bfa485b.htm

0000013075-09-000006.txt : 20090408 0000013075-09-000006.hdr.sgml : 20090408 20090408161335 ACCESSION NUMBER: 0000013075-09-000006 CONFORMED SUBMISSION TYPE: 485BPOS PUBLIC DOCUMENT COUNT: 8 FILED AS OF DATE: 20090408 DATE AS OF CHANGE: 20090408 EFFECTIVENESS DATE: 20090501 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BOND FUND OF AMERICA INC CENTRAL INDEX KEY: 0000013075 IRS NUMBER: 952884967 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: 1933 Act SEC FILE NUMBER: 002-50700 FILM NUMBER: 09740055 BUSINESS ADDRESS: STREET 1: 333 S HOPE ST - 55TH FL (MICG) CITY: LOS ANGELES STATE: CA ZIP: 90071 BUSINESS PHONE: 213-486-9200 MAIL ADDRESS: STREET 1: 333 S HOPE ST - 55TH FL (MICG) CITY: LOS ANGELES STATE: CA ZIP: 90071 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BOND FUND OF AMERICA INC CENTRAL INDEX KEY: 0000013075 IRS NUMBER: 952884967 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: 1940 Act SEC FILE NUMBER: 811-02444 FILM NUMBER: 09740056 BUSINESS ADDRESS: STREET 1: 333 S HOPE ST - 55TH FL (MICG) CITY: LOS ANGELES STATE: CA ZIP: 90071 BUSINESS PHONE: 213-486-9200 MAIL ADDRESS: STREET 1: 333 S HOPE ST - 55TH FL (MICG) CITY: LOS ANGELES STATE: CA ZIP: 90071

0000013075

S000009231 BOND FUND OF AMERICA INC

C000077906 Class R-6

0000013075 S000009231 BOND FUND OF AMERICA INC

C000025097 Class A ABNDX

C000025098 Class R-1 RBFAX

C000025099 Class R-2 RBFBX

C000025100 Class R-3 RMFCX

C000025101 Class R-4 RBFEX

C000025102 Class R-5 RBFFX

C000025103 Class B BFABX

C000025104 Class C BFACX

C000025105 Class F-1 BFAFX

C000025106 Class 529-A CFAAX

C000025107 Class 529-B CFABX

C000025108 Class 529-C CFACX

C000025109 Class 529-E CFAEX

C000025110 Class 529-F-1 CFAFX

C000068564 Class F-2 ABNFX

485BPOS 1 bfa485b.htm BOND FUND OF AMERICA bfa485b.htm

SEC. File Nos. 002- 50700

811-02444

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

__________________

FORM N-1A

Registration Statement

Under

the Securities Act of 1933

Post-Effective Amendment No. 58

and

Registration Statement

Under

The Investment Company Act of 1940

Amendment No. 39

__________________

THE BOND FUND OF AMERICA, INC.

(Exact Name of Registrant as Specified in Charter)

333 South Hope Street

Los Angeles, California 90071-1406

(Address of Principal Executive Offices)

Registrant's telephone number, including area code:

(213) 486-9200

__________________

KIMBERLY S. VERDICK, Secretary

The Bond Fund of America, Inc.

333 South Hope Street

Los Angeles, California 90071-1406

(Name and Address of Agent for Service)

__________________

Copies to:

Michael Glazer

PAUL, HASTINGS, JANOFSKY & WALKER LLP

515 S. Flower Street

Los Angeles, CA 90071-2228

(Counsel for the Registrant)

__________________

Approximate date of proposed public offering:

It is proposed that this filing become effective on May 1, 2009, pursuant to paragraph (b) of rule 485.

...

<PAGE>

[logo - American Funds /(R)/] The right choice for the long term/(R)/

The Bond Fund
of America/SM/

RETIREMENT PLAN
PROSPECTUS

May 1, 2009

TABLE OF CONTENTS

1 Risk/Return summary
4 Fees and expenses of the fund
6 Investment objective, strategies and risks
10 Management and organization
14 Purchase, exchange and sale of shares
18 Sales charges
20 Sales charge reductions
22 Rollovers from retirement plans to IRAs
23 Plans of distribution
24 Other compensation to dealers
25 Distributions and taxes
26 Financial highlights

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED OF
THESE SECURITIES. FURTHER, IT HAS NOT DETERMINED THAT THIS PROSPECTUS IS
ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.

<PAGE>

[This page is intentionally left blank for this filing.]

<PAGE>

Risk/Return summary

The fund seeks to maximize your level of current income and preserve your
capital by investing primarily in bonds. Normally, the fund invests the majority
of its assets in bonds with quality ratings of A3/A- or better. The fund may
also invest in lower rated bonds.

The fund is designed for investors seeking current income, capital preservation
over the long term and more price stability than that offered by stocks. Your
investment in the fund is subject to risks, including the possibility that the
fund's income and the value of its portfolio holdings may fluctuate in response
to economic, political or social events in the United States or abroad.

The values of, and the income generated by, debt securities owned by the fund
may be affected by changing interest rates and credit risk assessments as well
as by events specifically involving the issuers of those securities. Lower
quality or longer maturity debt securities may be subject to greater price
fluctuations than higher quality or shorter maturity debt securities. Although
all securities in the fund's portfolio may be adversely affected by currency
fluctuations or global economic, political or social instability, securities
issued by entities based outside the United States may be affected to a greater
extent.

Your investment in the fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency, entity or person.

YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS MAY BE
GREATER IF YOU INVEST FOR A SHORTER PERIOD OF TIME.

The Bond Fund of America / Prospectus
<PAGE>

HISTORICAL INVESTMENT RESULTS

The bar chart below shows how the fund's investment results have varied from
year to year, and the Investment Results table on page 3 shows how the fund's
average annual total returns for various periods compare with different broad
measures of market performance. This information provides some indication of the
risks of investing in the fund. All fund results reflect the reinvestment of
dividends and capital gain distributions, if any. Unless otherwise noted, fund
results reflect any fee waivers and/or expense reimbursements in effect during
the period presented. Past results are not predictive of future results.

CALENDAR YEAR TOTAL RETURNS FOR CLASS A SHARES
(Results do not include a sales charge; if a sales charge were included,
results would be lower.)

[begin bar chart]

1999 2.29%
2000 6.19
2001 7.15
2002 6.11
2003 12.22
2004 5.85
2005 1.94
2006 5.88
2007 3.37
2008 -12.24

[end bar chart]

Highest/Lowest quarterly results during this time period were:

HIGHEST 5.41% (quarter ended June 30, 2003)
LOWEST -6.82% (quarter ended September 30, 2008)

The Bond Fund of America / Prospectus

<PAGE>

Unlike the bar chart on the previous page, the Investment Results table below
reflects, as required by Securities and Exchange Commission rules, the fund's
investment results with the following maximum initial sales charge imposed:

. Class A share results reflect the maximum initial sales charge of 3.75%. This
charge is reduced for purchases of $100,000 or more and eliminated for
purchases of $1 million or more.

. Class R shares are sold without any initial sales charge.

Results would be higher if calculated without a sales charge.

Unlike the Investment Results table below, the Additional Investment Results
table on page 8 reflects the fund's results calculated without a sales charge.

INVESTMENT RESULTS (WITH A MAXIMUM SALES CHARGE)
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED DECEMBER 31, 2008
1 YEAR 5 YEARS 10 YEARS LIFETIME/1/
- --------------------------------------------------------------------------

CLASS A -- FIRST SOLD 5/28/74 -15.54% -0.05% 3.29% 8.16%
- --------------------------------------------------------------------------

1 YEAR 5 YEARS LIFETIME/1/
- -----------------------------------------------------------------

CLASS R-1 -- FIRST SOLD 6/11/02 -12.92% -0.09% 2.12%
- -----------------------------------------------------------------
CLASS R-2 -- FIRST SOLD 5/31/02 -12.99 -0.08 2.07
- -----------------------------------------------------------------
CLASS R-3 -- FIRST SOLD 6/4/02 -12.52 0.35 2.48
- -----------------------------------------------------------------
CLASS R-4 -- FIRST SOLD 5/20/02 -12.25 0.69 2.92
- -----------------------------------------------------------------
CLASS R-5 -- FIRST SOLD 5/15/02 -12.00 1.00 3.26
- -----------------------------------------------------------------

1 YEAR 5 YEARS 10 YEARS LIFETIME/2/
- -------------------------------------------------------------------------------

INDEXES
Barclays Capital U.S. Aggregate 5.24% 4.65% 5.63% N/A
Index/3/
Lipper Corporate Debt A-Rated Bond -5.88 1.60 3.77 8.04%
Funds Average/4/
Consumer Price Index/5/ 0.09 2.67 2.52 4.32
- -------------------------------------------------------------------------------
Class A annualized 30-day yield at December 31, 2008: 7.75%/6/
(For current yield information, please call American FundsLine/(R)/ at
800/325-3590.)

1 Lifetime results for each share class are measured from the date the share
class was first sold.
2 Lifetime results for the index(es) shown are measured from the date Class A
shares were first sold. The funds or securities that compose each index may
vary over time.

3 Barclays Capital U.S. Aggregate Index (formerly Lehman Brothers U.S. Aggregate
Index) represents the U.S. investment-grade fixed-rate bond market. This index
is unmanaged and its results include reinvested dividends and/or distributions,
but do not reflect the effect of sales charges, commissions, expenses or taxes.
This index was not in existence as of the date the fund's Class A shares were
first sold; therefore, lifetime results are not shown.
4 Lipper Corporate Debt A-Rated Bond Funds Average is composed of funds that
invest primarily in corporate debt issues rated A or better or government
issues. The results of the underlying funds in the average include the
reinvestment of dividends and capital gain distributions, as well as brokerage
commissions paid by the funds for portfolio transactions, but do not reflect the
effect of sales charges or taxes.
5 Consumer Price Index (CPI) is a measure of the average change over time in the
prices paid by urban consumers for a market basket of consumer goods and
services. Widely used as a measure of inflation, the CPI is computed by the
U.S. Department of Labor, Bureau of Labor Statistics.

6 Reflects a fee waiver (7.73% without the waiver) as described in the Annual
Fund Operating Expenses table under "Fees and expenses of the fund."

The Bond Fund of America / Prospectus
<PAGE>

Fees and expenses of the fund

These tables describe the fees and expenses that you may pay if you buy and hold
shares of the fund.

SHAREHOLDER FEES (PAID DIRECTLY FROM YOUR INVESTMENT)
CLASS A ALL R SHARE CLASSES
- ------------------------------------------------------------------------------

Maximum initial sales charge on purchases 3.75%/*/ none
(as a percentage of offering price)
- ------------------------------------------------------------------------------
Maximum sales charge on reinvested dividends none none
- ------------------------------------------------------------------------------
Maximum contingent deferred sales charge none none
- ------------------------------------------------------------------------------
Redemption or exchange fees none none

* The initial sales charge is reduced for purchases of $100,000 or more and
eliminated for purchases of $1 million or more.

ANNUAL FUND OPERATING EXPENSES (DEDUCTED FROM FUND ASSETS)
CLASS CLASS CLASS CLASS CLASS CLASS
CLASS A R-1 R-2 R-3 R-4 R-5/3/ R-6/3,4/
- -------------------------------------------------------------------------------

Management fees/1/ 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25%
- -------------------------------------------------------------------------------
Distribution and/or 0.25 1.00 0.75 0.50 0.25 none none
service (12b-1)
fees/2/
- -------------------------------------------------------------------------------
Other expenses/1/ 0.15 0.19 0.53 0.23 0.17 0.12 0.07
- -------------------------------------------------------------------------------
Total annual fund 0.65 1.44 1.53 0.98 0.67 0.37 0.32
operating expenses/1/
- -------------------------------------------------------------------------------

1 The fund's investment adviser waived a portion of its management fees from
September 1, 2004, through December 31, 2008. In addition, the investment
adviser paid a portion of the fund's transfer agent fees for certain R share
classes. Management fees, other expenses and total annual fund operating
expenses in the table do not reflect any waiver or reimbursement. Information
regarding the effect of any waiver/reimbursement on total annual fund operating
expenses can be found in the Financial Highlights table in this prospectus and
in the fund's annual report.
2 Class A, R-1, R-2, R-3 and R-4 12b-1 fees may not exceed .25%, 1.00%, 1.00%,
.75% and .50%, respectively, of the class's average net assets annually.

3 Class R-5 and R-6 shares are generally available only to fee-based programs
and/or through retirement plan intermediaries.
4 Based on estimated amounts for the current fiscal year. Amounts for all other
share classes are based on amounts incurred in the fund's previous fiscal year.

The Bond Fund of America / Prospectus

<PAGE>

OTHER EXPENSES

The "Other expenses" items in the table above include custodial, legal, transfer
agent and subtransfer agent/recordkeeping payments, as well as various other
expenses. Subtransfer agent/recordkeeping payments may be made to the fund's
investment adviser, affiliates of the adviser and unaffiliated third parties for
providing recordkeeping and other administrative services to retirement plans
invested in the fund in lieu of the transfer agent providing such services. The
amount paid for subtransfer agent/recordkeeping services will vary depending on
the share class selected and the entity receiving the payments. The table below
shows the maximum payments to entities providing services to retirement plans.

PAYMENTS TO UNAFFILIATED
PAYMENTS TO AFFILIATED ENTITIES ENTITIES
- -------------------------------------------------------------------------------

Class A .05% of assets or .05% of assets or
$12 per participant position/1/ $12 per participant position/1/
- -------------------------------------------------------------------------------
Class R-1 .10% of assets .10% of assets
- -------------------------------------------------------------------------------
Class R-2 .15% of assets plus $27 per .25% of assets
participant position/2/ or .35%
of assets/3/
- -------------------------------------------------------------------------------
Class R-3 .10% of assets plus $12 per .15% of assets
participant position/2/ or .19%
of assets/3/
Class R-4 .10% of assets .10% of assets
- -------------------------------------------------------------------------------
Class R-5 .05% of assets .05% of assets
- -------------------------------------------------------------------------------
Class R-6 none none
- -------------------------------------------------------------------------------

1 Payment amount depends on the date upon which services commenced.
2 Payment with respect to Recordkeeper Direct/(R)/ program.
3 Payment with respect to PlanPremier/(R)/ program.

EXAMPLES

The examples below are intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The examples assume that
you invest $10,000 in the fund for the time periods indicated, that your
investment has a 5% return each year, that all dividends and capital gain
distributions are reinvested, and that the fund's operating expenses remain the
same as shown above. The examples do not reflect the impact of any fee waivers
or expense reimbursements.

Although your actual costs may be higher or lower, based on these assumptions,
your cumulative estimated expenses would be:

1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------

Class A* $439 $575 $724 $1,155
- --------------------------------------------------------------------
Class R-1 147 456 787 1,724
- --------------------------------------------------------------------
Class R-2 156 483 834 1,824
- --------------------------------------------------------------------
Class R-3 100 312 542 1,201
- --------------------------------------------------------------------
Class R-4 68 214 373 835
- --------------------------------------------------------------------
Class R-5 38 119 208 468
- --------------------------------------------------------------------
Class R-6 33 103 180 406
- --------------------------------------------------------------------

* Reflects the maximum initial sales charge.

The Bond Fund of America / Prospectus
<PAGE>

Investment objective, strategies and risks

The fund's investment objective is to provide as high a level of current income
as is consistent with the preservation of capital. Normally, the fund invests at
least 80% of its assets in bonds and other debt securities. The fund invests a
majority of its assets in debt securities with quality ratings of A3/A- or
better, including securities issued and guaranteed by the U.S. and other
governments, and securities backed by mortgages and other assets. The fund's
current practice is not to invest more than 15% of its assets in debt securities
rated Ba1 and BB+ or below or in debt securities that are unrated but determined
by the fund's investment adviser to be of equivalent quality.

The values of, and the income generated by, most debt securities held by the
fund may be affected by changing interest rates and by changes in the effective
maturities and credit ratings of these securities. For example, the values of
debt securities in the fund's portfolio generally will decline when interest
rates rise and increase when interest rates fall. In addition, falling interest
rates may cause an issuer to redeem, "call" or refinance a security before its
stated maturity, which may result in the fund having to reinvest the proceeds in
lower yielding securities. Debt securities are also subject to credit risk,
which is the possibility that the credit strength of an issuer will weaken
and/or an issuer of a debt security will fail to make timely payments of
principal or interest and the security will go into default. Lower quality or
longer maturity debt securities generally have higher rates of interest and may
be subject to greater price fluctuations than higher quality or shorter maturity
debt securities. The fund's investment adviser attempts to reduce these risks
through diversification of the portfolio and ongoing credit analysis, as well as
by monitoring economic and legislative developments, but there can be no
assurance that it will be successful at doing so.

Many types of debt securities, including mortgage-related securities, are
subject to prepayment risk. For example, when interest rates fall, homeowners
are more likely to refinance their home mortgages and "prepay" their principal
earlier than expected. The fund must then reinvest the prepaid principal in new
securities when interest rates on new mortgage investments are falling, thus
reducing the fund's income.

A security backed by the U.S. Treasury or the full faith and credit of the U.S.
government is guaranteed only as to the timely payment of interest and principal
when held to maturity. Accordingly, the current market prices for these
securities will fluctuate with changes in interest rates.

Although all securities in the fund's portfolio may be adversely affected by
currency fluctuations or global economic, political or social instability,
securities issued by entities based outside the United States may be affected to
a greater extent.

The Bond Fund of America / Prospectus

<PAGE>

The fund may also hold cash or money market instruments. The percentage of the
fund invested in such holdings varies and depends on various factors, including
market conditions and purchases and redemptions of fund shares. A larger
percentage of such holdings could moderate the fund's investment results in a
period of rising market prices.

A larger percentage of cash or money market instruments could reduce the
magnitude of the fund's loss in a period of falling market prices and provide
liquidity to make additional investments or to meet redemptions.

The fund relies on the professional judgment of its investment adviser to make
decisions about the fund's portfolio investments. The basic investment
philosophy of the investment adviser is to seek to invest in attractively priced
securities that, in its opinion, represent above-average long-term investment
opportunities. The investment adviser believes that an important way to
accomplish this is through fundamental research, which may include analysis of
credit quality, general economic conditions and various quantitative measures
and, in the case of corporate obligations, meeting with company executives and
employees, suppliers, customers and competitors. Securities may be sold when the
investment adviser believes that they no longer represent relatively attractive
investment opportunities.

The Bond Fund of America / Prospectus
<PAGE>

ADDITIONAL INVESTMENT RESULTS

Unlike the Investment Results table on page 3, the table below reflects the
fund's results calculated without a sales charge.

ADDITIONAL INVESTMENT RESULTS (WITHOUT A SALES CHARGE)
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED DECEMBER 31, 2008
1 YEAR 5 YEARS 10 YEARS LIFETIME/1/
- -------------------------------------------------------------------------

CLASS A -- FIRST SOLD 5/28/74 -12.24% 0.72% 3.69% 8.27%

1 YEAR 5 YEARS LIFETIME/1/
- -----------------------------------------------------------------

CLASS R-1 -- FIRST SOLD 6/11/02 -12.92% -0.09% 2.12%
CLASS R-2 -- FIRST SOLD 5/31/02 -12.99 -0.08 2.07
CLASS R-3 -- FIRST SOLD 6/4/02 -12.52 0.35 2.48
CLASS R-4 -- FIRST SOLD 5/20/02 -12.25 0.69 2.92
CLASS R-5 -- FIRST SOLD 5/15/02 -12.00 1.00 3.26

1 YEAR 5 YEARS 10 YEARS LIFETIME/2/
- -------------------------------------------------------------------------------

INDEXES
Barclays Capital U.S. Aggregate 5.24% 4.65% 5.63% N/A
Index/3/
Lipper Corporate Debt A-Rated -5.88 1.60 3.77 8.04%
Bond Funds Average/4/
Consumer Price Index/5/ 0.09 2.67 2.52 4.32
- -------------------------------------------------------------------------------
Class A distribution rate at December 31, 2008: 6.95%/6/
(For current distribution rate information, please call American FundsLine
at 800/325-3590.)

The Bond Fund of America / Prospectus

<PAGE>

[begin pie chart]

PORTFOLIO BY TYPE OF SECURITY AS OF DECEMBER 31, 2008 (percent of net assets)

Corporate bonds & notes 36.67%
Mortgage-backed obligations 26.27
Bonds & notes of U.S. 14.05
government & government
agencies
Bonds & notes of governments 7.33
& government agencies
outside the U.S.
Asset-backed obligations 6.62
Preferred securities 3.18
Convertible securities 0.29
Municipals 0.23
Common stocks & warrants 0.08
Short-term securities & 5.28
other assets less
liabilities

[end pie chart]

HOLDINGS BY QUALITY RATING AS OF DECEMBER 31, 2008
See the appendix in the statement of additional information for a
description of quality categories. PERCENT OF NET ASSETS

- -------------------------------------------------------------------------------

U.S. government obligations/*/ 13.4%
- -------------------------------------------------------------------------------
Federal agencies 15.5
- -------------------------------------------------------------------------------
Aaa/AAA 17.3
- -------------------------------------------------------------------------------
Aa/AA 8.5
- -------------------------------------------------------------------------------
A/A 16.0
- -------------------------------------------------------------------------------
Baa/BBB 17.7
- -------------------------------------------------------------------------------
Ba/BB or below 6.2
- -------------------------------------------------------------------------------
Equity-related securities 0.1
- -------------------------------------------------------------------------------
Short-term securities & other assets 5.3
less liabilities
- -------------------------------------------------------------------------------

* These securities are guaranteed by the full faith and credit of the U.S.
government.

Because the fund is actively managed, its holdings will change over time.

For updated information on the fund's portfolio holdings, please visit us at
americanfunds.com.

The Bond Fund of America / Prospectus
<PAGE>

Management and organization

INVESTMENT ADVISER

Capital Research and Management Company, an experienced investment management
organization founded in 1931, serves as investment adviser to the fund and other
funds, including the American Funds. Capital Research and Management Company is
a wholly owned subsidiary of The Capital Group Companies, Inc. and is located at
333 South Hope Street, Los Angeles, California 90071, and 6455 Irvine Center
Drive, Irvine, California 92618. Capital Research and Management Company manages
the investment portfolio and business affairs of the fund. The total management
fee paid by the fund, as a percentage of average net assets, for the previous
fiscal year appears in the Annual Fund Operating Expenses table under "Fees and
expenses of the fund." As described more fully in the fund's statement of
additional information, the management fee is based on the daily net assets of
the fund and the fund's monthly gross investment income. A discussion regarding
the basis for the approval of the fund's investment advisory and service
agreement by the fund's board of directors is contained in the fund's annual
report to shareholders for the fiscal year ended December 31, 2008.

Capital Research and Management Company manages equity assets through two
investment divisions, Capital World Investors and Capital Research Global
Investors, and manages fixed-income assets through its Fixed Income division.
Capital World Investors and Capital Research Global Investors make investment
decisions on an independent basis.

Rather than remain as investment divisions, Capital World Investors and Capital
Research Global Investors may be incorporated into wholly owned subsidiaries of
Capital Research and Management Company. In that event, Capital Research and
Management Company would continue to be the investment adviser, and day-to-day
investment management of equity assets would continue to be carried out through
one or both of these subsidiaries. Capital Research and Management Company and
the funds it advises have applied to the Securities and Exchange Commission for
an exemptive order that would give Capital Research and Management Company the
authority to use, upon approval of the funds' boards, its management
subsidiaries and affiliates to provide day-to-day investment management services
to the funds, including making changes to the management subsidiaries and
affiliates providing such services. Approval by the funds' shareholders would be
required before any authority granted under an exemptive order could be
exercised. There is no assurance that Capital Research and Management Company
will incorporate its investment divisions or seek a shareholder vote to exercise
any authority, if granted, under an exemptive order.

The Bond Fund of America / Prospectus

<PAGE>

EXECUTION OF PORTFOLIO TRANSACTIONS

The investment adviser places orders with broker-dealers for the fund's
portfolio transactions. In selecting broker-dealers, the investment adviser
strives to obtain "best execution" (the most favorable total price reasonably
attainable under the circumstances) for the fund's portfolio transactions,
taking into account a variety of factors. Subject to best execution, the
investment adviser may consider investment research and/or brokerage services
provided to the adviser in placing orders for the fund's portfolio transactions.
The investment adviser may place orders for the fund's portfolio transactions
with broker-dealers who have sold shares of funds managed by the investment
adviser or its affiliated companies; however, it does not give consideration to
whether a broker-dealer has sold shares of the funds managed by the investment
adviser or its affiliated companies when placing any such orders for the fund's
portfolio transactions. A more detailed description of the investment adviser's
policies is included in the fund's statement of additional information.

PORTFOLIO HOLDINGS

Portfolio holdings information for the fund is available on the American Funds
website at americanfunds.com. To reach this information, access the fund's
detailed information page on the website. A link to the fund's complete list of
publicly disclosed portfolio holdings, updated as of each calendar quarter-end,
is generally posted to this page within 45 days after the end of the applicable
quarter. This information is available on the website until new information for
the next quarter is posted. Portfolio holdings information for the fund is also
contained in reports filed with the Securities and Exchange Commission.

A description of the fund's policies and procedures regarding disclosure of
information about its portfolio holdings is available in the statement of
additional information.

MULTIPLE PORTFOLIO COUNSELOR SYSTEM

Capital Research and Management Company uses a system of multiple portfolio
counselors in managing mutual fund assets. Under this approach, the portfolio of
a fund is divided into segments managed by individual counselors who decide how
their respective segments will be invested. In addition, Capital Research and
Management Company's investment analysts may make investment decisions with
respect to a portion of a fund's portfolio. Investment decisions are subject to
a fund's objective(s), policies and restrictions and the oversight of the
appropriate investment-related committees of Capital Research and Management
Company and its investment divisions.

The Bond Fund of America / Prospectus
<PAGE>

The primary individual portfolio counselors for The Bond Fund of America are:

PRIMARY TITLE WITH PORTFOLIO
PORTFOLIO INVESTMENT ADVISER COUNSELOR
PORTFOLIO COUNSELOR/ COUNSELOR (OR AFFILIATE) ROLE IN
FUND TITLE EXPERIENCE AND INVESTMENT MANAGEMENT
(IF APPLICABLE) IN THIS FUND EXPERIENCE OF THE FUND
- -----------------------------------------------------------------------------------------

ABNER D. GOLDSTINE 35 years Senior Vice President Serves as a
President and (since the fund's - Fixed Income, fixed-income
Director inception) Capital Research and portfolio counselor
Management Company

Investment
professional for 57
years in total;
42 years with Capital
Research and
Management Company or
affiliate
- -----------------------------------------------------------------------------------------
DAVID C. BARCLAY 14 years Senior Vice President Serves as a
Senior Vice President - Fixed Income, fixed-income
Capital Research and portfolio counselor
Management Company

Investment
professional for 28
years in total;
21 years with Capital
Research and
Management Company or
affiliate
- -----------------------------------------------------------------------------------------
MARK R. MACDONALD 10 years Senior Vice President Serves as a
Senior Vice President - Fixed Income, fixed-income
Capital Research and portfolio counselor
Management Company

Investment
professional for 24
years in total;
15 years with Capital
Research and
Management Company or
affiliate
- -----------------------------------------------------------------------------------------
JOHN H. SMET 20 years Senior Vice President Serves as a
Senior Vice President - Fixed Income, fixed-income
Capital Research and portfolio counselor
Management Company

Investment
professional for 27
years in total;
26 years with Capital
Research and
Management Company or
affiliate
- -----------------------------------------------------------------------------------------
MARK H. DALZELL 15 years Senior Vice President Serves as a
- Fixed Income, fixed-income
Capital Research and portfolio counselor
Management Company

Investment
professional for 31
years in total;
21 years with Capital
Research and
Management Company or
affiliate
- -----------------------------------------------------------------------------------------
SUSAN M. TOLSON 11 years Senior Vice President Serves as a
(plus 7 years of - Fixed Income, fixed-income
prior experience Capital Research and portfolio counselor
as an Management Company
investment analyst
for the fund) Investment
professional for 21
years in total;
19 years with Capital
Research and
Management Company or
affiliate
- -----------------------------------------------------------------------------------------

The Bond Fund of America / Prospectus

<PAGE>

Information regarding the portfolio counselors' compensation, their ownership of
securities in the fund and other accounts they manage can be found in the
statement of additional information.

CERTAIN PRIVILEGES AND/OR SERVICES DESCRIBED ON THE FOLLOWING PAGES OF THIS
PROSPECTUS AND IN THE STATEMENT OF ADDITIONAL INFORMATION MAY NOT BE AVAILABLE
TO YOU, DEPENDING ON YOUR INVESTMENT DEALER OR RETIREMENT PLAN RECORDKEEPER.
PLEASE SEE YOUR FINANCIAL ADVISER, INVESTMENT DEALER OR RETIREMENT PLAN
RECORDKEEPER FOR MORE INFORMATION.

The Bond Fund of America / Prospectus
<PAGE>

Purchase, exchange and sale of shares

AMERICAN FUNDS SERVICE COMPANY, THE FUND'S TRANSFER AGENT, ON BEHALF OF THE FUND
AND AMERICAN FUNDS DISTRIBUTORS,/(R)/ THE FUND'S DISTRIBUTOR, IS REQUIRED BY
LAW TO OBTAIN CERTAIN PERSONAL INFORMATION FROM YOU OR ANY OTHER PERSON(S)
ACTING ON YOUR BEHALF IN ORDER TO VERIFY YOUR OR SUCH PERSON'S IDENTITY. IF YOU
DO NOT PROVIDE THE INFORMATION, THE TRANSFER AGENT MAY NOT BE ABLE TO OPEN YOUR
ACCOUNT. IF THE TRANSFER AGENT IS UNABLE TO VERIFY YOUR IDENTITY OR THAT OF ANY
OTHER PERSON(S) AUTHORIZED TO ACT ON YOUR BEHALF, OR BELIEVES IT HAS IDENTIFIED
POTENTIALLY CRIMINAL ACTIVITY, THE FUND AND AMERICAN FUNDS DISTRIBUTORS RESERVE
THE RIGHT TO CLOSE YOUR ACCOUNT OR TAKE SUCH OTHER ACTION THEY DEEM REASONABLE
OR REQUIRED BY LAW.

PURCHASES AND EXCHANGES

Eligible retirement plans generally may open an account and purchase Class A or
R shares by contacting any investment dealer (who may impose transaction charges
in addition to those described in this prospectus) authorized to sell the fund's
shares. Some or all R share classes may not be available through certain
investment dealers. Additional shares may be purchased through a plan's
administrator or recordkeeper.

Class A shares are generally not available for retirement plans using the
PlanPremier or Recordkeeper Direct recordkeeping programs.

Class R shares generally are available only to 401(k) plans, 457 plans, 403(b)
plans, profit-sharing and money purchase pension plans, defined benefit plans
and nonqualified deferred compensation plans. Class R shares also are generally
available only to retirement plans where plan level or omnibus accounts are held
on the books of the fund. In addition, Class R-6 shares are available for
investment by American Funds Target Date Retirement Series/(R)/ and Class R-5
shares are available to other registered investment companies approved by the
fund. Class R shares generally are not available to retail nonretirement
accounts, traditional and Roth individual retirement accounts (IRAs), Coverdell
Education Savings Accounts, SEPs, SARSEPs, SIMPLE IRAs and 529 college savings
plans.

Shares of the fund offered through this prospectus generally may be exchanged
into shares of the same class of other American Funds. Exchanges of Class A
shares from American Funds money market funds purchased without a sales charge
generally will be subject to the appropriate sales charge.

FREQUENT TRADING OF FUND SHARES

The fund and American Funds Distributors reserve the right to reject any
purchase order for any reason. The fund is not designed to serve as a vehicle
for frequent trading. Frequent trading of fund shares may lead to increased
costs to the fund and less efficient management of the fund's portfolio,
potentially resulting in dilution of the value of the shares held by long-term
shareholders. Accordingly, purchases, including those that are part of exchange
activity that the fund or American Funds Distributors has determined could
involve actual or potential harm to the fund, may be rejected.

The Bond Fund of America / Prospectus

<PAGE>

The fund, through its transfer agent, American Funds Service Company, maintains
surveillance procedures that are designed to detect frequent trading in fund
shares. Under these procedures, various analytics are used to evaluate factors
that may be indicative of frequent trading. For example, transactions in fund
shares that exceed certain monetary thresholds may be scrutinized. American
Funds Service Company also may review transactions that occur close in time to
other transactions in the same account or in multiple accounts under common
ownership or influence. Trading activity that is identified through these
procedures or as a result of any other information available to the fund will be
evaluated to determine whether such activity might constitute frequent trading.
These procedures may be modified from time to time as appropriate to improve the
detection of frequent trading, to facilitate monitoring for frequent trading in
particular retirement plans or other accounts, and to comply with applicable
laws.

In addition to the fund's broad ability to restrict potentially harmful trading
as described above, the fund's board of directors has adopted a "purchase
blocking policy" under which any shareholder redeeming shares having a value of
$5,000 or more from the fund will be precluded from investing in the fund for 30
calendar days after the redemption transaction. This policy also applies to
redemptions and purchases that are part of exchange transactions. Under the
fund's purchase blocking policy, certain purchases will not be prevented and
certain redemptions will not trigger a purchase block, such as systematic
redemptions and purchases, where the entity maintaining the shareholder account
is able to identify the transaction as a systematic redemption or purchase;
purchases and redemptions of shares having a value of less than $5,000;
transactions in Class 529 shares; purchases and redemptions resulting from
reallocations by American Funds Target Date Retirement Series; retirement plan
contributions, loans and distributions (including hardship withdrawals)
identified as such on the retirement plan recordkeeper's system; and purchase
transactions involving transfers of assets, rollovers, Roth IRA conversions and
IRA recharacterizations, where the entity maintaining the shareholder account is
able to identify the transaction as one of these types of transactions.

The fund reserves the right to waive the purchase blocking policy with respect
to specific shareholder accounts in those instances where American Funds Service
Company determines that its surveillance procedures are adequate to detect
frequent trading in fund shares.

American Funds Service Company will work with certain intermediaries (such as
investment dealers holding shareholder accounts in street name, retirement plan
recordkeepers, insurance company separate accounts and bank trust companies) to
apply their own procedures, provided that American Funds Service Company
believes the intermediary's procedures are reasonably designed to enforce the
frequent trading policies of the fund. You should refer to disclosures provided
by the intermediaries with which you have an account to determine the specific
trading restrictions that apply to you.

The Bond Fund of America / Prospectus
<PAGE>

If American Funds Service Company identifies any activity that may constitute
frequent trading, it reserves the right to contact the intermediary and request
that the intermediary either provide information regarding an account owner's
transactions or restrict the account owner's trading. If American Funds Service
Company is not satisfied that the intermediary has taken appropriate action,
American Funds Service Company may terminate the intermediary's ability to
transact in fund shares.

There is no guarantee that all instances of frequent trading in fund shares will
be prevented.

NOTWITHSTANDING THE FUND'S SURVEILLANCE PROCEDURES AND PURCHASE BLOCKING POLICY,
ALL TRANSACTIONS IN FUND SHARES REMAIN SUBJECT TO THE FUND'S AND AMERICAN FUNDS
DISTRIBUTORS' RIGHT TO RESTRICT POTENTIALLY ABUSIVE TRADING GENERALLY (INCLUDING
THE TYPES OF TRANSACTIONS DESCRIBED ABOVE THAT WILL NOT BE PREVENTED OR TRIGGER
A BLOCK UNDER THE PURCHASE BLOCKING POLICY). SEE THE STATEMENT OF ADDITIONAL
INFORMATION FOR MORE INFORMATION ABOUT HOW AMERICAN FUNDS SERVICE COMPANY MAY
ADDRESS OTHER POTENTIALLY ABUSIVE TRADING ACTIVITY IN THE AMERICAN FUNDS.

SALES

Please contact your plan administrator or recordkeeper in order to sell shares
from your retirement plan.

RIGHT OF REINVESTMENT

If you notify American Funds Service Company, you may reinvest proceeds from a
redemption, dividend payment or capital gain distribution without a sales charge
in the same fund or other American Funds, provided that the reinvestment occurs
within 90 days after the date of the redemption or distribution and is made into
the same account from which you redeemed the shares or received the
distribution. If the account has been closed, you may reinvest without a sales
charge if the new receiving account has the same registration as the closed
account. Proceeds will be reinvested in the same share class from which the
original redemption or distribution was made. Redemption proceeds of Class A
shares representing direct purchases in American Funds money market funds that
are reinvested in non-money market American Funds will be subject to a sales
charge. Proceeds will be reinvested at the next calculated net asset value after
your request is received and accepted by American Funds Service Company. For
purposes of this "right of reinvestment policy," automatic transactions
(including, for example, automatic purchases, withdrawals and payroll
deductions) and ongoing retirement plan contributions are not eligible for
investment without a sales charge. See the statement of additional information
for further information. You may not reinvest proceeds in the American Funds as
described in this paragraph if such proceeds are subject to a purchase block as
described under "Frequent trading of fund shares" in this prospectus. This
paragraph does not apply to certain rollover investments as described under
"Rollovers from retirement plans to IRAs" in this prospectus.

The Bond Fund of America / Prospectus

<PAGE>

VALUING SHARES

The net asset value of each share class of the fund is the value of a single
share. The fund calculates the net asset value each day the New York Stock
Exchange is open for trading as of approximately 4 p.m. New York time, the
normal close of regular trading. Assets are valued primarily on the basis of
market quotations. However, the fund has adopted procedures for making "fair
value" determinations if market quotations are not readily available or are not
considered reliable. For example, fair value procedures may be used if an issuer
defaults and there is no market for its securities. Use of these procedures is
intended to result in more appropriate net asset values.

Because the fund may hold securities that are primarily listed on foreign
exchanges that trade on weekends or days when the fund does not price its
shares, the value of securities held in the fund may change on days when you
will not be able to purchase or redeem fund shares.

Your shares will be purchased at the net asset value (plus any applicable sales
charge in the case of Class A shares), or sold at the net asset value next
determined after American Funds Service Company receives and accepts your
request.

MOVING BETWEEN SHARE CLASSES AND ACCOUNTS

Please see the statement of additional information for details and limitations
on moving investments in certain share classes to different share classes and on
moving investments held in certain accounts to different accounts.

The Bond Fund of America / Prospectus
<PAGE>

Sales charges

CLASS A SHARES

The initial sales charge you pay each time you buy Class A shares differs
depending upon the amount you invest and may be reduced or eliminated for larger
purchases as indicated below. The "offering price," the price you pay to buy
shares, includes any applicable sales charge, which will be deducted directly
from your investment. Shares acquired through reinvestment of dividends or
capital gain distributions are not subject to an initial sales charge.

SALES CHARGE AS A
PERCENTAGE OF:
DEALER
NET COMMISSION
OFFERING AMOUNT AS A PERCENTAGE
INVESTMENT PRICE INVESTED OF OFFERING PRICE
- -------------------------------------------------------------------------------

Less than $100,000 3.75% 3.90% 3.00%
- -------------------------------------------------------------------------------
$100,000 but less than $250,000 3.50 3.63 2.75
- -------------------------------------------------------------------------------
$250,000 but less than $500,000 2.50 2.56 2.00
- -------------------------------------------------------------------------------
$500,000 but less than $750,000 2.00 2.04 1.60
- -------------------------------------------------------------------------------
$750,000 but less than $1 million 1.50 1.52 1.20
- -------------------------------------------------------------------------------
$1 million or more and certain other none none see below
investments described below
- -------------------------------------------------------------------------------

The sales charge, expressed as a percentage of the offering price or the net
amount invested, may be higher or lower than the percentages described in the
table above due to rounding. This is because the dollar amount of the sales
charge is determined by subtracting the net asset value of the shares purchased
from the offering price, which is calculated to two decimal places using
standard rounding criteria. The impact of rounding will vary with the size of
the investment and the net asset value of the shares.

CLASS A PURCHASES NOT SUBJECT TO SALES CHARGES

The following investments are not subject to any initial or contingent deferred
sales charge if American Funds Service Company is properly notified of the
nature of the investment:

.. investments made by accounts that are part of certain qualified fee-based
programs and that purchased Class A shares before the discontinuation of your
investment dealer's load-waived Class A share program with the American Funds;
and

.. certain rollover investments from retirement plans to IRAs (see "Rollovers
from retirement plans to IRAs" in this prospectus for more information).

The distributor may pay dealers up to 1% on investments made in Class A shares
with no initial sales charge. The fund may reimburse the distributor for these
payments through its plans of distribution (see "Plans of distribution" in this
prospectus).

The Bond Fund of America / Prospectus

<PAGE>

Certain other investors may qualify to purchase shares without a sales charge,
such as employees of investment dealers and registered investment advisers
authorized to sell American Funds, and employees of The Capital Group Companies.
Please see the statement of additional information for more information.

EMPLOYER-SPONSORED RETIREMENT PLANS

Employer-sponsored retirement plans that are eligible to purchase Class R
shares may instead purchase Class A shares and pay the applicable Class A sales
charge, provided their recordkeepers can properly apply a sales charge on plan
investments. These plans are not eligible to make initial purchases of $1
million or more in Class A shares and thereby invest in Class A shares without
a sales charge, nor are they eligible to establish a statement of intention
that qualifies them to purchase Class A shares without a sales charge. More
information about statements of intention can be found under "Sales charge
reductions" in this prospectus. Plans investing in Class A shares with a sales
charge may purchase additional Class A shares in accordance with the sales
charge table in this prospectus.

Employer-sponsored retirement plans that invested in Class A shares without any
sales charge on or before March 31, 2004, and that continue to meet the
eligibility requirements in effect as of that date for purchasing Class A
shares at net asset value, may continue to purchase Class A shares without any
initial or contingent deferred sales charge.

A 403(b) plan may not invest in Class A, B or C shares on or after January 1,
2009, unless such plan was invested in Class A, B or C shares prior to that
date.

CLASS R SHARES

Class R shares are sold without any initial or contingent deferred sales charge.
The distributor will pay dealers annually an asset-based compensation of up to
1.00% for sales of Class R-1 shares, up to .75% for Class R-2 shares, up to .50%
for Class R-3 shares and up to .25% for Class R-4 shares. No dealer compensation
is paid from fund assets on sales of Class R-5 or R-6 shares. The fund may
reimburse the distributor for these payments through its plans of distribution
(see "Plans of distribution" in this prospectus).

The Bond Fund of America / Prospectus
<PAGE>

Sales charge reductions

TO RECEIVE A REDUCTION IN YOUR CLASS A INITIAL SALES CHARGE, YOU MUST LET YOUR
FINANCIAL ADVISER OR AMERICAN FUNDS SERVICE COMPANY KNOW AT THE TIME YOU
PURCHASE SHARES THAT YOU QUALIFY FOR SUCH A REDUCTION. IF YOU DO NOT LET YOUR
ADVISER OR AMERICAN FUNDS SERVICE COMPANY KNOW THAT YOU ARE ELIGIBLE FOR A
REDUCTION, YOU MAY NOT RECEIVE A SALES CHARGE DISCOUNT TO WHICH YOU ARE
OTHERWISE ENTITLED. In order to determine your eligibility to receive a sales
charge discount, it may be necessary for you to provide your adviser or American
Funds Service Company with information and records (including account
statements) of all relevant accounts invested in the American Funds.

IN ADDITION TO THE INFORMATION IN THIS PROSPECTUS, YOU MAY OBTAIN MORE
INFORMATION ABOUT SHARE CLASSES, SALES CHARGES AND SALES CHARGE REDUCTIONS
THROUGH A LINK ON THE HOME PAGE OF THE AMERICAN FUNDS WEBSITE AT
AMERICANFUNDS.COM, FROM THE STATEMENT OF ADDITIONAL INFORMATION OR FROM YOUR
FINANCIAL ADVISER.

REDUCING YOUR CLASS A INITIAL SALES CHARGE

Consistent with the policies described in this prospectus, two or more
retirement plans of an employer or employer's affiliates may combine all of
their American Funds investments to reduce their Class A sales charge. Certain
investments in the American Funds Target Date Retirement Series may also be
combined for this purpose. Please see the American Funds Target Date Retirement
Series prospectus for further information. However, for this purpose,
investments representing direct purchases of American Funds money market funds
are excluded. Following are different ways that you may qualify for a reduced
Class A sales charge:

CONCURRENT PURCHASES

Simultaneous purchases of any class of shares of two or more American Funds
(excluding American Funds money market funds) may be combined to qualify for a
reduced Class A sales charge.

RIGHTS OF ACCUMULATION

You may take into account your accumulated holdings in all share classes of the
American Funds (excluding American Funds money market funds) to determine the
initial sales charge you pay on each purchase of Class A shares. Subject to
your investment dealer's or recordkeeper's capabilities, your accumulated
holdings will be calculated as the higher of (a) the current value of your
existing holdings or (b) the amount you invested (including reinvested
dividends and capital gains, but excluding capital appreciation) less any
withdrawals. Please see the statement of additional information for further
details. You should retain any records necessary to substantiate the historical
amounts you have invested.

The Bond Fund of America / Prospectus

<PAGE>

STATEMENT OF INTENTION

You may reduce your Class A sales charge by establishing a statement of
intention. A statement of intention allows you to combine all purchases of all
share classes of the American Funds (excluding American Funds money market
funds) you intend to make over a 13-month period to determine the applicable
sales charge; however, purchases made under a right of reinvestment,
appreciation of your holdings, and reinvested dividends and capital gains do
not count as purchases made during the statement period. The market value of
your existing holdings eligible to be aggregated as of the day immediately
before the start of the statement period may be credited toward satisfying the
statement. A portion of your account may be held in escrow to cover additional
Class A sales charges that may be due if your total purchases over the
statement period do not qualify you for the applicable sales charge reduction.
Employer-sponsored retirement plans may be restricted from establishing
statements of intention. See "Sales charges" in this prospectus for more
information.

RIGHT OF REINVESTMENT

Please see the "Sales" section of "Purchase, exchange and sale of shares" in
this prospectus for information on how to reinvest proceeds from a redemption,
dividend payment or capital gain distribution without a sales charge.

The Bond Fund of America / Prospectus
<PAGE>

Rollovers from retirement plans to IRAs

Assets from retirement plans may be invested in Class A, B, C or F shares
through an IRA rollover, subject to the other provisions of this prospectus and
the prospectus for nonretirement plan shareholders. More information on Class B,
C and F shares can be found in the fund's prospectus for nonretirement plan
shareholders. Rollovers invested in Class A shares from retirement plans will be
subject to applicable sales charges. The following rollovers to Class A shares
will be made without a sales charge:

.. rollovers to IRAs from 403(b) plans with Capital Bank and Trust Company as
custodian; and

.. rollovers to IRAs that are attributable to American Funds investments, if they
meet the following requirements:

-- the assets being rolled over were invested in American Funds at the time of
distribution; and

-- the rolled over assets are contributed to an American Funds IRA with Capital
Bank and Trust Company as custodian.

IRA rollover assets that roll over without a sales charge as described above
will not be subject to a contingent deferred sales charge and investment dealers
will be compensated solely with an annual service fee that begins to accrue
immediately. IRA rollover assets invested in Class A shares that are not
attributable to American Funds investments, as well as future contributions to
the IRA, will be subject to sales charges and the terms and conditions generally
applicable to Class A share investments as described in this prospectus and the
statement of additional information.

The Bond Fund of America / Prospectus

<PAGE>

Plans of distribution

The fund has plans of distribution or "12b-1 plans" for certain share classes,
under which it may finance activities primarily intended to sell shares,
provided the categories of expenses are approved in advance by the fund's board
of directors. The plans provide for payments, based on annualized percentages of
average daily net assets, of up to .25% for Class A shares, up to 1.00% for
Class R-1 and R-2 shares, up to .75% for Class R-3 shares and up to .50% for
Class R-4 shares. For all share classes indicated above, up to .25% of these
expenses may be used to pay service fees to qualified dealers for providing
certain shareholder services. The amount remaining for each share class may be
used for distribution expenses.

The 12b-1 fees paid by the fund, as a percentage of average net assets for the
previous fiscal year, are indicated in the Annual Fund Operating Expenses table
under "Fees and expenses of the fund" in this prospectus. Since these fees are
paid out of the fund's assets or income on an ongoing basis, over time they will
increase the cost and reduce the return of your investment.

The Bond Fund of America / Prospectus
<PAGE>

Other compensation to dealers

American Funds Distributors, at its expense, currently provides additional
compensation to investment dealers. These payments may be made, at the
discretion of American Funds Distributors, to the top 100 dealers (or their
affiliates) that have sold shares of the American Funds. The level of payments
made to a qualifying firm in any given year will vary and in no case would
exceed the sum of (a) .10% of the previous year's American Funds sales by that
dealer and (b) .02% of American Funds assets attributable to that dealer. For
calendar year 2008, aggregate payments made by American Funds Distributors to
dealers were less than .02% of the average assets of the American Funds.
Aggregate payments may also change from year to year. A number of factors will
be considered in determining payments, including the qualifying dealer's sales,
assets and redemption rates, and the quality of the dealer's relationship with
American Funds Distributors. American Funds Distributors makes these payments to
help defray the costs incurred by qualifying dealers in connection with efforts
to educate financial advisers about the American Funds so that they can make
recommendations and provide services that are suitable and meet shareholder
needs. American Funds Distributors will, on an annual basis, determine the
advisability of continuing these payments. American Funds Distributors may also
pay expenses associated with meetings conducted by dealers outside the top 100
firms to facilitate educating financial advisers and shareholders about the
American Funds. If investment advisers, distributors or other affiliates of
mutual funds pay additional compensation or other incentives in differing
amounts, dealer firms and their advisers may have financial incentives for
recommending a particular mutual fund over other mutual funds. You should
consult with your financial adviser and review carefully any disclosure by your
financial adviser's firm as to compensation received.

The Bond Fund of America / Prospectus

<PAGE>

Distributions and taxes

DIVIDENDS AND DISTRIBUTIONS

The fund declares daily dividends from net investment income and distributes the
accrued dividends, which may fluctuate, to you each month. Dividends begin
accruing one day after payment for shares is received by the fund or American
Funds Service Company.

Capital gains, if any, are usually distributed in December. When a capital gain
is distributed, the net asset value per share is reduced by the amount of the
payment.

All dividends and capital gain distributions paid to retirement plan
shareholders will be automatically reinvested.

TAXES ON DIVIDENDS AND DISTRIBUTIONS

Dividends and capital gains distributed by the fund to tax-deferred retirement
plan accounts are not taxable currently.

TAXES ON TRANSACTIONS

Exchanges within a tax-deferred retirement plan account will not result in a
capital gain or loss for federal or state income tax purposes. With limited
exceptions, distributions from a retirement plan account are taxable as ordinary
income.

PLEASE SEE YOUR TAX ADVISER FOR MORE INFORMATION.

The Bond Fund of America / Prospectus
<PAGE>

Financial highlights

The Financial Highlights table is intended to help you understand the fund's
results for the past five fiscal years. Certain information reflects financial
results for a single share of a particular class. A similar table will be shown
for Class R-6 shares beginning with the fund's fiscal year ending after the date
the share class is first offered. The total returns in the table represent the
rate that an investor would have earned or lost on an investment in the fund
(assuming reinvestment of all dividends and capital gain distributions). Where
indicated, figures in the table reflect the impact, if any, of certain
reimbursements/waivers from Capital Research and Management Company. For more
information about these reimbursements/waivers, see the footnotes to the Annual
Fund Operating Expenses table under "Fees and expenses of the fund" in this
prospectus and the fund's annual report. The information in the Financial
Highlights table has been audited by Deloitte & Touche LLP, whose report, along
with the fund's financial statements, is included in the statement of additional
information, which is available upon request.

(LOSS) INCOME FROM INVESTMENT OPERATIONS/1/

Net asset Net (losses)
value, Net gains on securities Total from
beginning investment (both realized investment
of year income and unrealized) operations
- -----------------------------------------------------------------------------------

CLASS A:
Year ended 12/31/2008 $13.06 $.70 $(2.25) $(1.55)
Year ended 12/31/2007 13.32 .69 (.25) .44
Year ended 12/31/2006 13.22 .67 .09 .76
Year ended 12/31/2005 13.65 .62 (.36) .26
Year ended 12/31/2004 13.51 .61 .16 .77
- -----------------------------------------------------------------------------------
CLASS R-1:
Year ended 12/31/2008 13.06 .60 (2.25) (1.65)
Year ended 12/31/2007 13.32 .58 (.25) .33
Year ended 12/31/2006 13.22 .56 .09 .65
Year ended 12/31/2005 13.65 .51 (.36) .15
Year ended 12/31/2004 13.51 .50 .16 .66
- -----------------------------------------------------------------------------------
CLASS R-2:
Year ended 12/31/2008 13.06 .59 (2.25) (1.66)
Year ended 12/31/2007 13.32 .59 (.25) .34
Year ended 12/31/2006 13.22 .56 .09 .65
Year ended 12/31/2005 13.65 .51 (.36) .15
Year ended 12/31/2004 13.51 .50 .16 .66
- -----------------------------------------------------------------------------------
CLASS R-3:
Year ended 12/31/2008 $13.06 $.66 $(2.25) $(1.59)
Year ended 12/31/2007 13.32 .65 (.25) .40
Year ended 12/31/2006 13.22 .62 .09 .71
Year ended 12/31/2005 13.65 .56 (.36) .20
Year ended 12/31/2004 13.51 .55 .16 .71
- -----------------------------------------------------------------------------------
CLASS R-4:
Year ended 12/31/2008 13.06 .70 (2.25) (1.55)
Year ended 12/31/2007 13.32 .69 (.25) .44
Year ended 12/31/2006 13.22 .66 .09 .75
Year ended 12/31/2005 13.65 .61 (.36) .25
Year ended 12/31/2004 13.51 .60 .16 .76
- -----------------------------------------------------------------------------------
CLASS R-5:
Year ended 12/31/2008 13.06 .73 (2.25) (1.52)
Year ended 12/31/2007 13.32 .73 (.25) .48
Year ended 12/31/2006 13.22 .70 .09 .79
Year ended 12/31/2005 13.65 .66 (.36) .30
Year ended 12/31/2004 13.51 .65 .16 .81

Dividends
(from net Net asset
investment value, end Total
income) of year return/2,3/
- ----------------------------------------------------------------

CLASS A:
Year ended 12/31/2008 $(.75) $10.76 (12.24)%
Year ended 12/31/2007 (.70) 13.06 3.37
Year ended 12/31/2006 (.66) 13.32 5.88
Year ended 12/31/2005 (.69) 13.22 1.94
Year ended 12/31/2004 (.63) 13.65 5.85
- ----------------------------------------------------------------
CLASS R-1:
Year ended 12/31/2008 (.65) 10.76 (12.92)
Year ended 12/31/2007 (.59) 13.06 2.54
Year ended 12/31/2006 (.55) 13.32 5.05
Year ended 12/31/2005 (.58) 13.22 1.11
Year ended 12/31/2004 (.52) 13.65 4.98
- ----------------------------------------------------------------
CLASS R-2:
Year ended 12/31/2008 (.64) 10.76 (12.99)
Year ended 12/31/2007 (.60) 13.06 2.56
Year ended 12/31/2006 (.55) 13.32 5.06
Year ended 12/31/2005 (.58) 13.22 1.14
Year ended 12/31/2004 (.52) 13.65 5.02
- ----------------------------------------------------------------
CLASS R-3:
Year ended 12/31/2008 $(.71) $10.76 (12.52)%
Year ended 12/31/2007 (.66) 13.06 3.02
Year ended 12/31/2006 (.61) 13.32 5.49
Year ended 12/31/2005 (.63) 13.22 1.53
Year ended 12/31/2004 (.57) 13.65 5.42
- ----------------------------------------------------------------
CLASS R-4:
Year ended 12/31/2008 (.75) 10.76 (12.25)
Year ended 12/31/2007 (.70) 13.06 3.35
Year ended 12/31/2006 (.65) 13.32 5.86
Year ended 12/31/2005 (.68) 13.22 1.91
Year ended 12/31/2004 (.62) 13.65 5.81
- ----------------------------------------------------------------
CLASS R-5:
Year ended 12/31/2008 (.78) 10.76 (12.00)
Year ended 12/31/2007 (.74) 13.06 3.65
Year ended 12/31/2006 (.69) 13.32 6.17
Year ended 12/31/2005 (.73) 13.22 2.21
Year ended 12/31/2004 (.67) 13.65 6.14

Ratio of Ratio of
expenses expenses
to average to average
net assets net assets
Net assets, before after Ratio of
end of reim- reim- net income
year bursements/ bursements/ to average
(in millions) waivers waivers/3/ net assets/3/
- --------------------------------------------------------------------------------

CLASS A:
Year ended 12/31/2008 $21,987 .65% .63% 5.76%
Year ended 12/31/2007 24,898 .63 .61 5.22
Year ended 12/31/2006 20,670 .65 .62 5.07
Year ended 12/31/2005 17,738 .65 .62 4.60
Year ended 12/31/2004 15,822 .65 .65 4.54
- --------------------------------------------------------------------------------
CLASS R-1:
Year ended 12/31/2008 88 1.44 1.42 5.01
Year ended 12/31/2007 71 1.44 1.42 4.44
Year ended 12/31/2006 29 1.49 1.42 4.28
Year ended 12/31/2005 18 1.51 1.43 3.82
Year ended 12/31/2004 11 1.55 1.47 3.70
- --------------------------------------------------------------------------------
CLASS R-2:
Year ended 12/31/2008 616 1.53 1.50 4.90
Year ended 12/31/2007 648 1.51 1.40 4.44
Year ended 12/31/2006 500 1.67 1.41 4.30
Year ended 12/31/2005 352 1.74 1.41 3.84
Year ended 12/31/2004 238 1.85 1.43 3.73
- --------------------------------------------------------------------------------
CLASS R-3:
Year ended 12/31/2008 $939 .98% .95% 5.45%
Year ended 12/31/2007 949 .98 .95 4.89
Year ended 12/31/2006 570 1.02 .99 4.71
Year ended 12/31/2005 361 1.05 1.02 4.23
Year ended 12/31/2004 213 1.06 1.05 4.12
- --------------------------------------------------------------------------------
CLASS R-4:
Year ended 12/31/2008 707 .67 .64 5.77
Year ended 12/31/2007 692 .66 .64 5.22
Year ended 12/31/2006 325 .67 .65 5.06
Year ended 12/31/2005 182 .67 .65 4.61
Year ended 12/31/2004 77 .68 .68 4.48
- --------------------------------------------------------------------------------
CLASS R-5:
Year ended 12/31/2008 667 .37 .34 6.06
Year ended 12/31/2007 635 .36 .34 5.50
Year ended 12/31/2006 336 .37 .35 5.36
Year ended 12/31/2005 204 .37 .35 4.91
Year ended 12/31/2004 127 .37 .37 4.81

The Bond Fund of America / Prospectus

<PAGE>

YEAR ENDED DECEMBER 31
2008 2007 2006 2005 2004
- -------------------------------------------------------------------------------

PORTFOLIO TURNOVER
RATE FOR ALL CLASSES 57% 58% 53% 50% 45%
OF SHARES

1 Based on average shares outstanding.
2 Total returns exclude any applicable sales charges.
3 This column reflects the impact, if any, of certain reimbursements/waivers
from Capital Research and Management Company. During the years shown, Capital
Research and Management Company reduced fees for investment advisory services.
In addition, during some of the years shown, Capital Research and Management
Company paid a portion of the fund's transfer agent fees for certain retirement
plan share classes.

The Bond Fund of America / Prospectus

<PAGE>

[logo - American Funds /(R)/] The right choice for the long term/(R)/

FOR SHAREHOLDER American Funds Service Company
SERVICES 800/421-0180
FOR RETIREMENT PLAN Call your employer or plan
SERVICES administrator
FOR ADVISER American Funds Distributors
MARKETING 800/421-9900
americanfunds.com
FOR 24 For Class R share information,
-HOUR INFORMATION visit
AmericanFundsRetirement.com

Telephone calls you have with the American Funds
organization may be monitored or recorded for quality
assurance, verification and/or recordkeeping purposes.
By speaking with us on the telephone, you are giving
your consent to such monitoring and recording.
- -----------------------------------------------------------------------------------

MULTIPLE TRANSLATIONS This prospectus may be translated into other languages.
If there is any inconsistency or ambiguity in the meaning of any translated word
or phrase, the English text will prevail.

ANNUAL/SEMI-ANNUAL REPORT TO SHAREHOLDERS The shareholder reports contain
additional information about the fund, including financial statements,
investment results, portfolio holdings, a discussion of market conditions and
the fund's investment strategies and the independent registered public
accounting firm's report (in the annual report).

STATEMENT OF ADDITIONAL INFORMATION (SAI) AND CODES OF ETHICS The current SAI,
as amended from time to time, contains more detailed information about the fund,
including the fund's financial statements, and is incorporated by reference into
this prospectus. This means that the current SAI, for legal purposes, is part of
this prospectus. The codes of ethics describe the personal investing policies
adopted by the fund, the fund's investment adviser and its affiliated companies.

The codes of ethics and current SAI are on file with the Securities and Exchange
Commission (SEC). These and other related materials about the fund are available
for review or to be copied at the SEC's Public Reference Room in Washington, DC
(202/551-8090) or on the EDGAR database on the SEC's website at sec.gov or,
after payment of a duplicating fee, via e-mail request to publicinfo@sec.gov or
by writing to the SEC's Public Reference Section, 100 F Street, NE, Washington,
DC 20549-1520. The codes of ethics, current SAI and shareholder reports are also
available, free of charge, on americanfunds.com.

E-DELIVERY AND HOUSEHOLD MAILINGS Each year you are automatically sent an
updated prospectus and annual and semi-annual reports for the fund. You may also
occasionally receive proxy statements for the fund. In order to reduce the
volume of mail you receive, when possible, only one copy of these documents will
be sent to shareholders who are part of the same family and share the same
household address. You may elect to receive these documents electronically in
lieu of paper form by enrolling in e-delivery on our website, americanfunds.com.

If you would like to opt out of household-based mailings or receive a
complimentary copy of the current SAI, codes of ethics or annual/semi-annual
report to shareholders, please call American Funds Service Company at
800/421-0180 or write to the secretary of the fund at 333 South Hope Street, Los
Angeles, California 90071.

SECURITIES INVESTOR PROTECTION CORPORATION (SIPC) Shareholders may obtain
information about SIPC/(R)/ on its website at sipc.org or by calling
202/371-8300.

Investment Company File No. 811-02444
RPGEPR-908-0509P Litho in USA CGD/B/8029
- -------------------------------------------------------------------------------
THE CAPITAL GROUP COMPANIES
American Funds Capital Research and Management Capital International Capital Guardian Capital Bank and Trust

THE FUND PROVIDES SPANISH TRANSLATION IN CONNECTION WITH THE
PUBLIC OFFERING AND SALE OF ITS SHARES. THE FOLLOWING IS A FAIR
AND ACCURATE ENGLISH TRANSLATION OF A SPANISH LANGUAGE PROSPECTUS
FOR THE FUND.

/s/ KIMBERLY S. VERDICK
KIMBERLY S. VERDICK
SECRETARY

<PAGE>

[logo - American Funds /(R)/] The right choice for the long term/(R)/

The Bond Fund
of America/SM/

RETIREMENT PLAN
PROSPECTUS

May 1, 2009

TABLE OF CONTENTS

<PAGE>

[This page is intentionally left blank for this filing.]

<PAGE>

Risk/Return summary

Your investment in the fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency, entity or person.

YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS MAY BE
GREATER IF YOU INVEST FOR A SHORTER PERIOD OF TIME.

The Bond Fund of America / Prospectus
<PAGE>

HISTORICAL INVESTMENT RESULTS

CALENDAR YEAR TOTAL RETURNS FOR CLASS A SHARES
(Results do not include a sales charge; if a sales charge were included,
results would be lower.)

[begin bar chart]

1999 2.29%
2000 6.19
2001 7.15
2002 6.11
2003 12.22
2004 5.85
2005 1.94
2006 5.88
2007 3.37
2008 -12.24

[end bar chart]

Highest/Lowest quarterly results during this time period were:

HIGHEST 5.41% (quarter ended June 30, 2003)
LOWEST -6.82% (quarter ended September 30, 2008)

The Bond Fund of America / Prospectus

<PAGE>

. Class A share results reflect the maximum initial sales charge of 3.75%. This
charge is reduced for purchases of $100,000 or more and eliminated for
purchases of $1 million or more.

. Class R shares are sold without any initial sales charge.

Results would be higher if calculated without a sales charge.

Unlike the Investment Results table below, the Additional Investment Results
table on page 8 reflects the fund's results calculated without a sales charge.

CLASS A -- FIRST SOLD 5/28/74 -15.54% -0.05% 3.29% 8.16%
- --------------------------------------------------------------------------

1 YEAR 5 YEARS LIFETIME/1/
- -----------------------------------------------------------------

1 YEAR 5 YEARS 10 YEARS LIFETIME/2/
- -------------------------------------------------------------------------------

6 Reflects a fee waiver (7.73% without the waiver) as described in the Annual
Fund Operating Expenses table under "Fees and expenses of the fund."

The Bond Fund of America / Prospectus
<PAGE>

Fees and expenses of the fund

These tables describe the fees and expenses that you may pay if you buy and hold
shares of the fund.

SHAREHOLDER FEES (PAID DIRECTLY FROM YOUR INVESTMENT)
CLASS A ALL R SHARE CLASSES
- ------------------------------------------------------------------------------

* The initial sales charge is reduced for purchases of $100,000 or more and
eliminated for purchases of $1 million or more.

The Bond Fund of America / Prospectus

<PAGE>

OTHER EXPENSES

PAYMENTS TO UNAFFILIATED
PAYMENTS TO AFFILIATED ENTITIES ENTITIES
- -------------------------------------------------------------------------------

1 Payment amount depends on the date upon which services commenced.
2 Payment with respect to Recordkeeper Direct/(R)/ program.
3 Payment with respect to PlanPremier/(R)/ program.

EXAMPLES

Although your actual costs may be higher or lower, based on these assumptions,
your cumulative estimated expenses would be:

1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------

* Reflects the maximum initial sales charge.

The Bond Fund of America / Prospectus
<PAGE>

Investment objective, strategies and risks

The Bond Fund of America / Prospectus

<PAGE>

The Bond Fund of America / Prospectus
<PAGE>

ADDITIONAL INVESTMENT RESULTS

Unlike the Investment Results table on page 3, the table below reflects the
fund's results calculated without a sales charge.

CLASS A -- FIRST SOLD 5/28/74 -12.24% 0.72% 3.69% 8.27%

1 YEAR 5 YEARS LIFETIME/1/
- -----------------------------------------------------------------

1 YEAR 5 YEARS 10 YEARS LIFETIME/2/
- -------------------------------------------------------------------------------

The Bond Fund of America / Prospectus

<PAGE>

[begin pie chart]

PORTFOLIO BY TYPE OF SECURITY AS OF DECEMBER 31, 2008 (percent of net assets)

[end pie chart]

HOLDINGS BY QUALITY RATING AS OF DECEMBER 31, 2008
See the appendix in the statement of additional information for a
description of quality categories. PERCENT OF NET ASSETS

- -------------------------------------------------------------------------------

* These securities are guaranteed by the full faith and credit of the U.S.
government.

Because the fund is actively managed, its holdings will change over time.

For updated information on the fund's portfolio holdings, please visit us at
americanfunds.com.

