Bond Fund of America – ‘N-30D’ for 12/31/99

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Annual or Semi-Annual Report Mailed to Shareholders   —   Rule 30d-1
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: N-30D       Annual or Semi-Annual Report Mailed to                57±   260K 
                          Shareholders                                           


[The American Funds Group(r)]                                                   

THE BOND FUND OF AMERICA                                                        
ANNUAL REPORT FOR THE YEAR ENDED DECEMBER 31, 1999                              

TWENTY-FIVE YEARS                                                               

[cover:  photos of various paper currencies with The Bond Fund of               
America seal watermark and "25" overlay]                                        

THE BOND FUND OF AMERICA(SM)                                                    

SEEKS AS HIGH A LEVEL OF CURRENT INCOME AS IS CONSISTENT WITH PRESERVATION OF   
CAPITAL THROUGH A DIVERSIFIED PORTFOLIO OF BONDS AND OTHER FIXED-INCOME         
OBLIGATIONS.                                                                    

The Bond Fund of America is one of the 29 mutual funds in The American Funds    
Group,(r) the nation's third-largest mutual fund family. For nearly seven       
decades, Capital Research and Management Company, the American Funds adviser,   
has invested with a long-term focus based on thorough research and attention to 
risk.                                                                           

RESULTS AT A GLANCE                                                             
(assuming distributions reinvested or interest                                  
compounded for periods ended December 31, 1999)                                 

                                                        [Enlarge/Download Table]

                                                                                        
                                     Average annual compound returns                    
                                                                         Lifetime       
                                     1 year       5 years      10 years  (since 5/28/74)
The Bond Fund of America             +2.3%        +8.2%        0.084     0.099          
Lehman Brothers                                                                         
Aggregate Bond Index                 -0.8         +7.7         +7.7      +9.3/1/        
Lipper Corporate A-Rated                                                                
Bond Funds Average/2/                -2.6         +6.9         +7.3      +9.0           
Average savings institution/3/       +4.6         +4.6         +4.8      +6.6           
Consumer Price Index (inflation)/4/  +2.7         +2.4         +2.9      +5.0           

/1/The Lehman Brothers Aggregate Bond Index began on January 1, 1976. From May  
31, 1974, through December 31, 1975, the Lehman Brothers Government/Corporate   
Bond Index was used. These indexes serve as a proxy for the broad U.S.          
investment-grade bond market and are unmanaged.                                 

/2/Source: Lipper, Inc. Lipper averages do not include the effects of sales     
charges.                                                                        

/3/Based on figures from the U.S. League of Savings Institutions and the        
Federal Reserve Board, which reflect all kinds of savings deposits (maximum     
allowable interest rates imposed by law until 1983). Savings accounts are       
guaranteed; the fund is not.                                                    

/4/Computed from data supplied by the U.S. Department of Labor, Bureau of Labor 
Statistics.                                                                     

Fund results in this report were computed without a sales charge unless         
otherwise indicated. The fund's 30-day yield as of January 31, 2000, calculated 
in accordance with the Securities and Exchange Commission formula, was 7.24%.   

FIGURES SHOWN ARE PAST RESULTS AND ARE NOT PREDICTIVE OF FUTURE RESULTS. SHARE  
PRICE AND RETURN WILL VARY, SO YOU MAY LOSE MONEY. INVESTING FOR SHORT PERIODS  
MAKES LOSSES MORE LIKELY. INVESTMENTS ARE NOT FDIC-INSURED, NOR ARE THEY        
DEPOSITS OF, OR GUARANTEED BY, A BANK OR ANY OTHER ENTITY.                      

FELLOW SHAREHOLDERS:                                                            

By almost any measure, 1999 proved to be a challenge for bonds. Investors       
closed out the year troubled by rising interest rates and continuing concerns   
about inflation on the horizon. In the process, bonds suffered their worst year 
since 1994. U.S. Treasury securities were hit hardest, but the rout was         
widespread, taking down most other sectors as well. The few bright spots tended 
to be found among emerging-market bonds.                                        

In this negative environment, The Bond Fund of America was able to achieve a    
positive total return for 1999, as it has done for every complete calendar year 
but one over its 25-year lifetime. For shareholders who reinvested monthly      
dividends totaling 93 cents a share, a decline in the net asset value of your   
shares was more than offset by the fund's 7.1% income return. The result was a  
12-month total return (income minus the change in capital value) of 2.3%.       

That was comfortably ahead of the fund's relevant benchmarks. The Lehman        
Brothers Aggregate Bond Index, a proxy for the U.S. bond market, fell 0.8% for  
the year on a reinvested basis. Meanwhile, the average total return for the 164 
corporate A-rated bond funds tracked by Lipper, Inc. was -2.6%. The fund's      
strong showing placed it third among those funds for the 12 months ended        
December 31; it ranked second among the 17 A-rated corporate bond funds in      
existence over its lifetime./1/                                                 

As the table at left shows, The Bond Fund of America has sustained a strong     
record over longer, more meaningful periods as well. Since beginning operations 
more than a quarter-century ago, the fund has achieved a cumulative total       
return of 1,014.5% - an average compound return of 9.9% a year - and outpaced   
both the Lehman index and the Lipper average. In that time, it has also         
provided shareholders with an ample cushion against inflation.                  

[Begin Sidebar]                                                                 
With close to $9.5 billion in assets, The Bond Fund of America is one of the    
nation's largest corporate bond funds and, at 25 years, among the oldest.       
[End Sidebar]                                                                   

TOO MUCH OF A GOOD THING?                                                       

Bond investors began to grow wary early in 1999, when a string of strong        
economic data rekindled fears of inflation. Although the rise in prices has yet 
to materialize, some warning signs did emerge during the year: Wage pressures   
intensified as unemployment touched record lows; the cost of crude oil and      
other raw materials rose sharply; and many of the world's troubled economies    
began to take their first steps toward recovery. The anticipation of preemptive 
measures by the Federal Reserve Board - confirmed by quarter-point increases in 
short-term interest rates in June, August and November - unsettled investors    
and considerably dampened prices of intermediate- and long-term bonds. (The Fed 
raised rates again in February of this year.)                                   

