicorp Mortgage Securities, Inc., Series 1988-16, Class A1, 10.00% 2018 548 550 .01
-------------------
723,833 7.64
-------------------
COMMERCIAL MORTGAGE-BACKED OBLIGATIONS - 6.32%(8)
DLJ Commercial Mortgage Corp.:
Series 1997-CF1, Class A1A, 7.40% 2006(2) 5,861 5,865
Series 1996-CF2, Class A1B, 7.29% 2021(2) 11,200 11,098
Series 1995-CF2, Class A1B, 6.85% 2027(2) 35,845 35,428
Series 1996-CF1, Class A1A, 7.28% 2028(2) 7,892 7,864
Series 1998-CF1, Class A-1A, 6.14% 2031(6) 21,036 20,268
Series 1998-CF2, Class A-1B, 6.24% 2031 10,000 9,229 .95
GMAC Commercial Mortgage Securities, Inc.:
Series 1997-C1, Class A1, 6.83% 2003 17,536 17,461
Series 1997-C1, Class A3, 6.869% 2007 20,000 18,959
Series 1997-C2, Class E, 7.624% 2011 27,703 23,390
Series 1996-C1, Class A2A, 6.79% 2028 740 735
Series 1999-C1, Class D, 6.866% 2033(6) 17,500 15,785
Series 1999-C1, Class E, 6.866% 2033(6) 8,500 7,228 .88
Morgan Stanley Capital I Inc.:
Series 1995-GA1, Class A-1, 7.00% 2002(2) 2,707 2,700
Series 1998-HF1, Class A-1, 6.19% 2007(6) 28,353 27,341
Series 1996-WF1, Class A-1, 6.601% 2028(2),(6) 6,027 5,983
Series 1998-WF2, Class A-1, 6.34% 2030(6) 9,046 8,751
Series 1998-HF2, Class A-2, 6.48% 2030 17,000 15,985
Series 1999-FNV1, Class A-1, 6.12% 2031 9,560 9,112 .74
Chase Commercial Mortgage Securities Corp.:
Series 1996-1, Class A1, 7.60% 2005 3,727 3,770
Series 1997-I, Class A1, 7.27% 2029 6,161 6,175
Series 1998-1, Class A1, 6.34% 2030 29,048 28,228
Series 1998-2, Class A-2, 6.39% 2030 8,000 7,451
Series 1998-2, Class E, 6.39% 2030 10,000 8,266 .57
Asset Securitization Corp.:
Series 1996-D3, Class A-1B, 7.21% 2026 3,000 2,974
Series 1997-D4, Class A-1A, 7.35% 2029 7,411 7,459
Series 1997-D5, Class A-PS1, interest only, 1.404% 2043(6) 273,785 24,146 .35
GS Mortgage Securities Corp. II, Mortgage pass-through certificates:(6)
Series 1998-C1, Class D, 7.243% 2030 3,750 3,370
Series 1998-C1, Class E, 7.243% 2030 31,076 26,694 .32
Merrill Lynch Mortgage Investors, Inc., Mortgage pass-through certificates:
Series 1995-C2, Class D, 7.681% 2021(6) 472 467
Series 1995-C3, Class A-1, 6.695% 2025(6) 1,145 1,136
Series 1995-C3, Class A-3, 7.189% 2025(6) 15,855 15,600
Series 1996-C2, Class A-1, 6.933% 2028(6) 10,191 10,074
Series 1998-C3, Class A1, 5.65% 2030 2,816 2,656 .32
L.A. Arena Funding, LLC, Series 1, Class A, 7.656% 2026(2) 32,625 29,085 .31
CS First Boston Mortgage Securities Corp.:
Series 1998-FL1, Class E, 6.260% 2013(2),(6) 12,080 11,970
Series 1998-C1, Class A-1A, 6.26% 2040 14,914 14,388 .27
Nationslink Funding Corp., Series 1999-1, Class D, 7.10% 2031 27,718 25,335 .27
Bear Stearns Commercial Mortgage Securities Inc.:
Series 1998-C1, Class A-1, 6.34% 2030 8,160 7,862
Series 1999-C1, Class X, 1.054% 2031(6) 172,052 11,262 .20
Deutsche Mortgage & Asset Receiving Corp., Series 1998-C1, 18,223 17,518 .18
Class A-1, 6.22% 2031
Prudential Securities Secured Financing Corp., Commercial 18,000 16,627 .18
Mortgage pass-through certificates, Series 1999-NRF1, Class C, 6.746% 2009
Commercial Mortgage Acceptance Corp.:
Series 1998-C1, Class A-1, 6.23% 2007 11,226 10,805
Series 1998-C2, Class A-1, 5.80% 2030 4,509 4,287 .16
Nomura Asset Securities Corp., Series 1998-D6, Class A-A1, 6.28% 2030(6) 14,642 14,071 .15
LB Commercial Mortgage Trust, Series 1998-C1, Class A1, 6.33% 2030 10,266 10,031 .11
Government Lease Trust:(2)
Series 1999-GSA1, Class A1, 5.86% 2003 4,230 4,165
Series 1999-C1A, Class B3, 4.00% 2011 6,500 4,294 .09
Resolution Trust Corp.:
Series 1993-C1, Class D, 9.45% 2024 5,939 5,918
Series 1993-C2, Class D, 8.50% 2025 1,534 1,528 .08
Mortgage Capital Funding, Inc., Series 1998-MC1, Class A-1, 6.417% 2030 7,561 7,328 .08
First Union Commercial Mortgage Trust, Series 1999-C1, Class E, 6.973% 20 7,000 5,714 .06
Structured Asset Securities Corp., pass-through certificates, 2,950 2,892 .03
Series 1996-CFL, Class D, 7.034% 2028
J.P. Morgan Commercial Finance Corp.:
Series 1995-C1, Class A-2, 7.373% 2010(6) 1,000 992
Series 1996-C3, Class A-1, 7.33% 2028 1,197 1,192 .02
-------------------
598,912 6.32
-------------------
GOVERNMENT
U.S. TREASURY OBLIGATIONS - 9.34%
13.125% May 2001 21,500 23,395
5.875% November 2001 16,565 16,459
3.772% July 2002(10) 3,676 3,639
11.625% November 2002 92,000 104,377
10.75% May 2003 7,500 8,476
5.75% August 2003 9,505 9,310
11.875% November 2003 39,350 46,445
7.25% May 2004 124,885 128,652
7.25% August 2004 7,500 7,734
7.875% November 2004 31,250 33,042
11.625% November 2004 106,175 128,239
7.50% February 2005 20,000 20,859
6.50% May 2005 4,750 4,751
6.50% October 2006 15,000 14,960
3.570% January 2007(10) 47,773 45,016
6.125% August 2007 6,815 6,645
4.75% November 2008 11,500 10,143
9.125% May 2009 18,000 19,651
10.375% November 2009 12,500 14,379
10.00% May 2010 12,500 14,332
10.375% November 2012 24,500 29,783
12.00% August 2013 10,000 13,353
8.875% August 2017 116,600 140,922
7.875% February 2021 4,250 4,751
8.125% May 2021 19,250 22,065
Strip Principal 0% 2027(9) 76,950 12,910
5.25% November 2028 1,350 1,112 9.34
-------------------
885,400 9.34
-------------------
FEDERAL AGENCY OBLIGATIONS
Mortgage Pass-Throughs - 8.05%(8)
Government National Mortgage Assn.:
6.00% 2014 - 2029 128,042 117,224
6.50% 2008 - 2029 51,222 48,279
7.00% 2008 - 2029 172,683 167,087
7.50% 2007 - 2029 63,859 63,490
8.00% 2017 - 2026 30,756 31,104
8.50% 2020 - 2029 15,975 16,483
9.00% 2009 - 2022 12,149 12,801
9.50% 2009 - 2021 8,731 9,289
10.00% 2017 - 2022 34,476 36,993
10.50% 2015 - 2019 184 199
12.00% 2015 1,968 2,207 5.33
Fannie Mae:
6.00% 2013 - 2029 41,729 39,220
6.50% 2013 - 2029 35,743 34,274
7.00% 2009 - 2029 57,681 56,230
7.255% 2026(6) 6,473 6,710
7.50% 2009 - 2029 10,649 10,598
7.50% 2029
8.00% 2023 - 2028 2,481 2,518
8.318% 2002(6) 5,301 5,278
8.50% 2009 - 2027 4,548 4,663
9.00% 2018 - 2025 2,318 2,415
9.50% 2009 - 2025 2,205 2,329
10.00% 2018 - 2025 6,687 7,161
10.50% 2012 - 2019 2,017 2,179
11.00% 2015 - 2020 2,272 2,480
11.00% 2020
11.25% 2014 21 23
11.50% 2010 - 2014 140 155
12.00% 2015 - 2029 4,580 5,101
12.00% 2019
12.50% 2015 - 2019 3,199 3,607
13.00% 2015 - 2028 7,015 7,907
15.00% 2013 31 36
Federal Housing Administration/Veterans Affairs 12.50% 2029 1,002 1,125 2.04
Freddie Mac:
6.00% 2014 - 2029 14,082 13,336
6.50% 2029 14,643 13,806
8.00% 2003 - 2026 4,489 4,524
8.25% 2007 1,295 1,311
8.50% 2002 - 2027 12,822 13,157
8.75% 2008 1,681 1,724
9.00% 2021 396 413
10.00% 2011 - 2019 127 134
10.50% 2020 1,642 1,755
10.75% 2010 54 57
11.00% 2018-2020 3,000 3,238
11.50% 2000 7 7
12.00% 2016 - 2020 5,944 6,564
12.50% 2015 - 2019 1,396 1,550
12.75% 2019 274 305
13.00% 2014 - 2015 2,040 2,291
13.50% 2018 6 7
13.75% 2014 10 11 .68
-------------------
763,355 8.05
-------------------
Other - 2.73%
Fannie Mae:
5.625% 2004 10,000 9,556
5.75% 2005 10,000 9,506
5.25% 2009 127,750 112,679
Medium Term Note, 6.75% 2028 15,000 12,884 1.53
Freddie Mac:
5.125% 2008 70,350 61,644
5.75% 2009 12,000 10,961
6.60% 2009 5,000 4,649
6.60% 2009 3,000 2,790 .84
Federal Home Loan Bank Bonds:
5.625% 2001 25,000 24,730
7.013% 2007 10,000 9,600 .36
-------------------
258,999 2.73
-------------------
Collateralized Mortgage Obligations - 0.61%(8)
Fannie Mae:
Series 91-146, Class Z, 8.00% 2006 3,225 3,265
Series 90-93, Class G, 5.50% 2020 585 556
Series 1991-2, Class Z, 6.50% 2021 10,509 10,057
Series 93-247, Class Z, 7.00% 2023 4,536 4,290
Series 1994-4, Class ZA, 6.50% 2024 4,036 3,530
Series 1997-28, Class C, 7.00% 2027 7,000 6,654
Series 1998-W5, Class B3, 6.50% 2028(2) 4,842 3,957 .34
Freddie Mac:
Series 1849, Class Z, 6.00% 2008 6,196 5,646
Series 1716, Class A, 6.50% 2009 4,750 4,538
Series 41, Class F, 10.00% 2020 2,109 2,230
Series 178, Class Z, 9.25% 2021 1,596 1,641
Series 1657, Class SA, 7.257% 2023(6) (11) 7,520 5,482
Series 1673, Class SA, 5.447% 2024(6) (11) 7,879 4,964
Series 2030, Class F, 6.963% 2028(6) 1,470 1,481 .27
-------------------
58,291 .61
-------------------
TAXABLE MUNICIPAL BONDS - 0.05%
California Maritime Infrastructure Authority, Taxable Lease Revenue 4,820 4,527 .05
Bonds (San Diego Unified Port District-South Bay Plant Acquisition),
Series 1999, 6.63% 2009(2)
-------------------
4,527 .05
-------------------
GOVERNMENT & GOVERNMENTAL BODIES (EXCLUDING
U.S. GOVERNMENT) - 7.72%
Hellenic Republic:
8.90% 2004 GRD 4900000 16,322
2.90% 2007 Y 1270000 13,091
6.95% 2008 $4,500 4,333
8.60% 2008 GRD 18295000 63,303
7.50% 2013 620,000 2,042 1.05
Bundesobligation Eurobond 5.00% 2002 P 48000 48,821
Bundesrepublik:
7.125% 2002 $12,271 13,192
6.00% 2007 5,827 6,127
Treuhandanstalt:
7.125% 2003 22,376 24,067
7.50% 2004 0 0 .97
Canadian Government:
9.00% 2004 C$ 20000 15,403
4.797% 2021(10) 10,000 8,059
4.538% 2026(10) 85,400 61,327 .89
The Japan Development Bank 6.50% 2001 Y C13664300000 46,500
Japanese Government 1.50% 2008 927,250 8,930 .59
KfW International Finance Inc. 1.00% 2004 4,750,000 46,600 .49
United Kingdom:
6.50% 2003 L 11750 19,185
8.50% 2005 12,000 21,790 .43
Polish Government:
12.00% 2001 PLZ 20000 4,649
13.00% 2001 25,000 5,871
12.00% 2002 8,375 1,947
12.00% 2003 81,000 19,220
8.50% 2004 40,000 8,552 .42
Spanish Government 6.00% 2008 P 36061 37,473 .40
French Treasury Note 4.50% 2003 28,000 27,972 .30
Norwegian Government:
6.75% 2007 NOK 90000 11,605
5.50% 2009 124,500 14,817 .28
Kingdom of Denmark 6.00% 2009 DKR 190000 26,385 .28
Hungary Government:
15.00% 2001 HUF 1440000 5,965
12.50% 2002 1,860,000 7,542
13.00% 2003 2,200,000 9,529
10.50% 2004 500,000 2,015 .26
Netherlands Government Eurobond 5.75% 2002 P C138923000 23,790 .25
Argentina (Republic of):
Series C, 0% 2001 $ 9,45 7,938
Series E, 0% 2003 5,500 3,685
Series L, 6.8125% Eurobonds 2005(6) 220 199
11.00% 2005 3,000 2,934
11.75% 2007(2) ARP 2650 2,399
11.75% 2009 $830 828
11.375% 2017 2,000 1,995
9.75% 2027 1,050 948 .22
New South Wales Treasury Corp. 8.00% 2008 A$ 26000 17,823 .19
Italian Government BTPS 6.00% Eurobond 2007 P 16204 16,768 .18
United Mexican States Government Eurobonds:
Global, 11.375% 2016 $9,015 10,224
Series A, 6.25% 2019 1,000 793
Global, 11.50% 2026 2,625 3,124 .15
Philippines (Republic of):
8.875% 2008 1,750 1,715
9.875% 2019 6,400 6,344 .09
Panama (Republic of):(6)
Interest Reduction Bond 4.25% 2014(2) 6,500 5,103
Past Due Interest Bond, 6.50% 2016(2),(3) 1,620 1,282
Past Due Interest Eurobond 6.50% 2016 270 214 .07
Mendoza (Province of) 10.00% 2007(2) 4,150 3,247 .03
Croatian Government, Series B, 6.456% 2006(6) 3,462 3,206 .03
Columbia (Republic of) 7.625% 2007 3,600 3,033 .03
Brazil (Federal Republic of), Bearer 8.00% 2014(3) 2,713 2,038 .02
Venezuela (Republic of):(6)
Front Loaded Interest Reduction Bond:
Series A, 6.875% 2007 714 561
Series B, 6.875% 2007 179 140
Eurobond 7.00% 2007 1,333 1,053 .02
MC-Cuernavaca Trust 9.25% 2001(2) 2,015 1,728 .02
New Zealand Government 4.739% 2016(10) NZ$ 3159 1,552 .02
Malaysia 8.75% 2009 $1,250 1,318 .01
Bulgaria (Republic of) Front Loaded Interest Reduction Bond, 2.75% 2012(6 1,770 1,281 .01
South Africa (Republic of) 12.00% 2005 ZAR 5100 795 .01
Peru (Republic of) Past Due Interest Eurobond 4.50% 2017(6) $750 518 .01
-------------------
731,210 7.72
-------------------
Market Percent
Value Of Net
EQUITY RELATED SECURITIES Shares (000) Assets
- ---------------------------------------------- -------- --------
STOCKS & WARRANTS - 0.61%
Omnipoint Corp. (9) 280,391 33,822 .36
Price Communications Corp. (9) 313,053 8,707 .09
Verio Inc., warrants, expire 2004 (2) (9) 48,550 7,893 .08
NTL Inc., warrants, expire 2008 (2),(5), (9) 26,362 3,478 .04
Wilshire Financial Services Group Inc. (12) 1,601,967 2,203 .02
Viatel, Inc. (9) 32,363 1,735 .02
ICG Holdings, Inc., warrants, expire 2005 (2),(5),(9) 19,800 204 .00
Globalstar Telecommunications Ltd., warrants, expire 2004 (9) 2,500 125 .00
Teletrac Holdings, Inc. warrants, expire 2004(5)(9) 194,624 19 .00
Raintree Healthcare Corp. (5)(9) 348,886 17 .00
Protection One Alarm Monitoring, Inc., warrants, expire 2005 (2),(5),(9) 54,400 14 .00
Tultex Corp., warrants, expire 2007 (5)(9) 1,867,700 0 .00
-------------------
58,217 .61
-------------------
MISCELLANEOUS
Investment securities in initial period of acquisition 33,400 .36
-------------------
TOTAL BONDS, NOTES AND EQUITY SECURITIES (cost: $9,299,058,000) 8,814,562 93.00
-------------------
Shares or Market Percent
Principle Amount Value Of Net
SHORT-TERM SECURITIES (000) (000) Assets
- ---------------------------------------------- -------- -------- --------
COMMERCIAL PAPER - 5.76%
BellSouth Telecommunications Inc.:
5.80% due 1/20/2000 $25,000 24,919
5.90% due 2/4/2000 25,000 24,857
5.90% due 2/11/2000 20,000 19,862
6.00% due 2/25/2000 24,750 24,520 .99
Citigroup Inc. (The)
4.75% due 1/3/2000 43,000 42,983
6.14% due 1/31/2000 10,000 9,947
5.95% due 2/4/2000 15,000 14,913
5.85% due 2/9/2000 25,000 24,836 .98
Bell Atlantic Network Funding Corp.:
6.35% due 1/11/2000 7,300 7,286
5.81% due 1/13/2000 25,000 24,948
5.86% due 1/24/2000 30,000 29,883
6.10% due 2/02/2000 20,000 19,888 .87
General Electric Capital Services Inc. :
6.40% due 1/21/2000 25,000 24,907
5.82% due 2/10/2000 25,000 24,832 .53
Park Avenue Receivables Corp. 5.95%-6.15% due 1/10/2000(2) 42,100 42,030 .44
Household Finance Corp.:
5.95% due 1/26/2000 25,000 24,894
6.05% due 2/3/2000 15,000 14,914 .42
Preferred Receivables Funding Corp.:(2)
6.12% due 1/12/2000 25,000 24,951
6.70% due 1/21/2000 4,054 4,038
6.25% due 1/24/2000 9,000 8,962 .40
Corporate Asset Funding Co. Inc. 6.20% due 2/16/2000(2) 37,500 37,196 .39
Gannett Co.:(2)