The Bond Fund of America / Prospectus
<PAGE>

Management and organization

INVESTMENT ADVISER

The Bond Fund of America / Prospectus

<PAGE>

EXECUTION OF PORTFOLIO TRANSACTIONS

PORTFOLIO HOLDINGS

A description of the fund's policies and procedures regarding disclosure of
information about its portfolio holdings is available in the statement of
additional information.

MULTIPLE PORTFOLIO COUNSELOR SYSTEM

The Bond Fund of America / Prospectus
<PAGE>

The primary individual portfolio counselors for The Bond Fund of America are:

The Bond Fund of America / Prospectus

<PAGE>

Information regarding the portfolio counselors' compensation, their ownership of
securities in the fund and other accounts they manage can be found in the
statement of additional information.

The Bond Fund of America / Prospectus
<PAGE>

Purchase, exchange and sale of shares

PURCHASES AND EXCHANGES

Class A shares are generally not available for retirement plans using the
PlanPremier or Recordkeeper Direct recordkeeping programs.

FREQUENT TRADING OF FUND SHARES

The Bond Fund of America / Prospectus

<PAGE>

The Bond Fund of America / Prospectus
<PAGE>

There is no guarantee that all instances of frequent trading in fund shares will
be prevented.

SALES

Please contact your plan administrator or recordkeeper in order to sell shares
from your retirement plan.

RIGHT OF REINVESTMENT

The Bond Fund of America / Prospectus

<PAGE>

VALUING SHARES

MOVING BETWEEN SHARE CLASSES AND ACCOUNTS

The Bond Fund of America / Prospectus
<PAGE>

Sales charges

CLASS A SHARES

CLASS A PURCHASES NOT SUBJECT TO SALES CHARGES

The following investments are not subject to any initial or contingent deferred
sales charge if American Funds Service Company is properly notified of the
nature of the investment:

.. certain rollover investments from retirement plans to IRAs (see "Rollovers
from retirement plans to IRAs" in this prospectus for more information).

The Bond Fund of America / Prospectus

<PAGE>

EMPLOYER-SPONSORED RETIREMENT PLANS

A 403(b) plan may not invest in Class A, B or C shares on or after January 1,
2009, unless such plan was invested in Class A, B or C shares prior to that
date.

CLASS R SHARES

The Bond Fund of America / Prospectus
<PAGE>

Sales charge reductions

REDUCING YOUR CLASS A INITIAL SALES CHARGE

CONCURRENT PURCHASES

Simultaneous purchases of any class of shares of two or more American Funds
(excluding American Funds money market funds) may be combined to qualify for a
reduced Class A sales charge.

RIGHTS OF ACCUMULATION

The Bond Fund of America / Prospectus

<PAGE>

STATEMENT OF INTENTION

RIGHT OF REINVESTMENT

The Bond Fund of America / Prospectus
<PAGE>

Rollovers from retirement plans to IRAs

.. rollovers to IRAs from 403(b) plans with Capital Bank and Trust Company as
custodian; and

.. rollovers to IRAs that are attributable to American Funds investments, if they
meet the following requirements:

-- the assets being rolled over were invested in American Funds at the time of
distribution; and

-- the rolled over assets are contributed to an American Funds IRA with Capital
Bank and Trust Company as custodian.

The Bond Fund of America / Prospectus

<PAGE>

Plans of distribution

The Bond Fund of America / Prospectus
<PAGE>

Other compensation to dealers

The Bond Fund of America / Prospectus

<PAGE>

Distributions and taxes

DIVIDENDS AND DISTRIBUTIONS

Capital gains, if any, are usually distributed in December. When a capital gain
is distributed, the net asset value per share is reduced by the amount of the
payment.

All dividends and capital gain distributions paid to retirement plan
shareholders will be automatically reinvested.

TAXES ON DIVIDENDS AND DISTRIBUTIONS

Dividends and capital gains distributed by the fund to tax-deferred retirement
plan accounts are not taxable currently.

TAXES ON TRANSACTIONS

PLEASE SEE YOUR TAX ADVISER FOR MORE INFORMATION.

The Bond Fund of America / Prospectus
<PAGE>

Financial highlights

(LOSS) INCOME FROM INVESTMENT OPERATIONS/1/

Dividends
(from net Net asset
investment value, end Total
income) of year return/2,3/
- ----------------------------------------------------------------

The Bond Fund of America / Prospectus

<PAGE>

YEAR ENDED DECEMBER 31
2008 2007 2006 2005 2004
- -------------------------------------------------------------------------------

PORTFOLIO TURNOVER
RATE FOR ALL CLASSES 57% 58% 53% 50% 45%
OF SHARES

The Bond Fund of America / Prospectus

<PAGE>

[logo - American Funds /(R)/] The right choice for the long term/(R)/

SECURITIES INVESTOR PROTECTION CORPORATION (SIPC) Shareholders may obtain
information about SIPC/(R)/ on its website at sipc.org or by calling
202/371-8300.

<PAGE>

THE BOND FUND OF AMERICA, INC.

Part B
Statement of Additional Information

May 1, 2009

This document is not a prospectus but should be read in conjunction with the
current prospectus of The Bond Fund of America (the "fund" or "BFA") dated March
1, 2009 or retirement plan prospectus of the fund dated May 1, 2009. You may
obtain a prospectus from your financial adviser or by writing to the fund at the
following address:

The Bond Fund of America, Inc.
Attention: Secretary
333 South Hope Street
Los Angeles, California 90071
213/486-9200

Certain privileges and/or services described below may not be available to all
shareholders (including shareholders who purchase shares at net asset value
through eligible retirement plans) depending on the shareholder's investment
dealer or retirement plan recordkeeper. Please see your financial adviser,
investment dealer, plan recordkeeper or employer for more information.

TABLE OF CONTENTS

Item Page no.
- ---- --------

Certain investment limitations and guidelines . . . . . . . . . . . 2
Description of certain securities and investment techniques . . . . 3
Fundamental policies and investment restrictions. . . . . . . . . . 12
Management of the fund . . . . . . . . . . . . . . . . . . . . . . 15
Execution of portfolio transactions . . . . . . . . . . . . . . . . 35
Disclosure of portfolio holdings. . . . . . . . . . . . . . . . . . 38
Price of shares . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Taxes and distributions . . . . . . . . . . . . . . . . . . . . . . 41
Purchase and exchange of shares . . . . . . . . . . . . . . . . . . 46
Sales charges . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Sales charge reductions and waivers . . . . . . . . . . . . . . . . 53
Selling shares. . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Shareholder account services and privileges . . . . . . . . . . . . 58
General information . . . . . . . . . . . . . . . . . . . . . . . . 61
Appendix. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Financial statements

The Bond Fund of America -- Page 1
<PAGE>

CERTAIN INVESTMENT LIMITATIONS AND GUIDELINES

The following limitations and guidelines are considered at the time of purchase,
under normal circumstances, and are based on a percentage of the fund's net
assets unless otherwise noted. This summary is not intended to reflect all of
the fund's investment limitations.

.. The fund will invest at least 80% of its assets in bonds (for purposes of
this limit, bonds include any debt instrument and cash equivalents, and may
include certain preferred securities).

.. The fund will invest at least 60% of its assets in debt securities rated A3
or better by Moody's Investors Service (Moody's) or A- or better by
Standard & Poor's Corporation (S&P) or in unrated securities that are
determined by the investment adviser to be of equivalent quality at time of
purchase, including U.S. government securities, money market instruments or
cash.

.. The fund may invest up to 40% of its assets in debt securities rated below
A3 by Moody's and below A- by S&P or in unrated securities that are
determined by the investment adviser to be of equivalent quality.

.. The fund may invest up to 35% of its assets in debt securities rated Ba1 or
below by Moody's and BB+ or below by S&P or in unrated securities
determined by the investment adviser to be of equivalent quality. However,
the fund's current practice is not to invest more than 15% of its assets in
debt securities rated Ba1 and BB+ or below or unrated but determined by the
investment adviser to be of equivalent quality.

.. The fund may invest up to 10% of its assets in preferred stocks.

.. The fund may invest up to 25% of its assets in securities of issuers
domiciled outside the United States. In determining the domicile of an
issuer, the fund's investment adviser will consider the domicile
determination of a leading provider of global indexes, such as Morgan
Stanley Capital International, and may also take into account such factors
as where the company is legally organized, maintains principal corporate
offices and/or conducts its principal operations.

.. While the fund may not make direct purchases of common stocks or warrants
or rights to acquire common stocks, the fund may invest in debt securities
that are issued together with common stock or other equity interests or in
securities that have equity conversion, exchange or purchase rights. The
fund may hold up to 5% of its assets in common stock, warrants and rights
acquired after sales of the corresponding debt securities or received in
exchange for debt securities.

.. The fund may invest up to 5% of its assets in IOs and POs (as defined in
the following section).

* * * * * *

The fund may experience difficulty liquidating certain portfolio securities
during significant market declines or periods of heavy redemptions.

The Bond Fund of America -- Page 2
<PAGE>

DESCRIPTION OF CERTAIN SECURITIES AND INVESTMENT TECHNIQUES

The descriptions below are intended to supplement the material in the prospectus
under "Investment objective, strategies and risks."

DEBT SECURITIES -- Debt securities are used by issuers to borrow money.
Generally, issuers pay investors periodic interest and repay the amount borrowed
either periodically during the life of the security and/or at maturity. Some
debt securities, such as zero coupon bonds, do not pay current interest, but are
purchased at a discount from their face values and their values accrete over
time to face value at maturity. The market prices of debt securities fluctuate
depending on such factors as interest rates, credit quality and maturity. In
general, market prices of debt securities decline when interest rates rise and
increase when interest rates fall.

Lower rated debt securities, rated Ba1 or below by Moody's and/or BB+ or below
by S&P or unrated but determined by the fund's investment adviser to be of
equivalent quality, are described by the rating agencies as speculative and
involve greater risk of default or price changes due to changes in the issuer's
creditworthiness than higher rated debt securities, or they may already be in
default. The market prices of these securities may fluctuate more than higher
quality securities and may decline significantly in periods of general economic
difficulty. It may be more difficult to dispose of, and to determine the value
of, lower rated debt securities.

Certain additional risk factors relating to debt securities are discussed below:

SENSITIVITY TO INTEREST RATE AND ECONOMIC CHANGES -- Debt securities may be
sensitive to economic changes, political and corporate developments, and
interest rate changes. Generally, debt securities that are lower in an
issuer's capital structure will be more sensitive to interest rate changes.
In addition, during an economic downturn or substantial period of rising
interest rates, issuers that are highly leveraged may experience increased
financial stress that could adversely affect their ability to meet
projected business goals, to obtain additional financing and to service
their principal and interest payment obligations. Periods of economic
change and uncertainty also can be expected to result in increased
volatility of market prices and yields of certain debt securities. For
example, prices of these securities can be affected by financial contracts
held by the issuer or third parties (such as derivatives) relating to the
security or other assets or indices.

PAYMENT EXPECTATIONS -- Debt securities may contain redemption or call
provisions. If an issuer exercises these provisions in a lower interest
rate market, the fund would have to replace the security with a lower
yielding security, resulting in decreased income to investors. If the
issuer of a debt security defaults on its obligations to pay interest or
principal or is the subject of bankruptcy proceedings, the fund may incur
losses or expenses in seeking recovery of amounts owed to it.

LIQUIDITY AND VALUATION -- There may be little trading in the secondary
market for particular debt securities, which may affect adversely the
fund's ability to value accurately or dispose of such debt securities.
Adverse publicity and investor perceptions, whether or not based on
fundamental analysis, may decrease the value and/or liquidity of debt
securities.

The investment adviser attempts to reduce the risks described above through
diversification of the fund's portfolio and by credit analysis of each issuer,
as well as by monitoring broad

The Bond Fund of America -- Page 3
<PAGE>

economic trends and corporate and legislative developments, but there can be no
assurance that it will be successful in doing so.

Credit ratings for debt securities provided by rating agencies reflect an
evaluation of the safety of principal and interest payments, not market value
risk. The rating of an issuer is a rating agency's view of past and future
potential developments related to the issuer and may not necessarily reflect
actual outcomes. There can be a lag between the time of developments relating to
an issuer and the time a rating is assigned and updated.

Bond rating agencies may assign modifiers (such as +/-) to ratings categories to
signify the relative position of a credit within the rating category. Investment
policies that are based on ratings categories should be read to include any
security within that category, without giving consideration to the modifier
except where otherwise provided. See the Appendix for more information about
credit ratings.

INFLATION-INDEXED BONDS -- The fund may invest in inflation-indexed bonds issued
by governments, their agencies or instrumentalities and corporations.

The principal amount of an inflation-indexed bond is adjusted in response to
changes in the level of the consumer price index. Repayment of the original bond
principal upon maturity (as adjusted for inflation) is guaranteed in the case of
U.S. Treasury inflation-indexed bonds, and therefore the principal amount of
such bonds cannot be reduced below par even during a period of deflation.
However, the current market value of these bonds is not guaranteed and will
fluctuate, reflecting the rise and fall of yields. In certain jurisdictions
outside the United States the repayment of the original bond principal upon the
maturity of an inflation-indexed bond is not guaranteed, allowing for the amount
of the bond repaid at maturity to be less than par.

The interest rate for inflation-indexed bonds is fixed at issuance as a
percentage of this adjustable principal. Accordingly, the actual interest income
may both rise and fall as the principal amount of the bonds adjusts in response
to movements of the consumer price index. For example, typically interest income
would rise during a period of inflation and fall during a period of deflation.

SECURITIES WITH EQUITY AND DEBT CHARACTERISTICS -- The fund may invest in
securities that have a combination of equity and debt characteristics. These
securities may at times behave more like equity than debt or vice versa. Some
types of convertible bonds, preferred stocks or other preferred securities
automatically convert into common stocks or other securities at a stated
conversion ratio and some may be subject to redemption at the option of the
issuer at a predetermined price. These securities, prior to conversion, may pay
a fixed rate of interest or a dividend. Because convertible securities have both
debt and equity characteristics, their values vary in response to many factors,
including the values of the securities into which they are convertible, general
market and economic conditions, and convertible market valuations, as well as
changes in interest rates, credit spreads and the credit quality of the issuer.

Hybrid securities, which have both debt and equity characteristics, are normally
at the bottom of an issuer's debt capital structure. As such, they may be more
sensitive to interest rate changes than more senior debt securities. These
securities may also be viewed as more equity-like by the market when the issuer
or its parent company experience financial problems.

The Bond Fund of America -- Page 4
<PAGE>

The prices and yields of nonconvertible preferred securities or preferred stocks
generally move with changes in interest rates and the issuer's credit quality,
similar to the factors affecting debt securities. Nonconvertible preferred
securities will be treated as debt for fund investment limit purposes.

OBLIGATIONS BACKED BY THE "FULL FAITH AND CREDIT" OF THE U.S. GOVERNMENT -- U.S.
government obligations include the following types of securities:

U.S. TREASURY SECURITIES -- U.S. Treasury securities include direct
obligations of the U.S. Treasury, such as Treasury bills, notes and bonds.
For these securities, the payment of principal and interest is
unconditionally guaranteed by the U.S. government, and thus they are of the
highest possible credit quality. Such securities are subject to variations
in market value due to fluctuations in interest rates, but, if held to
maturity, will be paid in full.

FEDERAL AGENCY SECURITIES -- The securities of certain U.S. government
agencies and government-sponsored entities are guaranteed as to the timely
payment of principal and interest by the full faith and credit of the U.S.
government. Such agencies and entities include the Government National
Mortgage Association (Ginnie Mae), the Veterans Administration (VA), the
Federal Housing Administration (FHA), the Export-Import Bank (Exim Bank),
the Overseas Private Investment Corporation (OPIC), the Commodity Credit
Corporation (CCC) and the Small Business Administration (SBA).

OTHER FEDERAL AGENCY OBLIGATIONS -- Additional federal agency securities are
neither direct obligations of, nor guaranteed by, the U.S. government. These
obligations include securities issued by certain U.S. government agencies and
government-sponsored entities. However, they generally involve some form of
federal sponsorship: some operate under a government charter; some are backed by
specific types of collateral; some are supported by the issuer's right to borrow
from the Treasury; and others are supported only by the credit of the issuing
government agency or entity. These agencies and entities include, but are not
limited to: Federal Home Loan Bank, Federal Home Loan Mortgage Corporation
(Freddie Mac), Federal National Mortgage Association (Fannie Mae), Tennessee
Valley Authority and Federal Farm Credit Bank System.

On September 7, 2008, Freddie Mac and Fannie Mae were placed into
conservatorship by their new regulator, the Federal Housing Finance Agency.
Simultaneously, the U.S. Treasury made a commitment of indefinite duration to
maintain the positive net worth of both firms.

GOVERNMENT SUPPORT FOR SHORT-TERM DEBT INSTRUMENTS -- Various agencies and
instrumentalities of the U.S. government and governments of other countries have
recently implemented or announced programs that support short-term debt
instruments, including commercial paper, in an attempt to sustain liquidity in
the markets for these securities. Following is a brief summary of some of these
programs (please refer to the applicable entity's website for further
information on the specific program). Entities issuing obligations supported by
these programs in which the fund invests must be on an approved list that is
monitored on a regular basis.

TEMPORARY LIQUIDITY GUARANTEE PROGRAM -- The FDIC will guarantee payment of
new senior unsecured debt issued by FDIC-insured depository institutions,
U.S. bank holding companies and financial holding companies and certain
U.S. savings and loan holding companies. The guarantee will cover all new
senior unsecured debt, including commercial paper, issued by these entities
on or before December 31, 2009. The

The Bond Fund of America -- Page 5
<PAGE>

guarantee will extend only until December 31, 2012, even if the debt has
not then matured.

COMMERCIAL PAPER FUNDING FACILITY (CPFF) -- The Federal Reserve Bank of New
York will lend money to a special purpose vehicle that will purchase
eligible commercial paper from eligible issuers from October 27, 2008 until
October 30, 2009. Under the CPFF, eligible issuers are U.S. domiciled
issuers of commercial paper (including those with parent companies outside
the U.S.) and eligible commercial paper must have a three month maturity,
be U.S. dollar denominated and be rated at least A-1/P-1/F1 by two or more
nationally recognized rating agencies.

ASSET BACKED COMMERCIAL PAPER MONEY MARKET FUND LIQUIDITY FACILITY (AMLF) -
The Federal Reserve Bank of Boston will lend money to eligible borrowers,
including U.S. depositary institutions, bank holding companies and U.S.
branches and agencies of foreign banks, in order to fund purchases of
eligible asset backed commercial paper from money market funds until
October 30, 2009. Under the AMLF, eligible asset backed commercial paper
must be issued by a U.S. issuer that was in existence on September 18,
2008, be U.S. dollar denominated, be rated at least A-1, P-1 or F1 by at
least two major rating agencies (or in the top rating category if rated by
only one agency) and have a maturity that does not exceed 120 days if the
borrower is a bank or 270 days for non-bank borrowers.

MONEY MARKET INVESTOR FUNDING FACILITY (MMIFF) -- In addition to the CPFF,
the Federal Reserve Bank of New York will lend money to a series of special
purpose vehicles to purchase eligible assets from eligible investors. Under
the MMIFF, eligible investors are U.S. money market funds and eligible
assets include U.S. dollar-denominated certificates of deposit, bank notes
and commercial paper with a remaining maturity of 90 days or less issued by
the financial institutions designated in operational documents of the
special purpose vehicles. The special purpose vehicles will purchase the
eligible assets with funds from the Federal Reserve Bank of New York and
the issuance of asset backed commercial paper to the eligible investor. The
MMIFF will run through October 30, 2009.

GOVERNMENT GUARANTEES OUTSIDE THE U.S. -- Various governments outside the
U.S. have implemented or announced programs under which the government or a
government agency will guarantee debt, including commercial paper, of
financial institutions in that country.

PASS-THROUGH SECURITIES -- The fund may invest in various debt obligations
backed by pools of mortgages or other assets including, but not limited to,
loans on single family residences, home equity loans, mortgages on commercial
buildings, credit card receivables and leases on airplanes or other equipment.
Principal and interest payments made on the underlying asset pools backing these
obligations are typically passed through to investors, net of any fees paid to
any insurer or any guarantor of the securities. Pass-through securities may have
either fixed or adjustable coupons. These securities include:

MORTGAGE-BACKED SECURITIES -- These securities may be issued by U.S.
government agencies and government-sponsored entities, such as Ginnie Mae,
Fannie Mae and Freddie Mac, and by private entities. The payment of
interest and principal on mortgage-backed obligations issued by U.S.
government agencies may be guaranteed by the full

The Bond Fund of America -- Page 6
<PAGE>

faith and credit of the U.S. government (in the case of Ginnie Mae), or may
be guaranteed by the issuer (in the case of Fannie Mae and Freddie Mac).
However, these guarantees do not apply to the market prices and yields of
these securities, which vary with changes in interest rates.

Mortgage-backed securities issued by private entities are structured
similarly to those issued by U.S. government agencies. However, these
securities and the underlying mortgages are not guaranteed by any
government agencies. These securities generally are structured with one or
more types of credit enhancements such as insurance or letters of credit
issued by private companies. Mortgage-backed securities generally permit
borrowers to prepay their underlying mortgages. Prepayments can alter the
effective maturity of these instruments.

COLLATERALIZED MORTGAGE OBLIGATIONS (CMOS) -- CMOs are also backed by a
pool of mortgages or mortgage loans, which are divided into two or more
separate bond issues. CMOs issued by U.S. government agencies are backed by
agency mortgages, while privately issued CMOs may be backed by either
government agency mortgages or private mortgages. Payments of principal and
interest are passed through to each bond issue at varying schedules
resulting in bonds with different coupons, effective maturities and
sensitivities to interest rates. Some CMOs may be structured in a way that
when interest rates change, the impact of changing prepayment rates on the
effective maturities of certain issues of these securities is magnified.
CMOs may be less liquid or may exhibit greater price volatility than other
types of mortgage or asset-backed securities.

COMMERCIAL MORTGAGE-BACKED SECURITIES -- These securities are backed by
mortgages on commercial property, such as hotels, office buildings, retail
stores, hospitals and other commercial buildings. These securities may have
a lower prepayment uncertainty than other mortgage-related securities
because commercial mortgage loans generally prohibit or impose penalties on
prepayments of principal. In addition, commercial mortgage-related
securities often are structured with some form of credit enhancement to
protect against potential losses on the underlying mortgage loans. Many of
the risks of investing in commercial mortgage-backed securities reflect the
risks of investing in the real estate securing the underlying mortgage
loans, including the effects of local and other economic conditions on real
estate markets, the ability of tenants to make rental payments and the
ability of a property to attract and retain tenants. Commercial
mortgage-backed securities may be less liquid or exhibit greater price
volatility than other types of mortgage or asset-backed securities.

ASSET-BACKED SECURITIES -- These securities are backed by other assets such
as credit card, automobile or consumer loan receivables, retail installment
loans or participations in pools of leases. Credit support for these
securities may be based on the underlying assets and/or provided through
credit enhancements by a third party. The values of these securities are
sensitive to changes in the credit quality of the underlying collateral,
the credit strength of the credit enhancement, changes in interest rates
and at times the financial condition of the issuer. Some asset-backed
securities also may receive prepayments that can change their effective
maturities.

"IOs" and "POs" are issued in portions or tranches with varying maturities and
characteristics. Some tranches may only receive the interest paid on the
underlying mortgages (IOs) and others may only receive the principal payments
(POs). The values of IOs and POs are extremely

The Bond Fund of America -- Page 7
<PAGE>

sensitive to interest rate fluctuations and prepayment rates, and IOs are also
subject to the risk of early repayment of the underlying mortgages that will
substantially reduce or eliminate interest payments.

INVESTING IN VARIOUS COUNTRIES -- Investing outside the United States may
involve additional risks caused by, among other things, currency controls and
fluctuating currency values; different accounting, auditing, financial reporting
and legal standards and practices in some countries; changing local, regional
and global economic, political and social conditions; expropriation; changes in
tax policy; greater market volatility; differing securities market structures;
higher transaction costs; and various administrative difficulties, such as
delays in clearing and settling portfolio transactions or in receiving payment
of dividends.

The risks described above may be heightened in connection with investments in
developing countries. Although there is no universally accepted definition, the
investment adviser generally considers a developing country as a country that is
in the earlier stages of its industrialization cycle with a low per capita gross
domestic product ("GDP") and a low market capitalization to GDP ratio relative
to those in the United States and the European Union. Historically, the markets
of developing countries have been more volatile than the markets of developed
countries. The fund may invest in securities of issuers in developing countries
only to a limited extent.

Additional costs could be incurred in connection with the fund's investment
activities outside the United States. Brokerage commissions may be higher
outside the United States, and the fund will bear certain expenses in connection
with its currency transactions. Furthermore, increased custodian costs may be
associated with maintaining assets in certain jurisdictions.

CURRENCY TRANSACTIONS -- The fund may purchase and sell currencies to facilitate
securities transactions and enter into forward currency contracts to protect
against changes in currency exchange rates. A forward currency contract is an
obligation to purchase or sell a specific currency at a future date, which may
be any fixed number of days from the date of the contract agreed upon by the
parties, at a price set at the time of the contract. Forward currency contracts
entered into by the fund will involve the purchase or sale of one currency
against the U.S. dollar. While entering into forward currency transactions could
minimize the risk of loss due to a decline in the value of the hedged currency,
it could also limit any potential gain that may result from an increase in the
value of the currency. The fund will not generally attempt to protect against
all potential changes in exchange rates. The fund will segregate liquid assets
that will be marked to market daily to meet its forward contract commitments to
the extent required by the Securities and Exchange Commission.

Certain provisions of the Internal Revenue Code may affect the extent to which
the fund may enter into forward contracts. Such transactions also may affect the
character and timing of income, gain or loss recognized by the fund for U.S.
federal income tax purposes.

REAL ESTATE INVESTMENT TRUSTS -- The fund may invest in debt securities issued
by real estate investment trusts (REITs), which primarily invest in real estate
or real estate-related loans. Equity REITs own real estate properties, while
mortgage REITs hold construction, development and/or long-term mortgage loans.
The values of REITs may be affected by changes in the value of the underlying
property of the trusts, the creditworthiness of the issuer, property taxes,
interest rates, tax laws and regulatory requirements, such as those relating to
the environment. Both types of REITs are dependent upon management skill and the
cash flows generated by their holdings, the real estate market in general and
the possibility of failing to qualify for any applicable pass--

The Bond Fund of America -- Page 8
<PAGE>

through tax treatment or failing to maintain any applicable exemptive status
afforded under relevant laws.

FORWARD COMMITMENT, WHEN ISSUED AND DELAYED DELIVERY TRANSACTIONS -- The fund
may enter into commitments to purchase or sell securities at a future date. When
the fund agrees to purchase such securities, it assumes the risk of any decline
in value of the security from the date of the agreement. If the other party to
such a transaction fails to deliver or pay for the securities, the fund could
miss a favorable price or yield opportunity, or could experience a loss.

The fund will not use these transactions for the purpose of leveraging and will
segregate liquid assets that will be marked to market daily in an amount
sufficient to meet its payment obligations in these transactions. Although these
transactions will not be entered into for leveraging purposes, to the extent the
fund's aggregate commitments in connection with these transactions exceed its
segregated assets, the fund temporarily could be in a leveraged position
(because it may have an amount greater than its net assets subject to market
risk). Should market values of the fund's portfolio securities decline while the
fund is in a leveraged position, greater depreciation of its net assets would
likely occur than if it were not in such a position. The fund will not borrow
money to settle these transactions and, therefore, will liquidate other
portfolio securities in advance of settlement if necessary to generate
additional cash to meet its obligations. After a transaction is entered into,
the fund may still dispose of or renegotiate the transaction. Additionally,
prior to receiving delivery of securities as part of a transaction, the fund may
sell such securities.

The fund may also enter into "roll" transactions which involve the sale of
mortgage-backed or other securities together with a commitment to purchase
similar, but not identical, securities at a later date. The fund assumes the
risk of price and yield fluctuations during the time of the commitment. The fund
will segregate liquid assets which will be marked to market daily in an amount
sufficient to meet its payment obligations in these transactions.

REPURCHASE AGREEMENTS -- The fund may enter into repurchase agreements under
which the fund buys a security and obtains a simultaneous commitment from the
seller to repurchase the security at a specified time and price. Repurchase
agreements permit the fund to maintain liquidity and earn income over periods of
time as short as overnight. The seller must maintain with the fund's custodian
collateral equal to at least 100% of the repurchase price, including accrued
interest, as monitored daily by the investment adviser. The fund will only enter
into repurchase agreements involving securities in which it could otherwise
invest and with selected banks and securities dealers whose financial condition
is monitored by the investment adviser. If the seller under the repurchase
agreement defaults, the fund may incur a loss if the value of the collateral
securing the repurchase agreement has declined and may incur disposition costs
in connection with liquidating the collateral. If bankruptcy proceedings are
commenced with respect to the seller, realization of the collateral by the fund
may be delayed or limited.

CASH AND CASH EQUIVALENTS -- The fund may hold cash or invest in cash
equivalents. Cash equivalents include (a) commercial paper (for example,
short-term notes with maturities typically up to 12 months in length issued by
corporations, governmental bodies or bank/corporation sponsored conduits
(asset-backed commercial paper)) (b) short-term bank obligations (for example,
certificates of deposit, bankers' acceptances (time drafts on a commercial bank
where the bank accepts an irrevocable obligation to pay at maturity)) or bank
notes, (c) savings association and savings bank obligations (for example, bank
notes and certificates of deposit issued by savings banks or savings
associations), (d) securities of the U.S. government, its

The Bond Fund of America -- Page 9
<PAGE>

agencies or instrumentalities that mature, or may be redeemed, in one year or
less, and (e) corporate bonds and notes that mature, or that may be redeemed, in
one year or less.

LOAN ASSIGNMENTS AND PARTICIPATIONS -- The fund may invest in loans or other
forms of indebtedness that represent interests in amounts owed by corporations
or other borrowers (collectively "borrowers"). The investment adviser defines
debt securities to include investments in loans, such as loan assignments and
participations. Loans may be originated by the borrower in order to address its
working capital needs, as a result of a reorganization of the borrower's assets
and liabilities (recapitalizations), to merge with or acquire another company
(mergers and acquisitions), to take control of another company (leveraged
buy-outs), to provide temporary financing (bridge loans), or for other corporate
purposes. Most corporate loans are variable or floating rate obligations.

Some loans may be secured in whole or in part by assets or other collateral. In
other cases, loans may be unsecured or may become undersecured by declines in
the value of assets or other collateral securing such loan. The greater the
value of the assets securing the loan the more the lender is protected against
loss in the case of nonpayment of principal or interest. Loans made to highly
leveraged borrowers may be especially vulnerable to adverse changes in economic
or market conditions and may involve a greater risk of default.

The investment adviser generally makes investment decisions based on publicly
available information, but may rely on non-public information if necessary.
Borrowers may offer to provide lenders with material, non-public information
regarding a specific loan or the borrower in general. The investment adviser
generally chooses not to receive this information. As a result, the investment
adviser may be at a disadvantage compared to other investors that may receive
such information. The investment adviser's decision not to receive material,
non-public information may impact the investment adviser's ability to assess a
borrower's requests for amendments or waivers of provisions in the loan
agreement. However, the investment adviser may on a case-by-case basis decide to
receive such information when it deems prudent. In these situations the
investment adviser may be restricted from trading the loan or buying or selling
other debt and equity securities of the borrower while it is in possession of
such material, non-public information, even if such loan or other security is
declining in value.

The fund normally acquires loan obligations through an assignment from another
lender, but also may acquire loan obligations by purchasing participation
interests from lenders or other holders of the interests. When the fund
purchases assignments it acquires direct contractual rights against the borrower
on the loan. The fund acquires the right to receive principal and interest
payments directly from the borrower and to enforce its rights as a lender
directly against the borrower. However, because assignments are arranged through
private negotiations between potential assignees and potential assignors, the
rights and obligations acquired by a fund as the purchaser of an assignment may
differ from, and be more limited than, those held by the assigning lender.

Loan participations are loans or other direct debt instruments that are
interests in amounts owed by the borrower to another party. They may represent
amounts owed to lenders or lending syndicates, to suppliers of goods or
services, or to other parties. The fund will have the right to receive payments
of principal, interest and any fees to which it is entitled only from the lender
selling the participation and only upon receipt by the lender of the payments
from the borrower. In connection with purchasing participations, the fund
generally will have no right to enforce compliance by the borrower with the
terms of the loan agreement relating to the loan, nor any

The Bond Fund of America -- Page 10
<PAGE>

rights of set-off against the borrower. In addition, the fund may not directly
benefit from any collateral supporting the loan in which it has purchased the
participation and the fund will have to rely on the agent bank or other
financial intermediary to apply appropriate credit remedies. As a result, the
fund will be subject to the credit risk of both the borrower and the lender that
is selling the participation. In the event of the insolvency of the lender
selling a participation, a fund may be treated as a general creditor of the
lender and may not benefit from any set-off between the lender and the borrower.

Loan assignments and participations are generally subject to legal or
contractual restrictions on resale and are not currently listed on any
securities exchange or automatic quotation system. The investment adviser
expects that most loan assignments and participations purchased for the fund
will trade on a secondary market. However, although secondary markets for
investments in loans are growing among institutional investors, there may be a
limited number of investors interested in a specific loan. It is possible that
loan participations, in particular, could be sold only to a limited number of
institutional investors. If there is no active secondary market for a particular
loan, it may be difficult for the investment adviser to sell the fund's interest
in such loan at a price that is acceptable to it and to obtain pricing
information on such loan.

Investments in loan participations and assignments present the possibility that
the fund could be held liable as a co-lender under emerging legal theories of
lender liability. In addition, if the loan is foreclosed, the fund could be part
owner of any collateral and could bear the costs and liabilities of owning and
disposing of the collateral. In addition, some loan participations and
assignments may not be rated by major rating agencies and may not be protected
by the securities laws.

INVERSE FLOATING RATE NOTES -- The fund may invest to a very limited extent (no
more than 1% of its assets) in inverse floating rate notes (a type of derivative
instrument). These notes have rates that move in the opposite direction of
prevailing interest rates. A change in prevailing interest rates will often
result in a greater change in the instruments' interest rates. As a result,
these instruments may have a greater degree of volatility than other types of
interest-bearing securities.

RESTRICTED OR ILLIQUID SECURITIES -- The fund may purchase securities subject to
restrictions on resale. Restricted securities may only be sold pursuant to an
exemption from registration under the Securities Act of 1933 (the "1933 Act"),
or in a registered public offering. Restricted securities held by the fund are
often eligible for resale under Rule 144A, an exemption under the 1933 Act
allowing for resales to "Qualified Institutional Buyers". Where registration is
required, the holder of a registered security may be obligated to pay all or
part of the registration expense and a considerable period may elapse between
the time it decides to seek registration and the time it may be permitted to
sell a security under an effective registration statement. Difficulty in selling
such securities may result in a loss to the fund or cause it to incur additional
administrative costs.

Securities (including restricted securities) not actively traded will be
considered illiquid unless they have been specifically determined to be liquid
under procedures adopted by the fund's board of directors, taking into account
factors such as the frequency and volume of trading, the commitment of dealers
to make markets and the availability of qualified investors, all of which can
change from time to time. The fund may incur certain additional costs in
disposing of illiquid securities.

MATURITY -- There are no restrictions on the maturity composition of the
portfolio, although it is anticipated that the fund normally will be invested
substantially in securities with maturities in

The Bond Fund of America -- Page 11
<PAGE>

excess of three years. Under normal market conditions, longer term securities
yield more than shorter term securities, but are subject to greater price
fluctuations.

LOANS OF PORTFOLIO SECURITIES -- The fund is authorized to lend portfolio
securities to selected securities dealers or other institutional investors whose
financial condition is monitored by the investment adviser. The borrower must
maintain with the fund's custodian collateral consisting of cash, cash
equivalents or U.S. government securities equal to at least 100% of the value of
the borrowed securities, plus any accrued interest. The investment adviser will
monitor the adequacy of the collateral on a daily basis. The fund may at any
time call a loan of its portfolio securities and obtain the return of the loaned
securities. The fund will receive any interest paid on the loaned securities and
a fee or a portion of the interest earned on the collateral. The fund will limit
its loans of portfolio securities to an aggregate of 33-1/3% of the value of its
total assets, measured at the time any such loan is made. The fund does not
currently intend to engage in this investment practice over the next 12 months.

* * * * * *

PORTFOLIO TURNOVER -- Portfolio changes will be made without regard to the
length of time particular investments may have been held. Short-term trading
profits are not the fund's objective, and changes in its investments are
generally accomplished gradually, though short-term transactions may
occasionally be made. High portfolio turnover involves correspondingly greater
transaction costs in the form of dealer spreads or brokerage commissions, and
may result in the realization of net capital gains, which are taxable when
distributed to shareholders.

Fixed-income securities are generally traded on a net basis and usually neither
brokerage commissions nor transfer taxes are involved. Transaction costs are
usually reflected in the spread between the bid and asked price.

The fund's portfolio turnover rates for the fiscal years ended December 31, 2008
and 2007 were 57% and 58%, respectively. The portfolio turnover rate would equal
100% if each security in a fund's portfolio were replaced once per year. See
"Financial highlights" in the prospectus for the fund's annual portfolio
turnover rate for each of the last five fiscal years.

FUNDAMENTAL POLICIES AND INVESTMENT RESTRICTIONS

All percentage limitations are considered at the time securities are purchased
and are based on the fund's net assets unless otherwise indicated. None of the
following investment restrictions involving a maximum percentage of assets will
be considered violated unless the excess occurs immediately after, and is caused
by, an acquisition by the fund.

FUNDAMENTAL POLICIES -- The fund has adopted the following fundamental policies
and investment restrictions, which may not be changed without approval by
holders of a majority of its outstanding shares. Such majority is defined in the
Investment Company Act of 1940, as amended (the "1940 Act"), as the vote of the
lesser of (a) 67% or more of the voting securities present at a shareholder
meeting, if the holders of more than 50% of the outstanding voting securities
are present in person or by proxy, or (b) more than 50% of the outstanding
voting securities.

The Bond Fund of America -- Page 12
<PAGE>

These restrictions provide that the fund may not:

1. With respect to 75% of the fund's total assets, purchase the security of
any issuer (other than securities issued or guaranteed by the U.S. government or
its agencies or instrumentalities), if as a result, (a) more than 5% of the
fund's total assets would be invested in securities of that issuer, or (b) the
fund would hold more than 10% of the outstanding voting securities of that
issuer.

2. Concentrate its investments in a particular industry, as that term is used
in the Investment Company Act of 1940, as amended, and as interpreted or
modified by regulatory authority having jurisdiction, from time to time.

3. Invest in companies for the purpose of exercising control or management;

4. Buy or sell real estate in the ordinary course of its business; however,
the fund may invest in debt securities secured by real estate or interests
therein or issued by companies, including real estate investment trusts, which
invest in real estate or interests therein;

5. Buy or sell commodities or commodity contracts in the ordinary course of
its business, provided, however, that this shall not prohibit the fund from
purchasing or selling currencies including forward currency contracts;

6. Invest more than 15% of the value of its net assets in securities that are
illiquid;

7. Engage in the business of underwriting of securities of other issuers,
except to the extent that the disposal of an investment position may technically
constitute the fund an underwriter as that term is defined under the Securities
Act of 1933;

8. Make loans in an aggregate amount in excess of 10% of the value of the
fund's total assets, taken at the time any loan is made, provided, (i) that the
purchase of debt securities pursuant to the fund's investment objectives and
entering into repurchase agreements maturing in seven days or less shall not be
deemed loans for the purposes of this restriction, and (ii) that loans of
portfolio securities as described under "Loans of Portfolio Securities," shall
be made only in accordance with the terms and conditions therein set forth;

9. Sell securities short, except to the extent that the fund contemporaneously
owns or has the right to acquire at no additional cost securities identical to
those sold short;

10. Purchase securities at margin;

11. Borrow money except from banks for temporary or emergency purposes, not in
excess of 5% of the value of the fund's total assets.

Notwithstanding Investment Restriction #9, the fund has no current intention (at
least during the next 12 months) to sell securities short to the extent the fund
contemporaneously owns or has the right to acquire at no additional cost
securities identical to those sold short.

The Bond Fund of America -- Page 13
<PAGE>

NONFUNDAMENTAL POLICIES -- The fund has adopted the following nonfundamental
investment policies, which may be changed by action of the Board of Directors
without shareholder approval:

1. The fund may not invest in securities of other investment companies, except
as permitted by the 1940 Act.

2. The fund may not issue senior securities, except as permitted by the 1940
Act.

3. The fund may not acquire securities of open-end investment companies or
unit investment trusts registered under the 1940 Act in reliance on Sections
12(d)(1)(F) or 12(d)(1)(G) of the 1940 Act.

The Bond Fund of America -- Page 14
<PAGE>

MANAGEMENT OF THE FUND

BOARD OF DIRECTORS AND OFFICERS

"INDEPENDENT" DIRECTORS/1/

NAME, AGE AND NUMBER OF
POSITION WITH FUND PORTFOLIOS/3/
(YEAR FIRST ELECTED AS A PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS/4/
DIRECTOR/2/) DURING PAST FIVE YEARS BY DIRECTOR HELD BY DIRECTOR
- -----------------------------------------------------------------------------------------------------------------

Ambassador Richard G. Corporate director and author; 16 Carnival Corporation
Capen, Jr., 74 former U.S. Ambassador to
Director (1999) Spain; former Vice Chairman,
Knight-Ridder, Inc.
(communications company);
former Chairman and Publisher,
The Miami Herald
- -----------------------------------------------------------------------------------------------------------------
H. Frederick Christie, 75 Private investor; former 16 AECOM Technology Corporation;
Director (1974) President and CEO, The Mission DineEquity, Inc.;
Group (non-utility holding Ducommun Incorporated;
company, subsidiary of Southern SouthWest Water Company
California Edison Company)

- -----------------------------------------------------------------------------------------------------------------
James G. Ellis, 62 Dean and Professor of 14 Quiksilver, Inc.
Director (2006) Marketing, University of
Southern California
- -----------------------------------------------------------------------------------------------------------------
Martin Fenton, 73 Chairman of the Board, Senior 19 None
Chairman of the Board Resource Group LLC (development
(Independent and and management of senior living
Non-Executive) (1989) communities)
- -----------------------------------------------------------------------------------------------------------------
Leonard R. Fuller, 62 President and CEO, Fuller 17 None
Director (1994) Consulting (financial
management consulting firm)
- -----------------------------------------------------------------------------------------------------------------
R. Clark Hooper, 62 Private investor; former 19 JPMorgan Value Opportunities
Director (2005) President, Dumbarton Group LLC Fund, Inc.;
(securities industry The Swiss Helvetia Fund, Inc.
consulting); former Executive
Vice President - Policy and
Oversight, NASD
- -----------------------------------------------------------------------------------------------------------------
Laurel B. Mitchell, Ph.D., Director, Accounting Program, 6 None
53 University of Redlands
Director (2009)
- -----------------------------------------------------------------------------------------------------------------
Richard G. Newman,/5/ 74 Chairman of the Board, AECOM 15 Sempra Energy;
Director (1991) Technology Corporation SouthWest Water Company
(engineering, consulting and
professional technical
services)
- -----------------------------------------------------------------------------------------------------------------
Frank M. Sanchez, 65 Principal, The Sanchez Family 14 None
Director (1999) Corporation dba McDonald's
Restaurants (McDonald's
licensee)
- -----------------------------------------------------------------------------------------------------------------
Steadman Upham, Ph.D., 60 President and Professor of 15 None
Director (2007) Anthropology, The University of
Tulsa; former President and
Professor of Archaeology,
Claremont Graduate University
- -----------------------------------------------------------------------------------------------------------------

The Bond Fund of America -- Page 15
<PAGE>

"INTERESTED" DIRECTORS/6,7/

PRINCIPAL OCCUPATION(S)
DURING PAST FIVE YEARS
NAME, AGE AND AND POSITIONS NUMBER OF
POSITION WITH FUND HELD WITH AFFILIATED ENTITIES PORTFOLIOS/3/
(YEAR FIRST ELECTED AS A OR THE PRINCIPAL UNDERWRITER OVERSEEN OTHER DIRECTORSHIPS/4/
DIRECTOR/OFFICER/2/) OF THE FUND BY DIRECTOR HELD BY DIRECTOR
- ------------------------------------------------------------------------------------------------------

Paul G. Haaga, Jr., 60 Vice Chairman of the Board, 15 None
Vice Chairman of the Capital Research and
Board and Director (1985) Management Company; Senior
Vice President - Fixed Income,
Capital Research and
Management Company
- ------------------------------------------------------------------------------------------------------
Abner D. Goldstine, 79 Senior Vice President - Fixed 14 None
President and Director Income, Capital Research and
(1974) Management Company; Director,
Capital Research and
Management Company
- ------------------------------------------------------------------------------------------------------

OTHER OFFICERS

NAME, AGE AND
POSITION WITH FUND PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS
(YEAR FIRST ELECTED AS AND POSITIONS HELD WITH AFFILIATED ENTITIES
AN OFFICER/2/) OR THE PRINCIPAL UNDERWRITER OF THE FUND
- -------------------------------------------------------------------------------

David C. Barclay, 52 Senior Vice President - Fixed Income, Capital
Senior Vice President Research and Management Company; Director, The
(1997) Capital Group Companies, Inc.*
- -------------------------------------------------------------------------------
Mark R. Macdonald, 50 Senior Vice President - Fixed Income, Capital
Senior Vice President Research and Management Company; Director,
(2001) Capital Research and Management Company
- -------------------------------------------------------------------------------
John H. Smet, 52 Senior Vice President - Fixed Income, Capital
Senior Vice President Research and Management Company; Director,
(1994) American Funds Distributors, Inc.*
- -------------------------------------------------------------------------------
Kristine M. Nishiyama, Vice President and Senior Counsel - Fund Business
38 Management Group, Capital Research and Management
Vice President (2003) Company; Vice President and Counsel, Capital Bank
and Trust Company*
- -------------------------------------------------------------------------------
Kimberly S. Verdick, 44 Vice President - Fund Business Management Group,
Secretary (1994) Capital Research and Management Company
- -------------------------------------------------------------------------------
Ari M. Vinocor, 34 Vice President - Fund Business Management Group,
Treasurer (2007) Capital Research and Management Company
- -------------------------------------------------------------------------------
Courtney R. Taylor, 34 Assistant Vice President - Fund Business
Assistant Secretary Management Group, Capital Research and Management
(2006) Company
- -------------------------------------------------------------------------------
M. Susan Gupton, 35 Vice President - Fund Business Management Group,
Assistant Treasurer Capital Research and Management Company
(2008)
- -------------------------------------------------------------------------------

The Bond Fund of America -- Page 16
<PAGE>

* Company affiliated with Capital Research and Management Company.

1 The term "independent" director refers to a director who is not an "interested
person" of the fund within the meaning of the 1940 Act.

2 Directors and officers of the fund serve until their resignation, removal or
retirement.
3 Funds managed by Capital Research and Management Company, including the
American Funds; American Funds Insurance Series,(R) which is composed of 16
funds and serves as the underlying investment vehicle for certain variable
insurance contracts; American Funds Target Date Retirement Series,(R)/ /Inc.,
which is composed of nine funds and is available through tax-deferred
retirement plans and IRAs; and Endowments, which is composed of two portfolios
and is available to certain nonprofit organizations.
4 This includes all directorships (other than those in the American Funds or
other funds managed by Capital Research and Management Company) that are held
by each director as a director of a public company or a registered investment
company.
5 The investment adviser and its affiliates use a subsidiary of AECOM, Inc. to
perform architectural and space management services. The investment adviser's
business relationship with the subsidiary preceded its acquisition by AECOM in
1994. The total fees relating to this engagement for the last two years
represent less than 0.1% of AECOM, Inc.'s 2007 gross revenues.
6 "Interested persons" of the fund within the meaning of the 1940 Act, on the
basis of their affiliation with the fund's investment adviser, Capital Research
and Management Company, or affiliated entities (including the fund's principal
underwriter).
7 All of the officers listed are officers and/or directors/trustees of one or
more of the other funds for which Capital Research and Management Company
serves as investment adviser.

THE ADDRESS FOR ALL DIRECTORS AND OFFICERS OF THE FUND IS 333 SOUTH HOPE STREET,
55TH FLOOR, LOS ANGELES, CALIFORNIA 90071, ATTENTION: SECRETARY.

The Bond Fund of America -- Page 17
<PAGE>

FUND SHARES OWNED BY DIRECTORS AS OF DECEMBER 31, 2008:

AGGREGATE
DOLLAR
RANGE/1/ OF
INDEPENDENT
AGGREGATE DIRECTORS
DOLLAR RANGE/1/ DOLLAR DEFERRED
OF SHARES RANGE/1 /OF COMPENSATION/2/
OWNED IN INDEPENDENT ALLOCATED TO
ALL FUNDS DIRECTORS ALL FUNDS
IN THE DEFERRED WITHIN
DOLLAR RANGE/1/ AMERICAN FUNDS COMPENSATION/2/ AMERICAN FUNDS
OF FUND FAMILY OVERSEEN ALLOCATED FAMILY OVERSEEN
NAME SHARES OWNED BY DIRECTOR TO FUND BY DIRECTOR
- --------------------------------------------------------------------------------------------

"INDEPENDENT" DIRECTORS
- --------------------------------------------------------------------------------------------
Richard G. Capen, None Over $100,000 N/A Over $100,000
Jr.
- --------------------------------------------------------------------------------------------
H. Frederick None Over $100,000 N/A Over $100,000
Christie
- --------------------------------------------------------------------------------------------
James G. Ellis $10,001 - Over $100,000 N/A N/A
$50,000
- --------------------------------------------------------------------------------------------
Martin Fenton $10,001 - Over $100,000 N/A Over $100,000
$50,000
- --------------------------------------------------------------------------------------------
Leonard R. Fuller $10,001 - $50,001 - $1 - $10,000 Over $100,000
$50,000 $100,000
- --------------------------------------------------------------------------------------------
R. Clark Hooper $10,001 - Over $100,000 N/A $50,001 -
$50,000 $100,000
- --------------------------------------------------------------------------------------------
Laurel B. Mitchell/3/ None None N/A N/A
- --------------------------------------------------------------------------------------------
Richard G. Newman $50,001 - Over $100,000 N/A N/A
$100,000
- --------------------------------------------------------------------------------------------
Frank M. Sanchez $1 - $10,000 $10,001 - N/A N/A
$50,000
- --------------------------------------------------------------------------------------------
Steadman Upham None Over $100,000 N/A Over $100,000
- --------------------------------------------------------------------------------------------

The Bond Fund of America -- Page 18
<PAGE>

AGGREGATE
DOLLAR RANGE/1/
OF SHARES
OWNED IN
ALL FUNDS
IN THE
DOLLAR RANGE/1/ AMERICAN FUNDS
OF FUND FAMILY OVERSEEN
NAME SHARES OWNED BY DIRECTOR
- -----------------------------------------------------------------------------

"INTERESTED" DIRECTORS
- -----------------------------------------------------------------------------
Abner D. Over $100,000 Over $100,000
Goldstine
- -----------------------------------------------------------------------------
Paul G. Haaga, Over $100,000 Over $100,000
Jr.
- -----------------------------------------------------------------------------

1 Ownership disclosure is made using the following ranges: None; $1 - $10,000;
$10,001 - $50,000; $50,001 - $100,000; and Over $100,000. The amounts listed
for "interested" directors include shares owned through The Capital Group
Companies, Inc. retirement plan and 401(k) plan.
2 Eligible directors may defer their compensation under a nonqualified deferred
compensation plan. Deferred amounts accumulate at an earnings rate determined
by the total return of one or more American Funds as designated by the
director.

3 Dr. Mitchell was appointed to the board effective March 19, 2009.

DIRECTOR COMPENSATION -- No compensation is paid by the fund to any officer or
director who is a director, officer or employee of the investment adviser or its
affiliates. The boards of funds advised by the investment adviser typically meet
either individually or jointly with the boards of one or more other such funds
with substantially overlapping board membership (in each case referred to as a
"board cluster"). The fund typically pays each independent director an annual
fee, which ranges from $11,718 to $38,852, based primarily on the total number
of board clusters on which that independent director serves.

In addition, the fund generally pays independent directors attendance and other
fees for meetings of the board and its committees. Board and committee chairs
receive additional fees for their services.

Independent directors also receive attendance fees for certain special joint
meetings and information sessions with directors and trustees of other groupings
of funds advised by the investment adviser. The fund and the other funds served
by each independent director each pay an equal portion of these attendance fees.

No pension or retirement benefits are accrued as part of fund expenses.
Independent directors may elect, on a voluntary basis, to defer all or a portion
of their fees through a deferred compensation plan in effect for the fund. The
fund also reimburses certain expenses of the independent directors.

The Bond Fund of America -- Page 19
<PAGE>

DIRECTOR COMPENSATION EARNED DURING THE FISCAL YEAR ENDED DECEMBER 31, 2008

TOTAL COMPENSATION
(INCLUDING
VOLUNTARILY DEFERRED
COMPENSATION/1/)
FROM ALL FUNDS MANAGED BY
AGGREGATE COMPENSATION CAPITAL RESEARCH AND
(INCLUDING VOLUNTARILY MANAGEMENT
DEFERRED COMPENSATION/1/) COMPANY OR ITS
NAME FROM THE FUND AFFILIATES/2/
- ------------------------------------------------------------------------------------------------------------------------------------

Richard G. Capen, Jr./3/ $44,317 $232,300
- ------------------------------------------------------------------------------------------------------------------------------------
H. Frederick Christie/3/ 42,134 484,275
- ------------------------------------------------------------------------------------------------------------------------------------
James G. Ellis 40,789 132,063
- ------------------------------------------------------------------------------------------------------------------------------------
Martin Fenton/3/ 52,570 418,821
- ------------------------------------------------------------------------------------------------------------------------------------
Leonard R. Fuller/3/ 46,965 338,800
- ------------------------------------------------------------------------------------------------------------------------------------
R. Clark Hooper 42,036 323,142
- ------------------------------------------------------------------------------------------------------------------------------------
Laurel B. Mitchell/4/ None None
- ------------------------------------------------------------------------------------------------------------------------------------
Richard G. Newman 55,036 272,800
- ------------------------------------------------------------------------------------------------------------------------------------
Frank M. Sanchez 45,797 138,652
- ------------------------------------------------------------------------------------------------------------------------------------
Steadman Upham/3/ 44,366 208,218
- ------------------------------------------------------------------------------------------------------------------------------------

1 Amounts may be deferred by eligible directors under a nonqualified deferred
compensation plan adopted by the fund in 1993. Deferred amounts accumulate at
an earnings rate determined by the total return of one or more American Funds
as designated by the directors. Compensation shown in this table for the fiscal
year ended December 31, 2008 does not include earnings on amounts deferred in
previous fiscal years. See footnote 3 to this table for more information.
2 Funds managed by Capital Research and Management Company, including the
American Funds; American Funds Insurance Series,(R) which is composed of 16
funds and serves as the underlying investment vehicle for certain variable
insurance contracts; American Funds Target Date Retirement Series,(R)/ Inc.,
which is composed of nine funds and is available through tax-deferred
retirement plans and IRAs; and Endowments, which is composed of two portfolios
and is available to certain nonprofit organizations.
3 Since the deferred compensation plan's adoption, the total amount of deferred
compensation accrued by the fund (plus earnings thereon) through the 2008
fiscal year for participating directors is as follows: Richard G. Capen, Jr.
($32,305), H. Frederick Christie ($23,811), Martin Fenton ($103,599), Leonard
R. Fuller ($42,360) and Steadman Upham ($37,911). Amounts deferred and
accumulated earnings thereon are not funded and are general unsecured
liabilities of the fund until paid to the directors.
4 Dr. Mitchell was appointed to the board effective March 19, 2009.

As of March 1, 2009, the officers and directors of the fund and their families,
as a group, owned beneficially or of record less than 1% of the outstanding
shares of the fund.

FUND ORGANIZATION AND THE BOARD OF DIRECTORS -- The fund, an open-end,
diversified management investment company, was organized as a Maryland
corporation on December 3, 1973. Although the board of directors has delegated
day-to-day oversight to the investment adviser, all fund operations are
supervised by the fund's board, which meets periodically and performs duties
required by applicable state and federal laws.

Under Maryland law, the business affairs of a fund are managed under the
direction of the board of directors, and all powers of the fund are exercised by
or under the authority of the board except as reserved to the shareholders by
law or the fund's charter or by-laws. Maryland law requires each director to
perform his/her duties as a director, including his/her duties as a member of
any board committee on which he/she serves, in good faith, in a manner he/she

The Bond Fund of America -- Page 20
<PAGE>

reasonably believes to be in the best interest of the fund, and with the care
that an ordinarily prudent person in a like position would use under similar
circumstances.

Independent board members are paid certain fees for services rendered to the
fund as described above. They may elect to defer all or a portion of these fees
through a deferred compensation plan in effect for the fund.

The fund has several different classes of shares. Shares of each class represent
an interest in the same investment portfolio. Each class has pro rata rights as
to voting, redemption, dividends and liquidation, except that each class bears
different distribution expenses and may bear different transfer agent fees and
other expenses properly attributable to the particular class as approved by the
board of directors and set forth in the fund's rule 18f-3 Plan. Each class'
shareholders have exclusive voting rights with respect to the respective class'
rule 12b-1 plans adopted in connection with the distribution of shares and on
other matters in which the interests of one class are different from interests
in another class. Shares of all classes of the fund vote together on matters
that affect all classes in substantially the same manner. Each class votes as a
class on matters that affect that class alone. Note that 529 college savings
plan account owners invested in Class 529 shares are not shareholders of the
fund and, accordingly, do not have the rights of a shareholder, such as the
right to vote proxies relating to fund shares. As the legal owner of the fund's
Class 529 shares, the Virginia College Savings Plan/SM/ will vote any proxies
relating to such fund shares.

The fund does not hold annual meetings of shareholders. However, significant
matters that require shareholder approval, such as certain elections of board
members or a change in a fundamental investment policy, will be presented to
shareholders at a meeting called for such purpose. Shareholders have one vote
per share owned. At the request of the holders of at least 10% of the shares,
the fund will hold a meeting at which any member of the board could be removed
by a majority vote.

The fund's articles of incorporation and by-laws as well as separate
indemnification agreements that the fund has entered into with independent
directors provide in effect that, subject to certain conditions, the fund will
indemnify its officers and directors against liabilities or expenses actually
and reasonably incurred by them relating to their service to the fund. However,
directors are not protected from liability by reason of their willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of their office.

COMMITTEES OF THE BOARD OF DIRECTORS -- The fund has an audit committee
comprised of Richard G. Capen, Jr.; H. Frederick Christie; Leonard R. Fuller; R.
Clark Hooper; Laurel B. Mitchell; and Steadman Upham, none of whom is an
"interested person" of the fund within the meaning of the 1940 Act. The
committee provides oversight regarding the fund's accounting and financial
reporting policies and practices, its internal controls and the internal
controls of the fund's principal service providers. The committee acts as a
liaison between the fund's independent registered public accounting firm and the
full board of directors. Six audit committee meetings were held during the 2008
fiscal year.

The fund has a contracts committee comprised of Richard G. Capen, Jr.; H.
Frederick Christie; James G. Ellis; Martin Fenton; Leonard R. Fuller; R. Clark
Hooper; Laurel B. Mitchell; Richard G. Newman; Frank M. Sanchez; and Steadman
Upham, none of whom is an "interested person" of the fund within the meaning of
the 1940 Act. The committee's principal function is to request, review and
consider the information deemed necessary to evaluate the terms of certain

The Bond Fund of America -- Page 21
<PAGE>

agreements between the fund and its investment adviser or the investment
adviser's affiliates, such as the Investment Advisory and Service Agreement,
Principal Underwriting Agreement, Administrative Services Agreement and Plans of
Distribution adopted pursuant to rule 12b-1 under the 1940 Act, that the fund
may enter into, renew or continue, and to make its recommendations to the full
board of directors on these matters. One contracts committee meeting was held
during the 2008 fiscal year.

The fund has a nominating and governance committee comprised of Richard G.
Capen, Jr.; H. Frederick Christie; James G. Ellis; Martin Fenton; Leonard R.
Fuller; R. Clark Hooper; Richard G. Newman; Frank M. Sanchez; and Steadman
Upham, none of whom is an "interested person" of the fund within the meaning of
the 1940 Act. The committee periodically reviews such issues as the board's
composition, responsibilities, committees, compensation and other relevant
issues, and recommends any appropriate changes to the full board of directors.
The committee also evaluates, selects and nominates independent director
candidates to the full board of directors. While the committee normally is able
to identify from its own and other resources an ample number of qualified
candidates, it will consider shareholder suggestions of persons to be considered
as nominees to fill future vacancies on the board. Such suggestions must be sent
in writing to the nominating and governance committee of the fund, addressed to
the fund's secretary, and must be accompanied by complete biographical and
occupational data on the prospective nominee, along with a written consent of
the prospective nominee for consideration of his or her name by the committee.
One nominating and governance committee meeting was held during the 2008 fiscal
year.

PROXY VOTING PROCEDURES AND PRINCIPLES -- The fund's investment adviser, in
consultation with the fund's board, has adopted Proxy Voting Procedures and
Principles (the "Principles") with respect to voting proxies of securities held
by the fund, other American Funds, Endowments and American Funds Insurance
Series. The complete text of these principles is available on the American Funds
website at americanfunds.com. Certain American Funds have established separate
proxy voting committees that vote proxies or delegate to a voting officer the
authority to vote on behalf of those funds. Proxies for all other funds
(including the fund) are voted by a committee of the appropriate equity
investment division of the investment adviser under authority delegated by those
funds' boards. Therefore, if more than one fund invests in the same company,
they may vote differently on the same proposal.

All U.S. proxies are voted. Proxies for companies outside the U.S. also are
voted, provided there is sufficient time and information available. After a
proxy statement is received, the investment adviser prepares a summary of the
proposals contained in the proxy statement. A discussion of any potential
conflicts of interest also is included in the summary. For proxies of securities
managed by a particular investment division of the investment adviser, the
initial voting recommendation is made by one or more of the division's
investment analysts familiar with the company and industry. A second
recommendation is made by a proxy coordinator (an investment analyst with
experience in corporate governance and proxy voting matters) within the
appropriate investment division, based on knowledge of these Principles and
familiarity with proxy-related issues. The proxy summary and voting
recommendations are made available to the appropriate proxy voting committee for
a final voting decision.

The analyst and proxy coordinator making voting recommendations are responsible
for noting any potential material conflicts of interest. One example might be
where a director of one or more American Funds is also a director of a company
whose proxy is being voted. In such instances, proxy voting committee members
are alerted to the potential conflict. The proxy voting committee

The Bond Fund of America -- Page 22
<PAGE>

may then elect to vote the proxy or seek a third-party recommendation or vote of
an ad hoc group of committee members.

The Principles, which have been in effect in substantially their current form
for many years, provide an important framework for analysis and decision-making
by all funds. However, they are not exhaustive and do not address all potential
issues. The Principles provide a certain amount of flexibility so that all
relevant facts and circumstances can be considered in connection with every
vote. As a result, each proxy received is voted on a case-by-case basis
considering the specific circumstances of each proposal. The voting process
reflects the funds' understanding of the company's business, its management and
its relationship with shareholders over time.

Information regarding how the fund voted proxies relating to portfolio
securities during the 12-month period ended June 30 of each year will be
available on or about September 1 of each year (a) without charge, upon request
by calling American Funds Service Company at 800/421-0180, (b) on the American
Funds website and (c) on the SEC's website at sec.gov.

The following summary sets forth the general positions of the American Funds,
Endowments, American Funds Insurance Series and the investment adviser on
various proposals. A copy of the full Principles is available upon request, free
of charge, by calling American Funds Service Company or visiting the American
Funds website.

DIRECTOR MATTERS -- The election of a company's slate of nominees for
director generally is supported. Votes may be withheld for some or all of
the nominees if this is determined to be in the best interest of
shareholders. Separation of the chairman and CEO positions also may be
supported.

GOVERNANCE PROVISIONS -- Typically, proposals to declassify a board (elect
all directors annually) are supported based on the belief that this
increases the directors' sense of accountability to shareholders. Proposals
for cumulative voting generally are supported in order to promote
management and board accountability and an opportunity for leadership
change. Proposals designed to make director elections more meaningful,
either by requiring a majority vote or by requiring any director receiving
more withhold votes than affirmative votes to tender his or her
resignation, generally are supported.

SHAREHOLDER RIGHTS -- Proposals to repeal an existing poison pill generally
are supported. (There may be certain circumstances, however, when a proxy
voting committee of a fund or an investment division of the investment
adviser believes that a company needs to maintain anti-takeover
protection.) Proposals to eliminate the right of shareholders to act by
written consent or to take away a shareholder's right to call a special
meeting typically are not supported.

COMPENSATION AND BENEFIT PLANS -- Option plans are complicated, and many
factors are considered in evaluating a plan. Each plan is evaluated based
on protecting shareholder interests and a knowledge of the company and its
management. Considerations include the pricing (or repricing) of options
awarded under the plan and the impact of dilution on existing shareholders
from past and future equity awards. Compensation packages should be
structured to attract, motivate and retain existing employees and qualified
directors; however, they should not be excessive.

The Bond Fund of America -- Page 23
<PAGE>

ROUTINE MATTERS -- The ratification of auditors, procedural matters
relating to the annual meeting and changes to company name are examples of
items considered routine. Such items generally are voted in favor of
management's recommendations unless circumstances indicate otherwise.

PRINCIPAL FUND SHAREHOLDERS -- The following table identifies those investors
who own of record or are known by the fund to own beneficially 5% or more of any
class of its shares as of the opening of business on March 1, 2009. Unless
otherwise indicated, the ownership percentages below represent ownership of
record rather than beneficial ownership.

NAME AND ADDRESS OWNERSHIP OWNERSHIP PERCENTAGE
- -------------------------------------------------------------------------------

Edward D. Jones & Co. Record Class A 21.53%
Omnibus Account Class B 12.89
Maryland Heights, MO Class F-1 17.21
- -------------------------------------------------------------------------------
First Clearing, LLC Record Class A 8.06
Custody Account Class B 9.46
Glen Allen, VA Class C 10.03
Class F-1 6.49
- -------------------------------------------------------------------------------
Merrill Lynch Record Class B 5.68
Omnibus Account Class C 15.88
Jacksonville, FL Class F-1 6.22
Class R-3 6.37
Class R-5 8.54
- -------------------------------------------------------------------------------
Citigroup Global Markets, Inc. Record Class C 9.53
Omnibus Account
New York, NY
- -------------------------------------------------------------------------------
Morgan Stanley & Co., Inc. Record Class F-1 7.97
Omnibus Account
Jersey City, NJ
- -------------------------------------------------------------------------------
LPL Financial Record Class F-2 7.91
Omnibus Account
San Diego, CA
- -------------------------------------------------------------------------------
Hartford Life Insurance Co. Separate Record Class R-1 29.70
Account Beneficial Class R-3 7.59
401K Plan
Hartford, CT
- -------------------------------------------------------------------------------
Nationwide Trust Company Record Class R-3 6.22
Columbus, OH
- -------------------------------------------------------------------------------
Trader Joe's Company Record Class R-4 11.62
Retirement Plan Beneficial
Englewood, CO
- -------------------------------------------------------------------------------
Charles Schwab & Co., Inc. Record Class R-4 5.31
Custody Account
San Francisco. CA
- -------------------------------------------------------------------------------
American Funds 2010 Target Date Record Class R-5 6.20
Retirement Fund
Norfolk, VA
- -------------------------------------------------------------------------------

The Bond Fund of America -- Page 24
<PAGE>

UNLESS OTHERWISE NOTED, REFERENCES IN THIS STATEMENT OF ADDITIONAL INFORMATION
TO CLASS F SHARES, CLASS R SHARES OR CLASS 529 SHARES REFER TO BOTH F SHARE
CLASSES, ALL R SHARE CLASSES OR ALL 529 SHARE CLASSES, RESPECTIVELY.