[Begin Sidebar]                                                                 
THE BENEFIT OF A LONG VIEW                                                      

Time can help mitigate volatility and increase the likelihood of success. The   
tables below show the best, worst and median returns on a $10,000 investment in 
the fund over one-, five- and 10-year rolling calendar-year periods. Notice     
that the longer the time frame, the less divergent the rates of return have     
been.                                                                           

1-year periods                                                                  

                                                                [Download Table]

                                                         
            Total                              $10,000   
            return        Year                 investment
Best        +32.9%        (1982)               $13,290   
Worst       -5.0%         (1994)               $9,498    
Median      0.095         (1983)               $10,946   

5-year periods                                                                  

                                                                [Download Table]

                                                         
            Average                            Value of  
            annual                             $10,000   
            return        Years                investment
Best        +18.9%        (1982-1986)          $23,746   
Worst       0.041         (1977-1981)          $12,219   
Median      0.092         (1987-1991)          $15,338   


10-year periods                                                                 

                                                                [Download Table]

                                                          
            Average                             Value of  
            annual                              $10,000   
            return        Years                 investment
Best        +13.9%        (1982-1991)           $36,896   
Worst       +8.4%         (1990-1999)           $22,374   
Median      +11.2%        (1977-1986)           $29,014   


[End Sidebar]                                                                   
U.S. Treasury securities suffered the steepest declines, revealing the flip     
side of last year's above-average gains. Yields on 30-year government bonds     
rose to 6.5% from 5.1%, reflecting an 18% drop in price. (Bond yields and       
prices move in opposite directions.) Corporate bonds also fell, although those  
at the lower end of the credit spectrum generally declined less. Mortgage- and  
asset-backed securities also fell. Emerging-market bonds proved to be the       
notable exception to the broad market weakness; prices soared upward of 20%,    
but they did so from a deeply depressed base.                                   

A LOOK AT THE PORTFOLIO                                                         

Although a number of the holdings in the portfolio fell in price, we are        
pleased to note that quite a few securities bucked the downward trend.          
Regardless of market movements, however, bonds are primarily income-producing   
instruments; throughout the year, the securities in the portfolio continued to  
generate a healthy income stream, which compensated to varying degrees for the  
loss in market value during the year. That steady flow of income added an       
important silver lining for shareholders who reinvested their dividends: They   
were able to acquire shares at lower prices as the year progressed.             

The portfolio remains very well diversified, with investments in hundreds of    
carefully selected securities. The lion's share - about half of net assets - is 
invested in corporate bonds from a range of industries and countries. Mortgage- 
and asset-backed securities represent about one quarter of net assets; roughly  
10% is held in U.S. Treasury securities. A more detailed sector breakdown can   
be found in the chart at the top of page 16. Overall, your fund maintains a     
high-quality orientation, but it has the flexibility to invest, when            
appropriate, in lower rated issues, which typically pay higher yields to        
compensate for somewhat greater risk.                                           

Your fund's portfolio is the product of intensive global research, which not    
only helps us find attractive long-term holdings in an increasingly complex     
marketplace, but has also helped mitigate some of the risks associated with     
bond investing. You can read more about how research helps the fund's           
investment professionals make decisions in the article that follows this        
letter.                                                                         

GROWING OPPORTUNITIES                                                           

The Bond Fund of America has experienced remarkable growth since it began life  
in May of 1974. Today, at close to $9.5 billion in assets, it is one of the     
nation's largest corporate bond funds and, at 25 years, among the oldest.       
Shareholder accounts number close to 300,000, and include a diverse group of    
individuals, foundations and corporate retirement plans. We are grateful for    
the confidence so many of you have placed in us.                                

The Bond Fund of America's method of portfolio management is well-suited to     
accommodating growth. The multiple portfolio counselor system, as it is called, 
was developed 40 years ago by the fund's investment adviser, Capital Research   
and Management Company, and is used for all American Funds stock and bond       
funds. Because assets are divided among a number of portfolio counselors,       
managers can be added as the fund expands. The system also encourages a         
diversity of investment styles, a strategy we believe has helped us moderate    
risk by smoothing out returns. Currently, The Bond Fund of America has six      
portfolio counselors, with an average of 22 years of experience.                

LOOKING FORWARD AND BACK                                                        

When we first introduced The Bond Fund of America in 1974, bond investing was   
concentrated in the hands of large financial institutions, which often hewed to 
a strict buy-and-hold strategy. We were convinced that an actively managed,     
diversified portfolio of bonds could offer individual investors two important   
benefits - the opportunity for high current income and relative stability of    
principal.                                                                      

Now, 25 years later, thanks to a great deal of hard work and good judgment on   
the part of many people, we can look back and say that the fund has achieved    
its goals. Over its lifetime, The Bond Fund of America's steady dividend stream 
and strong total returns have distinguished it from its peers. More             
importantly, they have provided long-term shareholders with a solid foundation  
for their financial programs.                                                   

We are equally enthusiastic about the future. Businesses are thriving and       
expanding; governments across the globe are increasingly committed to political 
freedom and economic stability; technological advances have added new and       
complex dimensions to fixed-income markets. These developments have laid the    
groundwork for seemingly unlimited opportunities for investors with the         
experience and resources to capitalize on them. As The Bond Fund of America     
moves into its next quarter century, we are prepared to meet those challenges   
and look forward to pursuing new endeavors on your behalf.                      

On the following pages, we invite you to look back at the last 25 years with    
some of the people who have been responsible for the fund's success.            

We look forward to reporting to you again in six months.                        