5.87% due 1/5/2000 10,000 9,992
5.95% due 1/24/2000 25,000 24,903 .37
Sara Lee Corp. 5.80% due 1/18/2000 25,000 24,927 .26
Procter & Gamble Co. 5.15%-5.88% due 1/28/2000 10,000 9,955 .11
-------------------
TOTAL SHORT-TERM SECURITIES (cost: $545,340,000) 545,343 5.76
-------------------
TOTAL INVESTMENT SECURITIES (cost: $9,844,398,000) 9,359,905 98.76
Excess of cash and receivables over payables 117,429 1.24
-------------------
NET ASSETS 9,477,334 100.00
======== =======
1 Step-up security; 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.
12 The fund owns 8.00% and 5.29% of the outstanding
voting 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
<S> <C> <C>
STATEMENT OF ASSETS AND LIABILITIES
at December 31,1999 (dollars in thousands)
Assets:
Investment securities at market
(Cost: $9,844,398) $9,359,905
Cash 20
Receivables for--
Sales of investments $1,517
Sales of fund's shares 14,796
Forward currency contracts-net 4,323
Dividends and accrued interest 132,324
Other 4 152,964
-------- --------
9,512,889
Liabilities:
Payables for--
Purchases of investments 4,652
Repurchases of fund's shares 24,668
Forward currency contracts-net 258
Dividends on fund's shares 123
Management services 2,658
Accrued expenses 3,196 35,555
-------- --------
Net Assets at December 31, 1999--
Equivalent to $12.98 per share
on 730,088,880 shares of $.001 par
value capital stock outstanding
(authorized capital stock--
2,500,000,000 shares) $9,477,334
==========
STATEMENT OF OPERATIONS
for the year ended December 31,1999 (dollars in thousands)
Investment Income:
Income:
Interest $717,055
Dividends 16,126 $733,181
-------- --------
Expenses:
Management services fee 30,826
Distribution expenses 23,847
Transfer agent fee 7,361
Reports to shareholders 337
Registration statement and prospectus 738
Postage, stationery and supplies 1,549
Directors' fees 67
Auditing and legal fees 64
Custodian fee 747
Taxes other than federal income tax 98
Other expenses 315 65,949
-------- --------
Net investment income 667,232
--------
Realized Loss and Unrealized
Depreciation on Investments:
Net realized loss (38,387)
Net change in unrealized (depreciation)
appreciation on:
Investments (414,726)
Open forward currency contracts 3,433
--------
Net unrealized depreciation (411,293)
--------
Net realized loss and
unrealized depreciation
on investments (449,680)
--------
Net Increase in Net Assets Resulting
from Operations $217,552
===============
STATEMENT OF CHANGES IN NET ASSETS (dollars in thousands)
Year ended
December 31,
1999 1998
-------- --------
Operations:
Net investment income $667,232 $621,853
Net realized loss on investments (38,387) 45,203
Net unrealized depreciation
on investments (411,293) (225,567)
-------- --------
Net increase in net assets
resulting from operations 217,552 441,489
-------- --------
Dividends and Distributions Paid to
Shareholders:
Dividends from net
investment income (671,007) (612,126)
Distributions from net realized gains
on investments - (92,338)
-------- --------
Total Dividends and Distributions (671,007) (704,464)
------------ ---------------
Capital Share Transactions:
Proceeds from shares sold:
186,154,681 and 219,927,964 2,473,751 3,045,786
shares, respectively
Proceeds from shares issued in
reinvestment of net investment
income dividends and distributions
of net realized gain on investments:
40,561,069 and 40,515,125 shares,
respectively 536,631 559,111
Cost of shares repurchased:
197,706,146 and 143,192,216
shares, respectively (2,620,186) (1,977,460)
-------- --------
Net increase in net assets
resulting from capital share
transactions 390,196 1,627,437
-------- --------
Total Decrease in Net Assets (63,259) 1,364,462
Net Assets:
Beginning of year 9,540,593 8,176,131
-------- --------
End of year (including
undistributed net investment
income: $3,354 and $(1,158)
respectively) $9,477,334 $9,540,593
======== ===========
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. In order to reduce administrative
costs the fund's par value was reduced on December 23, 1999.
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 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.
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 losses on dividends,
interest, sales of non-U.S. bonds and notes, forward contracts, and other
receivables and payables, on a book basis, were $2,673,000 for the year ended
December 31, 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 December 31, 1999, net unrealized depreciation on investments, excluding
forward currency contracts, for book and federal income tax purposes aggregated
$484,493,000, $214,554,000 related to appreciated securities and $699,047,000
related to depreciated securities. During the year ended December 31, 1999, the
fund realized, on a tax basis, a net capital loss of $46,674,000 on securities
transactions, of which the fund has deferred, for tax purposes, to fiscal year
ending December 31, 2000, the recognition of capital losses of $22,135,000
which were realized during the period November 1, 1999 through December 31,
1999. The fund had available at December 31, 1999 a net capital loss
carryforward totalling $24,539,000 which may be used to offset gains realized
during subsequent years through 2007 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 for capital
gains while a capital loss carryforward remains. Net gains related to non-U.S.
currency transactions of $11,720,000 were treated as an adjustment to ordinary
income for federal income tax purposes. The cost of portfolio securities,
excluding forward currency contracts, for book and federal income tax purposes
was $9,844,398,000 at December 31, 1999.
4. FEES AND TRANSACTIONS WITH RELATED PARTIES
INVESTMENT ADVISORY FEE - The fee of $30,826,000 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 provided 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 year ended December 31, 1999,
distribution expenses under the Plan were limited to $23,847,000. Had no
limitation been in effect, the fund would have paid $28,360,000 in distribution
expenses under the Plan. As of December 31, 1999, accrued and unpaid
distribution expenses were $1,588,000.
American Funds Distributors, Inc. (AFD), the principal underwriter of the
fund's shares, received $6,279,000 (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 $7,361,000.
DEFERRED DIRECTORS' FEES - Directors who are unaffiliated with CRMC may elect
to defer part or all of the fees earned for services as members of the Board.
Amounts deferred are not funded and are general unsecured liabilities of the
fund. As of December 31, 1999, aggregate deferred amounts and earnings thereon
since the deferred compensation plan's adoption (1993), net of any payments to
Directors, were $195,000.
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 $4,501,818,000 and $4,190,420,000, respectively,
during the year ended
December 31, 1999.
As of December 31, 1999, accumulated net realized loss on investments was
$46,674,000 and additional paid-in capital was $10,001,559,000. The fund
reclassified $8,287,000 of realized currency gains to undistributed net
investment income for the year ended December 31, 1999 as a result of permanent
differences between book and tax.
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 $747,000 includes $288,000 that was paid by these credits
rather than in cash.
At December 31, 1999, the fund had outstanding forward currency contracts to
sell non-U.S. currencies as follows:
<TABLE>
U.S. at
Contract Amount Valuations 12/31/1999
----------- --------- --------- ---------
<S> <C> <C> <C> <C>
Unrealized
Appreciation
Non-U.S. Currency Contracts Non-U.S. U.S. Amount (Depreciation)
Sales:
Euros expiring 1/12-6/01/2000 P 180612000 $187,361,000 $183,051,000 $4,310,000
British Pounds expiring 2/10-3/22/2 L 20889000 33,511,000 33,756,000 (245,000)
--------- --------- ---------
220,872,000 216,807,000 4,065,000
--------- --------- ---------
Buys:
Euros expiring 1/12/2000 P 18000000 18,333,333 18,333,000 0
--------- --------- ---------
18,333,333 18,333,000 0
--------- --------- ---------
$4,065,000
========
</TABLE>
<TABLE>
PER-SHARE DATA AND RATIOS
Year ended December 31
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $13.61 $14.00 $13.75 $13.88 $12.69
---------- ---------- ---------- ---------- ----------
Income from Investment Operations:
Net investment income 0.93 0.94 0.98 1.02 1.05
Net gains or losses on securities (bo (0.63) (0.24) 0.25 (0.13) 1.18
realized and unrealized) ---------- ---------- ---------- ---------- ----------
Total from investment operations 0.30 0.70 1.23 0.89 2.23
---------- ---------- ---------- ---------- ----------
Less Distributions:
Dividends (from net investment income) (0.93) (0.95) (0.98) (1.02) (1.04)
-- -- -- -- --
Distributions (from capital gains) - (0.14) - - -
---------- ---------- ---------- ---------- ----------
Total distributions (0.93) (1.09) (0.98) (1.02) (1.04)
---------- ---------- ---------- ---------- ----------
Net Asset Value, End of Year $12.98 $13.61 $14.00 $13.75 $13.88
====================== ===============================
Total Return* 2.29% 5.17% 9.24% 6.71% 18.25%
Ratios/Supplemental Data:
Net assets, end of year (in millions) $9,585 $9,541 $8,176 $7,002 $6,290
Ratio of expenses to average net asset 0.69% .66% .68% .71% .74%
Ratio of net income to average net ass 6.96 6.94% 6.95% 7.47% 7.87%
Portfolio turnover rate 46.71% 66.25% 51.96% 43.43% 43.80%
*Excludes maximum sales charge of 4.75%
</TABLE>
Independent Auditors' Report
To the Board of Directors and Shareholders of
The Bond Fund of America, Inc.:
We have audited the accompanying statement of assets and liabilities of
The Bond Fund of America, Inc. (the "fund"), including the investment
portfolio, as of December 31, 1999, and the related statement of operations for
the year then ended, the statement of changes in net assets for each of the two
years in the period then ended, and the per-share data and ratios for each of
the five years in the period then ended. These financial statements and
per-share data and ratios are the responsibility of the fund's management. Our
responsibility is to express an opinion on these financial statements and
per-share data and ratios based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
per-share data and ratios are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned at December 31, 1999, by correspondence with the custodian and brokers;
where replies were not received from brokers, we performed other auditing
procedures. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and per-share data and ratios
referred to above present fairly, in all material respects, the financial
position of The Bond Fund of America, Inc. at December 31, 1999, the results of
its operations for the year then ended, the changes in its net assets for each
of the two years in the period then ended, and the per-share data and ratios
for each of the five years in the period then ended, in conformity with
generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Los Angeles, California
January 28, 2000
Tax Information
We are required to advise you within 60 days of the fund's fiscal year-end
regarding the federal tax status of distributions received by shareholders
during such fiscal year.