INVESTMENT ADVISER -- Capital Research and Management Company, the fund's
investment adviser, founded in 1931, maintains research facilities in the United
States and abroad (Los Angeles, San Francisco, New York, Washington, DC, London,
Geneva, Hong Kong, Singapore and Tokyo). These facilities are staffed with
experienced investment professionals. The investment adviser is located at 333
South Hope Street, Los Angeles, CA 90071 and 6455 Irvine Center Drive, Irvine,
CA 92618. It is a wholly owned subsidiary of The Capital Group Companies, Inc.,
a holding company for several investment management subsidiaries. Capital
Research and Management Company manages equity assets through two investment
divisions, Capital World Investors and Capital Research Global Investors, and
manages fixed-income assets through its Fixed Income division. Capital World
Investors and Capital Research Global Investors make investment decisions on an
independent basis.

The investment adviser has adopted policies and procedures that address issues
that may arise as a result of an investment professional's management of the
fund and other funds and accounts. Potential issues could involve allocation of
investment opportunities and trades among funds and accounts, use of information
regarding the timing of fund trades, investment professional compensation and
voting relating to portfolio securities. The investment adviser believes that
its policies and procedures are reasonably designed to address these issues.

COMPENSATION OF INVESTMENT PROFESSIONALS -- As described in the prospectus, the
investment adviser uses a system of multiple portfolio counselors in managing
fund assets. In addition, Capital Research and Management Company's investment
analysts may make investment decisions with respect to a portion of a fund's
portfolio within their research coverage.

Portfolio counselors and investment analysts are paid competitive salaries by
Capital Research and Management Company. In addition, they may receive bonuses
based on their individual portfolio results. Investment professionals also may
participate in profit-sharing plans. The relative mix of compensation
represented by bonuses, salary and profit-sharing plans will vary depending on
the individual's portfolio results, contributions to the organization and other
factors.

To encourage a long-term focus, bonuses based on investment results are
calculated by comparing pretax total investment returns to relevant benchmarks
over the most recent year, a four-year rolling average and an eight-year rolling
average with greater weight placed on the four-year and eight-year rolling
averages. For portfolio counselors, benchmarks may include measures of the
marketplaces in which the fund invests and measures of the results of comparable
mutual funds. For investment analysts, benchmarks may include relevant market
measures and appropriate industry or sector indexes reflecting their areas of
expertise. Capital Research and Management Company makes periodic subjective
assessments of analysts' contributions to the investment process and this is an
element of their overall compensation. The investment results of each of the
fund's portfolio counselors may be measured against one or more of the following
benchmarks, depending on his or her investment focus: Barclays Capital U.S.
Aggregate Index (formerly Lehman Brothers U.S. Aggregate Index); Credit Suisse
First Boston High Yield Bond Index, Lipper High Current Yield Bond Funds Average
and Lipper Corporate Debt Funds A Rated Average.

The Bond Fund of America -- Page 25
<PAGE>

PORTFOLIO COUNSELOR FUND HOLDINGS AND OTHER MANAGED ACCOUNTS -- As described
below, portfolio counselors may personally own shares of the fund. In addition,
portfolio counselors may manage portions of other mutual funds or accounts
advised by Capital Research and Management Company or its affiliates.

THE FOLLOWING TABLE REFLECTS INFORMATION AS OF DECEMBER 31, 2008:

NUMBER NUMBER
OF OTHER OF OTHER NUMBER
REGISTERED POOLED OF OTHER
INVESTMENT INVESTMENT ACCOUNTS
COMPANIES (RICS) VEHICLES (PIVS) FOR WHICH
FOR WHICH FOR WHICH PORTFOLIO
PORTFOLIO PORTFOLIO COUNSELOR
DOLLAR RANGE COUNSELOR COUNSELOR IS A MANAGER
OF FUND IS A MANAGER IS A MANAGER (ASSETS OF
PORTFOLIO SHARES (ASSETS OF RICS (ASSETS OF PIVS OTHER ACCOUNTS
COUNSELOR OWNED/1/ IN BILLIONS)/2/ IN BILLIONS)/3/ IN BILLIONS)/4/
- --------------------------------------------------------------------------------------------

Abner D. $500,001 - 3 $139.0 None None
Goldstine $1,000,000
- --------------------------------------------------------------------------------------------
David C. Barclay $500,001 - 4 $148.7 2 $0.25 17 $5.54
$1,000,000
- --------------------------------------------------------------------------------------------
Mark R. Macdonald $500,001 - 4 $155.4 None None
$1,000,000
- --------------------------------------------------------------------------------------------
John H. Smet $100,001 - 7 $189.5 None 3 $2.06
$500,000
- --------------------------------------------------------------------------------------------
Mark H. Dalzell $100,001 - 3 $ 81.9 2 $0.16 17/5/ $5.23
$500,000
- --------------------------------------------------------------------------------------------
Susan M. Tolson $50,001 - 3 $ 90.9 None None
$100,000
- --------------------------------------------------------------------------------------------

1 Ownership disclosure is made using the following ranges: None; $1 - $10,000;
$10,001 - $50,000; $50,001 - $100,000; $100,001 - $500,000; $500,001 -
$1,000,000; and Over $1,000,000. The amounts listed include shares owned
through The Capital Group Companies, Inc. retirement plan and 401(k) plan.
2 Indicates fund(s) where the portfolio counselor also has significant
responsibilities for the day to day management of the fund(s). Assets noted are
the total net assets of the registered investment companies and are not the
total assets managed by the individual, which is a substantially lower amount.

3 Represents funds advised or sub-advised by Capital Research and Management
Company and sold outside the United States and/ or fixed-income assets in
institutional accounts managed by investment adviser subsidiaries of Capital
Group International, Inc., an affiliate of Capital Research and Management
Company. Assets noted are the total net assets of the funds or accounts and are
not the total assets managed by the individual, which is a substantially lower
amount.

4 Reflects other professionally managed accounts held at companies affiliated
with Capital Research and Management Company. Personal brokerage accounts of
portfolio counselors and their families are not reflected.
5 The advisory fee of two of these accounts (representing $0.24 billion in total
assets) is based partially on their investment results.

INVESTMENT ADVISORY AND SERVICE AGREEMENT -- The Investment Advisory and Service
Agreement (the "Agreement") between the fund and the investment adviser will
continue in effect until October 31, 2009, unless sooner terminated, and may be
renewed from year to year thereafter, provided that any such renewal has been
specifically approved at least annually by (a) the board of directors, or by the
vote of a majority (as defined in the 1940 Act) of the

The Bond Fund of America -- Page 26
<PAGE>

outstanding voting securities of the fund, and (b) the vote of a majority of
directors who are not parties to the Agreement or interested persons (as defined
in the 1940 Act) of any such party, cast in person at a meeting called for the
purpose of voting on such approval. The Agreement provides that the investment
adviser has no liability to the fund for its acts or omissions in the
performance of its obligations to the fund not involving willful misconduct, bad
faith, gross negligence or reckless disregard of its obligations under the
Agreement. The Agreement also provides that either party has the right to
terminate it, without penalty, upon 60 days' written notice to the other party,
and that the Agreement automatically terminates in the event of its assignment
(as defined in the 1940 Act).

In addition to providing investment advisory services, the investment adviser
furnishes the services and pays the compensation and travel expenses of persons
to perform the fund's executive, administrative, clerical and bookkeeping
functions, and provides suitable office space, necessary small office equipment
and utilities, general purpose accounting forms, supplies and postage used at
the fund's offices. The fund pays all expenses not assumed by the investment
adviser, including, but not limited to: custodian, stock transfer and dividend
disbursing fees and expenses; shareholder recordkeeping and administrative
expenses; costs of the designing, printing and mailing of reports, prospectuses,
proxy statements and notices to its shareholders; taxes; expenses of the
issuance and redemption of fund shares (including stock certificates,
registration and qualification fees and expenses); expenses pursuant to the
fund's plans of distribution (described below); legal and auditing expenses;
compensation, fees and expenses paid to independent directors; association dues;
costs of stationery and forms prepared exclusively for the fund; and costs of
assembling and storing shareholder account data.

The management fee is based upon the net assets of the fund and monthly gross
investment income. Gross investment income is determined in accordance with
generally accepted accounting principles and does not include gains or losses
from sales of capital assets.

The management fee is based on the following annualized rates and average daily
net asset levels:

Net asset level

RATE IN EXCESS OF UP TO
- ------------------------------------------------------------------------------

0.30% $ 0 $ 60,000,000
- ------------------------------------------------------------------------------
0.21 60,000,000 1,000,000,000
- ------------------------------------------------------------------------------
0.18 1,000,000,000 3,000,000,000
- ------------------------------------------------------------------------------
0.16 3,000,000,000 6,000,000,000
- ------------------------------------------------------------------------------
0.15 6,000,000,000 10,000,000,000
- ------------------------------------------------------------------------------
0.14 10,000,000,000 16,000,000,000
- ------------------------------------------------------------------------------
0.13 16,000,000,000 20,000,000,000
- ------------------------------------------------------------------------------
0.12 20,000,000,000 28,000,000,000
- ------------------------------------------------------------------------------
0.115 28,000,000,000 36,000,000,000
- ------------------------------------------------------------------------------
0.11 36,000,000,000
- ------------------------------------------------------------------------------

The Bond Fund of America -- Page 27
<PAGE>

The agreement also provides for fees based on monthly gross investment income at
the following annualized rates:

Monthly gross investment income

RATE IN EXCESS OF UP TO
- -----------------------------------------------------------------------------------

2.25% $ 0 $ 8,333,333
- -----------------------------------------------------------------------------------
2.00 8,333,333 41,666,667
- -----------------------------------------------------------------------------------
1.75 41,666,667
- -----------------------------------------------------------------------------------

The investment adviser has agreed to reduce the fee payable to it under the
agreement by (a) the amount by which the ordinary operating expenses of the fund
for any fiscal year of the fund, excluding interest, taxes and extraordinary
expenses such as litigation, exceed the greater of (i) 1% of the average
month-end net assets of the fund for such fiscal year or (ii) 10% of the fund's
gross investment income, and (b) any additional amount necessary to assure that
such ordinary operating expenses of the fund in any year after such reduction do
not exceed the lesser of (i) 1-1/2% of the first $30 million of average
month-end net assets of the fund, plus 1% of the average month-end net assets in
excess thereof, or (ii) 25% of the fund's gross investment income. To the extent
the fund's management fee must be waived due to Class A share expense ratios
exceeding these limits, management fees will be reduced similarly for all
classes of shares of the fund or other Class A fees will be waived in lieu of
management fees.

For the fiscal years ended December 31, 2008, 2007 and 2006, the investment
adviser was entitled to receive from the fund management fees of $90,043,000,
$79,099,000 and $62,421,000, respectively. After giving effect to the management
fee waivers described below, the fund paid the investment adviser management
fees of $81,039,000 (a reduction of $9,004,000), $71,056,000 (a reduction of
$8,043,000) and $56,179,000 (a reduction of $6,242,000) for the fiscal years
ended December 31, 2008, 2007 and 2006, respectively.

For the period from September 1, 2004 through March 31, 2005, the investment
adviser agreed to waive 5% of the management fees that it was otherwise entitled
to receive under the Agreement. From April 1, 2005 through December 31, 2008,
this waiver increased to 10% of the management fees that the investment adviser
was otherwise entitled to receive. The waiver was discontinued effective January
1, 2009.

ADMINISTRATIVE SERVICES AGREEMENT -- The Administrative Services Agreement (the
"Administrative Agreement") between the fund and the investment adviser relating
to the fund's Class C, F, R and 529 shares will continue in effect until October
31, 2009, unless sooner terminated, and may be renewed from year to year
thereafter, provided that any such renewal has been specifically approved at
least annually by the vote of a majority of directors who are not parties to the
Administrative Agreement or interested persons (as defined in the 1940 Act) of
any such party, cast in person at a meeting called for the purpose of voting on
such approval. The fund may terminate the Administrative Agreement at any time
by vote of a majority of independent directors. The investment adviser has the
right to terminate the Administrative Agreement upon 60 days' written notice to
the fund. The Administrative Agreement automatically terminates in the event of
its assignment (as defined in the 1940 Act).

The Bond Fund of America -- Page 28
<PAGE>

Under the Administrative Agreement, the investment adviser provides certain
transfer agent and administrative services for shareholders of the fund's Class
C and F shares, and Class R and 529 shares. The investment adviser may contract
with third parties, including American Funds Service Company,/(R)/ the fund's
Transfer Agent, to provide some of these services. Services include, but are not
limited to, shareholder account maintenance, transaction processing, tax
information reporting and shareholder and fund communications. In addition, the
investment adviser monitors, coordinates, oversees and assists with the
activities performed by third parties providing such services.

The investment adviser receives an administrative services fee at the annual
rate of up to 0.15% of the average daily net assets for Class C, F, R (excluding
Class R-5 and R-6 shares) and 529 shares for administrative services provided to
these share classes. Administrative services fees are paid monthly and accrued
daily. The investment adviser uses a portion of this fee to compensate third
parties for administrative services provided to the fund. Of the remainder, the
investment adviser does not retain more than 0.05% of the average daily net
assets for each applicable share class. For Class R-5 and R-6 shares, the
administrative services fee is calculated at the annual rate of up to 0.10% and
0.05%, respectively, of the average daily net assets of such class. The
administrative services fee includes compensation for transfer agent and
shareholder services provided to the fund's Class C, F, R and 529 shares. In
addition to making administrative service fee payments to unaffiliated third
parties, the investment adviser also makes payments from the administrative
services fee to American Funds Service Company according to a fee schedule,
based principally on the number of accounts serviced, contained in a Shareholder
Services Agreement between the fund and American Funds Service Company. A
portion of the fees paid to American Funds Service Company for transfer agent
services is also paid directly from the relevant share class.

During the 2008 fiscal year, administrative services fees, gross of any payments
made by the investment adviser, were:

ADMINISTRATIVE SERVICES FEE
- --------------------------------------------------------------------------------

CLASS C $4,145,000
- --------------------------------------------------------------------------------
CLASS F-1 3,700,000
- --------------------------------------------------------------------------------
CLASS F-2 32,000
- --------------------------------------------------------------------------------
CLASS 529-A 629,000
- --------------------------------------------------------------------------------
CLASS 529-B 101,000
- --------------------------------------------------------------------------------
CLASS 529-C 321,000
- --------------------------------------------------------------------------------
CLASS 529-E 32,000
- --------------------------------------------------------------------------------
CLASS 529-F-1 28,000
- --------------------------------------------------------------------------------
CLASS R-1 152,000
- --------------------------------------------------------------------------------
CLASS R-2 3,393,000
- --------------------------------------------------------------------------------
CLASS R-3 2,127,000
- --------------------------------------------------------------------------------
CLASS R-4 1,123,000
- --------------------------------------------------------------------------------
CLASS R-5 703,000
- --------------------------------------------------------------------------------

The Bond Fund of America -- Page 29
<PAGE>

PRINCIPAL UNDERWRITER AND PLANS OF DISTRIBUTION -- American Funds
Distributors,/(R)/ Inc. (the "Principal Underwriter") is the principal
underwriter of the fund's shares. The Principal Underwriter is located at 333
South Hope Street, Los Angeles, CA 90071; 6455 Irvine Center Drive, Irvine, CA
92618; 3500 Wiseman Boulevard, San Antonio, TX 78251; 8332 Woodfield Crossing
Boulevard, Indianapolis, IN 46240; and 5300 Robin Hood Road, Norfolk, VA 23513.

The Principal Underwriter receives revenues relating to sales of the fund's
shares, as follows:

. For Class A and 529-A shares, the Principal Underwriter receives
commission revenue consisting of the balance of the Class A and 529-A
sales charge remaining after the allowances by the Principal
Underwriter to investment dealers.

. For Class B and 529-B shares, the Principal Underwriter sells its
rights to the 0.75% distribution-related portion of the 12b-1 fees
paid by the fund, as well as any contingent deferred sales charges, to
a third party. The Principal Underwriter compensates investment
dealers for sales of Class B and 529-B shares out of the proceeds of
this sale and keeps any amounts remaining after this compensation is
paid.

. For Class C and 529-C shares, the Principal Underwriter receives any
contingent deferred sales charges that apply during the first year
after purchase.

In addition, the fund reimburses the Principal Underwriter for advancing
immediate service fees to qualified dealers and advisers upon the sale of Class
B, 529-B, C and 529-C shares. The fund also reimburses the Principal Underwriter
for service fees (and, in the case of Class 529-E shares, commissions) paid on a
quarterly basis to qualified dealers and advisers in connection with investments
in Class F-1, 529-F-1, 529-E, R-1, R-2, R-3 and R-4 shares.

Commissions, revenue or service fees retained by the Principal Underwriter after
allowances or compensation to dealers were:

COMMISSIONS, ALLOWANCE OR
REVENUE COMPENSATION
FISCAL YEAR/PERIOD OR FEES RETAINED TO DEALERS
- -----------------------------------------------------------------------------------------------------

CLASS A 2008 $17,191,000 $65,427,000
2007 21,447,000 82,699,000
2006 17,277,000 66,722,000
- -----------------------------------------------------------------------------------------------------
CLASS B 2008 600,000 4,740,000
2007 797,000 5,367,000
2006 739,000 4,925,000
- -----------------------------------------------------------------------------------------------------
CLASS C 2008 -- 5,776,000
2007 -- 8,656,000
2006 -- 5,761,000
- -----------------------------------------------------------------------------------------------------
CLASS 529-A 2008 652,000 2,482,000
2007 752,000 2,879,000
2006 643,000 2,452,000
- -----------------------------------------------------------------------------------------------------
CLASS 529-B 2008 33,000 260,000
2007 42,000 282,000
2006 44,000 287,000
- -----------------------------------------------------------------------------------------------------
CLASS 529-C 2008 -- 671,000
2007 -- 746,000
2006 -- 479,000
- -----------------------------------------------------------------------------------------------------

The Bond Fund of America -- Page 30
<PAGE>

Plans of distribution -- The fund has adopted plans of distribution (the
"Plans") pursuant to rule 12b-1 under the 1940 Act. The Plans permit the fund to
expend amounts to finance any activity primarily intended to result in the sale
of fund shares, provided the fund's board of directors has approved the category
of expenses for which payment is being made.

Each Plan is specific to a particular share class of the fund. As the fund has
not adopted a Plan for Class F-2, Class R-5 or Class R-6, no 12b-1 fees are paid
from Class F-2, Class R-5 or Class R-6 share assets and the following disclosure
is not applicable to these share classes.

Payments under the Plans may be made for service-related and/or
distribution-related expenses. Service-related expenses include paying service
fees to qualified dealers. Distribution-related expenses include commissions
paid to qualified dealers. The amounts actually paid under the Plans for the
past fiscal year, expressed as a percentage of the fund's average daily net
assets attributable to the applicable share class, are disclosed in the
prospectus under "Fees and expenses of the fund." Further information regarding
the amounts available under each Plan is in the "Plans of Distribution" section
of the prospectus.

Following is a brief description of the Plans:

CLASS A AND 529-A -- For Class A and 529-A shares, up to 0.25% of the
fund's average daily net assets attributable to such shares is reimbursed
to the Principal Underwriter for paying service-related expenses, and the
balance available under the applicable Plan

The Bond Fund of America -- Page 31
<PAGE>

may be paid to the Principal Underwriter for distribution-related expenses.
The fund may annually expend up to 0.25% for Class A shares and up to 0.50%
for Class 529-A shares under the applicable Plan.

Distribution-related expenses for Class A and 529-A shares include dealer
commissions and wholesaler compensation paid on sales of shares of $1
million or more purchased without a sales charge. Commissions on these "no
load" purchases (which are described in further detail under the "Sales
Charges" section of this statement of additional information) in excess of
the Class A and 529-A Plan limitations and not reimbursed to the Principal
Underwriter during the most recent fiscal quarter are recoverable for five
quarters, provided that the reimbursement of such commissions does not
cause the fund to exceed the annual expense limit. After five quarters,
these commissions are not recoverable. As of December 31, 2008,
unreimbursed expenses which remain subject to reimbursement under the Plan
for Class A shares totaled $4,453,000 or 0.02% of Class A net assets.

CLASS B AND 529-B -- The Plans for Class B and 529-B shares provide for
payments to the Principal Underwriter of up to 0.25% of the fund's average
daily net assets attributable to such shares for paying service-related
expenses and 0.75% for distribution-related expenses, which include the
financing of commissions paid to qualified dealers.

OTHER SHARE CLASSES (CLASS C, 529-C, F-1, 529-F-1, 529-E, R-1, R-2, R-3 AND
R-4) -- The Plans for each of the other share classes that have adopted
Plans provide for payments to the Principal Underwriter for paying
service-related and distribution-related expenses of up to the following
amounts of the fund's average daily net assets attributable to such shares:

SERVICE TOTAL
RELATED DISTRIBUTION ALLOWABLE
PAYMENTS/1/ RELATED UNDER
SHARE CLASS PAYMENTS/1/ THE PLANS/2/
- ----------------------------------------------------------------------------------

Class C 0.25% 0.75% 1.00%
--------------------------------------------------------------------------
Class 529-C 0.25 0.75 1.00
--------------------------------------------------------------------------
Class F-1 0.25 -- 0.50
--------------------------------------------------------------------------
Class 529-F-1 0.25 -- 0.50
--------------------------------------------------------------------------
Class 529-E 0.25 0.25 0.75
--------------------------------------------------------------------------
Class R-1 0.25 0.75 1.00
--------------------------------------------------------------------------
Class R-2 0.25 0.50 1.00
--------------------------------------------------------------------------
Class R-3 0.25 0.25 0.75
--------------------------------------------------------------------------
Class R-4 0.25 -- 0.50
- ----------------------------------------------------------------------------------

1Amounts in these columns represent the amounts approved by the board of
directors under the applicable Plan.
2The fund may annually expend the amounts set forth in this column under
the current Plans with the approval of the board of directors.

The Bond Fund of America -- Page 32
<PAGE>

During the 2008 fiscal year, 12b-1 expenses accrued and paid, and if applicable,
unpaid, were:

12B-1 UNPAID LIABILITY
12B-1 EXPENSES OUTSTANDING
- ------------------------------------------------------------------------------

CLASS A $61,314,000 $3,841,000
- ------------------------------------------------------------------------------
CLASS B 14,378,000 1,031,000
- ------------------------------------------------------------------------------
CLASS C 25,500,000 1,916,000
- ------------------------------------------------------------------------------
CLASS F-1 7,441,000 753,000
- ------------------------------------------------------------------------------
CLASS 529-A 1,158,000 114,000
- ------------------------------------------------------------------------------
CLASS 529-B 766,000 63,000
- ------------------------------------------------------------------------------
CLASS 529-C 2,635,000 229,000
- ------------------------------------------------------------------------------
CLASS 529-E 145,000 12,000
- ------------------------------------------------------------------------------
CLASS 529-F-1 0 0
- ------------------------------------------------------------------------------
CLASS R-1 838,000 98,000
- ------------------------------------------------------------------------------
CLASS R-2 4,994,000 395,000
- ------------------------------------------------------------------------------
CLASS R-3 5,083,000 472,000
- ------------------------------------------------------------------------------
CLASS R-4 1,900,000 155,000
- ------------------------------------------------------------------------------

Approval of the Plans -- As required by rule 12b-1 and the 1940 Act, the Plans
(together with the Principal Underwriting Agreement) have been approved by the
full board of directors and separately by a majority of the independent
directors of the fund who have no direct or indirect financial interest in the
operation of the Plans or the Principal Underwriting Agreement. In addition, the
selection and nomination of independent directors of the fund are committed to
the discretion of the independent directors during the existence of the Plans.

Potential benefits of the Plans to the fund include quality shareholder
services, savings to the fund in transfer agency costs, and benefits to the
investment process from growth or stability of assets. The Plans may not be
amended to materially increase the amount spent for distribution without
shareholder approval. Plan expenses are reviewed quarterly by the board of
directors and the Plans must be renewed annually by the board of directors.

FEE TO VIRGINIA COLLEGE SAVINGS PLAN -- With respect to Class 529 Shares, as
compensation for its oversight and administration, Virginia College Savings Plan
receives a quarterly fee accrued daily and calculated at the annual rate of
0.10% on the first $30 billion of the net assets invested in Class 529 Shares of
the American Funds, 0.09% on net assets between $30 billion and $60 billion,
0.08% on net assets between $60 billion and $90 billion, 0.07% on net assets
between $90 billion and $120 billion, and 0.06% on net assets between $120
billion and $150 billion. The fee for any given calendar quarter is accrued and
calculated on the basis of average net assets of Class 529 Shares of the
American Funds for the last month of the prior calendar quarter.

The Bond Fund of America -- Page 33
<PAGE>

OTHER COMPENSATION TO DEALERS -- As of October 2008, the top dealers (or their
affiliates) that American Funds Distributors anticipates will receive additional
compensation (as described in the prospectus) include:

AIG Advisors Group
Advantage Capital Corporation
AIG Financial Advisors, Inc.
American General Securities Incorporated
FSC Securities Corporation
Royal Alliance Associates, Inc.
AXA Advisors, LLC
Cadaret, Grant & Co., Inc.
Cambridge Investment Research, Inc.
Commonwealth Financial Network
Cuna Brokerage Services, Inc.
Deutsche Bank Securities Inc.
Edward Jones
Genworth Financial Securities Corporation
Hefren-Tillotson, Inc.
HTK / Janney Montgomery Group
Hornor, Townsend & Kent, Inc.
Janney Montgomery Scott LLC
ING Advisors Network Inc.
Bancnorth Investment Group, Inc.
Financial Network Investment Corporation
Guaranty Brokerage Services, Inc.
ING Financial Partners, Inc.
Multi-Financial Securities Corporation
Primevest Financial Services, Inc.
Intersecurities / Transamerica
InterSecurities, Inc.
Transamerica Financial Advisors, Inc.
JJB Hilliard/PNC Bank
J.J.B. Hilliard, W.L. Lyons, Inc.
PNC Bank, National Association
PNC Investments LLC
Lincoln Financial Advisors Corporation
LPL Group
Associated Securities Corp.
LPL Financial Corporation
Mutual Service Corporation
Uvest Investment Services
Waterstone Financial Group, Inc.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Metlife Enterprises
Metlife Securities Inc.
New England Securities
Tower Square Securities
Walnut Street Securities, Inc.
MML Investors Services, Inc.

The Bond Fund of America -- Page 34
<PAGE>

Morgan Keegan & Company, Inc.
Morgan Stanley & Co., Incorporated
National Planning Holdings Inc.
Invest Financial Corporation
Investment Centers of America, Inc.
National Planning Corporation
SII Investments, Inc.
NFP Securities, Inc.
Northwestern Mutual Investment Services, LLC
Park Avenue Securities LLC
Princor Financial Services Corporation
Raymond James Group
Raymond James & Associates, Inc.
Raymond James Financial Services Inc.
RBC Dain Rauscher Inc.
Robert W. Baird & Co. Incorporated
Securian / C.R.I.
CRI Securities, LLC
Securian Financial Services, Inc.
Smith Barney
Legg Mason
Primerica Financial Services
U.S. Bancorp Investments, Inc.
UBS Financial Services Inc.
Wachovia Group
A. G. Edwards, a Division of Wachovia Securities, LLC
First Clearing LLC
Wachovia Securities Financial Network, LLC
Wachovia Securities Investment Services Group
Wachovia Securities Latin American Channel
Wachovia Securities Private Client Group
Wells Fargo Investments, LLC

EXECUTION OF PORTFOLIO TRANSACTIONS

The investment adviser places orders with broker-dealers for the fund's
portfolio transactions. Purchases and sales of equity securities on a securities
exchange or an over-the-counter market are effected through broker-dealers who
receive commissions for their services. Generally, commissions relating to
securities traded on foreign exchanges will be higher than commissions relating
to securities traded on U.S. exchanges and may not be subject to negotiation.
Equity securities may also be purchased from underwriters at prices that include
underwriting fees. Purchases and sales of fixed-income securities are generally
made with an issuer or a primary market-maker acting as principal with no stated
brokerage commission. The price paid to an underwriter for fixed-income
securities includes underwriting fees. Prices for fixed-income securities in
secondary trades usually include undisclosed compensation to the market-maker
reflecting the spread between the bid and ask prices for the securities.

In selecting broker-dealers, the investment adviser strives to obtain "best
execution" (the most favorable total price reasonably attainable under the
circumstances) for the fund's portfolio transactions, taking into account a
variety of factors. These factors include the size and type of

The Bond Fund of America -- Page 35
<PAGE>

transaction, the nature and character of the markets for the security to be
purchased or sold, the cost, quality and reliability of the executions and the
broker-dealer's ability to offer liquidity and anonymity. The investment adviser
considers these factors, which involve qualitative judgments, when selecting
broker-dealers and execution venues for fund portfolio transactions. The
investment adviser views best execution as a process that should be evaluated
over time as part of an overall relationship with particular broker-dealer firms
rather than on a trade-by-trade basis. The fund does not consider the investment
adviser as having an obligation to obtain the lowest commission rate available
for a portfolio transaction to the exclusion of price, service and qualitative
considerations.

The investment adviser may execute portfolio transactions with broker-dealers
who provide certain brokerage and/or investment research services to it, but
only when in the investment adviser's judgment the broker-dealer is capable of
providing best execution for that transaction. The receipt of these services
permits the investment adviser to supplement its own research and analysis and
makes available the views of, and information from, individuals and the research
staffs of other firms. Such views and information may be provided in the form of
written reports, telephone contacts and meetings with securities analysts. These
services may include, among other things, reports and other communications with
respect to individual companies, industries, countries and regions, economic,
political and legal developments, as well as scheduling meetings with corporate
executives and seminars and conferences related to relevant subject matters. The
investment adviser considers these services to be supplemental to its own
internal research efforts and therefore the receipt of investment research from
broker-dealers does not tend to reduce the expenses involved in the investment
adviser's research efforts. If broker-dealers were to discontinue providing such
services it is unlikely the investment adviser would attempt to replicate them
on its own, in part because they would then no longer provide an independent,
supplemental viewpoint. Nonetheless, if it were to attempt to do so, the
investment adviser would incur substantial additional costs. Research services
that the investment adviser receives from broker-dealers may be used by the
investment adviser in servicing the fund and other funds and accounts that it
advises; however, not all such services will necessarily benefit the fund.

The investment adviser may pay commissions in excess of what other
broker-dealers might have charged - including on an execution-only basis - for
certain portfolio transactions in recognition of brokerage and/or investment
research services provided by a broker-dealer. In this regard, the investment
adviser has adopted a brokerage allocation procedure consistent with the
requirements of Section 28(e) of the U.S. Securities Exchange Act of 1934.
Section 28(e) permits an investment adviser to cause an account to pay a higher
commission to a broker-dealer that provides certain brokerage and/or investment
research services to the investment adviser, if the investment adviser makes a
good faith determination that such commissions are reasonable in relation to the
value of the services provided by such broker-dealer to the investment adviser
in terms of that particular transaction or the investment adviser's overall
responsibility to the fund and other accounts that it advises. Certain brokerage
and/or investment research services may not necessarily benefit all accounts
paying commissions to each such broker-dealer; therefore, the investment adviser
assesses the reasonableness of commissions in light of the total brokerage and
investment research services provided by each particular broker-dealer.

In accordance with its internal brokerage allocation procedure, each equity
investment division of the investment adviser periodically assesses the
brokerage and investment research services provided by each broker-dealer from
which it receives such services. Using its judgment, each equity investment
division of the investment adviser then creates lists with suggested levels of

The Bond Fund of America -- Page 36
<PAGE>

commissions for particular broker-dealers and provides those lists to its
trading desks. Neither the investment adviser nor the fund incurs any obligation
to any broker-dealer to pay for research by generating trading commissions. The
actual level of business received by any broker-dealer may be less than the
suggested level of commissions and can, and often does, exceed the suggested
level in the normal course of business. As part of its ongoing relationships
with broker-dealers, the investment adviser routinely meets with firms,
typically at the firm's request, to discuss the level and quality of the
brokerage and research services provided, as well as the perceived value and
cost of such services. In valuing the brokerage and investment research services
the investment adviser receives from broker-dealers in connection with its good
faith determination of reasonableness, the investment adviser does not attribute
a dollar value to such services, but rather takes various factors into
consideration, including the quantity, quality and usefulness of the services to
the investment adviser.

The investment adviser seeks, on an ongoing basis, to determine what the
reasonable levels of commission rates are in the marketplace. The investment
adviser takes various considerations into account when evaluating such
reasonableness, including, (a) rates quoted by broker-dealers, (b) the size of a
particular transaction in terms of the number of shares and dollar amount, (c)
the complexity of a particular transaction, (d) the nature and character of the
markets on which a particular trade takes place, (e) the ability of a
broker-dealer to provide anonymity while executing trades, (f) the ability of a
broker-dealer to execute large trades while minimizing market impact, (g) the
extent to which a broker-dealer has put its own capital at risk, (h) the level
and type of business done with a particular broker-dealer over a period of time,
(i) historical commission rates, and (j) commission rates that other
institutional investors are paying.

When executing portfolio transactions in the same equity security for the funds
and accounts, or portions of funds and accounts, over which the investment
adviser, through its equity investment divisions, has investment discretion,
each of the investment divisions will normally aggregate its respective
purchases or sales and execute them as part of the same transaction or series of
transactions. When executing portfolio transactions in the same fixed-income
security for the fund and the other funds or accounts over which it or one of
its affiliated companies has investment discretion, the investment adviser will
normally aggregate such purchases or sales and execute them as part of the same
transaction or series of transactions. The objective of aggregating purchases
and sales of a security is to allocate executions in an equitable manner among
the funds and other accounts that have concurrently authorized a transaction in
such security.

The investment adviser may place orders for the fund's portfolio transactions
with broker-dealers who have sold shares of the funds managed by the investment
adviser or its affiliated companies; however, it does not consider whether a
broker-dealer has sold shares of the funds managed by the investment adviser or
its affiliated companies when placing any such orders for the fund's portfolio
transactions.

Brokerage commissions paid on portfolio transactions for the fiscal years ended
December 31, 2008, 2007 and 2006 amounted to $24,000, $29,000 and $48,000,
respectively.

The fund is required to disclose information regarding investments in the
securities of its "regular" broker-dealers (or parent companies of its regular
broker-dealers) that derive more than 15% of their revenue from broker-dealer,
underwriter or investment adviser activities. A regular broker-dealer is (a) one
of the 10 broker-dealers that received from the fund the largest amount of
brokerage commissions by participating, directly or indirectly, in the fund's
portfolio transactions

The Bond Fund of America -- Page 37
<PAGE>

during the fund's most recent fiscal year; (b) one of the 10 broker-dealers that
engaged as principal in the largest dollar amount of portfolio transactions of
the fund during the fund's most recent fiscal year; or (c) one of the 10
broker-dealers that sold the largest amount of securities of the fund during the
fund's most recent fiscal year.

At the end of the fund's most recent fiscal year, the fund's regular
broker-dealers included Citigroup Global Markets Inc., Goldman Sachs & Co., J.P.
Morgan Securities Inc., Lehman Brothers Inc., Merrill Lynch, Pierce, Fenner &
Smith, Inc. and Morgan Stanley. As of the fund's most recent fiscal year-end,
the fund held debt securities of Citigroup Inc. in the amount of $42,799,000,
Goldman Sachs Group, Inc. in the amount of $37,411,000, JPMorgan Chase & Co. in
the amount of $55,285,000, Lehman Brothers Holdings, Inc. in the amount of
$13,874,000, Merrill Lynch, Pierce, Fenner & Smith, Inc. in the amount of
$10,478,000 and Morgan Stanley in the amount of $23,070,000, and equity
securities of JPMorgan Chase & Co. in the amount of $115,279,000 and Citigroup
Inc. in the amount of $63,191,000.

DISCLOSURE OF PORTFOLIO HOLDINGS

The fund's investment adviser, on behalf of the fund, has adopted policies and
procedures with respect to the disclosure of information about fund portfolio
securities. These policies and procedures have been reviewed by the fund's board
of directors and compliance will be periodically assessed by the board in
connection with reporting from the fund's Chief Compliance Officer.

Under these policies and procedures, the fund's complete list of portfolio
holdings available for public disclosure, dated as of the end of each calendar
quarter, is permitted to be posted on the American Funds website no earlier than
the tenth day after such calendar quarter. In practice, the public portfolio
typically is posted on the website approximately 45 days after the end of the
calendar quarter. Such portfolio holdings information may then be disclosed to
any person pursuant to an ongoing arrangement to disclose portfolio holdings
information to such person no earlier than one day after the day on which the
information is posted on the American Funds website. The fund's custodian,
outside counsel and auditor, each of which requires portfolio holdings
information for legitimate business and fund oversight purposes, may receive the
information earlier.

Affiliated persons of the fund, including officers of the fund and employees of
the investment adviser and its affiliates, who receive portfolio holdings
information are subject to restrictions and limitations on the use and handling
of such information pursuant to applicable codes of ethics, including
requirements not to trade in securities based on confidential and proprietary
investment information, to maintain the confidentiality of such information, and
to preclear securities trades and report securities transactions activity, as
applicable. For more information on these restrictions and limitations, please
see the "Code of Ethics" section in this statement of additional information and
the Code of Ethics. Third party service providers of the fund, as described in
this statement of additional information, receiving such information are subject
to confidentiality obligations. When portfolio holdings information is disclosed
other than through the American Funds website to persons not affiliated with the
fund (which, as described above, would typically occur no earlier than one day
after the day on which the information is posted on the American Funds website),
such persons will be bound by agreements (including confidentiality agreements)
or fiduciary obligations that restrict and limit their use of the information to
legitimate business uses only. Neither the fund nor its investment adviser or
any affiliate thereof receives

The Bond Fund of America -- Page 38
<PAGE>

compensation or other consideration in connection with the disclosure of
information about portfolio securities.

Subject to board policies, the authority to disclose a fund's portfolio
holdings, and to establish policies with respect to such disclosure, resides
with the appropriate investment-related committees of the fund's investment
adviser. In exercising their authority, the committees determine whether
disclosure of information about the fund's portfolio securities is appropriate
and in the best interest of fund shareholders. The investment adviser has
implemented policies and procedures to address conflicts of interest that may
arise from the disclosure of fund holdings. For example, the investment
adviser's code of ethics specifically requires, among other things, the
safeguarding of information about fund holdings and contains prohibitions
designed to prevent the personal use of confidential, proprietary investment
information in a way that would conflict with fund transactions. In addition,
the investment adviser believes that its current policy of not selling portfolio
holdings information and not disclosing such information to unaffiliated third
parties until such holdings have been made public on the American Funds website
(other than to certain fund service providers for legitimate business and fund
oversight purposes) helps reduce potential conflicts of interest between fund
shareholders and the investment adviser and its affiliates.

PRICE OF SHARES

Shares are purchased at the offering price or sold at the net asset value price
next determined after the purchase or sell order is received and accepted by the
fund or the Transfer Agent; the offering or net asset value price is effective
for orders received prior to the time of determination of the net asset value
and, in the case of orders placed with dealers or their authorized designees,
accepted by the Principal Underwriter, the Transfer Agent, a dealer or any of
their designees. In the case of orders sent directly to the fund or the Transfer
Agent, an investment dealer should be indicated. The dealer is responsible for
promptly transmitting purchase and sell orders to the Principal Underwriter.

Orders received by the investment dealer or authorized designee, the Transfer
Agent or the fund after the time of the determination of the net asset value
will be entered at the next calculated offering price. Note that investment
dealers or other intermediaries may have their own rules about share
transactions and may have earlier cut-off times than those of the fund. For more
information about how to purchase through your intermediary, contact your
intermediary directly.

Prices that appear in the newspaper do not always indicate prices at which you
will be purchasing and redeeming shares of the fund, since such prices generally
reflect the previous day's closing price, while purchases and redemptions are
made at the next calculated price. The price you pay for shares, the offering
price, is based on the net asset value per share, which is calculated once daily
as of approximately 4 p.m. New York time, which is the normal close of trading
on the New York Stock Exchange, each day the Exchange is open. If, for example,
the Exchange closes at 1 p.m., the fund's share price would still be determined
as of 4 p.m. New York time. The New York Stock Exchange is currently closed on
weekends and on the following holidays: New Year's Day; Martin Luther King, Jr.
Day; Presidents' Day; Good Friday; Memorial Day; Independence Day; Labor Day;
Thanksgiving; and Christmas Day. Each share class of the fund has a separately
calculated net asset value (and share price).

All portfolio securities of funds managed by Capital Research and Management
Company (other than money market funds) are valued, and the net asset values per
share for each share class

The Bond Fund of America -- Page 39
<PAGE>

are determined, as indicated below. The fund follows standard industry practice
by typically reflecting changes in its holdings of portfolio securities on the
first business day following a portfolio trade.

1. Equity securities, including depositary receipts, are valued at the
official closing price of, or 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. Prices for each security are taken from the principal exchange or
market in which the security trades. Fixed-income securities are valued at
prices obtained from one or more independent pricing vendors, when such prices are
available; however, in circumstances where the investment adviser deems it
appropriate to do so, such securities will be valued in good faith at the mean
quoted bid and asked prices that are reasonably and timely available (or bid
prices, if asked prices are not available) or at prices for securities of
comparable maturity, quality and type. The pricing vendors base bond prices
on, among other things, valuation matrices which may incorporate dealer-supplied
valuations, electronic data processing techniques and an evaluation of the yield
curve as of approximately 3 p.m. New York time. The fund's investment adviser
performs certain checks on these prices prior to calculation of the fund's net
asset value.

Securities with both fixed-income and equity characteristics (e.g., convertible
bonds, preferred stocks, units comprised of more than one type of security,
etc.), or equity securities traded principally among fixed-income dealers, are
valued in the manner described above for either equity or fixed-income
securities, depending on which method is deemed most appropriate by the
investment adviser.

Securities with original maturities of one year or less having 60 days or less
to maturity are amortized to maturity based on their cost if acquired within 60
days of maturity, or if already held on the 60th day, based on the value
determined on the 61st day. Forward currency contracts are valued at the mean of
representative quoted bid and asked prices.

Assets or liabilities initially expressed in terms of currencies other than U.S.
dollars are translated prior to the next determination of the net asset value of
the fund's shares into U.S. dollars at the prevailing market rates.

Securities and assets for which market quotations are not readily available or
are considered unreliable are valued at fair value as determined in good faith
under policies approved by the fund's board. Subject to board oversight, the
fund's board has delegated the obligation to make fair valuation determinations
to a valuation committee established by the fund's investment adviser. The board
receives regular reports describing fair-valued securities and the valuation
methods used.

The valuation committee has adopted guidelines and procedures (consistent with
SEC rules and guidance) to consider certain relevant principles and factors
when making all fair value determinations. As a general principle,
securities lacking readily available market quotations, or that have quotations
that are considered unreliable by the investment adviser, are valued in good
faith by the valuation committee based upon what the fund might reasonably
expect to receive upon their current sale. Fair valuators and valuations of
investments that are not actively trading involve judgment and may differ
materially from valuations that would have been used had greater market activity
occurred. The valuation committee considers relevant indications of value that
are reasonably and timely available to it in determining the fair value to be
assigned to a particular security, such as the type and cost of the security,
contractual or legal restrictions on resale of the security, relevant financial
or business developments of the issuer, actively traded similar or related
securities, conversion or exchange rights on the security, related corporate
actions,

The Bond Fund of America -- Page 40
<PAGE>

significant events occurring after the close of trading in the security and
changes in overall market conditions.

2. Each class of shares represents interests in the same portfolio of
investments and is identical in all respects to each other class, except for
differences relating to distribution, service and other charges and expenses,
certain voting rights, differences relating to eligible investors, the
designation of each class of shares, conversion features and exchange
privileges. Expenses attributable to the fund, but not to a particular class of
shares, are borne by each class pro rata based on relative aggregate net assets
of the classes. Expenses directly attributable to a class of shares are borne by
that class of shares. Liabilities, including accruals of taxes and other expense
items attributable to particular share classes, are deducted from total assets
attributable to such share classes.

3. Net assets so obtained for each share class are then divided by the total
number of shares outstanding of that share class, and the result, rounded to the
nearest cent, is the net asset value per share for that share class.

TAXES AND DISTRIBUTIONS

FUND TAXATION -- The fund has elected to be treated as a regulated investment
company under Subchapter M of the Internal Revenue Code (the "Code"). A
regulated investment company qualifying under Subchapter M of the Code is
required to distribute to its shareholders at least 90% of its investment
company taxable income (including the excess of net short-term capital gain over
net long-term capital losses) and generally is not subject to federal income tax
to the extent that it distributes annually 100% of its investment company
taxable income and net realized capital gains in the manner required under the
Code. The fund intends to distribute annually all of its investment company
taxable income and net realized capital gains and therefore does not expect to
pay federal income tax, although in certain circumstances the fund may determine
that it is in the interest of shareholders to distribute less than that amount.

To be treated as a regulated investment company under Subchapter M of the Code,
the fund must also (a) derive at least 90% of its gross income from dividends,
interest, payments with respect to securities loans, net income from certain
publicly traded partnerships and gains from the sale or other disposition of
securities or foreign currencies, or other income (including, but not limited
to, gains from options, futures or forward contracts) derived with respect to
the business of investing in such securities or currencies, and (b) diversify
its holdings so that, at the end of each fiscal quarter, (i) at least 50% of the
market value of the fund's assets is represented by cash, U.S. government
securities and securities of other regulated investment companies, and other
securities (for purposes of this calculation, generally limited in respect of
any one issuer, to an amount not greater than 5% of the market value of the
fund's assets and 10% of the outstanding voting securities of such issuer) and
(ii) not more than 25% of the value of its assets is invested in the securities
of any one issuer (other than U.S. government securities or the securities of
other regulated investment companies), two or more issuers which the fund
controls and which are determined to be engaged in the same or similar trades or
businesses or the securities of certain publicly traded partnerships.

Under the Code, a nondeductible excise tax of 4% is imposed on the excess of a
regulated investment company's "required distribution" for the calendar year
ending within the regulated investment company's taxable year over the
"distributed amount" for such calendar year. The term "required distribution"
means the sum of (a) 98% of ordinary income (generally net

The Bond Fund of America -- Page 41
<PAGE>

investment income) for the calendar year, (b) 98% of capital gain (both
long-term and short-term) for the one-year period ending on October 31 (as
though the one-year period ending on October 31 were the regulated investment
company's taxable year) and (c) the sum of any untaxed, undistributed net
investment income and net capital gains of the regulated investment company for
prior periods. The term "distributed amount" generally means the sum of (a)
amounts actually distributed by the fund from its current year's ordinary income
and capital gain net income and (b) any amount on which the fund pays income tax
during the periods described above. Although the fund intends to distribute its
net investment income and net capital gains so as to avoid excise tax liability,
the fund may determine that it is in the interest of shareholders to distribute
a lesser amount.

The following information may not apply to you if you hold fund shares in a
tax-deferred account, such as a retirement plan or education savings account.
Please see your tax adviser for more information.

DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS -- Dividends and capital gain
distributions on fund shares will be reinvested in shares of the fund of the
same class, unless shareholders indicate in writing that they wish to receive
them in cash or in shares of the same class of other American Funds, as provided
in the prospectus. Dividends and capital gain distributions by 529 share classes
will be automatically reinvested.

Distributions of investment company taxable income and net realized capital
gains to shareholders will be taxable whether received in shares or in cash,
unless such shareholders are exempt from taxation. Shareholders electing to
receive distributions in the form of additional shares will have a cost basis
for federal income tax purposes in each share so received equal to the net asset
value of that share on the reinvestment date. Dividends and capital gain
distributions by the fund to a tax-deferred retirement plan account are not
taxable currently.

DIVIDENDS -- The fund intends to follow the practice of distributing
substantially all of its investment company taxable income. Investment
company taxable income generally includes dividends, interest, net
short-term capital gains in excess of net long-term capital losses, and
certain foreign currency gains, if any, less expenses and certain foreign
currency losses.

Under the Code, gains or losses attributable to fluctuations in exchange
rates that occur between the time the fund accrues receivables or
liabilities denominated in a foreign currency and the time the fund
actually collects such receivables, or pays such liabilities, generally are
treated as ordinary income or ordinary loss. Similarly, on disposition of
debt securities denominated in a foreign currency and on disposition of
certain futures contracts, forward contracts and options, gains or losses
attributable to fluctuations in the value of foreign currency between the
date of acquisition of the security or contract and the date of disposition
are also treated as ordinary gain or loss. These gains or losses, referred
to under the Code as Section 988 gains or losses, may increase or decrease
the amount of the fund's investment company taxable income to be
distributed to its shareholders as ordinary income.

If the fund invests in stock of certain passive foreign investment
companies, the fund may be subject to U.S. federal income taxation on a
portion of any "excess distribution" with respect to, or gain from the
disposition of, such stock. The tax would be determined by allocating such
distribution or gain ratably to each day of the fund's holding period for
the

The Bond Fund of America -- Page 42
<PAGE>

stock. The distribution or gain so allocated to any taxable year of the
fund, other than the taxable year of the excess distribution or
disposition, would be taxed to the fund at the highest ordinary income rate
in effect for such year, and the tax would be further increased by an
interest charge to reflect the value of the tax deferral deemed to have
resulted from the ownership of the foreign company's stock. Any amount of
distribution or gain allocated to the taxable year of the distribution or
disposition would be included in the fund's investment company taxable
income and, accordingly, would not be taxable to the fund to the extent
distributed by the fund as a dividend to its shareholders.

To avoid such tax and interest, the fund intends to elect to treat these
securities as sold on the last day of its fiscal year and recognize any
gains for tax purposes at that time. Under this election, deductions for
losses are allowable only to the extent of any prior recognized gains, and
both gains and losses will be treated as ordinary income or loss. The fund
will be required to distribute any resulting income, even though it has not
sold the security and received cash to pay such distributions. Upon
disposition of these securities, any gain recognized is treated as ordinary
income and loss is treated as ordinary loss to the extent of any prior
recognized gain.

Dividends from domestic corporations may comprise some portion of the
fund's gross income. To the extent that such dividends constitute any of
the fund's gross income, a portion of the income distributions of the fund
may be eligible for the deduction for dividends received by corporations.
Corporate shareholders will be informed of the portion of dividends that so
qualifies. The dividends-received deduction is reduced to the extent that
either the fund shares, or the underlying shares of stock held by the fund,
with respect to which dividends are received, are treated as debt-financed
under federal income tax law, and is eliminated if the shares are deemed to
have been held by the shareholder or the fund, as the case may be, for less
than 46 days during the 91-day period beginning on the date that is 45 days
before the date on which the shares become ex-dividend. Capital gain
distributions are not eligible for the dividends-received deduction.

A portion of the difference between the issue price of zero coupon
securities and their face value (original issue discount) is considered to
be income to the fund each year, even though the fund will not receive cash
interest payments from these securities. This original issue discount
(imputed income) will comprise a part of the investment company taxable
income of the fund that must be distributed to shareholders in order to
maintain the qualification of the fund as a regulated investment company
and to avoid federal income taxation at the level of the fund.

The price of a bond purchased after its original issuance may reflect
market discount which, depending on the particular circumstances, may
affect the tax character and amount of income required to be recognized by
a fund holding the bond. In determining whether a bond is purchased with
market discount, certain de minimis rules apply.

Dividend and interest income received by the fund from sources outside the
United States may be subject to withholding and other taxes imposed by such
foreign jurisdictions. Tax conventions between certain countries and the
United States, however, may reduce or eliminate these foreign taxes. Some
foreign countries impose taxes on capital gains with respect to investments
by foreign investors.

The Bond Fund of America -- Page 43
<PAGE>

CAPITAL GAIN DISTRIBUTIONS -- The fund also intends to follow the practice
of distributing the entire excess of net realized long-term capital gains
over net realized short-term capital losses. Net capital gains for a fiscal
year are computed by taking into account any capital loss carryforward of
the fund.

If any net long-term capital gains in excess of net short-term capital
losses are retained by the fund for reinvestment, requiring federal income
taxes to be paid thereon by the fund, the fund intends to elect to treat
such capital gains as having been distributed to shareholders. As a result,
each shareholder will report such capital gains as long-term capital gains
taxable to individual shareholders at a maximum 15% capital gains rate,
will be able to claim a pro rata share of federal income taxes paid by the
fund on such gains as a credit against personal federal income tax
liability, and will be entitled to increase the adjusted tax basis on fund
shares by the difference between a pro rata share of the retained gains and
such shareholder's related tax credit.

SHAREHOLDER TAXATION -- In January of each year, individual shareholders holding
fund shares in taxable accounts will receive a statement of the federal income
tax status of all distributions. Shareholders of the fund also may be subject to
state and local taxes on distributions received from the fund.

DIVIDENDS -- Fund dividends are taxable to shareholders as ordinary income.
All or a portion of a fund's dividend distribution may be a "qualified
dividend." If the fund meets the applicable holding period requirement, it
will distribute dividends derived from qualified corporation dividends to
shareholders as qualified dividends. Interest income from bonds and money
market instruments and nonqualified foreign dividends will be distributed
to shareholders as nonqualified fund dividends. The fund will report on
Form 1099-DIV the amount of each shareholder's dividend that may be treated
as a qualified dividend. If a shareholder other than a corporation meets
the requisite holding period requirement, qualified dividends are taxable
at a maximum rate of 15%.

CAPITAL GAINS -- Distributions of the excess of net long-term capital gains
over net short-term capital losses that the fund properly designates as
"capital gain dividends" generally will be taxable as long-term capital
gain. Regardless of the length of time the shares of the fund have been
held by a shareholder, a capital gain distribution by the fund is subject
to a maximum tax rate of 15%. Any loss realized upon the redemption of
shares held at the time of redemption for six months or less from the date
of their purchase will be treated as a long-term capital loss to the extent
of any amounts treated as distributions of long-term capital gains during
such six-month period.

Distributions by the fund result in a reduction in the net asset value of the
fund's shares. Investors should consider the tax implications of buying shares
just prior to a distribution. The price of shares purchased at that time
includes the amount of the forthcoming distribution. Those purchasing just prior
to a distribution will subsequently receive a partial return of their investment
capital upon payment of the distribution, which will be taxable to them.

Redemptions of shares, including exchanges for shares of other American Funds,
may result in federal, state and local tax consequences (gain or loss) to the
shareholder.

If a shareholder exchanges or otherwise disposes of shares of the fund within 90
days of having acquired such shares, and if, as a result of having acquired
those shares, the shareholder

The Bond Fund of America -- Page 44
<PAGE>

subsequently pays a reduced sales charge for shares of the fund, or of a
different fund, the sales charge previously incurred in acquiring the fund's
shares will not be taken into account (to the extent such previous sales charges
do not exceed the reduction in sales charges) for the purposes of determining
the amount of gain or loss on the exchange, but will be treated as having been
incurred in the acquisition of such other fund(s).

Any loss realized on a redemption or exchange of shares of the fund will be
disallowed to the extent substantially identical shares are reacquired within
the 61-day period beginning 30 days before and ending 30 days after the shares
are disposed of. Any loss disallowed under this rule will be added to the
shareholder's tax basis in the new shares purchased.

The fund will be required to report to the IRS all distributions of investment
company taxable income and capital gains as well as gross proceeds from the
redemption or exchange of fund shares, except in the case of certain exempt
shareholders. Under the backup withholding provisions of Section 3406 of the
Code, distributions of investment company taxable income and capital gains and
proceeds from the redemption or exchange of a regulated investment company may
be subject to backup withholding of federal income tax in the case of non-exempt
U.S. shareholders who fail to furnish the investment company with their taxpayer
identification numbers and with required certifications regarding their status
under the federal income tax law. Withholding may also be required if the fund
is notified by the IRS or a broker that the taxpayer identification number
furnished by the shareholder is incorrect or that the shareholder has previously
failed to report interest or dividend income. If the withholding provisions are
applicable, any such distributions and proceeds, whether taken in cash or
reinvested in additional shares, will be reduced by the amounts required to be
withheld.

The foregoing discussion of U.S. federal income tax law relates solely to the
application of that law to U.S. persons (i.e., U.S. citizens and residents and
U.S. corporations, partnerships, trusts and estates). Each shareholder who is
not a U.S. person should consider the U.S. and foreign tax consequences of
ownership of shares of the fund, including the possibility that such a
shareholder may be subject to a U.S. withholding tax at a rate of 30% (or a
lower rate under an applicable income tax treaty) on dividend income received by
the shareholder.

Shareholders should consult their tax advisers about the application of federal,
state and local tax law in light of their particular situation.

The Bond Fund of America -- Page 45
<PAGE>

UNLESS OTHERWISE NOTED, ALL REFERENCES IN THE FOLLOWING PAGES TO CLASS A, B, C
OR F-1 SHARES ALSO REFER TO THE CORRESPONDING CLASS 529-A, 529-B, 529-C OR
529-F-1 SHARES. CLASS 529 SHAREHOLDERS SHOULD ALSO REFER TO THE APPLICABLE
PROGRAM DESCRIPTION FOR INFORMATION ON POLICIES AND SERVICES SPECIFICALLY
RELATING TO THESE ACCOUNTS. SHAREHOLDERS HOLDING SHARES THROUGH AN ELIGIBLE
RETIREMENT PLAN SHOULD CONTACT THEIR PLAN'S ADMINISTRATOR OR RECORDKEEPER FOR
INFORMATION REGARDING PURCHASES, SALES AND EXCHANGES.

PURCHASE AND EXCHANGE OF SHARES

PURCHASES BY INDIVIDUALS -- As described in the prospectus, you may generally
open an account and purchase fund shares by contacting a financial adviser or
investment dealer authorized to sell the fund's shares. You may make investments
by any of the following means:

CONTACTING YOUR FINANCIAL ADVISER -- Deliver or mail a check to your
financial adviser.

BY MAIL -- For initial investments, you may mail a check, made payable to
the fund, directly to the address indicated on the account application.
Please indicate an investment dealer on the account application. You may
make additional investments by filling out the "Account Additions" form at
the bottom of a recent account statement and mailing the form, along with a
check made payable to the fund, using the envelope provided with your
account statement.

The amount of time it takes for us to receive regular U.S. postal mail may
vary and there is no assurance that we will receive such mail on the day
you expect. Mailing addresses for regular U.S. postal mail can be found in
the prospectus. To send investments or correspondence to us via overnight
mail or courier service, use either of the following addresses:

American Funds
8332 Woodfield Crossing Blvd.
Indianapolis, IN 46240-2482

American Funds
5300 Robin Hood Rd.
Norfolk, VA 23513-2407

BY TELEPHONE -- Using the American FundsLine. Please see the "Shareholder
account services and privileges" section of this statement of additional
information for more information regarding this service.

BY INTERNET -- Using americanfunds.com. Please see the "Shareholder account
services and privileges" section of this statement of additional
information for more information regarding this service.

BY WIRE -- If you are making a wire transfer, instruct your bank to wire
funds to:

Wells Fargo Bank
ABA Routing No. 121000248
Account No. 4600-076178

The Bond Fund of America -- Page 46
<PAGE>

Your bank should include the following information when wiring funds:

For credit to the account of:
American Funds Service Company
(fund's name)

For further credit to:
(shareholder's fund account number)
(shareholder's name)

You may contact American Funds Service Company at 800/421-0180 if you have
questions about making wire transfers.

OTHER PURCHASE INFORMATION -- The Principal Underwriter will not knowingly sell
shares of the fund directly or indirectly to any person or entity, where, after
the sale, such person or entity would own beneficially directly or indirectly
more than 3% of the outstanding shares of the fund without the consent of a
majority of the fund's board.

Class 529 shares may be purchased only through CollegeAmerica by investors
establishing qualified higher education savings accounts. Class 529-E shares may
be purchased only by investors participating in CollegeAmerica through an
eligible employer plan. Class R-5 shares are also available to clients of the
Personal Investment Management group of Capital Guardian Trust Company who do
not have an intermediary associated with their accounts. In addition, the
American Funds state tax-exempt funds are qualified for sale only in certain
jurisdictions, and tax-exempt funds in general should not serve as retirement
plan investments. The fund and the Principal Underwriter reserve the right to
reject any purchase order.

Class R-5 and R-6 shares may be made available to certain charitable foundations
organized and maintained by The Capital Group Companies, Inc. or its affiliates.

Beginning May 1, 2009, cash investments received without investment instructions
will be invested in Class A shares of the American Funds Money Market Fund
(rather than The Cash Management Trust of America) pursuant to the policies
described in the "Purchase and exchange of shares" section of the prospectus.

PURCHASE MINIMUMS AND MAXIMUMS -- All investments are subject to the purchase
minimums and maximums described in the prospectus. As noted in the prospectus,
purchase minimums may be waived or reduced in certain cases.

In the case of American Funds non-tax-exempt funds, the initial purchase minimum
of $25 may be waived for the following account types:

. Payroll deduction retirement plan accounts (such as, but not limited
to, 403(b), 401(k), SIMPLE IRA, SARSEP and deferred compensation plan
accounts); and

. Employer-sponsored CollegeAmerica accounts.

The Bond Fund of America -- Page 47
<PAGE>

The following account types may be established without meeting the initial
purchase minimum:

. Retirement accounts that are funded with employer contributions; and

. Accounts that are funded with monies set by court decree.

The following account types may be established without meeting the initial
purchase minimum, but shareholders wishing to invest in two or more funds must
meet the normal initial purchase minimum of each fund:

. Accounts that are funded with (a) transfers of assets, (b) rollovers
from retirement plans, (c) rollovers from 529 college savings plans or
(d) required minimum distribution automatic exchanges; and

. American Funds money market fund accounts registered in the name of
clients of Capital Guardian Trust Company's Personal Investment
Management group.

Certain accounts held on the fund's books, known as omnibus accounts, contain
multiple underlying accounts that are invested in shares of the fund. These
underlying accounts are maintained by entities such as financial intermediaries
and are subject to the applicable initial purchase minimums as described in the
prospectus and this statement of additional information. However, in the case
where the entity maintaining these accounts aggregates the accounts' purchase
orders for fund shares, such accounts are not required to meet the fund's
minimum amount for subsequent purchases.

EXCHANGES -- You may only exchange shares into other American Funds within the
same share class. However, exchanges from Class A shares of The Cash Management
Trust of America or American Funds Money Market Fund may be made to Class C
shares of other American Funds for dollar cost averaging purposes. Exchanges
are not permitted from Class A shares of The Cash Management Trust of America or
American Funds Money Market Fund to Class C shares of Intermediate Bond Fund of
America, Limited Term Tax-Exempt Bond Fund of America or Short-Term Bond Fund of
America. Exchange purchases are subject to the minimum investment requirements
of the fund purchased and no sales charge generally applies. However, exchanges
of shares from American Funds money market funds are subject to applicable sales
charges on the fund being purchased, unless the money market fund shares were
acquired by an exchange from a fund having a sales charge, or by reinvestment or
cross-reinvestment of dividends or capital gain distributions. Exchanges of
Class F shares generally may only be made through fee-based programs of
investment firms that have special agreements with the fund's distributor and
certain registered investment advisers.

You may exchange shares of other classes by contacting the Transfer Agent, by
contacting your investment dealer or financial adviser, by using American
FundsLine or americanfunds.com, or by telephoning 800/421-0180 toll-free, or
faxing (see "American Funds Service Company service areas" in the prospectus for
the appropriate fax numbers) the Transfer Agent. For more information, see
"Shareholder account services and privileges" in this statement of additional
information. THESE TRANSACTIONS HAVE THE SAME TAX CONSEQUENCES AS ORDINARY SALES
AND PURCHASES.

Shares held in employer-sponsored retirement plans may be exchanged into other
American Funds by contacting your plan administrator or recordkeeper. Exchange
redemptions and purchases are processed simultaneously at the share prices next
determined after the exchange order is received (see "Price of shares" in this
statement of additional information).

The Bond Fund of America -- Page 48
<PAGE>

FREQUENT TRADING OF FUND SHARES -- As noted in the prospectus, certain
redemptions may trigger a purchase block lasting 30 calendar days under the
fund's "purchase blocking policy." Under this policy, systematic redemptions
will not trigger a purchase block and systematic purchases will not be
prevented. For purposes of this policy, systematic redemptions include, for
example, regular periodic automatic redemptions and statement of intention
escrow share redemptions. Systematic purchases include, for example, regular
periodic automatic purchases and automatic reinvestments of dividends and
capital gain distributions.

OTHER POTENTIALLY ABUSIVE ACTIVITY -- In addition to implementing purchase
blocks, American Funds Service Company will monitor for other types of activity
that could potentially be harmful to the American Funds - for example,
short-term trading activity in multiple funds. When identified, American Funds
Service Company will request that the shareholder discontinue the activity. If
the activity continues, American Funds Service Company will freeze the
shareholder account to prevent all activity other than redemptions of fund
shares.

MOVING BETWEEN SHARE CLASSES

If you wish to "move" your investment between share classes (within the
same fund or between different funds), we generally will process your
request as an exchange of the shares you currently hold for shares in the
new class or fund. Below is more information about how sales charges are
handled for various scenarios.

EXCHANGING CLASS B SHARES FOR CLASS A SHARES -- If you exchange Class B
shares for Class A shares during the contingent deferred sales charge
period you are responsible for paying any applicable deferred sales charges
attributable to those Class B shares, but you will not be required to pay a
Class A sales charge. If, however, you exchange your Class B shares for
Class A shares after the contingent deferred sales charge period, you are
responsible for paying any applicable Class A sales charges.

EXCHANGING CLASS C SHARES FOR CLASS A SHARES -- If you exchange Class C
shares for Class A shares, you are still responsible for paying any Class C
contingent deferred sales charges and applicable Class A sales charges.

EXCHANGING CLASS C SHARES FOR CLASS F SHARES -- If you are part of a
qualified fee-based program and you wish to exchange your Class C shares
for Class F shares to be held in the program, you are still responsible for
paying any applicable Class C contingent deferred sales charges.

EXCHANGING CLASS F SHARES FOR CLASS A SHARES -- You can exchange Class F
shares held in a qualified fee-based program for Class A shares without
paying an initial Class A sales charge if all of the following requirements
are met: (a) you are leaving or have left the fee-based program, (b) you
have held the Class F shares in the program for at least one year, and (c)
you notify American Funds Service Company of your request. If you have
already redeemed your Class F shares, the foregoing requirements apply and
you must purchase Class A shares within 90 days after redeeming your Class
F shares to receive the Class A shares without paying an initial Class A
sales charge.