Cordially,                                                                      

/s/Paul G. Haaga, Jr.                                                           
Paul G. Haaga, Jr.                                                              
Chairman of the Board                                                           

/s/Abner D. Goldstine                                                           
Abner D. Goldstine                                                              
President                                                                       

February 14, 2000                                                               

THE VALUE OF A LONG-TERM PERSPECTIVE                                            

HOW A $10,000 INVESTMENT HAS GROWN                                              

There have always been reasons not to invest. If you look beyond the negative   
headlines, however, you will find that, despite occasional stumbles, financial  
markets have tended to reward investors over the long term. Active management - 
bolstered by experience and careful research - can add even more value: As the  
chart at right shows, over its lifetime, The Bond Fund of America has done      
demonstrably better than its relevant benchmarks.                               

The table beneath the chart breaks down BFA's year-by-year total returns into   
their income and capital components.                                            

[Begin chart]                                                                   
President Nixon resigns - 1974                                                  
U.S. withdraws from Vietnam - 1975                                              
New York City threatens bankruptcy - 1976                                       
Energy crisis - 1977                                                            
Unemployment falls - 1978                                                       
U.S. dollar weakens - 1979                                                      
Inflation up worldwide - 1980                                                   
Federal funds rate peaks above 19% - 1981                                       
Worst recession in 40 years - 1982                                              
Economic recovery raises inflation fears - 1983                                 
Iran/Iraq war escalates - 1984                                                  
U.S. becomes a debtor nation - 1985                                             
Bombing of Libya - 1986                                                         
Record-setting stock market decline - 1987                                      
Bank failures peak - 1988                                                       
Junk bond debacle - 1989                                                        
Iraq invades Kuwait - 1990                                                      
Recession in U.S. - 1991                                                        
Los Angeles riots - 1992                                                        
Bond prices surge - 1993                                                        
Sharpest bond decline in history - 1994                                         
Orange County bankruptcy - 1995                                                 
Economic boom roils bonds - 1996                                                
First signs of "Asian flu" - 1997                                               
President Clinton impeached - 1998                                              
Inflation fears resurface - 1999                                                

AVERAGE ANNUAL COMPOUND RETURNS                                                 
(for periods ended December 31, 1999)                                           

                                                                [Download Table]

                                  
10 Years      5 Years       1 Year
+7.97%        +7.38%        -1.54%

Calculated for a $1,000 investment at the maximum sales charge and assumes      
reinvestment of all distributions.                                              

                                                                [Download Table]

Year ended Dec. 31        BFA with          Lehman Brothers   Consumer Price
                          Dividends         Aggregate Bond Index /3/   Index
                          Reinvested                                        
                          /1//2/                                            

                                                                            
May 28, 1974                                10,000           10,000         

1974*                     9,988             10,318           10,679         

1975                      11,254            11,587           11,420         

1976                      13,294            13,395           11,975         

1977                      13,977            13,802           12,778         

1978                      14,261            13,994           13,930         

1979                      14,710            14,264           15,782         

1980                      15,230            14,650           17,757         

1981                      16,242            15,565           19,342         

1982                      21,586            20,643           20,082         

1983                      23,628            22,368           20,844         

1984                      26,450            25,756           21,667         

1985                      33,488            31,449           22,490         

1986                      38,568            36,251           22,737         

1987                      39,324            37,248           23,745         

1988                      43,533            40,186           24,794         

1989                      47,942            46,026           25,946         

1990                      49,509            50,149           27,531         

1991                      59,927            58,174           28,374         

1992                      66,722            62,480           29,197         

1993                      76,155            68,571           30,000         

1994                      72,335            66,571           30,802         

1995                      85,536            78,870           31,584         

1996                      91,273            81,733           32,634         

1997                      99,708            89,624           33,189         

1998                      104,863           97,410           33,724         

1999                      107,265           96,609           34,630         


[end chart]                                                                     

                                                        [Enlarge/Download Table]

                                                                                             
Year ended   1974*   1975    1976    1977    1978     1979     1980    1981    1982    1983  

December 31                                                                                  

TOTAL VALUE                                                                                  

Dividends    $418    907     1,020   1,126   1,211    1,401    1,725   2,118   2,435   2,526 

Reinvested                                                                                   

Value at     $9,988  11,254  13,294  13,977  14,261   14,710   15,230  16,242  21,586  23,628

Year-End/1/                                                                                  

BFA's Total  (0.1)%  12.7    18.1    5.1     2.0      3.1      3.5     6.6     32.9    9.5   

Return                                                                                       

Year ended   1984    1985    1986    1987    1988     1989     1990    1991    1992    1993  

December 31                                                                                  

TOTAL VALUE                                                                                  

Dividends    2,869   3,227   3,604   3,787   3,954    4,472    4,698   4,908   5,274   5,326 

Reinvested                                                                                   

Value at     26,450  33,488  38,568  39,324  43,533   47,942   49,509  59,927  66,722  76,155

Year-End/1/                                                                                  

BFA's Total  11.9    26.6    15.2    2.0     10.7     10.1     3.3     21.0    11.3    14.1  

Return                                                                                       

Year ended   1994    1995    1996    1997    1998     1999                                   

December 31                                                                                  

TOTAL VALUE                                                                                  

Dividends    5,733   6,180   6,473   6,703   7,008    7,398                                  

Reinvested                                                                                   

Value at     72,335  85,536  91,273  99,708  104,863  107,265                                

Year-End/1/                                                                                  

BFA's Total  (5.0)   18.2    6.7     9.2     5.2      2.3                                    


Average annual compound return for 25-1/2 years: 9.71%/1//2/                    

*For the period May 28 through December 31, 1974.                               

/1/Results reflect payment of the maximum sales charge of 3.75% on the $10,000  
investment. Thus, the net amount invested was $9,625. Prior to January 10,      
2000, the maximum sales charge was 4.75%. As outlined in the prospectus, the    
sales charge is reduced for larger investments.                                 

