SEC. File Nos. 002- 50700

811-02444

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

__________________

FORM N-1A

Registration Statement

Under

the Securities Act of 1933

Post-Effective Amendment No. 61

and

Registration Statement

Under

The Investment Company Act of 1940

Amendment No. 42

__________________

THE BOND FUND OF AMERICA

(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

__________________

COURTNEY R. TAYLOR, Secretary

The Bond Fund of America

333 South Hope Street

Los Angeles, California 90071-1406

(Name and Address of Agent for Service)

__________________

Copies to:

Michael Glazer

Bingham McCutchen LLP

 355 South Grand Avenue, Suite 4400

Los Angeles, CA 90071-3106

 (Counsel for the Registrant)

__________________

Approximate date of proposed public offering:

It is proposed that this filing become effective on March 1, 2011, pursuant to paragraph (b) of rule 485.

Pursuant to Rule 414 under the Securities Act of 1933, The Bond Fund of America, a Delaware statutory trust, as successor of The Bond Fund of America, Inc., a Maryland corporation, is filing this amendment to the registration statement of The Bond Fund of America, Inc., and expressly adopts the registration statement of The Bond Fund of America, Inc. as its own for all purposes of the Securities Act of 1933, as amended and the Investment Company Act of 1940, as amended.

..

   

The Bond Fund

of AmericaSM

Class A B C Ticker ABNDX BFABX BFACX F-1 F-2 529-A 529-B BFAFX ABNFX CFAAX CFABX 529-C 529-E 529-F-1   CFACX CFAEX CFAFX  

Prospectus
March 1, 2011
Table of contents
Investment objective  Fees and expenses of the fund  Principal investment strategies  Principal risks  Investment results  Management  Purchase and sale of fund shares  Tax information  Payments to broker-dealers and other financial intermediaries  Investment objective, strategies and risks  Additional investment results  Management and organization	1 1 2 3 4 6 7 7 7 8 11 13	Shareholder information Purchase, exchange and sale of shares  How to sell shares  Distributions and taxes  Choosing a share class  Sales charges  Sales charge reductions and waivers  Rollovers from retirement plans to IRAs  Plans of distribution  Other compensation to dealers  Fund expenses  Financial highlights	17 18 21 24 25 29 32 36 37 38 39 40
The U.S. 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.

 Investment objective

The fund’s investment objective is to provide as high a level of current income as is consistent with the preservation of capital.

Fees and expenses of the fund

This table describes the fees and expenses that you may pay if you buy and hold shares of the fund. You may qualify for sales charge discounts if you and your family invest, or agree to invest in the future, at least $100,000 in American Funds. More information about these and other discounts is available from your financial professional and in the “Sales charge reductions and waivers” section on page 32 of the prospectus and on page 64 of the fund’s statement of additional information.

Shareholder fees (fees paid directly from your investment)
	Share classes
	A and 529-A	B and 529-B	C and 529-C	529-E	F-1, F-2 and 529-F-1
Maximum sales charge (load) imposed on purchases (as a percentage of offering price)	3.75%	none	none	none	none
Maximum deferred sales charge (load) (as a percentage of the amount redeemed)	none	5.00%	1.00%	none	none
Maximum sales charge (load) imposed on reinvested dividends	none	none	none	none	none
Redemption or exchange fees	none	none	none	none	none
Maximum annual account fee (529 share classes only)	$10	$10	$10	$10	$10

Annual fund operating expenses (expenses that you pay each year as a percentage of the value of your investment)
	Share classes
	A	B	C	F-1	F-2
Management fees	0.21%	0.21%	0.21%	0.21%	0.21%
Distribution and/or service (12b-1) fees	0.24	1.00	1.00	0.25	none
Other expenses	0.14	0.14	0.18	0.16	0.15
Total annual fund operating expenses	0.59	1.35	1.39	0.62	0.36

	529-A	529-B	529-C	529-E	529-F-1
Management fees	0.21%	0.21%	0.21%	0.21%	0.21%
Distribution and/or service (12b-1) fees	0.21	1.00	1.00	0.50	0.00
Other expenses	0.23	0.24	0.23	0.22	0.23
Total annual fund operating expenses	0.65	1.45	1.44	0.93	0.44

Example

This example is intended to help you compare the cost of investing in the fund with the cost of investing in other mutual funds.

The example assumes that you invest $10,000 in the fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also

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assumes that your investment has a 5% return each year and that the fund’s operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:

Share classes	1 year	3 years	5 years	10 years
A	$433	$557	$692	$1,085
B	637	828	939	1,415
C	242	440	761	1,669
F-1	63	199	346	774
F-2	37	116	202	456
529-A	459	615	782	1,261
529-B	667	897	1,049	1,620
529-C	266	494	844	1,824
529-E	115	336	573	1,247
529-F-1	65	181	306	661

For the share classes listed below, you would pay the following if you did not redeem your shares:

Share classes	1 year	3 years	5 years	10 years
B	$137	$428	$739	$1,415
C	142	440	761	1,669
529-B	167	497	849	1,620
529-C	166	494	844	1,824

Portfolio turnover

The fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the fund’s results. During the most recent fiscal year, the fund’s portfolio turnover rate was 99% of the average value of its portfolio.

Principal investment strategies

The fund seeks to maximize your level of current income and preserve your capital by investing primarily in bonds. 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 by Nationally Recognized Statistical Ratings Organizations designated by the fund’s investment adviser or in debt securities that are unrated but determined to be of equivalent quality by the fund’s investment adviser, including securities issued and guaranteed by the United States and other governments, securities of corporate issuers and securities backed by mortgages and other assets.

The fund may also invest in debt securities and mortgage-backed securities issued by government-sponsored entities and federal agencies and instrumentalities that are not backed by the full faith and credit of the U.S. government. The fund invests in debt securities with a wide range of maturities.

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The fund’s current practice is not to invest more than 10% of its assets in debt securities rated Ba1 and BB+ or below by Nationally Recognized Statistical Ratings Organizations designated by the fund’s investment adviser or in debt securities that are unrated but determined by the fund’s investment adviser to be of equivalent quality. Securities rated Ba1 and BB+ or below are sometimes referred to as “junk bonds.”

The investment adviser uses a system of multiple portfolio counselors in managing the fund’s assets. Under this approach, the portfolio of the fund is divided into segments managed by individual counselors who decide how their respective segments will be invested.

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 good, 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.

Principal risks

This section describes the principal risks associated with the fund’s principal investment strategies. 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.

Market conditions — The prices of, and the income generated by, the securities held by the fund may decline due to market conditions and other factors, including those directly involving the issuers of securities held by the fund.

Investing in bonds — Rising interest rates will generally cause the prices of bonds and other debt securities to 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. Longer maturity debt securities may be subject to greater price fluctuations than shorter maturity debt securities.

Bonds and other debt securities are 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 debt securities generally have higher rates of interest and may be subject to greater price fluctuations than higher quality debt securities.

Investing in mortgage-backed and asset-backed securities — Many types of bonds and other debt securities, including mortgage-backed securities, are subject to prepayment

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risk, as well as the risks associated with investing in debt securities in general. If interest rates fall and the loans underlying these securities are prepaid faster than expected, the fund may have to reinvest the prepaid principal in lower yielding securities, thus reducing the fund’s income. Conversely, if interest rates increase and the loans underlying the securities are prepaid more slowly than expected, the expected duration of the securities may be extended. This reduces the potential for the fund to invest the principal in higher yielding securities.

Investing in securities backed by the U.S. government — Securities backed by the U.S. Treasury or the full faith and credit of the U.S. government are guaranteed only as to the timely payment of interest and principal when held to maturity. Accordingly, the current market values for these securities will fluctuate with changes in interest rates. Securities issued by government sponsored entities and federal agencies and instrumentalities are neither issued nor guaranteed by the U.S. government.

Thinly traded securities — There may be little trading in the secondary market for particular bonds or other debt securities, which may make them more difficult to value or sell.

Investing outside the United States — Securities of issuers domiciled outside the United States, or with significant operations outside the United States, may lose value because of political, social or economic developments in the country or region in which the issuer operates. These securities may also lose value due to changes in the exchange rate of the country’s currency against the U.S. dollar. Securities markets in certain countries may be more volatile and/or less liquid than those in the United States. Investments outside the United States may also be subject to different settlement and accounting practices and different regulatory, legal and reporting standards than those in the United States. These risks may be heightened in connection with investments in developing countries.

Management — The investment adviser to the fund actively manages the fund’s investments. Consequently, the fund is subject to the risk that the methods and analyses employed by the investment adviser in this process may not produce the desired results. This could cause the fund to lose value or its results to lag relevant benchmarks or other funds with similar objectives.

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 governmental agency, entity or person. You should consider how this fund fits into your overall investment program.

Investment results

The following bar chart shows how the fund’s investment results have varied from year to year, and the following table shows how the fund’s average annual total returns for various periods compare with different broad measures of market results. This information provides some indication of the risks of investing in the fund. Lipper Corporate Debt A-Rated Bond Funds Average includes the fund and other funds that disclose

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investment objectives reasonably comparable to the fund’s objective. The Consumer Price Index provides a comparison of the fund’s results to inflation. Past results (before and after taxes) are not predictive of future results. Updated information on the fund’s results can be obtained by visiting americanfunds.com.

Highest/Lowest quarterly results during this time period were:

Highest                       7.36%                      (quarter ended June 30, 2009)

Lowest                     –6.82%                        (quarter ended September 30, 2008)

Average annual total returns For the periods ended December 31, 2010 (with maximum sales charge):
Share class	Inception date	1 year	5 years	10 years	Lifetime
A − Before taxes	5/28/1974	3.27%	2.64%	4.61%	8.31%
− After taxes on distributions		1.93	0.90	2.63	N/A
− After taxes on distributions and sale of fund shares		2.12	1.22	2.74	N/A

Share class (before taxes)	Inception date	1 year	5 years	10 years	Lifetime
B	3/15/2000	1.50%	2.34%	4.39%	4.52%
C	3/15/2001	5.45	2.63	N/A	3.90
F-1	3/15/2001	7.27	3.45	N/A	4.71
F-2	8/4/2008	7.55	N/A	N/A	4.81
529-A	2/15/2002	3.22	2.60	N/A	4.26
529-B	2/15/2002	1.39	2.23	N/A	3.92
529-C	2/19/2002	5.40	2.57	N/A	3.88
529-E	3/7/2002	6.93	3.09	N/A	4.43
529-F-1	9/26/2002	7.47	3.60	N/A	5.11

Indexes	1 year	5 years	10 years	Lifetime (from Class A inception)
Barclays Capital U.S. Aggregate Index (reflects no deductions for sales charges, account fees, expenses or taxes)	6.54%	5.80%	5.84%	N/A
Lipper Corporate Debt A-Rated Bond Funds Average (reflects no deductions for sales charges, account fees or taxes)	7.51	4.82	5.27	8.35%
Consumer Price Index	1.50	2.18	2.34	4.20
Class A annualized 30-day yield at December 31, 2010: 2.63% (For current yield information, please call American FundsLine® at 800/325-3590.)

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After-tax returns are shown only for Class A shares; after-tax returns for other share classes will vary. After-tax returns are calculated using the highest individual federal income tax rates in effect during each year of the periods shown and do not reflect the impact of state and local taxes. Your actual after-tax returns depend on your individual tax situation and likely will differ from the results shown above. In addition, after-tax returns are not relevant if you hold your fund shares through a tax-deferred arrangement, such as a 401(k) plan, individual retirement account (IRA) or 529 college savings plan.

 Management

Investment adviser

Capital Research and Management Company

Portfolio counselors

The individuals primarily responsible for the portfolio management of the fund are:

Portfolio counselor/ Fund title (if applicable)	Portfolio counselor experience in this fund	Primary title with investment adviser
John H. Smet President	22 years	Senior Vice President – Fixed Income, Capital Research and Management Company
Mark R. Macdonald Senior Vice President	12 years	Senior Vice President – Fixed Income, Capital Research and Management Company
Mark H. Dalzell Vice President	17 years	Senior Vice President – Fixed Income, Capital Research and Management Company
David A. Daigle	Less than 1 year	Senior Vice President – Fixed Income, Capital Research Company
David A. Hoag	2 years	Senior Vice President – Fixed Income, Capital Research and Management Company
Thomas H. Hogh	2 years	Senior Vice President – Fixed Income, Capital Research Company
Robert H. Neithart	2 years	Senior Vice President – Fixed Income, Capital Research and Management Company

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 Purchase and sale of fund shares

Purchase minimums (for all share classes)
To establish an account (including retirement plan and 529 accounts)	$250
For a payroll deduction retirement plan account, payroll deduction savings plan account or employer-sponsored 529 account	25
To add to an account	50
For a payroll deduction retirement plan account, payroll deduction savings plan account or employer-sponsored 529 account	25

You may sell (redeem) shares through your dealer or financial adviser or by writing to American Funds Service Company at P.O. Box 6007, Indianapolis, Indiana 46206-6007; telephoning American Funds Service Company at 800/421-0180; faxing American Funds Service Company at 888/421-4351; or accessing our website at americanfunds.com.

 Tax information

Dividends and capital gain distributions you receive from the fund are subject to federal income taxes and may also be subject to state and local taxes, unless you are tax-exempt or your account is tax-deferred.

 Payments to broker-dealers and other financial intermediaries

If you purchase shares of the fund through a broker-dealer or other financial intermediary (such as a bank), the fund and the fund’s distributor or its affiliates may pay the intermediary for the sale of fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your individual financial adviser to recommend the fund over another investment. Ask your individual financial adviser or visit your financial intermediary’s website for more information.

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 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.

The fund seeks to maximize your level of current income and preserve your capital by investing primarily in bonds. 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 by Nationally Recognized Statistical Ratings Organizations designated by the fund’s investment adviser or in debt securities that are unrated but determined to be of equivalent quality by the fund’s investment adviser, including securities issued and guaranteed by the United States and other governments, securities of corporate issuers and securities backed by mortgages and other assets.

The fund may also invest in debt securities and mortgage-backed securities issued by government-sponsored entities and federal agencies and instrumentalities that are not backed by the full faith and credit of the U.S. government. The fund invests in debt securities with a wide range of maturities.

The fund’s current practice is not to invest more than 10% of its assets in debt securities rated Ba1 and BB+ or below by Nationally Recognized Statistical Ratings Organizations designated by the fund’s investment adviser or in debt securities that are unrated but determined by the fund’s investment adviser to be of equivalent quality. Securities rated Ba1 and BB+ or below are sometimes referred to as “junk bonds.”

The prices of, and the income generated by, the securities held by the fund may decline in response to certain events taking place around the world, including those directly involving the issuers whose securities are owned by the fund; conditions affecting the general economy; overall market changes; local, regional or global political, social or economic instability; governmental or governmental agency responses to economic conditions; and currency, interest rate and commodity price fluctuations.

The prices of, and the income generated by, most bonds and other 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 prices 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. Longer maturity debt securities generally have higher rates of interest and may be subject to greater price fluctuations than shorter maturity debt securities.

Bonds and other 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

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quality debt securities generally have higher rates of interest and may be subject to greater price fluctuations than higher quality debt securities.

Many types of bonds and other debt securities, including mortgage-backed 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. Conversely, if interest rates increase, homeowners may not make prepayments to the extent expected, resulting in an extension of the expected terms of the securities backed by such mortgages. This reduces the potential for the fund to invest the principal in higher yielding securities. In addition, the values of the securities ultimately depend upon the payment of the underlying loans by individuals.

Securities backed by the U.S. Treasury or the full faith and credit of the U.S. government are guaranteed only as to the timely payment of interest and principal when held to maturity. Accordingly, the current market values for these securities will fluctuate with changes in interest rates. Securities issued by government sponsored entities and federal agencies and instrumentalities are neither issued nor guaranteed by the U.S. government.

There may be little trading in the secondary market for particular bonds or other debt securities, which may make them more difficult to value or sell.

The prices of securities of issuers domiciled outside the United States or with significant operations outside the United States may decline due to conditions specific to the country or region in which the issuer is domiciled or operates, including political, economic or market changes or instability in such country or region. The securities of issuers domiciled in certain countries outside the United States may be more volatile, less liquid and/or more difficult to value than those of U.S issuers. Issuers in countries outside the United States may also be subject to different tax and accounting policies and different auditing, reporting, legal and regulatory standards. In addition, the value of investments outside the United States may be reduced by foreign taxes, including foreign withholding taxes on interest and dividends. Further, there may be increased risks of delayed settlement of securities purchased or sold by the fund. These investments may also be affected by changes in the exchange rate of that country’s currency against the U.S. dollar and/or currencies of other countries.

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. For temporary defensive purposes, the fund may hold a significant portion of its assets in such securities. The investment adviser may determine that it is appropriate to take such action in response to certain circumstances, such as periods of market turmoil. 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

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the fund’s loss in a period of falling market prices and provide liquidity to make additional investments or to meet redemptions.

The investment adviser to the fund actively manages the fund’s investments. Consequently, the fund is subject to the risk that the methods and analyses employed by the investment adviser in this process may not produce the desired results. This could cause the fund to lose value or its results to lag relevant benchmarks or other funds with similar objectives.

The fund’s investment results will depend on the ability of the fund’s investment adviser to navigate the risks discussed above.

In addition to the investment strategies described above, the fund has other investment practices that are described in the statement of additional information.

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 Additional investment results

Unlike the table on page 5, the table below reflects the fund’s results calculated without sales charges.

Average annual total returns For the periods ended December 31, 2010 (without sales charge):
Share class	Inception date	1 year	5 years	10 years	Lifetime
A − Before taxes	5/28/1974	7.30%	3.44%	5.01%	8.42%
− After taxes on distributions		5.90	1.68	3.02	N/A
− After taxes on distributions and sale of fund shares		4.74	1.90	3.09	N/A

Share class (before taxes)	Inception date	1 year	5 years	10 years	Lifetime
B	3/15/2000	6.50%	2.68%	4.39%	4.52%
C	3/15/2001	6.45	2.63	N/A	3.90
F-1	3/15/2001	7.27	3.45	N/A	4.71
F-2	8/4/2008	7.55	N/A	N/A	4.81
529-A	2/15/2002	7.24	3.39	N/A	4.72
529-B	2/15/2002	6.39	2.56	N/A	3.92
529-C	2/19/2002	6.40	2.57	N/A	3.88
529-E	3/7/2002	6.93	3.09	N/A	4.43
529-F-1	9/26/2002	7.47	3.60	N/A	5.11

Indexes	1 year	5 years	10 years	Lifetime (from Class A inception)
Barclays Capital U.S. Aggregate Index (reflects no deductions for sales charges, account fees, expenses or taxes)	6.54%	5.80%	5.84%	N/A
Lipper Corporate Debt A-Rated Bond Funds Average (reflects no deductions for sales charges, account fees or taxes)	7.51	4.82	5.27	8.35%
Consumer Price Index	1.50	2.18	2.34	4.20
Class A distribution rate at December 31, 2010: 3.79%* (For current distribution rate information, please call American FundsLine at 800/325-3590.)

* The distribution rate is based on actual dividends paid to Class A shareholders over a 12-month period. Capital gain distributions, if any, are added back to net asset value to determine the rate.

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The investment results tables above and on page 5 show how the fund’s average annual total returns compare with various broad measures of market results. Barclays Capital U.S. Aggregate Index represents the U.S. investment-grade fixed-rate bond market. This index is unmanaged and its results include reinvested distributions, but do not reflect the effect of sales charges, commissions, account fees, 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. 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 and other fund expenses, but do not reflect the effect of sales charges, account fees or taxes. 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.

All fund results reflected in the “Investment results” and “Additional investment results” sections of this prospectus 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.

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 Management and organization

Investment adviser

Capital Research and Management Company, an experienced investment management organization founded in 1931, serves as the 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.” The management fee is based on the daily net assets of the fund and the fund’s monthly gross investment income. Please see the statement of additional information for further details. A discussion regarding the basis for the approval of the fund’s Investment Advisory and Service Agreement by the fund’s board of trustees is contained in the fund’s semi-annual report to shareholders for the period ended June 30, 2010.

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. Although not currently contemplated, Capital Research and Management Company could incorporate its Fixed Income division in the future and engage it to provide day-to-day investment management of fixed-income assets. Capital Research and Management Company and each of the funds it advises have applied to the U.S. Securities and Exchange Commission for an exemptive order that would give Capital Research and Management Company the authority to use, upon approval of the fund’s board, its management subsidiaries and affiliates to provide day-to-day investment management services to the fund, including making changes to the management subsidiaries and affiliates providing such services. The fund’s shareholders approved this arrangement at a meeting of the fund’s shareholders on November 24, 2009. There is no assurance that Capital Research and Management Company will incorporate its investment divisions or exercise any authority, if granted, under an exemptive order.

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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 U.S. 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.

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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 table below shows the investment experience and role in management of the fund for each of the fund’s primary portfolio counselors.

Portfolio counselor	Investment experience	Experience in this fund	Role in management of the fund
John H. Smet	Investment professional for 29 years in total; 28 years with Capital Research and Management Company or affiliate	22 years	Serves as a fixed-income portfolio counselor
Mark R. Macdonald	Investment professional for 25 years in total; 17 years with Capital Research and Management Company or affiliate	12 years	Serves as a fixed-income portfolio counselor
Mark H. Dalzell	Investment professional for 33 years in total; 23 years with Capital Research and Management Company or affiliate	17 years	Serves as a fixed-income portfolio counselor
David A. Daigle	Investment professional for 16 years, all with Capital Research and Management Company or affiliate	Less than 1 year (plus 15 years of prior experience as an investment analyst for the fund)	Serves as a fixed-income portfolio counselor
David A. Hoag	Investment professional for 23 years in total; 20 years with Capital Research and Management Company or affiliate	2 years	Serves as a fixed-income portfolio counselor

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Portfolio counselor	Investment experience	Experience in this fund	Role in management of the fund
Thomas H. Hogh	Investment professional for 24 years in total; 20 years with Capital Research and Management Company or affiliate	2 years	Serves as a fixed-income portfolio counselor
Robert H. Neithart	Investment professional for 24 years, all with Capital Research and Management Company or affiliate	2 years (plus 13 years of prior experience as an investment analyst for the fund)	Serves as a fixed-income portfolio counselor

Information regarding the portfolio counselors’ compensation, their ownership of securities in the fund and other accounts they manage is in the statement of additional information.

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 Shareholder information

Shareholder services

American Funds Service Company®,  the fund’s transfer agent, offers a wide range of services that you can use to alter your investment program should your needs or circumstances change. These services may be terminated or modified at any time upon 60 days’ written notice.

A more detailed description of policies and services is included in the fund’s statement of additional information and the owner’s guide sent to new American Funds shareholders entitled Welcome. Class 529 shareholders should also refer to the applicable program description for information on policies and services specifically relating to their account(s). These documents are available by writing to or calling American Funds Service Company. 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. Please see your financial adviser or investment dealer for more information.

Unless otherwise noted, references to Class A, B, C or F-1 shares on the following pages also refer to the corresponding Class 529-A, 529-B, 529-C or 529-F-1 shares.

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 Purchase, exchange and sale of shares

The fund’s transfer agent, on behalf of the fund and American Funds Distributors,®  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.

When purchasing shares, you should designate the fund or funds in which you wish to invest. If no fund is designated and the amount of your cash investment is more than $5,000, your money will be held uninvested (without liability to the transfer agent for loss of income or appreciation pending receipt of proper instructions) until investment instructions are received, but for no more than three business days. Your investment will be made at the net asset value (plus any applicable sales charge in the case of Class A shares) next determined after investment instructions are received and accepted by the transfer agent. If investment instructions are not received, your money will be invested in Class A shares of American Funds Money Market Fund® on the third business day after receipt of your investment.

If no fund is designated and the amount of your cash investment is $5,000 or less, your money will be invested in the same proportion and in the same fund or funds in which your last cash investment (excluding exchanges) was made, provided that such investment was made within the last 16 months. If no investment was made within the last 16 months, your money will be held uninvested (without liability to the transfer agent for loss of income or appreciation pending receipt of proper instructions) until investment instructions are received, but for no more than three business days. Your investment will be made at the net asset value (plus any applicable sales charge in the case of Class A shares) next determined after investment instructions are received and accepted by the transfer agent. If investment instructions are not received, your money will be invested in Class A shares of American Funds Money Market Fund on the third business day after receipt of your investment.

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. The fund will not calculate net asset values on days that the New York Stock Exchange is closed for 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

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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 values 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 your request, provided that your request contains all information and legal documentation necessary to process the transaction. A contingent deferred sales charge may apply at the time you sell certain Class A, B and C shares.

Purchase of Class A and C shares

You may generally open an account and purchase Class A and C shares by contacting any financial adviser (who may impose transaction charges in addition to those described in this prospectus) authorized to sell the fund’s shares. You may purchase additional shares in various ways, including through your financial adviser and by mail, telephone, the Internet and bank wire.

Purchase of Class F shares

Unless otherwise noted, references in this prospectus to Class F shares refer to both Class F-1 and F-2 shares.

You may generally open an account and purchase Class F shares only through fee-based programs of investment dealers that have special agreements with the fund’s distributor, through certain registered investment advisers and through other intermediaries approved by the fund’s distributor. These intermediaries typically charge ongoing fees for services they provide. Intermediary fees are not paid by the fund and normally range from .75% to 1.50% of assets annually, depending on the services offered.

Purchase of Class 529 shares

Class 529 shares may be purchased only through an account established with a 529 college savings plan managed by the American Funds organization. You may open this type of account and purchase Class 529 shares by contacting any financial adviser (who may impose transaction charges in addition to those described in this prospectus) authorized to sell such an account. You may purchase additional shares in various ways, including through your financial adviser and by mail, telephone, the Internet and bank wire.

Class 529-E shares may be purchased only by employees participating through an eligible employer plan.

Accounts holding Class 529 shares are subject to a $10 account setup fee and an annual $10 account maintenance fee.

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Purchase minimums and maximums

The purchase minimums described in the table on page 7 may be waived in certain cases. In addition, the fund reserves the right to redeem the shares of any shareholder for their then current net asset value per share if the shareholder’s aggregate investment in the fund falls below the fund’s minimum initial investment amount. See the statement of additional information for details.

For accounts established with an automatic investment plan, the initial purchase minimum of $250 may be waived if the purchases (including purchases through exchanges from another fund) made under the plan are sufficient to reach $250 within five months of account establishment.

The effective purchase maximums for Class 529-A, 529-C, 529-E and 529-F-1 shares will reflect the maximum applicable contribution limits under state law. See the applicable program description for more information.

The purchase maximum for Class C shares is $500,000 per transaction. In addition, if you have significant American Funds holdings, you may not be eligible to invest in Class C or 529-C shares. Specifically, you may not purchase Class C or 529-C shares if you are eligible to purchase Class A or 529-A shares at the $1 million or more sales charge discount rate (that is, at net asset value). See “Sales charge reductions and waivers” in this prospectus and the statement of additional information for more details regarding sales charge discounts.

Exchange

Generally, you may exchange your shares into shares of the same class of other American Funds without a sales charge. Class A, C or F-1 shares may generally be exchanged into the corresponding 529 share class without a sales charge. Class B shares may not be exchanged into Class 529-B shares. Exchanges from Class A, C or F-1 shares to the corresponding 529 share class, particularly in the case of Uniform Gifts to Minors Act or Uniform Transfers to Minors Act custodial accounts, may result in significant legal and tax consequences, as described in the applicable program description. Please consult your financial adviser before making such an exchange.

Exchanges of shares from American Funds Money Market Fund initially purchased without a sales charge generally will be subject to the appropriate sales charge. For purposes of computing the contingent deferred sales charge on Class B and C shares, the length of time you have owned your shares will be measured from the date of original purchase and will not be affected by any permitted exchange.

Exchanges have the same tax consequences as ordinary sales and purchases. For example, to the extent you exchange shares held in a taxable account that are worth more now than what you paid for them, the gain will be subject to taxation. See “Transactions by telephone, fax or the Internet” in this prospectus for information regarding electronic exchanges.

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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.

 How to sell shares

You may sell (redeem) shares in any of the following ways:

Through your dealer or financial adviser (certain charges may apply)

• Shares held for you in your dealer’s name must be sold through the dealer.

• Class F shares must be sold through intermediaries such as dealers or financial advisers.

Writing to American Funds Service Company

• Requests must be signed by the registered shareholder(s).

• A signature guarantee is required if the redemption is:

— more than $75,000;

— made payable to someone other than the registered shareholder(s); or

— sent to an address other than the address of record or to an address of record that has been changed within the last 10 days.

• American Funds Service Company reserves the right to require signature guarantee(s) on any redemption.

• Additional documentation may be required for redemptions of shares held in corporate, partnership or fiduciary accounts.

Telephoning or faxing American Funds Service Company or using the Internet

·   Redemptions by telephone, fax or the Internet (including American FundsLine and americanfunds.com) are limited to $75,000 per American Funds shareholder each day.

·   Checks must be made payable to the registered shareholder.

·   Checks must be mailed to an address of record that has been used with the account for at least 10 days.

If you recently purchased shares and subsequently request a redemption of those shares, you will receive proceeds from the redemption once a sufficient period of time has passed to reasonably ensure that checks or drafts (including certified or cashier’s checks) for the shares purchased have cleared (normally 10 business days).

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Transactions by telephone, fax or the Internet

Generally, you are automatically eligible to redeem or exchange shares by telephone, fax or the Internet, unless you notify us in writing that you do not want any or all of these services. You may reinstate these services at any time.

Unless you decide not to have telephone, fax or Internet services on your account(s), you agree to hold the fund, American Funds Service Company, any of its affiliates or mutual funds managed by such affiliates, and each of their respective directors, trustees, officers, employees and agents harmless from any losses, expenses, costs or liabilities (including attorney fees) that may be incurred in connection with the exercise of these privileges, provided that American Funds Service Company employs reasonable procedures to confirm that the instructions received from any person with appropriate account information are genuine. If reasonable procedures are not employed, American Funds Service Company and/or the fund may be liable for losses due to unauthorized or fraudulent instructions.

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 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 a fund will be precluded from investing in that 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

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not trigger a purchase block, such as 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; 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; and systematic redemptions and purchases, where the entity maintaining the shareholder account is able to identify the transaction as a systematic redemption or purchase. Generally, purchases and redemptions will not be considered “systematic” unless the transaction is pre-scheduled for a specific date.

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.

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 right of the fund and American Funds Distributors 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.

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 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.

You may elect to reinvest dividends and/or capital gain distributions to purchase additional shares of this fund or other American Funds, or you may elect to receive them in cash. Dividends and capital gain distributions for 529 share classes will be reinvested automatically.

Taxes on dividends and distributions

Dividends and capital gain distributions you receive from the fund are subject to federal income taxes and may also be subject to state and local taxes, unless you are tax-exempt or your account is tax-deferred.

For federal tax purposes, dividends and distributions of short-term capital gains are taxable as ordinary income. The fund’s distributions of net long-term capital gains are taxable as long-term capital gains. Any dividends or capital gain distributions you receive from the fund will normally be taxable to you when made, regardless of whether you reinvest dividends or capital gain distributions or receive them in cash.

Taxes on transactions

Your redemptions, including exchanges, may result in a capital gain or loss for federal tax purposes. A capital gain or loss on your investment is the difference between the cost of your shares, including any sales charges, and the amount you receive when you sell them.

Shareholder fees

Fees borne directly by the fund normally have the effect of reducing a shareholder’s taxable income on distributions. By contrast, fees paid directly to advisers by a fund shareholder for ongoing advice are deductible for income tax purposes only to the extent that they (combined with certain other qualifying expenses) exceed 2% of such shareholder’s adjusted gross income.

Please see your tax adviser for more information. Holders of Class 529 shares should refer to the applicable program description for more information regarding the tax consequences of selling Class 529 shares.