EXCHANGING CLASS A SHARES FOR CLASS F SHARES -- If you are part of a
qualified fee-based program and you wish to exchange your Class A shares
for Class F shares to be

The Bond Fund of America -- Page 49
<PAGE>

held in the program, any Class A sales charges (including contingent
deferred sales charges) that you paid or are payable will not be credited
back to your account.

EXCHANGING CLASS A SHARES FOR CLASS R SHARES -- Provided it is eligible to
invest in Class R shares, a retirement plan currently invested in Class A
shares may exchange its shares for Class R shares. Any Class A sales
charges that the retirement plan previously paid will not be credited back
to the plan's account.

EXCHANGING CLASS F-1 SHARES FOR CLASS F-2 SHARES -- If you are part of a
qualified fee-based program that offers Class F-2 shares, you may exchange
your Class F-1 shares for Class F-2 shares to be held in the program.

MOVING BETWEEN OTHER SHARE CLASSES -- If you desire to move your investment
between share classes and the particular scenario is not described in this
statement of additional information, please contact American Funds Service
Company at 800/421-0180 for more information.

NON-REPORTABLE TRANSACTIONS -- Automatic conversions described in the
prospectus will be non-reportable for tax purposes. In addition, except in
the case of a movement between a 529 share class and a non-529 share class,
an exchange of shares from one share class of a fund to another share class
of the same fund will be treated as a non-reportable exchange for tax
purposes, provided that the exchange request is received in writing by
American Funds Service Company and processed as a single transaction.

SALES CHARGES

CLASS A PURCHASES

PURCHASES BY CERTAIN 403(B) PLANS

A 403(b) plan may not invest in Class A, B or C shares on or after January
1, 2009, unless such plan was invested in Class A, B or C shares prior to
that date.

Participant accounts of a 403(b) plan that were treated as an
individual-type plan for sales charge purposes prior to January 1, 2009,
may continue to be treated as accounts of an individual-type plan for sales
charge purposes. Participant accounts of a 403(b) plan that were treated as
an employer-sponsored plan for sales charge purposes prior to January 1,
2009, may continue to be treated as accounts of an employer-sponsored plan
for sales charge purposes. Participant accounts of a 403(b) plan that is
established on or after January 1, 2009 are treated as accounts of an
employer-sponsored plan for sales charge purposes.

PURCHASES BY SEP PLANS AND SIMPLE IRA PLANS

Participant accounts in a Simplified Employee Pension (SEP) plan or a
Savings Incentive Match Plan for Employees of Small Employers IRA (SIMPLE
IRA) plan will be aggregated together for Class A sales charge purposes if
the SEP plan or SIMPLE IRA plan was established after November 15, 2004 by
an employer adopting a prototype plan produced by American Funds
Distributors, Inc. In the case where the employer adopts any other plan
(including, but not limited to, an IRS model agreement), each participant's
account in

The Bond Fund of America -- Page 50
<PAGE>

the plan will be aggregated with the participant's own personal investments
that qualify under the aggregation policy. A SEP plan or SIMPLE IRA plan
with a certain method of aggregating participant accounts as of November
15, 2004 may continue with that method so long as the employer has not
modified the plan document since that date.

OTHER PURCHASES

Pursuant to a determination of eligibility by a vice president or more
senior officer of the Capital Research and Management Company Fund
Administration Unit, or by his or her designee, Class A shares of the
American Funds stock, stock/bond and bond funds may be sold at net asset
value to:

(1) current or retired directors, trustees, officers and advisory board
members of, and certain lawyers who provide services to, the funds
managed by Capital Research and Management Company, current or retired
employees of Washington Management Corporation, current or retired
employees and partners of The Capital Group Companies, Inc. and its
affiliated companies, certain family members of the above persons, and
trusts or plans primarily for such persons;

(2) currently registered representatives and assistants directly employed
by such representatives, retired registered representatives with
respect to accounts established while active, or full-time employees
(collectively, "Eligible Persons") (and their (a) spouses or
equivalents if recognized under local law, (b) parents and children,
including parents and children in step and adoptive relationships,
sons-in-law and daughters-in-law, and (c) parents-in-law, if the
Eligible Persons or the spouses, children or parents of the Eligible
Persons are listed in the account registration with the
parents-in-law) of dealers who have sales agreements with the
Principal Underwriter (or who clear transactions through such
dealers), plans for the dealers, and plans that include as
participants only the Eligible Persons, their spouses, parents and/or
children;

(3) currently registered investment advisers ("RIAs") and assistants
directly employed by such RIAs, retired RIAs with respect to accounts
established while active, or full-time employees (collectively,
"Eligible Persons") (and their (a) spouses or equivalents if
recognized under local law, (b) parents and children, including
parents and children in step and adoptive relationships, sons-in-law
and daughters-in-law and (c) parents-in-law, if the Eligible Persons
or the spouses, children or parents of the Eligible Persons are listed
in the account registration with the parents-in-law) of RIA firms that
are authorized to sell shares of the funds, plans for the RIA firms,
and plans that include as participants only the Eligible Persons,
their spouses, parents and/or children;

(4) companies exchanging securities with the fund through a merger,
acquisition or exchange offer;

(5) insurance company separate accounts;

(6) accounts managed by subsidiaries of The Capital Group Companies, Inc.;

(7) The Capital Group Companies, Inc., its affiliated companies and
Washington Management Corporation;

The Bond Fund of America -- Page 51
<PAGE>

(8) an individual or entity with a substantial business relationship with
The Capital Group Companies, Inc. or its affiliates, or an individual
or entity related or relating to such individual or entity;

(9) wholesalers and full-time employees directly supporting wholesalers
involved in the distribution of insurance company separate accounts
whose underlying investments are managed by any affiliate of The
Capital Group Companies, Inc.; and

(10) full-time employees of banks that have sales agreements with the
Principal Underwriter, who are solely dedicated to directly supporting
the sale of mutual funds.

Shares are offered at net asset value to these persons and organizations
due to anticipated economies in sales effort and expense. Once an account
is established under this net asset value privilege, additional investments
can be made at net asset value for the life of the account.

TRANSFERS TO COLLEGEAMERICA -- A transfer from the Virginia Prepaid
Education Program/SM/ or the Virginia Education Savings Trust/SM/ to a
CollegeAmerica account will be made with no sales charge. No commission
will be paid to the dealer on such a transfer.

MOVING BETWEEN ACCOUNTS -- Investments in certain account types may be moved to
other account types without incurring additional Class A sales charges. These
transactions include, for example:

. redemption proceeds from a non-retirement account (for example, a
joint tenant account) used to purchase fund shares in an IRA or other
individual-type retirement account;

. required minimum distributions from an IRA or other individual-type
retirement account used to purchase fund shares in a non-retirement
account; and

. death distributions paid to a beneficiary's account that are used by
the beneficiary to purchase fund shares in a different account.

LOAN REPAYMENTS -- Repayments on loans taken from a retirement plan or an
individual-type retirement account are not subject to sales charges if American
Funds Service Company is notified of the repayment.

DEALER COMMISSIONS AND COMPENSATION -- Commissions (up to 1.00%) are paid to
dealers who initiate and are responsible for certain Class A share purchases not
subject to initial sales charges. These purchases consist of purchases of $1
million or more, purchases by employer-sponsored defined contribution-type
retirement plans investing $1 million or more or with 100 or more eligible
employees, and purchases made at net asset value by certain retirement plans,
endowments and foundations with assets of $50 million or more. Commissions on
such investments (other than IRA rollover assets that roll over at no sales
charge under the fund's IRA rollover policy as described in the prospectus) are
paid to dealers at the following rates: 1.00% on amounts of less than $4
million, 0.50% on amounts of at least $4 million but less than $10 million and
0.25% on amounts of at least $10 million. Commissions are based on cumulative
investments over the life of the account with no adjustment for redemptions,
transfers, or market declines. For example, if a shareholder has accumulated
investments in excess of $4 million (but

The Bond Fund of America -- Page 52
<PAGE>

less than $10 million) and subsequently redeems all or a portion of the
account(s), purchases following the redemption will generate a dealer commission
of 0.50%.

A dealer concession of up to 1% may be paid by the fund under its Class A plan
of distribution to reimburse the Principal Underwriter in connection with dealer
and wholesaler compensation paid by it with respect to investments made with no
initial sales charge.

SALES CHARGE REDUCTIONS AND WAIVERS

REDUCING YOUR CLASS A SALES CHARGE -- As described in the prospectus, there are
various ways to reduce your sales charge when purchasing Class A shares.
Additional information about Class A sales charge reductions is provided below.

STATEMENT OF INTENTION -- By establishing a statement of intention (the
"Statement"), you enter into a nonbinding commitment to purchase shares of
the American Funds (excluding money market funds) over a 13-month period
and receive the same sales charge (expressed as a percentage of your
purchases) as if all shares had been purchased at once, unless the Statement
is upgraded as described below.

The Statement period starts on the date on which your first purchase made
toward satisfying the Statement is processed. The market value of your
existing holdings eligible to be aggregated (see below) as of the day
immediately before the start of the Statement period may be credited toward
satisfying the Statement.

You may revise the commitment you have made in your Statement upward at any
time during the Statement period. If your prior commitment has not been met
by the time of the revision, the Statement period during which purchases
must be made will remain unchanged. Purchases made from the date of the
revision will receive the reduced sales charge, if any, resulting from the
revised Statement. If your prior commitment has been met by the time of the
revision, your original Statement will be considered met and a new
Statement will be established.

The Statement will be considered completed if the shareholder dies within
the 13-month Statement period. Commissions to dealers will not be adjusted
or paid on the difference between the Statement amount and the amount
actually invested before the shareholder's death.

When a shareholder elects to use a Statement, shares equal to 5% of the
dollar amount specified in the Statement may be held in escrow in the
shareholder's account out of the initial purchase (or subsequent purchases,
if necessary) by the Transfer Agent. All dividends and any capital gain
distributions on shares held in escrow will be credited to the
shareholder's account in shares (or paid in cash, if requested). If the
intended investment is not completed within the specified Statement period,
the purchaser may be required to remit to the Principal Underwriter the
difference between the sales charge actually paid and the sales charge
which would have been paid if the total of such purchases had been made at
a single time. Any dealers assigned to the shareholder's account at the
time a purchase was made during the Statement period will receive a
corresponding commission adjustment if appropriate. If the difference is
not paid by the close of the Statement period, the appropriate number of
shares held in escrow will be redeemed to

The Bond Fund of America -- Page 53
<PAGE>

pay such difference. If the proceeds from this redemption are inadequate,
the purchaser may be liable to the Principal Underwriter for the balance
still outstanding.

Certain payroll deduction retirement plans purchasing Class A shares under
a Statement on or before November 12, 2006, may continue to purchase Class
A shares at the sales charge determined by that particular Statement until
the plans' values reach the amounts specified in their Statements. Upon
reaching such amounts, the Statements for these plans will be deemed
completed and will terminate. In addition, effective May 1, 2009, the
Statements for these plans will expire if they have not been met by next
anniversary of the establishment of such Statement. After such termination,
these plans are eligible for additional sales charge reductions by meeting
the criteria under the fund's rights of accumulation policy.

In addition, if you currently have individual holdings in American Legacy
variable annuity contracts or variable life insurance policies that were
established on or before March 31, 2007, you may continue to apply
purchases under such contracts and policies to a Statement.

Shareholders purchasing shares at a reduced sales charge under a Statement
indicate their acceptance of these terms and those in the prospectus with
their first purchase.

AGGREGATION -- Qualifying investments for aggregation include those made by
you and your "immediate family" as defined in the prospectus, if all
parties are purchasing shares for their own accounts and/or:

. individual-type employee benefit plans, such as an IRA,
single-participant Keogh-type plan, or a participant account of a
403(b) plan that is treated as an individual-type plan for sales
charge purposes (see "Purchases by certain 403(b) plans" under "Sales
charges" in this statement of additional information);

. SEP plans and SIMPLE IRA plans established after November 15, 2004 by
an employer adopting any plan document other than a prototype plan
produced by American Funds Distributors, Inc.;

. business accounts solely controlled by you or your immediate family
(for example, you own the entire business);

. trust accounts established by you or your immediate family (for trusts
with only one primary beneficiary, upon the trustor's death the trust
account may be aggregated with such beneficiary's own accounts; for
trusts with multiple primary beneficiaries, upon the trustor's death
the trustees of the trust may instruct American Funds Service Company
to establish separate trust accounts for each primary beneficiary;
each primary beneficiary's separate trust account may then be
aggregated with such beneficiary's own accounts);

. endowments or foundations established and controlled by you or your
immediate family; or

. 529 accounts, which will be aggregated at the account owner level
(Class 529-E accounts may only be aggregated with an eligible employer
plan).

The Bond Fund of America -- Page 54
<PAGE>

Individual purchases by a trustee(s) or other fiduciary(ies) may also be
aggregated if the investments are:

. for a single trust estate or fiduciary account, including employee
benefit plans other than the individual-type employee benefit plans
described above;

. made for two or more employee benefit plans of a single employer or of
affiliated employers as defined in the 1940 Act, excluding the
individual-type employee benefit plans described above;

. for a diversified common trust fund or other diversified pooled
account not specifically formed for the purpose of accumulating fund
shares;

. for nonprofit, charitable or educational organizations, or any
endowments or foundations established and controlled by such
organizations, or any employer-sponsored retirement plans established
for the benefit of the employees of such organizations, their
endowments, or their foundations;

. for participant accounts of a 403(b) plan that is treated as an
employer-sponsored plan for sales charge purposes (see "Purchases by
certain 403(b) plans" under "Sales charges" in this statement of
additional information), or made for participant accounts of two or
more such plans, in each case of a single employer or affiliated
employers as defined in the 1940 Act; or

.
for a SEP or SIMPLE IRA plan established after November 15, 2004 by an
employer adopting a prototype plan produced by American Funds
Distributors, Inc.

Purchases made for nominee or street name accounts (securities held in the
name of an investment dealer or another nominee such as a bank trust
department instead of the customer) may not be aggregated with those made
for other accounts and may not be aggregated with other nominee or street
name accounts unless otherwise qualified as described above.

CONCURRENT PURCHASES -- As described in the prospectus, you may reduce your
Class A sales charge by combining purchases of all classes of shares in the
American Funds, as well as holdings in Endowments and applicable holdings
in the American Funds Target Date Retirement Series. Shares of money market
funds purchased through an exchange, reinvestment or cross-reinvestment
from a fund having a sales charge also qualify. However, direct purchases
of American Funds money market funds are excluded. If you currently have
individual holdings in American Legacy variable annuity contracts or
variable life insurance policies that were established on or before March
31, 2007, you may continue to combine purchases made under such contracts
and policies to reduce your Class A sales charge.

RIGHTS OF ACCUMULATION -- Subject to the limitations described in the
aggregation policy, you may take into account your accumulated holdings in
all share classes of the American Funds, as well as your holdings in
Endowments and applicable holdings in the American Funds Target Date
Retirement Series, to determine your sales charge on investments in
accounts eligible to be aggregated. Direct purchases of American Funds
money market funds are excluded. Subject to your investment dealer's or
recordkeeper's capabilities, your accumulated holdings will be calculated
as the higher of (a) the current value of your existing holdings (the
"market value") or (b) the amount you invested

The Bond Fund of America -- Page 55
<PAGE>

(including reinvested dividends and capital gains, but excluding capital
appreciation) less any withdrawals (the "cost value"). Depending on the
entity on whose books your account is held, the value of your holdings in
that account may not be eligible for calculation at cost value. For
example, accounts held in nominee or street name may not be eligible for
calculation at cost value and instead may be calculated at market value for
purposes of rights of accumulation.

The value of all of your holdings in accounts established in calendar year
2005 or earlier will be assigned an initial cost value equal to the market
value of those holdings as of the last business day of 2005. Thereafter,
the cost value of such accounts will increase or decrease according to
actual investments or withdrawals. You must contact your financial adviser
or American Funds Service Company if you have additional information that
is relevant to the calculation of the value of your holdings.

When determining your American Funds Class A sales charge, if your
investment is not in an employer-sponsored retirement plan, you may also
continue to take into account the market value (as of the day prior to your
American Funds investment) of your individual holdings in various American
Legacy variable annuity contracts and variable life insurance policies that
were established on or before March 31, 2007. An employer-sponsored
retirement plan may also continue to take into account the market value of
its investments in American Legacy Retirement Investment Plans that were
established on or before March 31, 2007.

You may not purchase Class B or 529-B shares if your combined American
Funds and applicable American Legacy holdings cause you to be eligible to
purchase Class A or 529-A shares at the $100,000 or higher sales charge
discount rate. In addition, you may not purchase Class C or 529-C shares if
such combined holdings cause you to be eligible to purchase Class A or
529-A shares at the $1 million or more sales charge discount rate (i.e. at
net asset value).

If you make a gift of American Funds Class A shares, upon your request, you
may purchase the shares at the sales charge discount allowed under rights
of accumulation of all of your American Funds and applicable American
Legacy accounts.

RIGHT OF REINVESTMENT -- As described in the prospectus, certain
transactions may be eligible for investment without a sales charge pursuant
to the fund's right of reinvestment policy. Recent legislation suspended
required minimum distributions from individual retirement accounts and
employer-sponsored retirement plan accounts for the 2009 tax year. Given
this suspension, proceeds from an automatic withdrawal plan to satisfy a
required minimum distribution may be invested without a sales charge for
the 2009 tax year, or any subsequent period, to the extent such legislation
is extended. This policy is subject to any restrictions regarding the
investment of proceeds from a required minimum distribution that may be
established by the transfer agent.

CDSC WAIVERS FOR CLASS A, B AND C SHARES -- As noted in the prospectus, a
contingent deferred sales charge ("CDSC") may be waived for redemptions due to
death or post-purchase disability of a shareholder (this generally excludes
accounts registered in the names of trusts and other entities). In the case of
joint tenant accounts, if one joint tenant dies, a surviving joint tenant, at
the time he or she notifies the Transfer Agent of the other joint tenant's death
and removes the decedent's name from the account, may redeem shares from the
account without

The Bond Fund of America -- Page 56
<PAGE>

incurring a CDSC. Redemptions made after the Transfer Agent is notified of the
death of a joint tenant will be subject to a CDSC.

In addition, a CDSC may be waived for the following types of transactions, if
together they do not exceed 12% of the value of an "account" (defined below)
annually (the "12% limit"):

. Required minimum distributions taken from retirement accounts upon the
shareholder's attainment of age 70-1/2 (required minimum distributions
that continue to be taken by the beneficiary(ies) after the account
owner is deceased also qualify for a waiver).

. Redemptions through an automatic withdrawal plan ("AWP") (see
"Automatic withdrawals" under "Shareholder account services and
privileges" in this statement of additional information). For each AWP
payment, assets that are not subject to a CDSC, such as appreciation
on shares and shares acquired through reinvestment of dividends and/or
capital gain distributions, will be redeemed first and will count
toward the 12% limit. If there is an insufficient amount of assets not
subject to a CDSC to cover a particular AWP payment, shares subject to
the lowest CDSC will be redeemed next until the 12% limit is reached.
Any dividends and/or capital gain distributions taken in cash by a
shareholder who receives payments through an AWP will also count
toward the 12% limit. In the case of an AWP, the 12% limit is
calculated at the time an automatic redemption is first made, and is
recalculated at the time each additional automatic redemption is made.
Shareholders who establish an AWP should be aware that the amount of a
payment not subject to a CDSC may vary over time depending on
fluctuations in the value of their accounts. This privilege may be
revised or terminated at any time.

For purposes of this paragraph, "account" means:

. in the case of Class A shares, your investment in Class A shares of
all American Funds (investments representing direct purchases of
American Funds money market funds are excluded);

. in the case of Class B shares, your investment in Class B shares of
the particular fund from which you are making the redemption; and

. in the case of Class C shares, your investment in Class C shares of
the particular fund from which you are making the redemption.

CDSC waivers are allowed only in the cases listed here and in the prospectus.
For example, CDSC waivers will not be allowed on redemptions of Class 529-B and
529-C shares due to termination of CollegeAmerica; a determination by the
Internal Revenue Service that CollegeAmerica does not qualify as a qualified
tuition program under the Code; proposal or enactment of law that eliminates or
limits the tax-favored status of CollegeAmerica; or elimination of the fund by
the Virginia College Savings Plan as an option for additional investment within
CollegeAmerica.

SELLING SHARES

The methods for selling (redeeming) shares are described more fully in the
prospectus. If you wish to sell your shares by contacting American Funds Service
Company directly, any such

The Bond Fund of America -- Page 57
<PAGE>

request must be signed by the registered shareholders. To contact American Funds
Service Company via overnight mail or courier service, see "Purchase and
exchange of shares."

A signature guarantee may be required for certain redemptions. In such an event,
your signature may be guaranteed by a domestic stock exchange or the Financial
Industry Regulatory Authority, bank, savings association or credit union that is
an eligible guarantor institution. The Transfer Agent reserves the right to
require a signature guarantee on any redemptions.

Additional documentation may be required for sales of shares held in corporate,
partnership or fiduciary accounts. You must include with your written request
any shares you wish to sell that are in certificate form.

If you sell Class A, B or C shares and request a specific dollar amount to be
sold, we will sell sufficient shares so that the sale proceeds, after deducting
any applicable CDSC, equals the dollar amount requested.

Redemption proceeds will not be mailed until sufficient time has passed to
provide reasonable assurance that checks or drafts (including certified or
cashier's checks) for shares purchased have cleared (which may take up to 10
business days from the purchase date). Except for delays relating to clearance
of checks for share purchases or in extraordinary circumstances (and as
permissible under the 1940 Act), sale proceeds will be paid on or before the
seventh day following receipt and acceptance of an order. Interest will not
accrue or be paid on amounts that represent uncashed distribution or redemption
checks.

You may request that redemption proceeds of $1,000 or more from money market
funds be wired to your bank by writing American Funds Service Company. A
signature guarantee is required on all requests to wire funds.

SHAREHOLDER ACCOUNT SERVICES AND PRIVILEGES

The following services and privileges are generally available to all
shareholders. However, certain services and privileges described in the
prospectus and this statement of additional information may not be available for
Class 529 shareholders or if your account is held with an investment dealer or
through an employer-sponsored retirement plan.

AUTOMATIC INVESTMENT PLAN -- An automatic investment plan enables you to make
monthly or quarterly investments in the American Funds through automatic debits
from your bank account. To set up a plan, you must fill out an account
application and specify the amount that you would like to invest and the date on
which you would like your investments to occur. The plan will begin within 30
days after your account application is received. Your bank account will be
debited on the day or a few days before your investment is made, depending on
the bank's capabilities. The Transfer Agent will then invest your money into the
fund you specified on or around the date you specified. If the date you
specified falls on a weekend or holiday, your money will be invested on the
following business day. However, if the following business day falls in the next
month, your money will be invested on the business day immediately preceding the
weekend or holiday. If your bank account cannot be debited due to insufficient
funds, a stop-payment or the closing of the account, the plan may be terminated
and the related investment reversed. You may change the amount of the investment
or discontinue the plan at any time by contacting the Transfer Agent.

The Bond Fund of America -- Page 58
<PAGE>

AUTOMATIC REINVESTMENT -- Dividends and capital gain distributions are
reinvested in additional shares of the same class and fund at net asset value
unless you indicate otherwise on the account application. You also may elect to
have dividends and/or capital gain distributions paid in cash by informing the
fund, the Transfer Agent or your investment dealer. Dividends and capital gain
distributions paid to retirement plan shareholders or shareholders of the 529
share classes will be automatically reinvested.

If you have elected to receive dividends and/or capital gain distributions in
cash, and the postal or other delivery service is unable to deliver checks to
your address of record, or you do not respond to mailings from American Funds
Service Company with regard to uncashed distribution checks, your distribution
option may be automatically converted to having all dividends and other
distributions reinvested in additional shares.

CROSS-REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS -- For all share classes,
except the 529 classes of shares, you may cross-reinvest dividends and capital
gains (distributions) into other American Funds in the same share class at net
asset value, subject to the following conditions:

(1) the aggregate value of your account(s) in the fund(s) paying distributions
equals or exceeds $5,000 (this is waived if the value of the account in the fund
receiving the distributions equals or exceeds that fund's minimum initial
investment requirement);

(2) if the value of the account of the fund receiving distributions is below
the minimum initial investment requirement, distributions must be automatically
reinvested; and

(3) if you discontinue the cross-reinvestment of distributions, the value of
the account of the fund receiving distributions must equal or exceed the minimum
initial investment requirement. If you do not meet this requirement within 90
days of notification, the fund has the right to automatically redeem the
account.

AUTOMATIC EXCHANGES -- For all share classes, you may automatically exchange
shares of the same class in amounts of $50 or more among any of the American
Funds on any day (or preceding business day if the day falls on a nonbusiness
day) of each month you designate.

AUTOMATIC WITHDRAWALS -- Depending on the type of account, for all share classes
except R shares, you may automatically withdraw shares from any of the American
Funds. You can make automatic withdrawals of $50 or more. You can designate the
day of each period for withdrawals and request that checks be sent to you or
someone else. Withdrawals may also be electronically deposited to your bank
account. The Transfer Agent will withdraw your money from the fund you specify
on or around the date you specify. If the date you specified falls on a weekend
or holiday, the redemption will take place on the previous business day.
However, if the previous business day falls in the preceding month, the
redemption will take place on the following business day after the weekend or
holiday. You should consult with your adviser or intermediary to determine if
your account is eligible for automatic withdrawals.

Withdrawal payments are not to be considered as dividends, yield or income.
Generally, automatic investments may not be made into a shareholder account from
which there are automatic withdrawals. Withdrawals of amounts exceeding
reinvested dividends and distributions and increases in share value would reduce
the aggregate value of the shareholder's account. The Transfer Agent arranges
for the redemption by the fund of sufficient shares, deposited by the
shareholder with the Transfer Agent, to provide the withdrawal payment
specified.

The Bond Fund of America -- Page 59
<PAGE>

Redemption proceeds from an automatic withdrawal plan are not eligible for
reinvestment without a sales charge.

ACCOUNT STATEMENTS -- Your account is opened in accordance with your
registration instructions. Transactions in the account, such as additional
investments, will be reflected on regular confirmation statements from the
Transfer Agent. Dividend and capital gain reinvestments, purchases through
automatic investment plans and certain retirement plans, as well as automatic
exchanges and withdrawals, will be confirmed at least quarterly.

AMERICAN FUNDSLINE AND AMERICANFUNDS.COM -- You may check your share balance,
the price of your shares or your most recent account transaction; redeem shares
(up to $75,000 per American Funds shareholder each day) from nonretirement plan
accounts; or exchange shares around the clock with American FundsLine or using
americanfunds.com. To use American FundsLine, call 800/325-3590 from a
TouchTone(TM) telephone. Redemptions and exchanges through American FundsLine
and americanfunds.com are subject to the conditions noted above and in
"Telephone and Internet purchases, redemptions and exchanges" below. You will
need your fund number (see the list of the American Funds under "General
information -- fund numbers"), personal identification number (generally the
last four digits of your Social Security number or other tax identification
number associated with your account) and account number.

Generally, all shareholders are automatically eligible to use these services.
However, if you are not currently authorized to do so, you may complete an
American FundsLink Authorization Form. Once you establish this privilege, you,
your financial adviser or any person with your account information may use these
services.

TELEPHONE AND INTERNET PURCHASES, REDEMPTIONS AND EXCHANGES -- By using the
telephone (including American FundsLine) or the Internet (including
americanfunds.com), or fax purchase, redemption and/or exchange options, you
agree to hold the fund, the Transfer Agent, any of its affiliates or mutual
funds managed by such affiliates, and each of their respective directors,
trustees, officers, employees and agents harmless from any losses, expenses,
costs or liabilities (including attorney fees) that may be incurred in
connection with the exercise of these privileges. Generally, all shareholders
are automatically eligible to use these services. However, you may elect to opt
out of these services by writing the Transfer Agent (you may also reinstate them
at any time by writing the Transfer Agent). If the Transfer Agent does not
employ reasonable procedures to confirm that the instructions received from any
person with appropriate account information are genuine, it and/or the fund may
be liable for losses due to unauthorized or fraudulent instructions. In the
event that shareholders are unable to reach the fund by telephone because of
technical difficulties, market conditions or a natural disaster, redemption and
exchange requests may be made in writing only.

CHECKWRITING -- You may establish check writing privileges for Class A shares
(but not Class 529-A shares) of American Funds money market funds upon meeting
the fund's initial purchase minimum of $1,000. This can be done by using an
account application. If you request check writing privileges, you will be
provided with checks that you may use to draw against your account. These checks
may be made payable to anyone you designate and must be signed by the authorized
number of registered shareholders exactly as indicated on your account
application.

REDEMPTION OF SHARES -- The fund's articles of incorporation permit the fund to
direct the Transfer Agent to redeem the shares of any shareholder for their then
current net asset value per

The Bond Fund of America -- Page 60
<PAGE>

share if at such time the shareholder of record owns shares having an aggregate
net asset value of less than the minimum initial investment amount required of
new shareholders as set forth in the fund's current registration statement under
the 1940 Act, and subject to such further terms and conditions as the board of
directors of the fund may from time to time adopt.

While payment of redemptions normally will be in cash, the fund's articles of
incorporation permit payment of the redemption price wholly or partly with
portfolio securities or other fund assets under conditions and circumstances
determined by the fund's board of directors. For example, redemptions could be
made in this manner if the board determined that making payments wholly in cash
over a particular period would be unfair and/or harmful to other fund
shareholders.

SHARE CERTIFICATES -- Shares are credited to your account and certificates are
not issued unless you request them by contacting the Transfer Agent.
Certificates are not available for the 529 or R share classes.

GENERAL INFORMATION

CUSTODIAN OF ASSETS -- Securities and cash owned by the fund, including proceeds
from the sale of shares of the fund and of securities in the fund's portfolio,
are held by JPMorgan Chase Bank, 270 Park Avenue, New York, NY 10017-2070, as
Custodian. If the fund holds securities of issuers outside the U.S., the
Custodian may hold these securities pursuant to subcustodial arrangements in
banks outside the U.S. or branches of U.S. banks outside the U.S.

TRANSFER AGENT -- American Funds Service Company, a wholly owned subsidiary of
the investment adviser, maintains the records of shareholder accounts, processes
purchases and redemptions of the fund's shares, acts as dividend and capital
gain distribution disbursing agent, and performs other related shareholder
service functions. The principal office of American Funds Service Company is
located at 6455 Irvine Center Drive, Irvine, CA 92618. American Funds Service
Company was paid a fee of $31,795,000 for Class A shares and $1,742,000 for
Class B shares for the 2008 fiscal year. American Funds Service Company is also
compensated for certain transfer agency services provided to all other share
classes from the administrative services fees paid to Capital Research and
Management Company and from the relevant share class, as described under
"Administrative services agreement."

In the case of certain shareholder accounts, third parties who may be
unaffiliated with the investment adviser provide transfer agency and shareholder
services in place of American Funds Service Company. These services are rendered
under agreements with American Funds Service Company or its affiliates and the
third parties receive compensation according to such agreements. Compensation
for transfer agency and shareholder services, whether paid to American Funds
Service Company or such third parties, is ultimately paid from fund assets and
is reflected in the expenses of the fund as disclosed in the prospectus.

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM -- Deloitte & Touche LLP, 695 Town
Center Drive, Costa Mesa, California 92626, serves as the fund's independent
registered public accounting firm, providing audit services, preparation of tax
returns and review of certain documents to be filed with the Securities and
Exchange Commission. The financial statements included in this statement of
additional information from the annual report have been audited by Deloitte &
Touche LLP, an independent registered public accounting firm, as stated in their
report appearing herein. Such financial statements have been so included in
reliance upon the report of such firm given upon their authority as experts in
accounting and auditing. The selection of the

The Bond Fund of America -- Page 61
<PAGE>

fund's independent registered public accounting firm is reviewed and determined
annually by the board of directors.

INDEPENDENT LEGAL COUNSEL -- Paul, Hastings, Janofsky & Walker LLP, 515 South
Flower Street, Los Angeles, CA 90071, serves as independent legal counsel
("counsel") for the fund and for independent directors in their capacities as
such. Certain legal matters in connection with certain capital shares offered by
the prospectus have been passed upon for the fund by Paul, Hastings, Janofsky &
Walker LLP and DLA Piper US LLP, Baltimore, Maryland. A determination with
respect to the independence of the fund's counsel will be made at least annually
by the independent directors of the fund, as prescribed by the 1940 Act and
related rules.

PROSPECTUSES, REPORTS TO SHAREHOLDERS AND PROXY STATEMENTS -- The fund's fiscal
year ends on December 31. Shareholders are provided updated prospectuses
annually and at least semiannually with reports showing the fund's investment
portfolio or summary investment portfolio, financial statements and other
information. The fund's annual financial statements are audited by the fund's
independent registered public accounting firm, Deloitte & Touche LLP. In
addition, shareholders may also receive proxy statements for the fund. In an
effort to reduce the volume of mail shareholders receive from the fund when a
household owns more than one account, the Transfer Agent has taken steps to
eliminate duplicate mailings of prospectuses, shareholder reports and proxy
statements. To receive additional copies of a prospectus, report or proxy
statement, shareholders should contact the Transfer Agent.

Shareholders may also elect to receive updated prospectuses, annual reports and
semi-annual reports electronically by signing up for electronic delivery on our
website, americanfunds.com. Upon electing the electronic delivery of updated
prospectuses and other reports, a shareholder will no longer automatically
receive such documents in paper form by mail. A shareholder who elects
electronic delivery is able to cancel this service at any time and return to
receiving updated prospectuses and other reports in paper form by mail.

Prospectuses, annual reports and semi-annual reports that are mailed to
shareholders by the American Funds organization are printed with ink containing
soy and/or vegetable oil on paper containing recycled fibers.

CODES OF ETHICS -- The fund and Capital Research and Management Company and its
affiliated companies, including the fund's Principal Underwriter, have adopted
codes of ethics that allow for personal investments, including securities in
which the fund may invest from time to time. These codes include a ban on
acquisitions of securities pursuant to an initial public offering; restrictions
on acquisitions of private placement securities; preclearance and reporting
requirements; review of duplicate confirmation statements; annual
recertification of compliance with codes of ethics; blackout periods on personal
investing for certain investment personnel; ban on short-term trading profits
for investment personnel; limitations on service as a director of publicly
traded companies; and disclosure of personal securities transactions.

LEGAL PROCEEDINGS -- On February 16, 2005, the NASD (now the Financial Industry
Regulatory Authority, or FINRA) filed an administrative complaint against the
Principal Underwriter. The complaint alleges violations of certain NASD rules by
the Principal Underwriter with respect to the selection of broker-dealer firms
that buy and sell securities for mutual fund investment portfolios. The
complaint seeks sanctions, restitution and disgorgement. On August 30, 2006, a
FINRA Hearing Panel ruled against the Principal Underwriter and imposed a $5
million fine. On April 30, 2008, FINRA's National Adjudicatory Council affirmed
the decision by FINRA's Hearing Panel.

The Bond Fund of America -- Page 62
<PAGE>

The Principal Underwriter has appealed this decision to the Securities and
Exchange Commission.

The investment adviser and Principal Underwriter believe that the likelihood
that this matter could have a material adverse effect on the fund or on the
ability of the investment adviser or Principal Underwriter to perform their
contracts with the fund is remote. In addition, class action lawsuits have been
filed in the U.S. District Court, Central District of California, relating to
this and other matters. The investment adviser believes that these suits are
without merit and will defend itself vigorously.

DETERMINATION OF NET ASSET VALUE, REDEMPTION PRICE AND MAXIMUM OFFERING PRICE
PER SHARE FOR CLASS A SHARES -- DECEMBER 31, 2008

Net asset value and redemption price per share
(Net assets divided by shares outstanding). . $10.76
Maximum offering price per share
(100/96.25 of net asset value per share,
which takes into account the fund's current maximum
sales charge). . . . . . . . . . . . . . . . $11.18

OTHER INFORMATION -- The fund reserves the right to modify the privileges
described in this statement of additional information at any time.

The financial statements, including the investment portfolio and the report of
the fund's independent registered public accounting firm contained in the annual
report, are included in this statement of additional information. The following
information on fund numbers is not included in the annual report:

The Bond Fund of America -- Page 63
<PAGE>

FUND NUMBERS -- Here are the fund numbers for use with our automated telephone
line, American FundsLine/(R)/, or when making share transactions:

FUND NUMBERS
-------------------------------------------------
FUND CLASS A CLASS B CLASS C CLASS F-1 CLASS F-2
- -------------------------------------------------------------------------------

STOCK AND STOCK/BOND FUNDS
AMCAP Fund/(R)/ . . . . . . 002 202 302 402 602
American Balanced Fund/(R)/ 011 211 311 411 611
American Mutual Fund/(R)/ . 003 203 303 403 603
Capital Income Builder/(R)/ 012 212 312 412 612
Capital World Growth and
Income Fund/SM/ . . . . . . 033 233 333 433 633
EuroPacific Growth Fund/(R)/ 016 216 316 416 616
Fundamental Investors/SM/ . 010 210 310 410 610
The Growth Fund of
America/(R)/. . . . . . . . 005 205 305 405 605
The Income Fund of
America/(R)/. . . . . . . . 006 206 306 406 606
International Growth and
Income Fund/SM/ . . . . . . 034 234 334 434 634
The Investment Company of
America/(R)/. . . . . . . . 004 204 304 404 604
The New Economy Fund/(R)/ . 014 214 314 414 614
New Perspective Fund/(R)/ . 007 207 307 407 607
New World Fund/(R)/ . . . . 036 236 336 436 636
SMALLCAP World Fund/(R)/ . 035 235 335 435 635
Washington Mutual Investors
Fund/SM/ . . . . . . . . . 001 201 301 401 601
BOND FUNDS
American High-Income
Municipal Bond Fund/(R)/ . 040 240 340 440 640
American High-Income
Trust/SM/ . . . . . . . . . 021 221 321 421 621
The Bond Fund of America/SM/ 008 208 308 408 608
Capital World Bond Fund/(R)/ 031 231 331 431 631
Intermediate Bond Fund of
America/SM/ . . . . . . . . 023 223 323 423 623
Limited Term Tax-Exempt Bond
Fund of America/SM/ . . . . 043 243 343 443 643
Short-Term Bond Fund of
America/SM/ . . . . . . . . 048 248 348 448 648
The Tax-Exempt Bond Fund of
America/(R)/. . . . . . . . 019 219 319 419 619
The Tax-Exempt Fund of
California/(R)/*. . . . . . 020 220 320 420 620
The Tax-Exempt Fund of
Maryland/(R)/*. . . . . . . 024 224 324 424 624
The Tax-Exempt Fund of
Virginia/(R)/*. . . . . . . 025 225 325 425 625
U.S. Government Securities
Fund/SM/. . . . . . . . . . 022 222 322 422 622
MONEY MARKET FUNDS
American Funds Money Market
Fund/SM/ . . . . . . . . . 059 259 359 459 659
The Cash Management Trust of
America/(R)/. . . . . . . . 009 209 309 409 609
The Tax-Exempt Money Fund of
America/SM/ . . . . . . . . 039 N/A N/A N/A N/A
The U.S. Treasury Money Fund
of America/SM/ . . . . . . 049 N/A N/A N/A N/A
___________
*Qualified for sale only in certain jurisdictions.

The Bond Fund of America -- Page 64
<PAGE>

FUND NUMBERS
----------------------------------------------
CLASS CLASS CLASS CLASS CLASS
FUND 529-A 529-B 529-C 529-E 529-F-1
- -------------------------------------------------------------------------------

STOCK AND STOCK/BOND FUNDS
AMCAP Fund . . . . . . . . . . 1002 1202 1302 1502 1402
American Balanced Fund . . . . 1011 1211 1311 1511 1411
American Mutual Fund . . . . . 1003 1203 1303 1503 1403
Capital Income Builder . . . . 1012 1212 1312 1512 1412
Capital World Growth and Income
Fund . . . . . . . . . . . . . 1033 1233 1333 1533 1433
EuroPacific Growth Fund . . . 1016 1216 1316 1516 1416
Fundamental Investors . . . . 1010 1210 1310 1510 1410
The Growth Fund of America . . 1005 1205 1305 1505 1405
The Income Fund of America . . 1006 1206 1306 1506 1406
International Growth and Income
Fund . . . . . . . . . . . . . 1034 1234 1334 1534 1434
The Investment Company of
America. . . . . . . . . . . . 1004 1204 1304 1504 1404
The New Economy Fund . . . . . 1014 1214 1314 1514 1414
New Perspective Fund . . . . . 1007 1207 1307 1507 1407
New World Fund . . . . . . . . 1036 1236 1336 1536 1436
SMALLCAP World Fund . . . . . 1035 1235 1335 1535 1435
Washington Mutual Investors
Fund . . . . . . . . . . . . . 1001 1201 1301 1501 1401
BOND FUNDS
American High-Income Trust . . 1021 1221 1321 1521 1421
The Bond Fund of America . . . 1008 1208 1308 1508 1408
Capital World Bond Fund . . . 1031 1231 1331 1531 1431
Intermediate Bond Fund of
America. . . . . . . . . . . . 1023 1223 1323 1523 1423
Short-Term Bond Fund of America 1048 1248 1348 1548 1448
U.S. Government Securities Fund 1022 1222 1322 1522 1422
MONEY MARKET FUND
American Funds Money Market
Fund . . . . . . . . . . . . . 1059 1259 1359 1559 1459
The Cash Management Trust of
America. . . . . . . . . . . . 1009 1209 1309 1509 1409

The Bond Fund of America -- Page 65
<PAGE>

FUND NUMBERS
------------------------------------------
CLASS CLASS CLASS CLASS CLASS CLASS
FUND R-1 R-2 R-3 R-4 R-5 R-6
- -------------------------------------------------------------------------------

STOCK AND STOCK/BOND FUNDS
AMCAP Fund . . . . . . . . . . . . 2102 2202 2302 2402 2502 2602
American Balanced Fund . . . . . . 2111 2211 2311 2411 2511 2611
American Mutual Fund . . . . . . . 2103 2203 2303 2403 2503 2603
Capital Income Builder . . . . . . 2112 2212 2312 2412 2512 2612
Capital World Growth and Income
Fund . . . . . . . . . . . . . . . 2133 2233 2333 2433 2533 2633
EuroPacific Growth Fund . . . . . 2116 2216 2316 2416 2516 2616
Fundamental Investors . . . . . . 2110 2210 2310 2410 2510 2610
The Growth Fund of America . . . . 2105 2205 2305 2405 2505 2605
The Income Fund of America . . . . 2106 2206 2306 2406 2506 2606
International Growth and Income
Fund . . . . . . . . . . . . . . . 2134 2234 2334 2434 2534 2634
The Investment Company of America 2104 2204 2304 2404 2504 2604
The New Economy Fund . . . . . . . 2114 2214 2314 2414 2514 2614
New Perspective Fund . . . . . . . 2107 2207 2307 2407 2507 2607
New World Fund . . . . . . . . . . 2136 2236 2336 2436 2536 2636
SMALLCAP World Fund . . . . . . . 2135 2235 2335 2435 2535 2635
Washington Mutual Investors Fund . 2101 2201 2301 2401 2501 2601
BOND FUNDS
American High-Income Municipal Bond
Fund . . . . . . . . . . . . . . . N/A N/A N/A N/A 2540 N/A
American High-Income Trust . . . . 2121 2221 2321 2421 2521 2621
The Bond Fund of America . . . . . 2108 2208 2308 2408 2508 2608
Capital World Bond Fund . . . . . 2131 2231 2331 2431 2531 2631
Intermediate Bond Fund of America 2123 2223 2323 2423 2523 2623
Limited Term Tax-Exempt Bond Fund
of America . . . . . . . . . . . . N/A N/A N/A N/A 2543 N/A
Short-Term Bond Fund of America. . 2148 2248 2348 2448 2548 2648
The Tax-Exempt Bond Fund of America N/A N/A N/A N/A 2519 N/A
The Tax-Exempt Fund of California* N/A N/A N/A N/A 2520 N/A
The Tax-Exempt Fund of Maryland* . N/A N/A N/A N/A 2524 N/A
The Tax-Exempt Fund of Virginia* . N/A N/A N/A N/A 2525 N/A
U.S. Government Securities Fund . 2122 2222 2322 2422 2522 2622
MONEY MARKET FUNDS
American Funds Money Market Fund . 2159 2259 2359 2459 2559 2659
The Cash Management Trust of
America. . . . . . . . . . . . . . 2109 2209 2309 2409 2509 N/A
The Tax-Exempt Money Fund of
America . . . . . . . . . . . . . N/A N/A N/A N/A 2539 N/A
The U.S. Treasury Money Fund of
America . . . . . . . . . . . . . 2149 2249 2349 2449 2549 N/A
___________
*Qualified for sale only in certain
jurisdictions.

The Bond Fund of America -- Page 66
<PAGE>

FUND NUMBERS
---------------------------------------------------
CLASS CLASS CLASS CLASS CLASS CLASS
FUND CLASS A R-1 R-2 R-3 R-4 R-5 R-6
- -------------------------------------------------------------------------------

AMERICAN FUNDS TARGET DATE RETIREMENT SERIES/(R)/
American Funds 2050 Target
Date Retirement Fund/(R)/ 069 2169 2269 2369 2469 2569 2669
American Funds 2045 Target
Date Retirement Fund/(R)/ 068 2168 2268 2368 2468 2568 2668
American Funds 2040 Target
Date Retirement Fund/(R)/ 067 2167 2267 2367 2467 2567 2667
American Funds 2035 Target
Date Retirement Fund/(R)/ 066 2166 2266 2366 2466 2566 2666
American Funds 2030 Target
Date Retirement Fund/(R)/ 065 2165 2265 2365 2465 2565 2665
American Funds 2025 Target
Date Retirement Fund/(R)/ 064 2164 2264 2364 2464 2564 2664
American Funds 2020 Target
Date Retirement Fund/(R)/ 063 2163 2263 2363 2463 2563 2663
American Funds 2015 Target
Date Retirement Fund/(R)/ 062 2162 2262 2362 2462 2562 2662
American Funds 2010 Target
Date Retirement Fund/(R)/ 061 2161 2261 2361 2461 2561 2661

The Bond Fund of America -- Page 67
<PAGE>

APPENDIX

The following descriptions of debt security ratings are based on information
provided by Moody's Investors Service and Standard & Poor's Corporation.

DESCRIPTION OF BOND RATINGS

MOODY'S
LONG-TERM RATING DEFINITIONS

Aaa
Obligations rated Aaa are judged to be of the highest quality, with minimal
credit risk.

Aa
Obligations rated Aa are judged to be of high quality and are subject to very
low credit risk.

A
Obligations rated A are considered upper-medium grade and are subject to low
credit risk.

Baa
Obligations rated Baa are subject to moderate credit risk. They are considered
medium-grade and as such may possess certain speculative characteristics.

Ba
Obligations rated Ba are judged to have speculative elements and are subject to
substantial credit risk.

B
Obligations rated B are considered speculative and are subject to high credit
risk.

Caa
Obligations rated Caa are judged to be of poor standing and are subject to very
high credit risk.

Ca
Obligations rated Ca are highly speculative and are likely in, or very near,
default, with some prospect of recovery of principal and interest.

C
Obligations rated C are the lowest rated class of bonds and are typically in
default, with little prospect for recovery of principal or interest.

NOTE: Moody's appends numerical modifiers 1, 2, and 3 to each generic rating
classification from Aa through Caa. The modifier 1 indicates that the obligation
ranks in the higher end of its generic rating category; the modifier 2 indicates
a mid-range ranking; and the modifier 3 indicates a ranking in the lower end of
that generic rating category.

The Bond Fund of America -- Page 68
<PAGE>

STANDARD & POOR'S
LONG-TERM ISSUE CREDIT RATINGS

AAA
An obligation rated AAA has the highest rating assigned by Standard & Poor's.
The obligor's capacity to meet its financial commitment on the obligation is
extremely strong.

AA
An obligation rated AA differs from the highest-rated obligations only in small
degree. The obligor's capacity to meet its financial commitment on the
obligation is very strong.

A
An obligation rated A is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than obligations in
higher-rated categories. However, the obligor's capacity to meet its financial
commitment on the obligation is still strong.

BBB
An obligation rated BBB exhibits adequate protection parameters. However,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity of the obligor to meet its financial commitment on the
obligation.

BB, B, CCC, CC, AND C
Obligations rated BB, B, CCC, CC, and C are regarded as having significant
speculative characteristics. BB indicates the least degree of speculation and C
the highest. While such obligations will likely have some quality and protective
characteristics, these may be outweighed by large uncertainties or major
exposures to adverse conditions.

BB
An obligation rated BB is less vulnerable to nonpayment than other speculative
issues. However, it faces major ongoing uncertainties or exposure to adverse
business, financial, or economic conditions which could lead to the obligor's
inadequate capacity to meet its financial commitment on the obligation.

B
An obligation rated B is more vulnerable to nonpayment than obligations rated
BB, but the obligor currently has the capacity to meet its financial commitment
on the obligation. Adverse business, financial, or economic conditions will
likely impair the obligor's capacity or willingness to meet its financial
commitment on the obligation.

CCC
An obligation rated CCC is currently vulnerable to nonpayment and is dependent
upon favorable business, financial, and economic conditions for the obligor to
meet its financial commitment on the obligation. In the event of adverse
business, financial, or economic conditions, the obligor is not likely to have
the capacity to meet its financial commitment on the obligation.

CC
An obligation rated CC is currently highly vulnerable to nonpayment.

The Bond Fund of America -- Page 69
<PAGE>

C
A C rating is assigned to obligations that are currently highly vulnerable to
nonpayment, obligations that have payment arrearages allowed by the terms of the
documents, or obligations of an issuer that is the subject of a bankruptcy
petition or similar action which have not experienced a payment default. Among
others, the C rating may be assigned to subordinated debt, preferred stock or
other obligations on which cash payments have been suspended in accordance with
the instrument's terms.

D
An obligation rated D is in payment default. The D rating category is used when
payments on an obligation are not made on the date due even if the applicable
grace period has not expired, unless Standard & Poor's believes that such
payments will be made during such grace period. The D rating also will be used
upon the filing of a bankruptcy petition or the taking of a similar action if
payments on an obligation are jeopardized.

PLUS (+) OR MINUS (-)
The ratings from AA to CCC may be modified by the addition of a plus or minus
sign to show relative standing within the major rating categories.

The Bond Fund of America -- Page 70

...

[logo – American Funds®]

Bond Fund of AmericaSM

Investment portfolio

December 31, 2008

Bonds & notes — 91.17%	Principal amount (000)			Value (000)

CORPORATE BONDS & NOTES — 36.67%
FINANCIALS — 12.77%
Banks — 3.86%
Santander Issuances, SA Unipersonal 1.885% 20161,2	$	21,500		$	15,657
Santander Issuances, SA Unipersonal 5.805% 20161,2		76,100			68,501
Abbey National PLC 7.95% 2029		23,255			20,303
Santander Perpetual, SA Unipersonal 6.671% (undated)1,2		16,000			10,191
Abbey National PLC 7.50% (undated)1	£	3,270			3,957
Bayerische Hypo- und Vereinsbank AG 6.00% 2014	€	2,155			2,856
UniCredito Italiano SpA 5.584% 20171,2	$	60,690			53,104
UniCredito Italiano SpA 6.00% 20172		67,825			56,645
HVB Funding Trust I 8.741% 20312		5,555			1,608
HVB Funding Trust III 9.00% 20312		8,506			2,462
Household Finance Corp. 6.75% 2011		23,750			23,660
HSBC Finance Corp. 2.346% 20121		20,000			15,228
HSBC Finance Corp. 4.853% 20121		15,000			11,550
HSBC Finance Corp. 5.00% 2015		27,195			24,172
HSBC Holdings PLC 6.50% 2037		24,435			24,897
Midland Bank 2.063% Eurodollar note (undated)1		15,000			8,025
Sovereign Bancorp, Inc. 2.461% 20091		20,700			20,112
Independence Community Bank Corp. 4.90% 2010		12,000			10,767
Sovereign Bancorp, Inc. 4.903% 20131		6,500			4,638
Sovereign Bancorp, Inc. 8.75% 2018		75,350			69,228
Resona Bank, Ltd. 3.75% 20151	€	9,740			11,693
Resona Bank, Ltd. 5.85% (undated)1,2	$	102,333			58,084
Fifth Third Bancorp 8.25% 2038		30,250			25,052
Fifth Third Capital Trust IV 6.50% 20671		82,615			41,337
TuranAlem Finance BV 7.75% 20132		11,000			4,455
TuranAlem Finance BV 8.00% 2014		12,460			5,171
TuranAlem Finance BV 8.00% 20142		5,000			2,075
TuranAlem Finance BV 8.50% 20152		23,335			10,151
TuranAlem Finance BV 8.50% 2015		11,310			4,920
TuranAlem Finance BV 8.25% 20372		59,045			25,685
TuranAlem Finance BV, Series 8, 8.25% 2037		6,000			2,610
Royal Bank of Scotland PLC 9.625% 2015	£	200			324
Royal Bank of Scotland Group PLC 4.70% 2018	$	635			465
Royal Bank of Scotland PLC 5.00% (undated)1	£	200			254
Royal Bank of Scotland Group PLC 6.99% (undated)1,2	$	74,990			34,120
Royal Bank of Scotland Group PLC, Series U, 7.64% (undated)1		29,500			11,763
HBOS PLC 6.75% 20182		47,850			42,183
HBOS PLC 6.00% 20332		5,465			3,743
Wachovia Bank NA 4.80% 2014		3,750			3,497
Wachovia Bank NA 6.60% 2038		37,000			40,277
PNC Funding Corp. 3.62% 20141		30,000			24,221
PNC Bank NA 6.875% 2018		5,200			5,542
PNC Funding Corp., Series II, 6.113% (undated)1,2		23,300			9,628
National City Preferred Capital Trust I 12.00% (undated)1		39,500			37,327
Standard Chartered Bank 6.40% 20172		42,410			35,329
Standard Chartered Bank 5.375% (undated)1	£	150			136
Société Générale 5.75% 20162	$	36,515			33,500
Development Bank of Singapore Ltd. 7.875% 20092		20,000			20,365
DBS Bank Ltd. 5.16% 20211,2		12,500			9,026
HSBK (Europe) BV 7.75% 2013		10,855			7,761
HSBK (Europe) BV 7.75% 20132		305			218
HSBK (Europe) BV 7.25% 20172		39,245			21,389
Kazkommerts International BV 7.00% 20092		5,500			4,757
Kazkommerts International BV 8.50% 2013		5,000			2,925
Kazkommerts International BV 7.875% 20142		9,200			5,106
Kazkommerts International BV 8.00% 20152		15,500			7,362
Kazkommerts International BV 8.00% 2015		600			285
Kazkommerts International BV, Series 4, 7.50% 2016		10,000			3,800
SunTrust Banks, Inc. 7.25% 2018		21,200			22,322
Wells Fargo Bank, National Assn. 4.75% 2015		15,370			15,578
Wells Fargo & Co. 5.625% 2017		4,820			5,037
United Overseas Bank Ltd. 5.375% 20191,2		22,250			18,673
Northern Rock PLC 5.60% (undated)1,2		13,815			5,319
Northern Rock PLC 6.594% (undated)1,2		27,465			10,574
UnionBanCal Corp. 5.25% 2013		2,000			1,705
Union Bank of California, NA 5.95% 2016		17,415			13,997
Silicon Valley Bank 5.70% 2012		18,000			15,638
Canadian Imperial Bank of Commerce 3.25% Eurodollar note 20851,3		25,000			12,152
Skandinaviska Enskilda Banken AB 5.00% (undated)1	£	265			339
Skandinaviska Enskilda Banken AB 7.50% (undated)1	$	12,500			11,551
Korea Development Bank 5.30% 2013		12,135			11,213
BNP Paribas 5.125% 20152		11,315			10,143
BNP Paribas 5.75% 2022	£	415			594
AB Spintab 6.00% 2009	SKr73,000				9,360
Banco Santander-Chile 5.375% 20142	$	9,035			8,354
Sumitomo Mitsui Banking Corp. 8.00% 2012		3,500			3,596
Sumitomo Mitsui Banking Corp. 5.625% (undated)1,2		5,970			4,427
Chohung Bank 4.50% 20141,2		8,000			6,918
Zions Bancorporation 5.50% 2015		9,625			6,816
Credit Agricole SA 6.637% (undated)1,2		12,220			5,804
Banco Mercantil del Norte, SA 6.135% 20161,2		8,530			5,507
Bank of Nova Scotia 3.25% 20851		10,000			4,693
Industrial Bank of Korea 4.00% 20141,2		5,000			4,599
Lloyds Bank, Series 2, 2.375% (undated)1		8,000			4,090
Shinsei Bank, Ltd. 3.75% 20161	€	6,865			3,959
Shinsei Bank, Ltd. 5.625% (undated)1	£	195			94
KeyBank NA 5.50% 2012	$	3,750			3,499
Allied Irish Banks, PLC 5.625% 20301	£	250			245
Allied Irish Banks Ltd. 3.875% (undated)1	$	7,000			2,999
Bergen Bank 3.25% (undated)1		5,000			2,600
National Bank of Canada 3.313% 20871		5,000			2,338
Christiana Bank Og Kreditkasse 2.783% (undated)1		4,000			2,060
Norinchukin Finance (Cayman) Ltd. 5.625% 20161	£	205			268
Barclays Bank PLC 6.375% (undated)1		240			258
Commerzbank AG 6.625% 2019		70			93
Downey Financial Corp. 6.50% 2014	$	10,720			50
					1,241,559


Diversified financials — 3.83%
Countrywide Home Loans, Inc., Series M, 4.125% 2009	$	54,575		$	53,944
Countrywide Home Loans, Inc., Series K, 5.625% 2009		10,375			10,331
Countrywide Financial Corp., Series A, 4.50% 2010		15,540			15,274
Countrywide Financial Corp. 6.25% 2010	$	A7,700			5,450
Bank of America Corp. 7.125% 2011	$	1,750			1,768
Countrywide Financial Corp., Series B, 2.946% 20121		30,000			25,950
Countrywide Financial Corp., Series B, 5.80% 2012		152,003			148,263
MBNA Corp., Series F, 7.50% 2012		1,800			1,854
MBNA Capital A, Series A, 8.278% 2026		7,500			6,238
MBNA Global Capital Funding, Series B, 3.993% 20271		33,000			19,757
Bank of America Corp. 6.50% 2037		20,240			20,758
JPMorgan Chase & Co. 4.891% 20151		55,000			55,285
JPMorgan Chase Bank NA 5.875% 2016		25,730			25,708
JPMorgan Chase Bank NA 6.00% 2017		22,580			22,814
JPMorgan Chase Capital XV, Series O, 5.875% 2035		2,242			1,740
JPMorgan Chase Capital XXV, Series Y, 6.80% 2037		7,088			6,550
JPMorgan Chase Capital XX, Series T, 6.55% 2066		22,275			18,883
JPMorgan Chase Capital XXII, Series V, 6.45% 20871		11,735			9,644
CIT Group Inc. 2.303% 20091		1,732			1,691
CIT Group Inc. 6.875% 2009		15,000			14,405
CIT Group Inc. 4.25% 2010		33,000			30,261
CIT Group Inc. 3.796% 20111		32,500			26,706
CIT Group Inc. 2.425% 20121		6,080			4,775
CIT Group Inc. 7.625% 2012		18,275			15,440
CIT Group Inc. 7.75% 2012		2,455			1,943
CIT Group Inc. 5.40% 2013		21,140			15,979
CIT Group Inc. 5.125% 2014		2,700			1,929
CIT Group Inc. 5.65% 2017		4,089			2,847
CIT Group Inc. 12.00% 20182,3		8,713			6,796
CIT Group Inc. 5.80% 2036		1,574			1,041
CIT Group Inc. 6.10% 20671		36,265			11,211
Citigroup Inc. 4.125% 2010		26,000			25,628
Citigroup Inc. 6.50% 2013		17,000			17,171
Citigroup Capital XXI 8.30% 20771		93,630			72,374
GMAC LLC 3.399% 20091		500			478
General Motors Acceptance Corp. 5.85% 2009		8,790			8,733
General Motors Acceptance Corp. 7.50% 20132,3		10,426			7,090
General Motors Acceptance Corp. 8.00% 20182,3		9,577			4,645
General Motors Acceptance Corp. 7.25% 20112,3		13,727			12,354
General Motors Acceptance Corp. 6.625% 20122,3		1,899			1,519
General Motors Acceptance Corp. 6.875% 20122,3		7,782			6,226
General Motors Acceptance Corp. 7.00% 20122,3		20,383			16,510
General Motors Acceptance Corp. 4.403% 20141,2,3		3,070			1,965
General Motors Acceptance Corp. 6.75% 20142,3		1,535			1,121
Capital One Financial Corp. 2.469% 20091		30,000			28,581
Capital One Financial Corp. 5.70% 2011		12,000			11,197
Capital One Financial Corp. 6.15% 2016		10,000			7,047
Capital One Capital III 7.686% 20361		46,825			19,901
International Lease Finance Corp., Series O, 4.55% 2009		8,125			7,329
International Lease Finance Corp. 5.00% 2012		13,500			9,310
International Lease Finance Corp., Series R, 5.40% 2012		10,000			6,987
International Lease Finance Corp., Series R, 5.625% 2013		20,000			13,368
International Lease Finance Corp., Series R, 6.375% 2013		2,000			1,360
International Lease Finance Corp., Series R, 6.625% 2013		25,500			17,198
International Lease Finance Corp., Series R, 5.65% 2014		16,135			10,551
SLM Corp., Series A, 4.50% 2010		38,000			32,991
SLM Corp., Series A, 5.40% 2011		13,700			10,369
SLM Corp., Series A, 5.125% 2012		10,000			7,489
SLM Corp., Series A, 5.375% 2013		3,000			2,201
SLM Corp., Series A, 3.835% 20141		6,900			4,662
ORIX Corp. 5.48% 2011		68,155			51,266
Goldman Sachs Group, Inc. 6.25% 2017		10,000			9,712
Goldman Sachs Group, Inc. 6.15% 2018		26,060			25,086
Goldman Sachs Group, Inc. 6.75% 2037		3,210			2,613
American Express Co. 6.15% 2017		19,715			19,038
American Express Co. 8.15% 2038		4,600			5,291
American Express Co. 6.80% 20661		14,176			7,347
Charles Schwab Corp., Series A, 6.375% 2017		15,490			14,358
Schwab Capital Trust I 7.50% 20371		28,820			14,437
Morgan Stanley Dean Witter & Co. 6.75% 2011		10,000			9,844
Morgan Stanley, Series F, 5.95% 2017		15,000			12,470
Morgan Stanley 10.09% 2017	BRL3,000				756
Lazard Group LLC 7.125% 2015	$	29,385			18,682
Lazard Group LLC 6.85% 2017		1,775			1,132
Capmark Financial Group Inc. 3.038% 20101		835			426
Capmark Financial Group Inc. 5.875% 2012		35,070			11,965
Capmark Financial Group Inc. 6.30% 2017		13,162			3,624
Lehman Brothers Holdings Inc. 5.00% 20104	£	235			29
Lehman Brothers Holdings Inc., Series I, 3.018% 20121,4	$	3,300			314
Lehman Brothers Holdings Inc., Series G, 4.80% 20144		10,395			1,040
Lehman Brothers Holdings Inc., Series I, 6.20% 20144		42,650			4,265
Lehman Brothers Holdings Inc., Series H, 5.50% 20164		765			77
Lehman Brothers Holdings Inc., Series I, 6.875% 20184		81,508			8,151
iStar Financial, Inc. 5.375% 2010		7,000			3,221
iStar Financial, Inc. 6.00% 2010		3,805			1,599
iStar Financial, Inc., Series B, 5.125% 2011		4,320			1,513
iStar Financial, Inc. 6.50% 2013		10,120			3,038
iStar Financial, Inc. 8.625% 2013		5,000			1,551
iStar Financial, Inc., Series B, 5.70% 2014		1,300			403
iStar Financial, Inc. 6.05% 2015		4,152			1,226
ING Bank NV 5.50% 2012	€	3,750			5,120
ING Groep NV 5.775% (undated)1	$	15,500			6,646
Merrill Lynch & Co., Inc. 6.875% 2018		10,000			10,478
Northern Trust Corp. 5.50% 2013		5,450			5,602
Northern Trust Co. 5.85% 20175		3,750			3,840
E*TRADE Financial Corp. 8.00% 2011		11,450			5,267
E*TRADE Financial Corp. 7.375% 2013		1,150			420
E*TRADE Financial Corp. 7.875% 2015		9,720			3,548
Bank of New York Mellon Corp., Series G, 4.95% 2012		3,500			3,557
Advanta Capital Trust I, Series B, 8.99% 2026		12,500			1,562
					1,232,104