/2/Includes reinvested dividends of $96,531 and reinvested capital gain         
distributions of $4,571.                                                        

/3/From May 31, 1974, through December 31, 1975, the Lehman Brothers            
Government/Corporate Bond Index was used because the Lehman Brothers Aggregate  
Bond Index did not yet exist. Since January 1, 1976, the Lehman Brothers        
Aggregate Bond Index has been used. These indexes are unmanaged.                

/4/Computed from data supplied by the U.S. Department of Labor, Bureau of Labor 
Statistics.                                                                     

Past results are not predictive of future results.                              

CONSISTENCY AMID CHANGE                                                         

[watermark of various paper currencies]                                         

The Bond Fund of America maintains a consistent approach even as bond markets   
continue to evolve and reinvent themselves. Over the years, that strategy -     
careful attention to risk, a search for value and a focus on the long term -    
has served shareholders very well indeed. When the fund began in May of 1974,   
it was one of some three dozen mutual funds that emphasized bonds. Today,       
millions of investors make bonds and other fixed-income instruments a           
cornerstone of their financial plans. Bond funds number in the thousands and    
have assets in excess of $1 trillion.                                           

A LOOK BACK AT BFA'S FIRST QUARTER CENTURY                                      

The past quarter century has seen bond markets become increasingly complex. In  
1974, the bond market consisted primarily of U.S. Treasury debt and high-grade  
corporate securities. There was little market for foreign bonds and even        
government-sponsored mortgage-backed securities, now part of the $plain         
vanilla' market, were deemed too exotic for most investors' tastes.             

That scenario has changed considerably. Today, the U.S. government debt is      
shrinking; bond markets outside the U.S. have become increasingly liquid and    
attractive; and high-yield bonds provide financing for some of the world's most 
innovative businesses. Technology has probably been the greatest catalyst for   
change by making information widely available; computers have created entire    
sectors of sophisticated securities that we could scarcely have imagined back   
in 1974.                                                                        

Through the years, our research effort has expanded to accommodate the growing  
scope of BFA's investment universe. Today, Capital Research and Management      
Company, the fund's investment adviser, operates one of the industry's most     
globally integrated research networks. Some 30 investment professionals are     
devoted to fixed-income investment for BFA and the other American Funds. These  
men and women conduct thousands of research visits a year, analyzing securities 
and identifying their potential value as long-term investments for the fund.    
They also work closely with stock analysts, giving them a perspective few other 
investors can match.                                                            

A silver anniversary is an appropriate occasion to review past accomplishments  
and look forward to new endeavors. On the next few pages, we'll highlight three 
years in BFA's history: 1974, the year the fund was introduced; 1986, the       
midpoint of our quarter century; and 1999, on the threshold of the future.      
As you can see below, even though conditions changed over both of these         
periods, the fund achieved consistent "real," or after-inflation, returns.      

[photo 1974: photograph of cars lined up at gasoline station]                   
[photo 1986;  President Reagan and Gorbachev signing document]                  
[photo 1999: child using personal computer]                                     
[Begin Caption]                                                                 
1974                                                                            
1986                                                                            
1999                                                                            
[End Caption]                                                                   

[Begin Sidebar]                                                                 
BFA'S "REAL" RETURNS (ANNUALIZED)                                               
[Begin Bar Chart]                                                               

                                                                [Download Table]

                                                                        
                     1974-1986            1986-1999            1974-1999
Total Return         11.7%                8.2%                 9.9%     
"Real" Return        4.6%                 4.7%                 4.7%     

[End Chart]                                                                     

[End Sidebar]                                                                   
1974 COPING WITH TURBULENCE                                                     

[photographs of gas shortage]                                                   
[Begin Caption]                                                                 
Oil prices quadrupled and helped send inflation soaring. At right, BFA's        
investment professionals share ideas.                                           
[End Caption]                                                                   

Among the laundry list of difficulties that confronted investors in 1974 were:  
an oil embargo that had quadrupled the cost of petroleum; a devastating drop in 
business activity; persistent double-digit inflation; a steep, protracted stock 
market decline; an assault on the U.S. dollar; and the trauma of Watergate,     
which culminated in the only resignation of an American president.              

We maintained a cautious stance that year; at BFA's first fiscal close, only    
half of the portfolio was invested in the bond market, with the remainder in    
highly liquid short-term securities. "We were dealing with an unusually         
turbulent situation," remembers Bill Newton, the fund's first president. "Bond  
yields were at 7 and 8 percent, but inflation was running 11 percent and        
higher. Our cash position provided some stability at a very scary time."        

Still, for investors with patience and resources, this was an environment that  
had also given rise to exceptional opportunities. The convergence of severely   
depressed bond prices and a record volume of debt issuance by companies anxious 
to stockpile reserves had created some very attractive values. To uncover those 
values, the fund's investment professionals relied on one of Capital's          
strengths - intensive, fundamental research.                                    

"As we began to build the portfolio, we realized that good credit research in   
many ways would look a lot like good stock research," notes Abner Goldstine,    
BFA's president and one of the fund's original portfolio counselors. "That      
meant going beyond static balance sheet analysis and looking at industry        
developments, management skills, future earnings and cash flow. We believed     
that digging deeper could help us appreciate things that less-informed          
investors might miss."                                                          

To help fill out the picture, Capital's investment professionals established a  
number of avenues for exchanging ideas internally. In addition to meeting with  
each other, fixed-income specialists also consult regularly with staff          
economists and stock analysts who cover industries heavily impacted by changes  
in interest rates - sectors such as finance, utilities, real estate and         
insurance. That interchange helps put individual decisions in a broader         
context.                                                                        