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 Choosing a share class

The fund offers different classes of shares through this prospectus. Class A, C, F-1 and F-2 shares are available through various investment programs or accounts, including certain types of retirement plans (see limitations below). The services or share classes available to you may vary depending upon how you wish to purchase shares of the fund.

Class B and 529-B shares may not be purchased or acquired, except by exchange from Class B or 529-B shares of another fund in the American Funds family. Any other investment received by the fund that is intended for Class B or 529-B shares will instead be invested in Class A or 529-A shares and will be subject to any applicable sales charges.

Shareholders with investments in Class B and 529-B shares may continue to hold such shares until they convert to Class A or 529-A shares. However, no additional investments will be accepted in Class B or 529-B shares. Dividends and capital gain distributions may continue to be reinvested in Class B or 529-B shares until their conversion dates. In addition, shareholders invested in Class B or 529-B shares will be able to exchange those shares for Class B or 529-B shares of other American Funds offering Class B or 529-B shares until they convert.

Investors residing in any state may purchase Class 529 shares through an account established with a 529 college savings plan managed by the American Funds organization. Class 529-A, 529-B, 529-C and 529-F-1 shares are structured similarly to the corresponding Class A, B, C and F-1 shares. For example, the same initial sales charges apply to Class 529-A shares as to Class A shares. Class 529-E shares are available only to investors participating through an eligible employer plan.

Each share class represents an investment in the same portfolio of securities, but each class has its own sales charge and expense structure, allowing you to choose the class that best fits your situation. When you purchase shares of the fund, you should choose a share class. If none is chosen, your investment will be made in Class A shares or, in the case of a 529 plan investment, Class 529-A shares.

Factors you should consider when choosing a class of shares include:

·   how long you expect to own the shares;

·   how much you intend to invest;

·   total expenses associated with owning shares of each class;

·   whether you qualify for any reduction or waiver of sales charges (for example, Class A or 529-A shares may be a less expensive option over time, particularly if you qualify for a sales charge reduction or waiver);

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·   whether you plan to take any distributions in the near future (for example, the contingent deferred sales charge will not be waived if you sell your Class 529-B or 529-C shares to cover higher education expenses); and

·   availability of share classes:

—   Class C shares are not available to retirement plans that do not currently invest in such shares and that are eligible to invest in Class R shares, including employer-sponsored retirement plans such as defined benefit plans, 401(k) plans, 457 plans, 403(b) plans, and money purchase pension and profit-sharing plans; and

—   Class F and 529-F-1 shares are generally available only to fee-based programs of investment dealers that have special agreements with the fund’s distributor, to certain registered investment advisers and to other intermediaries approved by the fund’s distributor.

Each investor’s financial considerations are different. You should speak with your financial adviser to help you decide which share class is best for you.

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Summary of the primary differences among share classes
Class A shares
Initial sales charge	up to 3.75% (reduced for purchases of $100,000 or more and eliminated for purchases of $1 million or more)
Contingent deferred sales charge	none (except that a charge of 1.00% applies to certain redemptions made within one year following purchases of $1 million or more without an initial sales charge)
12b-1 fees	up to .25% annually (for Class 529-A shares, may not exceed .50% annually)
Dividends	generally higher than other classes due to lower annual expenses, but may be lower than Class F-1 shares, depending on relative expenses, and lower than Class F-2 shares due to 12b-1 fees
Purchase maximum	none
Conversion	none
Class B shares
Initial sales charge	none
Contingent deferred sales charge	starts at 5.00%, declining to 0% six years after purchase
12b-1 fees	up to 1.00% annually
Dividends	generally lower than Class A and F shares due to higher 12b-1 fees and other expenses, but higher than Class C shares due to lower other expenses
Purchase maximum	Class B shares may not be purchased or acquired except by exchange from Class B shares of other American Funds
Conversion	automatic conversion to Class A or 529-A shares in the month of the eight-year anniversary of the purchase date, reducing future annual expenses
Class C shares
Initial sales charge	none
Contingent deferred sales charge	1.00% if shares are sold within one year after purchase
12b-1 fees	up to 1.00% annually
Dividends	generally lower than other classes due to higher 12b-1 fees and other expenses
Purchase maximum	see the discussion regarding purchase minimums and maximums in “Purchase, exchange and sale of shares”
Conversion	automatic conversion to Class F-1 shares in the month of the 10-year anniversary of the purchase date, reducing future annual expenses (Class 529-C shares will not convert to Class 529-F-1 shares)
Class 529-E shares
Initial sales charge	none
Contingent deferred sales charge	none
12b-1 fees	currently up to .50% annually (may not exceed .75% annually)
Dividends	generally higher than Class 529-B and 529-C shares due to lower 12b-1 fees, but lower than Class 529-A and 529-F-1 shares due to higher 12b-1 fees
Purchase maximum	none
Conversion	none

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Summary of the primary differences among share classes
Class F-1 shares
Initial sales charge	none
Contingent deferred sales charge	none
12b-1 fees	currently up to .25% annually (may not exceed .50% annually)
Dividends	generally higher than Class B and C shares due to lower 12b-1 fees, but may be higher than Class A shares, depending on relative expenses, and lower than Class F-2 shares due to 12b-1 fees
Purchase maximum	none
Conversion	none
Class F-2 shares
Initial sales charge	none
Contingent deferred sales charge	none
12b-1 fees	none
Dividends	generally higher than other classes due to absence of 12b-1 fees
Purchase maximum	none
Conversion	none

Employer-sponsored retirement plans

Many employer-sponsored retirement plans are eligible to purchase Class R shares. Such eligible plans and Class R shares are described in more detail in the fund’s retirement plan prospectus.

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 that 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 and waivers” 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 before April 1, 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 or C shares unless it was invested in Class A or C shares before January 1, 2009.

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 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:
Investment	Offering price	Net amount invested	Dealer commission as a percentage 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 investments described below	none	none	see 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. Similarly, any contingent deferred sales charge paid by you on investments in Class A shares may be higher or lower than the 1% charge described below due to rounding.

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Except as provided below, investments in Class A shares of $1 million or more may be subject to a 1% contingent deferred sales charge if the shares are sold within one year of purchase. The contingent deferred sales charge is based on the original purchase cost or the current market value of the shares being sold, whichever is less.

Class A share 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 in Class A shares made by endowments or foundations with $50 million or more in assets;

·   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 a commission of 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).

Transfers from certain 529 plans to plans managed by the American Funds organization will be made with no sales charge. No commission will be paid to the dealer on such a transfer. Please see the statement of additional information for more information.

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, Inc. Please see the statement of additional information for further details.

Class B and C shares

For Class B shares, a contingent deferred sales charge may be applied to shares you sell within six years of purchase, as shown in the table below. The contingent deferred sales charge is eliminated six years after purchase.

Contingent deferred sales charge on Class B shares
Year of redemption:	1	2	3	4	5	6	7+
Contingent deferred sales charge:	5%	4%	4%	3%	2%	1%	0%

Class C shares are sold without any initial sales charge. American Funds Distributors pays 1% of the amount invested to dealers who sell Class C shares. A contingent deferred sales charge of 1% applies if Class C shares are sold within one year of purchase. The contingent deferred sales charge is eliminated one year after purchase.

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Any contingent deferred sales charge paid by you on redemptions of Class B or C shares, expressed as a percentage of the applicable redemption amount, may be higher or lower than the percentages described above due to rounding.

Shares acquired through reinvestment of dividends or capital gain distributions are not subject to a contingent deferred sales charge. In addition, the contingent deferred sales charge may be waived in certain circumstances. See “Contingent deferred sales charge waivers” in this prospectus. The contingent deferred sales charge is based on the original purchase cost or the current market value of the shares being sold, whichever is less. For purposes of determining the contingent deferred sales charge, if you sell only some of your shares, shares that are not subject to any contingent deferred sales charge will be sold first, followed by shares that you have owned the longest.

See “Plans of distribution” in this prospectus for ongoing compensation paid to your dealer or financial adviser for all share classes.

Automatic conversion of Class B and C shares

Class B shares automatically convert to Class A shares in the month of the eight-year anniversary of the purchase date. Class C shares automatically convert to Class F-1 shares in the month of the 10-year anniversary of the purchase date; however, Class 529-C shares will not convert to Class 529-F-1 shares. The Internal Revenue Service currently takes the position that these automatic conversions are not taxable. Should its position change, the automatic conversion feature may be suspended. If this happens, you would have the option of converting your Class B, 529-B or C shares to the respective share classes at the anniversary dates described above. This exchange would be based on the relative net asset values of the two classes in question, without the imposition of a sales charge or fee, but you might face certain tax consequences as a result.

Class 529-E and Class F shares

Class 529-E and Class F shares are sold without any initial or contingent deferred sales charge.

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 Sales charge reductions and waivers

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 and waivers 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, you and your “immediate family” (your spouse — or equivalent if recognized under local law — and your children under the age of 21) may combine all of your American Funds investments to reduce your 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 Fund are excluded. Following are different ways that you may qualify for a reduced Class A sales charge:

Aggregating accounts

To receive a reduced Class A sales charge, investments made by you and your immediate family (see above) may be aggregated if made for your own account(s) and/or certain other accounts, such as:

·   trust accounts established by the above individuals (please see the statement of additional information for details regarding aggregation of trust accounts where the person(s) who established the trust is/are deceased);

·   solely controlled business accounts; and

·   single-participant retirement plans.

Concurrent purchases

You may combine simultaneous purchases (including, upon your request, purchases for gifts) of any class of shares of two or more American Funds (excluding American Funds Money Market Fund) to qualify for a reduced Class A sales charge.

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Rights of accumulation

You may take into account your accumulated holdings in all share classes of the American Funds (excluding American Funds Money Market Fund) to determine the initial sales charge you pay on each purchase of Class A shares. Subject to your investment dealer’s capabilities, your accumulated holdings will be calculated as the higher of (a) the current value of your existing holdings (as of the day prior to your additional American Funds investment) 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.

If you make a gift of 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 accounts.

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 Fund) 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. Your accumulated holdings (as described and calculated under “Rights of accumulation” above) 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 the discussion regarding employer-sponsored retirement plans under “Choosing a share class” in this prospectus for more information.

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, dividend payment or distribution and is made into the same account from which you redeemed the shares or received the dividend payment or 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 from a Class B share redemption for which a contingent deferred sales charge was paid will be reinvested in Class A shares without any initial sales charge. If you

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redeem Class B shares without paying a contingent deferred sales charge, you may reinvest the proceeds in Class B shares or purchase Class A shares; if you purchase Class A shares, you are responsible for paying any applicable Class A sales charges. Proceeds from any other type of redemption and all dividend payments and capital gain distributions will be reinvested in the same share class from which the original redemption, dividend payment or distribution was made. Any contingent deferred sales charge on Class A or C shares will be credited to your account. Redemption proceeds of Class A shares representing direct purchases in American Funds Money Market Fund that are reinvested in other 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 by American Funds Service Company, provided that your request contains all information and legal documentation necessary to process the transaction. 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. 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.

Contingent deferred sales charge waivers

The contingent deferred sales charge on Class A, B and C shares may be waived in the following cases:

·   permitted exchanges of shares, except if shares acquired by exchange are then redeemed within the period during which a contingent deferred sales charge would apply to the initial shares purchased;

·   tax-free returns of excess contributions to IRAs;

·   redemptions due to death or postpurchase disability of the shareholder (this generally excludes accounts registered in the names of trusts and other entities);

·   for 529 share classes only, redemptions due to a beneficiary’s death, postpurchase disability or receipt of a scholarship (to the extent of the scholarship award);

·   redemptions due to the complete termination of a trust upon the death of the trustor/grantor or beneficiary, but only if such termination is specifically provided for in the trust document; and

·   the following types of transactions, if together they do not exceed 12% of the value of an account annually (see the statement of additional information for further details about waivers regarding these types of transactions):

—   redemptions due to receiving required minimum distributions from retirement accounts upon reaching age 70½ (required minimum distributions that continue to

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be taken by the beneficiary(ies) after the account owner is deceased also qualify for a waiver); and

—   if you have established an automatic withdrawal plan, redemptions through such a plan (including any dividends and/or capital gain distributions taken in cash).

To have your Class A, B or C contingent deferred sales charge waived, you must inform your adviser or American Funds Service Company at the time you redeem shares that you qualify for such a waiver.

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 Rollovers from retirement plans to IRAs

Assets from retirement plans may be invested in Class A, C or F shares through an IRA rollover, subject to the other provisions of this prospectus. 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.

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 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 that the categories of expenses are approved in advance by the fund’s board of trustees. The plans provide for payments, based on annualized percentages of average daily net assets, of up to .25% for Class A shares; up to .50% for Class 529-A shares; up to 1.00% for Class B and 529-B shares; up to 1.00% for Class C and 529-C shares; up to .75% for Class 529-E shares; and up to .50% for Class F-1 and 529-F-1 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 each share class of 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 may cost you more than paying other types of sales charges and reduce the return of your investment. The higher fees for Class B and C shares may cost you more over time than paying the initial sales charge for Class A shares.

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 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 2010, 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 or investments. You should consult with your financial adviser and review carefully any disclosure by your financial adviser’s firm as to compensation received.

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 Fund expenses

In periods of market volatility, assets of the fund may decline significantly, causing total annual fund operating expenses (as a percentage of the value of your investment) to become higher than the numbers shown in the Annual Fund Operating Expenses table in this prospectus.

The “Other expenses” items in the table on page 1 include custodial, legal, transfer agent and subtransfer agent/recordkeeping payments and various other expenses. Subtransfer agent/recordkeeping payments may be made to third parties (including affiliates of the fund’s investment adviser) that provide subtransfer agent, recordkeeping and/or shareholder services with respect to certain shareholder accounts in lieu of the transfer agent providing such services. The amount paid for subtransfer agent/recordkeeping services varies depending on the share class and services provided, and typically ranges from $3 to $19 per account. For Class 529 shares, an expense of up to a maximum of .10% paid to a state or states for oversight and administrative services is included as an “Other expenses” item.

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 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. 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 fund’s statement of additional information and 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.

		Income (loss) from investment operations1
	Net asset value, beginning of period	Net investment income	Net gains (losses) on securities (both realized and unrealized)	Total from investment operations	Dividends (from net investment income)	Net asset value, end of period	Total return2,3	Net assets, end of period (in millions)	Ratio of expenses to average net assets before reim- bursements/ waivers	Ratio of expenses to average net assets after reim- bursements/ waivers3	Ratio of net income to average net assets3
Class A:
Year ended 12/31/2010	$11.80	$.44	$   .41	$   .85	$(.46)	$12.19	7.30%	$25,627	.59%	.59%	3.61%
Year ended 12/31/2009	10.76	.53	1.03	1.56	(.52)	11.80	14.91	27,349	.65	.65	4.74
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
Class B:
Year ended 12/31/2010	11.80	.35	.41	.76	(.37)	12.19	6.50	891	1.35	1.35	2.88
Year ended 12/31/2009	10.76	.45	1.03	1.48	(.44)	11.80	14.06	1,212	1.40	1.40	4.05
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

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		Income (loss) from investment operations1
	Net asset value, beginning of period	Net investment income	Net gains (losses) on securities (both realized and unrealized)	Total from investment operations	Dividends (from net investment income)	Net asset value, end of period	Total return2,3	Net assets, end of period (in millions)	Ratio of expenses to average net assets before reim- bursements/ waivers	Ratio of expenses to average net assets after reim- bursements/ waivers3	Ratio of net income to average net assets3
Class C:
Year ended 12/31/2010	$11.80	$.35	$  .41	$  .76	$(.37)	$12.19	6.45%	$2,931	1.39%	1.39%	2.81%
Year ended 12/31/2009	10.76	.44	1.03	1.47	(.43)	11.80	14.00	3,189	1.44	1.44	3.91
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
Class F-1:
Year ended 12/31/2010	11.80	.44	.41	.85	(.46)	12.19	7.27	1,866	.62	.62	3.59
Year ended 12/31/2009	10.76	.53	1.03	1.56	(.52)	11.80	14.91	2,329	.65	.65	4.80
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
Class F-2:
Year ended 12/31/2010	11.80	.47	.41	.88	(.49)	12.19	7.55	402	.36	.36	3.89
Year ended 12/31/2009	10.76	.56	1.03	1.59	(.55)	11.80	15.19	737	.39	.39	4.66
Period from 8/4/2008 to 12/31/20084	12.31	.29	(1.47)	(1.18)	(.37)	10.76	(9.62)	99	.18	.17	2.69
Class 529-A:
Year ended 12/31/2010	11.80	.44	.41	.85	(.46)	12.19	7.24	898	.65	.65	3.53
Year ended 12/31/2009	10.76	.53	1.03	1.56	(.52)	11.80	14.86	758	.70	.70	4.67
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
Class 529-B:
Year ended 12/31/2010	11.80	.34	.41	.75	(.36)	12.19	6.39	73	1.45	1.45	2.76
Year ended 12/31/2009	10.76	.44	1.03	1.47	(.43)	11.80	13.94	86	1.50	1.50	3.89
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
(The Financial Highlights table continues on the following page.)

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		Income (loss) from investment operations1
	Net asset value, beginning of period	Net investment income	Net gains (losses) on securities (both realized and unrealized)	Total from investment operations	Dividends (from net investment income)	Net asset value, end of period	Total return2,3	Net assets, end of period (in millions)	Ratio of expenses to average net assets before reim- bursements/ waivers	Ratio of expenses to average net assets after reim- bursements/ waivers3	Ratio of net income to average net assets3
Class 529-C:
Year ended 12/31/2010	$11.80	$.34	$  .41	$  .75	$(.36)	$12.19	6.40%	$428	1.44%	1.44%	2.74%
Year ended 12/31/2009	10.76	.44	1.03	1.47	(.43)	11.80	13.95	370	1.49	1.49	3.87
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
Class 529-E:
Year ended 12/31/2010	11.80	.40	.41	.81	(.42)	12.19	6.93	49	.93	.93	3.24
Year ended 12/31/2009	10.76	.49	1.03	1.52	(.48)	11.80	14.52	40	.99	.99	4.38
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
Class 529-F-1:
Year ended 12/31/2010	11.80	.46	.41	.87	(.48)	12.19	7.47	54	.44	.44	3.74
Year ended 12/31/2009	10.76	.55	1.03	1.58	(.54)	11.80	15.09	44	.49	.49	4.84
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 December 31
	2010	2009	2008	2007	2006
Portfolio turnover rate for all classes of shares	99%	84%	57%	58%	53%

1 Based on average shares outstanding.

2 Total returns exclude any applicable sales charges, including contingent deferred sales charges.

3 This column reflects the impact, if any, of certain reimbursements/waivers from Capital Research and Management Company. During some of the periods shown, Capital Research and Management Company reduced fees for investment advisory services.

4 Based on operations for the period shown and, accordingly, may not be representative of a full year.

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Notes

Page 43

Notes

Page 44

Notes

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For shareholder services	American Funds Service Company 800/421-0180
For retirement plan services	Call your employer or plan administrator
For 529 plans	American Funds Service Company 800/421-0180, ext. 529
For 24-hour information	American FundsLine 800/325-3590 americanfunds.com
Telephone calls you have with American Funds may be monitored or recorded for quality assurance, verification and recordkeeping purposes. By speaking to American Funds on the telephone, you consent to such monitoring and recording.

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).

Program description  The CollegeAmerica® 529 program description contains additional information about the policies and services related to 529 plan accounts.

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 U.S. Securities and Exchange Commission (SEC). These and other related materials about the fund are available for review or to be copied at the SEC’s Public Reference Room in Washington, D.C. (202/551-8090), 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, D.C. 20549-1520. The codes of ethics, current SAI and shareholder reports are also available, free of charge, on our website, americanfunds.com.

E-delivery and household mailings   Each year you are automatically sent an updated summary 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, annual/semi-annual report to shareholders or applicable program description, 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 90071-1406.

Securities Investor Protection Corporation (SIPC)   Shareholders may obtain information about SIPC® on its website at sipc.org or by calling 202/371-8300.

MFGEPR-908-0311P Litho in USA CGD/AC/8005 Investment Company File No. 811-02444

The Capital Group Companies
American Funds	Capital Research and Management	Capital International	Capital Guardian	Capital Bank and Trust

   

The Bond Fund

of AmericaSM

Class A                        R-1                        R-2                        Ticker ABNDX RBFAX RBFBX R-3                        R-4                        R-5                        R-6                        RBFCX RBFEX RBFFX RBFGX

Retirement plan prospectus
March 1, 2011
Table of contents
Investment objective  Fees and expenses of the fund  Principal investment strategies  Principal risks  Investment results  Management  Purchase and sale of fund shares  Tax information  Payments to broker-dealers and other financial intermediaries  Investment objective, strategies and risks  Additional investment results	1 1 2 3 4 6 7 7 7 8 11	Management and organization  Purchase, exchange and sale of shares  Distributions and taxes  Sales charges  Sales charge reductions Rollovers from retirement plans to IRAs  Plans of distribution  Other compensation to dealers  Fund expenses  Financial highlights	13 16 20 21 23 25 25 26 27 28
The U.S. 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.

 Investment objective

The fund’s investment objective is to provide as high a level of current income as is consistent with the preservation of capital.

 Fees and expenses of the fund

This table describes the fees and expenses that you may pay if you buy and hold shares of the fund. You may qualify for a Class A sales charge discount if you and your family invest, or agree to invest in the future, at least $100,000 in American Funds. More information about these and other discounts is available from your financial professional and in the “Sales charge reductions” section on page 23 of the retirement plan prospectus and in the “Sales charge reductions and waivers” section on page 64 of the fund’s statement of additional information.

Shareholder fees (fees paid directly from your investment)
	Class A	All R share classes
Maximum sales charge (load) imposed on purchases (as a percentage of offering price)	3.75%	none
Maximum deferred sales charge (load) (as a percentage of the amount redeemed)	none	none
Maximum sales charge (load) imposed on reinvested dividends	none	none
Redemption or exchange fees	none	none

Annual fund operating expenses

(expenses that you pay each year as a percentage of thevalue of your investment)

	Share classes
	A	R-1	R-2	R-3	R-4	R-5	R-6
Management fees	0.21%	0.21%	0.21%	0.21%	0.21%	0.21%	0.21%
Distribution and/or service (12b-1) fees	0.24	0.99	0.75	0.50	0.25	none	none
Other expenses	0.14	0.18	0.43	0.22	0.16	0.11	0.06
Total annual fund operating expenses	0.59	1.38	1.39	0.93	0.62	0.32	0.27

Example

This example is intended to help you compare the cost of investing in the fund with the cost of investing in other mutual funds.

The example assumes that you invest $10,000 in the fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the fund’s operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:

Share classes	1 year	3 years	5 years	10 years
A	$433	$557	$692	$1,085
R-1	140	437	755	1,657
R-2	142	440	761	1,669
R-3	95	296	515	1,143
R-4	63	199	346	774
R-5	33	103	180	406
R-6	28	87	152	343

Portfolio turnover

The fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the fund’s results. During the most recent fiscal year, the fund’s portfolio turnover rate was 99% of the average value of its portfolio.

 Principal investment strategies

The fund seeks to maximize your level of current income and preserve your capital by investing primarily in bonds. 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 by Nationally Recognized Statistical Ratings Organizations designated by the fund’s investment adviser or in debt securities that are unrated but determined to be of equivalent quality by the fund’s investment adviser, including securities issued and guaranteed by the United States and other governments, securities of corporate issuers and securities backed by mortgages and other assets.

The fund may also invest in debt securities and mortgage-backed securities issued by government-sponsored entities and federal agencies and instrumentalities that are not backed by the full faith and credit of the U.S. government. The fund invests in debt securities with a wide range of maturities.

The fund’s current practice is not to invest more than 10% of its assets in debt securities rated Ba1 and BB+ or below by Nationally Recognized Statistical Ratings Organizations designated by the fund’s investment adviser or in debt securities that are unrated but determined by the fund’s investment adviser to be of equivalent quality. Securities rated Ba1 and BB+ or below are sometimes referred to as “junk bonds.”

The investment adviser uses a system of multiple portfolio counselors in managing the fund’s assets. Under this approach, the portfolio of the fund is divided into segments managed by individual counselors who decide how their respective segments will be invested.

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 good, 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.

 Principal risks

This section describes the principal risks associated with the fund’s principal investment strategies. 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.

Market conditions — The prices of, and the income generated by, the securities held by the fund may decline due to market conditions and other factors, including those directly involving the issuers of securities held by the fund.

Investing in bonds — Rising interest rates will generally cause the prices of bonds and other debt securities to 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. Longer maturity debt securities may be subject to greater price fluctuations than shorter maturity debt securities.

Bonds and other debt securities are 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 debt securities generally have higher rates of interest and may be subject to greater price fluctuations than higher quality debt securities.

Investing in mortgage-backed and asset-backed securities — Many types of bonds and other debt securities, including mortgage-backed securities, are subject to prepayment risk, as well as the risks associated with investing in debt securities in general. If interest rates fall and the loans underlying these securities are prepaid faster than expected, the fund may have to reinvest the prepaid principal in lower yielding securities, thus reducing the fund’s income. Conversely, if interest rates increase and the loans underlying the securities are prepaid more slowly than expected, the expected duration of the securities may be extended. This reduces the potential for the fund to invest the principal in higher yielding securities.

Investing in securities backed by the U.S. government — Securities backed by the U.S. Treasury or the full faith and credit of the U.S. government are guaranteed only as to the timely payment of interest and principal when held to maturity. Accordingly, the current market values for these securities will fluctuate with changes in interest rates. Securities issued by government sponsored entities and federal agencies and instrumentalities are neither issued nor guaranteed by the U.S. government.

Thinly traded securities — There may be little trading in the secondary market for particular bonds or other debt securities, which may make them more difficult to value or sell.

Investing outside the United States — Securities of issuers domiciled outside the United States, or with significant operations outside the United States, may lose value because of political, social or economic developments in the country or region in which the issuer operates. These securities may also lose value due to changes in the exchange rate of the country’s currency against the U.S. dollar. Securities markets in certain countries may be more volatile and/or less liquid than those in the United States. Investments outside the United States may also be subject to different settlement and accounting practices and different regulatory, legal and reporting standards than those in the United States. These risks may be heightened in connection with investments in developing countries.

Management — The investment adviser to the fund actively manages the fund’s investments. Consequently, the fund is subject to the risk that the methods and analyses employed by the investment adviser in this process may not produce the desired results. This could cause the fund to lose value or its results to lag relevant benchmarks or other funds with similar objectives.

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 governmental agency, entity or person. You should consider how this fund fits into your overall investment program.

 Investment results

The following bar chart shows how the fund’s investment results have varied from year to year, and the following table shows how the fund’s average annual total returns for various periods compare with different broad measures of market results. This information provides some indication of the risks of investing in the fund. Lipper Corporate Debt A-Rated Bond Funds Average includes the fund and other funds that disclose investment objectives reasonably comparable to the fund’s objective. The Consumer Price Index provides a comparison of the fund’s results to inflation. Past results are not predictive of future results. Updated information on the fund’s results can be obtained by visiting americanfunds.com.

Highest/Lowest quarterly results during this time period were:

Highest                       7.36%                      (quarter ended June 30, 2009)

Lowest                     –6.82%                        (quarter ended September 30, 2008)

Average annual total returns For the periods ended December 31, 2010 (with maximum sales charge):
Share class	Inception date	1 year	5 years	10 years	Lifetime
A	5/28/1974	3.27%	2.64%	4.61%	8.31%

Share class	Inception date	1 year	5 years	Lifetime
R-1	6/11/2002	6.47%	2.63%	3.95%
R-2	5/31/2002	6.44	2.60	3.89
R-3	6/4/2002	6.94	3.09	4.34
R-4	5/20/2002	7.27	3.42	4.74
R-5	5/15/2002	7.59	3.73	5.08
R-6	5/1/2009	7.64	N/A	12.30

Indexes	1 year	5 years	10 years	Lifetime (from Class A inception)
Barclays Capital U.S. Aggregate Index (reflects no deductions for sales charges, account fees, expenses or taxes)	6.54%	5.80%	5.84%	N/A
Lipper Corporate Debt A-Rated Bond Funds Average (reflects no deductions for sales charges, account fees or taxes)	7.51	4.82	5.27	8.35%
Consumer Price Index	1.50	2.18	2.34	4.20
Class A annualized 30-day yield at December 31, 2010: 2.63% (For current yield information, please call American FundsLine® at 800/325-3590.)

 Management

Investment adviser

Capital Research and Management Company

Portfolio counselors

The individuals primarily responsible for the portfolio management of the fund are:

Portfolio counselor/ Fund title (if applicable)	Portfolio counselor experience in this fund	Primary title with investment adviser
John H. Smet President	22 years	Senior Vice President – Fixed Income, Capital Research and Management Company
Mark R. Macdonald Senior Vice President	12 years	Senior Vice President – Fixed Income, Capital Research and Management Company
Mark H. Dalzell Vice President	17 years	Senior Vice President – Fixed Income, Capital Research and Management Company
David A. Daigle	Less than 1 year	Senior Vice President – Fixed Income, Capital Research Company
David A. Hoag	2 years	Senior Vice President – Fixed Income, Capital Research and Management Company
Thomas H. Hogh	2 years	Senior Vice President – Fixed Income, Capital Research Company
Robert H. Neithart	2 years	Senior Vice President – Fixed Income, Capital Research and Management Company

 Purchase and sale of fund shares

Eligible retirement plans generally may open an account and purchase Class A or R shares by contacting any investment dealer authorized to sell these classes of the fund’s shares. Investment dealers may impose transaction charges in addition to those described in this retirement plan prospectus.

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

 Tax information

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

 Payments to broker-dealers and other financial intermediaries

If you purchase shares of the fund through a broker-dealer or other financial intermediary (such as a bank), the fund and the fund’s distributor or its affiliates may pay the intermediary for the sale of fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your individual financial adviser to recommend the fund over another investment. Ask your individual financial adviser or visit your financial intermediary’s website for more information.

 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.

The fund seeks to maximize your level of current income and preserve your capital by investing primarily in bonds. 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 by Nationally Recognized Statistical Ratings Organizations designated by the fund’s investment adviser or in debt securities that are unrated but determined to be of equivalent quality by the fund’s investment adviser, including securities issued and guaranteed by the United States and other governments, securities of corporate issuers and securities backed by mortgages and other assets.

The fund may also invest in debt securities and mortgage-backed securities issued by government-sponsored entities and federal agencies and instrumentalities that are not backed by the full faith and credit of the U.S. government. The fund invests in debt securities with a wide range of maturities.

The fund’s current practice is not to invest more than 10% of its assets in debt securities rated Ba1 and BB+ or below by Nationally Recognized Statistical Ratings Organizations designated by the fund’s investment adviser or in debt securities that are unrated but determined by the fund’s investment adviser to be of equivalent quality. Securities rated Ba1 and BB+ or below are sometimes referred to as “junk bonds.”

The prices of, and the income generated by, the securities held by the fund may decline in response to certain events taking place around the world, including those directly involving the issuers whose securities are owned by the fund; conditions affecting the general economy; overall market changes; local, regional or global political, social or economic instability; governmental or governmental agency responses to economic conditions; and currency, interest rate and commodity price fluctuations.

The prices of, and the income generated by, most bonds and other 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 prices 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. Longer maturity debt securities generally have higher rates of interest and may be subject to greater price fluctuations than shorter maturity debt securities.

Bonds and other 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 debt securities generally have higher rates of interest and may be subject to greater price fluctuations than higher quality debt securities.

Many types of bonds and other debt securities, including mortgage-backed 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. Conversely, if interest rates increase, homeowners may not make prepayments to the extent expected, resulting in an extension of the expected terms of the securities backed by such mortgages. This reduces the potential for the fund to invest the principal in higher yielding securities. In addition, the values of the securities ultimately depend upon the payment of the underlying loans by individuals.