CORPORATE SHAREHOLDERS MAY EXCLUDE UP TO 70% OF QUALIFYING DIVIDENDS RECEIVED
DURING THE YEAR. FOR PURPOSES OF COMPUTING THIS EXCLUSION, 1% OF THE DIVIDENDS
PAID BY THE FUND FROM NET INVESTMENT INCOME REPRESENT QUALIFYING DIVIDENDS.
Certain states may exempt from income taxation that portion of the dividends
paid from net investment income that was derived from direct U.S. Treasury
obligations. For purposes of computing this exclusion, 9% of the dividends paid
by the fund from net investment income were derived from interest on direct
U.S. Treasury obligations.
Dividends and distributions received by retirement plans such as IRAs,
Keogh-type plans and 403(b) plans need not be reported as taxable income.
However, many retirement plan trusts may need this information for their annual
information reporting.
The fund designates as a capital gain distribution a portion of earnings and
profits paid to shareholders in redemption of their shares.
SHAREHOLDERS SHOULD CONSULT THEIR TAX ADVISERS.
RESULT OF MEETING OF SHAREHOLDERS HELD NOVEMBER 22, 1999 (adjourned session
December 13, 1999)
(unaudited)
Shares Outstanding on September 7, 1999 729,293,860
Shares Voting on November 22, 1999
(proposals 1, 4 & 5) 478,661,430 (65.6%)
Shares Voting on December 13, 1999
(adjourned session - proposals 2 & 3) 489,760,357 (67.2%)
PROPOSAL 1: Election of Directors
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Percent of Percent of
Votes Shares Votes Shares
Director For Voting For Withheld Withheld
Richard G. Capen, Jr. 471,613,229 98.5% 7,048,201 1.5%
H. Frederick Christie 471,448,821 98.5 7,212,609 1.5
Don R. Conlan 471,685,494 98.5 6,975,936 1.5
Diane C. Creel 471,468,142 98.5 7,193,289 1.5
Martin Fenton 471,610,809 98.5 7,050,621 1.5
Leonard R. Fuller 471,638,085 98.5 7,023,345 1.5
Abner D. Goldstine 471,450,215 98.5 7,211,216 1.5
Paul G. Haaga, Jr. 471,666,998 98.5 6,994,432 1.5
Richard G. Newman 471,609,956 98.5 7,051,474 1.5
Frank M. Sanchez 471,428,092 98.5 7,233,338 1.5
</TABLE>
PROPOSAL 2: Amendments to Certificate of Incorporation (i) increasing the
authorized shares of capital stock, (ii) establishing a new class of common
stock and (iii) authorizing the Board to create additional series of shares
within the new class of common stock
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Percent of
Percent of Shares Percent of
Votes Shares Votes Voting Shares
For Voting For Against Against Abstentions Abstaining
(Broker Non-Votes = 78,678,468)
378,541,004 77.3% 14,622,216 3.0% 17,918,669 3.7%
</TABLE>
PROPOSAL 3: Amendment to Certificate of Incorporation reducing the par value
per share of capital stock
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Percent of
Percent of Shares Percent of
Votes Shares Votes Voting Shares
For Voting For Against Against Abstentions Abstaining
444,225,264 90.7% 22,933,856 4.7% 22,601,237 4.6%
</TABLE>
PROPOSAL 4: Changes to investment restrictions
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Percent Percent of
of Shares of Shares Percent of
Votes Voting Votes Voting Shares
For For Against Against Abstentions Abstaining
(Broker Non-Votes = 97,692,963;
same for all restrictions)
4(A) Amend the restriction
regarding diversification
and industry concentration
342,560,426 71.6% 19,046,721 4.0% 19,361,320 4.0%
4(B) Eliminate the restriction
on pledging assets
334,137,335 69.8% 25,915,386 5.4% 20,915,747 4.4%
4(C) Eliminate the restriction
regarding affiliated ownership
335,844,720 70.2% 23,248,084 4.9% 21,875,662 4.6%
4(D) Reclassify the restriction
regarding purchasing securities
of other investment companies
339,689,739 70.9% 20,025,531 4.2% 21,253,197 4.4%
</TABLE>
PROPOSAL 5: Ratification of Accountants
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Percent of
Percent of Shares Percent of
Votes Shares Votes Voting Shares
For Voting For Against Against Abstentions Abstaining
462,036,732 96.5% 4,330,532 0.9% 12,294,167 2.6%
</TABLE>
PART C
OTHER INFORMATION
THE BOND FUND OF AMERICA, INC.
(a) Previously filed (see Post-Effective Amendment No. 45 filed 1/5/00)
(b) Previously filed (see Post-Effective Amendment No. 41 filed 2/28/97)
(c) Share certificate
(d) Previously filed (see Post-Effective Amendment No. 45 filed 1/5/00)
(e) Previously filed (see Post-Effective Amendment No. 45 filed 1/5/00)
(f) None
(g) Previously filed (see Post-Effective Amendment No. 45 filed 1/5/00)
(h) None
(i) Legal Opinion for Class B Shares
(j) Consent of Independent Auditors
(k) None
(l) Previously filed (see Post-Effective Amendment No. 41 filed 2/28/97)
(m) Previously filed (see Post-Effective Amendment No. 45 filed 1/5/00)
(n) Previously filed (see Post-Effective Amendment No. 45 filed 1/5/00)
(o) None
(p) Codes of Ethics
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
None
ITEM 25. INDEMNIFICATION
Registrant is a joint-insured under Investment Advisor/Mutual fund Errors and
Omissions Policies written by American International Surplus Lines Insurance
Company, Chubb Custom Insurance Company, and ICI Mutual Insurance Company which
insures its officers and directors against certain liabilities. However, in no
event will Registrant maintain insurance to indemnify any such person for any
act for which Registrant itself is not permitted to indemnify the individual.
Article VI, Section 7 of the Articles of Incorporation of the Fund provides
that:
"(7) The Corporation shall provide any indemnification required by the laws of
Maryland and shall indemnify directors, officers, agents and employees as
follows:
ITEM 25. INDEMNIFICATION (CONTINUED)
(a) The Corporation shall indemnify any director or officer of the Corporation
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of the
Corporation) by reason of the fact that he is or was such director or officer
or an employee or agent of the corporation, or is or was serving at the request
of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgement, order, settlement, conviction or upon
a plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
(b) The Corporation shall indemnify any director or officer of the Corporation
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action or suit by or in the right of the Corporation to
procure a judgment in its favor by reason of the fact that he is or was such
director or officer or employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), actually and
reasonably incurred by him in connection with the defense or settlement of such
action or suit if he acted in defense or settlement of such action or suit if
he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Corporation, except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable for negligence or
misconduct in the performance of his duty to the Corporation unless and only to
the extent that the court in which such action or suit was brought, or any
other court having jurisdiction in the premises, shall determine upon
application that, despite the adjudication of liability but in view of all
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which such court shall deem proper.
(c) To the extent that a director or officer of the Corporation has been
successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in subparagraphs (a) or (b) above or in defense of any
claim, issue or matter therein, he shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith, without the necessity for the determination as to the
standard of conduct as provided in subparagraph (d).
ITEM 25. INDEMNIFICATION (CONTINUED)
(d) Any indemnification under subparagraph (a) or (b) (unless ordered by a
court) shall be made by the Corporation only as authorized in the specific case
upon a determination that indemnification of the director or officer is proper
in the circumstances because he has met the applicable standard of conduct set
forth in subparagraph (a) or (b). Such determination shall be made (i) by the
Board of Directors by a majority vote of a quorum consisting of directors who
were not parties to such action, suit or proceeding, or (ii) if such a quorum
is not obtainable, or, even if obtainable, such a quorum of disinterested
directors so directs, by independent legal counsel (who may be regular counsel
for the Corporation) in a written opinion; and any determination so made shall
be conclusive.
(e) Expenses incurred in defending a civil or criminal action, writ or
proceeding may be paid by the Corporation in advance of the final disposition
of such action, suit or proceeding, as authorized in the particular case, upon
receipt of an undertaking by or on behalf of the director or officer to repay
such amount unless it shall ultimately be determined that he is entitled to be
indemnified by the Corporation as authorized herein.