Rising interest rates continued to vex U.S. bond markets, although the tide     
began to shift as the decade progressed. The Federal Reserve Board eased        
monetary policy in late 1974 in an effort to kickstart a recovery, but          
short-term interest rates soon spiked upward again, peaking at 19% in 1981.     
That was the year that Paul Volcker, then Chairman of the Federal Reserve       
Board, famously "broke the back" of inflation with a series of sharp interest   
rate hikes, laying the groundwork for a halcyon period for bonds.               
[photo 1974: Federal Reserve Board]                                             
[Begin Caption]                                                                 
1974                                                                            
[End Caption]                                                                   

By the end of 1975, BFA's portfolio was nearly 95% invested in longer term      
bonds; most carried A ratings or better and paid interest ranging from about 9% 
to 11%. Electric and telephone utilities constituted the largest industry       
concentrations, but other large holdings included GTE, American Airlines and    
NCR, which had just pioneered scanning and ATM technology. As interest rates    
fell during the next few years, the prices of many of these bonds soared,       
providing shareholders with not only healthy income but significant capital     
appreciation as well.                                                           

The turbulence of those early years illustrates the value of experience.        
"Different environments require different emphases," Bill Newton stresses.      
"When the environment is constructive, we concentrate on delivering higher      
income, but when the outlook is questionable, we do more to protect the capital 
base. That's what active management is all about - assessing and balancing      
risk."                                                                          

[Begin Sidebar]                                                                 
25 YEARS OF BOND INVESTING:                                                     
William Skinker, a fund shareholder since 1974, appreciates the value of a long 
view. In the past quarter century, Bill has seen bond markets and the fund's    
share price fluctuate, often dramatically. But he has also seen how the         
discipline of staying the course and reinvesting dividends has helped him       
preserve the value of his principal and enjoy considerable growth besides.      
[End Sidebar]                                                                   

[Begin Sidebar]                                                                 
A SHAREHOLDER'S VIEW 1974                                                       

[photograph of Mary and Bill and family]                                        

As an insurance agent in Springfield, Illinois, Bill was well aware of the      
importance of planning for the future. He and his wife, Mary, (pictured in 1974 
with their children Carolyn and Steve) looked to The Bond Fund of America for   
their retirement. The mid-1970s were a time of terrible turbulence in financial 
markets, but Bill was encouraged by the fund's focus on high income and         
preservation of principal. He also kept his eye on a longer horizon and used    
market declines as opportunities to add to his investments. "I've been          
investing long enough to know that what has gone down has usually gone up," he  
says. In the years ahead, that proved to be true.                               
[End Sidebar]                                                                   

1986 BOND FUNDS BOOM                                                            
[photographs of Berlin wall, and Reagan and Gorbachev signing document]         
[Begin Caption]                                                                 
With inflation trending downward, bonds enjoyed a period of growth - as did     
Capital's research group, pictured at right.                                    
[End Caption]                                                                   

The mid-1980s proved to be a propitious era for bond investors. As interest     
rates drifted lower, bond prices appreciated smartly, allowing investors to     
chalk up impressive total returns. What's more, with inflation falling faster   
than interest rates, Treasury and high-quality corporate bonds, some yielding   
14% or more, provided shareholders with generous "real," or after-inflation,    
income.                                                                         

The superior returns on quality bonds attracted many new investors to bond      
funds. According to the Investment Company Institute, new sales reached a       
record $138 billion in 1986, exceeding the total net assets in bond funds at    
the end of 1985. Bonds became even more attractive with the passage of the Tax  
Reform Act of 1986, which, among other things, lowered the tax rate on interest 
income.                                                                         

There was no lack of fixed-income options to meet the demands of eager          
investors. Economic recovery had sent corporations, homeowners and the          
government on a borrowing spree. Declining interest rates had sparked attention 
in high-yield bonds. Meanwhile, technological advances inspired the development 
of new financial instruments; these were the salad days of such popular         
securities as mortgage pass-throughs, but also of an array of arcane products   
created by investment banks at the time.                                        

These developments demanded new kinds of research, and by the mid-1980's,       
Capital's fixed-income coverage had expanded to meet those challenges.          
Mortgage-backed securities, for example, had become a major area of focus by    
this time. These securities, which are made of pools of home loans, carry       
little risk of default, but are subject to the risk that homeowners will prepay 
their loans at a disadvantageous time. Trying to determine the likelihood and   
causes of prepayments is a time-consuming and difficult job.                    

Careful research helps uncover facts that other investors may have overlooked.  
"On the face of it, two securities may look the same," says John Smet, a        
portfolio counselor who specialized in mortgage-backed issues as an analyst in  
the 1980s. "What you often find after scratching the surface, though, is that   
they have very different characteristics. Those differences will affect not     
only their market price, but also their appropriateness for the fund."          

The bond market's faster pace and explosive growth in the 1980s put a new spin  
on traditional notions of risk. Richard Schotte, who retired two years ago      
after 20 years as a portfolio counselor with the fund, notes that "as bond      
investing became increasingly sophisticated, investment managers added value by 
taking prudent risks they believed would benefit shareholders in the long run.  
Then, as now, those judgments were based on information you gathered and the    
experience you gained as a professional."                                       

[photo 1986: trading room]                                                      
[Begin Caption]                                                                 
1986                                                                            
[End Caption]                                                                   

Mirroring broader trends, The Bond Fund of America enjoyed tremendous growth in 
the 1980s. In 1986, net assets stood at nearly $700 million, representing not   
only appreciation of the securities in the portfolio, but a large inflow of new 
shareholders. Accounts had risen to 26,000 - a tenfold increase since the end   
of 1974. The portfolio was also more diversified, with bonds of media and       
communications companies, such as Warner Communications, Tele-Communications,   
Inc. and McCaw Cellular, and sizable positions in mortgage-backed securities    
and U.S., Canadian and Australian government bonds.                             