Securities backed by the U.S. Treasury or the full faith and credit of the U.S. government are guaranteed only as to the timely payment of interest and principal when held to maturity. Accordingly, the current market values for these securities will fluctuate with changes in interest rates. Securities issued by government sponsored entities and federal agencies and instrumentalities are neither issued nor guaranteed by the U.S. government.

There may be little trading in the secondary market for particular bonds or other debt securities, which may make them more difficult to value or sell.

The prices of securities of issuers domiciled outside the United States or with significant operations outside the United States may decline due to conditions specific to the country or region in which the issuer is domiciled or operates, including political, economic or market changes or instability in such country or region. The securities of issuers domiciled in certain countries outside the United States may be more volatile, less liquid and/or more difficult to value than those of U.S issuers. Issuers in countries outside the United States may also be subject to different tax and accounting policies and different auditing, reporting, legal and regulatory standards. In addition, the value of investments outside the United States may be reduced by foreign taxes, including foreign withholding taxes on interest and dividends. Further, there may be increased risks of delayed settlement of securities purchased or sold by the fund. These investments may also be affected by changes in the exchange rate of that country’s currency against the U.S. dollar and/or currencies of other countries.

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. For temporary defensive purposes, the fund may hold a significant portion of its assets in such securities. The investment adviser may determine that it is appropriate to take such action in response to certain circumstances, such as periods of market turmoil. 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 investment adviser to the fund actively manages the fund’s investments. Consequently, the fund is subject to the risk that the methods and analyses employed by the investment adviser in this process may not produce the desired results. This could cause the fund to lose value or its results to lag relevant benchmarks or other funds with similar objectives.

The fund’s investment results will depend on the ability of the fund’s investment adviser to navigate the risks discussed above.

In addition to the investment strategies described above, the fund has other investment practices that are described in the statement of additional information.

 Additional investment results

Unlike the table on page 5, the table below reflects the fund’s results calculated without a sales charge.

Average annual total returns For the periods ended December 31, 2010 (without sales charge):
Share class	Inception date	1 year	5 years	10 years	Lifetime
A − Before taxes	5/28/1974	7.30%	3.44%	5.01%	8.42%

Share class	Inception date	1 year	5 years	Lifetime
R-1	6/11/2002	6.47%	2.63%	3.95%
R-2	5/31/2002	6.44	2.60	3.89
R-3	6/4/2002	6.94	3.09	4.34
R-4	5/20/2002	7.27	3.42	4.74
R-5	5/15/2002	7.59	3.73	5.08
R-6	5/1/2009	7.64	N/A	12.30

Indexes	1 year	5 years	10 years	Lifetime (from Class A inception)
Barclays Capital U.S. Aggregate Index (reflects no deductions for sales charges, account fees, expenses or taxes)	6.54%	5.80%	5.84%	N/A
Lipper Corporate Debt A-Rated Bond Funds Average (reflects no deductions for sales charges, account fees or taxes)	7.51	4.82	5.27	8.35%
Consumer Price Index	1.50	2.18	2.34	4.20
Class A distribution rate at December 31, 2010: 3.79%* (For current distribution rate information, please call American FundsLine at 800/325-3590.)

* The distribution rate is based on actual dividends paid to Class A shareholders over a 12-month period. Capital gain distributions, if any, are added back to net asset value to determine the rate.

The investment results tables above and on page 5 show how the fund’s average annual total returns compare with various broad measures of market results. Barclays Capital U.S. Aggregate Index represents the U.S. investment-grade fixed-rate bond market. This index is unmanaged and its results include reinvested distributions, but do not reflect the effect of sales charges, commissions, account fees, 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. 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 and other fund expenses, but do not reflect the effect of sales charges, account fees or taxes. 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.

All fund results reflected in the “Investment results” and “Additional investment results” sections of this prospectus 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.

 Management and organization

Investment adviser

Capital Research and Management Company, an experienced investment management organization founded in 1931, serves as the 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.” The management fee is based on the daily net assets of the fund and the fund’s monthly gross investment income. Please see the statement of additional information for further details. A discussion regarding the basis for the approval of the fund’s Investment Advisory and Service Agreement by the fund’s board of trustees is contained in the fund’s semi-annual report to shareholders for the period ended June 30, 2010.

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. Although not currently contemplated, Capital Research and Management Company could incorporate its Fixed Income division in the future and engage it to provide day-to-day investment management of fixed-income assets. Capital Research and Management Company and each of the funds it advises have applied to the U.S. Securities and Exchange Commission for an exemptive order that would give Capital Research and Management Company the authority to use, upon approval of the fund’s board, its management subsidiaries and affiliates to provide day-to-day investment management services to the fund, including making changes to the management subsidiaries and affiliates providing such services. The fund’s shareholders approved this arrangement at a meeting of the fund’s shareholders on November 24, 2009. There is no assurance that Capital Research and Management Company will incorporate its investment divisions or exercise any authority, if granted, under an exemptive order.

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 U.S. 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 table below shows the investment experience and role in management of the fund for each of the fund’s primary portfolio counselors.

Portfolio counselor	Investment experience	Experience in this fund	Role in management of the fund
John H. Smet	Investment professional for 29 years in total; 28 years with Capital Research and Management Company or affiliate	22 years	Serves as a fixed-income portfolio counselor
Mark R. Macdonald	Investment professional for 25 years in total; 17 years with Capital Research and Management Company or affiliate	12 years	Serves as a fixed-income portfolio counselor
Mark H. Dalzell	Investment professional for 33 years in total; 23 years with Capital Research and Management Company or affiliate	17 years	Serves as a fixed-income portfolio counselor
David A. Daigle	Investment professional for 16 years, all with Capital Research and Management Company or affiliate	Less than 1 year (plus 15 years of prior experience as an investment analyst for the fund)	Serves as a fixed-income portfolio counselor
David A. Hoag	Investment professional for 23 years in total; 20 years with Capital Research and Management Company or affiliate	2 years	Serves as a fixed-income portfolio counselor
Thomas H. Hogh	Investment professional for 24 years in total; 20 years with Capital Research and Management Company or affiliate	2 years	Serves as a fixed-income portfolio counselor
Robert H. Neithart	Investment professional for 24 years, all with Capital Research and Management Company or affiliate	2 years (plus 13 years of prior experience as an investment analyst for the fund)	Serves as a fixed-income portfolio counselor

Information regarding the portfolio counselors’ compensation, their ownership of securities in the fund and other accounts they manage is 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.

 Purchase, exchange and sale of shares

American Funds Service Company, the fund’s transfer agent, on behalf of the fund and American Funds Distributors,® 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.

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. The fund will not calculate net asset values on days that the New York Stock Exchange is closed for 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 values 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 your request, provided that your request contains all information and legal documentation necessary to process the transaction.

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 these classes of 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 are generally 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. Class R-5 and R-6 shares are generally available only to fee-based programs or through retirement plan intermediaries. In addition, Class R-6 shares are available for investment by American Funds Target Date Retirement Series,®  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 Fund® purchased without a sales charge generally will be subject to the appropriate sales charge.

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.

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 that 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 before April 1, 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 or C shares, unless it was invested in Class A or C shares before January 1, 2009.

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 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 a fund will be precluded from investing in that 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 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; 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; and systematic redemptions and purchases, where the entity maintaining the shareholder account is able to identify the transaction as a systematic redemption or purchase. Generally, purchases and redemptions will not be considered “systematic” unless the transaction is pre-scheduled for a specific date.

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.

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 right of the fund and American Funds Distributors 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.

 Distributions and taxes

Dividends and distributions

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

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

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

Taxes on dividends and distributions

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

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.

 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:
Investment	Offering price	Net amount invested	Dealer commission as a percentage 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 investments described below	none	none	see 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 share 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 a commission of 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).

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, Inc. Please see the statement of additional information for further details.

Class R shares

Class R shares are sold without any initial or contingent deferred sales charge. The distributor will pay dealers annually 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).

 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 Fund 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 Fund) 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 Fund) 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 (as of the day prior to your additional American Funds investment) 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.

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 Fund) 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. Your accumulated holdings (as described and calculated under “Rights of accumulation” above) 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 the discussion regarding employer-sponsored retirement plans under “Purchase, exchange and sale of shares” in this prospectus for more information.

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, dividend payment or distribution and is made into the same account from which you redeemed the shares or received the dividend payment or 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, dividend payment or distribution was made. Redemption proceeds of Class A shares representing direct purchases in American Funds Money Market Fund that are reinvested in other 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 by American Funds Service Company, provided that your request contains all information and legal documentation necessary to process the transaction. 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. 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.

 Rollovers from retirement plans to IRAs

Assets from retirement plans may be invested in Class A, 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 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.

 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 that the categories of expenses are approved in advance by the fund’s board of trustees. 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 each share class of 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 may cost you more than paying other types of sales charges and reduce the return of your investment.

 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 2010, 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 or investments. You should consult with your financial adviser and review carefully any disclosure by your financial adviser’s firm as to compensation received.

 Fund expenses

In periods of market volatility, assets of the fund may decline significantly, causing total annual fund operating expenses (as a percentage of the value of your investment) to become higher than the numbers shown in the Annual Fund Operating Expenses table in this prospectus.

The “Other expenses” items in the table on page 1 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 these services to retirement plans.

	Payments to affiliated entities	Payments to unaffiliated entities
Class A	.05% of assets or $12 per participant position1	.05% of assets or $12 per participant position1
Class R-1	.10% of assets	.10% of assets
Class R-2	.15% of assets plus $27 per participant position2 or .35% of assets3	.25% of assets
Class R-3	.10% of assets plus $12 per participant position2 or .19% of assets3	.15% of assets
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 program.

3 Payment with respect to PlanPremier program.

 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. 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 fund’s statement of additional information and 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.

		Income (loss) from investment operations1
	Net asset value, beginning of period	Net investment income	Net gains (losses) on securities (both realized and unrealized)	Total from investment operations	Dividends (from net investment income)	Net asset value, end of period	Total return2,3	Net assets, end of period (in millions)	Ratio of expenses to average net assets before reim- bursements/ waivers	Ratio of expenses to average net assets after reim- bursements/ waivers3	Ratio of net income to average net assets3
Class A:
Year ended 12/31/2010	$11.80	$.44	$  .41	$   .85	$(.46)	$12.19	7.30%	$25,627	.59%	.59%	3.61%
Year ended 12/31/2009	10.76	.53	1.03	1.56	(.52)	11.80	14.91	27,349	.65	.65	4.74
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
Class R-1:
Year ended 12/31/2010	11.80	.35	.41	.76	(.37)	12.19	6.47	99	1.38	1.38	2.82
Year ended 12/31/2009	10.76	.44	1.03	1.47	(.43)	11.80	14.02	103	1.43	1.43	3.96
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
(The Financial Highlights table continues on the following page.)

		Income (loss) from investment operations1
	Net asset value, beginning of period	Net investment income	Net gains (losses) on securities (both realized and unrealized)	Total from investment operations	Dividends (from net investment income)	Net asset value, end of period	Total return2,3	Net assets, end of period (in millions)	Ratio of expenses to average net assets before reim- bursements/ waivers	Ratio of expenses to average net assets after reim- bursements/ waivers3	Ratio of net income to average net assets3
Class R-2:
Year ended 12/31/2010	$11.80	$.34	$  .41	$  .75	$(.36)	$12.19	6.44%	$832	1.39%	1.39%	2.79%
Year ended 12/31/2009	10.76	.44	1.03	1.47	(.43)	11.80	13.95	795	1.49	1.49	3.89
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
Class R-3:
Year ended 12/31/2010	11.80	.40	.41	.81	(.42)	12.19	6.94	1,053	.93	.93	3.26
Year ended 12/31/2009	10.76	.50	1.03	1.53	(.49)	11.80	14.54	1,091	.97	.97	4.43
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
Class R-4:
Year ended 12/31/2010	11.80	.44	.41	.85	(.46)	12.19	7.27	768	.62	.62	3.57
Year ended 12/31/2009	10.76	.53	1.03	1.56	(.52)	11.80	14.90	788	.66	.66	4.75
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
Class R-5:
Year ended 12/31/2010	11.80	.48	.41	.89	(.50)	12.19	7.59	370	.32	.32	3.88
Year ended 12/31/2009	10.76	.56	1.03	1.59	(.55)	11.80	15.24	451	.37	.37	5.20
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
Class R-6:
Year ended 12/31/2010	11.80	.48	.41	.89	(.50)	12.19	7.64	280	.27	.27	3.90
Period from 5/1/2009 to 12/31/20094	10.78	.35	1.01	1.36	(.34)	11.80	12.75	252	.315	.315	4.595

	Year ended December 31
	2010	2009	2008	2007	2006
Portfolio turnover rate for all classes of shares	99%	84%	57%	58%	53%

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 some of the periods shown, Capital Research and Management Company reduced fees for investment advisory services. In addition, during some of the periods shown, Capital Research and Management Company paid a portion of the fund’s transfer agent fees for certain retirement plan share classes.

4 Based on operations for the period shown and, accordingly, may not be representative of a full year.

5 Annualized.

   

For shareholder services	American Funds Service Company 800/421-0180
For retirement plan services	Call your employer or plan administrator
For 24-hour information	americanfunds.com For Class R share information, visit AmericanFundsRetirement.com
Telephone calls you have with American Funds may be monitored or recorded for quality assurance, verification and recordkeeping purposes. By speaking to American Funds on the telephone, you 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 U.S. Securities and Exchange Commission (SEC). These and other related materials about the fund are available for review or to be copied at the SEC’s Public Reference Room in Washington, D.C. (202/551-8090), 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, D.C. 20549-1520. The codes of ethics, current SAI and shareholder reports are also available, free of charge, on our website, americanfunds.com.

E-delivery and household mailings   Each year you are automatically sent an updated summary 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, 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 90071-1406.

Securities Investor Protection Corporation (SIPC)   Shareholders may obtain information about SIPC® on its website at sipc.org or by calling 202/371-8300.

RPGEPR-908-0311P Litho in USA CGD/AC/8029 Investment Company File No. 811-02444

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 RETIREMENT PLAN PROSPECTUS FOR THE FUND.

/s/ COURTNEY R. TAYLOR

COURTNEY R. TAYLOR

SECRETARY

   

The Bond Fund

of AmericaSM

Class A                        R-1                        R-2                        Ticker ABNDX RBFAX RBFBX R-3                        R-4                        R-5                        R-6                        RBFCX RBFEX RBFFX RBFGX

Retirement plan prospectus
March 1, 2011
Table of contents
Investment objective  Fees and expenses of the fund  Principal investment strategies  Principal risks  Investment results  Management  Purchase and sale of fund shares  Tax information  Payments to broker-dealers and other financial intermediaries  Investment objective, strategies and risks  Additional investment results	1 1 2 3 4 6 7 7 7 8 11	Management and organization  Purchase, exchange and sale of shares  Distributions and taxes  Sales charges  Sales charge reductions Rollovers from retirement plans to IRAs  Plans of distribution  Other compensation to dealers  Fund expenses  Financial highlights	13 16 20 21 23 25 25 26 27 28
The U.S. 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.

 Investment objective

The fund’s investment objective is to provide as high a level of current income as is consistent with the preservation of capital.

 Fees and expenses of the fund

This table describes the fees and expenses that you may pay if you buy and hold shares of the fund. You may qualify for a Class A sales charge discount if you and your family invest, or agree to invest in the future, at least $100,000 in American Funds. More information about these and other discounts is available from your financial professional and in the “Sales charge reductions” section on page 23 of the retirement plan prospectus and in the “Sales charge reductions and waivers” section on page 64 of the fund’s statement of additional information.

Shareholder fees (fees paid directly from your investment)
	Class A	All R share classes
Maximum sales charge (load) imposed on purchases (as a percentage of offering price)	3.75%	none
Maximum deferred sales charge (load) (as a percentage of the amount redeemed)	none	none
Maximum sales charge (load) imposed on reinvested dividends	none	none
Redemption or exchange fees	none	none

Annual fund operating expenses

(expenses that you pay each year as a percentage of thevalue of your investment)

	Share classes
	A	R-1	R-2	R-3	R-4	R-5	R-6
Management fees	0.21%	0.21%	0.21%	0.21%	0.21%	0.21%	0.21%
Distribution and/or service (12b-1) fees	0.24	0.99	0.75	0.50	0.25	none	none
Other expenses	0.14	0.18	0.43	0.22	0.16	0.11	0.06
Total annual fund operating expenses	0.59	1.38	1.39	0.93	0.62	0.32	0.27

Example

This example is intended to help you compare the cost of investing in the fund with the cost of investing in other mutual funds.

The example assumes that you invest $10,000 in the fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the fund’s operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:

Share classes	1 year	3 years	5 years	10 years
A	$433	$557	$692	$1,085
R-1	140	437	755	1,657
R-2	142	440	761	1,669
R-3	95	296	515	1,143
R-4	63	199	346	774
R-5	33	103	180	406
R-6	28	87	152	343

Portfolio turnover

The fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the fund’s results. During the most recent fiscal year, the fund’s portfolio turnover rate was 99% of the average value of its portfolio.

 Principal investment strategies

The fund seeks to maximize your level of current income and preserve your capital by investing primarily in bonds. 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 by Nationally Recognized Statistical Ratings Organizations designated by the fund’s investment adviser or in debt securities that are unrated but determined to be of equivalent quality by the fund’s investment adviser, including securities issued and guaranteed by the United States and other governments, securities of corporate issuers and securities backed by mortgages and other assets.

The fund may also invest in debt securities and mortgage-backed securities issued by government-sponsored entities and federal agencies and instrumentalities that are not backed by the full faith and credit of the U.S. government. The fund invests in debt securities with a wide range of maturities.

The fund’s current practice is not to invest more than 10% of its assets in debt securities rated Ba1 and BB+ or below by Nationally Recognized Statistical Ratings Organizations designated by the fund’s investment adviser or in debt securities that are unrated but determined by the fund’s investment adviser to be of equivalent quality. Securities rated Ba1 and BB+ or below are sometimes referred to as “junk bonds.”

The investment adviser uses a system of multiple portfolio counselors in managing the fund’s assets. Under this approach, the portfolio of the fund is divided into segments managed by individual counselors who decide how their respective segments will be invested.

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 good, 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.

 Principal risks

This section describes the principal risks associated with the fund’s principal investment strategies. 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.

Market conditions — The prices of, and the income generated by, the securities held by the fund may decline due to market conditions and other factors, including those directly involving the issuers of securities held by the fund.

Investing in bonds — Rising interest rates will generally cause the prices of bonds and other debt securities to 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. Longer maturity debt securities may be subject to greater price fluctuations than shorter maturity debt securities.

Bonds and other debt securities are 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 debt securities generally have higher rates of interest and may be subject to greater price fluctuations than higher quality debt securities.

Investing in mortgage-backed and asset-backed securities — Many types of bonds and other debt securities, including mortgage-backed securities, are subject to prepayment risk, as well as the risks associated with investing in debt securities in general. If interest rates fall and the loans underlying these securities are prepaid faster than expected, the fund may have to reinvest the prepaid principal in lower yielding securities, thus reducing the fund’s income. Conversely, if interest rates increase and the loans underlying the securities are prepaid more slowly than expected, the expected duration of the securities may be extended. This reduces the potential for the fund to invest the principal in higher yielding securities.

Investing in securities backed by the U.S. government — Securities backed by the U.S. Treasury or the full faith and credit of the U.S. government are guaranteed only as to the timely payment of interest and principal when held to maturity. Accordingly, the current market values for these securities will fluctuate with changes in interest rates. Securities issued by government sponsored entities and federal agencies and instrumentalities are neither issued nor guaranteed by the U.S. government.

Thinly traded securities — There may be little trading in the secondary market for particular bonds or other debt securities, which may make them more difficult to value or sell.

Investing outside the United States — Securities of issuers domiciled outside the United States, or with significant operations outside the United States, may lose value because of political, social or economic developments in the country or region in which the issuer operates. These securities may also lose value due to changes in the exchange rate of the country’s currency against the U.S. dollar. Securities markets in certain countries may be more volatile and/or less liquid than those in the United States. Investments outside the United States may also be subject to different settlement and accounting practices and different regulatory, legal and reporting standards than those in the United States. These risks may be heightened in connection with investments in developing countries.

Management — The investment adviser to the fund actively manages the fund’s investments. Consequently, the fund is subject to the risk that the methods and analyses employed by the investment adviser in this process may not produce the desired results. This could cause the fund to lose value or its results to lag relevant benchmarks or other funds with similar objectives.

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 governmental agency, entity or person. You should consider how this fund fits into your overall investment program.

 Investment results

The following bar chart shows how the fund’s investment results have varied from year to year, and the following table shows how the fund’s average annual total returns for various periods compare with different broad measures of market results. This information provides some indication of the risks of investing in the fund. Lipper Corporate Debt A-Rated Bond Funds Average includes the fund and other funds that disclose investment objectives reasonably comparable to the fund’s objective. The Consumer Price Index provides a comparison of the fund’s results to inflation. Past results are not predictive of future results. Updated information on the fund’s results can be obtained by visiting americanfunds.com.

Highest/Lowest quarterly results during this time period were:

Highest                       7.36%                      (quarter ended June 30, 2009)

Lowest                     –6.82%                        (quarter ended September 30, 2008)

Average annual total returns For the periods ended December 31, 2010 (with maximum sales charge):
Share class	Inception date	1 year	5 years	10 years	Lifetime
A	5/28/1974	3.27%	2.64%	4.61%	8.31%

Share class	Inception date	1 year	5 years	Lifetime
R-1	6/11/2002	6.47%	2.63%	3.95%
R-2	5/31/2002	6.44	2.60	3.89
R-3	6/4/2002	6.94	3.09	4.34
R-4	5/20/2002	7.27	3.42	4.74
R-5	5/15/2002	7.59	3.73	5.08
R-6	5/1/2009	7.64	N/A	12.30

Indexes	1 year	5 years	10 years	Lifetime (from Class A inception)
Barclays Capital U.S. Aggregate Index (reflects no deductions for sales charges, account fees, expenses or taxes)	6.54%	5.80%	5.84%	N/A
Lipper Corporate Debt A-Rated Bond Funds Average (reflects no deductions for sales charges, account fees or taxes)	7.51	4.82	5.27	8.35%
Consumer Price Index	1.50	2.18	2.34	4.20
Class A annualized 30-day yield at December 31, 2010: 2.63% (For current yield information, please call American FundsLine® at 800/325-3590.)

 Management

Investment adviser

Capital Research and Management Company

Portfolio counselors

The individuals primarily responsible for the portfolio management of the fund are:

Portfolio counselor/ Fund title (if applicable)	Portfolio counselor experience in this fund	Primary title with investment adviser
John H. Smet President	22 years	Senior Vice President – Fixed Income, Capital Research and Management Company
Mark R. Macdonald Senior Vice President	12 years	Senior Vice President – Fixed Income, Capital Research and Management Company
Mark H. Dalzell Vice President	17 years	Senior Vice President – Fixed Income, Capital Research and Management Company
David A. Daigle	Less than 1 year	Senior Vice President – Fixed Income, Capital Research Company
David A. Hoag	2 years	Senior Vice President – Fixed Income, Capital Research and Management Company
Thomas H. Hogh	2 years	Senior Vice President – Fixed Income, Capital Research Company
Robert H. Neithart	2 years	Senior Vice President – Fixed Income, Capital Research and Management Company

 Purchase and sale of fund shares

Eligible retirement plans generally may open an account and purchase Class A or R shares by contacting any investment dealer authorized to sell these classes of the fund’s shares. Investment dealers may impose transaction charges in addition to those described in this retirement plan prospectus.

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

 Tax information

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

 Payments to broker-dealers and other financial intermediaries

If you purchase shares of the fund through a broker-dealer or other financial intermediary (such as a bank), the fund and the fund’s distributor or its affiliates may pay the intermediary for the sale of fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your individual financial adviser to recommend the fund over another investment. Ask your individual financial adviser or visit your financial intermediary’s website for more information.

 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.

The fund seeks to maximize your level of current income and preserve your capital by investing primarily in bonds. 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 by Nationally Recognized Statistical Ratings Organizations designated by the fund’s investment adviser or in debt securities that are unrated but determined to be of equivalent quality by the fund’s investment adviser, including securities issued and guaranteed by the United States and other governments, securities of corporate issuers and securities backed by mortgages and other assets.

The fund may also invest in debt securities and mortgage-backed securities issued by government-sponsored entities and federal agencies and instrumentalities that are not backed by the full faith and credit of the U.S. government. The fund invests in debt securities with a wide range of maturities.

The fund’s current practice is not to invest more than 10% of its assets in debt securities rated Ba1 and BB+ or below by Nationally Recognized Statistical Ratings Organizations designated by the fund’s investment adviser or in debt securities that are unrated but determined by the fund’s investment adviser to be of equivalent quality. Securities rated Ba1 and BB+ or below are sometimes referred to as “junk bonds.”

The prices of, and the income generated by, the securities held by the fund may decline in response to certain events taking place around the world, including those directly involving the issuers whose securities are owned by the fund; conditions affecting the general economy; overall market changes; local, regional or global political, social or economic instability; governmental or governmental agency responses to economic conditions; and currency, interest rate and commodity price fluctuations.

The prices of, and the income generated by, most bonds and other 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 prices 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. Longer maturity debt securities generally have higher rates of interest and may be subject to greater price fluctuations than shorter maturity debt securities.

Bonds and other 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 debt securities generally have higher rates of interest and may be subject to greater price fluctuations than higher quality debt securities.

Many types of bonds and other debt securities, including mortgage-backed 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. Conversely, if interest rates increase, homeowners may not make prepayments to the extent expected, resulting in an extension of the expected terms of the securities backed by such mortgages. This reduces the potential for the fund to invest the principal in higher yielding securities. In addition, the values of the securities ultimately depend upon the payment of the underlying loans by individuals.

Securities backed by the U.S. Treasury or the full faith and credit of the U.S. government are guaranteed only as to the timely payment of interest and principal when held to maturity. Accordingly, the current market values for these securities will fluctuate with changes in interest rates. Securities issued by government sponsored entities and federal agencies and instrumentalities are neither issued nor guaranteed by the U.S. government.

There may be little trading in the secondary market for particular bonds or other debt securities, which may make them more difficult to value or sell.

The prices of securities of issuers domiciled outside the United States or with significant operations outside the United States may decline due to conditions specific to the country or region in which the issuer is domiciled or operates, including political, economic or market changes or instability in such country or region. The securities of issuers domiciled in certain countries outside the United States may be more volatile, less liquid and/or more difficult to value than those of U.S issuers. Issuers in countries outside the United States may also be subject to different tax and accounting policies and different auditing, reporting, legal and regulatory standards. In addition, the value of investments outside the United States may be reduced by foreign taxes, including foreign withholding taxes on interest and dividends. Further, there may be increased risks of delayed settlement of securities purchased or sold by the fund. These investments may also be affected by changes in the exchange rate of that country’s currency against the U.S. dollar and/or currencies of other countries.

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. For temporary defensive purposes, the fund may hold a significant portion of its assets in such securities. The investment adviser may determine that it is appropriate to take such action in response to certain circumstances, such as periods of market turmoil. 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 investment adviser to the fund actively manages the fund’s investments. Consequently, the fund is subject to the risk that the methods and analyses employed by the investment adviser in this process may not produce the desired results. This could cause the fund to lose value or its results to lag relevant benchmarks or other funds with similar objectives.

The fund’s investment results will depend on the ability of the fund’s investment adviser to navigate the risks discussed above.

In addition to the investment strategies described above, the fund has other investment practices that are described in the statement of additional information.

 Additional investment results

Unlike the table on page 5, the table below reflects the fund’s results calculated without a sales charge.

Average annual total returns For the periods ended December 31, 2010 (without sales charge):
Share class	Inception date	1 year	5 years	10 years	Lifetime
A − Before taxes	5/28/1974	7.30%	3.44%	5.01%	8.42%

Share class	Inception date	1 year	5 years	Lifetime
R-1	6/11/2002	6.47%	2.63%	3.95%
R-2	5/31/2002	6.44	2.60	3.89
R-3	6/4/2002	6.94	3.09	4.34
R-4	5/20/2002	7.27	3.42	4.74
R-5	5/15/2002	7.59	3.73	5.08
R-6	5/1/2009	7.64	N/A	12.30

Indexes	1 year	5 years	10 years	Lifetime (from Class A inception)
Barclays Capital U.S. Aggregate Index (reflects no deductions for sales charges, account fees, expenses or taxes)	6.54%	5.80%	5.84%	N/A
Lipper Corporate Debt A-Rated Bond Funds Average (reflects no deductions for sales charges, account fees or taxes)	7.51	4.82	5.27	8.35%
Consumer Price Index	1.50	2.18	2.34	4.20
Class A distribution rate at December 31, 2010: 3.79%* (For current distribution rate information, please call American FundsLine at 800/325-3590.)

* The distribution rate is based on actual dividends paid to Class A shareholders over a 12-month period. Capital gain distributions, if any, are added back to net asset value to determine the rate.

The investment results tables above and on page 5 show how the fund’s average annual total returns compare with various broad measures of market results. Barclays Capital U.S. Aggregate Index represents the U.S. investment-grade fixed-rate bond market. This index is unmanaged and its results include reinvested distributions, but do not reflect the effect of sales charges, commissions, account fees, 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. 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 and other fund expenses, but do not reflect the effect of sales charges, account fees or taxes. 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.

All fund results reflected in the “Investment results” and “Additional investment results” sections of this prospectus 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.

 Management and organization

Investment adviser

Capital Research and Management Company, an experienced investment management organization founded in 1931, serves as the 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.” The management fee is based on the daily net assets of the fund and the fund’s monthly gross investment income. Please see the statement of additional information for further details. A discussion regarding the basis for the approval of the fund’s Investment Advisory and Service Agreement by the fund’s board of trustees is contained in the fund’s semi-annual report to shareholders for the period ended June 30, 2010.

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. Although not currently contemplated, Capital Research and Management Company could incorporate its Fixed Income division in the future and engage it to provide day-to-day investment management of fixed-income assets. Capital Research and Management Company and each of the funds it advises have applied to the U.S. Securities and Exchange Commission for an exemptive order that would give Capital Research and Management Company the authority to use, upon approval of the fund’s board, its management subsidiaries and affiliates to provide day-to-day investment management services to the fund, including making changes to the management subsidiaries and affiliates providing such services. The fund’s shareholders approved this arrangement at a meeting of the fund’s shareholders on November 24, 2009. There is no assurance that Capital Research and Management Company will incorporate its investment divisions or exercise any authority, if granted, under an exemptive order.

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 U.S. 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 table below shows the investment experience and role in management of the fund for each of the fund’s primary portfolio counselors.

Portfolio counselor	Investment experience	Experience in this fund	Role in management of the fund
John H. Smet	Investment professional for 29 years in total; 28 years with Capital Research and Management Company or affiliate	22 years	Serves as a fixed-income portfolio counselor
Mark R. Macdonald	Investment professional for 25 years in total; 17 years with Capital Research and Management Company or affiliate	12 years	Serves as a fixed-income portfolio counselor
Mark H. Dalzell	Investment professional for 33 years in total; 23 years with Capital Research and Management Company or affiliate	17 years	Serves as a fixed-income portfolio counselor
David A. Daigle	Investment professional for 16 years, all with Capital Research and Management Company or affiliate	Less than 1 year (plus 15 years of prior experience as an investment analyst for the fund)	Serves as a fixed-income portfolio counselor
David A. Hoag	Investment professional for 23 years in total; 20 years with Capital Research and Management Company or affiliate	2 years	Serves as a fixed-income portfolio counselor
Thomas H. Hogh	Investment professional for 24 years in total; 20 years with Capital Research and Management Company or affiliate	2 years	Serves as a fixed-income portfolio counselor
Robert H. Neithart	Investment professional for 24 years, all with Capital Research and Management Company or affiliate	2 years (plus 13 years of prior experience as an investment analyst for the fund)	Serves as a fixed-income portfolio counselor

Information regarding the portfolio counselors’ compensation, their ownership of securities in the fund and other accounts they manage is 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.