(f) Agents and employees of the Corporation who are not directors or officers
of the Corporation may be indemnified under the same standards and procedures
set forth above, in the discretion of the Board of Directors.
(g) Any indemnification pursuant to this paragraph shall not be deemed
exclusive of any other rights to which those indemnified may be entitled and
shall continue as to a person who has ceased to be a director or officer and
shall inure to the benefit of the heirs, executors and administrators of such a
person.
(h) Nothing in these Articles of Incorporation or in the By-Laws shall be
deemed to protect any director or officer of the Corporation against any
liability to the Corporation or to its security holders to which he would
otherwise be subject by reason of willful malfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his
office."
Subsection (b) of Section 2-418 of the General Corporation Law of Maryland
empowers a corporation to indemnify any person who was or is party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the
corporation or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation or enterprise,
against reasonable expenses (including attorneys' fees), judgments, penalties,
fines and amounts paid in settlement actually incurred by him in connection
with such action, suit or proceeding unless it is proved that: (i) the act or
omission of the person was material to the cause of action adjudicated in the
proceeding and was committed in bad faith or was the result of active and
deliberate dishonesty; (ii) the person actually received an improper personal
benefit of money, property or services; or (iii) with respect to any criminal
action or proceeding, the person had reasonable cause to believe his act or
omission was unlawful.
ITEM 25. INDEMNIFICATION (CONTINUED)
Indemnification under subsection (b) of Section 2-418 may not be made by a
corporation unless authorized for a specific proceeding after a determination
has been made that indemnification is permissible in the circumstances because
the party to be indemnified has met the standard of conduct set forth in
subsection (b). This determination shall be made (i) by the Board of Directors
by a majority vote of a quorum consisting of directors not, at the time,
parties to the proceeding, or, if such quorum cannot be obtained, then by a
majority vote of a committee of the Board consisting solely of two or more
directors not, at the time, parties to such proceeding and who were duly
designated to act in the matter by a majority vote of the full Board in which
the designated directors who are parties may participate; (ii) by special legal
counsel selected by the Board of Directors of a committee of the Board by vote
as set forth in subparagraph (i), or, if the requisite quorum of the full Board
cannot be obtained therefor and the committee cannot be established, by a
majority vote of the full Board in which any director who is a party may
participate; or (iii) by the stockholders (except that shares held by any party
to the specific proceeding may not be voted). A court of appropriate
jurisdiction may also order indemnification if the court determines that a
person seeking indemnification is entitled to reimbursement under subsection
(b).
Section 2-418 further provides that indemnification provided for by Section
2-418 shall not be deemed exclusive of any rights to which the indemnified
party may be entitled; that the scope of indemnification extends to directors,
officers, employees or agents of a constituent corporation absorbed in a
consolidation or merger and persons serving in that capacity at the request of
the constituent corporation for another; and empowers the corporation to
purchase and maintain insurance on behalf of a director, officer, employee or
agent of the corporation against any liability asserted against or incurred by
such person in any such capacity or arising out of such person's status as such
whether or not the corporation would have the power to indemnify such person
against such liabilities under Section 2-418.
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
None
ITEM 27. PRINCIPAL UNDERWRITERS
(a) American Funds Distributors, Inc. is also the Principal Underwriter of
shares of: AMCAP Fund, Inc., American Balanced Fund, Inc., The American Funds
Income Series, The American Funds Tax-Exempt Series I, The American Funds
Tax-Exempt Series II, American High-Income Municipal Bond Fund, Inc., American
High-Income Trust, American Mutual Fund, Inc., The Capital Income Builder,
Inc., Capital World Bond Fund, Inc., Capital World Growth and Income Fund,
Inc., The Cash Management Trust of America, EuroPacific Growth Fund,
Fundamental Investors, Inc., The Growth Fund of America, Inc., The Income Fund
of America, Inc., The Investment Company of America, Intermediate Bond Fund of
America, Limited Term Tax-Exempt Bond Fund of America, The New Economy Fund,
New Perspective Fund, Inc., New World Fund, Inc., SMALLCAP World Fund, Inc.,
The Tax-Exempt Bond Fund of America, Inc., The Tax-Exempt Money Fund of
America, U.S. Treasury Money Fund of America and Washington Mutual Investors
Fund, Inc.
<TABLE>
<CAPTION>
(B) (1) (2) (3)
NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS AND OFFICES
BUSINESS ADDRESS WITH UNDERWRITER WITH REGISTRANT
<S> <C> <C> <C>
David L. Abzug Regional Vice President None
27304 Park Vista Road
Agoura Hills, CA 91301
John A. Agar Vice President None
#61 Point West Circle
Little Rock, AR 72211
Robert B. Aprison Vice President None
2983 Bryn Wood Drive
Madison, WI 53711
L William W. Bagnard Vice President None
Steven L. Barnes Senior Vice President None
5400 Mount Meeker Road
Suite 1
Boulder, CO 80301-3508
B Carl R. Bauer Assistant Vice President None
Michelle A. Bergeron Senior Vice President None
4160 Gateswalk Drive
Smyrna, GA 30080
J. Walter Best, Jr. Regional Vice President None
9013 Brentmeade Blvd.
Brentwood, TN 37027
Joseph T. Blair Senior Vice President None
148 E. Shore Ave.
Groton Long Point, CT 06340
John A. Blanchard Vice President None
6421 Aberdeen Road
Mission Hills, KS 66208
Ian B. Bodell Senior Vice President None
P.O. Box 1665
Brentwood, TN 37024-1665
Mick L. Brethower Senior Vice President None
29003 Colonial Drive
Georgetown, TX 78628
Alan Brown Regional Vice President None
4129 Laclede Avenue
St. Louis, MO 63108
B J. Peter Burns Vice President None
Brian C. Casey Regional Vice President None
8002 Greentree Road
Bethesda, MD 20817
Victor C. Cassato Senior Vice President None
609 W. Littleton Blvd., Suite 310
Greenwood Village, CO 80120
Christopher J. Cassin Senior Vice President None
19 North Grant Street
Hinsdale, IL 60521
Denise M. Cassin Vice President None
1301 Stoney Creek Drive
San Ramon, CA 94538
L Larry P. Clemmensen Director None
L Kevin G. Clifford Director, President and Co-Chief None
Executive Officer
Ruth M. Collier Senior Vice President None
29 Landsdowne Drive
Larchmont, NY 10538
S David Coolbaugh Assistant Vice President None
H Carlo O. Cordasco Assistant Vice President None
Thomas E. Cournoyer Vice President None
2333 Granada Boulevard
Coral Gables, FL 33134
Douglas A. Critchell Senior Vice President None
3521 Rittenhouse Street, N.W.
Washington, D.C. 20015
L Carl D. Cutting Vice President None
William Daugherty Regional Vice President None
1216 Highlander Way
Mechanicsburg, PA 17055
Daniel J. Delianedis Regional Vice President None
8689 Braxton Drive
Eden Prairie, MN 55347
Michael A. Dilella Vice President None
P. O. Box 661
Ramsey, NJ 07446
G. Michael Dill Senior Vice President None
505 E. Main Street
Jenks, OK 74037
Kirk D. Dodge Senior Vice President None
633 Menlo Avenue, Suite 210
Menlo Park, CA 94025
Peter J. Doran Director, Executive Vice None
President
100 Merrick Road, Suite 216W
Rockville Centre, NY 11570
L Michael J. Downer Secretary Vice President
Robert W. Durbin Vice President None
74 Sunny Lane
Tiffin, OH 44883
I Lloyd G. Edwards Senior Vice President None
L Paul H. Fieberg Senior Vice President None
John Fodor Vice President None
15 Latisquama Road
Southborough, MA 01772
Daniel B. Frick Regional Vice President None
845 Western Avenue
Glen Ellyn, IL 60137
Clyde E. Gardner Senior Vice President None
Route 2, Box 3162
Osage Beach, MO 65065
B Evelyn K. Glassford Vice President None
Jeffrey J. Greiner Vice President None
12210 Taylor Road
Plain City, OH 43064
L Paul G. Haaga, Jr. Director Chairman and Director
B Mariellen Hamann Assistant Vice President None
David E. Harper Senior Vice President None
150 Old Franklin School Road
Pittstown, NJ 08867
H Mary Pat Harris Assistant Vice President None
Ronald R. Hulsey Vice President None
6744 Avalon
Dallas, TX 75214
Robert S. Irish Regional Vice President None
1225 Vista Del Mar Drive
Delray Beach, FL 33483
Michael J. Johnston Director None
630 Fifth Avenue, 36th Floor
New York, NY 10111
B Damien M. Jordan Vice President None
Arthur J. Levine Senior Vice President None
12558 Highlands Place
Fishers, IN 46038
B Karl A. Lewis Assistant Vice President None
T. Blake Liberty Regional Vice President None
5506 East Mineral Lane
Littleton, CO 80122
Mark J. Lien Regional Vice President None
5570 Beechwood Terrace
West Des Moines, IA 50266
L Lorin E. Liesy Assistant Vice President None
L Susan G. Lindgren Vice President - None
Institutional
Investment Services
LW Robert W. Lovelace Director None
Stephen A. Malbasa Vice President None
13405 Lake Shore Blvd.
Cleveland, OH 44110
Steven M. Markel Senior Vice President None
5241 South Race Street
Littleton, CO 80121
L J. Clifton Massar Director, Senior Vice None
President
L E. Lee McClennahan Senior Vice President None
S John V. McLaughlin Senior Vice President None
Terry W. McNabb Vice President None
2002 Barrett Station Road
St. Louis, MO 63131
L R. William Melinat Vice President - None
Institutional
Investment Services
David R. Murray Vice President None
60 Briant Drive
Sudbury, MA 01776
Stephen S. Nelson Vice President None
P.O. Box 470528
Charlotte, NC 28247-0528
William E. Noe Regional Vice President None
304 River Oaks Road
Brentwood, TN 37027
Peter A. Nyhus Vice President None
3084 Wilds Ridge Court
Prior Lake, MN 55372
Eric P. Olson Vice President None
62 Park Drive
Glenview, IL 60025
Gary A. Peace Regional Vice President None
291 Kaanapali Drive
Napa, CA 94558
Samuel W. Perry Regional Vice President None
6133 Calle del Paisano
Scottsdale, AZ 85251
Fredric Phillips Senior Vice President None
175 Highland Avenue, 4th Floor
Needham, MA 02494
B Candance D. Pilgrim Assistant Vice President None
Carl S. Platou Vice President None
7455 80th Place, S.E.