[Begin Sidebar]                                                                 
A SHAREHOLDER'S VIEW 1986                                                       

[photograph of Bill, Mary and Steve]                                            
By 1986, Bill (pictured with Mary and Steve) had retired, having sold his       
agency the year before. He continued to reinvest his dividends in The Bond Fund 
of America, preferring to use income from other investments to meet daily       
expenses. It was a wise decision. The fund enjoyed extremely strong returns     
through a good part of the decade, and the value of Bill's holdings appreciated 
considerably. Its relative stability also served another function. "With The    
Bond Fund of America as an anchor to my overall portfolio, I felt more          
comfortable investing a little more aggressively in riskier assets, like        
individual stocks." When Mary became ill in 1991, Bill used dividends from the  
fund to help offset some of her medical costs.                                  
[End Sidebar]                                                                   

1999 OUT OF DIVERSITY, OPPORTUNITY                                              

[photographs of Internet screen and child using personal computer]              
[Begin Caption]                                                                 
Today, technology and globalization make research more important than ever.     
[End Caption]                                                                   

The intervening years have seen conditions for the bond market continue to      
change. Interest rates have generally trended lower; thriving businesses are    
turning to capital markets to meet their expansion needs; and global economies  
have taken historic steps toward political and economic stability. At the same  
time, a budget surplus is shrinking the supply of U.S. Treasury securities. All 
of this increases the challenges - and opportunities - for bond investors.      

International bonds have provided a particularly rich vein to mine. These       
issues, worth some $13 trillion, offer the potential for diversification as     
well as income. BFA first invested outside the U.S. in 1979, with holdings in   
Canadian province obligations and "Gilts" issued by the British government.     
Today, BFA holds bonds issued in countries such as Greece, Poland, New Zealand, 
Argentina and South Africa.                                                     

If globalization has broadened the fund's investment possibilities, it has also 
made the process more complicated. Non-U.S. bonds are subject to special risks, 
such as currency fluctuations and accounting standards that differ from country 
to country. Moreover, the sheer diversity of options can be daunting. "Issuers  
today appeal to a global community," says portfolio counselor Mark Dalzell.     
"That means we can choose to invest in securities issued in dollars inside the  
U.S., in dollars or local currency outside the U.S., or even in bonds of U.S.   
companies issued in euros, sterling or yen. Each of these carries different     
risks and potential rewards." Fortunately, Capital's global research presence   
has enabled us to take advantage of some of those opportunities. At the end of  
1999, bonds of non-U.S. issuers accounted for just over 20% of BFA's net        
assets.                                                                         

Investments in lower rated bonds have also contributed to the fund's success.   
"On the heels of the $junk' bond scandal of 1989 and the recession that         
followed, the high-yield sector has experienced a $re-birth' in the 1990s,"     
notes Susan Tolson, a portfolio counselor. "Today, new issuers are reasserting  
what the sector is supposed to be all about: providing growth capital for       
innovative companies around the world that don't have access to traditional     
capital markets." High-yield bonds are traded in a vast, diverse marketplace    
worth some $650 billion, providing ample opportunities for investors with the   
global resources to find the best of them. Research also helps mitigate some of 
the volatility and other risks associated with these bonds.                     

The multiple portfolio counselor system has made The Bond Fund of America's     
growth process a relatively seamless one. As assets have increased, so has the  
number of portfolio counselors. An additional portion of the portfolio,         
currently about 15% of net assets, is the responsibility of more than a dozen   
research analysts. By further encouraging a multiplicity of viewpoints, their   
contributions have been an important factor in the fund's long-term record.     

[photograph 1999: associates in conference]                                     
[Begin Caption]                                                                 
1999                                                                            
[End Caption]                                                                   

The multiple portfolio counselor system has another benefit: It helps ensure    
the continuity of the fund's investment strategy even as market and economic    
conditions change. Susan Tolson became a portfolio counselor two years ago      
after serving as a research analyst for seven years. She notes that many of     
BFA's pioneers are still on hand to pass on the legacy of their experience.     
"They've taught me by example that sensible bond investors measure success in   
years, not months. That perspective keeps me from heading for the bunker when   
times get tough, and adds a ballast to the investment style of some of the      
younger managers."                                                              

The fund's judicious approach has never varied, and it should give shareholders 
some comfort to know it should be in place 25 years from now.                   

[Begin Sidebar]                                                                 
A SHAREHOLDER'S VIEW 1999                                                       

[photograph of Bill, mary, Carolyn, and Glen Wetzel]                            
Today, Bill has moved to a comfortable retirement complex in Bloomington,       
Illinois, not far from his daughter, Carolyn, son-in-law, Glen Wetzel and       
grandson Calvin, pictured above. (Mary passed away in 1994.) For the time       
being, he has chosen to leave his investment in the fund untouched, and is      
meeting expenses with income from other sources. He has earmarked his BFA       
assets to help finance college tuition for his three (soon to be four)          
grandchildren. "Over the years, my original investment has compounded and       
grown," Bill says. "Thanks to The Bond Fund of America - and plenty of time -   
I've been able to build something for the future."                              
[End Sidebar]                                                                   

WHAT MAKES THE AMERICAN FUNDS DIFFERENT                                         

[photograph of globe, map and magnifying glass]                                 

As a shareholder in The Bond Fund of America, you are also a member of The      
American Funds Group,(r) the nation's third-largest mutual fund family. You     
won't find us advertised, yet thousands of financial advisers recommend the     
American Funds for their clients' serious money - money set aside for           
education, a home, retirement and other important dreams.                       

What the 29 funds in our group have in common is a commitment to your best      
interests and the proven approach of our investment adviser, Capital Research   
and Management Company. In business since 1931, Capital's calling cards         
include:                                                                        

A LONG-TERM, VALUE-ORIENTED APPROACH:                                           

Rather than follow short-term fads, we rely on our own intensive research to    
find well-managed companies with reasonably priced securities and solid,        
long-term potential. Despite our size, we offer relatively few funds compared   
with many large fund families, allowing us to maintain a careful focus on our   
objectives and enabling you to benefit from economies of scale.                 