 Purchase, exchange and sale of shares

American Funds Service Company, the fund’s transfer agent, on behalf of the fund and American Funds Distributors,® 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.

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. The fund will not calculate net asset values on days that the New York Stock Exchange is closed for 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 values 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 your request, provided that your request contains all information and legal documentation necessary to process the transaction.

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 these classes of 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 are generally 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. Class R-5 and R-6 shares are generally available only to fee-based programs or through retirement plan intermediaries. In addition, Class R-6 shares are available for investment by American Funds Target Date Retirement Series,®  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 Fund® purchased without a sales charge generally will be subject to the appropriate sales charge.

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.

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 that 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 before April 1, 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 or C shares, unless it was invested in Class A or C shares before January 1, 2009.

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 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 a fund will be precluded from investing in that 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 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; 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; and systematic redemptions and purchases, where the entity maintaining the shareholder account is able to identify the transaction as a systematic redemption or purchase. Generally, purchases and redemptions will not be considered “systematic” unless the transaction is pre-scheduled for a specific date.

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.

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 right of the fund and American Funds Distributors 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.

 Distributions and taxes

Dividends and distributions

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

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

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

Taxes on dividends and distributions

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

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.

 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:
Investment	Offering price	Net amount invested	Dealer commission as a percentage 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 investments described below	none	none	see 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 share 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 a commission of 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).

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, Inc. Please see the statement of additional information for further details.

Class R shares

Class R shares are sold without any initial or contingent deferred sales charge. The distributor will pay dealers annually 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).

 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 Fund 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 Fund) 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 Fund) 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 (as of the day prior to your additional American Funds investment) 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.

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 Fund) 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. Your accumulated holdings (as described and calculated under “Rights of accumulation” above) 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 the discussion regarding employer-sponsored retirement plans under “Purchase, exchange and sale of shares” in this prospectus for more information.

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, dividend payment or distribution and is made into the same account from which you redeemed the shares or received the dividend payment or 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, dividend payment or distribution was made. Redemption proceeds of Class A shares representing direct purchases in American Funds Money Market Fund that are reinvested in other 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 by American Funds Service Company, provided that your request contains all information and legal documentation necessary to process the transaction. 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. 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.

 Rollovers from retirement plans to IRAs

Assets from retirement plans may be invested in Class A, 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 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.

 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 that the categories of expenses are approved in advance by the fund’s board of trustees. 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 each share class of 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 may cost you more than paying other types of sales charges and reduce the return of your investment.

 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 2010, 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 or investments. You should consult with your financial adviser and review carefully any disclosure by your financial adviser’s firm as to compensation received.

 Fund expenses

In periods of market volatility, assets of the fund may decline significantly, causing total annual fund operating expenses (as a percentage of the value of your investment) to become higher than the numbers shown in the Annual Fund Operating Expenses table in this prospectus.

The “Other expenses” items in the table on page 1 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 these services to retirement plans.

	Payments to affiliated entities	Payments to unaffiliated entities
Class A	.05% of assets or $12 per participant position1	.05% of assets or $12 per participant position1
Class R-1	.10% of assets	.10% of assets
Class R-2	.15% of assets plus $27 per participant position2 or .35% of assets3	.25% of assets
Class R-3	.10% of assets plus $12 per participant position2 or .19% of assets3	.15% of assets
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 program.

3 Payment with respect to PlanPremier program.

 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. 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 fund’s statement of additional information and 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.

		Income (loss) from investment operations1
	Net asset value, beginning of period	Net investment income	Net gains (losses) on securities (both realized and unrealized)	Total from investment operations	Dividends (from net investment income)	Net asset value, end of period	Total return2,3	Net assets, end of period (in millions)	Ratio of expenses to average net assets before reim- bursements/ waivers	Ratio of expenses to average net assets after reim- bursements/ waivers3	Ratio of net income to average net assets3
Class A:
Year ended 12/31/2010	$11.80	$.44	$  .41	$   .85	$(.46)	$12.19	7.30%	$25,627	.59%	.59%	3.61%
Year ended 12/31/2009	10.76	.53	1.03	1.56	(.52)	11.80	14.91	27,349	.65	.65	4.74
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
Class R-1:
Year ended 12/31/2010	11.80	.35	.41	.76	(.37)	12.19	6.47	99	1.38	1.38	2.82
Year ended 12/31/2009	10.76	.44	1.03	1.47	(.43)	11.80	14.02	103	1.43	1.43	3.96
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
(The Financial Highlights table continues on the following page.)

		Income (loss) from investment operations1
	Net asset value, beginning of period	Net investment income	Net gains (losses) on securities (both realized and unrealized)	Total from investment operations	Dividends (from net investment income)	Net asset value, end of period	Total return2,3	Net assets, end of period (in millions)	Ratio of expenses to average net assets before reim- bursements/ waivers	Ratio of expenses to average net assets after reim- bursements/ waivers3	Ratio of net income to average net assets3
Class R-2:
Year ended 12/31/2010	$11.80	$.34	$  .41	$  .75	$(.36)	$12.19	6.44%	$832	1.39%	1.39%	2.79%
Year ended 12/31/2009	10.76	.44	1.03	1.47	(.43)	11.80	13.95	795	1.49	1.49	3.89
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
Class R-3:
Year ended 12/31/2010	11.80	.40	.41	.81	(.42)	12.19	6.94	1,053	.93	.93	3.26
Year ended 12/31/2009	10.76	.50	1.03	1.53	(.49)	11.80	14.54	1,091	.97	.97	4.43
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
Class R-4:
Year ended 12/31/2010	11.80	.44	.41	.85	(.46)	12.19	7.27	768	.62	.62	3.57
Year ended 12/31/2009	10.76	.53	1.03	1.56	(.52)	11.80	14.90	788	.66	.66	4.75
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
Class R-5:
Year ended 12/31/2010	11.80	.48	.41	.89	(.50)	12.19	7.59	370	.32	.32	3.88
Year ended 12/31/2009	10.76	.56	1.03	1.59	(.55)	11.80	15.24	451	.37	.37	5.20
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
Class R-6:
Year ended 12/31/2010	11.80	.48	.41	.89	(.50)	12.19	7.64	280	.27	.27	3.90
Period from 5/1/2009 to 12/31/20094	10.78	.35	1.01	1.36	(.34)	11.80	12.75	252	.315	.315	4.595

	Year ended December 31
	2010	2009	2008	2007	2006
Portfolio turnover rate for all classes of shares	99%	84%	57%	58%	53%

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 some of the periods shown, Capital Research and Management Company reduced fees for investment advisory services. In addition, during some of the periods shown, Capital Research and Management Company paid a portion of the fund’s transfer agent fees for certain retirement plan share classes.

4 Based on operations for the period shown and, accordingly, may not be representative of a full year.

5 Annualized.

   

For shareholder services	American Funds Service Company 800/421-0180
For retirement plan services	Call your employer or plan administrator
For 24-hour information	americanfunds.com For Class R share information, visit AmericanFundsRetirement.com
Telephone calls you have with American Funds may be monitored or recorded for quality assurance, verification and recordkeeping purposes. By speaking to American Funds on the telephone, you 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 U.S. Securities and Exchange Commission (SEC). These and other related materials about the fund are available for review or to be copied at the SEC’s Public Reference Room in Washington, D.C. (202/551-8090), 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, D.C. 20549-1520. The codes of ethics, current SAI and shareholder reports are also available, free of charge, on our website, americanfunds.com.

E-delivery and household mailings   Each year you are automatically sent an updated summary 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, 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 90071-1406.

Securities Investor Protection Corporation (SIPC)   Shareholders may obtain information about SIPC® on its website at sipc.org or by calling 202/371-8300.

RPGEPR-908-0311P Litho in USA CGD/AC/8029 Investment Company File No. 811-02444

The Capital Group Companies
American Funds	Capital Research and Management	Capital International	Capital Guardian	Capital Bank and Trust

..

The Bond Fund of America

Part B

Statement of Additional Information

March 1, 2011

This document is not a prospectus but should be read in conjunction with the current prospectus or retirement plan prospectus of The Bond Fund of America (the “fund” or “BFA”) dated March 1, 2011. You may obtain a prospectus from your financial adviser or by writing to the fund at the following address:

The Bond Fund of America

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.

Class A	ABNDX	Class 529-A	CFAAX	Class R-1	RBFAX
Class B	BFABX	Class 529-B	CFABX	Class R-2	RBFBX
Class C	BFACX	Class 529-C	CFACX	Class R-3	RBFCX
Class F-1	BFAFX	Class 529-E	CFAEX	Class R-4	RBFEX
Class F-2	ABNFX	Class 529-F-1	CFAFX	Class R-5	RBFFX
				Class R-6	RBFGX

Table of Contents

Item	Page no.
Certain investment limitations and guidelines	2
Description of certain securities and investment techniques	3
Fund policies	14
Management of the fund	16
Execution of portfolio transactions	45
Disclosure of portfolio holdings	48
Price of shares	50
Taxes and distributions	53
Purchase and exchange of shares	56
Sales charges	61
Sales charge reductions and waivers	64
Selling shares	69
Shareholder account services and privileges	70
General information	73
Appendix	80
Investment portfolio
Financial statements

Page 1

 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 or A- or better by Nationally Recognized Statistical Rating Organizations, or NRSROs, designated by the fund’s investment adviser or unrated but determined to be of equivalent quality by the fund’s investment adviser at time of purchase, including U.S. government securities, money market instruments or cash. The fund currently intends to look to the ratings from Moody’s Investors Service, Standard & Poor’s Corporation and Fitch Ratings. If agency ratings differ, securities are put in the highest rating category.

·   The fund may invest up to 40% of its assets in debt securities rated below A3 and below A- by NRSROs designated by the fund’s investment adviser or unrated but determined to be of equivalent quality by the fund’s investment adviser.

·   The fund may invest up to 35% of its assets in debt securities rated Ba1 or below and BB+ or below by NRSROs designated by the fund’s investment adviser or unrated but determined to be of equivalent quality by the fund’s investment adviser. However, the fund’s current practice is not to invest more than 10% of its assets in debt securities rated Ba1 and BB+ or below by NRSROs designated by the fund’s investment adviser or unrated but determined to be of equivalent quality by the fund’s investment adviser.

·   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.

Page 2

 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, also known as “fixed-income securities,” are used by issuers to borrow money. Bonds, notes, debentures, asset-backed securities (including those backed by mortgages), and loan participations and assignments are common types of debt securities. 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/BB+ or below by Nationally Recognized Statistical Rating Organizations, 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. Investment grade bonds in the ratings categories A or Baa/BBB also may be more susceptible to changes in market or economic conditions than bonds rated in the highest rating categories.

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. 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.

Page 3

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 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. The investment adviser considers these ratings of securities as one of many criteria in making its investment decisions.

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.

These securities may include hybrid securities, which also have equity and debt characteristics. Such securities are normally at the bottom of an issuer’s debt capital structure. As such, they may be more sensitive to economic changes than more senior debt securities. These securities

Page 4

may also be viewed as more equity-like by the market when the issuer or its parent company experience financial problems.

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 Federal Financing Bank (FFB), 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 (“FHFA”). Simultaneously, the U.S. Treasury made a commitment of indefinite duration to maintain the positive net worth of both firms. As conservator, the FHFA has the authority to repudiate any contract either firm has entered into prior to FHFA’s appointment as conservator (or receiver should either firm go into default) if the FHFA, in its sole discretion determines that performance of the contract is burdensome and repudiation would promote the orderly administration of Fannie Mae’s or Freddie Mac’s affairs. While the FHFA has indicated that it does not intend to repudiate the guaranty obligations of either entity, doing so could adversely affect holders of their mortgage-backed securities. For example, if a contract were repudiated, the liability for any direct compensatory damages would accrue to the entity’s conservatorship estate and could only be satisfied to the extent the estate had available assets. As a result, if interest payments on Fannie Mae or Freddie Mac mortgage-backed securities held by the fund were reduced because underlying borrowers failed to make payments or such payments were not advanced

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by a loan servicer, the fund’s only recourse might be against the conservatorship estate, which might not have sufficient assets to offset any shortfalls.

The FHFA, in its capacity as conservator, has the power to transfer or sell any asset or liability of Fannie Mae or Freddie Mac. The FHFA has indicated it has no current intention to do this; however, should it do so a holder of a Fannie Mae or Freddie Mac mortgage-backed security would have to rely on another party for satisfaction of the guaranty obligations and would be exposed to the credit risk of that party.

Certain rights provided to holders of mortgage-backed securities issued by Fannie Mae or Freddie Mac under their operative documents may not be enforceable against FHFA, or enforcement may be delayed during the course of the conservatorship or any future receivership. For example, the operative documents may provide that upon the occurrence of an event of default by Fannie Mae or Freddie Mac, holders of a requisite percentage of the mortgage-backed security may replace the entity as trustee. However, under the Federal Housing Finance Regulatory Reform Act of 2008, holders may not enforce this right if the event of default arises solely because a conservator or receiver has been appointed.

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. The U.S. government or other entities implementing these programs may discontinue these programs, change the terms of the programs or adopt new programs at their discretion.

Temporary Liquidity Guarantee Program — The FDIC guaranteed payment of 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 covers all senior unsecured debt issued under this program, including commercial paper, issued by these entities on or before December 31, 2009. Entities eligible to participate in this program may have also issued debt during the period that is not guaranteed by the FDIC. The guarantee will extend only until December 31, 2012, even if the debt has not then matured.

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:

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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 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. In addition, delinquencies, losses or defaults by borrowers can adversely affect the prices and volatility of these securities. Such delinquencies and losses can be exacerbated by declining or flattening housing and property values. This, along with other outside pressures, such as bankruptcies and financial difficulties experienced by mortgage loan originators, decreased investor demand for mortgage loans and mortgage-related securities and increased investor demand for yield, can adversely affect the value and liquidity of mortgage-backed securities.

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.

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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 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 outside the U.S. — 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, disclosure, and regulatory and legal standards and practices; changing local, regional and global economic, political and social conditions; expropriation; changes in tax policy; greater market volatility; different 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. Many of developing countries may be referred to as emerging market 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.

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’s securities are listed and where the company is legally organized, maintains principal corporate offices and/or conducts its principal operations.

Currency transactions — The fund may enter into currency transactions to provide for the purchase or sale of a currency needed to purchase a security denominated in that currency (often referred to as a spot or cover transaction). The fund may also 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. Although forward contracts entered into by the fund will typically involve the

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purchase or sale of a currency against the U.S. dollar, the fund also may cross hedge and purchase or sell one currency against another currency (other than the U.S. dollar).

The fund will not generally attempt to protect against all potential changes in exchange rates and the use of forward contracts does not eliminate the risk of fluctuations in the prices of the underlying securities. If the value of the underlying securities declines or the amount of the fund’s commitment increases because of changes in exchange rates, the fund may need to provide additional cash or securities to satisfy its commitment under the forward contract. The fund is also subject to the risk that it may be delayed or prevented from obtaining payments owed to it under the forward contract as a result of the insolvency or bankruptcy of the counterparty with which it entered into the forward contract or the failure of the counterparty to comply with the terms of the contract.

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. Entering into forward currency transactions may change the fund’s exposure to currency exchange rates and could result in losses to the fund if currencies do not perform as expected by the fund’s investment adviser. For example, if the fund’s investment adviser increases the fund’s exposure to a foreign currency using forward contracts and that foreign currency’s value declines, the fund may incur a loss. 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 U.S. Securities and Exchange Commission.

Forward currency transactions also may affect the character and timing of income, gain, or loss recognized by the fund for U.S. tax purposes. The use of forward currency contracts could result in the application of the mark-to-market provisions of the Internal Revenue Code and may cause an increase (or decrease) in the amount of taxable dividends paid by the fund.

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-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

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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. Because the security purchased constitutes collateral for the repurchase obligation, a repurchase agreement may be considered a loan by the fund that is collateralized by the security purchased. 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 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.

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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.

Some loans may represent revolving credit facilities or delayed funding loans, in which a lender agrees to make loans up to a maximum amount upon demand by the borrower during a specified term. These commitments may have the effect of requiring the fund to increase its investment in a company at a time when it might not otherwise decide to do so (including at a time when the company’s financial condition makes it unlikely that such amounts will be repaid). To the extent that the fund is committed to advance additional funds, the fund will segregate assets determined to be liquid in an amount sufficient to meet such commitments.

Some loans may represent debtor-in-possession financings (commonly known as “DIP financings”). DIP financings are arranged when an entity seeks the protections of the bankruptcy court under Chapter 11 of the U.S. Bankruptcy Code. These financings allow the entity to continue its business operations while reorganizing under Chapter 11. Such financings constitute senior liens on unencumbered collateral (i.e., collateral not subject to other creditors’ claims). There is a risk that the entity will not emerge from Chapter 11 and be forced to liquidate its assets under Chapter 7 of the U.S. Bankruptcy Code. In the event of liquidation, the fund’s only recourse will be against the collateral securing the DIP financing.

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 assignments are 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 purchase of a loan.  Risks may also arise due to the inability of the agent to meet its obligations under the loan agreement.

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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 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. Risks may arise due to delayed settlements of loan assignments and participations. 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.

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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 trustees, 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. The fund invests in debt securities with a wide range of maturities. Under normal market conditions, longer term securities yield more than shorter term securities, but are subject to greater price fluctuations.

*     *     *     *     *     *

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. It may also result in the realization of net capital gains, which are taxable when distributed to shareholders, unless the shareholder is exempt from taxation or his or her account is tax-deferred.

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, 2010 and 2009 were 99% and 84%, 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.

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 Fund policies

All percentage limitations in the following fund policies are considered at the time securities are purchased and are based on the fund’s net assets unless otherwise indicated. None of the following policies 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. In managing the fund, the fund’s investment adviser may apply more restrictive policies than those listed below.

Fundamental policies — The fund has adopted the following policies, which may not be changed without approval by holders of a majority of its outstanding shares. Such majority is currently 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.

1.Except as permitted by (i) the 1940 Act and the rules and regulations thereunder, or other successor law governing the regulation of registered investment companies, or interpretations or modifications thereof by the SEC, SEC staff or other authority of competent jurisdiction, or (ii) exemptive or other relief or permission from the SEC, SEC staff or other authority of competent jurisdiction, the fund may not:

a.Borrow money;

b.Issue senior securities;

c.Underwrite the securities of other issuers;

d.Purchase or sell real estate or commodities;

e.Make loans; or

f.     Purchase the securities of any issuer if, as a result of such purchase, the fund’s investments would be concentrated in any particular industry.

2.The fund may not invest in companies for the purpose of exercising control or management.

Nonfundamental policies — The following policy may be changed without shareholder approval:

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.

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Additional information about the fund’s policies — The information below is not part of the fund’s fundamental or nonfundamental policies. This information is intended to provide a summary of what is currently required or permitted by the 1940 Act and the rules and regulations thereunder, or by the interpretive guidance thereof by the SEC or SEC staff, for particular fundamental policies of the fund. Information is also provided regarding the fund’s current intention with respect to certain investment practices permitted by the 1940 Act.

For purposes of fundamental policy 1a, the fund may borrow money in amounts of up to 33⅓% of its total assets from banks for any purpose. Additionally, the fund may borrow up to 5% of its total assets from banks or other lenders for temporary purposes (a loan is presumed to be for temporary purposes if it is repaid within 60 days and is not extended or renewed).

For purposes of fundamental policy 1b, a senior security does not include any promissory note or evidence of indebtedness if such loan is for temporary purposes only and in an amount not exceeding 5% of the value of the total assets of the fund at the time the loan is made (a loan is presumed to be for temporary purposes if it is repaid within 60 days and is not extended or renewed). Further, to the extent the fund covers its commitments under certain types of agreements and transactions, including reverse repurchase agreements, mortgage-dollar-roll transactions, sale-buybacks, when-issued, delayed-delivery, or forward commitment transactions, and other similar trading practices, by segregating or earmarking liquid assets equal in value to the amount of the fund’s commitment, such agreement or transaction will not be considered a senior security by the fund.

For purposes of fundamental policy 1c, the policy will not apply to the fund to the extent the fund may be deemed an underwriter within the meaning of the 1933 Act in connection with the purchase and sale of fund portfolio securities in the ordinary course of pursuing its investment objectives and strategies.

For purposes of fundamental policy 1d, the fund may invest in securities or other instruments backed by real estate or commodities or securities of issuers engaged in the real estate business, including real estate investment trusts, or issuers engaged in business related to commodities. Further, the fund does not consider currency contracts or hybrid instruments to be commodities.

For purposes of fundamental policy 1e, the fund may not lend more than 33⅓% of its total assets, provided that this limitation shall not apply to the fund’s purchase of debt obligations.

For purposes of fundamental policy 1f, the fund may not invest 25% or more of its total assets in the securities of issuers in a particular industry. This policy does not apply to investments in securities of the U.S. Government, its agencies or Government Sponsored Enterprises or repurchase agreements with respect thereto.

The fund currently does not intend to engage in securities lending, purchase securities on margin, sell securities short or invest in puts, calls, straddles or spreads or combinations thereof.

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 Management of the fund

Board of trustees and officers

“Independent” trustees1

The fund’s nominating and governance committee and board select independent trustees with a view toward constituting a board that, as a body, possesses the qualifications, skills, attributes and experience to appropriately oversee the actions of the fund’s service providers, decide upon matters of general policy and represent the long-term interests of fund shareholders. In doing so, they consider the qualifications, skills, attributes and experience of the current board members, with a view toward maintaining a board that is diverse in viewpoint, experience, education and skills.

The fund seeks independent trustees who have high ethical standards and the highest levels of integrity and commitment, who have inquiring and independent minds, mature judgment, good communication skills, and other complementary personal qualifications and skills that enable them to function effectively in the context of the fund’s board and committee structure and who have the ability and willingness to dedicate sufficient time to effectively fulfill their duties and responsibilities.

Each independent trustee has a significant record of accomplishments in governance, business, not-for-profit organizations, government service, academia, law, accounting or other professions. Although no single list could identify all experience upon which the fund’s independent trustees draw in connection with their service, the following table summarizes key experience for each independent trustee. These references to the qualifications, attributes and skills of the trustees are pursuant to the disclosure requirements of the U.S. Securities and Exchange Commission, and shall not be deemed to impose any greater responsibility or liability on any trustee or the board as a whole. Notwithstanding the accomplishments listed below, none of the independent trustees is considered an “expert” within the meaning of the federal securities laws with respect to information in the fund’s registration statement.

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Name, age and position with fund (year first elected as a trustee2)	Principal occupation(s) during the past five years	Number of portfolios3 overseen by trustee	Other directorships4 held by trustee during the past five years	Other relevant experience
Lee A. Ault III, 74 Trustee (2010)	Private investor and corporate director; former Chairman of the Board, In-Q-Tel, Inc. (technology venture company)	40	Anworth Mortgage Asset Corporation; Office Depot, Inc.	·Service as chief executive officer, payment services company ·Corporate board experience ·Service on board of healthcare foundation
William H. Baribault, 65 Trustee (2010)	Chairman of the Board and CEO, Oakwood Enterprises (private investment and consulting)	40	Former director of Henry Co. (until 2009); Professional Business Bank (until 2009)	·Service as chief executive officer for multiple companies ·Corporate board experience ·Service on advisory and trustee boards for charitable, educational and nonprofit organizations
James G. Ellis, 64 Trustee (2006)	Dean and Professor of Marketing, Marshall School of Business, University of Southern California	44	Quiksilver, Inc. Former director of Genius Products (until 2008); Professional Business Bank (until 2007)	·Service as chief executive officer for multiple companies ·Corporate board experience ·Service on advisory and trustee boards for charitable, municipal and nonprofit organizations ·M.B.A.
Martin Fenton, 75 Chairman of the Board (Independent and Non-Executive) (1989)	Chairman, Senior Resource Group LLC (development and management of senior living communities)	40	Capital Private Client Services Funds	·Service as chief executive officer of multiple companies

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Name, age and position with fund (year first elected as a trustee2)	Principal occupation(s) during the past five years	Number of portfolios3 overseen by trustee	Other directorships4 held by trustee during the past five years	Other relevant experience
Leonard R. Fuller, 64 Trustee (1994)	President and CEO, Fuller Consulting (financial management consulting firm)	44	None	·Former partner, public accounting firm ·Financial management consulting ·Service on advisory and trustee boards for municipal, educational and nonprofit organizations ·M.B.A.
W. Scott Hedrick, 65 Trustee (2010)	Founding General Partner, InterWest Partners (a venture capital firm)	40	Hot Topic, Inc.; Office Depot, Inc.	·Corporate board experience ·Service on advisory and trustee boards for charitable and nonprofit organizations ·M.B.A.
R. Clark Hooper, 64 Trustee (2005)	Private investor; former President, Dumbarton Group LLC (securities industry consulting)	46	JPMorgan Value Opportunities Fund, Inc.; The Swiss Helvetia Fund, Inc.	·Senior regulatory and management experience, National Association of Securities Dealers (now FINRA) ·Service on trustee boards for charitable, educational and nonprofit organizations

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Name, age and position with fund (year first elected as a trustee2)	Principal occupation(s) during the past five years	Number of portfolios3 overseen by trustee	Other directorships4 held by trustee during the past five years	Other relevant experience
Merit E. Janow, 52 Trustee (2010)	Professor, Columbia University, School of International and Public Affairs; former Member, World Trade Organization Appellate Body	43	The NASDAQ Stock Market LLC; Trimble Navigation Limited	·Service with Office of the U.S. Trade Representative and U.S. Department of Justice ·Corporate board experience ·Service on advisory and trustee boards for charitable, educational and nonprofit organizations ·Experience as corporate lawyer ·J.D.
Laurel B. Mitchell, Ph.D., 55 Trustee (2009)	Clinical Professor and Director, Accounting Program, University of Redlands	40	None	·Assistant professor, accounting ·Service in the Office of Chief Accountant and Enforcement Division of the Securities and Exchange Commission ·Experience in corporate management and public accounting ·Service on advisory and trustee boards for charitable, educational and nonprofit organizations ·Ph.D., accounting ·Formerly licensed as C.P.A.

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Name, age and position with fund (year first elected as a trustee2)	Principal occupation(s) during the past five years	Number of portfolios3 overseen by trustee	Other directorships4 held by trustee during the past five years	Other relevant experience
Frank M. Sanchez, 67 Trustee (1999)	Principal, The Sanchez Family Corporation dba McDonald's Restaurants (McDonald's licensee)	40	None	·Senior academic leadership position ·Corporate board experience ·Service on advisory and trustee boards for charitable and nonprofit organizations ·Ph.D., education administration and finance
Margaret Spellings, 53 Trustee (2010)	President and CEO, Margaret Spellings & Company; President, U.S. Forum for Policy Innovation and Senior Advisor to the President and CEO, U.S. Chamber of Commerce;; former U.S. Secretary of Education, U.S. Department of Education - Federal Government Agency; former Assistant to the President for Domestic Policy, The White House - Federal Government, Executive Branch	40	None	·Former senior advisor to the Governor of Texas ·Service on advisory and trustee boards for charitable and nonprofit organizations

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Name, age and position with fund (year first elected as a trustee2)	Principal occupation(s) during the past five years	Number of portfolios3 overseen by trustee	Other directorships4 held by trustee during the past five years	Other relevant experience
Steadman Upham, Ph.D., 61 Trustee (2007)	President and Professor of Anthropology, The University of Tulsa	43	None	·Senior academic leadership positions for multiple universities ·Service on advisory and trustee boards for educational and nonprofit organizations ·Ph.D., anthropology

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“Interested” trustees5,6

Interested trustees have similar qualifications, skills and attributes as the independent trustees. Interested trustees are senior executive officers of Capital Research and Management Company or its affiliates. This management role with the fund’s service providers also permits them to make a significant contribution to the fund’s board.

Name, age and position with fund (year first elected as a director/officer2)	Principal occupation(s) during the past five years and positions held with affiliated entities or the Principal Underwriter of the fund	Number of portfolios3 overseen by trustee	Other directorships4 held by trustee during the past five years
Paul G. Haaga, Jr., 62 Vice Chairman of the Board and Director (1985)	Chairman of the Board, Capital Research and Management Company; Senior Vice President – Fixed Income, Capital Research and Management Company	14	None
Abner D. Goldstine, 81 Director (1974)	Senior Vice President – Fixed Income, Capital Research and Management Company; Director, Capital Research and Management Company	2	None

Other officers6

Name, age and position with fund (year first elected as an officer2)	Principal occupation(s) during the past five years and positions held with affiliated entities or the Principal Underwriter of the fund
John H. Smet, 54 President (1994)	Senior Vice President – Fixed Income, Capital Research and Management Company; Director, The Capital Group Companies, Inc.*
David C. Barclay, 54 Senor Vice President (1997)	Director, Capital Research and Management Company; Senior Vice President – Fixed Income, Capital Research and Management Company
Mark R. Macdonald, 51 Senior Vice President (2001)	Senior Vice President – Fixed Income, Capital Research and Management Company; Director, Capital Research and Management Company
Mark H. Dalzell, 56 Vice President (2009)	Senior Vice President – Fixed Income, Capital Research and Management Company
Kristine M. Nishiyama, 40 Vice President (2003)	Senior Vice President and Senior Counsel – Fund Business Management Group, Capital Research and Management Company; Vice President and Senior Counsel – Capital Bank and Trust Company*
Courtney R. Taylor, 36 Secretary (2006)	Assistant Vice President – Fund Business Management Group, Capital Research and Management Company

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Name, age and position with fund (year first elected as an officer2)	Principal occupation(s) during the past five years and positions held with affiliated entities or the Principal Underwriter of the fund
Ari M. Vinocor, 36 Treasurer (2007)	Vice President – Fund Business Management Group, Capital Research and Management Company
Steven I. Koszalka, 46 Assistant Secretary (2010)	Vice President – Fund Business Management Group, Capital Research and Management Company
M. Susan Gupton, 37 Assistant Treasurer (2008)	Vice President – Fund Business Management Group, Capital Research and Management Company
Dori Laskin, 59 Assistant Treasurer (2010)	Vice President – Fund Business Management Group, Capital Research and Management Company

*Company affiliated with Capital Research and Management Company.

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

2Includes service as a director or officer of the fund’s predecessor, The Bond Fund of America, Inc., a Maryland corporation. Trustees and officers of the fund serve until their resignation, removal or retirement.

3Funds managed by Capital Research and Management Company, including the American Funds; American Funds Insurance Series®, which is composed of 16 funds and serves as the underlying investment vehicle for certain variable insurance contracts; American Funds Target Date Retirement Series®, which is composed of 10 funds and is available through tax-deferred retirement plans and IRAs; and EndowmentsSM, which is available to certain nonprofit organizations.

4This 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 trustee as a director of a public company or a registered investment company. Unless otherwise noted, all directorships are current.

5“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).

6All 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 trustees and officers of the fund is 333 South Hope Street, 55th Floor, Los Angeles, California 90071, Attention: Secretary.

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Fund shares owned by trustees as of December 31, 2010:

Name	Dollar range1 of fund shares owned	Aggregate dollar range1 of shares owned in all funds in the American Funds family overseen by trustee	Dollar range1,2 of independent trustees deferred compensation3 allocated to fund	Aggregate dollar range1,2 of independent trustees deferred compensation3 allocated to all funds within American Funds family overseen by trustee
“Independent” trustees
Lee A. Ault III	None	Over $100,000	N/A	N/A
William H. Baribault	None	$10,001 – $50,000	N/A	N/A
James G. Ellis	$10,001 – $50,000	Over $100,000	N/A	N/A
Martin Fenton	$10,001 – $50,000	Over $100,000	$50,001 – $100,000	Over $100,000
Leonard R. Fuller	$10,001 – $50,000	Over $100,000	$10,001 – $50,000	Over $100,000
W. Scott Hedrick	None	Over $100,000	N/A	N/A
R. Clark Hooper	$10,001 – $50,000	Over $100,000	N/A	Over $100,000
Merit E. Janow	None	Over $100,000	N/A	N/A
Laurel B. Mitchell	$1 – $10,000	$10,001 – $50,000	N/A	N/A
Frank M. Sanchez	$1 – $10,000	$10,001 – $50,000	N/A	N/A
Margaret Spellings	None	$10,001 – $50,000	N/A	N/A
Steadman Upham	None	None	N/A	Over $100,000

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Name	Dollar range1 of fund shares owned	Aggregate dollar range1 of shares owned in all funds in the American Funds family overseen by trustee
“Interested” trustees
Abner D. Goldstine	Over $100,000	Over $100,000
Paul G. Haaga, Jr.	Over $100,000	Over $100,000

1Ownership 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” trustees include shares owned through The Capital Group Companies, Inc. retirement plan and 401(k) plan.