Mercer Island, WA 98040
L John O. Post Senior Vice President None
S Richard P. Prior Vice President None
Steven J. Reitman Senior Vice President None
212 The Lane
Hinsdale, IL 60521
Brian A. Roberts Vice President None
244 Lambeau Lane
Glenville, NC 28736
George S. Ross Senior Vice President None
55 Madison Avenue
Morristown, NJ 07960
L Julie D. Roth Vice President None
L James F. Rothenberg Director None
Douglas F. Rowe Vice President None
414 Logan Ranch Road
Georgetown, TX 78628
Christopher S. Rowey Regional Vice President None
9417 Beverlywood Street
Los Angeles, CA 90034
Dean B. Rydquist Senior Vice President None
1080 Bay Pointe Crossing
Alpharetta, GA 30005
Richard R. Samson Senior Vice President None
4604 Glencoe Avenue, #4
Marina del Rey, CA 90292
Joseph D. Scarpitti Vice President None
31465 St. Andrews
Westlake, OH 44145
L R. Michael Shanahan Director None
Brad W. Short Regional Vice President None
306 15th Street
Seal Beach, CA 90740
David W. Short Chairman of the Board and None
1000 RIDC Plaza, Suite 212 Co-Chief Executive Officer
Pittsburgh, PA 15238
William P. Simon Senior Vice President None
912 Castlehill Lane
Devon, PA 19333
L John C. Smith Assistant Vice President - None
Institutional Investment
Services
Rodney G. Smith Vice President None
100 N. Central Expressway
Suite 1214
Richardson, TX 75080
S Sherrie L. Snyder-Senft Assistant Vice President None
Anthony L. Soave Regional Vice President None
8831 Morning Mist Drive
Clarkston, MI 48348
Therese L. Souiller Assistant Vice President None
2652 Excaliber Court
Virginia Beach, VA 23454
Nicholas D. Spadaccini Regional Vice President None
855 Markley Woods Way
Cincinnati, OH 45230
L Kristen J. Spazafumo Assistant Vice President None
Daniel S. Spradling Senior Vice President None
181 Second Avenue
Suite 228
San Mateo, CA 94401
LW Eric H. Stern Director None
B Max D. Stites Vice President None
Thomas A. Stout Regional Vice President None
1004 Ditchley Road
Virginia Beach, VA 23451
Craig R. Strauser Vice President None
3 Dover Way
Lake Oswego, OR 97034
Francis N. Strazzeri Senior Vice President None
31641 Saddletree Drive
Westlake Village, CA 91361
L Drew W. Taylor Assistant Vice President None
S James P. Toomey Vice President None
I Christopher E. Trede Vice President None
George F. Truesdail Vice President None
400 Abbotsford Court
Charlotte, NC 28270
Scott W. Ursin-Smith Vice President None
60 Reedland Woods Way
Tiburon, CA 94920
J. David Viale Regional Vice President None
7 Gladstone Lane
Laguna Niguel, CA 92677
Thomas E. Warren Regional Vice President None
119 Faubel Street
Sarasota, FL 34242
L J. Kelly Webb Senior Vice President, None
Treasurer and Controller
Gregory J. Weimer Vice President None
206 Hardwood Drive
Venetia, PA 15367
B Timothy W. Weiss Director None
George J. Wenzel Regional Vice President None
3406 Shakespeare Drive
Troy, MI 48084
J. D. Wiedmaier Assistant Vice President None
3513 Riverstone Way
Chesapeake, VA 23325
Timothy J. Wilson Vice President None
113 Farmview Place
Venetia, PA 15367
B Laura L. Wimberly Vice President None
H Marshall D. Wingo Director, Senior Vice None
President
L Robert L. Winston Director, Senior Vice None
President
William R. Yost Vice President None
9320 Overlook Trail
Eden Prairie, MN 55347
Janet M. Young Regional Vice President None
1616 Vermont
Houston, TX 77006
Scott D. Zambon Regional Vice President None
2887 Player Lane
Tustin Ranch, CA 92782
</TABLE>
__________
L Business Address, 333 South Hope Street, Los Angeles, CA 90071
LW Business Address, 11100 Santa Monica Boulevard, 15th Floor, Los Angeles, CA
90025
B Business Address, 135 South State College Boulevard, Brea, CA 92821
S Business Address, 3500 Wiseman Boulevard, San Antonio, TX 78251
H Business Address, 5300 Robin Hood Road, Norfolk, VA 23513
I Business Address, 8332 Woodfield Crossing Blvd., Indianapolis, IN 46240
(c) None
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS
Accounts, books and other records required by Rules 31a-1 and 31a-2 under the
Investment Company Act of 1940, as amended, are maintained and held in the
offices of its investment adviser, Capital Research and Management Company, 333
South Hope Street, Los Angeles, California 90071, and/or 135 South State
College Boulevard, Brea, California 92821.
Registrant's records covering shareholder accounts are maintained and kept by
its transfer agent, American Funds Service Company, 135 South State College
Boulevard, Brea, California 92821, 8332 Woodfield Crossing Boulevard,
Indianapolis, IN 46240, 3500 Wiseman Boulevard, San Antonio, Texas 78251 and
5300 Robin Hood Road, Norfolk, VA 23513.
Registrant's records covering portfolio transactions are maintained and kept
by its custodian, The Chase Manhattan Bank, One Chase Manhattan Plaza, New
York, New York 10081.
ITEM 29. MANAGEMENT SERVICES
None
ITEM 30. UNDERTAKINGS
n/a
SIGNATURE OF REGISTRANT
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant certifies that it meets all of the
requirements for effectiveness of this Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933 and has duly caused this amended
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Los Angeles, and State of California, on the
7/th/ day of March, 2000.
THE BOND FUND OF AMERICA, INC.
By /s/ Paul G. Haaga, Jr.
(Paul G. Haaga, Jr., Chairman of the Board)
Pursuant to the requirements of the Securities Act of 1933, this amendment to
registration statement has been signed below on March 7, 2000, by the following
persons in the capacities indicated.
<TABLE>
<CAPTION>
<S> <C> <C>
SIGNATURE TITLE
(1) Principal Executive Officer:
/s/ Abner D. Goldstine President and Director
(Abner D. Goldstine)
(2) Principal Financial Officer and Principal Accounting Officer:
/s/ Anthony W. Hynes, Jr. Treasurer
(Anthony W. Hynes, Jr.)
(3) Directors:
Richard G. Capen, Jr.* Trustee
H. Frederick Christie* Trustee
Don R. Conlan* Trustee
Diane C. Creel* Trustee
Martin Fenton* Trustee
Leonard R. Fuller* Trustee
/s/ Abner D. Goldstine President and Director
(Abner D. Goldstine)
/s/ Paul G. Haaga, Jr. Chairman and Director
(Paul G. Haaga, Jr.)
Richard G. Newman* Director
Frank M. Sanchez* Director
</TABLE>
*By /s/ Julie F. Williams
Julie F. Williams, Attorney-in-Fact
Counsel represents that this amendment does not contain disclosures that
would make the amendment ineligible for effectiveness under the provisions of
rule 485(b).
/s/ Michael J. Downer
(Michael J. Downer)
NUMBER (certificate number)
SHARES (number of shares)
CUSIP (cusip number)
CLASS (class of shares)
THE BOND FUND OF AMERICA, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND
This Certifies that (shareholder name and address) is the owner of (number of
shares) fully paid and nonassessable Common Shares of Capital Stock, of the
Class and number indicated above, of The Bond Fund of America, Inc., each of
the par value of One Tenth of One Cent, transferable on the books of the
Corporation by the holder thereof in person or by duly authorized attorney upon
surrender of this certificate properly endorsed. This certificate is not valid
unless countersigned by the Transfer Agent. (See reverse for certain
abbreviations.)
Witness, the facsimile signatures of duly authorized officers of the
Corporation.