AN UNPARALLELED GLOBAL RESEARCH EFFORT                                          

We opened our first overseas office in 1962, well before most mutual funds      
began investing internationally. Today, the American Funds draw on one of the   
industry's most globally integrated research networks. We spend substantial     
resources getting to know companies and industries around the world.            

A MULTIPLE PORTFOLIO COUNSELOR SYSTEM                                           

More than 40 years ago, we developed a unique strategy for managing investments 
that blends teamwork with individual accountability. Every American Fund is     
divided among a number of portfolio counselors, each of whom manages his or her 
portion independently, within each fund's objectives; in most cases, research   
analysts manage a portion as well. Over time, this method has contributed to    
consistency of results and continuity of management.                            

EXPERIENCED INVESTMENT PROFESSIONALS                                            

More than 75% of the portfolio counselors who serve the American Funds were in  
the investment business before the sharp stock market decline in October 1987.  
Long tenure and experience through a variety of market conditions mean we       
aren't "practicing" with your money.                                            

A COMMITMENT TO LOW OPERATING EXPENSES                                          

You can't control market returns, but you can control what you invest in and    
how much you pay to own it. American Funds provide exceptional value for        
shareholders, with operating expenses that are among the lowest in the mutual   
fund industry. Our portfolio turnover rates are low as well, keeping            
transaction costs and tax consequences contained.                               

A PORTFOLIO FOR EVERY INVESTOR                                                  

[photograph of American flag]                                                   
Most financial advisers suggest that investors balance their portfolios by      
investing across several types of investments. Which mix is right for you? That 
depends on a number of things - including your risk tolerance, investment time  
horizon and financial goals. The American Funds Group offers 29 funds with an   
array of investment objectives to help you and your financial adviser build a   
portfolio specifically tailored to your needs.                                  

GROWTH FUNDS                                                                    

Emphasis on long-term growth through stocks                                     
AMCAP Fund(r)                                                                   
EuroPacific Growth Fund(r)                                                      
The Growth Fund of America(r)                                                   
The New Economy Fund(r)                                                         
New Perspective Fund(r)                                                         
New World Fund(SM)                                                              
SMALLCAP World Fund(r)                                                          

GROWTH-AND-INCOME FUNDS                                                         

Emphasis on long-term growth and dividends through stocks                       
American Mutual Fund(r)                                                         
Capital World Growth and Income Fund(SM)                                        
Fundamental Investors(SM)                                                       
The Investment Company of America(r)                                            
Washington Mutual Investors Fund(SM)                                            

EQUITY-INCOME FUNDS                                                             

Emphasis on above-average income and growth through stocks and/or bonds         
Capital Income Builder(r)                                                       
The Income Fund of America(r)                                                   

BALANCED FUND                                                                   

Emphasis on long-term growth and current income through stocks and bonds        
American Balanced Fund(r)                                                       

INCOME FUNDS                                                                    

Emphasis on current income through bonds                                        
American High-Income Trust(SM)                                                  
The Bond Fund of America(SM)                                                    
Capital World Bond Fund(r)                                                      
Intermediate Bond Fund of America(r)                                            
U.S. Government Securities Fund(SM)                                             

TAX-EXEMPT INCOME FUNDS                                                         

Emphasis on tax-free current income through municipal bonds                     
American High-Income Municipal Bond Fund(r)                                     
Limited Term Tax-Exempt Bond Fund of America(SM)                                
The Tax-Exempt Bond Fund of America                                             
State-specific tax-exempt funds:                                                
The Tax-Exempt Fund of California(r)                                            
The Tax-Exempt Fund of Maryland(r)                                              
The Tax-Exempt Fund of Virginia(r)                                              

MONEY MARKET FUNDS                                                              

Emphasis on stable monthly income through money market instruments              
The Cash Management Trust of America(r)                                         
The Tax-Exempt Money Fund of America(SM)                                        
The U.S. Treasury Money Fund of America(SM)                                     

We also offer a full line of retirement plans and variable annuities.           

For more complete information about any of the funds, including charges and     
expenses, please obtain a prospectus from your financial adviser, download one  
from our Web site at www.americanfunds.com, or phone the funds' transfer agent, 
American Funds Service Company, at 800/421-0180. Please read the prospectus     
carefully before you invest or send money.  For more information, ask your      
financial adviser for a copy of A Portfolio for Every Investor.                 

                                                                [Download Table]
THE BOND FUND OF AMERICA                                              
INVESTMENT PORTFOLIO DECEMBER 31, 1999                                
[pie chart]                                                           
                                                                      
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.

                                                        [Enlarge/Download 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     
----------------------------------------------------------------------   -------------------------------------------
                                                                                                                    
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.                                                               

                                                                [Download Table]
The Bond Fund of America                                               
FINANCIAL STATEMENTS                                                   
                                                                       
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                                      

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:                                            

                                                        [Enlarge/Download Table]
                                                                    U.S.               at  
                                      Contract        Amount   Valuations       12/31/1999 
                                    -----------    ---------    ---------        --------- 
                                                                                           
                                                                                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
                                                                                  ======== 

                                                        [Enlarge/Download Table]
PER-SHARE DATA AND RATIOS                                                                     

                                                         Year      ended   December        31 
                                              1999        1998       1997       1996      1995
                                                                                              
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%                                                       

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                                               

                                                                [Download Table]

                                                                     
                                    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       


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                                            

                                                        [Enlarge/Download Table]

                                                                                            
                                                        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%       


PROPOSAL 3: Amendment to Certificate of Incorporation reducing the par value    
per share of capital stock                                                      

                                                                [Download Table]

                                                                         
                                     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%       


PROPOSAL 4: Changes to investment restrictions                                  

                                                        [Enlarge/Download Table]

                                                                                            
                                  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%


PROPOSAL 5: Ratification of Accountants                                         

                                                                [Download Table]

                                                                        
                                    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%       


[The American Funds Group(r)]                                                   