2N/A indicates that the listed individual, as of December 31, 2010, was not a trustee of a particular fund, did not allocate deferred compensation to the fund or did not participate in the deferred compensation plan.

3Eligible trustees 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 trustee.

Trustee compensation — No compensation is paid by the fund to any officer or trustee 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 trustee an annual fee, which ranges from $3,077 to $11,255, based primarily on the total number of board clusters on which that independent trustee serves.

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

Independent trustees 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 trustee each pay an equal portion of these attendance fees.

No pension or retirement benefits are accrued as part of fund expenses. Independent trustees 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 trustees.

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Trustee compensation earned during the fiscal year ended December 31, 2010:

Name	Aggregate compensation (including voluntarily deferred compensation1) from the fund		Total compensation (including voluntarily deferred compensation1) from all funds managed by Capital Research and Management Company or its affiliates2
Lee A. Ault III		$25,279			$168,150
William H. Baribault		24,279			175,822
James G. Ellis		21,195			250,471
Martin Fenton3		29,371			298,607
Leonard R. Fuller3		21,410			320,751
W. Scott Hedrick		21,707			158,322
R. Clark Hooper		20,216			416,266
Merit E. Janow		20,442			261,457
Laurel B. Mitchell		28,387		170,682
Frank M. Sanchez		27,439		151,348
Margaret Spellings		18,163		142,367
Steadman Upham3		22,013		244,789

1Amounts may be deferred by eligible trustees 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 trustees. Compensation shown in this table for the fiscal year ended December 31, 2010 does not include earnings on amounts deferred in previous fiscal years. See footnote 3 to this table for more information.

2Funds managed by Capital Research and Management Company, including the American Funds; American Funds Insurance Series®, which is composed of 16 funds and serves as the underlying investment vehicle for certain variable insurance contracts; American Funds Target Date Retirement Series®, which is composed of 10 funds and is available through tax-deferred retirement plans and IRAs; and EndowmentsSM, which is available to certain nonprofit organizations.

3Since the deferred compensation plan’s adoption, the total amount of deferred compensation accrued by the fund (plus earnings thereon) through the 2010 fiscal year for participating trustees is as follows: Martin Fenton ($193,319), Leonard R. Fuller ($71,218) and Steadman Upham ($138,637). Amounts deferred and accumulated earnings thereon are not funded and are general unsecured liabilities of the fund until paid to the trustees.

As of February 1, 2011, the officers and trustees of the fund and their families, as a group, owned beneficially or of record less than 1% of the outstanding shares of the fund.

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Fund organization and the board of trustees — The fund, an open-end, diversified management investment company, was organized as a Maryland corporation on December 3, 1973 and was reorganized as a Delaware statutory trust on March 1, 2011. All fund operations are supervised by the fund’s board of trustees which meets periodically and performs duties required by applicable state and federal laws.

Delaware law charges trustees with the duty of managing the business affairs of the trust. Trustees are considered to be fiduciaries of the trust and owe duties of care and loyalty to the trust and its shareholders.

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 trustees 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 PlanSM will vote any proxies relating to the fund’s Class 529 shares. In addition, the trustees have the authority to establish new series and classes of shares, and to split or combine outstanding shares into a greater or lesser number, without shareholder approval.

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.

The fund’s declaration of trust and by-laws as well as separate indemnification agreements with independent trustees provide in effect that, subject to certain conditions, the fund will indemnify its officers and trustees against liabilities or expenses actually and reasonably incurred by them relating to their service to the fund. However, trustees 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.

Removal of trustees by shareholders — At any meeting of shareholders, duly called and at which a quorum is present, shareholders may, by the affirmative vote of the holders of two-thirds of the votes entitled to be cast, remove any trustee from office and may elect a successor or successors to fill any resulting vacancies for the unexpired terms of removed trustees. In addition, the trustees of the fund will promptly call a meeting of shareholders for the purpose of voting upon the removal of any trustees when requested in writing to do so by the record holders of at least 10% of the outstanding shares.

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Leadership structure — The board’s chair is currently an independent trustee who is not an “interested person” of the fund within the meaning of the 1940 Act. The board has determined that an independent chair facilitates oversight and enhances the effectiveness of the board. The independent chair’s duties include, without limitation, generally presiding at meetings of the board, approving board meeting schedules and agendas, leading meetings of the independent trustees in executive session, facilitating communication with committee chairs, and serving as the principal independent trustee contact for fund management and independent fund counsel.

Risk oversight — Day-to-day management of the fund, including risk management, is the responsibility of the fund’s contractual service providers, including the fund’s investment adviser, principal underwriter/distributor and transfer agent. Each of these entities is responsible for specific portions of the fund’s operations, including the processes and associated risks relating to the fund’s investments, integrity of cash movements, financial reporting, operations and compliance. The board of trustees oversees the service providers’ discharge of their responsibilities, including the processes they use to manage relevant risks. In that regard, the board receives reports regarding the operations of the fund’s service providers, including risks. For example, the board receives reports from investment professionals regarding risks related to the fund’s investments and trading. The board also receives compliance reports from the fund’s and the investment adviser’s chief compliance officers addressing certain areas of risk.

Committees of the fund’s board, as well as joint committees of independent board members of funds managed by Capital Research and Management Company, also explore risk management procedures in particular areas and then report back to the full board. For example, the fund’s audit committee oversees the processes and certain attendant risks relating to financial reporting, valuation of fund assets, and related controls. Similarly, a joint review and advisory committee oversees certain risk controls relating to the fund’s transfer agency services.

Not all risks that may affect the fund can be identified or processes and controls developed to eliminate or mitigate their effect. Moreover, it is necessary to bear certain risks (such as investment-related risks) to achieve the fund’s objectives. As a result of the foregoing and other factors, the ability of the fund’s service providers to eliminate or mitigate risks is subject to limitations.

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Committees of the board of trustees — The fund has an audit committee comprised of Laurel B. Mitchell, 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 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 trustees. The audit committee held five meetings during the 2010 fiscal year.

The fund has a contracts committee comprised of Lee A. Ault III, William H. Baribault, James G. Ellis, Martin Fenton, Leonard R. Fuller, W. Scott Hedrick, R. Clark Hooper, Merit E. Janow, Laurel B. Mitchell, Frank M. Sanchez, Margaret Spellings, 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 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 trustees on these matters. The contracts committee held two meetings during the 2010 fiscal year.

The fund has a nominating and governance committee comprised of Lee A. Ault III, William H. Baribault, James G. Ellis, R. Clark Hooper, Merit E. Janow, Laurel B. Mitchell, and Margaret Spellings, 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 trustees. The committee also evaluates, selects and nominates independent trustee candidates to the full board of trustees. 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. The nominating and governance committee held two meetings during the 2010 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. Proxies are voted by a committee of the appropriate equity investment division of the investment adviser under authority delegated by the funds’ boards. Therefore, if more than one fund invests in the same company, they may vote differently on the same proposal. In addition, the funds’ boards monitor the proxy voting process and provide guidance with respect to the Principles.

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

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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 board member of one or more American Funds is also a board member 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 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

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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.

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 February 1, 2011. 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. Omnibus Account Maryland Heights, MO	Record	Class A Class B	22.01% 15.01
Pershing, LLC Jersey City, NJ	Record	Class A Class B Class C Class F-1 Class F-2	8.70  9.83  8.71 27.07 12.41
First Clearing, LLC Custody Account St, Louis, MO	Record	Class A Class B Class C Class F-1	8.33  8.28 11.35 13.01
Merrill Lynch Omnibus Account Jacksonville, FL	Record	Class B Class C Class F-2	5.78 12.98 27.97
Citigroup Global Markets, Inc. Omnibus Account New York, NY	Record	Class C Class F-1	6.38  6.08
UBS WM USA Omnibus Account Jersey City, NJ	Record	Class F-1	10.35
Morgan Stanley & Co., Inc. Omnibus Account Jersey City, NJ	Record	Class F-1	9.27
LPL Financial Omnibus Account San Diego, CA	Record	Class F-2	8.13
Hartford Life Insurance Co. Separate Account 401K Plan Hartford, CT	Record Beneficial	Class R-1 Class R-3	29.55  8.09

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Name and address	Ownership	Ownership percentage
Trader Joe’s Company Retirement Plan Englewood, CO	Record Beneficial	Class R-4	14.02
Mount Sinai Medical Center Retirement Plan New York, NY	Record Beneficial	Class R-5	10.09
Orlando Regional Healthcare System Retirement Plan Englewood, CO	Record Beneficial	Class R-5	9.34
The Capital Group Companies Retirement Plan Los Angeles, CA	Record Beneficial	Class R-5	7.21
Edward D. Jones & Co. Retirement Plan Norwood, MA	Record Beneficial	Class R-5	5.16
John Hancock Life Insurance Co. USA Omnibus Account Boston, MA	Record Beneficial	Class R-5	5.04
American Funds 2010 Target Date Retirement Fund Los Angeles, CA	Record	Class R-6	39.28
American Funds 2015 Target Date Retirement Fund Los Angeles, CA	Record	Class R-6	33.59

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, D.C., 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

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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 benchmarks, depending on his or her investment focus, such as: Barclays Capital U.S. Aggregate Index and Lipper Corporate Debt A-Rated Bond Funds Average. From time to time, Capital Research and Management Company may adjust these benchmarks to better reflect the universe of comparably managed funds of competitive investment management firms.

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.

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The following table reflects information as of December 31, 2010:

Portfolio counselor	Dollar range of fund shares owned1	Number of other registered investment companies (RICs) for which portfolio counselor is a manager (assets of RICs in billions)2		Number of other pooled investment vehicles (PIVs) for which portfolio counselor is a manager (assets of PIVs in billions)3		Number of other accounts for which portfolio counselor is a manager (assets of other accounts in billions)4
John H. Smet	$500,001 – $1,000,000	5	$143.6	None		None
Mark R. Macdonald	Over $1,000,000	2	$83.5	None		None
Mark H. Dalzell	$100,001 – $500,000	2	$124.1	2	$0.11	77	$2.40
David A. Hoag	$100,001 – $500,000	5	$205.7	None		None
Thomas H. Hogh	None5	3	$131.2	1	$0.16	28	0.21
David A. Daigle	$50,001 – $100,0006	2	$129.7	None		None
Robert H. Neithart	Over $1,000,000	2	$124.1	7	$3.48	18	$7.20

1Ownership 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.

2Indicates 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.

3Represents funds advised or sub-advised by Capital Research and Management Company or its affiliates 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.

4Reflects 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.

5Tax considerations may adversely influence portfolio counselor’s ability to own shares of the fund.

6As of March 1, 2011.

7The advisory fee of one of these accounts (representing $0.01 billion in total assets) is based partially on its investment results.

8The advisory fee of one of these accounts (representing $0.04 billion in total assets) is based partially on its investment results.

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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 March 31, 2011, 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 trustees, or by the vote of a majority (as defined in the 1940 Act) of the outstanding voting securities of the fund, and (b) the vote of a majority of trustees 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, the Agreement provides that the investment adviser may delegate all, or a portion of, its investment management responsibilities to one or more subsidiary advisers approved by the fund’s board, pursuant to an agreement between the investment adviser and such subsidiary. Any such subsidiary adviser will be paid solely by the investment adviser out of its fees.

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 trustees; 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.

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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 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

For the fiscal years ended December 31, 2010, 2009 and 2008, the investment adviser was entitled to receive from the fund management fees of $83,015,000, $86,265,000 and $90,043,000, 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) for the fiscal year ended December 31, 2008.

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.

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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 March 31, 2011, 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 trustees 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 trustees. 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).

Under the Administrative Agreement, the investment adviser provides certain transfer agent and administrative services for shareholders of the fund’s Class C, F, R and 529 shares. The investment adviser may contract with third parties, including American Funds Service Company®, 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 applicable share classes. 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.

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During the 2010 fiscal year, administrative services fees, gross of any payments made by the investment adviser, were:

	Administrative services fee
Class C	$5,204,000
Class F-1	3,206,000
Class F-2	715,000
Class 529-A	919,000
Class 529-B	103,000
Class 529-C	479,000
Class 529-E	49,000
Class 529-F-1	55,000
Class R-1	170,000
Class R-2	3,559,000
Class R-3	2,319,000
Class R-4	1,216,000
Class R-5	445,000
Class R-6	153,000

Principal Underwriter and plans of distribution — American Funds Distributors®,  Inc. (the “Principal Underwriter”) is the principal underwriter of the fund’s shares. The Principal Underwriter is located at 333 South Hope Street, Los Angeles, CA 90071; 6455 Irvine Center Drive, Irvine, CA 92618; 3500 Wiseman Boulevard, San Antonio, TX 78251 and 12811 North Meridian Street, Carmel, IN 46032.

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 sold prior to April 21, 2009, the Principal Underwriter sold 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 compensated investment dealers for sales of Class B and 529-B shares out of the proceeds of this sale and kept any amounts remaining after this compensation was 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 C and 529-C shares. The fund also reimbursed the Principal Underwriter for advancing immediate service fees to qualified dealers on sales of Class B and 529-B shares prior to April 21, 2009. 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 intermediaries, such as qualified dealers or financial advisers, in connection with investments in Class F-1, 529-F-1, 529-E, R-1, R-2, R-3 and R-4 shares.

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

	Fiscal year		Commissions, revenue or fees retained		Allowance or compensation to dealers
Class A		2010		$9,884,000	$37,968,000
		2009		17,478,000	66,353,000
		2008		17,191,000	65,427,000
Class B		2010		19,000	—
		2009		245,000	1,742,000
		2008		600,000	4,740,000
Class C		2010		2,250,000	3,483,000
		2009		—	8,192,000
		2008		—	5,776,000
Class 529-A		2010		633,000	2,421,000
		2009		641,000	2,401,000
		2008		652,000	2,482,000
Class 529-B		2010		1,000	—
		2009		16,000	71,000
		2008		33,000	260,000
Class 529-C		2010		70,000	692,000
		2009		—	758,000
		2008		—	671,000

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 trustees 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.

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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 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.

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.

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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:

Share class	Service related payments1	Distribution related payments1	Total allowable under the Plans2
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

1   Amounts in these columns represent the amounts approved by the board of trustees under the applicable Plan.

2   The fund may annually expend the amounts set forth in this column under the current Plans with the approval of the board of trustees.

During the 2010 fiscal year, 12b-1 expenses accrued and paid, and if applicable, unpaid, were:

	12b-1 expenses	12b-1 unpaid liability outstanding
Class A	$66,283,000	$5,085,000
Class B	10,557,000	781,000
Class C	31,627,000	2,583,000
Class F-1	5,468,000	501,000
Class 529-A	1,811,000	148,000
Class 529-B	823,000	67,000
Class 529-C	4,089,000	399,000
Class 529-E	228,000	22,000
Class 529-F-1	0	0
Class R-1	1,015,000	91,000
Class R-2	6,318,000	552,000
Class R-3	5,487,000	535,000
Class R-4	2,020,000	176,000

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 trustees and

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separately by a majority of the independent trustees 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 trustees of the fund are committed to the discretion of the independent trustees 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 trustees and the Plans must be renewed annually by the board of trustees.

A portion of the fund’s 12b-1 expense is paid to financial advisers to compensate them for providing ongoing services. If you have questions regarding your investment in the fund or need assistance with your account, please contact your financial adviser. If you need a financial adviser, please call American Funds Distributors at (800) 421-4120 for assistance.

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.

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Other compensation to dealers — As of July 2010, the top dealers (or their affiliates) that American Funds Distributors anticipates will receive additional compensation (as described in the prospectus) include:

AXA Advisors, LLC

Cadaret, Grant & Co., Inc.

Cambridge Investment Research, Inc.

Cetera Financial Group

Financial Network Investment Corporation

Guaranty Brokerage Services, Inc.

Multi-Financial Securities Corporation

Primevest Financial Services, Inc.

Commonwealth Financial Network

D.A. Davidson & Co.

Edward Jones

Genworth Financial Securities Corporation

H. Beck, Inc.

Hefren-Tillotson, Inc.

HTK / Janney Montgomery Group

Hornor, Townsend & Kent, Inc.

Janney Montgomery Scott LLC

ING Financial Partners, Inc.

Transamerica Financial Advisors, Inc.

J. J. B. Hilliard, W. L. Lyons, LLC

J.P. Morgan Chase Banc One

Chase Investment Services Corp.

J.P. Morgan Securities Inc.

Lincoln Financial Advisors Corporation

Lincoln Financial Securities Corporation

LPL Group

Associated Securities Corp.

LPL Financial Corporation

Mutual Service Corporation

Uvest Investment Services

Waterstone Financial Group, Inc.

Merrill Lynch Banc of America

Banc of America Investment Services, Inc.

Banc of America Securities LLC

Merrill Lynch, Pierce, Fenner & Smith Incorporated

Metlife Enterprises

Metlife Securities Inc.

Nathan & Lewis Securities, Inc.

New England Securities

Tower Square Securities, Inc.

Walnut Street Securities, Inc.

MML Investors Services, Inc.

Morgan Keegan & Company, Inc.

Morgan Stanley Smith Barney LLC

National Planning Holdings Inc.

Invest Financial Corporation

Investment Centers of America, Inc.

Page 43

National Planning Corporation

SII Investments, Inc.

NFP Securities, Inc.

Northwestern Mutual Investment Services, LLC

Park Avenue Securities LLC

PFS Investments Inc.

PNC Bank, National Association

PNC Investments LLC

Raymond James Group

Raymond James & Associates, Inc.

Raymond James Financial Services Inc.

RBC Capital Markets Corporation

Robert W. Baird & Co. Incorporated

Stifel, Nicolaus & Company, Incorporated

SunTrust Investment Services, Inc.

The Advisor Group

FSC Securities Corporation

Royal Alliance Associates, Inc.

SagePoint Financial, Inc.

Sentra Securities Corporation

Spelman & Co., Inc.

U.S. Bancorp Investments, Inc.

UBS Financial Services Inc.

Wells Fargo Network

A. G. Edwards, A Division Of  Wells Fargo Advisors, LLC

Captrust Financial Advisors

First Clearing LLC

First Union Securities Financial Network, Inc.

Southtrust Securities, Inc.

Wachovia Securities, Inc.

Wells Fargo Advisors Financial Network, LLC

Wells Fargo Advisors Investment Services Group

Wells Fargo Advisors Latin American Channel

Wells Fargo Advisors Private Client Group

Wells Fargo Investments, LLC

Page 44

 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 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

Page 45

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 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

Page 46

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, 2010, 2009 and 2008 amounted to $27,000, $743,000 and $24,000, respectively. The volume of commissionable trading activity was higher during fiscal year 2009, resulting in higher brokerage commissions paid on portfolio transactions.

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 during the fund’s most recently completed 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 recently completed 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 recently completed fiscal year.

At the end of the fund’s most recently completed fiscal year, the fund’s regular broker-dealers included Citigroup Global Markets Inc., Goldman Sachs & Co., Morgan Stanley and UBS AG. As of the fund’s most recently completed fiscal year-end, the fund held debt securities of Citigroup Inc. in the amount of $296,857,000, Goldman Sachs Group, Inc. in the amount of $100,462,000, Morgan Stanley in the amount of $85,755,000 and UBS AG in the amount of $47,947,000.

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

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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.

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 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 by the fund or the Transfer Agent provided that your request contains all information and legal documentation necessary to process the transaction. The Transfer Agent may accept written orders for the sale of fund shares on a future date. These orders are subject to the Transfer Agent’s policies, which generally allow shareholders to provide a written request to sell shares at the net asset value on a specified date no more than five business days after receipt of the order by the Transfer Agent. Any request to sell shares on a future date will be rejected if the request is not in writing, if the requested transaction date is more than five business days after the Transfer Agent receives the request or if the request does not contain all information and legal documentation necessary to process the transaction.

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). The fund will not calculate net asset values on days the New York Stock Exchange is closed for trading.

All portfolio securities of funds managed by Capital Research and Management Company (other than American Funds Money Market Fund®) are valued, and the net asset values per share for each share class 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.

Equity securities, including depositary receipts, are generally 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.

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Fixed-income securities, including short-term securities purchased with more than 60 days left to maturity, are generally valued at prices obtained as of approximately 3 p.m. New York time from one or more independent pricing vendors. The pricing vendors base bond prices on, among other things, benchmark yields, transactions, bids, offers, quotations from dealers and trading systems, new issues, underlying equity of the issuer, interest rate volatilities, spreads and other relationships observed in the markets among comparable securities and proprietary pricing models such as yield measures calculated using factors such as cash flows, prepayment information, default rates, delinquency and loss assumptions, financial or collateral characteristics or performance, credit enhancements, liquidation value calculations, specific deal information and other reference data. The fund’s investment adviser performs certain checks on these prices prior to calculation of the fund’s net asset value. When 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.

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 generally 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 other assets for which representative market quotations are not readily available or are considered unreliable by the investment adviser 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 valuations 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, significant events occurring after the close of trading in the security and changes in overall market conditions.

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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.

Net assets so obtained for each share class are 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.

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 Taxes and distributions

Disclaimer: Some of the following information may not apply to certain shareholders including those holding fund shares in a tax-deferred account, such as a retirement plan or education savings account. Shareholders should consult their tax advisers about the application of federal, state and local tax law in light of their particular situation.

Taxation as a regulated investment company — The fund intends to qualify each year as a “regulated investment company” under Subchapter M of the Internal Revenue Code (“Code”) so that it will not be liable for federal tax on income and capital gains distributed to shareholders. In order to qualify as a regulated investment company, and avoid being subject to federal income taxes, the fund intends to distribute substantially all of its net investment income and realized net capital gains on a fiscal year basis, and intends to comply with other federal tax rules applicable to regulated investment companies.

The Code includes savings provisions allowing the fund to cure inadvertent failures of the so-called gross income and asset diversification tests required under Subchapter M. However, should the fund fail to qualify under Subchapter M, the fund would be subject to federal, and possibly state, corporate taxes on its taxable income and gains, and distributions to shareholders would be taxed as dividend income to the extent of the fund’s earnings and profits.

Amounts not distributed by the fund on a timely basis in accordance with a calendar year distribution requirement may be subject to a nondeductible 4% excise tax. Unless an applicable exception applies, to avoid the tax, the fund must distribute during each calendar year an amount equal to the sum of (1) at least 98% of its ordinary income (not taking into account any capital gains or losses) for the calendar year, (2) at least 98.2% of its capital gains in excess of its capital losses for the twelve month period ending on October 31, and (3) all ordinary income and capital gains for previous years that were not distributed during such years.

Dividends paid by the fund from ordinary income or from an excess of net short-term capital gain over net long-term capital loss are taxable to shareholders as ordinary income dividends. For corporate shareholders, a portion of the fund’s ordinary income dividends may be eligible for the 70% deduction for dividends received by corporations to the extent the fund’s income consists of dividends paid by U.S. corporations. This deduction does not include dividends received from non-U.S. corporations and dividends on stocks the fund has not held for more than 45 days during the 90-day period beginning 45 days before the stock became ex-dividend (90 and 180 days for certain preferred stock). Corporate shareholders can only apply the lower rate to the qualified portion of a fund’s dividends if they have held the shares in the fund on which the dividends were paid for the applicable 45 day or 90 day holding period surrounding the ex-dividend date of the fund’s dividends.

The fund may declare a capital gain distribution consisting of 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. For fund fiscal years beginning on or after December 22, 2010, capital losses may be carried forward indefinitely and retain their character as either short-term or long-term. Under prior law, net capital losses could be carried forward for eight tax years and were treated as short-term capital losses. The fund is required to use capital losses arising in fiscal years beginning on or after December 22, 2010 before using capital losses arising in fiscal years prior to December 22, 2010.

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The fund may retain a portion of net capital gain for reinvestment and may elect to treat such capital gain as having been distributed to shareholders of the fund. Shareholders may receive a credit for the tax that the fund paid on such undistributed net capital gain and would increase the basis in their shares of the fund by the difference between the amount of includible gains and the tax deemed paid by the shareholder.

Distributions of net capital gain that the fund properly designates as a capital gain distribution 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. 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 net realized long-term capital gains (including any undistributed amounts treated as distributed capital gains, as described above) during such six-month period.

Capital gain 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 capital gain 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 and exchanges of fund shares — 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.

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.

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 subsequently pays a reduced or no sales charge for shares of the fund, or of a different fund acquired before January 31st of the year following the year the shareholder exchanged or otherwise disposed of the original fund shares, 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).

Tax consequences of investments in non-U.S. securities — 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.

If more than 50% of the value of the total assets of the fund at the close of the taxable year consists of securities of foreign corporations, the fund may elect to pass through to shareholders the foreign taxes paid by the fund. If such an election is made, shareholders may claim a credit or deduction on their federal income tax returns for, and will be required to treat as part of the amounts distributed to them, their pro rata portion of qualified taxes paid by the fund to foreign

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countries. The application of the foreign tax credit depends upon the particular circumstances of each shareholder.

Foreign currency gains and losses, including the portion of gain or loss on the sale of debt securities attributable to fluctuations in foreign exchange rates, are generally taxable as ordinary income or loss. These gains or losses may increase or decrease the amount of dividends payable by the fund to shareholders. A fund may elect to treat gain and loss on certain foreign currency contracts as capital gain and loss instead of ordinary income or loss.

If the fund invests in stock of certain passive foreign investment companies (PFICs), the fund intends to mark-to-market these securities and recognize any gains at the end of its fiscal and excise tax years. Deductions for losses are allowable only to the extent of any previously recognized gains. Both gains and losses will be treated as ordinary income or loss, and the fund is required to distribute any resulting income. If the fund is unable to identify an investment as a PFIC security and thus does not make a timely mark-to-market election, the fund may be subject to adverse tax consequences.

Other tax considerations — After the end of each calendar 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.

Under the backup withholding provisions of the Code, the fund generally will be required to withhold federal income tax on all payments (other than exempt-interest dividends) made to a shareholder if the shareholder either does not furnish the fund with the shareholder’s correct taxpayer identification number or fails to certify that the shareholder is not subject to backup withholding. Backup withholding also applies if the IRS notifies the shareholder or the fund that the taxpayer identification number provided by the shareholder is incorrect or that the shareholder has previously failed to properly report interest or dividend income.

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 legal 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.

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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 transaction confirmation and mailing the form, along with a check made payable to the fund, using the envelope provided with your confirmation.

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

12711 North Meridian Street

Carmel, IN 46032-9181

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

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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 — 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. 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. In addition, 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.

Class R-5 and R-6 shares may also be made available to the Virginia College Savings Plan for use in the Virginia Education Savings Trust and the Virginia Prepaid Education Program and other registered investment companies approved by the fund. Class R-6 shares are also available to other post employment benefits plans.

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 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.

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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 Capital Group Private Client Services division.

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 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 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 Fund are subject to applicable sales charges, unless the American Funds 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).

Conversion — Currently, Class C shares of the fund automatically convert to Class F-1 shares in the month of the 10-year anniversary of the purchase date. The board of trustees of the fund reserves the right at any time, without shareholder approval, to amend the conversion feature of the Class C shares, including without limitation, providing for conversion into a different share class or for no conversion. In making its decision, the board of trustees will consider, among other things, the effect of any such amendment on shareholders.

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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 if the entity maintaining the shareholder account is able to identify the transaction as a systematic redemption or purchase. 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. Generally, purchases and redemptions will not be considered “systematic” unless the transaction is pre-scheduled for a specific date.

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. Notwithstanding the previous sentence, you can exchange Class F shares received in a conversion from Class C shares for Class A shares at any time without paying an initial Class A sales charge if you notify American Funds Service Company of the conversion when you make 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

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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 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.

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 Sales charges

Class A purchases

Purchases by certain 403(b) plans

A 403(b) plan may not invest in Class A or C shares unless such plan was invested in Class A or C shares before January 1, 2009.

Participant accounts of a 403(b) plan that were treated as an individual-type plan for sales charge purposes before 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 before 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 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,

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	(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;
(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 ProgramSM or the Virginia Education Savings TrustSM to a CollegeAmerica account will be made with no sales charge. No commission will be paid to the dealer on such a transfer.

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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 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.

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 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 American Funds Money Market Fund) 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. Your accumulated holdings (as described in the paragraph below titled “Rights of accumulation”) eligible to be aggregated 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 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.

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.

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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).

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

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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 American Funds Money Market Fund 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 Fund 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 Fund 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”) as of the day prior to your American Funds investment or (b) the amount you invested (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

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investments in American Legacy Retirement Investment Plans that were established on or before March 31, 2007.

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.

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 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 70½ (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 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 your investment in the applicable class of 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

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elimination of the fund by the Virginia College Savings Plan as an option for additional investment within CollegeAmerica.

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 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 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.

If you hold multiple American Funds and a CDSC applies to the shares you are redeeming, the CDSC will be calculated based on the applicable class of shares of the particular fund from which you are making the redemption.

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 American Funds Money Market Fund be wired to your bank by writing American Funds Service Company. A signature guarantee is required on all requests to wire funds.

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 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.

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.

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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.

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™ 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

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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 Fund 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 declaration of trust permits the fund to direct the Transfer Agent to redeem the shares of any shareholder for their then current net asset value per share if at such time the shareholder 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 trustees of the fund may from time to time adopt.

While payment of redemptions normally will be in cash, the fund’s declaration of trust 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 trustees. 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. The fund does not issue share certificates.

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 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 $32,997,000 for Class A shares and $1,236,000 for Class B shares for the 2010 fiscal year. American Funds Service Company is also compensated for certain transfer agency services provided to all 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 fund’s independent registered public accounting firm is reviewed and determined annually by the board of trustees.

Independent legal counsel — Bingham McCutchen LLP, 355 South Grand Avenue, Suite 4400, Los Angeles, CA 90071, serves as independent legal counsel (“counsel”) for the fund and for independent trustees in their capacities as such. Counsel does not provide legal services to the fund's investment adviser or any of its affiliated companies or control persons. A determination with respect to the independence of the fund’s counsel will be made at least annually by the independent trustees 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 summary prospectuses annually and at least semi-annually with reports showing the fund’s investment portfolio or summary investment portfolio, financial statements and other information. Shareholders may request a copy of the fund’s current prospectus at no cost by calling 800/421-0180 or by sending an e-mail request to

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prospectus@americanfunds.com. Shareholders may also access the fund’s current summary prospectus, prospectus, statement of additional information and shareholder reports at americanfunds.com/prospectus.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 summary prospectuses, shareholder reports and proxy statements. To receive additional copies of a summary prospectus, report or proxy statement, shareholders should contact the Transfer Agent.

Shareholders may also elect to receive updated summary 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 summary 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 summary prospectuses and other reports in paper form by mail.

Summary prospectuses, 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 Principal Underwriter has appealed this decision to the U.S. 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.

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Determination of net asset value, redemption price and maximum offering price per share for Class A shares — December 31, 2010

Net asset value and redemption price per share (Net assets divided by shares outstanding)	$12.19
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)	$12.66

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.