Dated: (date issued)
S/Julie F. Williams
Secretary
S/Abner D. Goldstine
President
Countersigned
AMERICAN FUNDS SERVICE COMPANY
TRANSFER AGENT
BY ___________________
AUTHORIZED SIGNATURE
THE ISSUER OF THE SHARES REPRESENTED BY THIS CERTIFICATE WILL FURNISH TO ANY
SHAREHOLDER UPON REQUEST AND WITHOUT CHARGE A FULL STATEMENT OF THE
DESIGNATIONS, PREFERENCES, LIMITATIONS AND RELATIVE RIGHTS OF THE SHARES OF
EACH CLASS AND SERIES AUTHORIZED TO BE ISSUED, THE VARIATIONS IN THE RELATIVE
RIGHTS AND PREFERENCES BETWEEN THE SHARES OF EACH CLASS AND SERIES INSOFAR AS
THE SAME HAVE BEEN FIXED AND DETERMINED, AND THE AUTHORITY OF THE BOARD OF
DIRECTORS OR TRUSTEES TO FIX AND DETERMINE THE RELATIVE RIGHTS AND PREFERENCES
OF CLASSES AND SERIES OF SHARES OF THE ISSUER. IF YOU WOULD LIKE A COPY OF THE
FULL STATEMENT, PLEASE WRITE TO THE SECRETARY OF THE ISSUER OR ITS TRANSFER
AGENT.
CLASS B AND SERIES B SHARES REDEEMED WITHIN SIX YEARS OF THEIR PURCHASE ARE
SUBJECT TO A DEFERRED SALES CHARGE OF UP TO 5%. IN ADDITION, DURING THE MONTH
FOLLOWING THE 96-MONTH PERIOD THAT BEGINS ON THE FIRST DAY OF THE MONTH IN
WHICH SUCH SHARES ARE PURCHASED, CLASS B AND SERIES B SHARES (ALONG WITH SHARES
OF THE SAME CLASS AND SERIES PURCHASED THROUGH REINVESTMENT OF DIVIDENDS AND
OTHER DISTRIBUTIONS ON SUCH SHARES) WILL AUTOMATICALLY CONVERT TO CLASS A
SHARES (OR COMMON SHARES) ON THE BASIS OF THEN CURRENT RELATIVE NET ASSET
VALUES PER SHARE. THE ISSUER MAY SUSPEND SUCH CONVERSION IN CERTAIN LIMITED
CIRCUMSTANCES, IN WHICH CASE AN EXCHANGE PRIVILEGE WILL APPLY. THE ISSUER MAY
REQUIRE TENDER OF THIS CERTIFICATE PRIOR TO ANY CONVERSION OR EXCHANGE. IF
SUCH TENDER IS NOT REQUIRED, THE NUMBER OF SHARES REPRESENTED BY THIS
CERTIFICATE AFTER SUCH CONVERSION OR EXCHANGE WILL BE DIFFERENT THAN THE NUMBER
INDICATED ON THE FACE OF THIS CERTIFICATE. SHAREHOLDERS MAY RETURN THIS
CERTIFICATE AFTER ANY CONVERSION OR EXCHANGE AND OBTAIN A NEW CERTIFICATE (OR
CERTIFICATES) REPRESENTING THE ACTUAL NUMBER AND TYPE OF SHARES OWNED.
NOTE: SHARES REPRESENTED BY THIS CERTIFICATE MAY BE REDEEMED WITHOUT THE
CONSENT OR APPROVAL OF THE SHAREHOLDER FOR THE THEN CURRENT NET ASSET VALUE PER
SHARE IF AT SUCH TIME THE SHAREHOLDER OWNS OF RECORD SHARES HAVING AN AGGREGATE
NET ASSET VALUE OF LESS THAN THE MINIMUM INITIAL INVESTMENT AMOUNT.
EXPLANATION OF ABBREVIATIONS
The following abbreviations, when used in the registration on the face of this
certificate, shall have the meanings assigned below:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ADM - Administratrix FBO - For the TTEE - Trustee
benefit
of
Administrator GDN - Guardian U/A - Under
agreement
COM - Community JT TEN - Joint UGMA/ - Uniform
PROP property tenants (State) Gift
with to Minors
right Act
of in
CUST - Custodian survivorship effect in
the
state
indicated
DTD - Dated LIFE TEN - Life UTMA/ - Uniform
tenant (State) Transfers
to
Minors Act
EST - Estate (State)/TOD - Uniform in effect
Transfer in
on the state
Death indicated
Of the estate Act in U/W - Last will
of effect and
in testament
the
state
ET - And others indicated Under last
AL will and
testament
of
EXEC - Executor TR - Trust Under the
will of
Executrix TEN COM - Tenants
in common
TEN ENT - Tenants
by the
entireties
Note: Abbreviations refer where appropriate to the
singular or plural, male
or female. Other abbreviations may also be used,
including U.S. Postal
Service two-letter state abbreviations.
</TABLE>
REQUIREMENTS: THE SIGNATURE(S) ON THIS ASSIGNMENT MUST CORRESPOND EXACTLY WITH
THE NAME(S) WRITTEN ON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR.
SIGNATURE(S) MUST BE GUARANTEED BY AN "ELIGIBLE GUARANTOR," SUCH AS A BANK,
SAVINGS ASSOCIATION OR CREDIT UNION THAT IS FEDERALLY INSURED OR A MEMBER FIRM
OF THE NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC. A NOTARY PUBLIC IS NOT
AN ACCEPTABLE GUARANTOR.
FOR VALUE RECEIVED, THE UNDERSIGNED HEREBY SELL, ASSIGN, AND TRANSFER
SHARES OF THE ISSUER REPRESENTED BY THIS
CERTIFICATE TO:
_______________________________________________________________________________
(PLEASE PRINT OR TYPE NAME AND ADDRESS OF ASSIGNEE)
AND DO HEREBY IRREVOCABLY CONSTITUTE AND APPOINT
_____________________________________________________ ATTORNEY TO TRANSFER
THESE SHARES ON THE BOOKS OF THE ISSUER WITH FULL POWER OF
SUBSTITUTION._________________________________________________________________
__________________________ _______________________________
Signature of owner Date
______________________________________________________________________________
_____________ _______________________________ Signature of
co-owner, if any Date
IMPORTANT: BEFORE SIGNING, PLEASE READ AND COMPLY WITH THE REQUIREMENTS
PRINTED ABOVE.
SIGNATURE(S) GUARANTEED BY:
______________________________________________________________________
PAUL, HASTINGS, JANOFSKY & WALKER LLP
555 South Flower Street
Los Angeles, California 90071
(213) 683-6000
March 7, 2000
The Bond Fund of America, Inc.
333 South Hope Street
Los Angeles, CA 90071
Ladies and Gentlemen:
We have acted as counsel to the Bond Fund of America, Inc., a Maryland
corporation (the "Fund") in connection with Post-Effective Amendment No. 46 to
the Fund's Registration Statement on Form N-1A (Registration No. 2-50700) filed
with the Securities and Exchange Commission under the Securities Act of 1933,
as amended (the "Registration Statement"), relating to the issuance by the Fund
of an indefinite number of Class B shares of common stock of the Fund (the
"Shares").
In our capacity as counsel for the Fund, we have examined the Articles of
Incorporation of the Fund dated December 3, 1973, as amended, the bylaws of the
Fund, as amended, and originals or copies of actions of the Board of Directors
of the Fund, as furnished to us by the Fund, certificates of public officials,
and such other documents, records and certificates as we have deemed necessary
for the purposes of this opinion.
Our opinion below is limited to the federal law of the United States of
America and the Maryland General Corporation Law. We are not licensed to
practice law in the State of Maryland, and we have based our opinion solely on
our review of the Maryland General Corporation Law and the case law
interpreting such Law as reported in the Annotated Laws of Maryland (Aspen Law
& Business, supp. 1999). We have not undertaken a review of other Maryland law
or of any administrative or court decisions in connection with rendering this
opinion. We disclaim any opinion as to any law other than as described above,
and we disclaim any opinion as to any statute, rule, regulation, ordinance,
order or other promulgation of any regional or local governmental authority.
Based on the foregoing and our examination of such questions of law as we
have deemed necessary and appropriate for the purpose of this opinion, we are
of the opinion that the Shares of the Fund are duly authorized and, when
purchased and paid for as described in the Registration Statement, will be
validly issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion of counsel as an exhibit to
the Registration Statement.
Very truly yours,
s/ PAUL, HASTINGS, JANOFSKY & WALKER LLP
INDEPENDENT AUDITORS' CONSENT
The Bond Fund of America, Inc.:
We consent to (a) the use in this Post-Effective Amendment No. 46 to
Registration Statement No. 2-50700 on Form N-1A of our report dated January 28,
2000 appearing in the Financial Statements, which are included in Part B, the
Statement of Additional Information of such Registration Statement, (b) the
references to us under the heading "General Information" in such Statement of
Additional Information and (c) the reference to us under the heading "Financial
Highlights" in the Prospectus, which is a part of such Registration Statement.
DELOITTE & TOUCHE LLP
Los Angeles, California
March 6, 2000
CODE OF CONDUCT
All of us within the Capital organization are responsible for maintaining the
very highest ethical standards when conducting business. In keeping with these
standards, we must never allow our own interests to be placed ahead of our
shareholders' and clients' interests.
Over the years we have earned a reputation for the highest integrity.
Regardless of lesser standards that may be followed through business or
community custom, we must observe exemplary standards of honesty and integrity.
REPORTING VIOLATIONS
If you know of any violation of our Code of Conduct, you have a responsibility
to report it. Deviations from controls or procedures that safeguard the
company, including the assets of shareholders and clients, should also be
reported.
You can report confidentially to:
- - Your manager or department head
- - CGC Audit Committee:
Wally Stern -- Chairman
Donnalisa Barnum
David Beevers
Jim Brown
Larry P. Clemmensen
Roberta Conroy
Bill Hurt -- (emeritus)
Sonny Kamm
Mike Kerr
Victor Kohn
John McLaughlin
Don O'Neal
Tom Rowland
John Smet
Antonio Vegezzi
Shaw Wagener
Kelly Webb
- - Mike Downer or any other lawyer in the CGC Legal Group
- - Don Wolfe of Deloitte & Touche LLP (CGC's auditors).