Insurance — 3.20%
Metropolitan Life Global Funding I, 5.125% 20132		18,310			17,076
MetLife, Inc. 5.50% 2014		5,224			4,825
MetLife, Inc. 5.00% 2015		2,000			1,876
MetLife Capital Trust IV 7.875% 20671,2		22,600			14,207
MetLife Capital Trust X 9.25% 20681,2		111,050			77,611
Liberty Mutual Group Inc. 6.50% 20352		37,810			21,728
Liberty Mutual Group Inc. 7.50% 20362		37,485			22,871
Liberty Mutual Group Inc., Series A, 7.80% 20872		25,033			11,250
Liberty Mutual Group Inc., Series C, 10.75% 20881,2		93,940			51,734
American General Finance Corp., Series J, 2.429% 20111		30,000			11,522
American General Finance Corp., Series I, 5.85% 2013		27,500			10,453
American General Finance Corp., Series I, 5.40% 2015		20,000			7,480
American General Finance Corp., Series J, 6.50% 2017		1,750			722
American General Finance Corp., Series J, 6.90% 2017		61,625			26,703
American International Group, Inc., Series G, 5.85% 2018		4,100			2,752
American International Group, Inc. 5.00% 2023	£	400			284
American International Group, Inc. 8.175% 20581,2	$	26,155			10,187
American International Group, Inc., Series A-1, 6.25% 20871		4,190			1,569
Prudential Financial, Inc., Series D, 5.10% 2011		3,375			3,021
Prudential Holdings, LLC, Series C, 8.695% 20232,6		57,035			55,076
Prudential Financial, Inc. 8.875% 20681		20,000			12,938
Hartford Financial Services Group, Inc. 5.25% 2011		5,625			4,855
Hartford Financial Services Group, Inc. 4.625% 2013		2,000			1,520
Hartford Financial Services Group, Inc. 6.30% 2018		38,250			29,051
Glen Meadow Pass-Through Trust 6.505% 20671,2		21,201			8,527
Hartford Financial Services Group, Inc. 8.125% 20681		31,250			16,474
Lincoln National Corp. 5.65% 2012		20,745			17,109
Lincoln National Corp. 7.00% 20661		90,738			38,152
Chubb Corp. 5.75% 2018		18,800			18,083
Chubb Corp. 6.50% 2038		19,850			19,010
Chubb Corp. 6.375% 20671		25,595			15,896
ACE INA Holdings Inc. 5.875% 2014		18,775			17,497
ACE INA Holdings Inc. 5.70% 2017		4,000			3,592
ACE INA Holdings Inc. 5.80% 2018		7,000			6,311
ACE Capital Trust II 9.70% 2030		12,423			9,552
ACE INA Holdings Inc. 6.70% 2036		5,980			5,255
Monumental Global Funding 5.50% 20132		18,760			17,715
Monumental Global Funding III 5.25% 20142		23,000			22,069
AEGON NV 6.125% 2031	£	1,730			1,854
CNA Financial Corp. 5.85% 2014	$	11,500			8,413
CNA Financial Corp. 6.50% 2016		24,625			17,462
CNA Financial Corp. 7.25% 2023		24,145			15,101
Allstate Life Global Funding Trust, Series 2008-4, 5.375% 2013		17,500			17,243
Allstate Corp., Series B, 6.125% 20671		32,665			18,998
Allstate Corp., Series A, 6.50% 20671		7,710			4,345
New York Life Global Funding 5.25% 20122		30,300			29,748
New York Life Global Funding 4.65% 20132		9,170			8,870
ZFS Finance (USA) Trust II 6.45% 20651,2		29,500			13,794
ZFS Finance (USA) Trust V 6.50% 20671,2		60,175			24,702
Catlin Insurance Ltd. 7.249% (undated)1,2		88,800			35,357
Nationwide Financial Services, Inc. 6.75% 20671		69,985			31,430
Nationwide Mutual Insurance 5.81% 20241,2,3		19,085			9,459
Nationwide Mutual Insurance Co. 8.25% 20312		15,675			9,923
Nationwide Mutual Insurance Co. 7.875% 20332		5,480			3,238
Nationwide Mutual Insurance Co. 6.60% 20342		2,000			1,002
Principal Life Insurance Co. 5.30% 2013		23,000			21,565
John Hancock Global Funding II, Series 2004-A, 3.50% 20092		18,000			17,979
Principal Life Global Funding I 4.40% 20102		16,600			16,295
AXA SA 6.463% (undated)1,2		35,000			15,310
Assurant, Inc. 5.625% 2014		19,420			14,774
Protective Life Insurance Co., Series 2005-C, 4.85% 2010		15,000			14,012
United Energy Distribution Pty Ltd., AMBAC insured, 4.70% 20112		10,000			10,508
MassMutual Global Funding II, Series 2002-1, 3.50% 20102		10,000			9,759
Jackson National Life Global 5.375% 20132		10,000			9,046
Genworth Global Funding Trust, Series 2007-C, 5.25% 2012		10,000			7,120
Genworth Financial, Inc. 6.15% 20661		15,135			1,435
Loews Corp. 6.00% 2035		8,000			6,255
Berkshire Hathaway Finance Corp. 5.00% 2013		5,125			5,219
XL Capital Finance (Europe) PLC 6.50% 2012		6,455			4,035
Twin Reefs Asset Trust (XLFA), Series B, 2.825% 20791,2,4		5,500			62
TIAA Global Markets 4.95% 20132		3,275			3,249
UnumProvident Corp. 5.859% 2009		1,000			954
UnumProvident Finance Co. PLC 6.85% 20152		1,425			1,167
Ambac Financial Group, Inc. 6.15% 20871		17,800			1,781
Assured Guaranty US Holdings Inc., Series A, 6.40% 20661		7,425			1,113
					1,029,130

Real estate — 1.64%
Westfield Capital Corp. Ltd., WT Finance (Australia) Pty Ltd. and WEA Finance LLC 4.375% 20102		44,950			36,398
Westfield Group 5.40% 20122		50,000			38,376
Westfield Capital Corp. Ltd., WT Finance (Australia) Pty Ltd. and WEA Finance LLC 5.125% 20142		41,600			29,028
Westfield Group 5.70% 20162		21,195			14,177
WT Finance (Australia) Pty Ltd., Westfield Europe Finance PLC, and WEA Finance LLC 5.50% 2017	£	3,780			3,881
Westfield Group 7.125% 20182	$	58,000			41,207
Simon Property Group, LP 5.60% 2011		8,810			7,368
Simon Property Group, LP 5.00% 2012		16,000			12,650
Simon Property Group, LP 5.75% 2012		4,000			3,200
Simon Property Group, LP 5.75% 2015		8,250			5,396
Simon Property Group, LP 5.25% 2016		3,610			2,310
Simon Property Group, LP 6.10% 2016		4,750			3,039
Simon Property Group, LP 5.875% 2017		19,250			12,874
Simon Property Group, LP 6.125% 2018		36,075			24,415
Kimco Realty Corp., Series C, 4.82% 2011		7,500			6,420
Kimco Realty Corp. 6.00% 2012		17,500			13,549
Kimco Realty Corp., Series C, 4.82% 2014		12,000			8,551
Kimco Realty Corp., Series C, 4.904% 2015		3,000			1,851
Kimco Realty Corp., Series C, 5.783% 2016		19,500			12,389
Kimco Realty Corp. 5.70% 2017		33,450			21,063
PLD International Finance LLC 4.375% 2011	€	5,400			3,606
ProLogis 5.625% 2015	$	13,035			6,495
ProLogis 5.75% 2016		27,245			13,604
ProLogis 6.625% 2018		74,080			35,482
Hospitality Properties Trust 6.85% 2012		6,000			3,890
Hospitality Properties Trust 6.75% 2013		17,845			11,054
Hospitality Properties Trust 5.125% 2015		12,970			6,561
Hospitality Properties Trust 6.30% 2016		24,600			11,348
Hospitality Properties Trust 5.625% 2017		7,535			3,479
Hospitality Properties Trust 6.70% 2018		33,515			15,610
ERP Operating LP 4.75% 2009		2,225			2,186
ERP Operating LP 6.625% 2012		5,000			4,111
ERP Operating LP 5.25% 2014		2,000			1,338
ERP Operating LP 6.584% 2015		13,040			8,724
ERP Operating LP 5.75% 2017		7,865			5,437
ERP Operating LP 7.125% 2017		12,375			8,995
Developers Diversified Realty Corp. 3.875% 2009		19,500			19,061
Developers Diversified Realty Corp. 5.375% 2012		5,782			2,427
Developers Diversified Realty Corp. 5.50% 2015		19,500			8,200
Brandywine Operating Partnership, LP 5.75% 2012		27,110			20,339
Brandywine Operating Partnership, LP 5.40% 2014		3,000			1,860
Rouse Co. 3.625% 2009		5,200			2,184
Rouse Co. 7.20% 2012		17,475			6,029
Rouse Co. 5.375% 2013		7,250			2,320
Rouse Co. 6.75% 20132		3,750			1,369
Post Apartment Homes, LP 7.70% 2010		1,400			1,240
Post Apartment Homes, LP 5.125% 2011		7,720			6,144
Realogy Corp., Letter of Credit, 5.05% 20131,6,7		243			153
Realogy Corp., Term Loan B, 5.706% 20131,6,7		866			548
Realogy Corp. 10.50% 2014		17,985			3,192
Realogy Corp. 11.75% 20148		2,620			315
Realogy Corp. 12.375% 2015		2,700			378
Weingarten Realty Investors, Series A, 4.857% 2014		6,080			4,109
Host Marriott, LP, Series M, 7.00% 2012		4,380			3,734
Host Hotels & Resorts, LP, Series S, 6.875% 2014		300			233
Federal Realty Investment Trust 4.50% 2011		3,500			2,944
Plum Creek Timberlands, LP 5.875% 2015		1,500			1,227
Agile Property Holdings Ltd. 9.00% 2013		780			430
					528,498

Automobiles & components — 0.24%
Ford Motor Credit Co. 3.225% 20091,2		1,000			955
Ford Motor Credit Co. 7.375% 2009		1,725			1,515
Ford Motor Credit Co. 7.875% 2010		10,000			8,004
Ford Motor Credit Co. 8.625% 2010		425			322
Ford Motor Credit Co. 9.75% 20101		5,000			4,001
Ford Motor Credit Co. 7.246% 20111		20,275			13,407
Ford Motor Credit Co. 7.25% 2011		24,000			17,542
Ford Motor Credit Co. 7.375% 2011		2,200			1,674
Ford Motor Credit Co. 7.569% 20121		8,825			5,747
Ford Motor Credit Co. 7.80% 2012		400			281
Ford Motor Credit Co. 8.00% 2016		2,000			1,305
American Honda Finance Corp. 5.125% 20102		21,850			21,558
					76,311

CONSUMER DISCRETIONARY — 4.48%
Media — 2.80%
Time Warner Inc. 2.405% 20091		23,500			22,624
Time Warner Inc. 5.50% 2011		1,000			940
AOL Time Warner Inc. 6.75% 2011		3,000			2,931
AOL Time Warner Inc. 6.875% 2012		22,500			21,631
Time Warner Inc. 5.875% 2016		36,140			32,448
Time Warner Companies, Inc. 7.25% 2017		1,600			1,471
Time Warner Companies, Inc. 7.57% 2024		12,340			11,919
AOL Time Warner Inc. 7.625% 2031		31,935			31,469
Time Warner Inc. 6.50% 2036		85,485			77,735
Comcast Cable Communications, Inc. 6.75% 2011		9,000			9,039
Tele-Communications, Inc. 9.80% 2012		17,500			18,461
Comcast Cable Communications, Inc. 7.125% 2013		14,625			14,381
Tele-Communications, Inc. 7.875% 2013		7,500			7,719
Comcast Corp. 5.85% 2015		29,025			27,493
Comcast Corp. 6.50% 2015		5,000			4,921
Comcast Corp. 6.30% 2017		36,090			35,192
Comcast Corp. 5.70% 2018		54,085			50,811
Comcast Corp. 5.65% 2035		4,745			4,232
Comcast Corp. 6.45% 2037		7,250			7,238
Comcast Corp. 6.95% 2037		15,520			16,396
Time Warner Cable Inc. 5.40% 2012		8,000			7,476
Time Warner Cable Inc. 6.20% 2013		4,500			4,261
Time Warner Cable Inc. 8.25% 2014		40,000			40,620
Time Warner Cable Inc. 6.75% 2018		62,040			59,835
Time Warner Cable Inc. 8.75% 2019		3,950			4,302
Thomson Reuters Corp. 6.50% 2018		74,120			67,516
News America Holdings Inc. 8.00% 2016		1,000			1,053
News America Inc. 7.25% 2018		2,250			2,192
News America Holdings Inc. 8.25% 2018		15,290			15,695
News America Inc. 6.65% 2037		37,900			37,631
Cox Communications, Inc. 7.875% 2009		1,000			983
Cox Communications, Inc. 4.625% 2010		900			871
Cox Communications, Inc. 7.125% 2012		7,000			6,704
Cox Communications, Inc. 5.45% 2014		12,750			11,164
Cox Communications, Inc. 9.375% 20192		30,500			31,964
CCH II, LLC and CCH II Capital Corp. 10.25% 2010		10,000			4,650
Charter Communications Operating, LLC and Charter Communications Operating Capital Corp. 8.00% 20122		10,150			8,374
CCO Holdings, LLC and CCO Holdings Capital Corp. 8.75% 2013		13,325			8,461
Charter Communications Operating, LLC, Term Loan B, 5.47% 20141,6,7		12,078			8,942
Charter Communications Operating, LLC and Charter Communications Operating Capital Corp. 8.375% 20142		1,575			1,213
Charter Communications Operating, LLC, Term Loan B, 8.50% 20141,6,7		1,985			1,576
Charter Communications Operating, LLC and Charter Communications Operating Capital Corp. 10.875% 20142		15,375			12,377
CCH I, LLC and CCH I Capital Corp. 11.00% 2015		11,734			2,112
Viacom Inc. 5.75% 2011		2,500			2,272
Viacom Inc. 6.25% 2016		20,000			16,601
Univision Communications, Inc., Second Lien Term Loan B, 2.961% 20091,6,7		4,571			3,222
Univision Communications Inc. 7.85% 2011		6,725			3,564
Univision Communications, Inc., First Lien Term Loan B, 2.711% 20141,6,7		8,955			3,751
Univision Communications Inc. 9.75% 20152,8		35,620			4,631
McGraw-Hill Companies, Inc. 5.90% 2017		13,200			11,132
CanWest Media Inc., Series B, 8.00% 2012		20,936			9,317
CanWest MediaWorks Inc. 9.25% 20152		3,325			1,280
Quebecor Media Inc. 7.75% 2016		8,950			6,086
Quebecor Media Inc. 7.75% 2016		5,670			3,856
Cinemark USA, Inc., Term Loan B, 2.95% 20131,6,7		3,348			2,451
Cinemark, Inc. 0%/9.75% 20149		8,750			7,120
AMC Entertainment Inc., Series B, 8.625% 2012		3,000			2,415
AMC Entertainment Inc. 8.00% 2014		8,125			5,038
AMC Entertainment Inc., Series B, 11.00% 2016		2,500			1,759
NTL Cable PLC 8.75% 2014		9,725			7,342
NTL Cable PLC 8.75% 2014	€	1,000			1,003
TL Acquisitions, Inc., Term Loan B, 2.96% 20141,6,7	$	5,614			3,689
Thomson Learning 0%/13.25% 20152,9		1,840			543
Thomson Learning 10.50% 20152		9,450			3,922
Kabel Deutschland GmbH 10.625% 2014		7,150			6,399
CSC Holdings, Inc., Series B, 8.125% 2009		3,000			2,992
Cablevision Systems Corp., Series B, 8.00% 2012		3,635			3,253
American Media Operations, Inc., Series B, 10.25% 20094		20,459			4,169
American Media Operations, Inc., Series B, 10.25% 20092,4		716			146
American Media Operations, Inc. 8.875% 2011		7,060			1,456
American Media Operations, Inc. 8.875% 20112		257			53
iesy Repository GmbH 10.375% 20152		7,375			5,817
Regal Cinemas Corp., Series B, 9.375% 20123		6,125			5,681
LBI Media, Inc. 8.50% 20172,3		11,390			3,986
Local T.V. Finance LLC 9.25% 20152,8		16,065			3,615
Warner Music Group 7.375% 2014		5,050			2,980
Atlantic Broadband Finance, LLC and Atlantic Broadband Finance, Inc. 9.375% 2014		4,300			2,967
Fox Acquisition LLC 13.375% 20162		6,165			2,651
Radio One, Inc. 6.375% 2013		7,380			2,528
Walt Disney Co. 5.625% 2016		2,000			2,078
Liberty Media Corp. 8.25% 2030		3,550			2,054
Mediacom Broadband LLC and Mediacom Broadband Corp. 8.50% 2015		2,970			1,949
Dex Media West LLC, Dex Media West Finance Co., Series B, 8.50% 2010		3,000			1,830
Dex Media, Inc., Series B, 8.00% 2013		525			100
Vidéotron Ltée 6.875% 2014		1,000			890
Vidéotron Ltée 6.375% 2015		1,000			790
WDAC Intermediate Corp. 8.375% 20142		2,425			703
WDAC Intermediate Corp. 8.50% 2014	€	500			195
Carmike Cinemas, Inc., Delayed Draw, Term Loan, 5.33% 20121,6,7	$	414			296
Young Broadcasting Inc. 10.00% 2011		13,317			200
					899,795

Retailing — 0.77%
Federated Retail Holdings, Inc. 5.35% 2012		10,365			7,704
Macy’s Retail Holdings, Inc. 7.875% 2015		52,175			37,623
Federated Retail Holdings, Inc. 5.90% 2016		102,390			62,248
Federated Retail Holdings, Inc. 6.375% 2037		7,700			4,345
Target Corp. 6.00% 2018		10,000			9,699
Target Corp. 6.50% 2037		47,390			40,813
Target Corp. 7.00% 2038		3,385			3,146
J.C. Penney Co., Inc. 8.00% 2010		5,185			5,035
J.C. Penney Co., Inc. 9.00% 2012		995			884
J.C. Penney Corp., Inc. 5.75% 2018		10,000			6,649
Michaels Stores, Inc., Term Loan B, 2.75% 20131,6,7		8,300			4,510
Michaels Stores, Inc. 10.00% 2014		15,725			7,234
Michaels Stores, Inc. 0%/13.00% 20169		3,875			717
Toys "R" Us, Inc. 7.625% 2011		17,180			8,504
Toys "R" Us-Delaware, Inc., Term Loan B, 4.831% 20121,6,7		7,970			3,866
Dollar General Corp., Term Loan B2, 3.211% 20141,6,7		1,000			741
Dollar General Corp. 10.625% 2015		5,650			5,424
Dollar General Corp. 11.875% 20171,8		6,875			5,912
Lowe’s Companies, Inc. 8.25% 2010		8,450			8,781
Sally Holdings LLC and Sally Capital Inc. 9.25% 2014		7,200			6,228
Kohl’s Corp. 7.375% 2011		875			859
Kohl’s Corp. 7.25% 2029		2,730			2,048
Kohl’s Corp. 6.00% 2033		315			203
Kohl’s Corp. 6.875% 2037		3,245			2,313
Marks and Spencer Group PLC 6.25% 20172		6,000			4,630
Edcon (Proprietary) Ltd. 6.579% 20141	€	6,500			3,668
Neiman Marcus Group, Inc. 9.00% 20158	$	5,120			2,278
Bon-Ton Department Stores, Inc. 10.25% 2014		12,350			1,544
Burlington Coat Factory Warehouse Corp. 11.125% 2014		2,700			823
					248,429

Consumer services — 0.47%
Marriott International, Inc., Series J, 5.625% 2013		13,250			10,079
Marriott International, Inc., Series I, 6.375% 2017		15,750			10,999
MGM MIRAGE 6.00% 2009		1,975			1,896
MGM MIRAGE 8.50% 2010		6,850			5,788
MGM MIRAGE 6.75% 2012		1,050			740
MGM MIRAGE 6.75% 2013		3,350			2,261
MGM MIRAGE 13.00% 20132		2,800			2,681
MGM MIRAGE 5.875% 2014		6,575			4,241
MGM MIRAGE 6.625% 2015		3,600			2,214
Seminole Tribe of Florida 5.798% 20132,6		9,865			9,037
Seminole Tribe of Florida 7.804% 20202,6		9,370			8,900
Mohegan Tribal Gaming Authority 6.375% 2009		14,410			13,618
Mohegan Tribal Gaming Authority 8.00% 2012		750			461
Mohegan Tribal Gaming Authority 7.125% 2014		5,250			2,678
President & Fellows of Harvard University 6.00% 20192		15,000			16,279
Boyd Gaming Corp. 7.75% 2012		2,550			2,308
Boyd Gaming Corp. 6.75% 2014		8,925			5,667
Boyd Gaming Corp. 7.125% 2016		3,500			2,083
Wynn Las Vegas, LLC and Wynn Las Vegas Capital Corp. 6.625% 2014		12,415			9,435
Circus and Eldorado Joint Venture and Silver Legacy Resort Casino 10.125% 2012		12,025			7,756
Wyndham Worldwide Corp. 6.00% 2016		16,421			6,627
Harrah’s Operating Co., Inc. 5.625% 2015		16,373			2,865
Harrah’s Operating Co., Inc. 6.50% 2016		8,303			1,328
Harrah’s Operating Co., Inc. 10.00% 20182		4,988			1,846
ERAC USA Finance Co. 7.00% 20372		10,000			5,519
Pinnacle Entertainment, Inc. 7.50% 2015		7,025			4,110
Education Management LLC and Education Management Finance Corp. 8.75% 2014		3,475			2,658
Education Management LLC and Education Management Finance Corp. 10.25% 2016		1,440			1,051
Seneca Gaming Corp. 7.25% 2012		2,500			2,025
Seneca Gaming Corp., Series B, 7.25% 2012		1,000			810
Gaylord Entertainment Co. 8.00% 2013		2,100			1,460
Gaylord Entertainment Co. 6.75% 2014		650			406
Royal Caribbean Cruises Ltd. 8.75% 2011		2,325			1,802
					151,628

Automobiles & components — 0.31%
DaimlerChrysler North America Holding Corp. 7.20% 2009		5,000			4,852
DaimlerChrysler North America Holding Corp., Series E, 5.75% 2011		3,825			3,232
DaimlerChrysler North America Holding Corp. 5.875% 2011		8,000			6,979
DaimlerChrysler North America Holding Corp. 7.75% 2011		14,000			12,674
DaimlerChrysler North America Holding Corp. 6.50% 2013		16,610			12,969
Ford Capital BV 9.50% 2010		6,266			2,757
Ford Motor Co., Term Loan B, 5.00% 20131,6,7		49,699			20,390
FCE Bank PLC 7.125% 2013	€	4,000			2,871
Ford Motor Co. 6.50% 2018	$	4,988			1,222
Ford Motor Co. 8.875% 2022		1,495			366
Ford Motor Co. 7.45% 2031		500			143
Allison Transmission Holdings, Inc., Term Loan B, 4.64% 20141,6,7		5,843			3,348
Allison Transmission Holdings, Inc. 11.00% 20152		750			371
Allison Transmission Holdings, Inc. 11.25% 20151,2,8		17,825			7,130
General Motors Corp. 7.20% 2011		11,540			2,452
General Motors Corp. 7.125% 2013		3,595			674
General Motors Corp. 7.25% 2013	€	700			200
General Motors Corp. 8.80% 2021	$	26,530			4,510
Tenneco Automotive Inc., Series B, 10.25% 2013		2,572			1,608
Tenneco Automotive Inc. 8.625% 2014		7,410			2,853
Tenneco Inc. 8.125% 2015		3,250			1,511
Visteon Corp. 8.25% 2010		2,912			917
Visteon Corp. 12.25% 20162		7,517			1,842
Goodyear Tire & Rubber Co. 6.318% 20091		1,150			1,052
TRW Automotive Inc. 7.00% 20142		1,500			802
Cooper-Standard Automotive Inc. 7.00% 2012		425			130
Cooper-Standard Automotive Inc. 8.375% 2014		2,200			396
Delphi Automotive Systems Corp. 6.50% 20094		6,000			120
Delphi Corp. 6.50% 20134		7,020			105
Delphi Automotive Systems Corp. 6.55% 20064		500			10
Delphi Automotive Systems Corp. 7.125% 20294		1,350			27
					98,513

Consumer durables & apparel — 0.13%
Standard Pacific Corp. 5.125% 2009		1,000			960
Standard Pacific Corp. 6.875% 2011		605			451
Standard Pacific Corp. 7.75% 2013		6,890			3,858
Standard Pacific Corp. 6.25% 2014		775			418
Standard Pacific Corp. 7.00% 2015		4,340			2,278
K. Hovnanian Enterprises, Inc. 8.875% 2012		7,060			2,083
K. Hovnanian Enterprises, Inc. 7.75% 2013		2,125			478
K. Hovnanian Enterprises, Inc. 6.375% 2014		2,290			630
K. Hovnanian Enterprises, Inc. 6.50% 2014		6,875			1,891
K. Hovnanian Enterprises, Inc. 6.25% 2015		2,775			735
K. Hovnanian Enterprises, Inc. 6.25% 2016		915			247
K. Hovnanian Enterprises, Inc. 7.50% 2016		2,330			594
K. Hovnanian Enterprises, Inc. 8.625% 2017		5,070			1,293
Hanesbrands Inc., Series B, 5.698% 20141		10,105			7,175
Meritage Corp. 7.00% 2014		1,850			1,064
Meritage Homes Corp. 6.25% 2015		6,500			3,477
Meritage Corp. 7.731% 20172,3		4,500			1,793
Beazer Homes USA, Inc. 8.625% 2011		4,625			2,474
Beazer Homes USA, Inc. 8.125% 2016		5,940			1,812
Sealy Mattress Co. 8.25% 2014		5,825			3,466
KB Home 5.875% 2015		1,320			799
KB Home 6.25% 2015		3,170			1,949
Toll Brothers, Inc. 4.95% 2014		1,640			1,236
					41,161

UTILITIES — 3.53%
National Rural Utilities Cooperative Finance Corp. 5.50% 2013		56,600			54,914
National Rural Utilities Cooperative Finance Corp. 5.45% 2017		4,880			4,376
National Rural Utilities Cooperative Finance Corp. 5.45% 2018		3,500			3,113
National Rural Utilities Cooperative Finance Corp., Collateral Trust Bonds, 10.375% 2018		62,500			73,268
National Rural Utilities Cooperative Finance Corp. 8.00% 2032		7,300			7,214
MidAmerican Energy Holdings Co. 5.875% 2012		15,000			14,975
MidAmerican Energy Co. 5.125% 2013		7,500			7,420
PacifiCorp, First Mortgage Bonds, 5.45% 2013		2,875			2,944
MidAmerican Energy Co. 4.65% 2014		5,000			4,763
MidAmerican Energy Co. 5.95% 2017		3,000			3,096
MidAmerican Energy Co. 5.30% 2018		10,000			9,874
PacifiCorp., First Mortgage Bonds, 5.65% 2018		3,800			3,877
MidAmerican Energy Holdings Co. 5.75% 2018		47,700			46,611
MidAmerican Energy Holdings Co. 6.125% 2036		13,750			12,826
E.ON International Finance BV 5.80% 20182		74,575			69,848
Abu Dhabi National Energy Co. PJSC (TAQA) 5.62% 20122		3,060			2,781
Abu Dhabi National Energy Co. PJSC (TAQA) 5.875% 20162		56,985			46,695
Abu Dhabi National Energy Co. PJSC (TAQA) 6.165% 20172		12,000			9,896
Abu Dhabi National Energy Co. PJSC (TAQA) 6.50% 20362		14,500			10,386
Edison Mission Energy 7.50% 2013		625			575
Southern California Edison Co., First and Refunding Mortgage Bonds, Series 2005-A, 5.00% 2016		4,000			4,053
Edison Mission Energy 7.75% 2016		7,125			6,377
Midwest Generation, LLC, Series B, 8.56% 20166		17,347			16,567
Edison Mission Energy 7.00% 2017		7,175			6,278
Southern California Edison Co., First and Refunding Mortgage Bonds, Series 2008-B, 5.50% 2018		1,000			1,047
Edison Mission Energy 7.20% 2019		15,450			12,746
Homer City Funding LLC 8.734% 20266		13,668			12,642
Edison Mission Energy 7.625% 2027		1,900			1,482
Southern California Edison Co., First and Refunding Mortgage Bonds, Series 2006-E, 5.55% 2037		3,500			3,700
Ohio Edison Co. 6.40% 2016		13,750			12,362
Jersey Central Power & Light Co. 5.65% 2017		3,000			2,759
Cleveland Electric Illuminating Co. 5.70% 2017		8,640			7,016
Pennsylvania Electric Co. 6.05% 2017		5,165			4,641
Cleveland Electric Illuminating Co. 8.875% 2018		24,600			26,789
Ohio Edison Co. 6.875% 2036		2,315			2,107
Israel Electric Corp. Ltd. 7.95% 20112		10,000			10,515
Israel Electric Corp. Ltd. 7.25% 20192		39,800			37,184
Israel Electric Corp. Ltd. 8.10% 20962		6,250			5,495
Consumers Energy Co., First Mortgage Bonds, Series P, 5.50% 2016		2,500			2,406
Consumers Energy Co. First Mortgage Bonds 5.15% 2017		5,000			4,692
Consumers Energy Co. 5.65% 2018		18,325			17,629
Consumers Energy Co., First Mortgage Bonds, 6.125% 2019		27,575			27,366
PSEG Power LLC 3.75% 2009		6,825			6,808
PSEG Power LLC 7.75% 2011		16,410			16,400
Public Service Electric and Gas Co., Series E, 5.30% 2018		12,690			12,348
PSEG Power LLC 8.625% 2031		7,350			7,505
Veolia Environnement 5.25% 2013		18,235			16,927
Veolia Environnement 6.00% 2018		4,945			4,391
Veolia Environnement 6.125% 2033	€	13,640			16,700
NGG Finance PLC 6.125% 2011		3,480			4,876
National Grid PLC 6.30% 2016	$	37,605			32,815
National Grid Co. PLC 5.875% 2024	£	170			227
Energy East Corp. 6.75% 2012	$	7,155			7,176
Scottish Power PLC 5.375% 2015		31,415			28,261
Commonwealth Edison Co., First Mortgage Bonds, Series 105, 5.40% 2011		9,000			8,768
Exelon Generation Co., LLC 6.95% 2011		13,665			13,272
PECO Energy Co., First and Refunding Mortgage Bonds, 4.75% 2012		3,900			3,799
Commonwealth Edison Co., First Mortgage Bonds, Series 106, 6.15% 2017		5,000			4,657
Ohio Power Co., Series J, 5.30% 2010		8,000			7,939
Ohio Power Co., Series H, 4.85% 2014		5,965			5,666
Ohio Power Co., Series K, 6.00% 2016		15,000			14,373
Oncor Electric Delivery Co. 6.80% 20182		25,000			24,016
Nevada Power Co., General and Refunding Mortgage Notes, Series I, 6.50% 2012		700			673
Sierra Pacific Power Co., General and Refunding Mortgage Notes, Series Q, 5.45% 2013		4,275			4,110
Sierra Pacific Resources 8.625% 2014		900			816
Nevada Power Co., General and Refunding Mortgage Notes, Series L, 5.875% 2015		2,550			2,454
Nevada Power Co., General and Refunding Mortgage Notes, Series M, 5.95% 2016		5,975			5,735
Nevada Power Co., General and Refunding Mortgage Notes, Series S, 6.50% 2018		10,025			9,766
Texas Competitive Electric Holdings Co. LLC, Term Loan B2, 5.368% 20141,6,7		4,529			3,152
Texas Competitive Electric Holdings Co. LLC 10.50% 20152		12,215			8,734
Texas Competitive Electric Holdings Co. LLC, Series B, 10.50% 20152		10,925			7,811
Texas Competitive Electric Holdings Co. LLC 11.25% 20162,8		5,250			2,651
Cilcorp Inc. 8.70% 2009		1,000			925
AmerenEnergy Generating Co., Series D, 8.35% 2010		1,500			1,548
Union Electric Co. 4.65% 2013		3,000			2,740
Union Electric Co. 5.40% 2016		5,750			4,989
Cilcorp Inc. 9.375% 2029		12,265			10,977
Southern California Gas Co., First Mortgage Bonds, Series II, 4.375% 2011		5,000			5,052
San Diego Gas & Electric Co., Series CCC, 5.30% 2015		10,000			10,274
San Diego Gas & Electric Co., Series DDD, 6.00% 2026		5,000			5,328
Northern States Power Co., First Mortgage Bonds, 5.25% 2018		13,500			13,475
Public Service Co. of Colorado 5.80% 2018		6,300			6,546
Intergen Power 9.00% 20172		23,450			19,346
Virginia Electric and Power Co., Series 2003-A, 4.75% 2013		6,000			5,776
Virginia Electric and Power Co., Series B, 5.95% 2017		10,000			10,083
Virginia Electric and Power Co., Series A, 6.00% 2037		1,250			1,215
Carolina Power & Light Co. d/b/a Progress Energy Carolinas, Inc., First Mortgage Bonds, 5.125% 2013		5,000			5,021
Carolina Power & Light Co. d/b/a Progress Energy Carolinas, Inc. 5.25% 2015		6,000			6,096
Progress Energy Florida, Inc., First Mortgage Bonds, 5.65% 2018		3,150			3,272
Empresa Nacional de Electricidad SA, Series B, 8.50% 2009		4,455			4,531
Empresa Nacional de Electricidad SA 8.35% 2013		5,000			5,290
Empresa Nacional de Electricidad SA 8.625% 2015		3,000			3,253
Pacific Gas and Electric Co., First Mortgage Bonds, 4.20% 2011		2,000			1,977
Pacific Gas and Electric Co. 6.25% 2013		1,550			1,605
Pacific Gas and Electric Co. 8.25% 2018		4,000			4,814
Pacific Gas and Electric Co., First Mortgage Bonds, 6.05% 2034		4,000			4,262
AES Corp. 9.50% 2009		927			925
AES Corp. 9.375% 2010		129			123
AES Corp. 8.75% 20132		624			602
AES Corp. 7.75% 2015		10,500			8,872
AES Corp. 8.00% 20202		1,925			1,502
Old Dominion Electric Cooperative, Series 2003-A, 5.676% 20286		11,250			10,227
Duke Energy Corp., First and Refunding Mortgage Bonds, 4.50% 2010		4,500			4,495
Duke Energy Corp., First and Refunding Mortgage Bonds, 5.30% 2015		5,000			5,222
Anglian Water Services Financing PLC 4.625% 2013	€	6,120			8,170
Anglian Water Services Financing PLC, Class A, 5.25% 2015	£	395			567
Florida Power & Light Co. 4.85% 2013	$	5,000			4,969
FPL Energy National Wind, LLC 5.608% 20242,6		4,041			3,212
SP PowerAssets Ltd. 5.00% 20132		8,000			8,024
Alabama Power Co., Series R, 4.70% 2010		2,250			2,265
Alabama Power Co., Series 2007-D, 4.85% 2012		1,550			1,551
Alabama Power Co., Series 2008-B, 5.80% 2013		4,000			4,167
NRG Energy, Inc. 7.25% 2014		4,200			3,938
NRG Energy, Inc. 7.375% 2016		3,700			3,450
ENEL SpA 5.625% 2027	€	5,760			6,883
Kern River Funding Corp. 4.893% 20182,6	$	8,008			6,302
Korea East-West Power Co., Ltd. 4.875% 20112		5,000			4,782
Enersis SA 7.375% 2014		3,000			3,131
Tri-State Generation and Transmission Assn. Inc., Pass Through Trust, Series 2003-A, 6.04% 20182,6		2,905			2,787
Connecticut Light & Power Co., First and Refunding Mortgage Bonds, Series 2008A, 5.65% 2018		2,500			2,568
RWE Aktiengesellschaft and RWE Finance BV 6.375% 2013	£	290			442
Kelda Group PLC 6.625% 2031		165			234
					1,135,936

TELECOMMUNICATION SERVICES — 3.52%
AT&T Corp. 7.30% 20111		4,734			4,922
AT&T Wireless Services, Inc. 7.875% 2011		15,355			15,904
SBC Communications Inc. 5.875% 2012		20,337			20,767
AT&T Wireless Services, Inc. 8.125% 2012		12,630			13,554
AT&T Inc. 4.95% 2013		17,000			17,109
AT&T Inc. 6.70% 2013		15,520			16,458
SBC Communications Inc. 5.10% 2014		10,245			10,083
SBC Communications Inc. 5.625% 2016		45,200			45,471
AT&T Inc. 5.50% 2018		9,945			10,068
AT&T Inc. 5.60% 2018		21,540			21,971
SBC Communications Inc. 6.45% 2034		11,175			11,733
AT&T Inc. 6.30% 2038		31,500			33,413
AT&T Inc. 6.40% 2038		13,950			14,994
Verizon Global Funding Corp. 7.375% 2012		11,835			12,391
Verizon Communications Inc. 5.25% 2013		14,500			14,569
Verizon Communications Inc. 5.50% 2017		21,495			20,836
Verizon Communications Inc. 5.50% 2018		15,540			14,973
Verizon Communications Inc. 6.10% 2018		36,180			36,113
Verizon Communications Inc. 8.50% 20182		16,400			19,249
Verizon Communications Inc. 8.75% 2018		36,000			42,308
Verizon Global Funding Corp. 7.75% 2030		9,501			10,565
Telecom Italia Capital SA 4.00% 2010		1,140			1,049
Telecom Italia Capital SA 4.875% 2010		1,260			1,141
Olivetti Finance NV 7.25% 2012	€	8,830			12,007
Telecom Italia Capital SA, Series B, 5.25% 2013	$	10,100			7,709
Telecom Italia Capital SA 5.25% 2015		69,000			52,596
Telecom Italia Capital SA 6.999% 2018		21,400			17,389
Telecom Italia SpA 7.75% 2033	€	8,270			10,030
Telecom Italia Capital SA 7.20% 2036	$	5,290			4,084
Telecom Italia Capital SA 7.721% 2038		64,000			52,693
Sprint Capital Corp. 6.375% 2009		21,230			21,099
Sprint Nextel Corp. 1.866% 20101		7,115			5,963
Nextel Communications, Inc., Series E, 6.875% 2013		93,707			39,846
Nextel Communications, Inc., Series F, 5.95% 2014		56,559			23,776
Nextel Communications, Inc., Series D, 7.375% 2015		49,375			20,747
Sprint Nextel Corp. 6.00% 2016		14,500			10,237
Sprint Capital Corp. 6.90% 2019		14,678			10,439
Sprint Capital Corp. 8.75% 2032		37,840			25,590
British Telecommunications PLC 5.15% 2013		50,035			47,706
British Telecommunications PLC 5.95% 2018		27,617			24,066
Vodafone Group PLC 7.75% 2010		20,000			20,446
Vodafone Group PLC 5.625% 2017		16,080			15,176
Vodafone Group PLC 6.15% 2037		6,000			5,950
France Télécom 7.75% 20111		32,000			33,690
France Télécom 7.25% 2013	€	4,800			7,165
ALLTEL Corp. 7.00% 2012	$	18,299			18,299
ALLTEL Corp., Term Loan B3, 3.939% 20151,6,7		10,087			10,008
ALLTEL Corp., Term Loan B2, 4.371% 20151,6,7		3,566			3,521
American Tower Corp. 7.125% 2012		14,850			14,702
American Tower Corp. 7.00% 20172,3		16,550			15,888
Centennial Communications Corp. 9.633% 20131		9,500			9,263
Centennial Communications Corp. 10.00% 2013		2,750			2,860
Centennial Communications Corp. and Centennial Cellular Operating Co. LLC 10.125% 2013		900			914
Centennial Communications Corp., Centennial Cellular Operating Co. LLC and Centennial Puerto Rico
Operations Corp. 8.125% 20141		9,300			9,486
Qwest Capital Funding, Inc. 7.90% 2010		950			869
Qwest Capital Funding, Inc. 7.25% 2011		15,650			13,224
Qwest Communications International Inc. 7.25% 2011		6,000			5,250
Qwest Capital Funding, Inc. 7.625% 2021		500			335
U S WEST Capital Funding, Inc. 6.875% 2028		1,940			1,174
Windstream Corp. 8.125% 2013		16,650			15,401
Valor Telecommunications Enterprises, LLC and Valor Telecommunications Enterprises Finance Corp. 7.75% 2015		2,850			2,382
Windstream Corp. 8.625% 2016		3,300			2,937
Embarq Corp. 6.738% 2013		20,000			16,915
Embarq Corp. 7.995% 2036		5,000			3,382
PCCW-HKT Capital Ltd. 8.00% 20111,2		15,000			14,673
PCCW-HKT Capital No. 3 Ltd. 5.25% 20152		6,800			5,023
Koninklijke KPN NV 8.00% 2010		6,550			6,613
Koninklijke KPN NV 4.75% 2017	€	3,500			4,356
Koninklijke KPN NV 8.375% 2030	$	5,200			5,889
MetroPCS Wireless, Inc. 9.25% 2014		11,950			10,755
Cricket Communications, Inc. 9.375% 2014		11,335			10,258
Singapore Telecommunications Ltd. 6.375% 2011		3,475			3,654
Singapore Telecommunications Ltd. 6.375% 20112		2,050			2,155
Singapore Telecommunications Ltd. 7.375% 20312		3,800			4,303
Rogers Wireless Inc. 7.25% 2012		713			697
Rogers Wireless Inc. 7.50% 2015		6,300			6,245
Cincinnati Bell Inc. 7.25% 2013		6,800			6,018
SK Telecom Co., Ltd. 4.25% 20112		6,000			5,643
NTELOS Inc., Term Loan B, 2.72% 20111,6,7		4,813			4,075
Deutsche Telekom International Finance BV 5.875% 2013		4,000			3,960
Digicel Group Ltd. 8.875% 20152		5,400			3,537
Digicel Group Ltd. 8.875% 2015		200			131
Millicom International Cellular SA 10.00% 2013		2,430			2,199
Intelsat, Ltd. 6.50% 2013		3,500			1,977
Orascom Telecom 7.875% 20142		3,275			1,752
Hawaiian Telcom Communications, Inc. 8.765% 20131,4		3,605			207
Hawaiian Telcom Communications, Inc. 9.75% 20134		7,715			617
Hawaiian Telcom Communications, Inc., Term Loan C, 4.75% 20141,6,7		2,114			826
Hawaiian Telcom Communications, Inc., Series B, 12.50% 20154		3,050			31
América Móvil, SAB de CV 8.46% 2036	MXN27,000				1,360
Nordic Telephone Co. Holding ApS 8.875% 20162	$	1,000			705
Citizens Communications Co. 7.875% 2027		1,125			658
Level 3 Financing, Inc. 9.25% 2014		1,000			585
Trilogy International Partners LLC, Term Loan B, 4.959% 20121,6,7		275			111
					1,133,868

INDUSTRIALS — 3.52%
Transportation — 2.00%
Continental Airlines, Inc., Series 2001-1, Class A-2, 6.503% 20116		14,050			10,889
Continental Airlines, Inc., Series 1999-2, Class A-2, 7.056% 20116		10,000			9,600
Continental Airlines, Inc. 8.75% 2011		6,300			3,733
Continental Airlines, Inc., Series 2000-2, Class A-2, 7.487% 20126		12,500			11,250
Continental Airlines, Inc., Series 2006-1, Class G, FGIC insured, 2.567% 20151,6		1,100			664
Continental Airlines, Inc., Series 1997-1, Class A, 7.461% 20166		29,170			20,127
Continental Airlines, Inc., Series 2001-1, Class B, 7.373% 20176		162			122
Continental Airlines, Inc., Series 1998-1, Class B, 6.748% 20186		2,030			1,421
Continental Airlines, Inc., Series 1997-4B, Class B, 6.90% 20186		1,871			1,273
Continental Airlines, Inc., Series 1998-1, Class A, 6.648% 20196		18,052			13,178
Continental Airlines, Inc., Series 1997-4, Class A, 6.90% 20196		37,632			30,106
Continental Airlines, Inc., Series 2000-2, Class B, 8.307% 20196		3,437			2,131
Continental Airlines, Inc., Series 1999-1, Class A, 6.545% 20206		22,064			17,651
Continental Airlines, Inc., Series 1999-1, Class B, 6.795% 20206		13,077			9,710
Continental Airlines, Inc., Series 2003-ERJ3, Class A, 7.875% 20206		8,665			4,852
Continental Airlines, Inc., Series 1999-2, Class A-1, 7.256% 20216		281			216
Continental Airlines, Inc., Series 1999-2, Class B, 7.566% 20216		9,006			7,003
Continental Airlines, Inc., Series 2001-1, Class A-1, 6.703% 20226		14,115			10,586
Continental Airlines, Inc., Series 2007-1, Class B, 6.903% 20226		10,130			5,363
Continental Airlines, Inc., Series 2000-2, Class A-1, 7.707% 20226		13,656			10,652
Continental Airlines, Inc., Series 2000-1, Class A-1, 8.048% 20226		13,692			10,953
Continental Airlines, Inc., Series 2000-1, Class B, 8.388% 20226		1,447			854
Delta Air Lines, Inc., Series 2000-1, Class A-2, 7.57% 20126		400			336
Northwest Airlines, Inc., Term Loan B, 4.96% 20131,3,6,7		2,991			2,409
Delta Air Lines, Inc., Series 2002-1, Class C, 7.779% 20136		2,618			2,265
Delta Air Lines, Inc., Second Lien Term Loan B, 5.149% 20141,6,7		4,925			2,458
Delta Air Lines, Inc., Series 2002-1, Class G-2, MBIA insured, 6.417% 20146		53,658			38,848
Delta Air Lines, Inc., Series 1992-A2, 9.20% 20144,6		4,760			4,213
Northwest Airlines, Inc., Term Loan A, 3.21% 20181,6,7		68,137			50,421
Delta Air Lines, Inc., Series 2002-1, Class G-1, MBIA insured, 6.718% 20246		40,693			25,637
CSX Corp. 5.75% 2013		8,335			7,839
CSX Corp. 6.25% 2015		15,000			14,743
CSX Corp. 6.25% 2018		10,000			9,213
CSX Corp. 6.15% 2037		26,585			21,336
CSX Corp. 7.45% 2038		35,550			33,903
American Airlines, Inc., Series 1999-1, Class A-1, 6.855% 20106		1,943			1,906
AMR Corp., Series B, 10.45% 2011		150			73
American Airlines, Inc., Series 2001-1, Class A-2, 6.817% 20126		3,750			2,662
American Airlines, Inc., Series 2001-2, Class A-1, 6.978% 20126		12,367			10,991
American Airlines, Inc., Series 2001-2, Class B, 8.608% 20126		18,165			12,579
AMR Corp. 9.00% 2012		5,800			2,994
American Airlines, Inc., Series 2001-2, Class A-2, 7.858% 20136		38,010			30,646
American Airlines, Inc., Series 1991-C2, 9.73% 20146		6,410			3,173
American Airlines, Inc., Series 2001-1, Class B, 7.377% 20196		8,721			3,576
Union Pacific Corp. 5.75% 2017		20,750			19,709
Union Pacific Corp. 5.70% 2018		4,000			3,858
Union Pacific Railroad Co. Pass Through Trust, Series 2001-1, 6.63% 20226		7,015			7,129
Union Pacific Corp. 6.15% 2037		13,930			12,953
Norfolk Southern Corp. 5.75% 2018		21,050			20,519
Norfolk Southern Corp. 7.05% 2037		12,690			13,312
United Air Lines, Inc., Series 2001-1, Class A-2, 6.201% 20106		2,925			2,731
United Air Lines, Inc., Series 2000-2, Class B, 7.811% 20114,6		7,335			8,086
United Air Lines, Inc., Series 2000-2, Class A-2, 7.186% 20126		304			279
United Air Lines, Inc., Term Loan B, 2.50% 20141,6,7		6,699			3,155
United Air Lines, Inc., Series 2001-1, Class A-1, 6.071% 20146		493			446
United Air Lines, Inc., Series 2001-1, Class A-3, 6.602% 20156		1,516			1,417
United Air Lines, Inc., Series 2007-1, Class B, 7.336% 20212,6		909			493
United Air Lines, Inc., Series 2007-1, Class A, 6.636% 20246		27,759			16,430
Canadian National Railway Co. 5.55% 2018		16,500			16,505
Canadian National Railway Co. 6.375% 2037		8,000			8,806
Burlington Northern and Santa Fe Railway Co. Pass Through Trust, Series 1996-B, 6.96% 20096		184			185
Burlington Northern Santa Fe Corp. 6.15% 2037		14,090			13,019
BNSF Funding Trust I 6.613% 20551		15,000			9,470
Kansas City Southern Railway Co. 7.50% 2009		2,500			2,519
TFM, SA de CV 9.375% 2012		3,800			3,496
Kansas City Southern Railway Co. 8.00% 2015		2,000			1,590
Southern Capital Corp. Pass Through Trust, Series 2002-1, Class G, MBIA insured, 5.70% 20232,6		4,514			4,526
Navios Maritime Holdings Inc. 9.50% 2014		8,030			4,514
AIR 2 US, Series A, 8.027% 20202,6		4,710			3,532
CEVA Group PLC 10.00% 20142		500			373
					643,607

Capital goods — 1.33%
Hutchison Whampoa International Ltd. 7.00% 20112		24,300			25,106
Hutchison Whampoa International Ltd. 6.50% 20132		59,200			58,161
BAE Systems Holding Inc. 4.75% 20102,6		10,350			10,293
BAE SYSTEMS 2001 Asset Trust, Series 2001, Class B, 7.156% 20112,3,6		33,838			29,478
BAE SYSTEMS 2001 Asset Trust, Series 2001, Class G, MBIA insured, 6.664% 20132,6		32,418			31,018
General Electric Capital Corp. 6.25% 2017	£	400			555
General Electric Capital Corp., Series A, 2.776% 20181	$	9,000			5,468
General Electric Capital Corp., Series A, 3.239% 20261		77,000			40,704
General Electric Capital Corp. 5.625% 2031	£	85			97
General Electric Capital Corp., Series A, 2.629% 20361	$	12,000			7,717
Koninklijke Philips Electronics NV 5.75% 2018		20,000			18,459
Koninklijke Philips Electronics NV 6.875% 2038		32,150			30,609
Caterpillar Inc. 4.50% 2009		1,190			1,187
Caterpillar Financial Services Corp. 4.30% 2010		2,400			2,360
Caterpillar Financial Services Corp., Series F, 5.125% 2011		500			486
Caterpillar Financial Services Corp., Series F, 4.85% 2012		210			199
Caterpillar Financial Services Corp., Series F, 4.90% 2013		10,500			9,851
Caterpillar Financial Services Corp., Series F, 5.50% 2016		4,050			3,860
Caterpillar Financial Services Corp., Series F, 5.85% 2017		2,000			1,961
Caterpillar Inc. 7.90% 2018		1,900			2,191
Caterpillar Inc. 6.05% 2036		2,000			1,954
DynCorp International and DIV Capital Corp. 9.50% 20132		9,295			8,191
DynCorp International and DIV Capital Corp., Series B, 9.50% 2013		6,198			5,400
John Deere Capital Corp. 5.40% 2011		3,500			3,503
John Deere Capital Corp., Series D, 4.50% 2013		3,000			2,874
John Deere Capital Corp. 5.10% 2013		1,100			1,083
John Deere Capital Corp., Series D, 5.50% 2017		3,650			3,488
John Deere Capital Corp., Series D, 5.75% 2018		2,000			1,950
US Investigations Services, Inc., Term Loan B, 4.275% 20151,6,7		5,435			3,954
US Investigations Services, Inc. 10.50% 20152		7,005			5,149
US Investigations Services, Inc. 11.75% 20162		5,445			3,458
Lockheed Martin Corp. 4.121% 2013		6,000			5,854
Lockheed Martin Corp., Series B, 6.15% 2036		6,000			6,528
Northrop Grumman Systems Corp. 7.125% 2011		8,000			8,322
Northrop Grumman Systems Corp. 7.75% 2031		3,000			3,674
Raytheon Co. 6.40% 2018		9,500			10,303
Ashtead Group PLC 8.625% 20152		4,675			2,478
Ashtead Capital, Inc. 9.00% 20162		14,125			7,345
DAE Aviation Holdings, Inc. and Standard Aero Ltd., Term Loan B1, 5.80% 20141,6,7		2,460			1,292
DAE Aviation Holdings, Inc. and Standard Aero Ltd., Term Loan B2, 7.17% 20141,6,7		2,425			1,273
DAE Aviation Holdings, Inc. 11.25% 20152		17,285			7,173
Embraer Overseas Ltd 6.375% 2017		10,825			7,794
NTK Holdings Inc. 0%/10.75% 20146,9		15,118			3,326
THL Buildco, Inc. 8.50% 2014		11,450			2,691
Hawker Beechcraft Acquisition Co., LLC, Term Loan B, 2.461% 20141,6,7		1,055			554
Hawker Beechcraft Acquisition Co., LLC, Letter of Credit, 3.459% 20141,6,7		62			33
Hawker Beechcraft Acquisition Co., LLC 8.50% 2015		1,325			550
Hawker Beechcraft Acquisition Co., LLC 8.875% 20158		11,125			3,838
Hawker Beechcraft Acquisition Co., LLC 9.75% 2017		570			157
DRS Technologies, Inc. 6.875% 2013		2,135			2,126
DRS Technologies, Inc. 6.625% 2016		475			477
DRS Technologies, Inc. 7.625% 2018		2,500			2,513
United Rentals (North America), Inc., Series B, 6.50% 2012		6,250			4,969
Atlas Copco AB 5.60% 20172		4,525			4,258
B/E Aerospace 8.50% 2018		4,370			3,944
Atrium Companies, Inc., Term Loan B, 12.50% 20121,6,7,8		4,709			2,943
Atrium Companies, Inc. 15.00% 20122,8		3,666			495
RBS Global, Inc. and Rexnord LLC 9.50% 2014		2,625			1,969
RBS Global, Inc. and Rexnord LLC 8.875% 2016		850			501
Tyco International Group SA 6.125% 2009		500			499
Tyco International Ltd. 7.00% 2019		600			494
Tyco International Ltd. 6.875% 2021		1,000			775
Alion Science and Technology Corp. 10.25% 2015		3,690			1,684
RSC Holdings III, LLC, Second Lien Term Loan B, 7.71% 20131,6,7		2,838			1,524
TransDigm Inc. 7.75% 2014		1,325			1,093
Esco Corp. 5.871% 20131,2		325			210
Esco Corp. 8.625% 20132		1,100			775
H&E Equipment Services, Inc. 8.375% 2016		1,750			936
Esterline Technologies Corp. 6.625% 2017		1,050			898
RSC Equipment Rental, Inc. and RSC Holdings III, LLC 9.50% 2014		900			499
Sequa Corp., Term Loan B, 4.69% 20141,6,7		875			494
					428,025

Commercial & professional services — 0.19%
Nielsen Finance LLC, Term Loan B, 4.388% 20131,6,7		6,531			4,441
Nielsen Finance LLC and Nielsen Finance Co. 10.00% 2014		23,825			19,179
Nielsen Finance LLC and Nielsen Finance Co. 0%/12.50% 20169		31,300			11,503
ARAMARK Corp., Term Loan B, 3.334% 20141,6,7		4,158			3,467
ARAMARK Corp., Letter of Credit, 4.494% 20141,6,7		264			220
ARAMARK Corp. 6.693% 20151		2,650			2,014
ARAMARK Corp. 8.50% 2015		6,525			5,938
Allied Waste North America, Inc., Series B, 6.50% 2010		500			483
Allied Waste North America, Inc., Series B, 5.75% 2011		2,500			2,345
Allied Waste North America, Inc., Series B, 6.125% 2014		3,500			3,171
Allied Waste North America, Inc., Series B, 7.375% 2014		4,750			4,494
Allied Waste North America, Inc. 6.875% 2017		1,000			931
FTI Consulting, Inc. 7.625% 2013		2,300			2,004
					60,190

ENERGY — 3.48%
Enterprise Products Operating LP, Series B, 4.625% 2009		9,500			9,203
Enterprise Products Operating LP 4.95% 2010		8,750			8,383
Enterprise Products Operating LP 7.50% 2011		10,250			10,072
Enterprise Products Operating LLC 5.65% 2013		24,095			21,870
Enterprise Products Operating LP, Series B 6.375% 2013		17,000			15,764
Enterprise Products Partners LP 5.60% 2014		1,855			1,576
Enterprise Products Operating LLC 9.75% 2014		5,975			6,090
Enterprise Products Operating LLC 6.30% 2017		30,000			25,431
Enterprise Products Operating LLC 6.50% 2019		31,350			26,421
Enterprise Products Operating LP 8.375% 20661		9,605			5,289
Enterprise Products Operating LP 7.034% 20681		29,115			13,702
Enbridge Energy Partners, LP, Series B, 6.50% 2018		45,455			37,466
Enbridge Energy Partners, LP 9.875% 2019		25,000			25,200
Enbridge Energy Partners, LP, Series B, 7.50% 2038		28,700			22,452
Enbridge Energy Partners, LP 8.05% 20771		67,100			32,705
TransCanada PipeLines Ltd. 6.50% 2018		51,250			50,368
TransCanada PipeLines Ltd. 6.20% 2037		4,000			3,485
TransCanada PipeLines Ltd. 7.25% 2038		5,645			5,636
TransCanada PipeLines Ltd. 6.35% 20671		88,815			39,750
Williams Companies, Inc. 5.883% 20101,2		7,500			6,617
Williams Companies, Inc. 6.375% 20102		1,500			1,399
Williams Companies, Inc. 7.125% 2011		500			460
Transcontinental Gas Pipe Line Corp. 6.40% 2016		10,000			9,142
Williams Companies, Inc. 7.875% 2021		78,897			60,464
Transcontinental Gas Pipe Line Corp. 7.25% 2026		1,750			1,601
Williams Companies, Inc. 8.75% 2032		19,891			14,849
Kinder Morgan Energy Partners LP 6.75% 2011		5,500			5,352
Kinder Morgan Energy Partners LP 5.85% 2012		6,500			5,957
Kinder Morgan Energy Partners LP 5.00% 2013		14,279			12,465
Kinder Morgan Energy Partners LP 5.125% 2014		34,052			29,702
Kinder Morgan Energy Partners LP 6.00% 2017		30,250			26,303
Kinder Morgan Energy Partners LP 9.00% 2019		4,150			4,337
Gaz Capital SA 7.343% 2013		500			408
Gaz Capital SA 5.875% 2015	€	5,125			4,481
Gaz Capital SA, Series 13, 6.605% 2018		8,200			6,598
Gaz Capital SA 8.146% 2018	$	2,560			1,818
Gaz Capital SA 6.51% 20222		92,010			54,976
Gaz Capital SA 7.288% 20372		24,400			14,518
Ras Laffan Liquefied Natural Gas Co. Ltd. 3.437% 20092,6		10,763			10,148
Ras Laffan Liquefied Natural Gas Co. Ltd. 3.437% 20096		594			560
Ras Laffan Liquefied Natural Gas Co. Ltd. 8.294% 20142,6		15,570			14,091
Ras Laffan Liquefied Natural Gas Co. Ltd. 8.294% 20146		1,000			905
Ras Laffan Liquefied Natural Gas II 5.298% 20202,6		45,970			32,817
Ras Laffan Liquefied Natural Gas III 5.838% 20272,3,6		15,000			10,275
Rockies Express Pipeline LLC 5.10% 20091,2		20,000			20,014
Rockies Express Pipeline LLC 6.25% 20132		6,940			6,839
Rockies Express Pipeline LLC 6.85% 20182		37,675			34,835
Enbridge Inc. 5.80% 2014		9,200			8,078
Enbridge Inc. 4.90% 2015		3,250			2,778
Enbridge Inc. 5.60% 2017		42,080			35,783
Tengizchevroil Finance Co. S.àr.l., Series A, 6.124% 20142,6		51,458			39,365
Tengizchevroil Finance Co. S.àr.l., Series A, 6.124% 20146		5,679			4,345
Marathon Oil Corp. 6.00% 2017		23,200			19,814
Marathon Oil Corp. 5.90% 2018		12,645			10,578
Marathon Oil Corp. 6.60% 2037		10,000			7,581
Pemex Finance Ltd. 8.875% 20106		12,800			13,171
Pemex Finance Ltd., Series 1999-2, Class A-3, 10.61% 20173,6		11,700			13,106
Pemex Project Funding Master Trust 5.75% 20182		3,150			2,796
Pemex Project Funding Master Trust 6.625% 20352		3,500			2,980
Phillips Petroleum Co. 8.75% 2010		4,000			4,217
Polar Tankers, Inc. 5.951% 20372,6		27,355			23,584
Qatar Petroleum 5.579% 20112,6		21,335			19,953
Husky Energy Inc. 6.20% 2017		21,000			18,801
XTO Energy Inc. 6.25% 2017		15,750			15,149
Petroleum Export Ltd., Class A-1, MBIA insured, 4.623% 20102,6		11,500			11,322
Petroleum Export Ltd., Class A-2, XLCA insured, 4.633% 20102,6		2,167			2,133
Sunoco, Inc. 4.875% 2014		14,830			12,489
Canadian Natural Resources Ltd. 5.70% 2017		14,000			12,229
Southern Natural Gas Co. 5.90% 20172		11,840			9,442
El Paso Natural Gas Co. 5.95% 2017		3,000			2,399
Devon Financing Corp. ULC 7.875% 2031		10,195			11,257
Nakilat Inc., Series A, 6.067% 20332,6		14,000			10,466
Delek & Avner-Yam Tethys Ltd. 5.326% 20132,6		10,338			10,434
Gulfstream Natural Gas 5.56% 20152		3,500			2,939
Gulfstream Natural Gas 6.19% 20252		7,235			5,407
Williams Partners L.P. and Williams Partners Finance Corp. 7.50% 2011		5,725			4,926
Williams Partners L.P. and Williams Partners Finance Corp. 7.25% 2017		3,475			2,749
Petroplus Finance Ltd. 6.75% 20142		4,750			3,040
Petroplus Finance Ltd. 7.00% 20172		7,500			4,613
Apache Corp. 5.625% 2017		7,200			7,260
Drummond Co., Inc. 7.375% 20162		9,800			4,802
Energy Transfer Partners, LP 5.95% 2015		3,465			2,980
PETRONAS Capital Ltd. 7.00% 20122		2,250			2,388
TEPPCO Partners LP 7.00% 20671		4,275			2,294
					1,120,442

HEALTH CARE — 2.38%
Health care equipment & services — 1.32%
UnitedHealth Group Inc. 1.705% 20101		8,250			7,436
UnitedHealth Group Inc. 5.25% 2011		2,463			2,317
UnitedHealth Group Inc. 4.875% 2013		7,100			6,622
UnitedHealth Group Inc. 5.375% 2016		24,250			21,402
UnitedHealth Group 6.00% 2017		24,920			22,475
UnitedHealth Group Inc. 5.80% 2036		7,884			6,024
Hospira, Inc. 4.95% 2009		7,391			7,394
Hospira, Inc. 1.948% 20101		26,500			25,860
Hospira, Inc. 5.90% 2014		4,510			3,993
Hospira, Inc. 6.05% 2017		30,675			24,953
Coventry Health Care, Inc. 5.875% 2012		1,000			735
Coventry Health Care, Inc. 6.30% 2014		62,750			38,437
Coventry Health Care, Inc. 6.125% 2015		160			95
Coventry Health Care, Inc. 5.95% 2017		12,430			6,489
Cardinal Health, Inc. 4.323% 20091		3,500			3,321
Cardinal Health, Inc. 6.75% 2011		13,625			13,565
Cardinal Health, Inc. 5.80% 2016		10,000			9,061
Cardinal Health, Inc. 5.85% 2017		12,000			10,838
Allegiance Corp. 7.00% 2026		9,260			8,449
Tenet Healthcare Corp. 7.375% 2013		5,895			4,230
Tenet Healthcare Corp. 9.875% 2014		28,095			22,757
Tenet Healthcare Corp. 9.25% 2015		8,170			6,618
Humana Inc. 6.45% 2016		27,012			21,386
Humana Inc. 6.30% 2018		11,670			8,757
Humana Inc. 7.20% 2018		3,743			3,015
WellPoint, Inc. 5.00% 2011		12,500			11,820
WellPoint, Inc. 5.25% 2016		6,455			5,723
WellPoint, Inc. 5.875% 2017		8,300			7,566
WellPoint, Inc. 6.375% 20373		7,500			6,694
HealthSouth Corp. 8.323% 20141		12,600			10,143
HealthSouth Corp. 10.75% 2016		13,105			12,089
Aetna Inc. 5.75% 2011		17,500			17,104
HCA Inc., Term Loan B, 3.709% 20131,6,7		14,012			11,061
HCA Inc. 9.125% 2014		295			274
HCA Inc. 9.25% 2016		530			488
HCA Inc. 10.375% 20168		1,530			1,197
Bausch & Lomb Inc. 9.875% 20152		13,625			10,287
VWR Funding, Inc. 10.25% 20151,8		15,675			9,954
Universal Health Services, Inc. 7.125% 2016		7,440			6,431
PTS Acquisition Corp. 9.50% 20158		16,115			6,204
Surgical Care Affiliates, Inc. 8.875% 20152,8		3,325			2,045
Surgical Care Affiliates, Inc. 10.00% 20172		7,845			4,119
Health Management Associates Inc., Term Loan B, 3.209% 20141,6,7		7,243			4,554
Team Finance LLC and Health Finance Corp. 11.25% 2013		3,525			2,785
Boston Scientific Corp. 5.45% 2014		1,115			953
Boston Scientific Corp. 5.125% 2017		1,190			904
Boston Scientific Corp. 7.00% 2035		920			685
Symbion Inc. 11.75% 20158		3,745			1,985
Viant Holdings Inc. 10.125% 20172		2,929			981
Universal Hospital Services, Inc. 5.943% 20151		1,290			793
AMR HoldCo, Inc. and EmCare HoldCo, Inc. 10.00% 2015		175			164
CHS/Community Health Systems, Inc. 8.875% 2015		45			42
					423,274

Pharmaceuticals, biotechnology & life sciences — 1.06%
GlaxoSmithKline Capital Inc. 4.85% 2013		24,000			24,097
GlaxoSmithKline Capital Inc. 5.65% 2018		41,127			43,276
GlaxoSmithKline Capital Inc. 6.375% 2038		33,650			38,153
Schering-Plough Corp. 5.55% 20131		27,559			27,790
Schering-Plough Corp. 5.375% 2014	€	6,120			7,971
Schering-Plough Corp. 6.00% 2017	$	49,164			48,749
Biogen Idec Inc. 6.00% 2013		36,525			36,159
Biogen Idec Inc. 6.875% 2018		27,000			26,425
AstraZeneca PLC 5.40% 2012		12,000			12,684
AstraZeneca PLC 5.40% 2014		6,000			6,279
AstraZeneca PLC 6.45% 2037		8,000			9,125
Bayer AG 5.00% (undated)1	€	23,085			24,034
Wyeth 5.50% 2016	$	15,000			15,297
Elan Finance PLC and Elan Finance Corp. 7.75% 2011		3,125			1,859
Elan Finance PLC and Elan Finance Corp. 6.328% 20131		5,135			2,439
Elan Finance PLC and Elan Finance Corp. 8.875% 2013		10,910			5,728
Warner Chilcott Corp. 8.75% 2015		5,150			4,609
Amgen Inc. 4.00% 2009		4,000			3,998
Mylan Inc., Term Loan B, 4.75% 20141,6,7		4,141			3,531
					342,203

CONSUMER STAPLES — 1.06%
Food & staples retailing — 0.79%
Kroger Co. 5.00% 2013		8,750			8,432
Kroger Co. 7.50% 2014		8,455			8,897
Kroger Co. 6.40% 2017		58,325			58,915
CVS Caremark Corp. 2.503% 20101		5,000			4,602
CVS Corp. 7.77% 20122,6		697			707
CVS Corp. 5.789% 20262,3,6		14,610			8,567
CVS Corp. 6.036% 20282,3,6		34,037			19,143
CVS Caremark Corp. 6.943% 20302,6		24,430			15,394
Tesco PLC 5.50% 20172		21,325			19,802
Tesco PLC 5.50% 2033	£	265			337
Tesco PLC 6.15% 20372	$	20,000			17,719
Delhaize Group 6.50% 2017		26,205			23,831
Safeway Inc. 6.25% 2014		2,725			2,742
Safeway Inc. 6.35% 2017		20,000			19,806
Stater Bros. Holdings Inc. 8.125% 2012		9,160			8,336
Stater Bros. Holdings Inc. 7.75% 2015		9,400			7,943
SUPERVALU INC., Term Loan B, 2.689% 20121,6,7		2,239			1,798
SUPERVALU INC. 7.50% 2012		365			323
Albertson’s, Inc. 7.25% 2013		3,950			3,358
SUPERVALU INC. 7.50% 2014		830			685
Albertson’s, Inc. 8.00% 2031		4,475			2,707
Duane Reade Inc. 6.496% 20101		4,992			3,669
Duane Reade Inc. 9.75% 2011		7,695			4,117
Vitamin Shoppe Industries Inc. 9.649% 20121		7,490			5,318
Walgreen Co. 4.875% 2013		5,000			5,155
Costco Wholesale Corp. 5.30% 2012		3,000			3,133
					255,436