THE BOND FUND OF AMERICA                                                        

BOARD OF DIRECTORS                                                              

H. Frederick Christie                                                           
Rolling Hills Estates, California                                               
Private investor; former President and Chief                                    
Executive Officer, The Mission Group;                                           
former President, Southern California                                           
Edison Company                                                                  

DON R. CONLAN                                                                   
South Pasadena, California                                                      
President (retired),                                                            
The Capital Group Companies, Inc.                                               

DIANE C. CREEL                                                                  
Long Beach, California                                                          
President and Chief Executive Officer,                                          
The Earth Technology Corporation                                                
(international consulting engineering)                                          

MARTIN FENTON                                                                   
San Diego, California                                                           
Managing Director,                                                              
Senior Resource Group, LLC                                                      
(senior living center management)                                               

LEONARD R. FULLER                                                               
Marina del Rey, California                                                      
President, Fuller Consulting                                                    
(financial management consulting)                                               

ABNER D. GOLDSTINE                                                              
Los Angeles, California                                                         
President of the fund                                                           
Senior Vice President and Director,                                             
Capital Research and Management Company                                         

PAUL G. HAAGA, JR.                                                              
Los Angeles, California                                                         
Chairman of the Board of the fund                                               
Executive Vice President and Director,                                          
Capital Research and Management Company                                         

RICHARD G. NEWMAN                                                               
Los Angeles, California                                                         
Chairman of the Board, President                                                
and Chief Executive Officer,                                                    
AECOM Technology Corporation                                                    
(architectural engineering)                                                     

HERBERT HOOVER III, a Director                                                  
since 1977, has retired from the                                                
Board. The Directors thank him for                                              
his many contributions to the fund.                                             

OTHER OFFICERS                                                                  

DAVID C. BARCLAY                                                                
Los Angeles, California                                                         
Vice President of the fund                                                      
Vice President, Capital Research                                                
and Management Company                                                          

MICHAEL J. DOWNER                                                               
Los Angeles, California                                                         
Vice President of the fund                                                      
Senior Vice President -                                                         
Fund Business Management Group,                                                 
Capital Research and Management Company                                         

JOHN H. SMET                                                                    
Los Angeles, California                                                         
Vice President of the fund                                                      
Vice President, Capital Research                                                
and Management Company                                                          

JULIE F. WILLIAMS                                                               
Los Angeles, California                                                         
Secretary of the fund                                                           
Vice President -                                                                
Fund Business Management Group,                                                 
Capital Research and Management Company                                         

ANTHONY W. HYNES, JR.                                                           
Brea, California                                                                
Treasurer of the fund                                                           
Vice President -                                                                
Fund Business Management Group,                                                 
Capital Research and Management Company                                         

KIMBERLY S. VERDICK                                                             
Los Angeles, California                                                         
Assistant Secretary of the fund                                                 
Assistant Vice President -                                                      
Fund Business Management Group,                                                 
Capital Research and Management Company                                         

TODD L. MILLER                                                                  
Brea, California                                                                
Assistant Treasurer of the fund                                                 
Assistant Vice President -                                                      
Fund Business Management Group,                                                 
Capital Research and Management Company                                         

OFFICES OF THE FUND AND                                                         
OF THE INVESTMENT ADVISER,                                                      
CAPITAL RESEARCH AND                                                            
MANAGEMENT COMPANY                                                              
333 South Hope Street                                                           
Los Angeles, California 90071-1443                                              

135 South State College Boulevard                                               
Brea, California 92821-5823                                                     

TRANSFER AGENT FOR SHAREHOLDER ACCOUNTS                                         
American Funds Service Company                                                  
(Please write to the address nearest you.)                                      
P.O. Box 2205                                                                   
Brea, California 92822-2205                                                     

P.O. Box 659522                                                                 
San Antonio, Texas 78265-9522                                                   

P.O. Box 6007                                                                   
Indianapolis, Indiana 46206-6007                                                

P.O. Box 2280                                                                   
Norfolk, Virginia 23501-2280                                                    

CUSTODIAN OF ASSETS                                                             
The Chase Manhattan Bank                                                        
One Chase Manhattan Plaza                                                       
New York, New York 10081-0001                                                   

COUNSEL                                                                         
Paul, Hastings, Janofsky & Walker LLP                                           
555 South Flower Street                                                         
Los Angeles, California 90071-2371                                              

INDEPENDENT AUDITORS                                                            
Deloitte & Touche LLP                                                           
1000 Wilshire Boulevard                                                         
Los Angeles, California 90017-2472                                              

PRINCIPAL UNDERWRITER                                                           
American Funds Distributors, Inc.                                               
333 South Hope Street                                                           
Los Angeles, California 90071-1462                                              

This report is for the information of shareholders of The Bond Fund of America, 
but it may also be used as sales literature when preceded or accompanied by the 
current prospectus, which gives details about charges, expenses, investment     
objectives and operating policies of the fund. If used as sales material after  
March 31, 2000, this report must be accompanied by an American Funds Group      
Statistical Update for the most recently completed calendar quarter.            

For information about your account or any of the fund's services, please        
contact your financial adviser. You may also call American Funds Service        
Company, toll-free, at 800/421-0180 or visit www.americanfunds.com on the World 
Wide Web.                                                                       

Printed on recycled paper                                                       
Litho in USA CD/L/4451                                                          
Lit. No. BFA-011-0200                                                           

Dates Referenced Herein   and   Documents Incorporated by Reference

This ‘N-30D’ Filing		Date		Other Filings
		12/31/00		24F-2NT,  N-30D,  NSAR-B
		3/31/00
Filed on:		3/7/00
		2/14/00
		1/31/00
		1/28/00
		1/10/00
For Period End:		12/31/99		24F-2NT,  NSAR-B
		12/23/99
		12/13/99
		11/22/99		DEF 14A,  PRE 14A
		11/1/99
				List all Filings