CGC GIFTS POLICY -- CONFLICTS OF INTEREST
A conflict of interest occurs when the private interests of associates
interfere or could potentially interfere with their responsibilities at work.
Associates must not place themselves or the company in a position of actual or
potential conflict. Associates may not accept gifts worth more than $100,
excessive business entertainment, loans, or anything else involving personal
gain from those who conduct business with the company. In addition, a business
entertainment event exceeding $200 in value should not be accepted unless the
associate receives permission from the Gifts Policy Committee.
REPORTING -- Although the limitations on accepting gifts applies to ALL
associates as described above, some associates will be asked to fill out
quarterly reports. If you receive a reporting form, you must report any gift
exceeding $50 (although it is recommended that you report ALL gifts received)
and business entertainment in which an event exceeds $75.
GIFTS POLICY COMMITTEE
The Gifts Policy Committee oversees administration of and compliance with the
Policy.
INSIDER TRADING
Antifraud provisions of the federal securities laws generally prohibit persons
while in possession of material nonpublic information from trading on or
communicating the information to others. Sanctions for violations can include
civil injunctions, permanent bars from the securities industry, civil penalties
up to three times the profits made or losses avoided, criminal fines and jail
sentences.
While investment research analysts are most likely to come in contact with
material nonpublic information, the rules (and sanctions) in this area apply to
all CGC associates and extend to activities both within and outside each
associate's duties.
PERSONAL INVESTING POLICY
As an associate of the Capital Group companies, you may have access to
confidential information. This places you in a position of special trust.
You are associated with a group of companies that is responsible for the
management of many billions of dollars belonging to mutual fund shareholders
and other clients. The law, ethics and our own policy place a heavy burden on
all of us to ensure that the highest standards of honesty and integrity are
maintained at all times.
There are several rules that must be followed to avoid possible conflicts of
interest in personal securities transactions.
ALL ASSOCIATES
Information regarding proposed or partially completed plans by CGC companies to
buy or sell specific securities must not be divulged to outsiders.
Favors or preferential treatment from stockbrokers may not be accepted.
Associates may not subscribe to ANY initial public offering (IPO). Generally,
this prohibition applies to spouses of associates and any family member
residing in the same household. However, an associate may request that the
Personal Investing Committee consider granting an exception under special
circumstances.
COVERED PERSONS
Associates who have access to investment information in connection with their
regular duties are generally considered "covered persons." If you receive a
quarterly personal securities transactions report form, you are a covered
person. You should take the time to review this policy, as ongoing
interpretations of the policy will be explained therein.
Covered persons must conduct their personal securities transactions in such a
way that they do not conflict with the interests of the funds and client
accounts. This policy also includes securities transactions of family members
living in the covered person's household and any trust or custodianship for
which the associate is trustee or custodian. A conflict may occur if you, a
family member in the same household, a trust or custodianship for which you are
trustee or custodian have a transaction in a security when the funds or client
accounts are considering or concluding a transaction in the same security.
Additional rules apply to "investment personnel" including portfolio
counselors/managers, research analysts, traders, portfolio control associates,
and investment administration personnel (see below).
PRE-CLEARANCE OF SECURITIES TRANSACTIONS
Before buying or selling securities, covered persons must check with the CGC
Legal Group based in LAO. (You will generally receive a response within one
business day.) Unless a shorter period is specified, clearance is good for two
trading days (including the day you check). If you have not executed your
transaction within this period, you must again pre-clear your transaction.
Covered persons must PROMPTLY submit quarterly reports of certain transactions.
Transactions of securities (including fixed-income securities) or options (see
below) must be pre-cleared as described above and reported except for: open-end
investment companies (mutual funds); money market instruments with maturities
of one year or less; direct obligations of the U.S. Government, bankers'
acceptances, CDs or other commercial paper; commodities; and options or futures
on broad-based indices. Covered persons must also report transactions made by
family members in their household and by those for which they are a trustee or
custodian.. NOTE THAT INVESTMENTS IN PRIVATE PLACEMENTS AND VENTURE CAPITAL
PARTNERSHIPS ARE ALSO SUBJECT TO PRECLEARANCE AND REPORTING. Reporting forms
will be supplied at the appropriate times AND MUST BE SUBMITTED BY THE DATE
INDICATED ON THE FORM
In addition, the following transactions must be reported but need not have been
pre-cleared: gifts or bequests (either receiving or giving) of securities MUST
be reported (sales of securities received as a gift MUST be both precleared and
reported); transactions in debt instruments rated "A" or above by at least one
national rating service; sales pursuant to tender offers; and dividend
reinvestment plan purchases (provided the purchase pursuant to such plan is
made with dividend proceeds only).
PERSONAL INVESTING SHOULD BE VIEWED AS A PRIVILEGE, NOT A RIGHT. AS SUCH,
LIMITATIONS MAY BE PLACED ON THE NUMBER OF PRE-CLEARANCES AND/OR TRANSACTIONS
AS DEEMED APPROPRIATE BY THE PERSONAL INVESTING COMMITTEE.
BROKERAGE ACCOUNTS
Covered persons should inform their stockbrokers that they are employed by an
investment adviser, trust company or affiliate of either. U.S. brokers are
subject to certain rules designed to prevent favoritism toward such accounts.
Associates may not accept negotiated commission rates which they believe may be
more favorable than the broker grants to accounts with similar characteristics.
In addition, covered persons must direct their brokers to send duplicate
confirmations and copies of all periodic statements on a timely basis to The
Legal Group of The Capital Group Companies, Inc. ALL DOCUMENTS RECEIVED ARE
KEPT STRICTLY CONFIDENTIAL.
[If extraneous information is included on an associate's statements (E.G.,
checking account information or other information that is not subject to the
policy), the associate might want to establish a separate account solely for
transactions subject to the policy.]
ANNUAL DISCLOSURE OF PERSONAL SECURITIES HOLDINGS
Covered persons will be required to disclose all personal securities holdings
upon commencement of employment (or upon becoming a covered person) and
thereafter on an annual basis. Reporting forms will be supplied for this
purpose.
ANNUAL RECERTIFICATION
All access persons will be required to certify annually that they have read and
understood the Personal Investing Policy and recognize that they are subject
thereto.
ADDITIONAL RULES FOR INVESTMENT PERSONNEL
DISCLOSURE OF OWNERSHIP OF RECOMMENDED SECURITIES -- Ownership of securities
that are held professionally as well as personally will be reviewed on a
periodic basis by the Legal Group and may also be reviewed by the applicable
Management Committee and/or Investment Committee or Subcommittee. In addition,
to the extent that disclosure has not already been made by the Legal Group to
the applicable Management Committee and/or Investment Committee or
Subcommittee, any associate who is in a position to recommend the purchase or
sale of securities by the fund or client accounts that s/he personally owns
should FIRST disclose such ownership either in writing (in a company write-up)
or orally (when discussing the company at investment meetings) prior to making
a recommendation.
BLACKOUT PERIOD <UNDEF> Investment personnel may not buy or sell a security
within at least seven calendar days before and after A FUND OR CLIENT ACCOUNT
THAT HIS OR HER COMPANY MANAGES transacts in that security. Profits resulting
from transactions occurring within this time period are subject to special
review and may be subject to disgorgement.
BAN ON SHORT-TERM TRADING PROFITS -- Investment personnel are prohibited from
profiting from the purchase and sale or sale and purchase of the same (or
equivalent) securities within 60 days. THIS RESTRICTION APPLIES TO THE
PURCHASE OF AN OPTION AND THE EXERCISE OF THE OPTION WITHIN 60 DAYS.
SERVICE AS A DIRECTOR -- Investment personnel must obtain prior authorization
of the investment committee of the appropriate management company or CGC
Management Committee BEFORE SERVING ON THE BOARD OF DIRECTORS OF PUBLICLY
TRADED COMPANIES. This can be arranged by calling the LAO Legal Group.
PERSONAL INVESTING COMMITTEE
Any questions or hardships that result from these policies or requests for
exceptions should be referred to CGC's Personal Investing Committee by calling
the LAO Legal Group.
/1/Note that this disclosure requirement is consistent with both AIMR standards
as well as the ICI Advisory Group Guidelines.
FORM OF FUND CODE OF ETHICS
(as adopted by the Fund's Board of Directors/Trustees)
1. No Director/Trustee shall use his or her position or the knowledge gained
therefrom as to create a conflict between his or her personal interest and that
of the Fund. No Director/Trustee shall seek or accept gifts, favors,
preferential treatment, or valuable consideration of any kind offered because
of his or her association with the Fund.
2. Each non-affiliated Director/Trustee shall report to the Secretary of the
Fund not later than ten (10) days after the end of each calendar quarter any
transaction in securities which such Director/Trustee has effected during the
quarter which the Director/Trustee then knows to have been effected within
fifteen (15) days before or after a date on which the Fund purchased or sold,
or considered the purchase or sale of, the same security.
3. For purposes of this Code of Ethics, transactions involving United States
Government securities as defined in the Investment Company Act of 1940,
bankers' acceptances, bank certificates of deposit, commercial paper, or shares
of registered open-end investment companies are exempt from reporting as are
non-volitional transactions such as dividend reimbursement programs and
transactions over which the Director/Trustee exercises no control.