Food, beverage & tobacco — 0.26%
Tyson Foods, Inc. 7.85% 20161		36,905			27,494
Altria Group, Inc. 9.70% 2018		2,925			3,167
Altria Group, Inc. 9.95% 2038		12,500			13,645
Constellation Brands, Inc. 8.375% 2014		2,075			1,982
Constellation Brands, Inc. 7.25% 2017		9,945			9,448
H.J. Heinz Co. 15.59% 20111,2		10,000			11,189
Dole Food Co., Inc. 7.25% 2010		2,175			1,528
Dole Food Co., Inc. 8.875% 2011		7,915			4,986
Smithfield Foods, Inc., Series B, 8.00% 2009		1,500			1,433
Smithfield Foods, Inc., Series B, 7.75% 2013		150			97
Smithfield Foods, Inc. 7.75% 2017		3,100			1,782
JBS SA 10.50% 2016		4,370			3,081
Cott Beverages Inc. 8.00% 2011		4,950			3,044
Diageo Capital PLC 5.75% 2017		1,437			1,393
Pilgrim’s Pride Corp. 7.625% 20154		1,100			302
Pilgrim’s Pride Corp. 8.375% 20174		1,050			68
					84,639

Household & personal products — 0.01%
Elizabeth Arden, Inc. 7.75% 2014		2,905			1,903
Yankee Candle Co., Inc., Series B, 8.50% 2015		4,025			1,897
					3,800

MATERIALS — 1.04%
International Paper Co. 7.40% 2014		40,990			33,635
International Paper Co. 7.95% 2018		35,605			28,184
ArcelorMittal 6.125% 2018		52,900			36,282
Stora Enso Oyj 6.404% 20162		22,800			15,073
Stora Enso Oyj 7.25% 20362		36,290			19,159
C5 Capital (SPV) Ltd. 6.196% (undated)1,2		15,000			6,910
C8 Capital (SPV) Ltd. 6.64% (undated)1,2		23,905			12,143
C10 Capital (SPV) Ltd. 6.722% (undated)1,2		13,295			6,337
Rio Tinto Finance (USA) Ltd. 5.875% 2013		31,500			25,114
Rohm and Haas Co. 5.60% 2013		950			918
Rohm and Haas Co. 6.00% 2017		25,850			23,564
UPM-Kymmene Corp. 5.625% 20142		34,190			22,169
UPM-Kymmene Corp. 6.625% 2017	£	235			270
Freeport-McMoRan Copper & Gold Inc. 6.875% 2014	$	800			721
Freeport-McMoRan Copper & Gold Inc. 8.25% 2015		16,580			14,109
Freeport-McMoRan Copper & Gold Inc. 8.375% 2017		2,230			1,831
Nalco Co. 7.75% 2011		4,760			4,593
Nalco Co. 8.875% 2013		4,350			3,698
Nalco Co. 9.00% 2013	€	1,000			1,024
Nalco Finance Holdings LLC and Nalco Finance Holdings Inc. 0%/9.00% 20149		2,254			1,634
E.I. du Pont de Nemours and Co. 4.125% 2010		2,000			2,017
E.I. du Pont de Nemours and Co. 5.00% 2013		6,355			6,418
E.I. du Pont de Nemours and Co. 5.25% 2016		2,000			1,991
Building Materials Corp. of America 7.75% 2014		9,950			6,318
Commercial Metals Co. 6.50% 2017		7,000			5,319
Plastipak Holdings, Inc. 8.50% 20152		7,690			5,191
Georgia Gulf Corp. 9.50% 2014		15,380			4,691
Georgia-Pacific Corp. 8.125% 2011		4,025			3,804
Weyerhaeuser Co. 7.375% 2032		2,500			1,627
Weyerhaeuser Co. 6.875% 2033		2,500			1,664
Arbermarle Corp. 5.10% 2015		3,656			3,238
Jefferson Smurfit Corp. (U.S.) 8.25% 2012		10,775			1,886
Stone Container Corp. 8.375% 2012		1,000			170
Jefferson Smurfit Corp. (U.S.) 7.50% 2013		1,250			225
Smurfit-Stone Container Enterprises, Inc. 8.00% 2017		4,225			824
Boise Cascade, LLC and Boise Cascade Finance Corp. 7.125% 2014		5,494			3,104
Associated Materials Inc. 9.75% 2012		3,450			2,734
AMH Holdings, Inc. 0%/11.25% 20149		375			210
Praxair, Inc. 4.625% 2015		2,500			2,520
Rockwood Specialties Group, Inc. 7.50% 2014		2,320			1,798
Rockwood Specialties Group, Inc. 7.625% 2014	€	500			488
Owens-Illinois, Inc. 7.50% 2010	$	2,250			2,239
Graphic Packaging International, Inc. 8.50% 2011		2,375			1,995
ICI Wilmington, Inc. 5.625% 2013		2,000			1,930
NewPage Corp., Series B, 10.00% 2012		3,500			1,557
NewPage Corp., Series A, 12.00% 2013		980			284
Metals USA Holdings Corp. 10.883% 20121,8		3,410			972
Metals USA, Inc. 11.125% 2015		1,200			714
Domtar Corp. 5.375% 2013		725			453
Domtar Corp. 7.125% 2015		1,810			1,186
Vale Overseas Ltd. 6.25% 2017		1,500			1,418
Potash Corp. of Saskatchewan Inc. 5.875% 2036		1,600			1,414
FMG Finance Pty Ltd. 10.625% 20162		2,000			1,170
AEP Industries Inc. 7.875% 2013		1,985			1,131
Dow Chemical Co. 5.70% 2018		1,000			890
Momentive Performance Materials Inc. 9.75% 2014		2,000			860
Airgas, Inc. 6.25% 2014		550			470
Airgas, Inc. 7.125% 20182		250			214
Neenah Paper, Inc. 7.375% 2014		1,140			621
Abitibi-Consolidated Inc. 7.75% 2011		505			48
Abitibi-Consolidated Co. of Canada 6.00% 2013		975			83
Abitibi-Consolidated Co. of Canada 8.375% 2015		5,000			425
					333,679

INFORMATION TECHNOLOGY — 0.89%
Semiconductors & semiconductor equipment — 0.34%
KLA-Tencor Corp. 6.90% 2018		56,300			42,648
NXP BV and NXP Funding LLC 7.503% 20131		9,320			3,134
NXP BV and NXP Funding LLC 8.068% 20131	€	6,075			2,116
NXP BV and NXP Funding LLC 7.875% 2014	$	24,285			9,593
NXP BV and NXP Funding LLC 8.625% 2015	€	10,050			2,591
NXP BV and NXP Funding LLC 9.50% 2015	$	31,070			5,981
Freescale Semiconductor, Inc., Term Loan B, 3.931% 20131,6,7		2,585			1,543
Freescale Semiconductor, Inc. 5.871% 20141		2,500			863
Freescale Semiconductor, Inc. 8.875% 2014		7,300			3,249
Freescale Semiconductor, Inc. 9.875% 20141,8		45,275			10,640
Freescale Semiconductor, Inc. 10.125% 2016		11,625			4,824
National Semiconductor Corp. 6.15% 2012		3,700			3,316
National Semiconductor Corp. 6.60% 2017		24,500			17,365
MagnaChip Semiconductor SA and MagnaChip Semiconductor Finance Co. 8.00% 20144		2,250			22
					107,885

Technology hardware & equipment — 0.33%
Electronic Data Systems Corp., Series B, 6.00% 20131		31,625			32,803
Electronic Data Systems Corp. 7.45% 2029		4,520			4,910
Jabil Circuit, Inc. 5.875% 2010		4,750			4,370
Jabil Circuit, Inc. 8.25% 2018		39,725			25,424
Cisco Systems, Inc. 5.25% 2011		10,000			10,387
Hughes Communications, Inc. 9.50% 2014		12,425			10,157
Sanmina-SCI Corp. 4.746% 20101,2		866			801
Sanmina-SCI Corp. 6.75% 2013		6,275			2,730
Sanmina-SCI Corp. 4.746% 20141,2		3,750			2,044
Sanmina-SCI Corp. 8.125% 2016		10,350			4,088
Celestica Inc. 7.875% 2011		5,700			5,216
Sensata Technologies BV 8.00% 20141		8,575			3,902
Nortel Networks Ltd. 9.003% 20111		3,500			892
					107,724

Software & services — 0.22%
Oracle Corp. 5.75% 2018		3,150			3,301
Oracle Corp. 6.50% 2038		30,000			33,143
SunGard Data Systems Inc. 9.125% 2013		12,975			11,288
First Data Corp., Term Loan B2, 3.211% 20141,6,7		14,567			9,425
First Data Corp. 9.875% 20152		1,500			915
Ceridian Corp. 11.25% 20152		13,050			6,965
Serena Software, Inc. 10.375% 2016		11,262			5,772
Exodus Communications, Inc. 11.625% 20103,4		1,128			—
					70,809

Total corporate bonds & notes					11,798,645


MORTGAGE-BACKED OBLIGATIONS — 26.27%
FEDERAL AGENCY MORTGAGE-BACKED OBLIGATIONS6 — 14.83%
Fannie Mae 7.00% 2009		2			2
Fannie Mae 7.50% 2009		31			31
Fannie Mae 7.50% 2009		11			11
Fannie Mae 7.50% 2009		2			2
Fannie Mae 7.50% 2009		2			2
Fannie Mae 7.50% 2009		1			1
Fannie Mae 7.50% 2009		—			—
Fannie Mae 8.50% 2009		3			3
Fannie Mae 9.50% 2009		4			4
Fannie Mae 7.00% 2010		3			3
Fannie Mae, Series 2003-T1, Class B, 4.491% 2012		46,225			48,746
Fannie Mae 4.89% 2012		25,000			26,221
Fannie Mae 7.00% 2016		144			150
Fannie Mae 11.50% 2016		290			325
Fannie Mae, Series 2002-15, Class PG, 6.00% 2017		7,406			7,647
Fannie Mae 5.50% 2018		422			436
Fannie Mae 9.00% 2018		23			25
Fannie Mae 10.00% 2018		226			254
Fannie Mae 4.50% 2019		19,702			20,236
Fannie Mae 4.50% 2019		19,341			19,866
Fannie Mae 5.50% 2019		4,375			4,528
Fannie Mae 5.50% 2019		1,794			1,854
Fannie Mae 12.00% 2019		299			338
Fannie Mae 4.50% 2020		5,028			5,158
Fannie Mae 5.50% 2020		16,090			16,649
Fannie Mae 5.50% 2020		1,797			1,858
Fannie Mae 11.00% 2020		120			134
Fannie Mae 11.23% 20201		279			323
Fannie Mae, Series 2003-48, Class TJ, 4.50% 2022		25,693			26,046
Fannie Mae 5.50% 2022		41,339			42,672
Fannie Mae 9.00% 2022		39			42
Fannie Mae 5.50% 2023		63,938			65,999
Fannie Mae 5.50% 2023		40,820			42,135
Fannie Mae 5.50% 2023		31,241			32,248
Fannie Mae 6.00% 2023		4,949			5,151
Fannie Mae 7.50% 2023		79			83
Fannie Mae: 5.50% 2024		38,000			39,149
Fannie Mae 6.00% 2024		12,923			13,361
Fannie Mae, Series 2001-4, Class GA, 10.156% 20251		515			579
Fannie Mae, Series 2001-4, Class NA, 11.873% 20251		2,236			2,473
Fannie Mae 6.00% 2026		29,752			30,761
Fannie Mae 6.123% 20261		503			511
Fannie Mae 5.50% 2027		25,492			26,179
Fannie Mae 6.50% 2027		27,823			28,952
Fannie Mae 6.50% 2027		23,957			24,929
Fannie Mae 6.50% 2027		19,996			20,807
Fannie Mae 8.50% 2027		8			9
Fannie Mae 6.00% 2028		10,716			11,052
Fannie Mae, Series 1998-W5, Class B3, 6.50% 2028		2,026			1,573
Fannie Mae, Series 2002-W3, Class A-5, 7.50% 2028		3,792			3,997
Fannie Mae 6.50% 2029		191			201
Fannie Mae, Series 2002-W7, Class A-5, 7.50% 2029		671			708
Fannie Mae 7.50% 2029		68			71
Fannie Mae 7.50% 2029		46			48
Fannie Mae 7.50% 2030		144			152
Fannie Mae, Series 2001-25, Class ZA, 6.50% 2031		5,600			5,835
Fannie Mae 7.50% 2031		366			385
Fannie Mae 7.50% 2031		40			42
Fannie Mae, Series 2001-20, Class E, 9.625% 20311		85			95
Fannie Mae, Series 2001-20, Class C, 12.049% 20311		88			100
Fannie Mae 6.50% 2032		593			616
Fannie Mae 5.50% 2033		32,551			33,481
Fannie Mae 6.50% 2034		882			915
Fannie Mae 4.569% 20351		12,120			12,228
Fannie Mae 5.50% 2035		41,779			42,939
Fannie Mae, Series 2005-68, Class PG, 5.50% 2035		6,511			6,679
Fannie Mae 6.50% 2035		10,480			10,945
Fannie Mae, Series 2006-51, Class PO, principal only, 0% 20363		9,137			7,190
Fannie Mae, Series 2006-32, Class OA, principal only, 0% 2036		8,257			6,833
Fannie Mae, Series 2006-96, Class OP, principal only, 0% 2036		1,924			1,557
Fannie Mae 5.00% 2036		130,319			133,328
Fannie Mae 5.00% 2036		54,683			55,946
Fannie Mae, Series 2006-101, Class PC, 5.50% 2036		8,188			8,306
Fannie Mae 6.00% 2036		40,473			41,746
Fannie Mae 6.00% 2036		30,511			31,471
Fannie Mae, Series 2006-106, Class HG, 6.00% 2036		21,428			22,095
Fannie Mae, Series 2006-43, Class PX, 6.00% 2036		19,187			19,792
Fannie Mae 6.00% 2036		11,906			12,280
Fannie Mae 6.50% 2036		9,136			9,544
Fannie Mae 6.50% 2036		5,050			5,163
Fannie Mae 7.00% 2036		4,146			4,266
Fannie Mae 7.00% 2036		1,862			1,955
Fannie Mae 7.00% 2036		1,741			1,827
Fannie Mae 7.00% 2036		1,183			1,218
Fannie Mae 7.50% 2036		1,722			1,773
Fannie Mae 7.50% 2036		911			937
Fannie Mae 8.00% 2036		2,835			2,930
Fannie Mae 5.498% 20371		45,616			46,677
Fannie Mae, Series 2007-40, Class PT, 5.50% 2037		30,898			32,084
Fannie Mae 5.632% 20371		12,371			12,644
Fannie Mae 5.755% 20371		19,821			20,276
Fannie Mae 5.783% 20371		23,048			23,622
Fannie Mae 5.994% 20371		36,593			37,574
Fannie Mae 6.00% 2037		56,329			58,100
Fannie Mae 6.00% 2037		13,645			13,801
Fannie Mae 6.00% 2037		8,538			8,636
Fannie Mae 6.00% 20373		4,871			4,887
Fannie Mae, Series 2007-24, Class P, 6.00% 2037		4,395			4,544
Fannie Mae 6.00% 2037		4,130			4,260
Fannie Mae 6.018% 20371		38,194			39,156
Fannie Mae 6.122% 20371		21,511			22,129
Fannie Mae 6.423% 20371		12,606			12,995
Fannie Mae 6.50% 2037		28,096			29,254
Fannie Mae 6.50% 2037		27,461			28,078
Fannie Mae 6.50% 20373		26,683			27,025
Fannie Mae 6.50% 2037		21,320			22,185
Fannie Mae 6.50% 2037		21,357			21,837
Fannie Mae 6.50% 2037		15,414			15,760
Fannie Mae 6.50% 2037		14,436			15,022
Fannie Mae 6.50% 2037		13,482			14,030
Fannie Mae 6.50% 2037		13,281			13,820
Fannie Mae 6.50% 2037		11,567			12,036
Fannie Mae 6.50% 2037		10,289			10,520
Fannie Mae 6.50% 20373		9,774			9,889
Fannie Mae 6.50% 2037		9,137			9,508
Fannie Mae 6.50% 2037		8,244			8,579
Fannie Mae 6.50% 2037		1,457			1,516
Fannie Mae 6.50% 2037		1,313			1,366
Fannie Mae 6.714% 20371		15,483			15,967
Fannie Mae 6.78% 20371		1,517			1,564
Fannie Mae 7.00% 2037		75,110			78,778
Fannie Mae 7.00% 2037		36,991			38,058
Fannie Mae 7.00% 2037		23,041			24,166
Fannie Mae 7.00% 2037		14,275			14,687
Fannie Mae 7.00% 2037		14,148			14,555
Fannie Mae 7.00% 2037		12,479			12,839
Fannie Mae 7.00% 2037		12,283			12,637
Fannie Mae 7.00% 20373		11,931			12,110
Fannie Mae 7.00% 2037		10,242			10,743
Fannie Mae 7.00% 2037		9,075			9,337
Fannie Mae 7.00% 2037		7,534			7,751
Fannie Mae 7.00% 2037		6,949			7,150
Fannie Mae 7.00% 2037		6,464			6,651
Fannie Mae 7.00% 2037		5,527			5,687
Fannie Mae 7.00% 2037		5,011			5,155
Fannie Mae 7.00% 2037		3,963			4,077
Fannie Mae 7.00% 2037		2,462			2,533
Fannie Mae 7.00% 2037		1,796			1,886
Fannie Mae 7.00% 2037		1,774			1,864
Fannie Mae 7.00% 2037		1,676			1,724
Fannie Mae 7.00% 2037		1,604			1,650
Fannie Mae 7.00% 2037		1,135			1,190
Fannie Mae 7.00% 2037		1,095			1,127
Fannie Mae 7.00% 2037		829			870
Fannie Mae 7.50% 2037		7,956			8,349
Fannie Mae 7.50% 2037		4,051			4,170
Fannie Mae 7.50% 20373		4,018			4,069
Fannie Mae 7.50% 2037		3,904			4,018
Fannie Mae 7.50% 2037		3,433			3,534
Fannie Mae 7.50% 2037		2,294			2,361
Fannie Mae 7.50% 2037		2,270			2,337
Fannie Mae 7.50% 2037		2,085			2,146
Fannie Mae 7.50% 2037		1,976			2,034
Fannie Mae 7.50% 2037		1,953			2,010
Fannie Mae 7.50% 2037		1,564			1,610
Fannie Mae 7.50% 2037		1,528			1,573
Fannie Mae 7.50% 2037		1,327			1,366
Fannie Mae 7.50% 2037		1,081			1,113
Fannie Mae 7.50% 2037		1,070			1,101
Fannie Mae 7.50% 2037		1,003			1,032
Fannie Mae 7.50% 2037		860			885
Fannie Mae 7.50% 2037		631			663
Fannie Mae 7.50% 2037		607			624
Fannie Mae 7.50% 2037		571			588
Fannie Mae 8.00% 2037		3,298			3,408
Fannie Mae 8.00% 2037		3,055			3,163
Fannie Mae 8.00% 2037		2,337			2,415
Fannie Mae 8.00% 2037		1,895			1,996
Fannie Mae 8.00% 2037		1,147			1,186
Fannie Mae 5.00% 2038		68,233			69,786
Fannie Mae 5.00% 2038		19,908			20,361
Fannie Mae 5.00% 2038		19,887			20,340
Fannie Mae 5.322% 20381		13,832			14,111
Fannie Mae 5.50% 2038		56,630			58,158
Fannie Mae 5.50% 2038		41,133			42,243
Fannie Mae 5.50% 2038		24,517			25,187
Fannie Mae 5.50% 2038		20,905			21,470
Fannie Mae 5.50% 2038		14,988			15,392
Fannie Mae 5.50% 2038		3,880			3,987
Fannie Mae 5.553% 20381		2,985			3,038
Fannie Mae 5.744% 20381		30,976			31,810
Fannie Mae 6.00% 2038		24,950			25,762
Fannie Mae 6.00% 2038		20,389			21,031
Fannie Mae 7.00% 2038		26,239			26,995
Fannie Mae 7.00% 2038		18,498			19,401
Fannie Mae 6.00% 2039		68,500			70,571
Fannie Mae, Series 2001-T10, Class A-1, 7.00% 2041		6,151			6,476
Fannie Mae, Series 2001-50, Class BA, 7.00% 2041		1,967			2,050
Fannie Mae, Series 2002-W1, Class 2A, 7.50% 2042		4,255			4,487
Fannie Mae 6.00% 2047		1,102			1,109
Fannie Mae 6.50% 2047		1,382			1,415
Fannie Mae 6.50% 2047		1,350			1,383
Fannie Mae 6.50% 2047		854			870
Fannie Mae 7.00% 2047		7,197			7,377
Fannie Mae 7.00% 2047		523			536
Fannie Mae 7.50% 2047		1,743			1,788
Fannie Mae 7.50% 2047		1,026			1,052
Fannie Mae 7.50% 2047		1,010			1,035
Freddie Mac 8.50% 2009		10			10
Freddie Mac 8.50% 2010		16			16
Freddie Mac 6.00% 2017		411			428
Freddie Mac, Series 2310, Class A, 10.543% 20171		356			392
Freddie Mac 11.00% 2018		52			58
Freddie Mac, Series 2890, Class KT, 4.50% 2019		2,500			2,440
Freddie Mac 5.50% 2019		9,152			9,473
Freddie Mac 8.50% 2020		129			137
Freddie Mac 8.50% 2020		45			48
Freddie Mac, Series 41, Class F, 10.00% 2020		94			95
Freddie Mac, Series 178, Class Z, 9.25% 20213		72			75
Freddie Mac, Series 2626, Class NG, 3.50% 2023		1,895			1,837
Freddie Mac, Series 2922, Class EL, 4.50% 2023		39,649			40,213
Freddie Mac 5.00% 2023		44,639			45,943
Freddie Mac 5.00% 2023		43,135			44,395
Freddie Mac 5.00% 2023		14,310			14,728
Freddie Mac 5.00% 2023		4,727			4,865
Freddie Mac 5.00% 2023		2,584			2,660
Freddie Mac 5.00% 2023		256			264
Freddie Mac 5.50% 2023		41,002			42,337
Freddie Mac 5.50% 2023		11,718			12,100
Freddie Mac 5.50% 2023		10,459			10,800
Freddie Mac 5.50% 2023		9,097			9,393
Freddie Mac 5.50% 2023		3,663			3,782
Freddie Mac 5.50% 2023		2,847			2,940
Freddie Mac 5.50% 2023		938			968
Freddie Mac, Series 1617, Class PM, 6.50% 2023		2,040			2,130
Freddie Mac 6.00% 2026		31,700			32,773
Freddie Mac 6.00% 2026		24,217			25,037
Freddie Mac 8.00% 2026		91			96
Freddie Mac 5.50% 2027		15,773			16,198
Freddie Mac 6.00% 2027		179,349			185,423
Freddie Mac 8.50% 2027		22			23
Freddie Mac, Series 2153, Class GG, 6.00% 2029		3,628			3,768
Freddie Mac, Series 2122, Class QM, 6.25% 2029		6,220			6,429
Freddie Mac 4.635% 20351		14,814			14,961
Freddie Mac, Series 3061, Class PN, 5.50% 2035		47,136			48,607
Freddie Mac 6.50% 20353		336			335
Freddie Mac, Series 3136, Class OP, principal only, 0% 2036		8,091			6,853
Freddie Mac, Series 3149, Class MO, principal only, 0% 2036		5,796			4,951
Freddie Mac, Series 3147, Class OD, principal only, 0% 2036		5,722			4,899
Freddie Mac, Series 3149, Class AO, principal only, 0% 2036		5,080			4,340
Freddie Mac 5.00% 2036		59,652			60,906
Freddie Mac, Series 3257, Class PA, 5.50% 2036		50,765			52,313
Freddie Mac 5.602% 20361		4,959			5,063
Freddie Mac 5.862% 20361		21,805			22,328
Freddie Mac, Series 3233, Class PA, 6.00% 2036		41,067			42,523
Freddie Mac, Series 3156, Class NG, 6.00% 2036		13,174			13,615
Freddie Mac, Series 3286, Class JN, 5.50% 2037		65,506			67,040
Freddie Mac, Series 3318, Class JT, 5.50% 2037		36,337			37,188
Freddie Mac 5.50% 2037		35,152			36,021
Freddie Mac 5.50% 2037		30,721			31,481
Freddie Mac, Series 3312, Class PA, 5.50% 2037		27,671			28,281
Freddie Mac 5.631% 20371		17,166			17,526
Freddie Mac 5.668% 20371		7,994			8,144
Freddie Mac 5.979% 20371		28,398			29,080
Freddie Mac, Series 3271, Class OA, 6.00% 2037		17,404			18,040
Freddie Mac 6.00% 2037		3,311			3,415
Freddie Mac 6.032% 20371		21,892			22,534
Freddie Mac 6.049% 20371		13,218			13,520
Freddie Mac 6.207% 20371		18,303			18,492
Freddie Mac 6.258% 20371		30,730			31,494
Freddie Mac 6.267% 20371		3,776			3,873
Freddie Mac 7.00% 2037		23,395			23,891
Freddie Mac 7.00% 2037		2,566			2,620
Freddie Mac 7.00% 2037		2,364			2,414
Freddie Mac 7.00% 2037		1,936			1,977
Freddie Mac 7.00% 20373		941			937
Freddie Mac 7.00% 20373		906			902
Freddie Mac 7.00% 20373		794			790
Freddie Mac 7.50% 2037		25,682			26,241
Freddie Mac 4.816% 20381		14,851			14,965
Freddie Mac 5.00% 2038		69,767			71,211
Freddie Mac 5.00% 2038		53,493			54,600
Freddie Mac 5.00% 2038		45,187			46,123
Freddie Mac 5.00% 2038		39,716			40,538
Freddie Mac 5.00% 2038		33,256			34,027
Freddie Mac 5.00% 2038		22,409			22,873
Freddie Mac 5.00% 2038		22,167			22,626
Freddie Mac 5.00% 2038		9,937			10,143
Freddie Mac 5.054% 20381		9,964			10,065
Freddie Mac 5.132% 20381		1,997			2,023
Freddie Mac 5.50% 2038		66,970			68,626
Freddie Mac 5.50% 2038		49,419			50,642
Freddie Mac 5.50% 2038		35,623			36,504
Freddie Mac 5.50% 2038		29,975			30,716
Freddie Mac 5.50% 2038		24,850			24,843
Freddie Mac 5.608% 20381		35,634			36,423
Freddie Mac 6.00% 2038		207,595			214,124
Freddie Mac 6.50% 2047		2,732			2,783
Freddie Mac 6.50% 2047		1,097			1,117
Freddie Mac 7.00% 2047		1,009			1,027
Freddie Mac 7.00% 2047		705			717
Government National Mortgage Assn. 6.50% 2009		1			1
Government National Mortgage Assn. 7.50% 2009		6			6
Government National Mortgage Assn. 7.50% 2009		3			3
Government National Mortgage Assn. 7.50% 2009		2			2
Government National Mortgage Assn. 7.50% 2009		1			1
Government National Mortgage Assn. 7.50% 2009		1			1
Government National Mortgage Assn. 7.50% 2009		1			1
Government National Mortgage Assn. 7.50% 2009		—			—
Government National Mortgage Assn. 9.00% 2009		4			4
Government National Mortgage Assn. 9.50% 2009		49			49
Government National Mortgage Assn. 9.50% 20093		4			4
Government National Mortgage Assn. 9.00% 2016		76			83
Government National Mortgage Assn. 9.00% 2017		20			22
Government National Mortgage Assn. 9.50% 2019		162			183
Government National Mortgage Assn. 8.50% 2020		27			30
Government National Mortgage Assn. 8.50% 2020		9			9
Government National Mortgage Assn. 9.50% 2020		66			75
Government National Mortgage Assn. 10.00% 2020		506			581
Government National Mortgage Assn. 8.50% 2021		161			177
Government National Mortgage Assn. 8.50% 2021		104			114
Government National Mortgage Assn. 8.50% 2021		33			36
Government National Mortgage Assn. 8.50% 2021		32			35
Government National Mortgage Assn. 10.00% 2021		919			1,037
Government National Mortgage Assn. 9.00% 2022		23			26
Government National Mortgage Assn. 8.50% 2023		24			26
Government National Mortgage Assn. 8.50% 2024		14			15
Government National Mortgage Assn. 8.50% 2024		7			7
Government National Mortgage Assn. 8.50% 2027		29			32
Government National Mortgage Assn. 8.50% 2028		23			25
Government National Mortgage Assn. 8.50% 2029		27			30
Government National Mortgage Assn., Series 2005-58, Class NO, principal only, 0% 2035		5,060			4,041
Government National Mortgage Assn. 6.00% 2038		175,944			181,896
Government National Mortgage Assn. 6.50% 2038		30,936			32,269
Government National Mortgage Assn., Series 2003, Class A, 5.612% 20583		10,515			10,725
					4,770,781

COMMERCIAL MORTGAGE-BACKED SECURITIES6 — 5.60%
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2001-CIBC1, Class A-3, 6.26% 2033		3,744			3,614
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2002-C2, Class F, 5.981% 20341,2		2,500			1,230
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2002-C3, Class A-1, 4.20% 2035		681			654
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2004-CBX, Class A-5, 4.654% 2037		2,500			1,957
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2005-CIBC11, Class A-2, 5.016% 2037		11,232			10,611
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2005-CIBC12, Class A-3B, 5.317% 20371		61,300			50,773
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2002-C1, Class E, 6.135% 20372		400			228
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2003-ML1, Class A-1, 3.972% 2039		6,076			5,574
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2004-C3, Class A-3, 4.545% 2042		21,050			17,171
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2005-LDP2, Class A-2, 4.575% 2042		20,058			17,721
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2005-LDP4, Class A-2, 4.79% 2042		9,692			8,859
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2005-LDP4, Class A-3A1, 4.871% 2042		25,000			21,267
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2005-LDP3, Class A-4A, 4.936% 20421		1,655			1,305
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2005-LDP5, Class A-2, 5.198% 2044		10,080			9,045
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2006-CIBC14, Class A-4, 5.481% 20441		21,259			16,134
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2006-LDP7, Class A-4, 5.875% 20451		29,000			22,842
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2005-LDP1, Class A-2, 4.625% 2046		91,455			86,337
CS First Boston Mortgage Securities Corp., Series 2001-CKN5, Class A-4, 5.435% 2034		1,215			1,126
CS First Boston Mortgage Securities Corp., Series 2001-CF2, Class A-4, 6.505% 2034		446			433
CS First Boston Mortgage Securities Corp., Series 2001-CK3, Class A-4, 6.53% 2034		2,475			2,422
CS First Boston Mortgage Securities Corp., Series 2002-CP5, Class A-1, 4.106% 2035		594			553
CS First Boston Mortgage Securities Corp., Series 2001-CK1, Class A-3, 6.38% 2035		43,386			42,026
CS First Boston Mortgage Securities Corp., Series 2002-CKP1, Class F, 7.067% 20351,2		1,500			973
CS First Boston Mortgage Securities Corp., Series 2002-CKS4, Class G, 6.006% 20361,2		500			257
CS First Boston Mortgage Securities Corp., Series 2001-CK6, Class A-3, 6.387% 2036		30,004			28,232
CS First Boston Mortgage Securities Corp., Series 2004-C5, Class A-2, 4.183% 2037		15,423			14,751
CS First Boston Mortgage Securities Corp., Series 2004-C5, Class A-3, 4.499% 2037		12,900			10,559
CS First Boston Mortgage Securities Corp., Series 2005-C3, Class A-2, 4.512% 2037		1,690			1,559
CS First Boston Mortgage Securities Corp., Series 2005-C3, Class A-AB, 4.614% 20373		20,000			16,904
CS First Boston Mortgage Securities Corp., Series 2005-C2, Class A-MFX, 4.877% 2037		10,000			5,970
CS First Boston Mortgage Securities Corp., Series 2004-C1, Class E, 5.015% 20372		8,240			2,818
CS First Boston Mortgage Securities Corp., Series 2002-CKN2, Class A-3, 6.133% 2037		13,000			12,397
CS First Boston Mortgage Securities Corp., Series 2003-C3, Class F, 4.518% 20382		2,000			902
CS First Boston Mortgage Securities Corp., Series 2005-C1, Class A-3, 4.813% 2038		20,710			16,833
CS First Boston Mortgage Securities Corp., Series 2005-C4, Class A-2, 5.017% 2038		12,200			11,004
CS First Boston Mortgage Securities Corp., Series 2005-C5, Class A-AB, 5.10% 20381		12,000			10,294
CS First Boston Mortgage Securities Corp., Series 2004-C4, Class A-4, 4.283% 2039		20,600			16,975
CS First Boston Mortgage Securities Corp., Series 2006-C1, Class A-3, 5.552% 20391		14,750			11,005
CS First Boston Mortgage Securities Corp., Series 2006-C2, Class A-3, 5.658% 20391		7,305			5,969
CS First Boston Mortgage Securities Corp., Series 2005-C6, Class A-3, 5.23% 20401		42,000			32,775
CS First Boston Mortgage Securities Corp., Series 2005-C6, Class A-M, 5.23% 20401		5,000			2,919
CS First Boston Mortgage Securities Corp., Series 1999-C1, Class D, 7.946% 20411		850			827
Bear Stearns Commercial Mortgage Securities Inc., Series 1999-WF2, Class X, interest only, 0.369% 20311		139,452			1,443
Bear Stearns Commercial Mortgage Securities Inc., Series 1999-C1, Class X, interest only, 1.119% 20311,2		65,643			711
Bear Stearns Commercial Mortgage Securities Inc., Series 2000-WF2, Class A-2, 7.32% 2032		16,338			16,285
Bear Stearns Commercial Mortgage Securities Inc., Series 2002-PBW1, Class A-1, 3.97% 2035		9,941			9,651
Bear Stearns Commercial Mortgage Securities Inc., Series 2001-TOP2, Class D, 6.94% 20352		3,000			2,939
Bear Stearns Commercial Mortgage Securities Inc., Series 2004-PWR6, Class A-4, 4.521% 2041		10,000			8,054
Bear Stearns Commercial Mortgage Securities Inc., Series 2005-PWR9, Class A-2, 4.735% 2042		64,000			58,093
Bear Stearns Commercial Mortgage Securities Inc., Series 2005-PWR9, Class A-3, 4.868% 2042		38,825			30,752
Fannie Mae, Series 2000-T5, Class B, 7.30% 2010		57,100			60,839
Fannie Mae, Series 2001-T6B, 6.088% 2011		48,000			51,780
Wachovia Bank Commercial Mortgage Trust, Series 2003-C9, Class A-3, 4.608% 2035		2,431			2,223
Wachovia Bank Commercial Mortgage Trust, Series 2004-C14, Class A-2, 4.368% 2041		1,530			1,457
Wachovia Bank Commercial Mortgage Trust, Series 2005-C17, Class A-2, 4.782% 2042		21,443			20,147
Wachovia Bank Commercial Mortgage Trust, Series 2005-C18, Class A-PB, 4.807% 2042		3,000			2,597
Wachovia Bank Commercial Mortgage Trust, Series 2005-C17, Class A-4, 5.083% 20421		35,000			28,458
Wachovia Bank Commercial Mortgage Trust, Series 2005-C20, Class A-7, 5.118% 20421		4,650			3,714
Wachovia Bank Commercial Mortgage Trust, Series 2005-C22, Class A-2, 5.242% 2044		17,000			15,098
Wachovia Bank Commercial Mortgage Trust, Series 2005-C22, Class A-4, 5.265% 20441		15,350			12,343
Wachovia Bank Commercial Mortgage Trust, Series 2005-C22, Class A-PB, 5.27% 20441		8,038			6,827
Wachovia Bank Commercial Mortgage Trust, Series 2006-C23, Class A-PB, 5.446% 2045		16,750			13,851
SBA CMBS Trust, Series 2005-1, Class A, 5.369% 20352,3		33,000			26,400
SBA CMBS Trust, Series 2005-1, Class B, 5.565% 20352,3		3,300			2,376
SBA CMBS Trust, Series 2005-1, Class E, 6.706% 20352,3		7,460			4,476
SBA CMBS Trust, Series 2006-1A, Class A, 5.314% 20362,3		48,500			38,800
SBA CMBS Trust, Series 2006-1A, Class B, 5.451% 20362,3		14,180			10,919
SBA CMBS Trust, Series 2006-1A, Class D, 5.852% 20362		12,329			8,754
SBA CMBS Trust, Series 2006-1A, Class E, 6.174% 20362		4,025			2,777
SBA CMBS Trust, Series 2006-1A, Class F, 6.709% 20362,3		375			255
SBA CMBS Trust, Series 2006-1A, Class G, 6.904% 20362,3		3,375			2,261
SBA CMBS Trust, Series 2006-1A, Class H, 7.389% 20362,3		5,040			3,326
SBA CMBS Trust, Series 2006-1A, Class J, 7.825% 20362,3		2,375			1,544
Crown Castle Towers LLC, Series 2005-1, Class A-FX, 4.643% 20352		36,000			30,600
Crown Castle Towers LLC, Series 2005-1, Class C, 5.074% 20352		43,000			30,324
Crown Castle Towers LLC, Series 2006-1, Class E, 6.065% 20362,3		31,000			18,395
Crown Castle Towers LLC, Series 2006-1, Class F, 6.650% 20362,3		10,350			5,922
Crown Castle Towers LLC, Series 2006-1, Class G, 6.795% 20362,3		1,400			762
American Tower Trust I, Series 2007-1A, Class A-FX, 5.42% 20372		33,100			27,188
American Tower Trust I, Series 2007-1A, Class B, 5.537% 20372,3		10,000			7,581
American Tower Trust I, Series 2007-1A, Class C, 5.615% 20372		10,000			6,712
American Tower Trust I, Series 2007-1A, Class D, 5.957% 20372,3		36,415			21,849
American Tower Trust I, Series 2007-1A, Class E, 6.249% 20372,3		11,375			6,260
American Tower Trust I, Series 2007-1A, Class F, 6.639% 20372,3		13,470			7,039
Banc of America Commercial Mortgage Inc., Series 2001-1, Class A-2, 6.503% 2036		48,616			47,768
Banc of America Commercial Mortgage Inc., Series 2004-5, Class A-3, 4.561% 2041		9,975			8,206
Banc of America Commercial Mortgage Inc., Series 2004-5, Class A-AB, 4.673% 2041		2,000			1,780
Banc of America Commercial Mortgage Inc., Series 2004-4, Class B, 4.985% 2042		1,000			388
Banc of America Commercial Mortgage Inc., Series 2005-1, Class A-4, 4.988% 20421		15,360			12,792
Banc of America Commercial Mortgage Inc., Series 2005-3, Class A-2, 4.501% 2043		1,260			1,074
Banc of America Commercial Mortgage Inc., Series 2005-5, Class A-4, 5.115% 20451		2,500			1,989
Structured Products Asset Return Certificates Trust, Series 2001-CF1, Class A, 6.36% 20333		47,208			44,920
J.P. Morgan Chase Commercial Mortgage Securities Trust, Series 2006-LDP6, Class A-4, 5.475% 20431		51,820			40,464
J.P. Morgan Chase Commercial Mortgage Securities Trust, Series 2006-LDP7, Class A-M, 5.875% 20451		7,645			3,962
GE Commercial Mortgage Corp., Series 2004-C3, Class B, 5.115% 20391		8,000			3,994
GE Commercial Mortgage Corp., Series 2004-C2, Class B, 4.983% 2040		19,193			9,690
GE Commercial Mortgage Corp., Series 2006-C1, Class A-4, 5.338% 20441		33,700			25,166
Commercial Mortgage Trust, Series 2000-C1, Class A-2, 7.416% 2033		2,552			2,553
Commercial Mortgage Trust, Series 2004-LB3A, Class A-4, 5.234% 2037		10,956			9,617
Commercial Mortgage Trust, Series 2003-LNB1, Class A-2, 4.084% 2038		20,000			17,248
Commercial Mortgage Trust, Series 2004-LNB2, Class A-3, 4.221% 2039		9,955			9,313
GMAC Commercial Mortgage Securities, Inc., Series 1997-C1, Class F, 7.222% 2029		1,647			1,636
GMAC Commercial Mortgage Securities, Inc., Series 2001-C1, Class A-2, 6.465% 2034		29,031			28,005
GMAC Commercial Mortgage Securities, Inc., Series 2003-C1, Class F, 4.718% 20361,2		1,000			472
GMAC Commercial Mortgage Securities, Inc., Series 2003-C1, Class G, 4.817% 20361,2		1,000			460
GMAC Commercial Mortgage Securities, Inc., Series 2004-C3, Class A-3, 4.207% 2041		8,000			7,770
Tower Ventures, LLC, Series 2006-1, Class A-2, 5.45% 20362,3		22,500			19,290
Tower Ventures, LLC, Series 2006-1, Class C, 5.707% 20362		3,670			2,752
Tower Ventures, LLC, Series 2006-1, Class D, 6.052% 20362,3		10,000			7,000
Tower Ventures, LLC, Series 2006-1, Class E, 6.495% 20362,3		4,730			3,216
Tower Ventures, LLC, Series 2006-1, Class F, 7.036% 20362,3		8,730			5,762
Greenwich Capital Commercial Funding Corp., Series 2003-C1, Class A-2, 3.285% 2035		2,107			1,937
Greenwich Capital Commercial Funding Corp., Series 2005-GG5, Class A-2, 5.117% 2037		13,045			11,664
Greenwich Capital Commercial Funding Corp., Series 2005-GG5, Class A-5, 5.224% 20371		11,000			8,816
Greenwich Capital Commercial Funding Corp., Series 2005-GG5, Class A-4-1, 5.243% 20371		15,000			13,592
L.A. Arena Funding, LLC, Series 1, Class A, 7.656% 20262		40,324			35,402
Merrill Lynch Mortgage Trust, Series 2005-CKI1, Class AM, 5.242% 20371		4,620			2,769
Merrill Lynch Mortgage Trust, Series 2005-CIP1, Class A-3-A, 4.949% 20381		8,500			6,712
Merrill Lynch Mortgage Trust, Series 2006-C1, Class A-3, 5.657% 20391		3,050			2,336
Merrill Lynch Mortgage Trust, Series 2004-BPC1, Class A-5, 4.855% 20411		6,805			5,115
Merrill Lynch Mortgage Trust, Series 2005-MCP1, Class A-4, 4.747% 20431		5,065			3,996
Merrill Lynch Mortgage Trust, Series 2005-MCP1, Class AM, 4.805% 20431		6,300			3,725
Merrill Lynch Mortgage Trust, Series 2006-C2, Class A-4, 5.742% 20431		10,250			8,275
GS Mortgage Securities Corp. II, Series 1998-C1, Class E, 7.19% 20301		31,076			30,964
GS Mortgage Securities Corp. II, Series 1998-C1, Class D, 15.51% 20301		733			731
ML-CFC Commercial Mortgage Trust, Series 2006-4, Class A-3, 5.172% 20491		41,210			30,242
Salomon Brothers Commercial Mortgage Trust, Series 2000-C3, Class A-2, 6.592% 2033		19,248			18,912
Salomon Brothers Commercial Mortgage Trust, Series 2001-C1, Class A-3, 6.428% 2035		7,372			7,218
Salomon Brothers Commercial Mortgage Trust, Series 2001-C2, Class A-3, 6.499% 2036		2,335			2,211
Chase Manhattan Bank - First Union National Bank, Commercial Mortgage Trust, Series 1999-1, Class A-2, 7.439% 2031		4,327			4,318
Chase Manhattan Bank - First Union National Bank, Commercial Mortgage Trust, Series 1999-1, Class B, 7.619% 2031		17,125			17,108
Chase Manhattan Bank - First Union National Bank, Commercial Mortgage Trust, Series 1999-1, Class C, 7.625% 2031		5,000			4,996
LB-UBS Commercial Mortgage Trust, Series 2000-C3, Class A-2, 7.95% 2025		13,978			14,046
LB-UBS Commercial Mortgage Trust, Series 2002-C1, Class A-3, 6.226% 2026		2,230			2,214
LB-UBS Commercial Mortgage Trust, Series 2005-C7, Class A-2, 5.103% 2030		3,468			3,088
LB-UBS Commercial Mortgage Trust, Series 2005-C5, Class A-M, 5.017% 20401		10,000			5,892
GE Capital Commercial Mortgage Corp., Series 2001-1, Class A-1, 6.079% 2033		73			72
GE Capital Commercial Mortgage Corp., Series 2001-1, Class A-2, 6.531% 2033		18,090			17,706
GE Capital Commercial Mortgage Corp., Series 2002-3, Class A-2, 4.996% 2037		2,500			2,176
GE Capital Commercial Mortgage Corp., Series 2001-3, Class A-1, 5.56% 2038		1,026			1,001
GE Capital Commercial Mortgage Corp., Series 2001-3, Class A-2, 6.07% 2038		2,500			2,341
Prudential Securities Secured Financing Corp., Series 1999-NRF1, Class C, 6.746% 2031		18,000			17,946
Citigroup Commercial Mortgage Trust, Series 2006-C4, Class A-3, 5.724% 20491		15,800			12,439
COBALT CMBS Commerical Mortgage Trust, Series 2006-C1, Class A-2, 5.174% 2048		14,000			11,292
Morgan Stanley Dean Witter Capital I Trust, Series 2000-LIFE2, Class A-2, 7.20% 2033		4,447			4,151
Morgan Stanley Dean Witter Capital I Trust, Series 2001-TOP5, Class A-3, 6.16% 2035		1,788			1,778
Morgan Stanley Dean Witter Capital I Trust, Series 2003-TOP9, Class A-1, 3.98% 2036		3,600			3,372
Citigroup-Deutsche Bank Commercial Mortgage Trust, Series 2006-CD3, Class A-5, 5.617% 2048		10,000			7,617
Morgan Stanley Capital I Trust, Series 2005-HQ7, Class A-2, 5.208% 20421		7,875			6,461
Hilton Hotel Pool Trust, Series 2000-HLTA, Class F, 7.75% 20152		5,000			5,250
Chase Commercial Mortgage Securities Corp., Series 2000-1, Class A-2, 7.757% 2032		4,872			4,773
Bank of America, NA and First Union National Bank Commercial Mortgage Trust, Series 2001-3, Class A-1, 4.89% 2037		2,761			2,721
First Union National Bank Commercial Mortgage Trust, Series 2001-C4, Class A-1, 5.673% 2033		665			657
Morgan Stanley Capital I, Inc., Series 1999-FNV1, Class A-2, 6.53% 2031		359			358
DLJ Commercial Mortgage Corp., Series 1999-CG1, Class A-1B, 6.46% 2032		51			51
					1,803,315

COLLATERALIZED MORTGAGE-BACKED OBLIGATIONS (PRIVATELY ORIGINATED)6 — 5.19%
Countrywide Alternative Loan Trust, Series 2004-5CB, Class 2-A-1, 5.00% 2019		6,724			5,701
Countrywide Alternative Loan Trust, Series 2006-J3, Class 2-A-1, 4.75% 2020		10,229			7,404
Countrywide Alternative Loan Trust, Series 2005-J8, Class 2-A-1, 5.00% 2020		13,092			10,184
Countrywide Alternative Loan Trust, Series 2004-14T2, Class A-2, 5.50% 2034		16,472			11,801
Countrywide Alternative Loan Trust, Series 2005-46CB, Class A-8, 5.50% 2035		41,327			30,872
Countrywide Alternative Loan Trust, Series 2005-54CB, Class 1-A-7, 5.50% 2035		31,331			27,644
Countrywide Alternative Loan Trust, Series 2005-49CB, Class A-1, 5.50% 2035		21,232			17,143
Countrywide Alternative Loan Trust, Series 2005-40CB, Class A-1, 5.50% 2035		16,716			12,347
Countrywide Alternative Loan Trust, Series 2005-21CB, Class A-9, 5.50% 2035		9,064			7,387
Countrywide Alternative Loan Trust, Series 2005-J13, Class 2-A-4, 5.50% 2035		8,060			3,944
Countrywide Alternative Loan Trust, Series 2005-J11, Class 1-A-12, 5.50% 2035		8,000			3,536
Countrywide Alternative Loan Trust, Series 2005-J11, Class 1-A-16, 5.50% 2035		4,618			1,816
Countrywide Alternative Loan Trust, Series 2004-28CB, Class 5-A-1, 5.75% 2035		2,358			1,993
Countrywide Alternative Loan Trust, Series 2004-36CB, Class 1-A-1, 6.00% 2035		11,454			8,945
Countrywide Alternative Loan Trust, Series 2005-9CB, Class 2-A-1, 6.00% 2035		5,877			4,004
Countrywide Alternative Loan Trust, Series 2004-28CB, Class 6-A-1, 6.00% 2035		943			610
Countrywide Alternative Loan Trust, Series 2006-36T2, Class 1-A-10, 0.791% 20361		41,771			20,985
Countrywide Alternative Loan Trust, Series 2006-18CB, Class A-7, 0.821% 20361		88,592			49,408
Countrywide Alternative Loan Trust, Series 2006-24CB, Class A-1, 6.00% 2036		15,209			12,897
Countrywide Alternative Loan Trust, Series 2007-14T2, Class A-4, 0.821% 20371,3		23,741			9,971
Countrywide Alternative Loan Trust, Series 2007-5CB, Class 1-A-19, 0.921% 20371,3		81,198			36,539
Countrywide Alternative Loan Trust, Series 2007-21CB, Class 2-A-3, 0.971% 20371		31,879			13,565
Countrywide Alternative Loan Trust, Series 2007-24, Class A-10, 7.00% 2037		12,785			6,727
Countrywide Alternative Loan Trust, Series 2007-HY4, Class 4-A-1, 5.93% 20471		41,948			19,996
CS First Boston Mortgage Securities Corp., Series 2003-23, Class II-A-8, 4.50% 2018		10,880			9,866
CS First Boston Mortgage Securities Corp., Series 2003-27, Class VI-A-1, 5.00% 2018		7,759			6,984
CS First Boston Mortgage Securities Corp., Series 2003-23, Class VII-A-1, 5.00% 2018		3,786			3,324
CS First Boston Mortgage Securities Corp., Series 2004-6, Class II-A-1, 4.75% 2019		16,548			15,199
CS First Boston Mortgage Securities Corp., Series 2002-30, Class I-A-1, 7.50% 2032		423			322
CS First Boston Mortgage Securities Corp., Series 2002-34, Class I-A-1, 7.50% 2032		50			30
CS First Boston Mortgage Securities Corp., Series 2003-21, Class V-A-1, 6.50% 2033		3,234			2,116
CS First Boston Mortgage Securities Corp., Series 2003-29, Class V-A-1, 7.00% 2033		1,011			906
CS First Boston Mortgage Securities Corp., Series 2004-5, Class IV-A-1, 6.00% 2034		7,286			5,074
CS First Boston Mortgage Securities Corp., Series 2005-10, Class III-A-3, 5.50% 2035		11,000			3,848
CS First Boston Mortgage Securities Corp., Series 2005-5, Class IV-A-1, 6.25% 2035		5,219			3,369
CS First Boston Mortgage Securities Corp., Series 2006-2R, Class A-PO, principal only, 0% 20362		27,785			21,184
CS First Boston Mortgage Securities Corp., Series 2006-7, Class 8-A-6, 1.101% 20361		13,377			3,499
CS First Boston Mortgage Securities Corp., Series 2006-7, Class 6-A-3, 5.50% 2036		27,123			16,090
CS First Boston Mortgage Securities Corp., Series 2006-2, Class 5-A-6, 6.00% 2036		23,412			18,285
CS First Boston Mortgage Securities Corp., Series 2006-4, Class 2-A-1, 6.50% 2036		19,612			8,518
Residential Accredit Loans, Inc., Series 2003-QS16, Class A-1, 5.00% 2018		12,673			12,642
Residential Accredit Loans, Inc., Series 2004-QS16, Class 1-A-1, 5.50% 2034		7,885			5,595
Residential Accredit Loans, Inc., Series 2005-QR1, Class A, 6.00% 2034		30,340			17,490
Residential Accredit Loans, Inc., Series 2004-QS12, Class M-1, 6.00% 2034		2,344			1,402
Residential Accredit Loans, Inc., Series 2005-QS4, Class A-3, 5.50% 2035		25,500			19,112
Residential Accredit Loans, Inc., Series 2005-QS9, Class A-6, 5.50% 2035		1,000			464
Residential Accredit Loans, Inc., Series 2005-QS5, Class A-5, 5.75% 2035		3,000			2,127
Residential Accredit Loans, Inc., Series 2005-QA12, Class CB-I, 5.868% 20351		4,592			2,124
Residential Accredit Loans, Inc., Series 2005-QS15, Class II-A, 6.00% 2035		14,920			8,600
Residential Accredit Loans, Inc., Series 2006-QA1, Class A-II-1, 5.95% 20361		14,452			6,819
Residential Accredit Loans, Inc., Series 2007-QS9, Class A-33, 6.50% 2037		48,855			25,419
Residential Accredit Loans, Inc., Series 2007-QS7, Class II-A-1, 6.75% 2037		11,367			7,121
Residential Accredit Loans, Inc., Series 2007-QS11, Class A-1, 7.00% 20373		7,196			3,886
WaMu Mortgage Pass-Through Certificates Trust, Series 2003-AR7, Class A-7, 3.848% 20331		11,838			9,553
WaMu Mortgage Pass-Through Certificates Trust, Series 2003-AR6, Class A-1, 3.955% 20331		5,471			4,456
WaMu Mortgage Pass-Through Certificates Trust, Series 2003-AR8, Class A, 4.281% 20331		3,409			2,547
WaMu Mortgage Pass-Through Certificates Trust, Series 2004-AR11, Class A, 4.536% 20341		23,591			15,920
WaMu Mortgage Pass-Through Certificates Trust, Series 2006-AR12, Class 1-A4, 6.062% 20361		2,457			1,595
WaMu Mortgage Pass-Through Certificates Trust, Series 2007-HY3, Class 4-A1, 5.347% 20371		7,420			4,302
WaMu Mortgage Pass-Through Certificates Trust, Series 2007-HY5, Class 3-A1, 5.826% 20371,3		47,879			29,206
WaMu Mortgage Pass-Through Certificates Trust, Series 2007-HY7, Class 2-A1, 5.859% 20371		33,659			17,032
WaMu Mortgage Pass-Through Certificates Trust, Series 2007-HY7, Class 4-A2, 5.869% 20371		42,008			21,759
Structured Adjustable Rate Mortgage Loan Trust, Series 2005-22, Class 5-A-1, 6.001% 20351		3,371			1,935
Structured Adjustable Rate Mortgage Loan Trust, Series 2006-8, Class 3-AF, 0.851% 20361		15,060			7,557
Structured Adjustable Rate Mortgage Loan Trust, Series 2006-4, Class 6-A, 5.923% 20361		66,586			33,531
Structured Adjustable Rate Mortgage Loan Trust, Series 2006-2, Class 5-A-1, 6.00% 20361		6,543			3,054
Structured Adjustable Rate Mortgage Loan Trust, Series 2007-7, Class 1-A1, 0.771% 20371		8,860			4,086
Structured Adjustable Rate Mortgage Loan Trust, Series 2007-6, Class 3-A-1, 5.884% 20371		36,918			18,983
Structured Adjustable Rate Mortgage Loan Trust, Series 2006-12, Class 2-A1, 5.929% 20371		21,242			10,154
Structured Adjustable Rate Mortgage Loan Trust, Series 2007-8, Class 2-A3, 5.979% 20371		42,809			21,427
Structured Adjustable Rate Mortgage Loan Trust, Series 2007-9, Class 2-A1, 5.981% 20471		11,020			5,614
Wells Fargo Alternative Loan Trust, Series 2007-PA1, Class A-1, 0.791% 20371,3		57,064			25,679
Wells Fargo Alternative Loan Trust, Series 2007-PA3, Class II-A-4, 6.00% 20373		2,500			1,200
Wells Fargo Alternative Loan Trust, Series 2007-PA4, Class III-A-1, 6.077% 20371		26,435			11,493
Wells Fargo Alternative Loan Trust, Series 2007-PA3, Class III-A-1, 6.25% 2037		75,649			40,893
Wells Fargo Alternative Loan Trust, Series 2007-PA3, Class IV-A-1, 6.50% 2037		25,503			11,214
IndyMac IMSC Mortgage Loan Trust, Series 2007-F2, Class 1-A-2, 6.00% 2037		10,069			5,007
IndyMac IMSC Mortgage Loan Trust, Series 2007-F3, Class 2-A-1, 6.50% 2037		48,387			26,127
IndyMac IMSC Mortgage Loan Trust, Series 2007-F2, Class 2-A-1, 6.50% 20373		42,041			21,021
IndyMac IMSC Mortgage Loan Trust, Series 2007-F3, Class 3-A-1, 7.00% 2037		63,907			34,914
Bear Stearns ARM Trust, Series 2003-6, Class I-A-2, 4.981% 20331		9,457			6,271
Bear Stearns ARM Trust, Series 2003-3, Class III-A-1, 5.131% 20331		3,641			2,685
Bear Stearns ARM Trust, Series 2003-3, Class II-A-2, 6.011% 20331		1,747			1,306
Bear Stearns ARM Trust, Series 2004-3, Class II-A, 4.221% 20341		9,687			6,086
Bear Stearns ARM Trust, Series 2003-9, Class III-A-2, 4.955% 20341		1,796			1,192
Bear Stearns ARM Trust, Series 2005-10, Class A-3, 4.65% 20351		51,800			30,047
Bear Stearns ARM Trust, Series 2005-6, Class I-A-1, 4.87% 20351		31,946			16,993
Bear Stearns ARM Trust, Series 2007-2, Class I-A-1, 5.00% 20461		866			446
Lehman Mortgage Trust, Series 2005-1, Class 6-A1, 5.00% 2020		29,092			25,024
Lehman Mortgage Trust, Series 2005-2, Class 5-A1, 1.371% 20351		31,870			12,931
Lehman Mortgage Trust, Series 2006-7, Class 2-A1, 0.921% 20361,3		12,359			5,314
Lehman Mortgage Trust, Series 2007-8, Class 3-A1, 7.25% 2037		29,015			19,516
GSR Mortgage Loan Trust, Series 2004-2F, Class XIIIA-1, 5.00% 2019		4,598			4,185
GSR Mortgage Loan Trust, Series 2004-15F, Class 5A-1, 5.50% 2020		30,860			28,151
GSR Mortgage Loan Trust, Series 2005-AR1, Class 2-A-1, 4.911% 20351		9,840			5,783
GSR Mortgage Loan Trust, Series 2006-2F, Class 3A-4, 6.00% 2036		11,543			9,076
CHL Mortgage Pass-Through Trust, Series 2003-27, Class A-1, 4.672% 20331		2,664			2,047
CHL Mortgage Pass-Through Trust, Series 2003-HYB3, Class 4-A-1, 4.91% 20331		1,355			916
CHL Mortgage Pass-Through Trust, Series 2004-22, Class A-2, 4.622% 20341		6,797			4,269
CHL Mortgage Pass-Through Trust, Series 2004-HYB6, Class A-3, 5.08% 20341		2,962			1,570
CHL Mortgage Pass-Through Trust, Series 2005-HYB8, Class 4-A-1, 5.563% 20351		24,302			13,689
CHL Mortgage Pass-Through Trust, Series 2007-2, Class A-16, 6.00% 2037		20,000			10,648
CHL Mortgage Pass-Through Trust, Series 2007-HY5, Class 1-A-1, 5.93% 20471		8,727			4,579
CHL Mortgage Pass-Through Trust, Series 2007-HY4, Class 1-A-1, 6.086% 20471		17,595			9,360
ChaseFlex Trust, Series 2007-M1, Class 2-AV2, 0.701% 20371		71,622			44,598
Wells Fargo Mortgage-backed Securities Trust, Series 2003-11, Class II-A-1, 4.75% 2018		9,415			8,554
Wells Fargo Mortgage-backed Securities Trust, Series 2004-2, Class A-1, 5.00% 2019		5,044			4,591
Wells Fargo Mortgage-backed Securities Trust, Series 2006-AR19, Class A-6, 5.629% 20361		10,000			5,565
Wells Fargo Mortgage-backed Securities Trust, Series 2006-AR15, Class A-1, 5.665% 20361		26,187			18,397
Wells Fargo Mortgage-backed Securities Trust, Series 2007-10, Class I-A-1, 6.00% 2037		5,728			3,795
Citigroup Mortgage Loan Trust, Inc., Series 2003-UST1, Class A-3, 5.00% 2018		11,799			10,739
Citigroup Mortgage Loan Trust, Inc., Series 2005-8, Class I-A4A, 5.572% 20351,3		29,791			16,197
Citigroup Mortgage Loan Trust, Inc., Series 2007-AR5, Class 1-A2A, 5.607% 20371		7,036			3,916
Residential Asset Securitization Trust, Series 2004-A6, Class A-1, 5.00% 2019		9,015			7,014
Residential Asset Securitization Trust, Series 2005-A7, Class A-5, 5.50% 2035		5,338			2,074
Residential Asset Securitization Trust, Series 2005-A8CB, Class A-11, 6.00% 2035		14,669			9,409
Residential Asset Securitization Trust, Series 2006-A8, Class 1-A-2, 0.771% 20361		10,696			5,732
Residential Asset Securitization Trust, Series 2006-A8, Class 3-A-11, 6.00% 2036		3,853			1,580
Morgan Stanley Mortgage Loan Trust, Series 2004-3, Class 4-A, 5.68% 20341		5,407			5,012
Morgan Stanley Mortgage Loan Trust, Series 2004-3, Class 3-A, 6.00% 2034		2,319			1,858
Morgan Stanley Mortgage Loan Trust, Series 2005-6AR, Class 3-A-1, 5.562% 20351		20,515			9,479
Morgan Stanley Mortgage Loan Trust, Series 2006-2, Class 5-A-3, 5.50% 2036		19,140			7,771
CitiMortgage Alternative Loan Trust, Series 2006-A1, Class IA-3, 5.75% 2036		10,000			5,342
CitiMortgage Alternative Loan Trust, Series 2006-A7, Class IA-1, 6.00% 2036		15,000			9,317
CitiMortgage Alternative Loan Trust, Series 2007-A3, Class IA-1, 6.00% 2037		15,000			8,153
IndyMac INDX Mortgage Loan Trust, Series 2006-AR5, Class 2-A-1, 5.762% 20361		25,227			12,400
IndyMac INDX Mortgage Loan Trust, Series 2006-AR25, Class 3-A-1, 6.253% 20361		20,459			9,632
Banc of America Funding Trust, Series 2005-H, Class 9-A-1, 5.938% 20351		23,457			11,401
Banc of America Funding Trust, Series 2007-1, Class T-A-5, 6.09% 20371		13,249			9,380
TBW Mortgage-Backed Trust, Series 2006-1, Class 6-A-1, 6.50% 2036		16,530			7,519
TBW Mortgage-backed Trust, Series 2007-2, Class A-4-B, 0.891% 20371		22,000			12,651
MASTR Alternative Loan Trust, Series 2004-10, Class 2-A-1, 5.50% 2019		4,193			3,569
MASTR Alternative Loan Trust, Series 2003-2, Class 6-A-1, 6.00% 2033		551			441
MASTR Alternative Loan Trust, Series 2004-2, Class 2-A-1, 6.00% 2034		1,065			800
MASTR Alternative Loan Trust, Series 2005-1, Class 1-A-1, 5.50% 2035		13,433			9,569
MASTR Alternative Loan Trust, Series 2005-3, Class 1-A-1, 5.50% 2035		3,379			2,368
MASTR Alternative Loan Trust, Series 2005-3, Class 2-A-1, 6.00% 2035		4,231			2,882
MASTR Alternative Loan Trust, Series 2005-3, Class 3-A-1, 6.50% 2035		414			286
SunTrust Alternative Loan Trust, Series 2005-1F, Class 3-A-1, 6.50% 2035		24,349			12,524
SunTrust Alternative Loan Trust, Series 2005-1F, Class 4-A-1, 6.50% 2035		15,556			6,368
Thornburg Mortgage Securities Trust, Series 2006-5, Class A-1, 0.591% 20461		23,548			18,730
Bear Stearns Asset-backed Securities I Trust, Series 2005-AC8, Class A-4, 5.50% 2035		10,212			8,313
Bear Stearns Asset-backed Securities I Trust, Series 2006-AC2, Class II-1A-1, 6.00% 2036		13,433			8,291
American Home Mortgage Assets Trust, Series 2007-3, Class II-2A-1, 6.25% 20371		32,622			14,741
J.P. Morgan Alternative Loan Trust, Series 2006-A1, Class 2-A-1, 5.802% 20361		17,602			8,396
J.P. Morgan Alternative Loan Trust, Series 2006-A2, Class 5-A-1, 6.296% 20361		12,799			6,095
Structured Asset Securities Corp., Series 2003-20, Class 2-A-4, 4.50% 2018		4,317			3,929
Structured Asset Securities Corp., Series 1998-RF2, Class A, 8.461% 20271,2		4,544			4,538
Structured Asset Securities Corp., Series 1998-RF1, Class A, 8.641% 20271,2		1,681			1,680
Structured Asset Securities Corp., Series 1999-RF1, Class A, 7.805% 20281,2		1,085			1,148
Structured Asset Securities Corp., Series 2003-17A, Class 3-A-1, 6.629% 20331		457			368
Structured Asset Securities Corp., Series 2005-6, Class 5-A-9, 5.00% 2035		2,180			1,720
Adjustable Rate Mortgage Trust, Series 2006-1, Class 3-A-3, 5.882% 20361		18,562			12,676
J.P. Morgan Mortgage Trust, Series 2006-A3, Class 3-A-3, 5.734% 20361		4,000			2,004
J.P. Morgan Mortgage Trust, Series 2006-A7, Class 2-A-4, 5.793% 20371		21,750			9,976
Banc of America Mortgage Securities Trust, Series 2003-I, Class 3-A-1, 4.528% 20331		6,605			4,736
Banc of America Mortgage Securities Trust, Series 2003-F, Class 2-A-1, 4.67% 20331		8,749			6,363
Bear Stearns ALT-A Trust, Series 2006-2, Class II-4-A-1, 5.903% 20361		24,421			10,917
CSAB Mortgage-backed Trust, Series 2007-1, Class 4-A-8, 7.00% 2037		21,115			9,957
BCAP LLC Trust, Series 2006-AA2, Class A-1, 0.641% 20371		21,756			8,929
First Horizon Alternative Mortgage Securities Trust, Series 2005-FA8, Class I-A-14, 5.50% 2035		9,249			7,585
Banc of America Alternative Loan Trust, Series 2005-6, Class 2-CB-2, 6.00% 2035		12,779			7,367
GSAA Home Equity Trust, Series 2007-10, Class A-1A, 6.00% 2037		13,700			7,144
First Horizon Mortgage Pass-Through Trust, Series 2003-5, Class II-A-2, 5.00% 2018		8,117			6,961
American General Mortgage Loan Trust, Series 2006-1, Class A-5, 5.75% 20351,2		8,500			6,779
GMAC Mortgage Loan Trust, Series 2006-AR1, Class 2-A-1, 5.63% 20361		10,142			6,354
Residential Funding Mortgage Securities I, Inc., Series 2006-S11, Class A-4, 6.00% 2036		7,393			5,539
Washington Mutual Mortgage, WMALT Series 2005-1, Class 6-A-1, 6.50% 2035		1,148			793
Washington Mutual Mortgage, WMALT Series 2006-2, Class 1-A-3, 6.00% 2036		12,000			3,994
Sequoia Mortgage Trust, Series 2007-1, Class 4-A1, 5.782% 20461		5,807			3,795
Banc of America Mortgage Securities, Inc., Series 2003-G, Class 2-A-1, 4.842% 20331		3,408			2,891
Merrill Lynch Mortgage Investors, Inc., Series 2003-A4, Class II-A, 4.694% 20331		3,705			2,580
Harborview Mortgage Loan Trust, Series 2006-6, Class 1A, 5.447% 20361		3,469			1,648
Ocwen Residential MBS Corp., Series 1998-R1, Class AWAC, 1.329% 20401,2		1,542			1,150
American Home Mortgage Investment Trust, Series 2004-1, Class III-A, 3.28% 2044		903			688
GS Mortgage Securities Corp., Series 1998-2, Class M, 7.75% 20272		407			289
Financial Asset Securitization, Inc., Series 1997-NAM1, Class B-1, 7.75% 2027		269			268
					1,669,392