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Fund numbers — Here are the fund numbers for use with our automated telephone line, American FundsLine®, 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®	002	202	302	402	602
American Balanced Fund®	011	211	311	411	611
American Funds Global Balanced Fund SM	037	237	337	437	637
American Mutual Fund®	003	203	303	403	603
Capital Income Builder®	012	212	312	412	612
Capital World Growth and Income FundSM	033	233	333	433	633
EuroPacific Growth Fund®	016	216	316	416	616
Fundamental InvestorsSM	010	210	310	410	610
The Growth Fund of America®	005	205	305	405	605
The Income Fund of America®	006	206	306	406	606
International Growth and Income FundSM	034	234	334	434	634
The Investment Company of America®	004	204	304	404	604
The New Economy Fund®	014	214	314	414	614
New Perspective Fund®	007	207	307	407	607
New World Fund®	036	236	336	436	636
SMALLCAP World Fund®	035	235	335	435	635
Washington Mutual Investors FundSM	001	201	301	401	601
Bond funds
American Funds Mortgage FundSM	042	242	342	442	642
American Funds Short-Term Tax-Exempt Bond FundSM	039	N/A	N/A	439	639
American Funds Tax-Exempt Fund of New YorkSM	041	241	341	441	641
American High-Income Municipal Bond Fund®	040	240	340	440	640
American High-Income TrustSM	021	221	321	421	621
The Bond Fund of AmericaSM	008	208	308	408	608
Capital World Bond Fund®	031	231	331	431	631
Intermediate Bond Fund of AmericaSM	023	223	323	423	623
Limited Term Tax-Exempt Bond Fund of AmericaSM	043	243	343	443	643
Short-Term Bond Fund of AmericaSM	048	248	348	448	648
The Tax-Exempt Bond Fund of America®	019	219	319	419	619
The Tax-Exempt Fund of California®*	020	220	320	420	620
The Tax-Exempt Fund of Maryland®*	024	224	324	424	624
The Tax-Exempt Fund of Virginia®*	025	225	325	425	625
U.S. Government Securities FundSM	022	222	322	422	622
Money market fund
American Funds Money Market Fund®	059	259	359	459	659

___________

*Qualified for sale only in certain jurisdictions.

Page 76

	Fund numbers
Fund	Class 529-A	Class 529-B	Class 529-C	Class 529-E	Class 529-F-1
Stock and stock/bond funds
AMCAP Fund	1002	1202	1302	1502	1402
American Balanced Fund	1011	1211	1311	1511	1411
American Funds Global Balanced Fund	1037	1237	1337	1537	1437
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 Funds Mortgage Fund	1042	1242	1342	1542	1442
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

Page 77

	Fund numbers
Fund		Class R-1	Class R-2	Class R-3	Class R-4	Class R-5	Class 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 Funds Global Balanced Fund		2137	2237	2337	2437	2537	2637
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 Funds Mortgage Fund		2142	2242	2342	2442	2542	2642
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
Short-Term Bond Fund of America		2148	2248	2348	2448	2548	2648
U.S. Government Securities Fund		2122	2222	2322	2422	2522	2622
Money market fund
American Funds Money Market Fund		2159	2259	2359	2459	2559	2659

Page 78

		Fund numbers
Fund	Class A		Class R-1	Class R-2	Class R-3	Class R-4	Class R-5	Class R-6
Stock and stock/bond funds
American Funds 2055 Target Date Retirement FundSM	082		2182	2282	2382	2482	2582	2682
American Funds 2050 Target Date Retirement Fund®	069		2169	2269	2369	2469	2569	2669
American Funds 2045 Target Date Retirement Fund®	068		2168	2268	2368	2468	2568	2668
American Funds 2040 Target Date Retirement Fund®	067		2167	2267	2367	2467	2567	2667
American Funds 2035 Target Date Retirement Fund®	066		2166	2266	2366	2466	2566	2666
American Funds 2030 Target Date Retirement Fund®	065		2165	2265	2365	2465	2565	2665
American Funds 2025 Target Date Retirement Fund®	064		2164	2264	2364	2464	2564	2664
American Funds 2020 Target Date Retirement Fund®	063		2163	2263	2363	2463	2563	2663
American Funds 2015 Target Date Retirement Fund®	062		2162	2262	2362	2462	2562	2662
American Funds 2010 Target Date Retirement Fund®	061		2161	2261	2361	2461	2561	2661

Page 79

 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.

Page 80

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 to a 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.

Page 81

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 or when preferred stock is the subject of a distressed exchange offer, whereby some or all of the issue is either repurchased for an amount of cash or replaced by other instruments having a total value that is less than par.

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.

NR

This indicates that no rating has been requested, that there is insufficient information on which to base a rating, or that Standard & Poor’s does not rate a particular obligation as a matter of policy.

Page 82

Fitch

Long-term Credit Ratings

AAA

Highest credit quality. ‘AAA’ ratings denote the lowest expectation of credit risk. They are assigned only in case of exceptionally strong capacity for payment of financial commitments. This capacity is highly unlikely to be adversely affected by foreseeable events.

AA

Very high credit quality. ‘AA’ ratings denote expectations of very low credit risk. They indicate very strong capacity for payment of financial commitments. This capacity is not significantly vulnerable to foreseeable events.

A

High credit quality. ‘A’ ratings denote expectations of low credit risk. The capacity for payment of financial commitments is considered strong. This capacity may, nevertheless, be more vulnerable to changes in circumstances or in economic conditions than is the case for higher ratings.

BBB

Good credit quality. ‘BBB’ ratings indicate that there is currently expectations of low credit risk. The capacity for payment of financial commitments is considered adequate but adverse changes in circumstances and economic conditions are more likely to impair this capacity. This is the lowest investment grade category.

BB

Speculative. ‘BB’ ratings indicate that there is a possibility of credit risk developing, particularly as the result of adverse economic change over time; however, business or financial alternatives may be available to allow financial commitments to be met. Securities rated in this category are not investment grade.

B

Highly speculative.

·   For issuers and performing obligations, ‘B’ ratings indicate that significant credit risk is present, but a limited margin of safety remains. Financial commitments are currently being met; however, capacity for continued payment is contingent upon a sustained, favorable business and economic environment.

·   For individual obligations, may indicate distressed or defaulted obligations with potential for extremely high recoveries. Such obligations would possess a Recovery Rating of 'R1' (outstanding).

CCC

·   For issuers and performing obligations, default is a real possibility. Capacity for meeting financial commitments is solely reliant upon sustained, favorable business or economic conditions.

·   For individual obligations, may indicate distressed or defaulted obligations with potential for average to superior levels of recovery. Differences in credit quality

Page 83

may be denoted by plus/minus distinctions. Such obligations typically would possess a Recovery Rating of ‘R2’ (superior), or ‘R3’ (good) or ‘R4’ (average).

CC

·   For issuers and performing obligations, default of some kind appears probable.

·   For individual obligations, may indicate distressed or defaulted obligations with a Recovery Rating of ‘R4’ (average) or ‘R5’ (below average).

C

·   For issuers and performing obligations, default is imminent.

·   For individual obligations, may indicate distressed or defaulted obligations with potential for below-average to poor recoveries. Such obligations would possess a Recovery Rating of 'R6' (poor).

RD

Indicates an entity that has failed to make due payments (within the applicable grace period) on some but not all material financial obligations, but continues to honor other classes of obligations.

D

Indicates an entity or sovereign that has defaulted on all of its financial obligations. Default generally is defined as the following:

The modifiers “+” or “–” may be appended to a rating to denote relative status within major rating categories. Such suffixes are not added to the ‘AAA’ Long-term rating category, to categories below ‘CCC’, or to Short-term ratings other than ‘F1’. (The +/– modifiers are only used to denote issues within the CCC category, whereas issuers are only rated CCC without the use of modifiers.

Page 84

..

[logo – American Funds®]

Bond Fund of AmericaSM

Investment portfolio

December 31, 2010

Bonds & notes — 97.02%	Principal amount (000)			Value (000)
BONDS & NOTES OF U.S. GOVERNMENT & GOVERNMENT AGENCIES — 30.79%
U.S. Treasury 0.875% 2011	$	156,250		$	156,613
U.S. Treasury 0.875% 2011		97,000			97,165
U.S. Treasury 0.875% 2011		30,000			30,087
U.S. Treasury 1.125% 20111		262,675			264,677
U.S. Treasury 4.50% 2011		5,000			5,034
U.S. Treasury 4.625% 2011		133,500			139,163
U.S. Treasury 4.875% 2011		115,250			117,002
U.S. Treasury 5.00% 2011		37,100			38,193
U.S. Treasury 5.00% 2011		2,150			2,162
U.S. Treasury 0.50% 2012		23,245			23,218
U.S. Treasury 0.625% 2012		41,600			41,729
U.S. Treasury 1.00% 2012		617,590			622,376
U.S. Treasury 1.00% 2012		185,250			186,769
U.S. Treasury 1.375% 2012		54,900			55,729
U.S. Treasury 1.875% 2012		4,600			4,698
U.S. Treasury 2.00% 20122		63,103			65,432
U.S. Treasury 4.25% 2012		232,000			247,189
U.S. Treasury 4.50% 2012		15,000			15,775
U.S. Treasury 4.875% 2012		395,480			415,345
U.S. Treasury 0.75% 2013		4,455			4,423
U.S. Treasury 1.125% 2013		431,575			435,166
U.S. Treasury 1.375% 2013		184,900			187,710
U.S. Treasury 1.375% 2013		34,200			34,724
U.S. Treasury 1.50% 2013		110,000			111,594
U.S. Treasury 1.875% 20132		29,769			31,778
U.S. Treasury 2.75% 2013		50,000			52,269
U.S. Treasury 3.125% 2013		50,000			53,052
U.S. Treasury 3.375% 2013		154,250			164,258
U.S. Treasury 3.875% 2013		100,000			106,867
U.S. Treasury 4.25% 2013		715,808			779,501
U.S. Treasury 1.75% 2014		78,900			80,460
U.S. Treasury 1.875% 2014		46,500			47,626
U.S. Treasury 2.00% 20142		56,964			61,208
U.S. Treasury 2.375% 2014		10,500			10,879
U.S. Treasury 2.625% 2014		50,000			52,302
U.S. Treasury 4.25% 2014		3,300			3,641
U.S. Treasury 1.375% 2015		5,545			5,389
U.S. Treasury 1.75% 2015		5,300			5,283
U.S. Treasury 1.625% 20152		85,216			90,934
U.S. Treasury 1.875% 2015		57,225			57,460
U.S. Treasury 2.125% 2015		38,250			38,456
U.S. Treasury 4.00% 2015		74,675			81,824
U.S. Treasury 4.25% 2015		100,000			110,746
U.S. Treasury 11.25% 2015		50,520			70,020
U.S. Treasury 2.00% 20162		9,091			9,910
U.S. Treasury 2.375% 2016		150,000			151,933
U.S. Treasury 2.625% 2016		268,000			274,437
U.S. Treasury 3.00% 2016		76,615			79,560
U.S. Treasury 3.25% 2016		50,000			52,642
U.S. Treasury 5.125% 2016		66,500			76,639
U.S. Treasury 7.50% 2016		52,200			67,114
U.S. Treasury 2.50% 2017		94,950			94,602
U.S. Treasury 3.25% 2017		50,000			52,234
U.S. Treasury 4.50% 2017		159,500			178,516
U.S. Treasury 4.625% 2017		110,700			124,671
U.S. Treasury 8.75% 2017		25,000			34,338
U.S. Treasury 8.875% 2017		17,100			23,761
U.S. Treasury 3.50% 2018		223,850			235,542
U.S. Treasury 3.75% 2018		387,300			412,021
U.S. Treasury 4.00% 2018		120,000			130,064
U.S. Treasury 2.125% 20192		5,144			5,701
U.S. Treasury 2.75% 2019		34,600			34,161
U.S. Treasury 3.625% 2019		43,575			45,531
U.S. Treasury 8.125% 2019		75,000			104,525
U.S. Treasury 2.625% 2020		149,260			140,806
U.S. Treasury 2.625% 2020		22,120			20,973
U.S. Treasury 3.50% 2020		28,700			29,404
U.S. Treasury 3.625% 2020		112,800			117,088
U.S. Treasury 8.50% 2020		8,000			11,451
U.S. Treasury 8.75% 2020		37,800			55,238
U.S. Treasury 8.00% 2021		27,100			38,352
U.S. Treasury 7.125% 2023		103,050			138,507
U.S. Treasury 7.50% 2024		26,500			37,153
U.S. Treasury 6.875% 2025		124,400			166,346
U.S. Treasury 7.625% 2025		5,600			7,945
U.S. Treasury 6.00% 2026		40,200			49,726
U.S. Treasury 6.25% 2030		11,175			14,372
U.S. Treasury 5.375% 2031		6,750			7,880
U.S. Treasury 4.50% 2036		356,707			369,509
U.S. Treasury 4.375% 2038		20,065			20,286
U.S. Treasury 4.50% 2038		14,100			14,538
U.S. Treasury 3.50% 2039		45,000			38,792
U.S. Treasury 4.25% 2039		231,860			228,484
U.S. Treasury 4.50% 2039		225,210			231,392
U.S. Treasury 3.875% 2040		156,750			144,401
U.S. Treasury 4.25% 2040		7,750			7,625
U.S. Treasury 4.375% 2040		65,900			66,229
U.S. Treasury 4.625% 2040		425,950			446,362
U.S. Treasury 0% 2040		43,900			11,599
Federal Home Loan Bank 1.75% 2012		69,000			70,294
Federal Home Loan Bank, Series 363, 4.50% 2012		50,000			53,540
Federal Home Loan Bank 3.625% 2013		185,000			197,828
Federal Home Loan Bank 5.375% 2016		25,000			28,902
Fannie Mae 1.75% 2011		20,000			20,070
Fannie Mae 0.625% 2012		83,000			83,166
Fannie Mae, Series 2, 1.25% 2012		70,100			70,827
Fannie Mae 6.125% 2012		20,000			21,358
Fannie Mae 1.75% 2013		125,000			127,708
Fannie Mae 2.50% 2014		7,250			7,514
Freddie Mac 5.25% 2011		20,000			20,544
Freddie Mac 1.125% 2012		23,950			24,153
Freddie Mac 1.75% 2012		50,000			50,882
Freddie Mac 2.125% 2012		20,000			20,487
Freddie Mac 2.50% 2014		100,600			104,266
Freddie Mac 3.00% 2014		60,000			63,144
United States Government Agency-Guaranteed (FDIC insured), Citigroup Inc. 0.286% 20123		50,000			50,038
United States Government Agency-Guaranteed (FDIC insured), Citigroup Inc. 0.304% 20123		11,020			11,031
United States Government Agency-Guaranteed (FDIC insured), Citigroup Inc. 1.875% 2012		20,000			20,389
United States Government Agency-Guaranteed (FDIC insured), Citigroup Inc. 1.875% 2012		20,000			20,366
United States Government Agency-Guaranteed (FDIC insured), Citigroup Inc. 1.875% 2012		10,000			10,187
United States Government Agency-Guaranteed (FDIC insured), Citigroup Inc. 2.125% 2012		11,000			11,253
United States Government Agency-Guaranteed (FDIC insured), Citigroup Inc. 2.25% 2012		25,050			25,765
United States Government Agency-Guaranteed (FDIC insured), General Electric Capital Corp., Series G, 1.625% 2011		8,250			8,251
United States Government Agency-Guaranteed (FDIC insured), General Electric Capital Corp., Series G, 1.80% 2011		9,665			9,694
United States Government Agency-Guaranteed (FDIC insured), General Electric Capital Corp., Series G, 2.125% 2012		52,500			53,868
United States Government Agency-Guaranteed (FDIC insured), General Electric Capital Corp., Series G, 2.25% 2012		29,250			29,882
United States Government Agency-Guaranteed (FDIC insured), Ally Financial Inc. 1.75% 2012		27,500			28,005
United States Government Agency-Guaranteed (FDIC insured), Ally Financial Inc. 2.20% 2012		32,500			33,388
CoBank ACB 7.875% 20184		23,615			26,285
CoBank ACB 0.902% 20223,4		41,365			32,801
United States Government Agency-Guaranteed (FDIC insured), Goldman Sachs Group, Inc. 3.25% 2012		25,000			25,895
United States Government Agency-Guaranteed (FDIC insured), State Street Corp. 2.15% 2012		20,000			20,409
United States Government Agency-Guaranteed (FDIC insured), Bank of America Corp. 2.375% 2012		17,500			17,941
Federal Farm Credit Banks, Consolidated Systemwide Designated Bonds, 2.625% 2014		5,000			5,201
Federal Farm Credit Banks, Consolidated Systemwide Designated Bonds, 3.00% 2014		10,000			10,512
Federal Agricultural Mortgage Corp. 4.875% 20114		10,000			10,014
Federal Agricultural Mortgage Corp. 5.125% 20174		5,000			5,351
Tennessee Valley Authority 5.25% 2039		13,750			14,529
United States Government Agency-Guaranteed (FDIC insured), John Deere Capital Corp. 2.875% 2012		10,000			10,333
United States Agency for International Development, Republic of Egypt 4.45% 2015		5,000			5,454
Private Export Funding Corp., Series W, 5.00% 2016		3,400			3,808
					11,273,619
MORTGAGE-BACKED OBLIGATIONS — 29.08%
FEDERAL AGENCY MORTGAGE-BACKED OBLIGATIONS5 — 23.72%
Fannie Mae 4.89% 2012		25,000			25,558
Fannie Mae, Series 2002-15, Class PG, 6.00% 2017		4,072			4,384
Fannie Mae 4.00% 2019		20,385			21,262
Fannie Mae 4.50% 2019		13,475			14,241
Fannie Mae 4.50% 2019		12,755			13,482
Fannie Mae 5.50% 2019		113			122
Fannie Mae 5.50% 2020		9,796			10,584
Fannie Mae 5.50% 2020		1,139			1,229
Fannie Mae 11.178% 20203		107			122
Fannie Mae, Series 2003-48, Class TJ, 4.50% 2022		10,941			11,344
Fannie Mae 5.00% 2023		5,587			5,945
Fannie Mae 5.50% 2023		31,103			33,477
Fannie Mae 5.50% 2023		27,915			30,129
Fannie Mae 6.00% 2023		3,056			3,324
Fannie Mae 4.00% 2024		31,256			32,247
Fannie Mae 4.50% 2024		23,959			25,135
Fannie Mae 6.00% 2024		8,026			8,839
Fannie Mae 3.00% 2025		44,000			43,182
Fannie Mae 3.00% 2025		41,000			40,238
Fannie Mae 3.00% 2025		35,000			34,314
Fannie Mae 3.00% 2025		29,856			29,277
Fannie Mae 3.00% 2025		21,888			21,481
Fannie Mae 3.00% 2025		19,500			19,137
Fannie Mae 3.00% 2025		15,000			14,721
Fannie Mae 3.00% 2025		2,000			1,961
Fannie Mae 3.50% 2025		167,093			168,686
Fannie Mae 3.50% 2025		96,599			97,520
Fannie Mae 3.50% 2025		94,073			94,970
Fannie Mae 3.50% 2025		77,797			78,538
Fannie Mae 3.50% 2025		65,785			66,412
Fannie Mae 3.50% 2025		60,000			60,572
Fannie Mae 3.50% 2025		54,118			54,587
Fannie Mae 3.50% 2025		47,861			48,317
Fannie Mae 3.50% 2025		36,795			37,146
Fannie Mae 3.50% 2025		28,982			29,258
Fannie Mae 3.50% 2025		24,077			24,307
Fannie Mae 3.50% 2025		21,064			21,265
Fannie Mae 3.50% 2025		14,828			14,969
Fannie Mae 3.50% 2025		13,918			14,050
Fannie Mae 3.50% 2025		12,934			13,057
Fannie Mae 3.50% 2025		11,871			11,984
Fannie Mae 3.50% 2025		11,648			11,759
Fannie Mae 3.50% 2025		8,960			9,045
Fannie Mae 3.50% 2025		250			252
Fannie Mae 4.00% 2025		98,793			102,158
Fannie Mae 4.00% 2025		63,346			65,504
Fannie Mae 4.00% 2025		50,210			51,921
Fannie Mae 4.00% 2025		44,067			45,568
Fannie Mae 4.00% 2025		31,933			33,021
Fannie Mae 4.00% 2025		25,028			25,881
Fannie Mae 4.00% 2025		17,939			18,550
Fannie Mae 4.00% 2025		12,643			13,073
Fannie Mae 4.00% 2025		11,050			11,427
Fannie Mae 4.00% 2025		9,425			9,746
Fannie Mae 4.00% 2025		6,376			6,593
Fannie Mae 4.00% 2025		6,109			6,317
Fannie Mae 4.00% 2025		5,681			5,875
Fannie Mae 4.00% 2025		5,429			5,614
Fannie Mae 4.00% 2025		3,844			3,975
Fannie Mae 4.50% 2025		102,124			107,326
Fannie Mae 4.50% 2025		32,896			34,572
Fannie Mae 4.50% 2025		15,237			16,013
Fannie Mae 4.50% 2025		15,219			15,994
Fannie Mae 4.50% 2025		14,933			15,694
Fannie Mae, Series 2001-4, Class GA, 9.893% 20253		307			358
Fannie Mae, Series 2001-4, Class NA, 11.71% 20253		1,039			1,172
Fannie Mae 3.00% 2026		96,515			94,509
Fannie Mae 3.00% 2026		40,000			39,216
Fannie Mae 3.00% 2026		34,940			34,263
Fannie Mae 3.00% 2026		20,000			19,612
Fannie Mae 3.00% 2026		13,096			12,842
Fannie Mae 3.00% 2026		12,801			12,563
Fannie Mae 3.00% 2026		10,000			9,806
Fannie Mae 3.50% 2026		359,500			362,084
Fannie Mae 3.50% 2026		30,000			30,260
Fannie Mae 3.50% 2026		27,138			27,397
Fannie Mae 4.118% 20263		382			399
Fannie Mae 6.00% 2026		19,168			21,110
Fannie Mae 5.50% 2027		11,610			12,505
Fannie Mae 6.00% 2028		4,988			5,445
Fannie Mae 6.00% 2028		4,330			4,715
Fannie Mae, Series 1998-W5, Class B3, 6.50% 2028		1,600			1,249
Fannie Mae, Series 2002-W7, Class A-5, 7.50% 2029		524			607
Fannie Mae, Series 2001-25, Class ZA, 6.50% 2031		3,812			4,169
Fannie Mae, Series 2001-20, Class E, 9.626% 20313		51			60
Fannie Mae 6.50% 2032		568			629
Fannie Mae 6.50% 2034		856			952
Fannie Mae, Series 2005-68, Class PG, 5.50% 2035		4,710			5,112
Fannie Mae 6.50% 2035		5,885			6,642
Fannie Mae, Series 2006-51, Class PO, principal only, 0% 2036		6,895			5,800
Fannie Mae, Series 2006-32, Class OA, principal only, 0% 2036		6,503			5,728
Fannie Mae, Series 2006-96, Class OP, principal only, 0% 2036		1,439			1,251
Fannie Mae, Series 2006-101, Class PC, 5.50% 2036		5,557			5,962
Fannie Mae 5.50% 2036		2,552			2,745
Fannie Mae, Series 2006-106, Class HG, 6.00% 2036		16,023			17,412
Fannie Mae 6.00% 2036		14,746			16,061
Fannie Mae, Series 2006-43, Class PX, 6.00% 2036		14,237			15,410
Fannie Mae 6.00% 2036		13,125			14,308
Fannie Mae 6.00% 2036		6,838			7,455
Fannie Mae 6.00% 2036		6,400			6,966
Fannie Mae 6.00% 2036		4,203			4,577
Fannie Mae 6.50% 2036		14,340			15,915
Fannie Mae 6.50% 2036		8,481			9,458
Fannie Mae 7.00% 2036		1,241			1,399
Fannie Mae 7.00% 2036		715			807
Fannie Mae 7.50% 2036		359			391
Fannie Mae 7.50% 2036		112			122
Fannie Mae 8.00% 2036		1,206			1,322
Fannie Mae 5.157% 20373		688			730
Fannie Mae 5.454% 20373		12,685			13,403
Fannie Mae 5.50% 2037		89,047			95,357
Fannie Mae 5.50% 2037		25,580			27,432
Fannie Mae, Series 2007-40, Class PT, 5.50% 2037		23,967			26,268
Fannie Mae 5.532% 20373		5,546			5,803
Fannie Mae 5.597% 20373		19,550			20,629
Fannie Mae 5.707% 20373		9,656			10,226
Fannie Mae 5.723% 20373		7,138			7,527
Fannie Mae 5.791% 20373		11,267			12,058
Fannie Mae 6.00% 2037		71,875			78,223
Fannie Mae 6.00% 2037		44,569			48,410
Fannie Mae 6.00% 2037		29,720			32,281
Fannie Mae 6.00% 2037		23,553			25,572
Fannie Mae 6.00% 2037		22,308			24,230
Fannie Mae 6.00% 2037		20,254			22,043
Fannie Mae 6.00% 2037		19,660			21,396
Fannie Mae 6.00% 2037		13,063			14,182
Fannie Mae 6.00% 2037		9,745			10,605
Fannie Mae 6.00% 2037		9,689			10,545
Fannie Mae 6.00% 2037		6,901			7,408
Fannie Mae 6.00% 2037		6,721			7,300
Fannie Mae 6.00% 2037		5,630			6,127
Fannie Mae 6.00% 2037		3,613			3,878
Fannie Mae, Series 2007-24, Class P, 6.00% 2037		3,213			3,455
Fannie Mae 6.00% 2037		2,633			2,871
Fannie Mae 6.00% 2037		1,964			2,143
Fannie Mae 6.00% 2037		1,724			1,876
Fannie Mae 6.00% 2037		1,688			1,838
Fannie Mae 6.00% 2037		1,458			1,591
Fannie Mae 6.00% 2037		103			112
Fannie Mae 6.50% 2037		17,031			18,902
Fannie Mae 6.50% 2037		16,024			17,825
Fannie Mae 6.50% 2037		14,929			16,569
Fannie Mae 6.50% 2037		10,268			11,359
Fannie Mae 6.50% 2037		8,875			9,739
Fannie Mae 6.50% 2037		1,450			1,610
Fannie Mae 7.00% 2037		4,838			5,323
Fannie Mae 7.00% 2037		4,354			4,790
Fannie Mae 7.00% 2037		1,213			1,368
Fannie Mae 7.00% 2037		716			808
Fannie Mae 7.00% 2037		539			604
Fannie Mae 7.00% 2037		252			283
Fannie Mae 7.50% 2037		2,296			2,587
Fannie Mae 7.50% 2037		985			1,070
Fannie Mae 7.50% 2037		823			895
Fannie Mae 7.50% 2037		741			805
Fannie Mae 7.50% 2037		709			771
Fannie Mae 7.50% 2037		658			715
Fannie Mae 7.50% 2037		642			698
Fannie Mae 7.50% 2037		591			643
Fannie Mae 7.50% 2037		588			639
Fannie Mae 7.50% 2037		567			616
Fannie Mae 7.50% 2037		426			463
Fannie Mae 7.50% 2037		256			278
Fannie Mae 7.50% 2037		234			255
Fannie Mae 7.50% 2037		192			215
Fannie Mae 7.50% 2037		170			185
Fannie Mae 7.50% 2037		130			147
Fannie Mae 7.50% 2037		131			142
Fannie Mae 7.50% 2037		108			117
Fannie Mae 7.50% 2037		91			99
Fannie Mae 7.50% 2037		68			74
Fannie Mae 8.00% 2037		1,208			1,363
Fannie Mae 8.00% 2037		483			530
Fannie Mae 8.00% 2037		339			383
Fannie Mae 8.00% 2037		250			274
Fannie Mae 4.916% 20383		11,541			12,208
Fannie Mae 5.351% 20383		5,958			6,250
Fannie Mae 5.50% 2038		70,898			75,912
Fannie Mae 5.50% 2038		40,271			43,119
Fannie Mae 5.50% 2038		34,640			37,089
Fannie Mae 5.50% 2038		30,212			32,283
Fannie Mae 5.50% 2038		9,578			10,255
Fannie Mae 5.50% 2038		7,898			8,471
Fannie Mae 5.50% 2038		7,252			7,764
Fannie Mae 5.50% 2038		433			464
Fannie Mae 5.50% 2038		282			302
Fannie Mae 5.50% 2038		243			261
Fannie Mae 5.501% 20383		1,508			1,587
Fannie Mae 5.616% 20383		11,545			12,176
Fannie Mae 6.00% 2038		109,202			118,846
Fannie Mae 6.00% 2038		32,601			35,480
Fannie Mae 6.00% 2038		29,876			32,515
Fannie Mae 6.00% 2038		22,288			24,250
Fannie Mae 6.00% 2038		21,344			23,183
Fannie Mae 6.00% 2038		18,174			19,779
Fannie Mae 6.00% 2038		15,073			16,356
Fannie Mae 6.00% 2038		11,949			13,005
Fannie Mae 6.00% 2038		11,363			12,330
Fannie Mae 6.00% 2038		9,620			10,439
Fannie Mae 6.00% 2038		9,245			10,058
Fannie Mae 6.00% 2038		8,477			9,226
Fannie Mae 6.00% 2038		7,944			8,643
Fannie Mae 6.00% 2038		7,087			7,711
Fannie Mae 6.00% 2038		6,850			7,432
Fannie Mae 6.00% 2038		5,838			6,354
Fannie Mae 6.00% 2038		5,588			6,081
Fannie Mae 6.00% 2038		4,805			5,228
Fannie Mae 6.00% 2038		3,411			3,711
Fannie Mae 6.50% 2038		128,168			142,572
Fannie Mae 6.50% 2038		52,661			58,579
Fannie Mae 6.50% 2038		24,236			26,955
Fannie Mae 3.577% 20393		35,707			37,058
Fannie Mae 3.606% 20393		11,487			11,913
Fannie Mae 3.607% 20393		31,032			32,247
Fannie Mae 3.63% 20393		12,831			13,269
Fannie Mae 3.669% 20393		1,117			1,158
Fannie Mae 3.764% 20393		5,338			5,539
Fannie Mae 3.779% 20393		36,661			38,174
Fannie Mae 3.813% 20393		9,277			9,627
Fannie Mae 3.823% 20393		5,149			5,393
Fannie Mae 3.847% 20393		3,135			3,257
Fannie Mae 3.852% 20393		7,906			8,278
Fannie Mae 3.898% 20393		3,574			3,714
Fannie Mae 3.941% 20393		12,498			13,109
Fannie Mae 3.959% 20393		2,502			2,610
Fannie Mae 4.50% 2039		18,099			18,603
Fannie Mae 5.00% 2039		47,382			49,855
Fannie Mae 5.00% 2039		36,202			38,318
Fannie Mae 5.00% 2039		25,068			26,376
Fannie Mae 5.00% 2039		12,380			13,026
Fannie Mae 5.113% 20393		16,827			17,852
Fannie Mae 5.50% 2039		28,826			30,859
Fannie Mae 5.50% 2039		22,949			24,568
Fannie Mae 5.50% 2039		4,468			4,784
Fannie Mae 6.00% 2039		13,459			14,612
Fannie Mae 6.00% 2039		12,913			14,020
Fannie Mae 6.00% 2039		7,348			8,015
Fannie Mae 6.00% 2039		6,286			6,839
Fannie Mae 6.00% 2039		6,256			6,786
Fannie Mae 6.00% 2039		3,452			3,756
Fannie Mae 6.00% 2039		683			741
Fannie Mae 3.146% 20403		6,147			6,296
Fannie Mae 3.203% 20403		47,489			48,912
Fannie Mae 3.50% 2040		55,100			52,693
Fannie Mae 3.50% 2040		32,700			31,271
Fannie Mae 3.50% 2040		21,500			20,561
Fannie Mae 3.50% 2040		10,000			9,563
Fannie Mae 3.635% 20403		13,721			14,241
Fannie Mae 4.00% 2040		127,414			126,918
Fannie Mae 4.00% 2040		96,260			95,885
Fannie Mae 4.00% 2040		35,000			34,874
Fannie Mae 4.00% 2040		35,000			34,864
Fannie Mae 4.00% 2040		33,490			33,360
Fannie Mae 4.00% 2040		25,807			25,705
Fannie Mae 4.00% 2040		25,000			24,903
Fannie Mae 4.50% 2040		154,132			158,404
Fannie Mae 4.50% 2040		112,490			115,608
Fannie Mae 4.50% 2040		90,393			92,898
Fannie Mae 4.50% 2040		72,476			74,485
Fannie Mae 4.50% 2040		55,334			56,868
Fannie Mae 4.50% 2040		47,216			48,525
Fannie Mae 4.50% 2040		1,025			1,053
Fannie Mae 5.00% 2040		62,140			65,383
Fannie Mae 5.00% 2040		23,082			24,286
Fannie Mae 5.50% 2040		60,591			64,744
Fannie Mae 5.50% 2040		37,238			39,791
Fannie Mae 5.50% 2040		20,518			21,965
Fannie Mae 5.50% 2040		2,383			2,551
Fannie Mae 3.50% 2041		65,800			62,860
Fannie Mae 4.00% 2041		95,100			94,625
Fannie Mae 4.50% 2041		50,000			51,336
Fannie Mae 5.00% 2041		50,000			52,570
Fannie Mae, Series 2001-T10, Class A-1, 7.00% 2041		5,037			5,805
Fannie Mae, Series 2001-50, Class BA, 7.00% 2041		1,419			1,569
Fannie Mae, Series 2002-W3, Class A-5, 7.50% 2041		2,951			3,430
Fannie Mae, Series 2002-W1, Class 2A, 7.36% 20423		3,363			3,881
Fannie Mae 6.00% 2047		451			483
Fannie Mae 6.50% 2047		655			716
Fannie Mae 6.50% 2047		317			347
Fannie Mae 6.50% 2047		268			293
Fannie Mae 7.00% 2047		2,425			2,668
Fannie Mae 7.00% 2047		138			152
Fannie Mae 7.50% 2047		168			183
Government National Mortgage Assn. 10.00% 2021		561			637
Government National Mortgage Assn. 3.50% 2025		6,466			6,563
Government National Mortgage Assn. 3.50% 2025		2,485			2,522
Government National Mortgage Assn. 3.50% 2025		1,982			2,012
Government National Mortgage Assn., Series 2005-58, Class NO, principal only, 0% 2035		3,717			3,571
Government National Mortgage Assn. 6.00% 2038		49,182			53,676
Government National Mortgage Assn. 6.50% 2038		175			195
Government National Mortgage Assn. 3.50% 2039		12,496			12,056
Government National Mortgage Assn. 3.50% 2039		12,119			11,691
Government National Mortgage Assn. 3.50% 2039		6,518			6,289
Government National Mortgage Assn. 4.00% 2039		62,697			63,285
Government National Mortgage Assn. 4.00% 2039		19,429			19,611
Government National Mortgage Assn. 4.00% 2039		19,262			19,443
Government National Mortgage Assn. 4.00% 2039		13,741			13,870
Government National Mortgage Assn. 4.00% 2039		8,109			8,185
Government National Mortgage Assn. 4.00% 2039		5,237			5,287
Government National Mortgage Assn. 4.50% 2039		13,619			14,165
Government National Mortgage Assn. 3.50% 2040		25,000			24,119
Government National Mortgage Assn. 3.50% 20406		20,000			19,284
Government National Mortgage Assn. 3.50% 2040		10,000			9,648
Government National Mortgage Assn. 4.00% 2040		155,623			157,084
Government National Mortgage Assn. 4.00% 2040		127,886			129,087
Government National Mortgage Assn. 4.00% 2040		52,024			52,513
Government National Mortgage Assn. 4.00% 2040		42,615			43,015
Government National Mortgage Assn. 4.00% 2040		38,630			38,957
Government National Mortgage Assn. 4.00% 2040		23,000			23,216
Government National Mortgage Assn. 4.00% 2040		20,884			21,080
Government National Mortgage Assn. 4.00% 2040		17,818			17,985
Government National Mortgage Assn. 4.00% 2040		16,575			16,730
Government National Mortgage Assn. 4.00% 2040		15,035			15,176
Government National Mortgage Assn. 4.00% 2040		14,608			14,745
Government National Mortgage Assn. 4.00% 2040		14,112			14,244
Government National Mortgage Assn. 4.00% 2040		13,886			14,016
Government National Mortgage Assn. 4.00% 2040		9,971			10,065
Government National Mortgage Assn. 4.00% 2040		9,971			10,065
Government National Mortgage Assn. 4.00% 2040		9,969			10,063
Government National Mortgage Assn. 4.00% 2040		9,941			10,034
Government National Mortgage Assn. 4.00% 2040		6,320			6,379
Government National Mortgage Assn. 4.00% 2040		5,965			6,021
Government National Mortgage Assn. 4.00% 2040		5,964			6,020
Government National Mortgage Assn. 4.00% 2040		4,568			4,611
Government National Mortgage Assn. 4.00% 2040		1,506			1,520
Government National Mortgage Assn. 4.00% 2040		638			644
Government National Mortgage Assn. 4.00% 2040		441			445
Government National Mortgage Assn. 4.50% 2040		141,821			147,479
Government National Mortgage Assn. 4.50% 2040		29,362			30,534
Government National Mortgage Assn. 4.50% 2040		26,084			27,124
Government National Mortgage Assn. 4.50% 2040		22,602			23,504
Government National Mortgage Assn. 4.50% 2040		13,874			14,428
Government National Mortgage Assn. 4.50% 2040		9,631			10,015
Government National Mortgage Assn. 4.50% 2040		8,988			9,347
Government National Mortgage Assn. 4.50% 2040		4,921			5,118
Government National Mortgage Assn. 4.50% 2040		3,732			3,880
Government National Mortgage Assn. 4.50% 2040		1,463			1,521
Government National Mortgage Assn. 5.00% 2040		13,581			14,450
Government National Mortgage Assn. 4.00% 2041		40,000			40,281
Government National Mortgage Assn. 4.50% 2041		48,300			50,157
Freddie Mac, Series 2890, Class KT, 4.50% 2019		2,500			2,636
Freddie Mac 5.50% 2019		5,312			5,746
Freddie Mac, Series K009, Class A1, 2.757% 2020		3,988			3,952
Freddie Mac, Series 2626, Class NG, 3.50% 2023		1,159			1,191
Freddie Mac, Series 2922, Class EL, 4.50% 2023		17,055			17,539
Freddie Mac 5.00% 2023		7,748			8,197
Freddie Mac 5.00% 2023		309			327
Freddie Mac 5.00% 2023		47			50
Freddie Mac, Series 1617, Class PM, 6.50% 2023		1,278			1,406
Freddie Mac 5.00% 2024		21,089			22,282
Freddie Mac 3.50% 2025		37,996			38,293
Freddie Mac 4.00% 2025		47,668			49,039
Freddie Mac 4.00% 2025		23,358			24,070
Freddie Mac 4.00% 2025		15,758			16,239
Freddie Mac 4.50% 2025		59,407			62,174
Freddie Mac 4.50% 2025		46,076			48,221
Freddie Mac 6.00% 2026		14,227			15,474
Freddie Mac 6.00% 2026		11,938			12,985
Freddie Mac 5.50% 2027		7,912			8,489
Freddie Mac 6.00% 2027		84,605			92,025
Freddie Mac, Series 2153, Class GG, 6.00% 2029		2,143			2,336
Freddie Mac, Series 2122, Class QM, 6.25% 2029		3,628			3,923
Freddie Mac 2.711% 20353		8,028			8,426
Freddie Mac, Series 3061, Class PN, 5.50% 2035		34,737			38,195
Freddie Mac, Series 3136, Class OP, principal only, 0% 2036		6,171			5,245
Freddie Mac, Series 3149, Class MO, principal only, 0% 2036		4,130			3,482
Freddie Mac, Series 3147, Class OD, principal only, 0% 2036		4,065			3,399
Freddie Mac, Series 3149, Class AO, principal only, 0% 2036		3,619			3,051
Freddie Mac, Series 3156, Class PO, principal only, 0% 2036		78			69
Freddie Mac, Series 3257, Class PA, 5.50% 2036		40,503			43,510
Freddie Mac, Series 3233, Class PA, 6.00% 2036		30,877			33,491
Freddie Mac, Series 3156, Class NG, 6.00% 2036		9,807			10,860
Freddie Mac, Series 3286, Class JN, 5.50% 2037		51,007			54,219
Freddie Mac, Series 3318, Class JT, 5.50% 2037		28,728			30,546
Freddie Mac, Series 3312, Class PA, 5.50% 2037		21,607			22,979
Freddie Mac 5.50% 2037		16,575			17,657
Freddie Mac 5.50% 2037		15,730			16,756
Freddie Mac 5.522% 20373		21,168			22,716
Freddie Mac 5.681% 20373		6,500			6,933
Freddie Mac 5.765% 20373		4,180			4,394
Freddie Mac 5.929% 20373		7,724			8,154
Freddie Mac, Series 3271, Class OA, 6.00% 2037		12,707			14,127
Freddie Mac 6.00% 2037		1,958			2,128
Freddie Mac 7.00% 2037		639			708
Freddie Mac 7.00% 2037		361			401
Freddie Mac 7.00% 2037		290			322
Freddie Mac 7.50% 2037		4,629			5,150
Freddie Mac 4.808% 20383		9,270			9,809
Freddie Mac 5.058% 20383		7,607			8,070
Freddie Mac 5.272% 20383		11,670			12,373
Freddie Mac 5.50% 2038		12,213			13,029
Freddie Mac 5.556% 20383		17,995			18,983
Freddie Mac 6.00% 2038		41,203			44,540
Freddie Mac 6.50% 2038		10,357			11,460
Freddie Mac 3.721% 20393		6,434			6,705
Freddie Mac 3.922% 20393		6,146			6,445
Freddie Mac 5.00% 2039		48,600			51,009
Freddie Mac 5.50% 2039		40,691			43,395
Freddie Mac 3.152% 20403		7,205			7,369
Freddie Mac 6.00% 2040		16,341			17,721
Freddie Mac 6.00% 2040		13,707			14,865
Freddie Mac 6.50% 2047		1,357			1,482
Freddie Mac 6.50% 2047		755			825
Freddie Mac 7.00% 2047		324			357
FDIC Structured Sale Guaranteed Notes, Series 2010-L1A, Class A-1, 0% 20114		1,850			1,840
FDIC Structured Sale Guaranteed Notes, Series 2010-L2A, Class A, 3.00% 20194		14,566			14,754
FDIC Structured Sale Guaranteed Notes, Series 2010-S1, Class 1-A, 0.811% 20483,4		798			800
NGN, Series 2010-R2, Class 1A, 0.635% 20173,6		3,271			3,270
					8,685,709
COMMERCIAL MORTGAGE-BACKED SECURITIES5 — 3.87%
CS First Boston Mortgage Securities Corp., Series 2001-CKN5, Class A-4, 5.435% 2034		859			874
CS First Boston Mortgage Securities Corp., Series 2001-CF2, Class A-4, 6.505% 2034		41			41
CS First Boston Mortgage Securities Corp., Series 2001-CK3, Class A-4, 6.53% 2034		1,049			1,054
CS First Boston Mortgage Securities Corp., Series 2002-CP5, Class A-1, 4.106% 2035		340			345
CS First Boston Mortgage Securities Corp., Series 2002-CKP1, Class F, 7.067% 20353,4		1,500			1,524
CS First Boston Mortgage Securities Corp., Series 2002-CKS4, Class G, 6.006% 20363,4		500			464
CS First Boston Mortgage Securities Corp., Series 2001-CK6, Class A-3, 6.387% 2036		25,311			26,054
CS First Boston Mortgage Securities Corp., Series 2004-C5, Class A-2, 4.183% 2037		7,111			7,106
CS First Boston Mortgage Securities Corp., Series 2004-C5, Class A-3, 4.499% 2037		12,900			13,028
CS First Boston Mortgage Securities Corp., Series 2005-C3, Class A-AB, 4.614% 2037		17,715			18,412
CS First Boston Mortgage Securities Corp., Series 2005-C2, Class A-MFX, 4.877% 2037		10,000			8,762
CS First Boston Mortgage Securities Corp., Series 2004-C1, Class E, 5.015% 20374		8,240			7,071
CS First Boston Mortgage Securities Corp., Series 2002-CKN2, Class A-3, 6.133% 2037		2,500			2,604
CS First Boston Mortgage Securities Corp., Series 2003-C3, Class F, 4.518% 20384		2,000			1,881
CS First Boston Mortgage Securities Corp., Series 2005-C5, Class A-AB, 5.10% 20383		12,000			12,681
CS First Boston Mortgage Securities Corp., Series 2004-C4, Class A-4, 4.283% 2039		20,855			21,075
CS First Boston Mortgage Securities Corp., Series 2006-C5, Class A-3, 5.311% 2039		57,676			60,158
CS First Boston Mortgage Securities Corp., Series 2006-C1, Class A-3, 5.539% 20393		10,000			10,558
CS First Boston Mortgage Securities Corp., Series 2006-C2, Class A-3, 5.659% 20393		7,305			7,686
CS First Boston Mortgage Securities Corp., Series 2007-C4, Class A-4, 5.804% 20393		14,645			15,095
CS First Boston Mortgage Securities Corp., Series 2005-C6, Class A-3, 5.23% 20403		42,125			44,620
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2002-C2, Class F, 5.915% 20343,4		2,500			2,470
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2002-C3, Class A-1, 4.20% 2035		191			194
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2004-CBX, Class A-5, 4.654% 2037		2,500			2,561
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2005-CIBC12, Class A-3B, 5.318% 20373		61,300			62,663
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2002-C1, Class E, 6.135% 20374		400			397
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2003-ML1, Class A-1, 3.972% 2039		4,300			4,397
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2004-C3, Class A-3, 4.545% 2042		21,050			21,351
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2005-LDP2, Class A-2, 4.575% 2042		2,231			2,234
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2005-LDP4, Class A-3A1, 4.871% 2042		21,991			22,183
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2005-LDP3, Class A-4A, 4.936% 20423		1,655			1,754
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2005-LDP5, Class A-2, 5.198% 2044		10,080			10,536
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2006-CIBC14, Class A-4, 5.481% 20443		15,130			16,018
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2006-LDP7, Class A-4, 5.872% 20453		64,257			70,110
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2005-LDP1, Class A-2, 4.625% 2046		10,634			10,790
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2007-CB19, Class A-4, 5.742% 20493		18,678			19,873
Greenwich Capital Commercial Funding Corp., Series 2005-GG5, Class A-2, 5.117% 2037		10,093			10,322
Greenwich Capital Commercial Funding Corp., Series 2005-GG5, Class A-5, 5.224% 20373		11,000			11,627
Greenwich Capital Commercial Funding Corp., Series 2005-GG5, Class A-4-1, 5.243% 20373		15,000			15,727
Greenwich Capital Commercial Funding Corp., Series 2006-GG7, Class A-4, 5.883% 20383		27,715			30,274
Greenwich Capital Commercial Funding Corp., Series 2007-GG9, Class A-4, 5.444% 2039		31,000			32,707
Fannie Mae, Series 2001-T6B, 6.088% 2011		48,250			49,110
Fannie Mae, Series 2003-T1, Class B, 4.491% 2012		46,225			49,037
American Tower Trust I, Series 2007-1A, Class A-FX, 5.42% 20374		18,500			19,850
American Tower Trust I, Series 2007-1A, Class B, 5.537% 20374		10,000			10,543
American Tower Trust I, Series 2007-1A, Class C, 5.615% 20374		10,000			10,543
American Tower Trust I, Series 2007-1A, Class D, 5.957% 20374		35,515			37,444
American Tower Trust I, Series 2007-1A, Class E, 6.249% 20374		8,250			8,698
American Tower Trust I, Series 2007-1A, Class F, 6.639% 20374		5,000			5,271
Citigroup-Deutsche Bank Commercial Mortgage Trust, Series 2005-CD1, Class A-4, 5.222% 20443		17,005			18,321
Citigroup-Deutsche Bank Commercial Mortgage Trust, Series 2006-CD3, Class A-5, 5.617% 2048		44,734			48,100
J.P. Morgan Chase Commercial Mortgage Securities Trust, Series 2006-LDP6, Class A-4, 5.475% 20433		51,820			55,577
J.P. Morgan Chase Commercial Mortgage Securities Trust, Series 2006-LDP8, Class A-4, 5.399% 2045		9,040			9,637
Banc of America Commercial Mortgage Inc., Series 2001-1, Class A-2, 6.503% 2036		22,082			22,157
Banc of America Commercial Mortgage Inc., Series 2004-5, Class A-3, 4.561% 2041		9,975			10,153
Banc of America Commercial Mortgage Inc., Series 2004-5, Class A-AB, 4.673% 2041		1,365			1,418
Banc of America Commercial Mortgage Inc., Series 2004-4, Class B, 4.985% 2042		1,000			981
Banc of America Commercial Mortgage Inc., Series 2005-3, Class A-2, 4.501% 2043		848			859
Banc of America Commercial Mortgage Inc., Series 2005-5, Class A-4, 5.115% 20453		2,500			2,680
Banc of America Commercial Mortgage Inc., Series 2006-4, Class A-4, 5.634% 2046		15,990			17,178
Banc of America Commercial Mortgage Inc., Series 2007-3, Class A-4, 5.658% (undated)3		7,966			8,190
GE Commercial Mortgage Corp., Series 2004-C3, Class B, 5.235% 20393		8,000			7,116
GE Commercial Mortgage Corp., Series 2004-C2, Class B, 4.983% 2040		19,193			18,423
GE Commercial Mortgage Corp., Series 2006-C1, Class A-4, 5.335% 20443		33,700			36,323
Merrill Lynch Mortgage Trust, Series 2005-CKI1, Class AM, 5.241% 20373		4,620			4,804
Merrill Lynch Mortgage Trust, Series 2005-CIP1, Class A-3-A, 4.949% 20383		8,500			8,714
Merrill Lynch Mortgage Trust, Series 2006-C1, Class A-3, 5.656% 20393		3,050			3,143
Merrill Lynch Mortgage Trust, Series 2004-BPC1, Class A-5, 4.855% 20413		6,805			7,166
Merrill Lynch Mortgage Trust, Series 2005-MCP1, Class A-4, 4.747% 20433		12,080			12,808
Merrill Lynch Mortgage Trust, Series 2005-MCP1, Class AM, 4.805% 20433		6,300			6,488
Merrill Lynch Mortgage Trust, Series 2006-C2, Class A-4, 5.742% 20433		10,250			11,031
Wachovia Bank Commercial Mortgage Trust, Series 2003-C9, Class A-3, 4.608% 2035		1,418			1,484
Wachovia Bank Commercial Mortgage Trust, Series 2005-C18, Class A-PB, 4.807% 2042		2,630			2,721
Wachovia Bank Commercial Mortgage Trust, Series 2005-C20, Class A-7, 5.118% 20423		9,605			10,324
Wachovia Bank Commercial Mortgage Trust, Series 2005-C22, Class A-2, 5.242% 2044		2,534			2,531
Wachovia Bank Commercial Mortgage Trust, Series 2005-C22, Class A-4, 5.27% 20443		15,350			16,474
Wachovia Bank Commercial Mortgage Trust, Series 2005-C22, Class A-PB, 5.275% 20443		7,928			8,304
Wachovia Bank Commercial Mortgage Trust, Series 2006-C23, Class A-PB, 5.446% 2045		10,415			10,674