OTHER MORTGAGE-BACKED SECURITIES6 — 0.65%
Nykredit 4.00% 2035	Dkr293,352				50,613
Nykredit 5.00% 2038		171,033			30,982
Bank of America 5.50% 20122	$	34,750			35,817
Nationwide Building Society, Series 2007-2, 5.50% 20122		34,750			32,198
Deutsche Genossenschaftsbank-Hypothekenbank AG 5.25% 2009	€	19,447			27,509
Northern Rock PLC 5.625% 20172	$	20,000			20,037
Dexia Municipal Agency 3.50% 2009	€	10,076			14,094
					211,250

Total mortgage-backed obligations					8,454,738



BONDS & NOTES OF U.S. GOVERNMENT & GOVERNMENT AGENCIES — 14.05%
U.S. Treasury 3.875% 2009		55,925			56,688
U.S. Treasury 3.875% 20093,10		4,062			4,032
U.S. Treasury 6.00% 2009		74,600			77,195
U.S. Treasury 2.00% 2010		118,250			120,400
U.S. Treasury 2.00% 2010		10,000			10,253
U.S. Treasury 5.75% 2010		13,015			14,136
U.S. Treasury 1.75% 2011		50,240			51,384
U.S. Treasury 2.375% 20113,10		6,249			6,099
U.S. Treasury 4.50% 2011		53,740			58,121
U.S. Treasury 4.625% 2011		413,000			457,397
U.S. Treasury 4.25% 2012		50,050			55,909
U.S. Treasury 4.875% 2012		180,225			201,760
U.S. Treasury 0.625% 20133,10		3,946			3,792
U.S. Treasury 2.00% 2013		93,880			96,326
U.S. Treasury 1.875% 20133,10		11,796			11,110
U.S. Treasury 2.75% 2013		132,160			140,539
U.S. Treasury 3.50% 2013		102,410			112,195
U.S. Treasury 3.625% 2013		20,000			21,986
U.S. Treasury 4.25% 2013		655,786			745,983
U.S. Treasury 2.00% 20143,10		11,493			10,850
U.S. Treasury 2.00% 20143,10		13,601			12,855
U.S. Treasury 4.00% 2014		48,975			55,533
U.S. Treasury 4.25% 2014		33,550			38,831
U.S. Treasury Principal Strip 0% 2014		29,255			26,185
U.S. Treasury Principal Strip 0% 2014		500			461
U.S. Treasury 1.875% 20153,10		4,984			4,689
U.S. Treasury 4.25% 2015		5,000			5,809
U.S. Treasury 11.25% 2015		133,500			202,827
U.S. Treasury 2.375% 20173,10		5,586			5,522
U.S. Treasury 4.50% 2017		113,250			132,923
U.S. Treasury 4.625% 2017		5,000			5,915
U.S. Treasury 8.875% 2017		49,250			73,334
U.S. Treasury 1.375% 20183,10		14,693			13,715
U.S. Treasury 3.50% 2018		176,245			195,156
U.S. Treasury 3.75% 2018		143,745			162,735
U.S. Treasury 3.875% 2018		79,225			90,363
U.S. Treasury 4.00% 2018		8,000			9,240
U.S. Treasury 8.125% 2019		10,000			14,784
U.S. Treasury 8.00% 2021		25,525			38,734
U.S. Treasury 7.125% 2023		25,000			36,297
U.S. Treasury 7.50% 2024		13,575			21,790
U.S. Treasury 6.875% 2025		93,610			142,404
U.S. Treasury 6.00% 2026		78,000			108,932
U.S. Treasury 6.125% 2027		26,175			37,557
U.S. Treasury 4.50% 2036		150,210			199,709
U.S. Treasury Principal Strip 0% 2036		26,430			12,974
U.S. Treasury Principal Strip 0% 2037		81,778			39,760
U.S. Treasury 4.375% 20383		66,290			90,641
U.S. Treasury Principal Strip 0% 2038		95,530			46,127
Fannie Mae 6.077% 20091		575			575
Fannie Mae 2.875% 2010		134,695			138,520
Fannie Mae 5.25% 2012		15,000			15,418
Fannie Mae 6.125% 2012		10,000			11,329
Freddie Mac 3.125% 2010		73,990			75,798
Freddie Mac 5.25% 2011		20,000			21,785
Freddie Mac 5.50% 2016		20,000			23,286
CoBank ACB 7.875% 20182		22,115			22,377
CoBank ACB 2.596% 20221,2		46,470			32,765
Federal Home Loan Bank 2.25% 2009		43,515			43,911
Federal Home Loan Bank 3.625% 2013		10,000			10,500
Federal Agricultural Mortgage Corp. 4.875% 20112		10,000			10,658
United States Government Agency-Guaranteed (FDIC insured), John Deere Capital Corp. 2.875% 2012		10,000			10,294
United States Government Agency-Guaranteed (FDIC insured), Sovereign Bancorp, Inc. 2.75% 2012		7,500			7,704
United States Government-Guaranteed Certificates of Participation, Overseas Private Investment Corp.,
Series 2000-044-A, 3.74% 20156	7,150				7,591
United States Agency for International Development, Republic of Egypt 4.45% 2015		5,000			5,533
Private Export Funding Corp., Series W, 5.00% 2016		3,400			3,763
					4,523,764

BONDS & NOTES OF GOVERNMENTS & GOVERNMENT AGENCIES OUTSIDE THE U.S. — 7.33%
German Government 3.75% 2013	€	79,815			117,884
German Government 4.25% 2014		121,020			184,052
German Government, Series 6, 4.00% 2016		72,120			108,331
German Government, Series 8, 4.25% 2018		168,686			259,926
German Government 6.25% 2030		11,120			20,750
Japanese Government 1.80% 2010	¥	487,350			5,453
Japanese Government 1.30% 2011		7,643,050			85,948
Japanese Government 1.50% 2014		3,150,950			36,166
Japanese Government 1.70% 2016		3,754,600			44,046
Japanese Government 1.70% 2017		10,704,850			125,106
Japanese Government 2.30% 2035		3,629,700			44,059
Japanese Government 2.40% 2038		5,383,900			67,230
Israeli Government 6.00% 20103	ILS405,580				112,275
Israeli Government 7.50% 20143		132,880			41,383
Israeli Government 6.50% 20163		27,375			8,191
Israeli Government 5.50% 20173		318,800			88,992
United Kingdom 4.75% 2015	£	21,408			34,502
United Kingdom 5.00% 2018		55,620			93,660
United Kingdom 4.75% 2038		25,205			43,555
Swedish Government 5.00% 2009	SKr422,380				53,943
Swedish Government 5.25% 2011		311,885			42,966
Belgium (Kingdom of), Series 49, 4.00% 2017	€	42,000			59,704
Belgium (Kingdom of), Series 52, 4.00% 2018		15,150			21,457
United Mexican States Government Global 10.375% 2009	$	9,700			9,773
United Mexican States Government Global 6.375% 2013		5,150			5,433
United Mexican States Government, Series MI10, 9.50% 2014	MXN162,500				12,693
United Mexican States Government, Series M10, 7.75% 2017		180,000			12,887
United Mexican States Government, Series M20, 10.00% 2024		334,800			27,919
United Mexican States Government Global 6.75% 2034	$	8,570			9,084
French Government O.A.T. Eurobond 4.00% 2018	€	37,745			55,255
French Government O.A.T. Eurobond Strip Principal 0% 2019		14,000			13,309
French Government O.A.T. Eurobond 4.75% 2035		2,890			4,645
Canadian Government 4.25% 20263,10	$	C68,193			72,021
Singapore (Republic of) 3.125% 2011	$	S46,070			33,529
Singapore (Republic of) 3.75% 2016		43,800			34,616
Netherlands Government Eurobond 4.00% 2018	€	41,200			59,483
New South Wales Treasury Corp., Series 14, 5.50% 2014	$	A35,400			25,990
New South Wales Treasury Corp., Series 19, 6.00% 2019		33,350			25,922
Kingdom of Denmark 5.00% 2013	DKr233,215				47,419
Polish Government 5.25% 2017	PLN110,040				36,861
Spanish Government 3.80% 2017	€	23,833			33,404
Aries Vermögensverwaltungs GmbH, Series C, 9.60% 2014	$	24,750			30,994
Italian Government 4.25% 2013	€	14,100			20,059
Queensland Treasury Corp., Series 15, 6.00% 2015	$	A18,380			13,931
Russian Federation 7.50% 20306	$	13,122			11,515
Russian Federation 7.50% 20302,6		142			125
Brazilian Treasury Bill 6.00% 20103,10	BRL9,465				4,041
Brazil (Federal Republic of) Global 8.00% 20186	$	644			724
Brazil (Federal Republic of) Global 8.875% 2024		1,375			1,712
Brazil (Federal Republic of) Global 12.25% 2030		425			678
Brazil (Federal Republic of) Global 7.125% 2037		750			855
Brazil (Federal Republic of) Global 11.00% 2040		2,110			2,764
Banque Centrale de Tunisie 4.75% 2011	€	3,000			3,888
Banque Centrale de Tunisie 7.375% 2012	$	4,500			4,432
Corporación Andina de Fomento 6.875% 2012		5,895			5,711
Corporación Andina de Fomento 5.125% 2015		2,000			1,690
Panama (Republic of) Global 7.125% 2026		690			654
Panama (Republic of) Global 8.875% 2027		250			274
Panama (Republic of) Global 9.375% 2029		340			376
Panama (Republic of) Global 6.70% 20366		5,748			5,202
Colombia (Republic of) Global 8.25% 2014		3,250			3,518
Colombia (Republic of) Global 12.00% 2015	COP2,765,000				1,360
Colombia (Republic of) Global 9.85% 2027		840,000			374
Colombia (Republic of) Global 7.375% 2037	$	1,000			985
State of Qatar 9.75% 2030		4,220			5,212
Turkey (Republic of) 12.375% 2009		500			514
Turkey (Republic of) 15.00% 2010	TRY5,250				3,421
Turkey (Republic of) 8.00% 2034	$	1,250			1,169
Peru (Republic of) 8.375% 2016		2,920			3,161
El Salvador (Republic of) 7.65% 20352		4,450			2,848
European Investment Bank 4.75% 2012	£	790			1,210
European Investment Bank 5.00% 2039		395			676
Argentina (Republic of) 5.83% 20333,6,8,10	ARS 8,834				804
Argentina (Republic of) GDP-Linked 2035		18,225			219
Argentina (Republic of) 0.63% 20383,6,10		9,052			237
Dominican Republic 9.50% 20112,6	$	1,406			1,188
Egypt (Arab Republic of) Treasury Bill 0% 2009	EGP6,125				1,080
Uruguay (Republic of) 7.625% 20366	$	1,250			1,056
Guatemala (Republic of) 10.25% 20112		1,000			1,025
Venezuela (Republic of) Global 8.50% 2014		245			129
Venezuela (Republic of) 7.65% 2025		985			389
KfW International Finance Inc. 5.50% 2015	£	275			446
LCR Finance PLC 5.10% 2051		165			303
					2,360,771

ASSET-BACKED OBLIGATIONS6 — 6.62%
AmeriCredit Automobile Receivables Trust, Series 2005-C-F, Class A-4, FSA insured, 4.63% 2012	$	12,662			11,755
AmeriCredit Automobile Receivables Trust, Series 2007-D-F, Class A-3-A, FSA insured, 5.49% 2012		12,000			11,158
AmeriCredit Automobile Receivables Trust, Series 2007-A-X, Class A-4, XLCA insured, 1.916% 20131		125,000			93,113
AmeriCredit Automobile Receivables Trust, Series 2006-B-G, Class A-4, FGIC insured, 5.21% 2013		28,269			21,882
AmeriCredit Automobile Receivables Trust, Series 2007-C-M, Class A-4-B, MBIA insured, 1.956% 20141		10,000			5,884
AmeriCredit Automobile Receivables Trust, Series 2007-C-M, Class A-4-A, MBIA insured, 5.55% 2014		4,572			3,145
CSAB Mortgage-backed Trust, Series 2006-3, Class A-2, 0.631% 20361		36,600			31,688
CSAB Mortgage-backed Trust, Series 2006-4, Class A-2-B, 0.631% 20361		15,500			11,284
CSAB Mortgage-backed Trust, Series 2006-2, Class A-2, 0.641% 20361		40,500			35,514
CSAB Mortgage-backed Trust, Series 2006-4, Class A-3, 0.691% 20361		26,000			9,417
CSAB Mortgage-backed Trust, Series 2006-3, Class A-3-B, 0.701% 20361		27,626			10,225
CSAB Mortgage-backed Trust, Series 2006-1, Class A-3, 0.711% 20361		11,589			6,973
CSAB Mortgage-backed Trust, Series 2006-2, Class A-6-A, 5.72% 20361		25,000			13,518
CSAB Mortgage-backed Trust, Series 2006-4, Class A-4, FSA insured, 5.873% 20361		18,000			7,883
CSAB Mortgage-backed Trust, Series 2007-1, Class 1-A-3B, 5.908% 20371		5,757			1,488
CSAB Mortgage-backed Trust, Series 2007-1, Class 1-A-4, 5.95% 20371,3		13,334			5,334
Drive Auto Receivables Trust, Series 2006-2, Class A-2, MBIA insured, 5.30% 20112		280			277
Drive Auto Receivables Trust, Series 2005-2, Class A-3, MBIA insured, 4.26% 20122,3		36,077			33,902
Drive Auto Receivables Trust, Series 2005-3, Class A-4, FSA insured, 5.09% 20132,3		16,011			14,610
Drive Auto Receivables Trust, Series 2006-1, Class A-4, FSA insured, 5.54% 20132		67,000			59,735
Drive Auto Receivables Trust, Series 2006-2, Class A-3, MBIA insured, 5.33% 20142		20,000			17,191
CPS Auto Receivables Trust, Series 2004-A, Class A-2, FSA insured, 3.87% 20102		981			925
CPS Auto Receivables Trust, Series 2004-D, Class A-2, XLCA insured, 3.86% 20112		3,404			3,043
CPS Auto Receivables Trust, Series 2006-C, Class A-3, XLCA insured, 5.14% 20112		7,569			7,432
CPS Auto Receivables Trust, Series 2005-B, Class A-2, FSA insured, 4.36% 20122		9,259			8,878
CPS Auto Receivables Trust, Series 2005-D, Class A-2, FSA insured, 5.06% 20122,3		5,015			4,358
CPS Auto Receivables Trust, Series 2006-A, Class 1-A-4, FSA insured, 5.33% 20122		8,944			8,181
CPS Auto Receivables Trust, Series 2006-B, Class A-4, MBIA insured, 5.81% 20122		31,000			25,841
CPS Auto Receivables Trust, Series 2007-A, Class A-4, MBIA insured, 5.05% 20132		15,100			11,140
CPS Auto Receivables Trust, Series 2006-C, Class A-4, XLCA insured, 5.14% 20132		26,200			21,585
CPS Auto Receivables Trust, Series 2007-TFC, Class A-2, XLCA insured, 5.25% 20132,3		252			202
CPS Auto Receivables Trust, Series 2007-B, Class A-4, FSA insured, 5.60% 20142		20,000			16,041
CPS Auto Receivables Trust, Series 2007-C, Class A-4, FSA insured, 5.92% 20142		18,950			12,643
Capital One Auto Finance Trust, Series 2006-A, Class A-4, AMBAC insured, 1.205% 20121		4,000			3,361
Capital One Auto Finance Trust, Series 2005-C, Class A-4-B, FGIC insured, 1.235% 20121		87,981			81,368
Capital One Auto Finance Trust, Series 2006-C, Class A-4, FGIC insured, 1.225% 20131		25,000			17,504
Capital One Auto Finance Trust, Series 2007-B, Class A-4, MBIA insured, 1.225% 20141		12,425			8,514
Chase Issuance Trust, Series 2007-A9, Class A, 1.225% 20141		77,310			63,319
Chase Issuance Trust, Series 2006-4, Class C, 1.485% 20141		8,000			3,671
Chase Issuance Trust, Series 2008-4, Class A, 4.65% 2015		18,000			15,955
Washington Mutual Master Note Trust, Series 2006-A3A, Class A-3, 1.225% 20131,2		12,890			11,297
Washington Mutual Master Note Trust, Series 2007-B1, Class B-1, 4.95% 20142		4,000			2,376
Washington Mutual Master Note Trust, Series 2007-A4A, Class A-4, 5.20% 20142		35,055			25,667
Washington Mutual Master Note Trust, Series 2006-A2A, Class A, 1.245% 20151,2		42,000			29,206
GS Auto Loan Trust, Series 2006-1, Class A-4, 5.38% 2014		57,000			53,907
GS Auto Loan Trust, Series 2006-1, Class A-4, 5.60% 2014		9,953			9,090
ARG Funding Corp., Series 2005-1, Class A-3, MBIA insured, 4.29% 20112		55,200			40,762
ARG Funding Corp., Series 2005-2, Class A-4, AMBAC insured, 4.84% 20112		30,000			21,900
Honda Auto Receivables Owner Trust, Series 2006-3, Class A-4, 5.11% 2012		35,160			32,605
Honda Auto Receivables Owner Trust, Series 2006-2, Class A-4, 5.28% 2012		24,250			23,797
Santander Drive Auto Receivables Trust, Series 2007-1, Class A-4, FGIC insured, 1.245% 20141		71,000			52,219
Green Tree Financial Corp., Series 1996-10, Class A-6, 7.30% 2028		1,866			1,666
Green Tree Financial Corp., Series 1997-6, Class A-7, 7.14% 2029		5,169			4,188
Green Tree Recreational, Equipment & Consumer Trust, Series 1997-D, 7.25% 2029		1,916			781
Conseco Finance Home Equity Loan Trust, Series 2002-B, Class M-1, 3.173% 20331		901			736
Green Tree Financial Corp., Series 2008-MH1, Class A-3, 8.97% 20382,3		46,575			36,329
Long Beach Acceptance Auto Receivables Trust, Series 2006-B, Class A-3, FSA insured, 5.17% 2011		5,104			5,094
Long Beach Acceptance Auto Receivables Trust, Series 2006-B, Class A-4, FSA insured, 5.18% 2013		27,800			23,903
Long Beach Acceptance Auto Receivables Trust, Series 2007-A, Class A-4, FSA insured, 5.025% 2014		15,500			11,928
Triad Automobile Receivables Trust, Series 2006-C, Class A-3, AMBAC insured, 5.26% 2011		11,928			11,805
Triad Automobile Receivables Trust, Series 2005-A, Class A-4, AMBAC insured, 4.22% 2012		13,573			13,169
Triad Automobile Receivables Trust, Series 2007-A, Class A-3, FSA insured, 5.28% 2012		7,630			7,153
Triad Automobile Receivables Trust, Series 2006-C, Class A-4, AMBAC insured, 5.31% 2013		10,000			7,736
Vega ContainerVessel PLC, Series 2006-1, Class A, XLCA insured, 5.562% 20212		41,748			37,916
Nissan Auto Lease Trust, Series 2008-A, Class A-3a, 5.14% 2011		40,250			36,049
Prestige Auto Receivables Trust, Series 2005-1A, Class A-2, FSA insured, 4.37% 20122		3,372			3,123
Prestige Auto Receivables Trust, Series 2006-1A, Class A-2, FSA insured, 5.25% 20132		8,740			7,960
Prestige Auto Receivables Trust, Series 2007-1, Class A-3, FSA insured, 5.58% 20142		30,000			23,977
Residential Funding Mortgage Securities II, Inc., Series 2005-HI1, Class A-4, FGIC insured, 4.70% 2034		6,671			3,231
Residential Funding Mortgage Securities II, Inc., Series 2005-HS1, Class A-1-2, FGIC insured, 4.66% 20351		12,500			11,299
Residential Funding Mortgage Securities II, Inc., Series 2006-HSA3, Class A, FSA insured, 0.601% 20361		3,092			2,066
Residential Funding Mortgage Securities II, Inc., Series 2007-HSA2, Class A-1F, MBIA insured, 8.47% 20371		17,722			17,029
Drivetime Auto Owner Trust, Series 2006-A, Class A-3, XLCA insured, 5.501% 20111,2		13,286			12,605
Drivetime Auto Owner Trust, Series 2007-A, XLCA insured, 5.603% 20131,2		20,000			18,662
Credit-Based Asset Servicing and Securitization LLC, Series 2005-CB4, Class AF-4, 5.028% 20351		3,388			3,002
Credit-Based Asset Servicing and Securitization LLC, Series 2007-MX1, Class A-3, 5.825% 20361,2,3		8,387			3,187
Credit-Based Asset Servicing and Securitization LLC, Series 2007-MX1, Class M-3, 6.282% 20361,2		3,935			1,414
Credit-Based Asset Servicing and Securitization LLC, Series 2007-MX1, Class M-5, 6.831% 20361,2		4,725			1,219
Credit-Based Asset Servicing and Securitization LLC, Series 2007-MX1, Class M-6, 7.00% 20361,2		1,816			373
Credit-Based Asset Servicing and Securitization LLC, Series 2007-CB3, Class A-2, 5.588% 20371		8,000			3,366
Credit-Based Asset Servicing and Securitization LLC, Series 2007-CB1, Class AF-2, 5.721% 20371		11,305			3,957
Credit-Based Asset Servicing and Securitization LLC, Series 2007-CB4, Class A-2B, 5.723% 20371		3,061			1,916
Credit-Based Asset Servicing and Securitization LLC, Series 2007-CB2, Class A-2A, 5.891% 20371		12,719			11,821
CWHEQ Home Equity Loan Trust, Series 2006-S2, Class A-5, FGIC insured, 5.753% 2027		15,750			5,430
CWHEQ Home Equity Loan Trust, Series 2006-S6, Class A-6, AMBAC insured, 5.657% 2034		15,050			4,155
CWHEQ Home Equity Loan Trust, Series 2006-S4, Class A-6, AMBAC insured, 5.834% 20341		9,548			5,124
CWHEQ Home Equity Loan Trust, Series 2007-S1, Class A-6, MBIA insured, 5.693% 20361		33,951			14,646
Vanderbilt Mortgage and Finance, Inc., Series 2002-C, Class A-4, 6.57% 2024		7,660			7,359
Vanderbilt Mortgage and Finance, Inc., Series 1999-B, Class I-A-6, 6.925% 2024		7,901			7,711
Vanderbilt Mortgage and Finance, Inc., Series 2000-C, Class A-4, 7.905% 2026		1,812			1,826
Vanderbilt Mortgage and Finance, Inc., Series 1997-C, Class II-A-1, 2.086% 20271		616			532
Vanderbilt Mortgage and Finance, Inc., Series 2000-D, Class A-4, 7.715% 2027		2,024			1,945
Vanderbilt Mortgage and Finance, Inc., Series 2000-C, Class A-5, 8.195% 2030		6,889			6,980
Vanderbilt Mortgage and Finance, Inc., Series 2001-C, Class M-1, 6.76% 2032		982			732
Vanderbilt Mortgage and Finance, Inc., Series 2002-C, Class M-1, 7.82% 2032		2,436			1,999
J.P. Morgan Alternative Loan Trust, Series 2006-S3, Class A-6, 6.12% 20361		44,663			27,956
Susquehanna Auto Lease Trust, Series 2007-1, Class A-3, 5.25% 20102		27,179			27,022
CWHEQ Revolving Home Equity Loan Trust, Series 2006-I, Class 2-A, FSA insured, 1.335% 20371		27,327			18,209
CWHEQ Revolving Home Equity Loan Trust, Series 2007-C, Class A, FGIC insured, 1.345% 20371		17,429			5,566
CWHEQ Revolving Home Equity Loan Trust, Series 2007-B, Class A, FSA insured, 1.345% 20371		5,753			2,760
Morgan Stanley Structured Trust I, Series 2007-1, Class A-3, 0.701% 20371		47,595			26,090
Capital One Master Trust, Series 2002-1A, Class B, 1.795% 20111		1,000			995
Capital One Multi-asset Execution Trust, Series 2005-1, Class C, 1.595% 20131		9,000			6,237
Capital One Multi-asset Execution Trust, Series 2008-5, Class A, 4.85% 2014		19,500			18,122
Hyundai Auto Receivables Trust, Series 2006-A, Class A-4, 5.26% 2012		25,000			24,882
CarMax Auto Owner Trust, Series 2007-2, Class A-3, 5.23% 2011		14,383			13,675
CarMax Auto Owner Trust, Series 2007-2, Class A-4, 5.27% 2012		12,000			11,115
USAA Auto Owner Trust, Series 2007-1, Class A-4, 5.55% 2013		26,000			23,753
RAMP Trust, Series 2004-RS9, Class A-I-4, AMBAC insured, 4.767% 2032		5,553			4,091
RAMP Trust, Series 2004-RS10, Class A-I-6, 4.55% 2034		24,266			18,677
WFS Financial Owner Trust, Series 2005-1, Class A-4, 3.87% 2012		22,679			22,586
Citibank Credit Card Issuance Trust, Class 2004-A7, 2.243% 20131		19,200			16,200
Citibank Credit Card Issuance Trust, Series 2008, Class C6, 6.30% 20143		7,000			4,211
MBNA Credit Card Master Note Trust, Series 2003-1, Class C, 2.895% 20121		5,540			3,757
MBNA Credit Card Master Note Trust, Series 2001-C, Class C, 7.10% 20132		15,000			10,310
MBNA Credit Card Master Note Trust, Series 2002-1, Class C, 6.80% 2014		3,435			1,828
MBNA Credit Card Master Note Trust, Series 2006-1, Class C, 1.615% 20151		10,000			3,702
PECO Energy Transition Trust, Series 2000-A, Class A-4, 7.65% 2010		17,994			18,405
Spirit Master Funding LLC, Net-Lease Mortgage Notes, Series 2005-1, Class A-1, AMBAC insured, 5.05% 20232,3		25,262			17,936
UPFC Auto Receivables Trust, Series 2005-A, Class A-3, AMBAC insured, 4.34% 2010		1,646			1,581
UPFC Auto Receivables Trust, Series 2005-B, Class A-3, XLCA insured, 4.98% 2011		5,427			5,232
UPFC Auto Receivables Trust, Series 2007-A, Class A-3, MBIA insured, 5.53% 2013		13,275			11,041
Advanta Business Card Master Trust, Series 2006-A5, Class A, 5.10% 2012		20,000			16,000
Advanta Business Card Master Trust, Series 2005-A2, Class A-2, 0.638% 20131		2,000			1,600
J.P. Morgan Mortgage Acquisition Trust, Series 2006-CW1, Class A-4, 0.621% 20361		10,000			6,417
J.P. Morgan Mortgage Acquisition Trust, Series 2007-CH1, Class AF-3, 5.532% 20361		15,000			10,306
Vanderbilt Acquisition Loan Trust, Series 2002-1, Class B-1, 7.30% 2021		7,126			5,925
Vanderbilt Acquisition Loan Trust, Series 2002-1, Class A-4, 6.57% 2027		8,290			7,501
Vanderbilt Acquisition Loan Trust, Series 2002-1, Class A-5, 7.12% 2032		3,000			2,471
GMAC Mortgage Loan Trust, Series 2006-HE3, Class A-5, FGIC insured, 5.809% 20361		5,000			1,873
GMAC Mortgage Loan Trust, Series 2007-HE2, Class A-2, FGIC insured, 6.054% 20371		10,000			5,552
GMAC Mortgage Loan Trust, Series 2007-HE2, Class A-3, FGIC insured, 6.193% 20371		35,000			8,460
AEP Texas Central Transitioning Funding II LLC, Secured Transition Bonds, Series A, Class A-3, 5.09% 2015		16,720			15,753
Morgan Stanley ABS Capital I Inc., Series 2004-NC3, Class M-1, 1.266% 20341		18,822			10,324
Morgan Stanley ABS Capital I Inc., Series 2004-HE9, Class M-5, 1.521% 20341,3		6,447			4,384
Option One Mortgage Loan Trust, Series 2002-1, Class M-1, 1.596% 20321		355			219
Option One Mortgage Loan Trust, Series 2006-3, Class II-A-2, 0.571% 20371		16,275			13,414
Wachovia Auto Loan Owner Trust, Series 2006-1, Class A-4, 5.08% 20122		10,000			9,177
Wachovia Auto Loan Owner Trust, Series 2006-1, Class B, 5.15% 20122		5,000			4,071
Hertz Vehicle Financing LLC, Rental Car Asset-backed Notes, Series 2005-2, Class A-6, AMBAC insured, 5.08% 20112		14,500			12,199
Merrill Lynch Mortgage Investors, Inc., Series 2006-RM1, Class A-2B, 5.45% 20371		20,741			12,091
Citicorp Residential Mortgage Trust, Series 2006-2, Class A-4, 5.775% 20361		10,000			8,028
Carrington Mortgage Loan Trust, Series 2006-NC5, Class A-5, 0.531% 20371		5,572			3,982
Franklin Auto Trust, Series 2006-1, Class A-4, 5.03% 2014		10,950			10,021
Franklin Auto Trust, Series 2006-1, Class B, 5.14% 2014		2,000			1,568
GSAA Home Equity Trust, Series 2006-6, Class AF-6, 6.004% 20361		20,000			11,228
Residential Asset Securities Corp. Trust, Series 2001-KS3, Class A-I-6, 5.96% 2031		11,969			9,826
Bear Stearns Asset-backed Securities I Trust, Series 2005-CL1, Class A-1, 0.971% 20341,3		13,339			9,707
Lehman ABS Manufactured Housing Contract Trust, Series 2001-B, Class A-3, 4.35% 2014		2,475			1,587
Lehman ABS Manufactured Housing Contract Trust, Series 2001-B, Class A-4, 5.27% 2018		1,269			846
Lehman ABS Manufactured Housing Contract Trust, Series 2001-B, Class A-5, 5.873% 2022		4,167			2,848
Lehman ABS Manufactured Housing Contract Trust, Series 2002-A, Class A, 1.645% 20331		5,241			3,937
SACO I Trust, Series 2005-5, Class I-A, 0.711% 20351		5,789			3,959
SACO I Trust, Series 2006-10, Class A, 0.621% 20361		13,494			3,065
SACO I Trust, Series 2006-5, Class II-A-3, 0.651% 20361		7,500			652
SACO I Trust, Series 2006-4, Class A-3, 0.681% 20361		5,409			1,493
MASTR Asset-backed Securities Trust, Series 2006-AB1, Class A-4, 5.719% 20361		11,500			8,878
CNL Funding, Series 2000-AA, Class A-2, MBIA insured, 8.044% 20172		11,641			8,638
Structured Asset Securities Corp., Series 2005-S7, Class A2, 0.771% 20351,2		11,744			6,550
Structured Asset Securities Corp., Series 2006-S2, Class A-1, 0.541% 20361		1,431			1,374
Home Equity Mortgage Trust, Series 2006-2, Class 1A-1, 5.367% 20361		1,773			587
Home Equity Mortgage Trust, Series 2006-4, Class A-1, 5.67% 20361		17,438			3,793
Home Equity Mortgage Trust, Series 2006-5, Class A-1, 5.50% 20371		14,839			3,483
New Century Home Equity Loan Trust, Series 2004-A, Class A-II-5, FGIC insured, 5.25% 2034		11,000			7,816
First Horizon ABS Trust, Series 2006-HE2, Class A, FSA insured, 0.601% 20261		767			457
First Horizon ABS Trust, Series 2007-HE1, Class A, FSA insured, 0.601% 20291		11,761			6,449
AmeriCredit Prime Automobile Receivables Trust, Series 2007-2-M, Class A-4-A, MBIA insured, 5.35% 2016		10,073			6,533
Conseco Finance Securitizations Corp., Series 2002-2, Class A-2, 6.03% 2033		8,965			6,505
CWABS, Inc., Series 2005-11, Class AF-2, 4.657% 20361		6,066			5,972
Ford Credit Auto Owner Trust, Series 2006-B, Class B, 5.43% 2012		7,333			5,706
Morgan Stanley ABS Capital I Inc. Trust, Series 2006-HE4, Class A-3, 0.621% 20361		10,000			5,383
Securitized Asset-backed Receivables LLC Trust, Series 2006-HE2, Class A-2C, 0.621% 20361,3		18,000			5,310
Cendant Timeshare Receivables Funding, LLC, Series 2005-1, Class A-1, FGIC insured, 4.67% 20172		6,270			5,238
UCFC Manufactured Housing Contract, Series 1996-2, Class A, MBIA insured, 7.135% 2028		5,503			5,202
Merrill Lynch Mortgage Investors Trust, Series 2007-SL1, Class A-1, 0.771% 20371		22,232			5,074
Morgan Stanley Mortgage Loan Trust, Series 2006-4SL, Class A-1, 0.621% 20361,3		21,876			4,375
Discover Card Master Trust I, Series 1996-4, Class B, 1.745% 20131		7,000			4,243
Consumers Funding LLC, Series 2001-1, Class A-5, 5.43% 2015		4,140			4,141
First Investors Auto Owner Trust, Series 2005-A, Class A-2, MBIA insured, 4.23% 20122		2,028			1,904
First Investors Auto Owner Trust, Series 2006-A, Class A-4, MBIA insured, 5.00% 20132		2,500			2,092
RAAC Mortgage Loan Asset-backed Trust, Series 2004-SP3, Class A-I-5, 4.89% 2032		4,772			3,929
MBNA Master Credit Card Trust II, Series 1999-B, Class B, 6.20% 2011		3,750			3,663
Discover Card Execution Note Trust, Series 2008-3, Class A, 5.10% 2013		4,000			3,640
Home Equity Asset Trust, Series 2004-7, Class M-1, 1.091% 20351		6,500			3,607
Capital Auto Receivables Asset Trust, Series 2006-SN1, Class C, 5.77% 20102		3,700			3,518
Origen Manufactured Housing Contract Trust, Series 2004-B, Class M-1, 5.73% 2035		2,477			1,771
Origen Manufactured Housing Contract Trust, Series 2004-B, Class M-2, 6.51% 2035		1,983			1,406
CS First Boston Mortgage Securities Corp., Series 2007-3, Class 1-A-3B, 5.846% 20371		8,477			2,292
Bear Stearns Mortgage Funding Trust, Series 2007-SL1, Class I-A, 0.631% 20371		13,956			2,147
ACE Securities Corp. Home Equity Loan Trust, Series 2007-ASAP2, Class A-2C, 0.691% 20371		5,307			2,107
CWABS Revolving Home Equity Loan Trust, Series 2004-P, Class 2-A, MBIA insured, 1.515% 20341		6,161			2,107
Countryplace Manufactured Housing Contract, Series 2005-1, Class A-2, AMBAC insured, 4.42% 20351,2,3		2,004			1,862
ACLC Business Loan Receivables Trust, Series 2002-1, Class A-2, 7.462% 20222,3		2,239			1,747
IndyMac Home Equity Mortgage Loan Asset-backed Trust, Series 2007-H1, Class A-1, FSA insured, 0.631% 20371		2,515			1,693
SLM Student Loan Trust, Series 2003-10, Class A-4, 5.15% 20392	£	1,160			1,638
PG&E Energy Recovery Funding LLC, Series 2005-1, Class A-2, 3.87% 2011	$	1,164			1,166
Chase Auto Owner Trust, Series 2006-B, Class B, 5.24% 2014		1,013			938
Irwin Home Equity, Series 2006-2, Class 2-A3, FGIC insured, 6.40% 20361,2		2,000			845
IndyMac Home Equity Mortgage Loan Asset-backed Trust, Series SPMD 2001-A, Class AF-6, 6.537% 2030		636			546
					2,132,610

MUNICIPALS — 0.23%
State of South Dakota, Educational Enhancement Funding Corp., Tobacco Settlement Asset-backed Bonds,
Series 2002-A, Class A, 6.72% 2025		23,180			17,218
State of Illinois, Finance Authority, Revenue Bonds (University of Chicago), Series 2008-B, 6.25% 2038		15,000			16,111
State of Massachusetts, Health and Educational Facilities Authority, Revenue Bonds (Harvard University Issue),
Series 2009-A, 5.50% 2036		15,000			15,602
State of Louisiana, Tobacco Settlement Financing Corp., Tobacco Settlement Asset-backed Bonds,
Series 2001-A, Class A, 6.36% 2025		9,145			7,829
State of Louisiana, Citizens Property Insurance Corp., Assessment Revenue Bonds,
Series 2006-C-3, CIFG insured, 13.00% 20251		7,325			7,325
State of Wisconsin, Badger Tobacco Asset Securitization Corp., Tobacco Settlement Asset-backed Bonds, 6.125% 2027		8,150			7,210
California Maritime Infrastructure Authority, Taxable Lease Revenue Bonds (San Diego Unified Port District-
South Bay Plant Acquisition), Series 1999, 6.63% 20092		2,433			2,437
					73,732



Total bonds & notes (cost: $34,084,387,000)					29,344,260



	Shares or
Convertible securities — 0.29%	principal amount

FINANCIALS — 0.22%
Bank of America Corp., Series L, 7.25% convertible preferred		70,000			45,500
PNC Financial Services Group, Inc. 4.00% convertible notes 2011	$	25,000,000			22,406
Citigroup Inc., Series J, 7.00% noncumulative convertible preferred depositary shares3,5		50,000			1,469
Equity Residential 3.85% convertible notes 2026	$	1,000,000			843
Boston Properties, Inc. 2.875% convertible notes 2037	$	1,000,000			795
Fannie Mae, Series 2004-1, 5.375% convertible preferred3		400			220
					71,233

CONSUMER DISCRETIONARY — 0.04%
Amazon.com, Inc. 6.875% PEACS convertible notes 2010	¤9,005,000				12,454



				Value
	Principal amount				(000	)

INFORMATION TECHNOLOGY — 0.03%
Linear Technology Corp., Series A, 3.00% convertible notes 2027	$	11,500,000		$	8,381
Advanced Micro Devices, Inc. 6.00% convertible notes 2015	$	770,000			223
Advanced Micro Devices, Inc. 5.75% convertible notes 2012	$	6,950,000			2,424
					11,028

Total convertible securities (cost: $152,844,000)					94,715




Preferred securities — 3.18%	Shares

FINANCIALS — 3.17%
SMFG Preferred Capital USD 1 Ltd. 6.078%1,2		116,569,000			79,224
SMFG Preferred Capital USD 3 Ltd. 9.50%1,2		32,700,000			30,124
SMFG Preferred Capital USD 2 Ltd. 8.75% noncumulative2		19,300,000			16,233
JPMorgan Chase & Co., Series I, 7.90%1		138,220,000			115,279
Bank of America Corp., Series K, 8.00% noncumulative1		70,115,000			50,505
Bank of America Corp., Series M, 8.125% noncumulative1		54,210,000			40,617
Bank of America Corp., Series E, 0% depositary shares		1,384,800			16,206
HSBC Capital Funding LP, Series 1, 9.547% noncumulative step-up1,2		71,250,000			56,469
HSBC Capital Funding LP, Series 2, 10.176% noncumulative step-up1,2		29,550,000			24,125
HSBC Capital Funding LP 8.03% noncumulative1		20,000,000			23,583
HSBC Bank Capital Funding (Sterling 1) LP 5.844% noncumulative1		185,000			185
Citigroup Inc., Series E, 8.40%1		93,300,000			61,722
BNP Paribas 7.195%1,2		73,700,000			46,955
BNP Paribas Capital Trust 9.003% noncumulative trust1,2		15,000,000			9,189
Santander Finance Preferred S.A., Unipersonal, Series 4, 6.80%		1,600,000			30,400
Santander Finance Preferred S.A., Unipersonal, 6.50%		910,000			16,892
Standard Chartered PLC 6.409%1,2		90,200,000			33,264
Standard Chartered Capital Trust I 8.16%1		10,000,000			11,156
Standard Chartered PLC 7.014% noncumulative redeemable preference shares1,2		5,000,000			2,242
Barclays Bank PLC 7.434%1,2		70,910,000			35,897
Swire Pacific Capital Ltd. 8.84% cumulative guaranteed perpetual capital securities2		1,670,000			32,826
AXA SA, Series B, 6.379%1,2		53,770,000			24,095
ILFC E-Capital Trust II 6.25%1,2		42,460,000			17,751
ILFC E-Capital Trust I 5.90%1,2		13,699,000			4,392
XL Capital Ltd., Series C, 6.102%2,3,11		1,502,720			11,291
XL Capital Ltd., Series E, 6.50%1		44,200,000			10,175
QBE Capital Funding II LP 6.797%1,2		36,055,000			20,399
PNC Preferred Funding Trust I 6.517%1,2		46,000,000			19,934
Banco Bilbao Vizcaya Argentaria, SA, 5.919%1		48,005,000			19,130
Société Générale 5.922%1,2		35,170,000			16,462
Resona Preferred Global Securities (Cayman) Ltd. 7.191%1,2		32,800,000			15,631
RBS Capital Trust IV 2.259% noncumulative trust1		24,685,000			9,283
Royal Bank of Scotland Group PLC 6.625%1		4,700,000			5,349
Chuo Mitsui Trust and Banking Co., Ltd. 5.506%1,2		20,220,000			13,931
Aspen Insurance Holdings Ltd. 7.401% noncumulative1		1,035,500			12,847
DBS Capital Funding Corp., Series A, 7.657% noncumulative guaranteed preference shares1,2		11,250,000			11,232
Weingarten Realty Investors, Series D, 6.75% 2008		495,420			7,134
Weingarten Realty Investors, Series E, 6.95% cumulative redeemable depositary shares		250,000			3,688
HBOS PLC 6.657%1,2		18,500,000			7,185
HBOS Capital Funding LP, Series A, 6.461% noncumulative1		3,200,000			2,891
Lloyds TSB Group PLC 6.267%1,2		23,640,000			8,720
ING Capital Funding Trust III 8.439% noncumulative1		14,880,000			7,492
Commerzbank Capital Funding Trust I, Class B, 5.012% noncumulative1		15,500,000			7,236
Commerzbank Capital Funding Trust II, Class B, 5.905% noncumulative1		300,000			205
Mizuho Capital Investment (EUR) 1 Ltd. 5.02%1		4,650,000			4,363
Mizuho Capital Investment (USD) 1 Ltd. 6.686% noncumulative1,2		4,000,000			2,665
Shinsei Finance II (Cayman) Ltd. 7.16% noncumulative1,2		28,500,000			5,949
Fannie Mae, Series O, 7.00%1,2		4,485,673			4,626
Fannie Mae, Series S, 8.25% noncumulative		375,300			324
Fannie Mae, Series R, 7.625%		382,800			284
Freddie Mac, Series V, 5.57%		3,356,231			1,284
Freddie Mac, Series Z, 8.375%		2,663,885			1,179
Freddie Mac, Series W, 5.66%		1,548,000			871
Freddie Mac, Series F, 5.00%		294,375			159
Freddie Mac, Series U, 5.90%		496,600			154
Freddie Mac, Series Y, 6.55%		374,269			108
CBG Florida REIT Corp., Series A, Class A, 7.114%1,2		18,000,000			2,936
General Motors Corp. 9.00%2,3,11		10,437			1,566
IndyMac Bancorp, Inc., Series A, 8.50% noncumulative2		434,000			4
Lehman Brothers Holdings E-Capital Trust I 3.589%1,4		3,084,000			—
					1,019,478

U.S. GOVERNMENT AGENCY SECURITIES — 0.01%
US AgBank 6.11%1,2		5,000,000			3,217


Total preferred securities (cost: $1,949,073,000)					1,022,695



Common stocks — 0.08%

INDUSTRIALS — 0.05%
DigitalGlobe Inc.3,5,11		3,984,039			9,960
Delta Air Lines, Inc.11		615,301			7,052
UAL Corp.11		10,069			111
					17,123

CONSUMER DISCRETIONARY — 0.02%
Ford Motor Co.11		1,042,804			2,388
Time Warner Cable Inc., Class A11		109,676			2,353
Adelphia Recovery Trust, Series Arahova11		1,943,006			262
Adelphia Recovery Trust, Series ACC-6B3,11		5,056,500			50
Adelphia Recovery Trust, Series ACC-111		3,366,231			34
					5,087

INFORMATION TECHNOLOGY — 0.01%
ZiLOG, Inc.11,12		879,000			2,549


HEALTH CARE — 0.00%
Clarent Hospital Corp.3,11,12		331,291			3




XO Holdings, Inc.11		7,614			1


Total common stocks (cost: $55,394,000)					24,763




Warrants — 0.00%

TELECOMMUNICATION SERVICES — 0.00%
XO Holdings, Inc., Series A, warrants, expire 201011		15,233			—
XO Holdings, Inc., Series B, warrants, expire 201011		11,424			—
XO Holdings, Inc., Series C, warrants, expire 201011		11,424			—
GT Group Telecom Inc., warrants, expire 20102,3,11		2,750			—
					—

INDUSTRIALS — 0.00%
Atrium Corp., warrants, expire 20182,3,11		1,885			—


Total warrants (cost: $143,000)					—



	Principal amount
Short-term securities — 4.41%		(000	)

Federal Home Loan Bank 0.20%–3.30% due 1/2–6/26/2009	$	219,600			219,447
Fannie Mae 0.25%–2.10% due 2/3–4/15/2009		145,167			145,058
Freddie Mac 0.45%–2.40% due 3/2–7/7/2009		131,600			131,411
Hewlett-Packard Co. 2.20% due 2/3–2/4/20092		110,000			109,874
U.S. Treasury Bills 1.09%–1.95% due 2/5–4/16/2009		106,700			106,678
International Bank for Reconstruction and Development 0.22%–2.10% due 1/20–3/11/2009		104,900			104,846
Procter & Gamble International Funding S.C.A. 0.12%–1.00% due 2/26–5/28/20092		96,500			96,453
Wal-Mart Stores Inc. 0.25% due 6/16/20092		78,100			78,009
Bank of America Corp. 3.75% due 3/9/2009		50,000			49,894
Enterprise Funding Co. LLC 1.40%–2.25% due 1/7–2/2/20092		24,692			24,661
Chevron Funding Corp. 0.25% due 2/5/2009		50,000			49,987
General Electric Capital Corp., FDIC insured, 0.85% due 2/4/2009		50,000			49,959
Coca-Cola Co. 2.05% due 2/2/20092		50,000			49,947
Eli Lilly and Co. 1.35%–1.40% due 1/15–2/25/20092		40,519			40,504
Medtronic Inc. 1.00% due 3/9/20092		40,000			39,917
Emerson Electric Co. 0.40%–1.10% due 2/25–3/30/20092		36,900			36,884
Harvard University 0.90% due 2/11/2009		30,000			29,973
Eaton Corp. 1.75% due 2/11/20092		25,000			24,949
Yale University 2.37% due 2/12/2009		16,500			16,466
John Deere Capital Corp. 2.50% due 1/15/20092		15,600			15,590


Total short-term securities (cost: $1,419,110,000)					1,420,507


Total investment securities (cost: $37,660,951,000)					31,906,940
Other assets less liabilities					281,071

Net assets				$	32,188,011

1 Coupon rate may change periodically.

2 Purchased in a transaction exempt from registration under the Securities Act of 1933. May be resold in the U.S. in transactions exempt from registration, normally to qualified institutional buyers. The total value of all such securities was $4,944,277,000, which represented 15.36% of the net assets of the fund.

3 Valued under fair value procedures adopted by authority of the board of directors. The total value of all such securities was $1,343,327,000, which represented 4.17% of the net assets of the fund.

4 Scheduled interest and/or principal payment was not received.

5 Purchased in a transaction exempt from registration under the Securities Act of 1933. May be subject to legal or contractual restrictions on resale. Further details on these holdings appear below.

	Acquisition date(s)	Cost (000)		Value (000)		Percent of net assets

DigitalGlobe Inc.	4/14/1999–7/31/2003	$	3,250	$	9,960		.03	%
Northern Trust Co. 5.85% 2017	11/6/2007		3,749		3,840		.01
Citigroup Inc., Series J, 7.00%, noncumulative convertible
preferred depositary shares	1/15/2008		2,500		1,469		.00

Total restricted securities		$	9,499	$	15,269		.04	%

6Principal payments may be made periodically. Therefore, the effective maturity date may be earlier than the stated maturity date.

7	Loan participations and assignments; may be subject to legal or contractual restrictions on resale. The total value of all such loans was $189,726,000, which represented .59% of the net assets of the fund.

8Payment in kind; the issuer has the option of paying additional securities in lieu of cash.

9Step bond; coupon rate will increase at a later date.

10Index-linked bond whose principal amount moves with a government retail price index.

11Security did not produce income during the last 12 months.

12Represents an affiliated company as defined under the Investment Company Act of 1940.

Key to abbreviations and symbols

ARS = Argentine pesos	EGP = Egyptian pounds	PLN = Polish zloty
A$ = Australian dollars	€ = Euros	SKr = Swedish kronor
BRL = Brazilian reais	£ = British pounds	S$ = Singapore dollars
C$ = Canadian dollars	ILS = Israeli shekels	TRY = New Turkish liras
COP = Colombian pesos	¥ = Japanese yen
DKr = Danish kroner	MXN = Mexican pesos

Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so you may lose money.

Investors should carefully consider the investment objectives, risks, charges and expenses of the American Funds. This and other important information is contained in each fund’s prospectus, which can be obtained from your financial professional and should be read carefully before investing.

MFGEFP-908-0209O-S15816

Summary investment portfolio, December 31, 2008

The following summary investment portfolio is designed to streamline the report and help investors better focus on a fund’s principal holdings. For details on how to obtain a complete schedule of portfolio holdings, please see the inside back cover.

[begin pie chart]

Portfolio by type of security (percent of net assets)

Corporate bonds & notes	36.67	%
Mortgage-backed obligations	26.27
Bonds & notes of U.S. government & government agencies	14.05
Bonds & notes of governments & government agencies outside the U.S.	7.33
Asset-backed obligations	6.62
Preferred securities	3.18
Convertible securities	0.29
Municipals	0.23
Common stocks & warrants	0.08
Short-term securities & other assets less liabilities	5.28

[end pie chart]

Portfolio quality summary (percent of net assets)*

U.S. government obligations†	13.4	%
Federal agencies	15.5
AAA	17.3
AA	8.5
A	16.0
BBB	17.7
Ba/BB or below	6.2
Equity-related securities	0.1
Short-term securities & other assets less liabilities	5.3

* Bond ratings reflect those of a credit rating agency; if ratings are not available, they are assigned by the fund's investment analysts. The ratings are not covered by the Report of Independent Registered Public Accounting Firm.
† These securities are guaranteed by the full faith and credit of the United States government.

	Principal						Percent
	amount			Value			of net
Bonds & notes - 91.17%		(000	)		(000	)	assets

Corporate bonds & notes - 36.67%
Financials - 12.77%
Countrywide Financial Corp.:
Series B, 5.80% 2012	$	152,003		$	148,263
6.25% 2010	$	A 7,700			5,450
2.946%-4.50% 2010-2012 (1)	$	45,540			41,224
Countrywide Home Loans, Inc. 4.125%-5.625% 2009		64,950			64,275
Bank of America Corp. 6.50%-7.125% 2011-2037		21,990			22,526
MBNA Global Capital Funding, Series B, 3.993% 2027 (1)		33,000			19,757
MBNA Capital A, Series A, 8.278% 2026		7,500			6,238
MBNA Corp., Series F, 7.50% 2012		1,800			1,854			.96	%
MetLife Capital Trust X 9.25% 2068 (1) (2)		111,050			77,611			.24
Other securities					3,720,404			11.57
					4,107,602			12.77

Consumer discretionary - 4.48%
Time Warner Inc. 6.50% 2036		85,485			77,735			.24
Other securities					1,361,791			4.24
					1,439,526			4.48

Utilities - 3.53%
Other securities					1,135,936			3.53


Telecommunication services - 3.52%
Other securities					1,133,868			3.52


Industrials - 3.52%
Other securities					1,131,822			3.52


Energy - 3.48%
Other securities					1,120,442			3.48


Health care - 2.38%
Other securities					765,477			2.38


Other corporate bonds & notes - 2.99%
Other securities					963,972			2.99


Total corporate bonds & notes					11,798,645			36.67


Mortgage-backed obligations - 26.27%
Federal agency mortgage-backed obligations (3) - 14.83%
Fannie Mae:
5.00% 2036		130,319			133,328
7.00% 2037		75,110			78,778
0%-12.049% 2009-2047 (1) (4)		2,237,037			2,300,544			7.81
Freddie Mac:
6.00% 2027		179,349			185,423
6.00% 2038		207,595			214,124
0%-11.00% 2009-2047 (1) (4)		1,592,765			1,627,038			6.30
Government National Mortgage Assn. 6.00% 2038		175,944			181,896			.57
Other securities					49,650			.15
					4,770,781			14.83

Commercial mortgage-backed securities (3) - 5.60%
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2005-LDP1, Class A-2, 4.625% 2046		91,455			86,337			.27
CS First Boston Mortgage Securities Corp. 4.106%-7.946% 2034-2041 (1) (2) (4)		298,788			250,483			.78
Fannie Mae 6.088%-7.30% 2010-2011		105,100			112,619			.35
Other securities					1,353,876			4.20
					1,803,315			5.60

Collateralized mortgage-backed obligations (privately originated) (3) - 5.19%
Countrywide Alternative Loan Trust 0.791%-7.00% 2019-2047 (1) (4)		544,620			325,419			1.01
CS First Boston Mortgage Securities Corp. 0%-7.50% 2018-2036 (1) (2)		178,505			118,614			.37
Other securities					1,225,359			3.81
					1,669,392			5.19

Other mortgage-backed securities (3) - 0.65%
Bank of America 5.50% 2012 (2)		34,750			35,817			.11
Other securities					175,433			.54
					211,250			.65

Total mortgage-backed obligations					8,454,738			26.27


Bonds & notes of U.S. government & government agencies - 14.05%
U.S. Treasury:
6.00% 2009		74,600			77,195
2.00% 2010		118,250			120,400
4.625% 2011		413,000			457,397
4.875% 2012		180,225			201,760
2.00% 2013		93,880			96,326
2.75% 2013		132,160			140,539
3.50% 2013		102,410			112,195
4.25% 2013		655,786			745,983
11.25% 2015		133,500			202,827
4.50% 2017		113,250			132,923
3.50% 2018		176,245			195,156
3.75% 2018		143,745			162,735
3.875% 2018		79,225			90,363
6.875% 2025		93,610			142,404
6.00% 2026		78,000			108,932
4.50% 2036		150,210			199,709
4.375% 2038 (4)		66,290			90,641
0%-8.875% 2009-2038 (4) (5)		812,923			804,472			12.68
Fannie Mae:
2.875% 2010		134,695			138,520
5.25%-6.125% 2009-2012 (1)		25,575			27,322			.52
Freddie Mac:
3.125% 2010		73,990			75,798
5.25%-5.50% 2011-2016		40,000			45,071			.38
Other securities					155,096			.47
					4,523,764			14.05

Bonds & notes of governments & government agencies outside the U.S. - 7.33%
German Government:
3.75% 2013	€	79,815			117,884
4.25% 2014		121,020			184,052
Series 6, 4.00% 2016		72,120			108,331
Series 8, 4.25% 2018		168,686			259,926
6.25% 2030		11,120			20,750			2.15
Japanese Government:
1.30% 2011	¥	7,643,050			85,948
1.70% 2017		10,704,850			125,106
1.50%-2.40% 2010-2038		16,406,500			196,954			1.27
Israeli Government:
6.00% 2010 (4)	ILS 405,580				112,275
5.50% 2017 (4)		318,800			88,992			.63
United Kingdom 5.00% 2018	£	55,620			93,660			.29
Other securities					966,893			2.99
					2,360,771			7.33

Asset-backed obligations (3) - 6.62%
AmeriCredit Automobile Receivables Trust, Series 2007-A-X, Class A-4, XLCA insured, 1.916% 2013 (1)	$	125,000			93,113			.29
Capital One Auto Finance Trust, Series 2005-C, Class A-4-B, FGIC insured, 1.235% 2012 (1)		87,981			81,368			.25
CS First Boston Mortgage Securities Corp., Series 2007-3, Class 1-A-3B, 5.846% 2037 (1)		8,477			2,292			.01
Other securities					1,955,837			6.07
					2,132,610			6.62

Municipals - 0.23%
Other securities					73,732			.23


Total bonds & notes (cost: $34,084,387,000)					29,344,260			91.17



							Percent
				Value			of net
Convertible securities - 0.29%	Shares				(000	)	assets

Other - 0.29%
Bank of America Corp., Series L, 7.25% convertible preferred		70,000			45,500			.14
Fannie Mae, Series 2004-1, 5.375% convertible preferred (4)		400			220			.00
Other securities					48,995			.15


Total convertible securities (cost: $152,844,000)					94,715			.29



							Percent
				Value			of net
Preferred securities - 3.18%	Shares				(000	)	assets

Financials - 3.17%
JPMorgan Chase & Co., Series I, 7.90% (1)		138,220,000			115,279			.36
Bank of America Corp.:
Series K, 8.00% noncumulative (1)		70,115,000			50,505
Series M, 8.125% noncumulative (1)		54,210,000			40,617
Series E, 0% depositary shares		1,384,800			16,206			.33
SMFG Preferred Capital USD 1 Ltd. 6.078% (1) (2)		116,569,000			79,224			.25
Fannie Mae:
Series O, 7.00% (1) (2)		4,485,673			4,626
Series S, 8.25% noncumulative		375,300			324
Series R, 7.625%		382,800			284			.02
Freddie Mac:
Series V, 5.57%		3,356,231			1,284
Series Z, 8.375%		2,663,885			1,179
Series W, 5.66%		1,548,000			871
Series F, 5.00%		294,375			159
Series U, 5.90%		496,600			154
Series Y, 6.55%		374,269			108			.01
Other securities					708,658			2.20
					1,019,478			3.17

U.S. government agency securities - 0.01%
Other securities					3,217			.01



Total preferred securities (cost: $1,949,073,000)					1,022,695			3.18



							Percent
				Value			of net
Common stocks - 0.08%					(000	)	assets

Other - 0.08%
Other securities					24,763			.08


Total common stocks (cost: $55,394,000)					24,763			.08



							Percent
				Value			of net
Warrants - 0.00%					(000	)	assets

Other - 0.00%
Other securities					-			.00


Total warrants (cost: $143,000)					-			.00



	Principal						Percent
	amount			Value			of net
Short-term securities - 4.41%		(000	)		(000	)	assets

Federal Home Loan Bank 0.20%-3.30% due 1/2-6/26/2009	$	219,600			219,447			.68
Fannie Mae 0.25%-2.10% due 2/3-4/15/2009		145,167			145,058			.45
Freddie Mac 0.45%-2.40% due 3/2-7/7/2009		131,600			131,411			.41
Hewlett-Packard Co. 2.20% due 2/3-2/4/2009 (2)		110,000			109,874			.34
U.S. Treasury Bills 1.09%-1.95% due 2/5-4/16/2009		106,700			106,678			.33
International Bank for Reconstruction and Development 0.22%-2.10% due 1/20-3/11/2009		104,900			104,846			.33
Procter & Gamble International Funding S.C.A. 0.12%-1.00% due 2/26-5/28/2009 (2)		96,500			96,453			.30
Wal-Mart Stores Inc. 0.25% due 6/16/2009 (2)		78,100			78,009			.24
Bank of America Corp. 3.75% due 3/9/2009		50,000			49,894
Enterprise Funding Co. LLC 1.40%-2.25% due 1/7-2/2/2009 (2)		24,692			24,661			.23
Other securities					354,176			1.10

Total short-term securities (cost: $1,419,110,000)					1,420,507			4.41


Total investment securities (cost: $37,660,951,000)					31,906,940			99.13
Other assets less liabilities					281,071			.87

Net assets				$	32,188,011			100.00	%

"Other securities" includes all issues that are not disclosed separately in the summary investment portfolio. Some of these securities (with aggregate value of $15,269,000, which represented .04% of the net assets of the fund) may be subject to legal or contractual restrictions on resale.

Investments in affiliates

A company is considered to be an affiliate of the fund under the Investment Company Act of 1940 if the

fund's holdings in that company represent 5% or more of the outstanding voting shares of that company.

The value of the fund's holdings in affiliated companies is included in "Other securities"

under their respective industry sectors in the preceding summary investment portfolio. Further details on these

holdings and related transactions during the year ended December 31, 2008, appear below.

	Beginning shares		Additions		Reductions		Ending shares		Dividend income (000)		Value of affiliates at 12/31/08 (000)

ZiLOG, Inc. (6)		879,000		-		-		879,000		-	$	2,549
Clarent Hospital Corp. (4) (6)		331,291		-		-		331,291		-		3
										-	$	2,552

The following footnotes apply to either the individual securities noted or one or more of the securities aggregated and listed as a single line item.

(1) Coupon rate may change periodically.

(2) Purchased in a transaction exempt from registration under the Securities Act of 1933. May be resold in the U.S. in transactions exempt from registration, normally to qualified institutional buyers. The total value of all such securities, including those in "Other securities," was $4,944,277,000, which represented 15.36% of the net assets of the fund.

(3) Principal payments may be made periodically. Therefore, the effective maturity date may be earlier than the stated maturity date.

(4) Valued under fair value procedures adopted by authority of the board of directors. The total value of all such securities, including those in "Other securities," was $1,343,327,000, which represented 4.17% of the net assets of the fund.

(5) Index-linked bond whose principal amount moves with a government retail price index.

(6) Security did not produce income during the last 12 months.

Key to abbreviation and symbols

A$ = Australian dollars

€ = Euros

£ = British pounds

ILS = Israeli shekels

¥ = Japanese yen

The industry classifications shown in the summary investment portfolio were obtained from sources believed to be reliable and are not covered by the Report of Independent Registered Public Accounting Firm.

See Notes to Financial Statements

Financial statements

Statement of assets and liabilities
at December 31, 2008	(dollars in thousands)

Assets:
Investment securities, at value:
Unaffiliated issuers (cost: $37,645,108)	$	31,904,388
Affiliated issuers (cost: $15,843)		2,552	$	31,906,940
Cash				44,453
Unrealized gain on forward currency contracts				5,746
Receivables for:
Sales of investments		54,493
Sales of fund's shares		153,374
Dividends and interest		405,015		612,882
				32,570,021
Liabilities:
Unrealized loss on forward currency contracts				43,590
Payables for:
Purchases of investments		186,740
Repurchases of fund's shares		130,586
Investment advisory services		6,373
Services provided by affiliates		13,899
Directors' deferred compensation		331
Other		491		338,420
Net assets at December 31, 2008			$	32,188,011

Net assets consist of:
Capital paid in on shares of capital stock			$	39,792,180
Distributions in excess of net investment income				(42,588	)
Accumulated net realized loss				(1,768,302	)
Net unrealized depreciation				(5,793,279	)
Net assets at December 31, 2008			$	32,188,011

(dollars and shares in thousands, except per-share amounts)
Total authorized capital stock - 5,000,000 shares, $.001par value (2,992,699 total shares outstanding)
	Net assets		Shares outstanding		Net asset value per share*
Class A	$	21,986,979		2,044,250	$	10.76
Class B		1,227,225		114,102		10.76
Class C		2,274,063		211,432		10.76
Class F-1		2,652,992		246,663		10.76
Class F-2		98,649		9,171		10.76
Class 529-A		547,204		50,877		10.76
Class 529-B		71,447		6,643		10.76
Class 529-C		258,191		24,006		10.76
Class 529-E		28,693		2,668		10.76
Class 529-F-1		25,882		2,407		10.76
Class R-1		87,504		8,136		10.76
Class R-2		615,855		57,261		10.76
Class R-3		939,346		87,336		10.76
Class R-4		706,627		65,699		10.76
Class R-5		667,354		62,048		10.76

(*) Maximum offering price and redemption price per share were equal to the net asset value per share for all share classes, except for Classes A and 529-A, for which the maximum offering prices per share were $11.18 each.


See Notes to Financial Statements

Statement of operations
for the year ended December 31, 2008	(dollars in thousands)

Investment income:
Income:
Interest (net of non-U.S. taxes of $552)	$	2,243,986
Dividends		39,414		$	2,283,400

Fees and expenses*:
Investment advisory services		90,043
Distribution services		126,152
Transfer agent services		33,537
Administrative services		17,440
Reports to shareholders		1,412
Registration statement and prospectus		1,604
Postage, stationery and supplies		2,848
Directors' compensation		116
Auditing and legal		195
Custodian		1,236
State and local taxes		261
Other		8
Total fees and expenses before waiver		274,852
Less investment advisory services waiver		9,004
Total fees and expenses after waiver					265,848
Net investment income					2,017,552

Net realized loss and unrealized depreciation on investments and currency:
Net realized (loss) gain on:
Investments		(1,287,316	)
Currency transactions		71,911			(1,215,405	)
Net unrealized depreciation on:
Investments		(5,483,400	)
Currency translations		(43,226	)		(5,526,626	)
Net realized loss and unrealized depreciation on investments and currency					(6,742,031	)
Net decrease in net assets resulting from operations				$	(4,724,479	)

(*) Additional information related to class-specific fees and expenses is included in the Notes to Financial Statements.

See Notes to Financial Statements




Statements of changes in net assets		(dollars in thousands)


	Year ended December 31
	2008			2007
Operations:
Net investment income	$	2,017,552		$	1,643,458
Net realized (loss) gain on investments and currency transactions		(1,215,405	)		114,344
Net unrealized depreciation on investments and currency translations		(5,526,626	)		(731,832	)
Net (decrease) increase in net assets resulting from operations		(4,724,479	)		1,025,970

Dividends paid to shareholders from net investment income		(2,153,748	)		(1,685,415	)

Net capital share transactions		3,247,995			8,469,888

Total (decrease) increase in net assets		(3,630,232	)		7,810,443

Net assets:
Beginning of year		35,818,243			28,007,800

End of year (including distributions in excess of and undistributed net investment income: $(42,588) and $27,903, respectively)	$	32,188,011		$	35,818,243


See Notes to Financial Statements

Notes to financial statements

1.	Organization and significant accounting policies

Organization – The Bond Fund of America, Inc. (the "fund") is registered under the Investment Company Act of 1940 as an open-end, diversified management investment company. The fund seeks as high a level of current income as is consistent with preservation of capital through a diversified portfolio of bonds and other fixed-income obligations.

The fund offers 15 share classes consisting of five retail share classes, five 529 college savings plan share classes and five retirement plan share classes. The 529 college savings plan share classes (529-A, 529-B, 529-C, 529-E and 529-F-1) can be used to save for college education. The five retirement plan share classes (R-1, R-2, R-3, R-4 and R-5) are generally offered only through eligible employer-sponsored retirement plans. The fund’s share classes are described below:

Share class	Initial sales charge	Contingent deferred sales charge upon redemption	Conversion feature
Classes A and 529-A	Up to 3.75%	None (except 1% for certain redemptions within one year of purchase without an initial sales charge)	None
Classes B and 529-B	None	Declines from 5% to 0% for redemptions within six years of purchase	Classes B and 529-B convert to Classes A and 529-A, respectively, after eight years
Class C	None	1% for redemptions within one year of purchase	Class C converts to Class F-1 after 10 years
Class 529-C	None	1% for redemptions within one year of purchase	None
Class 529-E	None	None	None
Classes F-1, F-2 and 529-F-1	None	None	None
Classes R-1, R-2, R-3, R-4 and R-5	None	None	None

On August 1, 2008, the fund made an additional retail share class (Class F-2) available for sale pursuant to an amendment to its registration statement filed with the Securities and Exchange Commission (“SEC”). In addition, Class F shares were renamed Class F-1 and Class 529-F shares were renamed Class 529-F-1. Refer to the fund’s prospectus for more details.

Holders of all share classes have equal pro rata rights to assets, dividends and liquidation proceeds. Each share class has identical voting rights, except for the exclusive right to vote on matters affecting only its class. Share classes have different fees and expenses ("class-specific fees and expenses"), primarily due to different arrangements for distribution, administrative and shareholder services. Differences in class-specific fees and expenses will result in differences in net investment income and, therefore, the payment of different per-share dividends by each class.

Significant accounting policies – The financial statements have been prepared to comply with accounting principles generally accepted in the United States of America. These principles require management to make estimates and assumptions that affect reported amounts and disclosures. Actual results could differ from those estimates. The following is a summary of the significant accounting policies followed by the fund:

Security valuation – Equity securities are valued at the official closing price of, or 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. Prices for each security are taken from the principal exchange or market in which the security trades. Fixed-income securities, including short-term securities purchased with more than 60 days left to maturity, are valued at prices obtained from an independent pricing service when such prices are available. However, where the investment adviser deems it appropriate, such securities will be valued at the mean quoted bid and asked prices (or bid prices, if asked prices are not available) or at prices for securities of comparable maturity, quality and type. Securities with both fixed-income and equity characteristics, or equity securities traded principally among fixed-income dealers, are valued in the manner described above for either equity or fixed-income securities, depending on which method is deemed most appropriate by the investment adviser. Short-term securities purchased within 60 days to maturity are valued at amortized cost, which approximates market value. The value of short-term securities originally purchased with maturities greater than 60 days is determined based on an amortized value to par when they reach 60 days or less remaining to maturity. Forward currency contracts are valued at the mean of representative quoted bid and asked prices.

Securities and other assets for which representative market quotations are not readily available or are considered unreliable by the investment adviser are fair valued as determined in good faith under procedures adopted by authority of the fund's board of directors. Various factors may be reviewed in order to make a good faith determination of a security’s fair value. These factors include, but are not limited to, the type and cost of the security; contractual or legal restrictions on resale of the security; relevant financial or business developments of the issuer; actively traded similar or related securities; conversion or exchange rights on the security; related corporate actions; significant events occurring after the close of trading in the security; and changes in overall market conditions.

Security transactions and related investment income – Security transactions are recorded by the fund as of the date the trades are executed with brokers. Realized gains and losses from security transactions are determined based on the specific identified cost of the securities. In the event a security is purchased with a delayed payment date, the fund will segregate liquid assets sufficient to meet its payment obligations. 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 fixed-income securities are amortized daily over the expected life of the security.

Class allocations – Income, fees and expenses (other than class-specific fees and expenses) are allocated daily among the various share classes based on the relative value of their settled shares. Realized and unrealized gains and losses are allocated daily among the various share classes based on their relative net assets. Class-specific fees and expenses, such as distribution, administrative and shareholder services, are charged directly to the respective share class.

Dividends and distributions to shareholders – Dividends paid to shareholders are declared daily from net investment income and are paid to shareholders monthly. Distributions paid to shareholders are recorded on the ex-dividend date.

Currency translation – Assets and liabilities, including investment securities, denominated in currencies other than U.S. dollars are translated into U.S. dollars at the exchange rates in effect on the valuation date. Purchases and sales of investment securities and income and expenses are translated into U.S. dollars at the exchange rates on the dates of such transactions. On the accompanying financial statements, the effects of changes in exchange rates on investment securities are included with the net realized gain or loss and net unrealized appreciation or depreciation on investments. The realized gain or loss and unrealized appreciation or depreciation resulting from all other transactions denominated in currencies other than U.S. dollars are disclosed separately.

Forward currency contracts – The fund may enter into forward currency contracts, which represent agreements to exchange currencies on specific future dates at predetermined rates. The fund enters into these contracts to manage its exposure to changes in exchange rates arising from investments denominated in currencies other than U.S. dollars. Upon entering into these contracts, risks may arise from the potential inability of counterparties to meet the terms of their contracts and from possible movements in exchange rates. Due to these risks, the fund could incur losses up to the entire contract amount, which may exceed the net unrealized value shown on the accompanying financial statements. On a daily basis, the fund values forward currency contracts based on the applicable exchange rates and records unrealized gains or losses. The fund records realized gains or losses at the time the forward contract is closed or offset by another contract with the same broker for the same settlement date and currency. Closed forward currency contracts that have not reached their expiration date are included in the respective receivables for sales or payables for purchases of investment securities in the statement of assets and liabilities.

Loan transactions – The fund may enter into loan transactions in which the fund acquires a loan either through an agent, by assignment from another holder, or as a participation interest in another holder's portion of a loan. The loan is often administered by a financial institution that acts as agent for the holders of the loan, and the fund may be required to receive approval from the agent and/or borrower prior to the sale of the investment. The loan's interest rate and maturity date may change based on the terms of the loan, including potential early payments of principal. Risks may arise due to the delayed settlement date of the loan transaction and the ability of the agent and/or borrower to meet the obligations of the loan.

2.	Risk factors

Investing in the fund may involve certain risks including, but not limited to, those described below.

The values of, and the income generated by, most debt securities held by the fund may be affected by changing interest rates and by changes in the effective maturities and credit ratings of these securities. For example, the values of debt securities in the fund's portfolio generally will decline when interest rates rise and increase when interest rates fall. In addition, falling interest rates may cause an issuer to redeem, "call" or refinance a security before its stated maturity, which may result in the fund having to reinvest the proceeds in lower yielding securities. Debt securities are also subject to credit risk, which is the possibility that the credit strength of an issuer will weaken and/or an issuer of a debt security will fail to make timely payments of principal or interest and the security will go into default. Lower quality or longer maturity debt securities generally have higher rates of interest and may be subject to greater price fluctuations than higher quality or shorter maturity debt securities. The fund's investment adviser attempts to reduce these risks through diversification of the portfolio and ongoing credit analysis, as well as by monitoring economic and legislative developments, but there can be no assurance that it will be successful at doing so.

Many types of debt securities, including mortgage-related securities, are subject to prepayment risk. For example, when interest rates fall, homeowners are more likely to refinance their home mortgages and "prepay" their principal earlier than expected. The fund must then reinvest the prepaid principal in new securities when interest rates on new mortgage investments are falling, thus reducing the fund’s income.

A security backed by the U.S. Treasury or the full faith and credit of the U.S. government is guaranteed only as to the timely payment of interest and principal when held to maturity. Accordingly, the current market prices for these securities will fluctuate with changes in interest rates.

The fund may also invest in debt securities and mortgage-backed securities issued by federal agencies and instrumentalities that are not backed by the full faith and credit of the U.S. government. These securities are neither issued nor guaranteed by the U.S. Treasury. Although all securities in the fund's portfolio may be adversely affected by currency fluctuations or global economic, political or social instability, securities issued by entities based outside the United States may be affected to a greater extent.

3. Taxation and distributions

Federal income taxation – The fund complies with the requirements under Subchapter M of the Internal Revenue Code applicable to mutual funds and intends to distribute substantially all of its net taxable income and net capital gains each year. The fund is not subject to income taxes to the extent such distributions are made. Therefore, no federal income tax provision is required.

As of and during the period ended December 31, 2008, the fund did not have a liability for any unrecognized tax benefits. The fund recognizes interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the statement of operations. During the period, the fund did not incur any interest or penalties.

The fund is not subject to examination by U.S. federal tax authorities for tax years before 2005, by state tax authorities for tax years before 2004 and by tax authorities outside the U.S. for tax years before 2004.

Non-U.S. taxation – Dividend and interest income is recorded net of non-U.S. taxes paid. Realized and unrealized gains on securities in certain countries are subject to non-U.S. taxes. The fund records a liability based on realized and unrealized gains to provide for potential non-U.S. taxes payable on these securities. For the year ended December 31, 2008, non-U.S. taxes paid on realized gains were $32,000. As of December 31, 2008, there was no liability for non-U.S. taxes based on unrealized gains.

Distributions – Distributions paid to shareholders are based on net investment income and net realized gains determined on a tax basis, which may differ from net investment income and net realized gains for financial reporting purposes. These differences are due primarily to differing treatment for items such as currency gains and losses; short-term capital gains and losses; capital losses related to sales of certain securities within 30 days of purchase; unrealized appreciation of certain investments in securities outside the U.S.; cost of investments sold; paydowns on fixed-income securities; net capital losses; and income on certain investments. 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 for financial reporting purposes.

During the year ended December 31, 2008, the fund reclassified $65,801,000 from accumulated net realized loss to distributions in excess of net investment income and $96,000 from distributions in excess of net investment income to capital paid in on shares of capital stock to align financial reporting with tax reporting.

As of December 31, 2008, the tax basis components of distributable earnings, unrealized appreciation (depreciation) and cost of investment securities were as follows:

	(dollars in thousands)
Undistributed ordinary income				$	39,042
Post-October currency loss deferrals (realized during the period November 1, 2008, through December 31, 2008)*					(113,391	)
Capital loss carryforwards†:
Expiring 2010	$	(125,233	)
Expiring 2011		(243,982	)
Expiring 2014		(69,196	)
Expiring 2016		(959,389	)		(1,397,800	)
Post-October capital loss deferrals (realized during the period November 1, 2008, through December 31, 2008)*					(330,710	)
Gross unrealized appreciation on investment securities					906,914
Gross unrealized depreciation on investment securities					(6,711,868	)
Net unrealized depreciation on investment securities					(5,804,954	)
Cost of investment securities					37,711,894

*These deferrals are considered incurred in the subsequent year.
†The capital loss carryforwards will be used to offset any capital gains realized by the fund in future years through the expiration dates. The fund will not make distributions from capital gains while capital loss carryforwards remain.

Ordinary income distributions paid to shareholders from net investment income and currency gains were as follows (dollars in thousands):

	Year ended December 31
Share class	2008		2007

Class A	$	1,505,354	$	1,227,002
Class B		77,235		68,347
Class C		136,921		101,185
Class F-1		183,086		127,436
Class F-2*		1,971		-
Class 529-A		34,549		24,467
Class 529-B		4,096		3,260
Class 529-C		14,236		9,501
Class 529-E		1,715		1,231
Class 529-F-1		1,624		1,020
Class R-1		4,662		2,340
Class R-2		35,404		26,648
Class R-3		59,775		39,139
Class R-4		47,010		26,924
Class R-5		46,110		26,915
Total	$	2,153,748	$	1,685,415


* Class F-2 was offered beginning August 1, 2008.

4. Fees and transactions with related parties

Capital Research and Management Company ("CRMC"), the fund’s investment adviser, is the parent company of American Funds Service Company® ("AFS"), the fund’s transfer agent, and American Funds Distributors,® Inc. ("AFD"), the principal underwriter of the fund’s shares.

Investment advisory services - The Investment Advisory and Service Agreement with CRMC provides for monthly fees accrued daily. These fees are based on a declining series of annual rates beginning with 0.30% on the first $60 million of daily net assets and decreasing to 0.11% on such assets in excess of $36 billion. The agreement also provides for monthly fees, accrued daily, based on a declining series of rates beginning with 2.25% on the first $8,333,333 of the fund's monthly gross income and decreasing to 1.75% on such income in excess of $41,666,667. CRMC waived a portion of its investment advisory services fee from September 1, 2004, through December 31, 2008. During the year ended December 31, 2008, total investment advisory services fees waived by CRMC were $9,004,000. As a result, the fee shown on the accompanying financial statements of $90,043,000, which was equivalent to an annualized rate of 0.252%, was reduced to $81,039,000, or 0.227% of average daily net assets.

Class-specific fees and expenses – Expenses that are specific to individual share classes are accrued directly to the respective share class. The principal class-specific fees and expenses are described below:

Distribution services – The fund has adopted plans of distribution for all share classes, except Classes F-2 and R-5. Under the plans, the board of directors approves certain categories of expenses that are used to finance activities primarily intended to sell fund shares and service existing accounts. The plans provide for payments, based on an annualized percentage of average daily net assets, ranging from 0.25% to 1.00% as noted below. In some cases, the board of directors has limited the amounts that may be paid to less than the maximum allowed by the plans. All share classes except Classes F-2 and R-5 may use up to 0.25% of average daily net assets to pay service fees, or to compensate AFD for paying service fees, to firms that have entered into agreements with AFD to provide certain shareholder services. The remaining amounts available to be paid under each plan are paid to dealers to compensate them for their sales activities.

For Classes A and 529-A, the board of directors has also approved the reimbursement of dealer and wholesaler commissions paid by AFD for certain shares sold without a sales charge. These classes reimburse AFD for amounts billed within the prior 15 months but only to the extent that the overall annual expense limit of 0.25% is not exceeded. As of December 31, 2008, unreimbursed expenses subject to reimbursement totaled $4,453,000 for Class A. There were no unreimbursed expenses subject to reimbursement for Class 529-A.

Share class	Currently approved limits	Plan limits
Class A	0.25%	0.25%
Class 529-A	0.25	0.50
Classes B and 529-B	1.00	1.00
Classes C, 529-C and R-1	1.00	1.00
Class R-2	0.75	1.00
Classes 529-E and R-3	0.50	0.75
Classes F-1, 529-F-1 and R-4	0.25	0.50

Transfer agent services – The fund has a transfer agent agreement with AFS for Classes A and B. Under this agreement, these share classes compensate AFS for transfer agent services including shareholder recordkeeping, communications and transaction processing. AFS is also compensated for certain transfer agent services provided to all other share classes from the administrative services fees paid to CRMC described below.

Administrative services – The fund has an administrative services agreement with CRMC to provide transfer agent and other related shareholder services for all share classes other than Classes A and B. Each relevant share class pays CRMC annual fees up to 0.15% (0.10% for Class R-5) based on its respective average daily net assets. Each relevant share class also pays AFS additional amounts for certain transfer agent services. CRMC and AFS may use these fees to compensate third parties for performing these services. Each 529 share class is subject to an additional administrative services fee payable to the Commonwealth of Virginia for the maintenance of the 529 college savings plan. The quarterly fee is based on a declining series of annual rates beginning with 0.10% on the first $30 billion of the net assets invested in Class 529 shares of the American Funds and decreasing to 0.06% on such assets between $120 billion and $150 billion. The fee for any given calendar quarter is accrued and calculated on the basis of the average net assets of Class 529 shares of the American Funds for the last month of the prior calendar quarter. Although these amounts are included with administrative services fees on the accompanying financial statements, the Commonwealth of Virginia is not considered a related party.

Expenses under the agreements described on the previous page for the year ended December 31, 2008, were as follows (dollars in thousands):

Share class	Distribution services	Transfer agent services	Administrative services
Share class	Distribution services	Transfer agent services	CRMC administrative services	Transfer agent services	Commonwealth of Virginia administrative services
Class A	$61,314	$31,795	Not applicable	Not applicable	Not applicable
Class B	14,378	1,742	Not applicable	Not applicable	Not applicable
Class C	25,500	Included in administrative services	$3,551	$594	Not applicable
Class F-1	7,441		3,327	373	Not applicable
Class F-2 *	Not applicable		28	4	Not applicable
Class 529-A	1,158		523	106	$ 559
Class 529-B	766		73	28	77
Class 529-C	2,635		246	75	264
Class 529-E	145		27	5	29
Class 529-F-1	-		23	5	25
Class R-1	838		97	55	Not applicable
Class R-2	4,994		999	2,394	Not applicable
Class R-3	5,083		1,464	663	Not applicable
Class R-4	1,900		1,077	46	Not applicable
Class R-5	Not applicable		679	24	Not applicable
Total	$126,152	$33,537	$12,114	$4,372	$954

* Class F-2 was offered beginning August 1, 2008.

Directors’ deferred compensation – Since the adoption of the deferred compensation plan in 1993, directors who are unaffiliated with CRMC may elect to defer the cash payment of part or all of their compensation. These deferred amounts, which remain as liabilities of the fund, are treated as if invested in shares of the fund or other American Funds. These amounts represent general, unsecured liabilities of the fund and vary according to the total returns of the selected funds. Directors’ compensation of $116,000, shown on the accompanying financial statements, includes $292,000 in current fees (either paid in cash or deferred) and a net decrease of $176,000 in the value of the deferred amounts.

Affiliated officers and directors – Officers and certain directors of the fund are or may be considered to be affiliated with CRMC, AFS and AFD. No affiliated officers or directors received any compensation directly from the fund.

5. Disclosure of fair value measurements

The fund adopted the Statement of Financial Accounting Standards No. 157 (“FAS 157”), Fair Value Measurements, on January 1, 2008. FAS 157 requires the fund to classify its assets and liabilities into three levels based on the method used to value the assets or liabilities. Level 1 values are based on quoted prices in active markets for identical securities. Level 2 values are based on significant observable market inputs, such as quoted prices for similar securities and quoted prices in inactive markets. Level 3 values are based on significant unobservable inputs that reflect the fund’s determination of assumptions that market participants might reasonably use in valuing the securities. The valuation levels are not necessarily an indication of the risk or liquidity associated with the underlying investment. For example, U.S. government securities are generally high quality and liquid; however, they are reflected as Level 2 because the inputs used to determine fair value may not always be quoted prices in an active market. The following table presents the fund’s valuation levels as of December 31, 2008 (dollars in thousands):

	Investment securities		Forward currency contracts
Level 1 – Quoted prices	$	105,352
Level 2 – Other significant observable inputs		31,277,667	$	(37,844	) (*)
Level 3 – Significant unobservable inputs		523,921
Total	$	31,906,940

(*) Net unrealized depreciation on forward currency contracts is not included in the summary investment portfolio.

The following table reconciles the valuation of the fund’s Level 3 investment securities and related transactions during the year ended December 31, 2008 (dollars in thousands):

Beginning value at 1/1/2008	$	529,372
Net purchases		12,654
Net realized loss (†)		(706	)
Net unrealized depreciation (†)		(30,055	)
Net transfers into Level 3		12,656
Ending value at 12/31/2008	$	523,921

Net unrealized depreciation during the period on Level 3 investment securities held at 12/31/2008 (†)

(9,519

)

(†) Net realized loss and net unrealized depreciation are included in the related amounts on investments in the statement of operations.

6. Capital share transactions

Capital share transactions in the fund were as follows (dollars and shares in thousands):

	Sales(*)				Reinvestments of dividends				Repurchases(*)						Net increase (decrease)
Share class	Amount		Shares		Amount		Shares		Amount			Shares			Amount			Shares

Year ended December 31, 2008
Class A	$	6,852,721		563,129	$	1,370,285		116,136	$	(6,431,432	)		(541,018	)	$	1,791,574			138,247
Class B		304,429		24,965		68,497		5,813		(397,075	)		(33,311	)		(24,149	)		(2,533	)
Class C		922,097		75,445		120,888		10,276		(809,514	)		(68,089	)		233,471			17,632
Class F-1		1,692,529		139,793		157,443		13,367		(1,572,023	)		(133,348	)		277,949			19,812
Class F-2†		125,467		11,218		1,582		147		(23,803	)		(2,194	)		103,246			9,171
Class 529-A		160,968		13,215		34,433		2,929		(70,702	)		(5,954	)		124,699			10,190
Class 529-B		13,620		1,118		4,082		348		(8,590	)		(725	)		9,112			741
Class 529-C		92,811		7,615		14,184		1,211		(44,239	)		(3,731	)		62,756			5,095
Class 529-E		8,810		727		1,709		146		(3,943	)		(331	)		6,576			542
Class 529-F-1		11,194		927		1,615		138		(4,241	)		(366	)		8,568			699
Class R-1		54,856		4,492		4,534		388		(26,516	)		(2,206	)		32,874			2,674
Class R-2		295,996		24,167		35,134		2,992		(235,150	)		(19,523	)		95,980			7,636
Class R-3		512,079		41,561		59,475		5,056		(382,379	)		(31,909	)		189,175			14,708
Class R-4		382,804		31,033		46,848		3,980		(265,125	)		(22,311	)		164,527			12,702
Class R-5		371,353		30,448		42,060		3,567		(241,776	)		(20,583	)		171,637			13,432
Total net increase
(decrease)	$	11,801,734		969,853	$	1,962,769		166,494	$	(10,516,508	)		(885,599	)	$	3,247,995			250,748

Year ended December 31, 2007
Class A	$	7,454,214		561,931	$	1,094,271		82,834	$	(3,855,437	)		(291,100	)	$	4,693,048			353,665
Class B		264,610		19,942		58,649		4,439		(228,934	)		(17,270	)		94,325			7,111
Class C		1,036,755		78,152		88,010		6,667		(393,914	)		(29,739	)		730,851			55,080
Class F-1		1,824,172		137,537		106,373		8,060		(525,612	)		(39,715	)		1,404,933			105,882
Class 529-A		168,258		12,695		24,423		1,849		(39,488	)		(2,987	)		153,193			11,557
Class 529-B		12,825		967		3,252		246		(6,116	)		(462	)		9,961			751
Class 529-C		95,996		7,242		9,482		719		(23,745	)		(1,797	)		81,733			6,164
Class 529-E		8,587		648		1,228		93		(2,540	)		(192	)		7,275			549
Class 529-F-1		9,475		715		1,016		77		(2,310	)		(175	)		8,181			617
Class R-1		54,425		4,109		2,280		173		(13,406	)		(1,012	)		43,299			3,270
Class R-2		305,834		23,063		26,477		2,005		(171,711	)		(12,960	)		160,600			12,108
Class R-3		597,983		45,096		38,966		2,952		(241,796	)		(18,240	)		395,153			29,808
Class R-4		462,027		34,956		26,857		2,036		(111,187	)		(8,393	)		377,697			28,599
Class R-5		368,202		27,804		23,822		1,805		(82,385	)		(6,223	)		309,639			23,386
Total net increase
(decrease)	$	12,663,363		954,857	$	1,505,106		113,955	$	(5,698,581	)		(430,265	)	$	8,469,888			638,547

(*) Includes exchanges between share classes of the fund.
(†) Class F-2 was offered beginning August 1, 2008.

7. Forward currency contracts

As of December 31, 2008, the fund had open forward currency contracts to purchase or sell currencies as follows (amounts in thousands):

	Contract amount				U.S. valuation at December 31, 2008

							Unrealized
							(depreciation)
	Receive		Deliver		Amount		appreciation
Purchases:

Euros
expiring 2/27/2009	€	3,876	$	5,537	$	5,391	$	(146	)

Sales:

Australian dollars
expiring 1/22 to 1/27/2009	$	59,679	$	A89,980		63,816		(4,137	)

British pounds
expiring 1/7 to 2/10/2009		189,859	£	127,370		185,136		4,723

Euros
expiring 1/7 to 1/29/2009		774,459	€	579,655		807,059		(32,600	)

Israeli shekels
expiring 1/8 to 1/16/2009		85,001	ILS 339,045			89,619		(4,618	)

Japanese yen
expiring 1/15 to 1/29/2009		142,942	¥	13,073,684		143,909		(967	)

Polish zloty
expiring 1/26/2009		29,600	PLN88,000			29,699		(99	)

						1,319,238		(37,698	)

Forward currency contracts - net							$	(37,844	)

8. Investment transactions

The fund made purchases and sales of investment securities, excluding short-term securities and U.S. government obligations, if any, of $16,225,234,000 and $13,396,294,000, respectively, during the year ended December 31, 2008.

Financial highlights (1)

		(Loss) income from investment operations(2)
	Net asset value, beginning of period	Net investment income		Net (losses) gains on securities (both realized and unrealized)	Total from investment operations	Dividends (from net investment income)	Net asset value, end of period	Total return (3) (4)	Net assets, end of period (in millions)	Ratio of expenses to average net assets before reimbursements /waivers	Ratio of expenses to average net assets after reimbursements /waivers (4)	Ratio of net income to average net assets (4)
Class A:
Year ended 12/31/2008	$13.06	$.70	$	(2.25)	$(1.55)	$(.75)	$10.76	(12.24)%	$21,987	.65%	.63%	5.76%
Year ended 12/31/2007	13.32	.69		(.25)	.44	(.70)	13.06	3.37	24,898	.63	.61	5.22
Year ended 12/31/2006	13.22	.67		.09	.76	(.66)	13.32	5.88	20,670	.65	.62	5.07
Year ended 12/31/2005	13.65	.62		(.36)	.26	(.69)	13.22	1.94	17,738	.65	.62	4.60
Year ended 12/31/2004	13.51	.61		.16	.77	(.63)	13.65	5.85	15,822	.65	.65	4.54
Class B:
Year ended 12/31/2008	13.06	.61		(2.25)	(1.64)	(.66)	10.76	(12.88)	1,227	1.40	1.37	5.02
Year ended 12/31/2007	13.32	.59		(.25)	.34	(.60)	13.06	2.61	1,524	1.38	1.35	4.48
Year ended 12/31/2006	13.22	.57		.09	.66	(.56)	13.32	5.09	1,458	1.40	1.37	4.33
Year ended 12/31/2005	13.65	.52		(.36)	.16	(.59)	13.22	1.19	1,415	1.38	1.36	3.87
Year ended 12/31/2004	13.51	.51		.16	.67	(.53)	13.65	5.07	1,394	1.39	1.38	3.80
Class C:
Year ended 12/31/2008	13.06	.60		(2.25)	(1.65)	(.65)	10.76	(12.92)	2,274	1.44	1.41	4.98
Year ended 12/31/2007	13.32	.59		(.25)	.34	(.60)	13.06	2.56	2,532	1.42	1.40	4.43
Year ended 12/31/2006	13.22	.56		.09	.65	(.55)	13.32	5.04	1,847	1.45	1.42	4.27
Year ended 12/31/2005	13.65	.51		(.36)	.15	(.58)	13.22	1.12	1,429	1.44	1.42	3.81
Year ended 12/31/2004	13.51	.50		.16	.66	(.52)	13.65	4.99	1,123	1.46	1.45	3.71
Class F-1:
Year ended 12/31/2008	13.06	.70		(2.25)	(1.55)	(.75)	10.76	(12.23)	2,653	.64	.62	5.78
Year ended 12/31/2007	13.32	.69		(.25)	.44	(.70)	13.06	3.38	2,963	.62	.60	5.22
Year ended 12/31/2006	13.22	.67		.09	.76	(.66)	13.32	5.90	1,611	.63	.60	5.07
Year ended 12/31/2005	13.65	.62		(.36)	.26	(.69)	13.22	1.92	803	.65	.63	4.60
Year ended 12/31/2004	13.51	.60		.16	.76	(.62)	13.65	5.80	487	.70	.69	4.46
Class F-2:
Period from 8/4/2008 to 12/31/2008	12.31	.29		(1.47)	(1.18)	(.37)	10.76	(9.62)	99	.18	.17	2.69
Class 529-A:
Year ended 12/31/2008	13.06	.69		(2.25)	(1.56)	(.74)	10.76	(12.28)	547	.69	.67	5.74
Year ended 12/31/2007	13.32	.68		(.25)	.43	(.69)	13.06	3.31	532	.69	.67	5.17
Year ended 12/31/2006	13.22	.66		.09	.75	(.65)	13.32	5.85	388	.68	.66	5.05
Year ended 12/31/2005	13.65	.61		(.36)	.25	(.68)	13.22	1.88	273	.69	.67	4.57
Year ended 12/31/2004	13.51	.60		.16	.76	(.62)	13.65	5.80	187	.70	.70	4.48
Class 529-B:
Year ended 12/31/2008	13.06	.60		(2.25)	(1.65)	(.65)	10.76	(12.98)	71	1.51	1.48	4.92
Year ended 12/31/2007	13.32	.58		(.25)	.33	(.59)	13.06	2.49	77	1.50	1.47	4.36
Year ended 12/31/2006	13.22	.55		.09	.64	(.54)	13.32	4.97	69	1.53	1.50	4.20
Year ended 12/31/2005	13.65	.50		(.36)	.14	(.57)	13.22	1.02	58	1.54	1.52	3.71
Year ended 12/31/2004	13.51	.48		.16	.64	(.50)	13.65	4.86	49	1.59	1.58	3.60
Class 529-C:
Year ended 12/31/2008	13.06	.60		(2.25)	(1.65)	(.65)	10.76	(12.97)	258	1.50	1.47	4.94
Year ended 12/31/2007	13.32	.58		(.25)	.33	(.59)	13.06	2.50	247	1.49	1.46	4.37
Year ended 12/31/2006	13.22	.55		.09	.64	(.54)	13.32	4.99	170	1.51	1.49	4.22
Year ended 12/31/2005	13.65	.50		(.36)	.14	(.57)	13.22	1.03	121	1.53	1.51	3.74
Year ended 12/31/2004	13.51	.48		.16	.64	(.50)	13.65	4.88	86	1.57	1.57	3.61
Class 529-E:
Year ended 12/31/2008	13.06	.66		(2.25)	(1.59)	(.71)	10.76	(12.53)	29	.99	.96	5.45
Year ended 12/31/2007	13.32	.65		(.25)	.40	(.66)	13.06	3.02	28	.98	.96	4.88
Year ended 12/31/2006	13.22	.62		.09	.71	(.61)	13.32	5.53	21	.99	.97	4.74
Year ended 12/31/2005	13.65	.57		(.36)	.21	(.64)	13.22	1.56	15	1.01	.99	4.25
Year ended 12/31/2004	13.51	.55		.16	.71	(.57)	13.65	5.43	11	1.05	1.05	4.13

Class 529-F-1:
Year ended 12/31/2008	$13.06	$.72	$	(2.25)	$(1.53)	$(.77)	$10.76	(12.10)%	$26	.49%	.46%	5.96%
Year ended 12/31/2007	13.32	.71		(.25)	.46	(.72)	13.06	3.53	22	.48	.46	5.38
Year ended 12/31/2006	13.22	.69		.09	.78	(.68)	13.32	6.05	14	.49	.46	5.25
Year ended 12/31/2005	13.65	.62		(.36)	.26	(.69)	13.22	1.98	7	.58	.56	4.69
Year ended 12/31/2004	13.51	.59		.16	.75	(.61)	13.65	5.69	4	.80	.80	4.36
Class R-1:
Year ended 12/31/2008	13.06	.60		(2.25)	(1.65)	(.65)	10.76	(12.92)	88	1.44	1.42	5.01
Year ended 12/31/2007	13.32	.58		(.25)	.33	(.59)	13.06	2.54	71	1.44	1.42	4.44
Year ended 12/31/2006	13.22	.56		.09	.65	(.55)	13.32	5.05	29	1.49	1.42	4.28
Year ended 12/31/2005	13.65	.51		(.36)	.15	(.58)	13.22	1.11	18	1.51	1.43	3.82
Year ended 12/31/2004	13.51	.50		.16	.66	(.52)	13.65	4.98	11	1.55	1.47	3.70
Class R-2:
Year ended 12/31/2008	13.06	.59		(2.25)	(1.66)	(.64)	10.76	(12.99)	616	1.53	1.50	4.90
Year ended 12/31/2007	13.32	.59		(.25)	.34	(.60)	13.06	2.56	648	1.51	1.40	4.44
Year ended 12/31/2006	13.22	.56		.09	.65	(.55)	13.32	5.06	500	1.67	1.41	4.30
Year ended 12/31/2005	13.65	.51		(.36)	.15	(.58)	13.22	1.14	352	1.74	1.41	3.84
Year ended 12/31/2004	13.51	.50		.16	.66	(.52)	13.65	5.02	238	1.85	1.43	3.73
Class R-3:
Year ended 12/31/2008	13.06	.66		(2.25)	(1.59)	(.71)	10.76	(12.52)	939	.98	.95	5.45
Year ended 12/31/2007	13.32	.65		(.25)	.40	(.66)	13.06	3.02	949	.98	.95	4.89
Year ended 12/31/2006	13.22	.62		.09	.71	(.61)	13.32	5.49	570	1.02	.99	4.71
Year ended 12/31/2005	13.65	.56		(.36)	.20	(.63)	13.22	1.53	361	1.05	1.02	4.23
Year ended 12/31/2004	13.51	.55		.16	.71	(.57)	13.65	5.42	213	1.06	1.05	4.12
Class R-4:
Year ended 12/31/2008	13.06	.70		(2.25)	(1.55)	(.75)	10.76	(12.25)	707	.67	.64	5.77
Year ended 12/31/2007	13.32	.69		(.25)	.44	(.70)	13.06	3.35	692	.66	.64	5.22
Year ended 12/31/2006	13.22	.66		.09	.75	(.65)	13.32	5.86	325	.67	.65	5.06
Year ended 12/31/2005	13.65	.61		(.36)	.25	(.68)	13.22	1.91	182	.67	.65	4.61
Year ended 12/31/2004	13.51	.60		.16	.76	(.62)	13.65	5.81	77	.68	.68	4.48
Class R-5:
Year ended 12/31/2008	13.06	.73		(2.25)	(1.52)	(.78)	10.76	(12.00)	667	.37	.34	6.06
Year ended 12/31/2007	13.32	.73		(.25)	.48	(.74)	13.06	3.65	635	.36	.34	5.50
Year ended 12/31/2006	13.22	.70		.09	.79	(.69)	13.32	6.17	336	.37	.35	5.36
Year ended 12/31/2005	13.65	.66		(.36)	.30	(.73)	13.22	2.21	204	.37	.35	4.91
Year ended 12/31/2004	13.51	.65		.16	.81	(.67)	13.65	6.14	127	.37	.37	4.81

	Year ended December 31
	2008			2007			2006			2005			2004

Portfolio turnover rate for all classes of shares		57	%		58	%		53	%		50	%		45	%

(1) Based on operations for the periods shown (unless otherwise noted) and, accordingly, may not be representative of a full year.

(2) Based on average shares outstanding.

(3) Total returns exclude any applicable sales charges, including contingent deferred sales charges.

(4) This column reflects the impact, if any, of certain reimbursements/waivers from CRMC. During the periods shown, CRMC reduced fees for investment advisory services. In addition, during some of the periods shown, CRMC paid a portion of the fund's transfer agent fees for certain retirement plan share classes.

See Notes to Financial Statements

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors of The Bond Fund of America, Inc.:

We have audited the accompanying statement of assets and liabilities, including the summary investment portfolio, of The Bond Fund of America, Inc. (the “Fund”), as of December 31, 2008, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods presented. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of December 31, 2008, by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of The Bond Fund of America, Inc. as of December 31, 2008, 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 financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America.

Deloitte & Touche LLP

Costa Mesa, California

February 10, 2009

Tax information

unaudited

We are required to advise you within 60 days of the fund’s fiscal year-end regarding the federal tax status of certain distributions received by shareholders during such fiscal year. The fund hereby designates the following amounts for the fund’s fiscal year ended December 31, 2008:

Qualified dividend income	$	129,480,000
Corporate dividends received deduction	$	41,849,000
U.S. government income that may be exempt from state taxation	$	122,910,000

Individual shareholders should refer to their Form 1099 or other tax information, which was mailed in January 2009, to determine the calendar year amounts to be included on their 2008 tax returns. Shareholders should consult their tax advisers.

The Bond Fund of America, Inc.

Part C

Other Information

Item 23.

Exhibits for Registration Statement (1940 Act No. 002-50700 and 1933 Act No. 811-02444)

(a-1)

Articles of Incorporation - previously filed (see P/E Amendment No. 41 filed 2/28/97; No. 46 filed 3/9/00; No. 47 filed 3/9/01; No. 48 filed 2/15/02; No. 54 filed 2/28/07 and No. 56 filed 7/1/08)

(a-2)

Articles Supplementary dated 3/20/09

(b)	By-laws – By-laws as amended 9/20/07 – previously filed (see P/E Amendment No. 55 filed 2/29/08)

(c)	Instruments Defining Rights of Security Holders – Form of share certificate - previously filed (see P/E Amendment No. 47 filed 3/9/01)

(d)	Investment Advisory Contracts – Amended Investment Advisory and Service Agreement dated 11/1/07 – previously filed (see P/E Amendment No. 55 filed 2/29/08)

(e-1)

Underwriting Contracts – Form of Selling Group Agreements - previously filed (see P/E Amendment No. 49 filed 5/13/02); Form of Institutional Selling Group Agreement – previously filed (see P/E Amendment No. 52 filed 2/25/05); Form of Selling Group Agreement effective 11/1/06 – previously filed (see P/E Amendment No. 54 filed 2/28/07); Form of Amendment to Selling Group Agreement effective 2/1/07 – previously filed (see P/E Amendment No. 54 filed 2/28/07); Form of Amendment to Institutional Selling Group Agreement effective 2/1/07 – previously filed (see P/E Amendment No. 55 filed 2/29/08); Form of Amended and Restated Principal Underwriting Agreement dated 6/16/08 – previously filed (see P/E Amendment No. 56 filed 7/1/08); and Form of Amendment to Selling Group Agreement effective 10/1/08 – previously filed (see P/E Amendment No. 57 filed 2/27/09); Form of Amendment to Institutional Selling Group Agreement effective 10/1/08 – previously filed (see P/E Amendment No. 57 filed 2/27/09); Form of Class F Share Participation Agreement – previously filed (see P/E Amendment No. 57 filed 2/27/09); Form of Amendment to Class F Share Participation Agreement effective 8/1/08 – previously filed (see P/E Amendment No. 57 filed 2/27/09); Form of Bank/Trust Company Participation Agreement for Class F Shares – previously filed (see P/E Amendment No. 57 filed 2/27/09); and Form of Amendment to Bank/Trust Company Participation Agreement for Class F Shares effective 8/1/08 – previously filed (see P/E Amendment No. 57 filed 2/27/09)

(e-2)

Form of Amended and Restated Principal Underwriting Agreement effective 5/1/09; Form of Amendment to Selling Group Agreement effective 5/1/09; Form of Amendment to Institutional Selling Group Agreement effective 5/1/09; Form of Amendment to Bank/Trust Company Selling Group Agreement effective 5/1/09; Form of Amendment to Class F Share Participation Agreement effective 5/1/09; Form of Amendment to Bank/Trust Company Participation Agreement for Class F Shares effective 5/1/09

(f)	Bonus or Profit Sharing Contracts – Form of Deferred Compensation Plan as amended 1/1/08 – previously filed (see P/E Amendment No. 55 filed 2/29/08)

(g)	Custodian Agreements – Form of Global Custody Agreement dated 12/21/06 – previously filed (see P/E Amendment No. 54 filed 2/28/07)

(h-1)

Other Material Contracts - Amended Shareholder Services Agreement as of 4/1/03 - previously filed (see P/E Amendment No. 51 filed on 2/27/04); and Form of Indemnification Agreement dated 7/1/04 – previously filed (see P/E Amendment No. 52 filed 2/25/05); Form of Amendment to Shareholder Services Agreement dated 11/1/06 – previously filed (see P/E Amendment No. 54 filed 2/28/07); Form of Amended and Restated Administrative Services Agreement dated 6/16/08 – previously filed (see P/E Amendment No. 56 filed 7/1/08); Form of Amendment of Amended Shareholder Services Agreement dated 11/1/08 – previously filed (see P/E Amendment No. 57 filed 2/27/09)

(h-2)

Form of Amended and Restated Administrative Services Agreement effective 5/1/09

(i-1)

Legal Opinion – Legal Opinion – previously filed (see original Registration Statement filed in 1974; P/E Amendment No. 46 filed 3/15/00; No. 47 filed 3/15/01; No 48 filed 2/15/02 No. 49 filed 5/13/02 and No. 56 filed 7/1/08)

(i-2)

Legal Opinion

(j)	Other Opinions – Consent of Independent Registered Public Accounting Firm

(k)	Omitted Financial Statements - none

(l)	Initial Capital Agreements - previously filed (see P/E Amendment No. 41 filed 2/28/97)

(m)

Rule 12b-1 Plan – Forms of Plans of Distribution – Class A, B, C, F, 529-A, 529-B, 529-C, 529-E, 529-F and R-1, R-2, R-3 and R-4 – previously filed (see P/E Amendment No. 55 filed 2/29/08); Forms of Amendment to Plan of Distribution – Class F-1 and Class 529-F-1 dated 6/16/08 – previously filed (see P/E Amendment No. 56 filed 7/1/08)

(n)	Rule 18f-3 – Form of Amended and Restated Multiple Class Plan effective 5/1/09

(o)

Reserved

(p)	Code of Ethics – Code of Ethics for The Capital Group Companies dated December 2008; and Code of Ethics for Registrant dated December 2005

Item 24.

Persons Controlled by or Under Common Control with the Fund

None

Item 25. Indemnification

The Registrant is a joint-insured under Investment Adviser/Mutual Fund Errors and Omissions Policies, which insure its officers and directors against certain liabilities. However, in no event will Registrant maintain insurance to indemnify any such person for any act for which Registrant itself is not permitted to indemnify the individual.

Subsection (b) of Section 2-418 of the General Corporation Law of Maryland empowers a corporation to indemnify any person who was or is party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that he is or was a director, officer, employee or agent of the corporation or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation or enterprise, against reasonable expenses (including attorneys' fees), judgments, penalties, fines and amounts paid in settlement actually incurred by him in connection with such action, suit or proceeding unless it is proved that: (i) the act or omission of the person was material to the cause of action adjudicated in the proceeding and was committed in bad faith or was the result of active and deliberate dishonesty; (ii) the person actually received an improper personal benefit of money, property or services; or (iii) with respect to any criminal action or proceeding, the person had reasonable cause to believe his act or omission was unlawful.

Indemnification under subsection (b) of Section 2-418 may not be made by a corporation unless authorized for a specific proceeding after a determination has been made that indemnification is permissible in the circumstances because the party to be indemnified has met the standard of conduct set forth in subsection (b). This determination shall be made (i) by the Board of Directors by a majority vote of a quorum consisting of directors not, at the time, parties to the proceeding, or, if such quorum cannot be obtained, then by a majority vote of a committee of the Board consisting solely of two or more directors not, at the time, parties to such proceeding and who were duly designated to act in the matter by a majority vote of the full Board in which the designated directors who are parties may participate; (ii) by special legal counsel selected by the Board of Directors of a committee of the Board by vote as set forth in subparagraph (i), or, if the requisite quorum of the full Board cannot be obtained therefore and the committee cannot be established, by a majority vote of the full Board in which any director who is a party may participate; or (iii) by the stockholders (except that shares held by any party to the specific proceeding may not be voted). A court of appropriate jurisdiction may also order indemnification if the court determines that a person seeking indemnification is entitled to reimbursement under subsection (b)

Section 2-418 further provides that indemnification provided for by Section 2-418 shall not be deemed exclusive of any rights to which the indemnified party may be entitled; that the scope of indemnification extends to directors, officers, employees or agents of a constituent corporation absorbed in a consolidation or merger and persons serving in that capacity at the request of the constituent corporation for another; and empowers the corporation to purchase and maintain insurance on behalf of a director, officer, employee or agent of the corporation against any liability asserted against or incurred by such person in any such capacity or arising out of such person's status as such whether or not the corporation would have the power to indemnify such person against such liabilities under Section 2-418.

Article VI of the Registrant's Articles of Incorporation and Article 5 of the Registrant’s By-Laws as well as the indemnification agreements that the Registrant has entered into with each of its directors who is not an “interested person” of the Registrant (as defined under the Investment Company Act of 1940, as amended), provide in effect that the Registrant will indemnify its officers and directors against any liability or expenses actually and reasonably incurred by such person in any proceeding arising out of or in connection with his or her service to the Registrant, to the fullest extent permitted by applicable law, subject to certain conditions. In accordance with Section 17(h) and 17(i) of the Investment Company Act of 1940, as amended, and their respective terms, these provisions do not protect any person against any liability to the Registrant or its shareholders to which such person would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties involved in the conduct of his or her office.

Insofar as indemnification for liability arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the U.S. Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

Registrant will comply with the indemnification requirements contained in the Investment Company Act of 1940, as amended, and Release Nos. 7221 (June 9, 1972) and 11330 (September 4, 1980).

Item 26. Business and Other Connections of the Investment Adviser

None

Item 27. Principal Underwriters

(a) American Funds Distributors, Inc. is also the Principal Underwriter of shares of: AMCAP Fund, Inc., American Balanced Fund, Inc., The American Funds Income Series, American Funds Target Date Retirement Series, Inc., The American Funds Tax-Exempt Series I, The American Funds Tax-Exempt Series II, American High-Income Municipal Bond Fund, Inc., American High-Income Trust, American Mutual Fund, Inc., Capital Income Builder, Inc., Capital World Bond Fund, Inc., Capital World Growth and Income Fund, Inc., The Cash Management Trust of America, Endowments, EuroPacific Growth Fund, Fundamental Investors, Inc., The Growth Fund of America, Inc., The Income Fund of America, Inc., Intermediate Bond Fund of America, International Growth and Income Fund, Inc., The Investment Company of America, Limited Term Tax-Exempt Bond Fund of America, The New Economy Fund, New Perspective Fund, Inc., New World Fund, Inc., Short-Term Bond Fund of America, Inc., SMALLCAP World Fund, Inc., The Tax-Exempt Bond Fund of America, Inc., The Tax-Exempt Money Fund of America, The U.S. Treasury Money Fund of America and Washington Mutual Investors Fund, Inc.

(b)

	(1) Name and Principal Business Address	(2) Positions and Offices with Underwriter	(3) Positions and Offices with Registrant
LAO	E. Grant Abramson	Vice President	None
LAO	David L. Abzug	Vice President	None
LAO	William C. Anderson	Vice President	None
LAO	Robert B. Aprison	Senior Vice President	None
LAO	T. Patrick Bardsley	Regional Vice President	None
LAO	Shakeel A. Barkat	Vice President	None
LAO	Thomas M. Bartow	Senior Vice President	None
IRV	Carl R. Bauer	Vice President	None
LAO	Michelle A. Bergeron	Senior Vice President	None
LAO	J. Walter Best, Jr.	Senior Vice President	None
LAO	Roger J. Bianco, Jr.	Regional Vice President	None
LAO	John A. Blanchard	Senior Vice President	None
LAO	Randall L. Blanchetti	Regional Vice President	None
LAO	Gerard M. Bockstie, Jr.	Regional Vice President	None
LAO	Jonathan W. Botts	Regional Vice President	None
LAO	Bill Brady	Senior Vice President	None
LAO	Mick L. Brethower	Senior Vice President	None
LAO	C. Alan Brown	Vice President	None
IRV	William H. Bryan	Regional Vice President	None
LAO	Sheryl M. Burford	Assistant Vice President	None
IRV	J. Peter Burns	Vice President	None
LAO	Steven Calabria	Vice President	None
LAO	Thomas E. Callahan	Regional Vice President	None
SNO	Kathleen D. Campbell	Vice President	None
LAO	Matthew C. Carlisle	Vice President	None
LAO	Jason S. Carlough	Regional Vice President	None
LAO	Damian F. Carroll	Vice President	None
LAO	James D. Carter	Regional Vice President	None
LAO	Brian C. Casey	Senior Vice President	None
LAO	Victor C. Cassato	Senior Vice President	None
LAO	Christopher J. Cassin	Senior Vice President	None
LAO	Denise M. Cassin	Director, Senior Vice President and Director of AFIG and Dealer Relations	None
LAO	David D. Charlton	Director, Senior Vice President and Director Individual Investor and Advisory Business	None
LAO	Thomas M. Charon	Vice President	None
LAO	Wellington Choi	Vice President	None
LAO	Paul A. Cieslik	Vice President	None
LAO	Kevin G. Clifford	Director, President and Chief Executive Officer	None
HRO	Cheri Coleman	Vice President	None
LAO	Ruth M. Collier	Director, Senior Vice President	None
SNO	David Coolbaugh	Vice President	None
LAO	Carlo O. Cordasco	Regional Vice President	None
LAO	Charles H. Cote	Regional Vice President	None
LAO	Michael D. Cravotta	Assistant Vice President	None
LAO	Joseph G. Cronin	Vice President	None
LAO	D. Erick Crowdus	Regional Vice President	None
LAO	Christopher J. Curran	Regional Vice President	None
LAO	William F. Daugherty	Vice President	None
LAO	Peter J. Deavan	Regional Vice President	None
LAO	Guy E. Decker	Vice President	None
LAO	Daniel J. Delianedis	Senior Vice President	None
LAO	James W. DeLouise	Assistant Vice President	None
LAO	Jeffrey C. Denny	Regional Vice President	None
	James A. DePerno, Jr. 570 Porterville Road East Aurora, NY 14052	Senior Vice President	None
LAO	Bruce L. DePriester	Director, Senior Vice President, Treasurer and Controller	None
LAO	Lori A. Deuberry	Regional Vice President	None
LAO	Dianne M. Dexter	Assistant Vice President	None
LAO	Thomas J. Dickson	Vice President	None
LAO	Michael A. DiLella	Senior Vice President	None
NYO	Dean M. Dolan	Vice President	None
LAO	Hedy B. Donahue	Assistant Vice President	None
LAO	Michael J. Downer	Director	None
LAO	Craig A. Duglin	Regional Vice President	None
LAO	Michael J. Dullaghan	Vice President	None
IND	Lloyd G. Edwards	Senior Vice President	None
LAO	Timothy L. Ellis	Senior Vice President	None
LAO	Kristopher A. Feldmeyer	Regional Vice President	None
LAO	Lorna Fitzgerald	Vice President	None
LAO	William F. Flannery	Vice President	None
LAO	John R. Fodor	Director, Executive Vice President	None
LAO	Charles L. Freadhoff	Vice President	None
LAO	Daniel B. Frick	Vice President	None
LAO	Linda S. Gardner	Vice President	None
LAO	Keith R. George	Regional Vice President	None
IRV	Lori A. Giacomini	Assistant Vice President	None
LAO	J. Christopher Gies	Senior Vice President	None
LAO	David M. Givner	Secretary	None
LAO	Jack E. Goldin	Regional Vice President	None
LAO	Earl C. Gottschalk	Vice President	None
LAO	Jeffrey J. Greiner	Director, Senior Vice President	None
LAO	Eric M. Grey	Vice President	None
NYO	Maura S. Griffin	Assistant Vice President	None
LAO	Christopher M. Guarino	Senior Vice President	None
IRV	Steven Guida	Director, Senior Vice President	None
IRV	Mariellen Hamann	Vice President	None
LAO	Derek S. Hansen	Vice President	None
LAO	Calvin L. Harrelson, III	Vice President	None
LAO	Robert J. Hartig, Jr.	Vice President	None
LAO	Craig W. Hartigan	Regional Vice President	None
LAO	Linda M. Hines	Vice President	None
LAO	Russell K. Holliday	Vice President	None
LAO	Heidi Horwitz-Marcus	Regional Vice President	None
LAO	Kevin B. Hughes	Vice President	None
LAO	Ronald R. Hulsey	Senior Vice President	None
LAO	Marc Ialeggio	Vice President	None
LAO	Robert S. Irish	Senior Vice President	None
HRO	Jill Jackson-Chavis	Vice President	None
IND	David K. Jacocks	Assistant Vice President	None
LAO	Krista M. Johnson	Assistant Vice President	None
LAO	Linda Johnson	Vice President	None
GVO-1	Joanna F. Jonsson	Director	None
IRV	Damien M. Jordan	Senior Vice President	None
LAO	Marc J. Kaplan	Vice President	None
LAO	John P. Keating	Senior Vice President	None
LAO	Brian G. Kelly	Regional Vice President	None
LAO	Ryan C. Kidwell	Regional Vice President	None
LAO	Andrew J. Kilbride	Vice President	None
LAO	Mark Kistler	Regional Vice President	None
NYO	Dorothy Klock	Vice President	None
LAO	Dianne L. Koske	Vice President	None
IRV	Elizabeth K. Koster	Vice President	None
LAO	Christopher F. Lanzafame	Regional Vice President	None
LAO	Patricia D. Lathrop	Regional Vice President	None
IRV	Laura Lavery	Vice President	None
	R. Andrew LeBlanc 78 Eton Road Garden City, NY 11530	Vice President	None
LAO	Clay M. Leveritt	Regional Vice President	None
LAO	Susan B. Lewis	Assistant Vice President	None
LAO	T. Blake Liberty	Vice President	None
LAO	Mark J. Lien	Vice President	None
LAO	Lorin E. Liesy	Vice President	None
LAO	Louis K. Linquata	Vice President	None
HRO	Maria M. Lockard	Assistant Vice President	None
	Brendan T. Mahoney 1 Union Avenue, Suite One Sudbury, MA 01776	Vice President	None
LAO	Nathan G. Mains	Regional Vice President	None
	Stephen A. Malbasa 13405 Lake Shore Blvd. Cleveland, OH 44110	Director, Senior Vice President and Director of Retirement Plan Business	None
LAO	Paul R. Mayeda	Assistant Vice President	None
LAO	Eleanor P. Maynard	Vice President	None
LAO	Christopher McCarthy	Vice President	None
LAO	James R. McCrary	Vice President	None
LAO	Joseph A. McCreesh, III	Regional Vice President	None
LAO	Will McKenna	Vice President	None
SNO	John V. McLaughlin	Senior Vice President	None
LAO	Scott M. Meade	Senior Vice President	None
LAO	Daniel P. Melehan	Regional Vice President	None
LAO	William T. Mills	Regional Vice President	None
LAO	James R. Mitchell III	Regional Vice President	None
LAO	Charles L. Mitsakos	Regional Vice President	None
LAO	Monty L. Moncrief	Vice President	None
LAO	David H. Morrison	Regional Vice President	None
LAO	Andrew J. Moscardini	Vice President	None
LAO	Brian D. Munson	Regional Vice President	None
LAO	Jack Nitowitz	Assistant Vice President	None
LAO	William E. Noe	Senior Vice President	None
LAO	Matthew P. O’Connor	Vice President	None
LAO	Jonathan H. O’Flynn	Regional Vice President	None
LAO	Eric P. Olson	Senior Vice President	None
LAO	Jeffrey A. Olson	Vice President	None
LAO	Thomas A. O’Neil	Regional Vice President	None
LAO	Shawn M. O’Sullivan	Regional Vice President	None
LAO	Michael W. Pak	Regional Vice President	None
LAO	W. Burke Patterson, Jr.	Vice President	None
LAO	Gary A. Peace	Senior Vice President	None
LAO	Samuel W. Perry	Vice President	None
LAO	Raleigh G. Peters	Regional Vice President	None
LAO	David K. Petzke	Senior Vice President	None
IRV	John H. Phelan, Jr.	Director	None
LAO	Fredric Phillips	Senior Vice President	None
LAO	John Pinto	Vice President	None
LAO	Carl S. Platou	Senior Vice President	None
LAO	Charles R. Porcher	Regional Vice President	None
LAO	Julie K. Prather	Vice President	None
SNO	Richard P. Prior	Vice President	None
LAO	Steven J. Quagrello	Regional Vice President	None
LAO	Mike Quinn	Vice President	None
LAO	John W. Rankin	Regional Vice President	None
LAO	Jennifer D. Rasner	Regional Vice President	None
LAO	James P. Rayburn	Regional Vice President	None
LAO	Rene M. Reincke	Vice President	None
LAO	Mark S. Reischmann	Regional Vice President	None
LAO	Steven J. Reitman	Senior Vice President	None
LAO	Brian A. Roberts	Vice President	None
LAO	Jeffrey Robinson	Regional Vice President	None
LAO	Suzette M. Rothberg	Regional Vice President	None
LAO	James F. Rothenberg	Non-Executive Chairman and Director	None
LAO	Romolo D. Rottura	Vice President	None
LAO	Douglas F. Rowe	Senior Vice President	None
LAO	William M. Ryan	Regional Vice President	None
LAO	Dean B. Rydquist	Director, Senior Vice President, Chief Compliance Officer	None
LAO	Richard A. Sabec, Jr.	Vice President	None
LAO	Richard R. Samson	Senior Vice President	None
HRO	Diane Sawyer	Senior Vice President	None
LAO	Joseph D. Scarpitti	Senior Vice President	None
LAO	Kim D. Schmidt	Assistant Vice President	None
LAO	Shane D. Schofield	Vice President	None
LAO	David L. Schroeder	Assistant Vice President	None
LAO	Mark A. Seaman	Vice President	None
SNO	Sherrie L. Senft	Vice President	None
LAO	James J. Sewell III	Regional Vice President	None
LAO	Arthur M. Sgroi	Vice President	None
LAO	Steven D. Shackelford	Regional Vice President	None
LAO	R. Michael Shanahan	Director	None
LAO	Michael J. Sheldon	Vice President	None
LAO	Frederic J. Shipp	Regional Vice President	None
LAO	Daniel S. Shore	Vice President	None
LAO	Brad Short	Vice President	None
LAO	Nathan W. Simmons	Regional Vice President	None
LAO	William P. Simon, Jr.	Director, Senior Vice President	None
LAO	Connie F. Sjursen	Vice President	None
LAO	Jerry L. Slater	Senior Vice President	None
LAO-W	John H. Smet	Director	Senior Vice President
LAO	Rodney G. Smith	Senior Vice President	None
SNO	Stacy D. Smolka	Assistant Vice President	None
LAO	J. Eric Snively	Regional Vice President	None
LAO	Anthony L. Soave	Vice President	None
LAO	Therese L. Soullier	Vice President	None
LAO	Nicholas D. Spadaccini	Senior Vice President	None
LAO	Kristen J. Spazafumo	Vice President	None
LAO	Mark D. Steburg	Vice President	None
LAO	Michael P. Stern	Regional Vice President	None
LAO	Brad Stillwagon	Vice President	None
LAO	Thomas A. Stout	Vice President	None
LAO	Craig R. Strauser	Senior Vice President	None
LAO	Libby J. Syth	Vice President	None
LAO	Drew W. Taylor	Senior Vice President	None
LAO	Larry I. Thatt	Assistant Vice President	None
LAO	Gary J. Thoma	Vice President	None
LAO	Cynthia M. Thompson	Vice President	None
LAO	David R. Therrien	Assistant Vice President	None
LAO	John B. Thomas	Regional Vice President	None
LAO	Mark R. Threlfall	Regional Vice President	None
LAO	David Tippets	Regional Vice President	None
IND	James P. Toomey	Vice President	None
LAO	Luke N. Trammel	Regional Vice President	None
IND	Christopher E. Trede	Vice President	None
LAO	Scott W. Ursin-Smith	Director, Senior Vice President	None
SNO	Cindy Vaquiax	Vice President	None
LAO	Srinkanth Vemuri	Regional Vice President	None
LAO	J. David Viale	Senior Vice President	None
DCO	Bradley J. Vogt	Director	None
LAO	Sherrie S. Walling	Assistant Vice President	None
SNO	Chris L. Wammack	Assistant Vice President	None
LAO	Thomas E. Warren	Senior Vice President	None
LAO	Gregory J. Weimer	Senior Vice President	None
SFO	Gregory W. Wendt	Director	None
LAO	George J. Wenzel	Vice President	None
LAO	Jason M. Weybrecht	Regional Vice President	None
LAO	Brian E. Whalen	Vice President	None
LAO	William C. Whittington	Regional Vice President	None
LAO	N. Dexter Williams, Jr.	Senior Vice President	None
LAO	Alan J. Wilson	Director	None
LAO	Andrew L. Wilson	Vice President	None
LAO	Steven C. Wilson	Regional Vice President	None
LAO	Timothy J. Wilson	Director, Senior Vice President	None
LAO	Kurt A. Wuestenberg	Vice President	None
	William R. Yost 9463 Olympia Drive Eden Prairie, MN 55347	Senior Vice President	None
LAO	Jason P. Young	Vice President	None
LAO	Jonathan A. Young	Regional Vice President	None

__________

DCO	Business Address, 3000 K Street N.W., Suite 230, Washington, DC 20007-5140
GVO-1	Business Address, 3 Place des Bergues, 1201 Geneva, Switzerland
HRO	Business Address, 5300 Robin Hood Road, Norfolk, VA 23513
IND	Business Address, 8332 Woodfield Crossing Blvd., Indianapolis, IN 46240
IRV	Business Address, 6455 Irvine Center Drive, Irvine, CA 92618
LAO	Business Address, 333 South Hope Street, Los Angeles, CA 90071
LAO-W	Business Address, 11100 Santa Monica Blvd., 15th Floor, Los Angeles, CA 90025
NYO	Business Address, 630 Fifth Avenue, 36th Floor, New York, NY 10111
SFO	Business Address, One Market, Steuart Tower, Suite 1800, San Francisco, CA 94105
SNO	Business Address, 3500 Wiseman Boulevard, San Antonio, TX 78251

Item 28.

Location of Accounts and Records

Accounts, books and other records required by Rules 31a-1 and 31a-2 under the Investment Company Act of 1940, as amended, are maintained and held in the offices of the Registrant’s investment adviser, Capital Research and Management Company, 333 South Hope Street, Los Angeles, California 90071; 6455 Irvine Center Drive, Irvine, California 92618; and/or 5300 Robin Hood Road, Norfolk, Virginia 23513.

Registrant's records covering shareholder accounts are maintained and kept by its transfer agent, American Funds Service Company, 6455 Irvine Center Drive, Irvine, California 92618; 8332 Woodfield Crossing Boulevard, Indianapolis, Indiana 46240; 10001 North 92nd Street, Suite 100, Scottsdale, Arizona 85258; 3500 Wiseman Boulevard, San Antonio, Texas 78251; and 5300 Robin Hood Road, Norfolk, Virginia 23513.

Registrant's records covering portfolio transactions are maintained and kept by its custodian, JPMorgan Chase Bank, 270 Park Avenue, New York, New York 10017-2070.

Item 29. Management Services

None

Item 30. Undertakings

n/a

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant certifies that it meets all of the requirements for effectiveness of this registration statement under Rule 485(b) under the Securities Act of 1933 and has duly caused this registration statement to be signed on its behalf by the undersigned, duly authorized, in the City of Los Angeles, and State of California, on the 31st day of March, 2009.

THE BOND FUND OF AMERICA, INC.

By: /s/ Paul G. Haaga, Jr.

(Paul G. Haaga, Jr., Vice Chairman of the Board)

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed below on March 31, 2009, by the following persons in the capacities indicated.

	Signature		Title
(1)	Principal Executive Officer:
	/s/ Abner D. Goldstine	President/PEO and Director
	(Abner D. Goldstine)

(2)	Principal Financial Officer and Principal Accounting Officer:
	/s/ Ari M. Vinocor	Treasurer
	(Ari M. Vinocor)

(3)	Trustees:
	Richard G. Capen, Jr.*	Director
	H. Frederick Christie*	Director
	James G. Ellis*	Director
	Martin Fenton*	Chairman of the Board (Independent and Non-Executive)
	Leonard R. Fuller*	Director
	/s/ Abner D. Goldstine	President/PEO and Director
	(Abner D. Goldstine)
	/s/ Paul G. Haaga, Jr.	Vice Chairman and Director
	(Paul G. Haaga, Jr.)
	R. Clark Hooper*	Director
	Laurel B. Mitchell*	Director
	Richard G. Newman*	Director
	Frank M. Sanchez*	Director
	Steadman Upham*	Director
	*By: /s/ Kimberly S. Verdick
	(Kimberly S. Verdick, pursuant to a power of attorney filed werewith)

Counsel represents that this amendment does not contain disclosures that would make the amendment ineligible for effectiveness under the provisions of rule 485(b).

/s/ Timothy W. McHale

(Timothy W. McHale)

POWER OF ATTORNEY

I, Richard G. Capen, Jr., the undersigned Board member of the following registered investment companies (collectively, the “Funds”):

The American Funds Income Series – U.S. Government Securities Fund (File No. 002-98199, File No. 811-04318)

American Funds Money Market Fund (File No. 333-157162, File No. 811-22277)

The American Funds Tax-Exempt Series II – The Tax-Exempt Fund of California (File No. 033-06180, File No. 811-04694)

American High-Income Municipal Bond Fund, Inc. (File No. 033-80630, File No. 811-08576)

American High-Income Trust (File No. 033-17917, File No. 811-05364)

The Bond Fund of America, Inc. (File No. 002-50700, File No. 811-02444)

Capital World Bond Fund, Inc. (File No. 033-12447, File No. 811-05104)

The Cash Management Trust of America (File No. 002-47940, File No. 811-02380)

Intermediate Bond Fund of America (File No. 033-19514, File No. 811-05446)

Limited Term Tax-Exempt Bond Fund of America (File No. 033-66214, File No. 811-07888)

The New Economy Fund (File No. 002-83848, File No. 811-03735)

Short-Term Bond Fund of America, Inc. (File No. 333-135770, File No. 811-21928)

SMALLCAP World Fund, Inc. (File No. 033-32785, File No. 811-05888)

The Tax-Exempt Bond Fund of America, Inc. (File No. 002-49291, File No. 811-02421)

The Tax-Exempt Money Fund of America (File No. 033-26431, File No. 811-05750)

The U.S. Treasury Money Fund of America (File No. 033-38475, File No. 811-06235)

hereby revoke all previous powers of attorney I have signed and otherwise act in my name and behalf in matters involving the Funds and do hereby constitute and appoint

Vincent P. Corti

Chad L. Norton

Patrick F. Quan

Kimberly S. Verdick

Steven I. Koszalka

Tanya Schneider

Courtney R. Taylor

M. Susan Gupton

David A. Pritchett

Ari M. Vinocor

each of them singularly, my true and lawful attorneys-in-fact, with full power of substitution, and with full power to each of them, to sign for me and in my name in the appropriate capacities, all Registration Statements of the Funds on Form N-1A or Form N-14, any and all subsequent Amendments, or Post-Effective Amendments to said Registration Statement on Form N-1A or Form N-14 or any successor thereto, and any supplements or other instruments in connection therewith, and generally to do all such things in my name and behalf in connection therewith as said attorneys-in-fact deem necessary or appropriate, to comply with the provisions of the Securities Act of 1933 and the Investment Company Act of 1940 as amended, and all related requirements of the U. S. Securities and Exchange Commission. I hereby ratify and confirm all that said attorneys-in-fact or their substitutes may do or cause to be done by virtue hereof.

EXECUTED at Los Angeles, CA, this 18th day of March, 2009.

(City, State)

/s/ Richard G. Capen, Jr.

Richard G. Capen, Jr., Board member

POWER OF ATTORNEY

I, H. Frederick Christie, the undersigned Board member of the following registered investment companies (collectively, the “Funds”):

The American Funds Income Series – U.S. Government Securities Fund (File No. 002-98199, File No. 811-04318)

American Funds Money Market Fund (File No. 333-157162, File No. 811-22277)

The American Funds Tax-Exempt Series II – The Tax-Exempt Fund of California (File No. 033-06180, File No. 811-04694)

American High-Income Municipal Bond Fund, Inc. (File No. 033-80630, File No. 811-08576)

American High-Income Trust (File No. 033-17917, File No. 811-05364)

The Bond Fund of America, Inc. (File No. 002-50700, File No. 811-02444)

Capital Income Builder, Inc. (File No. 033-12967, File No. 811-05085)

Capital World Bond Fund, Inc. (File No. 033-12447, File No. 811-05104)

Capital World Growth and Income Fund, Inc. (File No. 033-54444, File No. 811-07338)