ML-CFC Commercial Mortgage Trust, Series 2006-4, Class A-3, 5.172% (undated)3		41,210			42,715
L.A. Arena Funding, LLC, Series 1, Class A, 7.656% 20264,6		39,852			41,265
Bear Stearns Commercial Mortgage Securities Inc., Series 1999-C1, Class X, interest only, 0.637% 20313,4		32,659			644
Bear Stearns Commercial Mortgage Securities Inc., Series 1999-WF2, Class X, interest only, 0.662% 20313		37,391			1,275
Bear Stearns Commercial Mortgage Securities Inc., Series 2002-PBW1, Class A-1, 3.97% 2035		1,481			1,491
Bear Stearns Commercial Mortgage Securities Inc., Series 2001-TOP2, Class D, 6.94% 20354		3,000			2,933
Bear Stearns Commercial Mortgage Securities Inc., Series 2004-PWR6, Class A-4, 4.521% 2041		10,000			10,195
Bear Stearns Commercial Mortgage Securities Inc., Series 2005-PWR9, Class A-3, 4.868% 2042		20,825			21,110
Crown Castle Towers LLC, Series 2010-1, Class C, 4.523% 20354		2,000			2,078
Crown Castle Towers LLC, Series 2010-5, Class C, 4.174% 20374		20,000			19,442
Crown Castle Towers LLC, Series 2010-2, Class C, 5.495% 20374		10,000			10,440
Commercial Mortgage Trust, Series 2003-LNB1, Class A-2, 4.084% 2038		20,000			20,791
Commercial Mortgage Trust, Series 2004-LNB2, Class A-3, 4.221% 2039		2,174			2,191
Citigroup Commercial Mortgage Trust, Series 2006-C4, Class A-3, 5.728% (undated)3		15,800			17,121
GE Capital Commercial Mortgage Corp., Series 2001-1, Class A-2, 6.531% 2033		9,370			9,388
GE Capital Commercial Mortgage Corp., Series 2002-3, Class A-2, 4.996% 2037		2,500			2,616
GE Capital Commercial Mortgage Corp., Series 2001-3, Class A-1, 5.56% 2038		165			166
GE Capital Commercial Mortgage Corp., Series 2001-3, Class A-2, 6.07% 2038		2,500			2,568
COBALT CMBS Commerical Mortgage Trust, Series 2006-C1, Class A-2, 5.174% 2048		10,455			10,655
Ally Financial Inc., Series 1997-C1, Class F, 7.222% 2029		120			120
Ally Financial Inc., Series 2001-C1, Class A-2, 6.465% 2034		7,705			7,729
Ally Financial Inc., Series 2003-C1, Class F, 4.718% 20363,4		1,000			942
Ally Financial Inc., Series 2003-C1, Class G, 4.817% 20363,4		1,000			867
LB-UBS Commercial Mortgage Trust, Series 2005-C7, Class A-2, 5.103% 2030		2,210			2,210
LB-UBS Commercial Mortgage Trust, Series 2005-C7, Class A-4, 5.197% 20303		5,000			5,398
Morgan Stanley Capital I Trust, Series 2005-HQ7, Class A-2, 5.191% 20423		7,224			7,490
Bear Stearns Commercial Mortgage Securities Trust, Series 2006-PWR13, Class A-4, 5.54% 2041		6,000			6,447
Salomon Brothers Commercial Mortgage Trust, Series 2001-C1, Class A-3, 6.428% 2035		3,063			3,074
Salomon Brothers Commercial Mortgage Trust, Series 2001-C2, Class A-3, 6.499% 2036		1,801			1,852
Morgan Stanley Dean Witter Capital I Trust, Series 2003-TOP9, Class A-1, 3.98% 2036		203			204
					1,418,973
COLLATERALIZED MORTGAGE-BACKED OBLIGATIONS (PRIVATELY ORIGINATED)5 — 0.85%
Structured Adjustable Rate Mortgage Loan Trust, Series 2005-22, Class 5-A-1, 5.814% 20353		2,805			2,234
Structured Adjustable Rate Mortgage Loan Trust, Series 2006-8, Class 3-AF, 0.641% 20363		11,574			7,944
Structured Adjustable Rate Mortgage Loan Trust, Series 2006-2, Class 5-A-1, 5.83% 20363		4,864			3,627
Structured Adjustable Rate Mortgage Loan Trust, Series 2006-12, Class 2-A1, 5.605% 20373		16,657			12,573
Structured Adjustable Rate Mortgage Loan Trust, Series 2007-6, Class 3-A-1, 5.662% 20373		16,866			11,922
WaMu Mortgage Pass-Through Certificates Trust, Series 2004-AR11, Class A, 2.717% 20343		15,010			13,959
WaMu Mortgage Pass-Through Certificates Trust, Series 2007-HY7, Class 2-A1, 5.628% 20373		26,760			18,133
American General Mortgage Loan Trust, Series 2006-1, Class A-5, 5.75% 20353,4		7,066			7,390
American General Mortgage Loan Trust, Series 2010-1A, Class A-1, 5.15% 20583,4		15,689			16,346
Residential Accredit Loans, Inc., Series 2005-QR1, Class A, 6.00% 2034		22,707			23,105
Bear Stearns ARM Trust, Series 2004-3, Class II-A, 2.694% 20343		6,541			5,691
Bear Stearns ARM Trust, Series 2005-6, Class I-A-1, 2.941% 20353		24,313			17,232
IndyMac IMSC Mortgage Loan Trust, Series 2007-F2, Class 2-A-1, 6.50% 2037		35,088			22,637
Countrywide Alternative Loan Trust, Series 2004-14T2, Class A-2, 5.50% 2034		8,484			8,384
Countrywide Alternative Loan Trust, Series 2005-J11, Class 1-A-16, 5.50% 2035		4,618			3,221
Countrywide Alternative Loan Trust, Series 2004-28CB, Class 5-A-1, 5.75% 2035		1,887			1,806
Countrywide Alternative Loan Trust, Series 2004-36CB, Class 1-A-1, 6.00% 2035		6,992			6,692
J.P. Morgan Alternative Loan Trust, Series 2006-A1, Class 2-A-1, 4.533% 20363		14,603			9,476
J.P. Morgan Alternative Loan Trust, Series 2006-A2, Class 5-A-1, 5.97% 20363		11,073			7,540
TBW Mortgage-backed Trust, Series 2007-2, Class A-4-B, 0.681% 20373		20,671			15,982
Thornburg Mortgage Securities Trust, Series 2006-5, Class A-1, 0.381% 20463		14,617			14,492
Banc of America Funding Trust, Series 2005-H, Class 9-A-1, 4.771% 20353		20,122			14,092
Bear Stearns ALT-A Trust, Series 2006-2, Class II-4-A-1, 5.626% 20363		19,308			12,273
CS First Boston Mortgage Securities Corp., Series 2002-30, Class I-A-1, 7.50% 2032		285			278
CS First Boston Mortgage Securities Corp., Series 2002-34, Class I-A-1, 7.50% 2032		36			36
CS First Boston Mortgage Securities Corp., Series 2003-21, Class V-A-1, 6.50% 2033		2,157			2,168
CS First Boston Mortgage Securities Corp., Series 2003-29, Class V-A-1, 7.00% 2033		38			39
CS First Boston Mortgage Securities Corp., Series 2004-5, Class IV-A-1, 6.00% 2034		5,772			5,963
CS First Boston Mortgage Securities Corp., Series 2007-1, Class 1-A-6A, 5.863% 20373		4,714			2,761
GSR Mortgage Loan Trust, Series 2006-2F, Class 3A-4, 6.00% 2036		11,543			10,897
IndyMac INDX Mortgage Loan Trust, Series 2006-AR25, Class 3-A-1, 5.476% 20363		16,019			8,880
CHL Mortgage Pass-Through Trust, Series 2004-HYB6, Class A-3, 3.089% 20343		2,151			1,827
CHL Mortgage Pass-Through Trust, Series 2007-HY5, Class 1-A-1, 5.775% 20473		6,486			5,019
CHL Mortgage Pass-Through Trust, Series 2007-HY4, Class 1-A-1, 5.837% 20473		1,927			1,423
Citigroup Mortgage Loan Trust, Inc., Series 2007-AR5, Class 1-A2A, 5.405% 20373		5,227			3,543
J.P. Morgan Mortgage Trust, Series 2006-A3, Class 3-A-3, 5.72% 20363		4,000			3,306
Banc of America Mortgage Securities Inc., Series 2003-I, Class 3-A1, 3.256% 20333		2,819			2,804
Washington Mutual Mortgage, WMALT Series 2007-2, Class 3-A-1, 5.50% 2022		2,469			2,300
Harborview Mortgage Loan Trust, Series 2006-6, Class 1A, 2.943% 20363		2,429			1,595
					309,590
OTHER MORTGAGE-BACKED SECURITIES5 — 0.64%
Nykredit 4.00% 2035	DKr279,720				49,018
Nationwide Building Society, Series 2007-2, 5.50% 20124	$	35,000			37,094
Bank of America 5.50% 20124		35,000			36,842
HBOS Treasury Services PLC 5.00% 20114		2,000			2,060
HBOS Treasury Services PLC 5.25% 20174		11,000			11,423
HBOS Treasury Services PLC 5.25% 2017		7,000			7,269
Northern Rock PLC 5.625% 20174		20,000			20,433
Barclays Bank PLC 4.00% 2019	€	14,150			19,017
Royal Bank of Canada 3.125% 20154	$	18,160			18,676
Bank of Montreal 2.85% 20154		17,000			17,286
Compagnie de Financement Foncier 2.125% 20134		16,700			16,852
					235,970
Total mortgage-backed obligations					10,650,242
CORPORATE BONDS & NOTES — 29.01%
FINANCIALS — 8.64%
Banks — 2.69%
Abbey National Treasury Services PLC 3.875% 20144	$	6,130		$	6,080
Santander Issuances, SA Unipersonal 5.911% 20164		13,600			13,355
Sovereign Bancorp, Inc. 8.75% 2018		72,725			79,736
Santander Issuances, SA Unipersonal 6.50% 20193,4		41,700			40,323
HBOS PLC 6.75% 20184		105,638			99,053
HBOS PLC 4.375% 20193	€	2,870			3,479
Lloyds TSB Bank PLC 6.50% 20204	$	8,900			8,202
HBOS PLC 6.00% 20334		19,520			14,594
Royal Bank of Scotland PLC 3.40% 2013		16,500			16,678
Royal Bank of Scotland Group PLC 5.00% 2014		6,665			6,417
Royal Bank of Scotland PLC 3.95% 2015		24,500			24,110
Royal Bank of Scotland PLC 4.875% 2015		23,000			23,549
Royal Bank of Scotland Group PLC 5.05% 2015		8,240			7,935
Royal Bank of Scotland Group PLC 4.70% 2018		3,485			2,955
Royal Bank of Scotland PLC 6.934% 2018	€	12,590			15,951
Royal Bank of Scotland PLC 5.625% 2020	$	16,250			16,185
Société Générale 2.20% 20134		7,500			7,475
Société Générale 3.10% 20154		21,000			20,544
Société Générale 3.50% 20164		16,000			15,778
Société Générale 5.75% 20164		63,110			66,917
CIT Group Inc., Series A, 7.00% 2013		11,494			11,752
CIT Group Inc., Series A, 7.00% 2014		19,353			19,595
CIT Group Inc., Series A, 7.00% 2015		22,884			22,999
Standard Chartered PLC 3.85% 20154		21,327			21,979
Standard Chartered Bank 6.40% 20174		25,491			27,313
HSBC Finance Corp. 0.652% 20123		10,750			10,598
HSBC Bank PLC 3.50% 20154		7,000			7,183
HSBC Bank USA, NA 4.875% 2020		31,195			31,069
Bank of Tokyo-Mitsubishi, Ltd. 2.45% 20154		17,000			16,699
Union Bank of California, NA 5.95% 2016		26,831			28,592
Barclays Bank PLC 5.125% 2020		11,500			11,766
Barclays Bank PLC 5.14% 2020		36,000			32,451
Korea Development Bank 5.30% 2013		13,635			14,400
Korea Development Bank 8.00% 2014		15,365			17,568
UniCredito Italiano SpA 6.00% 20174		20,000			19,585
HVB Funding Trust I 8.741% 20314		8,264			8,264
SunTrust Banks, Inc. 6.00% 2017		20,000			21,032
ANZ National (International) Ltd. 3.125% 20154		19,000			18,918
Silicon Valley Bank 5.70% 2012		18,000			18,781
PNC Funding Corp. 5.40% 2014		10,000			10,971
PNC Bank NA 6.875% 2018		5,200			5,952
Westpac Banking Corp. 3.00% 2015		16,000			15,988
Wells Fargo & Co. 5.625% 2017		8,500			9,425
Wachovia Capital Trust III 5.80% (undated)3		6,700			5,837
Banco de Crédito del Perú 5.375% 20204		15,000			14,850
Paribas, New York Branch 6.95% 2013		3,470			3,898
BNP Paribas 5.125% 20154		9,147			9,702
VEB Finance Ltd. 6.902% 20204		9,100			9,555
VEB Finance Ltd. 6.80% 20254		1,500			1,504
BBVA Bancomer SA 7.25% 20204		9,875			10,470
Banco del Estado de Chile 4.125% 20204		10,000			9,550
Allied Irish Banks, PLC 12.50% 2019	€	21,764			7,724
Regions Financial Corp. 6.375% 2012	$	6,792			6,922
Banco Santander-Chile 5.375% 20144		5,380			5,652
Nordea Bank, Series 2, 3.70% 20144		3,000			3,095
Bergen Bank 0.625% (undated)3		5,000			2,946
Bank of Ireland 10.00% 2020	€	1,215			942
Development Bank of Singapore Ltd. 7.125% 20114	$	400			408
Norinchukin Finance (Cayman) Ltd. 5.625% 20163	£	205			324
					985,575
Real estate — 2.31%
PLD International Finance LLC 4.375% 2011	€	7,700			10,315
ProLogis 7.625% 2014	$	26,250			29,624
ProLogis 5.75% 2016		15,245			15,846
ProLogis 6.25% 2017		8,300			8,672
ProLogis 6.625% 2018		53,205			56,575
ProLogis 7.375% 2019		32,707			35,784
ProLogis 6.875% 2020		22,053			23,454
Kimco Realty Corp., Series C, 4.82% 2011		7,500			7,639
Kimco Realty Corp. 6.00% 2012		12,250			13,142
Pan Pacific Retail Properties, Inc. 6.125% 2013		1,605			1,701
Kimco Realty Corp., Series C, 4.82% 2014		29,280			30,905
Kimco Realty Corp., Series C, 4.904% 2015		10,765			11,197
Kimco Realty Corp., Series C, 5.783% 2016		19,500			21,243
Kimco Realty Corp. 5.70% 2017		28,450			30,597
Kimco Realty Corp. 4.30% 2018		26,185			25,731
Kimco Realty Corp. 6.875% 2019		4,000			4,533
Westfield Group 5.40% 20124		18,400			19,514
Westfield Capital Corp. Ltd., WT Finance (Australia) Pty Ltd. and WEA Finance LLC 5.125% 20144		16,250			17,282
Westfield Group 7.50% 20144		12,500			14,198
Westfield Group 5.75% 20154		32,000			34,702
Westfield Group 5.70% 20164		14,195			15,340
Westfield Group 7.125% 20184		23,135			26,652
Simon Property Group, LP 6.75% 2014		11,265			12,691
Simon Property Group, LP 4.20% 2015		4,160			4,354
Simon Property Group, LP 5.25% 2016		7,595			8,204
Simon Property Group, LP 6.10% 2016		5,765			6,470
Simon Property Group, LP 5.875% 2017		15,000			16,487
Simon Property Group, LP 6.125% 2018		24,075			27,100
Simon Property Group, LP 10.35% 2019		8,995			12,316
Hospitality Properties Trust 6.75% 2013		14,745			15,583
Hospitality Properties Trust 7.875% 2014		950			1,052
Hospitality Properties Trust 5.125% 2015		6,665			6,766
Hospitality Properties Trust 6.30% 2016		26,868			28,288
Hospitality Properties Trust 5.625% 2017		1,195			1,189
Hospitality Properties Trust 6.70% 2018		32,170			33,776
Realogy Corp., Term Loan DD, 3.286% 20133,5,7		26,185			24,686
Realogy Corp., Term Loan B, 3.286% 20133,5,7		10,771			10,154
Realogy Corp., Letter of Credit, 3.297% 20133,5,7		1,472			1,388
Realogy Corp., Second Lien Term Loan A, 13.50% 20175,7		7,825			8,593
ERP Operating LP 5.25% 2014		9,000			9,823
ERP Operating LP 6.584% 2015		13,040			14,874
ERP Operating LP 5.75% 2017		1,530			1,679
ERP Operating LP 7.125% 2017		5,000			5,825
ERP Operating LP 4.75% 2020		9,500			9,593
Developers Diversified Realty Corp. 5.375% 2012		4,635			4,771
Developers Diversified Realty Corp. 5.50% 2015		11,643			11,988
Developers Diversified Realty Corp. 9.625% 2016		11,620			13,804
Developers Diversified Realty Corp. 7.50% 2017		7,655			8,562
Developers Diversified Realty Corp. 7.875% 2020		1,000			1,122
Brandywine Operating Partnership, LP 5.75% 2012		27,110			28,081
Brandywine Operating Partnership, LP 5.40% 2014		3,000			3,100
Rouse Co. 7.20% 2012		12,475			13,130
Rouse Co. 5.375% 2013		7,250			7,313
Rouse Co. 6.75% 20134		3,750			3,905
UDR, Inc., Series A, 5.25% 2015		13,030			13,620
Boston Properties, Inc. 5.875% 2019		10,000			10,863
Weingarten Realty Investors, Series A, 4.857% 2014		6,080			6,244
Host Marriott, LP, Series O, 6.375% 2015		2,000			2,040
Host Hotels & Resorts LP 9.00% 2017		1,800			2,007
					846,087
Diversified financials — 2.08%
Citigroup Inc. 4.587% 2015		74,215			77,455
Citigroup Inc. 4.75% 2015		40,000			41,925
Citigroup Inc. 6.125% 2017		24,500			26,887
Citigroup Inc. 5.375% 2020		1,500			1,561
JPMorgan Chase & Co., Series 2, 1.65% 2013		6,000			6,008
JPMorgan Chase & Co. 3.40% 2015		20,000			20,416
JPMorgan Chase & Co. 2.60% 2016		70,615			68,596
JPMorgan Chase & Co. 4.25% 2020		28,840			28,222
JPMorgan Chase & Co. 4.40% 2020		13,160			12,978
JPMorgan Chase & Co. 5.50% 2040		2,000			2,052
Countrywide Financial Corp., Series B, 5.80% 2012		18,000			18,944
Bank of America Corp. 3.70% 2015		16,500			16,375
Bank of America Corp. 0.549% 20163		1,500			1,332
Bank of America Corp. 5.75% 2017		7,845			8,175
Bank of America Corp. 5.65% 2018		19,405			19,857
Bank of America Corp. 5.625% 2020		2,500			2,553
Bank of America Corp. 5.875% 2021		66,810			69,253
Morgan Stanley 4.00% 2015		6,000			6,037
Morgan Stanley, Series F, 6.625% 2018		19,200			20,858
Morgan Stanley, Series F, 5.625% 2019		57,625			58,860
Goldman Sachs Group, Inc. 6.15% 2018		29,250			32,257
Goldman Sachs Group, Inc. 7.50% 2019		16,250			19,068
Goldman Sachs Group, Inc. 5.375% 2020		21,460			22,216
Goldman Sachs Group, Inc. 6.75% 2037		1,000			1,026
UBS AG 3.875% 2015		3,000			3,095
UBS AG 5.875% 2017		15,560			17,138
UBS AG 4.875% 2020		27,190			27,714
Lazard Group LLC 7.125% 2015		20,942			22,571
SLM Corp., Series A, 0.502% 20113		2,000			1,993
SLM Corp., Series A, 0.728% 20113		8,700			8,580
SLM Corp., Series A, 5.40% 2011		5,000			5,089
SLM Corp., Series A, 5.375% 2013		3,000			3,061
Bank of New York Mellon Corp., Series G, 2.50% 2016		16,000			15,834
Export-Import Bank of Korea 5.875% 2015		12,400			13,453
Northern Trust Corp. 4.625% 2014		8,475			9,170
Northern Trust Corp. 5.85% 20174		3,750			4,201
Capital One Financial Corp. 5.50% 2015		1,500			1,609
Capital One Financial Corp. 6.15% 2016		10,000			10,839
Capital One Capital IV 6.745% 20373		695			693
Development Bank of Kazakhstan 5.50% 20154		7,310			7,401
NASDAQ OMX Group, Inc. 5.25% 2018		6,525			6,592
Lehman Brothers Holdings Inc., Series G, 4.80% 20148		10,000			2,363
Lehman Brothers Holdings Inc., Series I, 6.875% 20188		15,000			3,788
ING Bank NV 5.50% 2012	€	3,750			5,154
Charles Schwab Corp., Series A, 6.375% 2017	$	4,000			4,520
International Lease Finance Corp., Series Q, 5.45% 2011		2,000			2,015
International Lease Finance Corp., Series Q, 5.75% 2011		370			374
International Lease Finance Corp. 5.00% 2012		390			394
American Express Co. 6.15% 2017		1,650			1,863
					762,415
Insurance — 1.51%
Liberty Mutual Group Inc. 5.75% 20144		10,435			10,861
Liberty Mutual Group Inc. 6.70% 20164		6,250			6,732
Liberty Mutual Group Inc. 6.50% 20354		43,810			38,924
Liberty Mutual Group Inc. 7.50% 20364		33,110			33,013
PRICOA Global Funding I 5.30% 20134		2,500			2,737
Prudential Holdings, LLC, Series C, 8.695% 20234,5		56,185			67,079
ACE INA Holdings Inc. 5.875% 2014		17,445			19,575
ACE INA Holdings Inc. 2.60% 2015		24,990			24,630
ACE INA Holdings Inc. 5.70% 2017		3,500			3,843
ACE INA Holdings Inc. 5.80% 2018		1,000			1,107
ACE Capital Trust II 9.70% 2030		12,423			15,382
CNA Financial Corp. 5.85% 2014		11,500			12,144
CNA Financial Corp. 6.50% 2016		10,000			10,722
CNA Financial Corp. 7.35% 2019		4,270			4,691
CNA Financial Corp. 7.25% 2023		24,145			25,098
Monumental Global Funding 5.50% 20134		16,370			17,527
Monumental Global Funding III 5.25% 20144		21,500			22,875
AEGON NV 6.125% 2031	£	1,730			2,526
MetLife Global Funding I 5.125% 20134	$	18,310			19,725
MetLife Global Funding I 2.50% 20154		19,500			19,238
AXA SA 8.60% 2030		2,315			2,601
AXA SA 6.463% (undated)3,4		40,000			36,100
New York Life Global Funding 5.25% 20124		15,300			16,468
New York Life Global Funding 4.65% 20134		9,370			10,082
Principal Life Insurance Co. 5.30% 2013		18,150			19,652
Allstate Life Global Funding Trust, Series 2008-4, 5.375% 2013		17,500			19,067
UnumProvident Finance Co. PLC 6.85% 20154		2,839			3,153
Unum Group 7.125% 2016		6,500			7,310
Unum Group 5.625% 2020		4,950			4,978
RSA Insurance Group PLC 9.375% 20393	£	3,765			6,896
RSA Insurance Group PLC 8.50% (undated)3		2,429			3,872
Jackson National Life Global 5.375% 20134	$	10,000			10,733
Lincoln National Corp. 5.65% 2012		10,000			10,641
Genworth Global Funding Trust, Series 2007-C, 5.25% 2012		10,000			10,364
United Energy Distribution Pty Ltd., AMBAC insured, 4.70% 20114		10,000			10,079
Nationwide Financial Services, Inc. 6.75% 20673		10,000			9,240
Berkshire Hathaway Inc. 3.20% 2015		5,000			5,164
Munich Re Finance BV 6.75% 20233	€	3,550			4,981
TIAA Global Markets 4.95% 20134	$	3,000			3,254
Chubb Corp. 6.375% 20673		1,000			1,047
Loews Corp. 6.00% 2035		225			220
					554,331
Automobiles & components — 0.05%
Toyota Motor Credit Corp. 1.375% 2013		16,500			16,578
Ford Motor Credit Co. 7.25% 2011		2,000			2,068
Ford Motor Credit Co. 7.375% 2011		300			301
					18,947
CONSUMER DISCRETIONARY — 3.49%
Media — 2.09%
Comcast Corp. 5.50% 2011	$	10,301		$	10,402
Comcast Cable Communications, Inc. 6.75% 2011		520			522
Tele-Communications, Inc. 9.80% 2012		17,500			19,053
Comcast Corp. 5.85% 2015		1,625			1,829
Comcast Corp. 5.90% 2016		1,400			1,569
Comcast Corp. 6.30% 2017		13,410			15,376
Comcast Corp. 5.875% 2018		37,820			42,051
Comcast Corp. 6.45% 2037		8,500			9,112
Comcast Corp. 6.95% 2037		15,520			17,611
Comcast Corp. 6.55% 2039		1,000			1,091
Comcast Corp. 6.40% 2040		20,100			21,618
Time Warner Cable Inc. 6.20% 2013		12,700			14,113
Time Warner Cable Inc. 7.50% 2014		15,675			17,989
Time Warner Cable Inc. 8.25% 2014		3,250			3,775
Time Warner Cable Inc. 6.75% 2018		48,140			56,200
Time Warner Cable Inc. 8.25% 2019		7,215			8,976
Time Warner Cable Inc. 4.125% 2021		15,000			14,302
Time Warner Cable Inc. 6.75% 2039		6,800			7,535
NBC Universal, Inc. 2.10% 20144		16,000			15,965
NBC Universal, Inc. 3.65% 20154		2,625			2,695
NBC Universal, Inc. 2.875% 20164		17,000			16,628
NBC Universal, Inc. 5.15% 20204		16,000			16,617
NBC Universal, Inc. 4.375% 20214		28,640			27,855
NBC Universal, Inc. 6.40% 20404		6,600			7,033
NBC Universal, Inc. 5.95% 20414		8,600			8,629
News America Holdings Inc. 8.00% 2016		1,000			1,231
News America Holdings Inc. 8.25% 2018		2,000			2,513
News America Inc. 6.90% 2019		30,750			36,900
News America Inc. 6.15% 2037		300			314
News America Inc. 6.65% 2037		38,900			43,227
Time Warner Inc. 5.875% 2016		30,670			34,661
Time Warner Companies, Inc. 7.25% 2017		1,600			1,912
Time Warner Companies, Inc. 7.57% 2024		12,340			14,986
AOL Time Warner Inc. 7.625% 2031		2,580			3,145
Time Warner Inc. 6.50% 2036		16,660			18,268
Time Warner Inc. 6.20% 2040		9,450			10,081
Thomson Reuters Corp. 6.50% 2018		47,225			55,141
Univision Communications Inc. 12.00% 20144		3,500			3,850
Univision Communications Inc. 10.50% 20153,4,9		19,265			20,232
Univision Communications Inc., Term Loan, 4.511% 20173,5,7		21,171			20,176
Univision Communications Inc. 8.50% 20214		495			504
Cox Communications, Inc. 7.125% 2012		7,000			7,680
Cox Communications, Inc. 5.45% 2014		17,045			18,781
Cox Communications, Inc. 9.375% 20194		7,225			9,464
Virgin Media Finance PLC, Series 1, 9.50% 2016		7,000			7,945
Virgin Media Finance PLC 8.375% 20194		8,050			8,835
Warner Music Group 7.375% 2014		2,100			2,027
Warner Music Group 9.50% 2016		7,175			7,731
Mediacom LLC and Mediacom Capital Corp. 9.125% 2019		9,000			9,225
Charter Communications, Inc. 13.50% 2016		7,334			8,782
Grupo Televisa, SAB 6.625% 2040		7,700			8,377
AMC Entertainment Inc. 8.75% 2019		7,775			8,339
Clear Channel Worldwide Holdings, Inc., Series B, 9.25% 2017		6,500			7,150
Radio One, Inc. 15.00% 20163,4,9		7,046			6,909
Regal Entertainment Group 9.125% 2018		4,000			4,280
Regal Cinemas Corp. 8.625% 2019		2,000			2,130
Ziggo Bond Co. BV 8.00% 2018	€	4,000			5,532
Nara Cable Funding Ltd. 8.875% 2018		3,250			4,196
UPC Holding BV 9.875% 20184	$	3,500			3,850
Cinemark USA, Inc., Term Loan, 3.52% 20163,5,7		407			410
Cinemark USA, Inc. 8.625% 2019		2,000			2,175
Walt Disney Co. 5.625% 2016		2,000			2,306
UPC Germany GmbH 9.625% 2019	€	1,250			1,842
Atlantic Broadband Finance, LLC and Atlantic Broadband Finance, Inc. 9.375% 2014	$	1,300			1,326
American Media, Inc. 13.50% 20184,6		1,316			1,284
					766,263
Retailing — 0.66%
Staples, Inc. 7.75% 2011		14,150			14,379
Staples, Inc. 9.75% 2014		30,627			37,140
Nordstrom, Inc. 6.75% 2014		25,860			29,331
Macy’s Retail Holdings, Inc. 8.375% 20153		21,770			25,580
Neiman Marcus Group, Inc. 9.00% 20153,9		14,867			15,648
Neiman Marcus Group, Inc. 10.375% 2015		4,325			4,590
Michaels Stores, Inc., Term Loan B1, 2.563% 20133,5,7		2,009			1,958
Michaels Stores, Inc. 0%/13.00% 201610		7,235			7,199
Michaels Stores, Inc., Term Loan B2, 4.813% 20163,5,7		681			682
Michaels Stores, Inc. 11.375% 2016		3,000			3,285
Michaels Stores, Inc. 7.75% 20184		6,500			6,516
Home Depot, Inc. 3.95% 2020		8,000			7,814
Home Depot, Inc. 5.875% 2036		6,000			6,262
Toys “R” Us-Delaware, Inc., Term Loan B, 6.00% 20163,5,7		4,339			4,387
Toys “R” Us Property Co. II, LLC 8.50% 2017		6,275			6,777
Toys “R” Us Property Co. I, LLC 10.75% 2017		650			744
Marks and Spencer Group PLC 6.25% 20174		8,500			9,052
Marks and Spencer Group PLC 7.125% 20374		850			850
Kohl’s Corp. 6.25% 2017		2,000			2,311
Kohl’s Corp. 6.00% 2033		3,878			3,966
Kohl’s Corp. 6.875% 2037		2,787			3,224
Bon-Ton Department Stores, Inc. 10.25% 2014		8,050			8,251
Sally Holdings LLC and Sally Capital Inc. 9.25% 2014		6,550			6,910
Sally Holdings LLC and Sally Capital Inc. 10.50% 2016		1,050			1,163
Dollar General Corp., Term Loan B2, 3.01% 20143,5,7		854			855
Dollar General Corp. 10.625% 2015		3,042			3,323
Dollar General Corp. 11.875% 20173,9		3,244			3,779
Edcon (Proprietary) Ltd. 4.276% 20143	€	6,000			6,815
Edcon (Proprietary) Ltd. 4.276% 20143		500			568
Lowe’s Companies, Inc. 3.75% 2021	$	4,000			3,875
Lowe’s Companies, Inc. 5.80% 2040		1,790			1,901
J.C. Penney Co., Inc. 7.65% 2016		1,000			1,093
J.C. Penney Co., Inc. 5.75% 2018		3,523			3,488
Burlington Coat Factory Warehouse Corp. 11.125% 2014		4,000			4,150
PETCO Animal Supplies, Inc. 9.25% 20184		2,050			2,171
Limited Brands, Inc. 7.60% 2037		1,000			985
					241,022
Automobiles & components — 0.34%
DaimlerChrysler North America Holding Corp., Series E, 5.75% 2011		7,505			7,756
DaimlerChrysler North America Holding Corp. 5.875% 2011		8,400			8,486
DaimlerChrysler North America Holding Corp. 7.75% 2011		14,930			14,964
DaimlerChrysler North America Holding Corp. 6.50% 2013		18,775			21,269
DaimlerChrysler North America Holding Corp. 8.50% 2031		10,750			14,404
Allison Transmission Holdings, Inc., Term Loan B, 3.02% 20143,5,7		2,493			2,446
Allison Transmission Holdings, Inc. 11.00% 20154		18,670			20,444
Allison Transmission Holdings, Inc. 11.25% 20153,4,9		12,402			13,580
Volkswagen International Finance NV 4.00% 20204		13,650			13,459
Tower Automotive Holdings 10.625% 20174		7,986			8,625
					125,433
Consumer services — 0.29%
MGM Resorts International 6.75% 2012		9,235			9,235
MGM Resorts International 6.75% 2013		4,375			4,371
MGM Resorts International 13.00% 2013		3,825			4,542
MGM Resorts International 5.875% 2014		3,425			3,177
MGM Resorts International 10.375% 2014		925			1,043
MGM Resorts International 6.625% 2015		2,600			2,395
MGM Resorts International 11.125% 2017		4,375			5,053
MGM Resorts International 9.00% 20204		2,900			3,205
Seminole Tribe of Florida 5.798% 20134,5		6,390			6,434
Seminole Tribe of Florida 7.804% 20204,5		8,325			8,121
Marriott International, Inc., Series I, 6.375% 2017		12,750			14,276
Boyd Gaming Corp. 6.75% 2014		6,450			6,369
Boyd Gaming Corp. 7.125% 2016		4,000			3,610
Boyd Gaming Corp. 9.125% 20184		1,500			1,489
Mohegan Tribal Gaming Authority 8.00% 2012		6,375			5,355
Mohegan Tribal Gaming Authority 7.125% 2014		6,750			4,286
Circus and Eldorado Joint Venture and Silver Legacy Resort Casino 10.125% 2012		7,525			7,271
Royal Caribbean Cruises Ltd. 11.875% 2015		3,900			4,836
Wynn Las Vegas, LLC and Wynn Capital Corp. 7.75% 2020		3,000			3,263
Seneca Gaming Corp. 8.25% 20184		2,775			2,796
Education Management LLC and Education Management Finance Corp. 8.75% 2014		1,850			1,905
NCL Corp Ltd 9.50% 20184		1,525			1,578
					104,610
Consumer durables & apparel — 0.11%
Fortune Brands, Inc. 6.375% 2014		20,000			21,692
Hanesbrands Inc., Series B, 3.831% 20143		11,105			11,091
Hanesbrands Inc. 8.00% 2016		3,100			3,341
Jarden Corp. 8.00% 2016		3,020			3,303
					39,427
ENERGY — 3.12%
Kinder Morgan Energy Partners LP 6.75% 2011		3,500			3,539
Kinder Morgan Energy Partners LP 5.00% 2013		11,571			12,580
Kinder Morgan Energy Partners LP 5.125% 2014		27,552			29,919
Kinder Morgan Energy Partners LP 5.625% 2015		14,100			15,489
Kinder Morgan Energy Partners LP 6.00% 2017		22,375			24,735
Kinder Morgan Energy Partners LP 9.00% 2019		4,395			5,543
Kinder Morgan Energy Partners LP 5.30% 2020		5,000			5,201
Kinder Morgan Energy Partners LP 6.85% 2020		47,435			54,444
Kinder Morgan Energy Partners LP 6.55% 2040		4,000			4,219
Enbridge Energy Partners, LP, Series B, 6.50% 2018		28,120			32,179
Enbridge Energy Partners, LP 9.875% 2019		27,505			36,223
Enbridge Energy Partners, LP 5.20% 2020		20,690			21,725
Enbridge Energy Partners, LP, Series B, 7.50% 2038		28,950			34,848
Enbridge Energy Partners, LP 8.05% 20773		3,880			4,117
Gazprom OJSC 5.092% 20154		28,225			29,072
Gazprom OJSC, Series 13, 6.605% 2018	€	5,200			7,409
Gazprom OJSC 9.25% 2019	$	18,900			23,319
Gazprom OJSC 6.51% 20224		14,500			14,863
Gazprom OJSC, Series 9, 6.51% 2022		3,500			3,588
Gazprom OJSC, Series 2, 8.625% 20344		2,050			2,470
Gazprom OJSC 7.288% 20374		4,500			4,703
Williams Partners L.P. and Williams Partners Finance Corp. 7.50% 2011		5,725			5,894
Williams Partners L.P. and Williams Partners Finance Corp. 3.80% 2015		17,500			18,102
Transcontinental Gas Pipe Line Corp. 6.40% 2016		5,000			5,756
Williams Partners L.P. and Williams Partners Finance Corp. 7.25% 2017		1,300			1,513
Williams Partners L.P. 4.125% 2020		10,000			9,491
Williams Partners L.P. and Williams Partners Finance Corp. 5.25% 2020		19,230			19,970
Williams Partners L.P. and Williams Partners Finance Corp. 6.30% 2040		9,250			9,661
Rockies Express Pipeline LLC 6.25% 20134		8,500			9,185
Rockies Express Pipeline LLC 6.85% 20184		56,700			60,551
StatoilHydro ASA 2.90% 2014		15,360			15,897
StatoilHydro ASA 3.875% 2014		7,000			7,443
StatoilHydro ASA 5.125% 20144		3,070			3,384
Statoil ASA 3.125% 2017		26,500			26,280
StatoilHydro ASA 5.25% 2019		13,080			14,594
Shell International Finance BV 1.30% 2011		17,125			17,239
Shell International Finance BV 1.875% 2013		16,500			16,758
Shell International Finance BV 4.00% 2014		2,120			2,258
Shell International Finance BV 3.10% 2015		10,000			10,280
Shell International Finance BV 4.30% 2019		7,875			8,225
TransCanada PipeLines Ltd. 3.40% 2015		4,865			5,060
TransCanada PipeLines Ltd. 6.50% 2018		7,500			8,866
TransCanada PipeLines Ltd. 7.125% 2019		7,540			9,244
TransCanada PipeLines Ltd. 6.10% 2040		1,500			1,657
TransCanada PipeLines Ltd. 6.35% 20673		25,895			25,603
Husky Energy Inc. 6.25% 2012		1,760			1,885
Husky Energy Inc. 5.90% 2014		3,250			3,575
Husky Energy Inc. 6.20% 2017		16,415			18,297
Husky Energy Inc. 7.25% 2019		17,830			21,207
Husky Energy Inc. 6.80% 2037		4,750			5,262
Enbridge Inc. 5.80% 2014		9,200			10,242
Enbridge Inc. 4.90% 2015		3,250			3,542
Enbridge Inc. 5.60% 2017		28,980			32,660
Chevron Corp. 3.95% 2014		3,200			3,419
Chevron Corp. 4.95% 2019		28,830			32,371
Devon Energy Corp. 5.625% 2014		7,750			8,571
Devon Energy Corp. 6.30% 2019		11,990			14,133
Devon Financing Corp. ULC 7.875% 2031		9,600			12,694
Ras Laffan Liquefied Natural Gas III 5.50% 2014		5,000			5,410
Ras Laffan Liquefied Natural Gas III 5.50% 20144		330			357
Ras Laffan Liquefied Natural Gas Co. Ltd. 8.294% 20145		700			776
Ras Laffan Liquefied Natural Gas III 5.832% 20165		1,784			1,925
Ras Laffan Liquefied Natural Gas III 6.75% 20194		2,500			2,912
Ras Laffan Liquefied Natural Gas II 5.298% 20204,5		20,639			21,816
Ras Laffan Liquefied Natural Gas III 6.332% 20275		2,000			2,117
Total Capital SA 3.00% 2015		19,250			19,674
Total Capital SA 3.125% 2015		6,850			7,028
Total Capital SA 4.45% 2020		3,500			3,635
Pemex Finance Ltd., Series 1999-2, Class A-3, 10.61% 20175		11,700			14,112
Pemex Project Funding Master Trust 5.75% 2018		3,150			3,384
Pemex Project Funding Master Trust, Series 13, 6.625% 2035		11,750			12,014
Petrobras International 5.75% 2020		13,500			14,075
Petrobras International 6.875% 2040		14,010			14,786
Enterprise Products Operating LP 7.50% 2011		5,000			5,022
Enterprise Products Operating LLC 5.65% 2013		17,850			19,231
Enterprise Products Operating LLC 7.00% 20673		1,770			1,752
Apache Corp. 6.00% 2013		2,420			2,719
Apache Corp. 5.625% 2017		7,200			8,222
Apache Corp. 6.90% 2018		7,145			8,737
Apache Corp. 5.10% 2040		3,750			3,657
Reliance Holdings Ltd. 4.50% 20204		8,750			8,365
Reliance Holdings Ltd. 6.25% 20404		14,250			14,296
BG Energy Capital PLC 2.50% 20154		22,120			21,941
Petroplus Finance Ltd. 6.75% 20144		6,500			6,013
Petroplus Finance Ltd. 7.00% 20174		11,675			10,391
Petroplus Finance Ltd. 9.375% 20194		3,650			3,395
Williams Companies, Inc. 7.875% 2021		8,102			9,581
Williams Companies, Inc. 8.75% 2032		3,557			4,363
Odebrecht Drilling Norbe VIII/IX Ltd 6.35% 20214,5		11,085			11,584
Noble Energy, Inc. 8.25% 2019		6,750			8,448
Cenovus Energy Inc. 4.50% 2014		6,000			6,435
Qatar Petroleum 5.579% 20114,5		2,613			2,663
General Maritime Corp. 12.00% 2017		2,650			2,570
PETRONAS Capital Ltd. 7.00% 20124		2,250			2,421
Energy Transfer Partners, LP 7.50% 2020		2,200			2,277
Overseas Shipholding Group, Inc. 8.125% 2018		1,650			1,662
Teekay Corp. 8.50% 2020		725			793
					1,141,513
INDUSTRIALS — 2.91%
Transportation — 1.43%
Continental Airlines, Inc. 8.75% 2011		300			310
Continental Airlines, Inc., Series 2001-1, Class A-2, 6.503% 20125		14,435			14,624
United Air Lines, Inc., Term Loan B, 2.313% 20143,5,7		4,484			4,343
Continental Airlines, Inc., Series 2006-1, Class G, FGIC insured, 0.65% 20153,5		1,044			990
Continental Airlines, Inc., Series 1997-1, Class A, 7.461% 20165		22,131			23,168
Continental Airlines, Inc., Series 2001-1, Class B, 7.373% 20175		146			146
Continental Airlines, Inc., Series 1998-1, Class B, 6.748% 20185		1,109			1,109
Continental Airlines, Inc., Series 1997-4B, Class B, 6.90% 20185		192			191
Continental Airlines, Inc., Series 1998-1, Class A, 6.648% 20195		15,774			16,494
Continental Airlines, Inc., Series 1997-4, Class A, 6.90% 20195		34,007			36,239
Continental Airlines, Inc., Series 2000-2, Class B, 8.307% 20195		353			359
Continental Airlines, Inc., Series 1999-1, Class A, 6.545% 20205		12,542			13,341
Continental Airlines, Inc., Series 1999-1, Class B, 6.795% 20205		10,213			10,188
Continental Airlines, Inc., Series 1999-2, Class A-1, 7.256% 20215		277			300
United Air Lines, Inc., Series 2007-1, Class B, 7.336% 20214,5		851			817
Continental Airlines, Inc., Series 1999-2, Class B, 7.566% 20215		3,163			3,183
Continental Airlines, Inc., Series 2001-1, Class A-1, 6.703% 20225		10,899			11,607
Continental Airlines, Inc., Series 2007-1, Class B, 6.903% 20225		3,929			3,959
Continental Airlines, Inc., Series 2000-2, Class A-1, 7.707% 20225		12,661			14,172
Continental Airlines, Inc., Series 2000-1, Class A-1, 8.048% 20225		10,457			11,863
Continental Airlines, Inc., Series 2000-1, Class B, 8.388% 20225		1,031			1,049
Northwest Airlines, Inc., Term Loan B, 3.81% 20133,5,7		2,062			1,969
Delta Air Lines, Inc., Series 2001-1, Class A-2, 7.111% 20135		10,000			10,388
Delta Air Lines, Inc., Series 2002-1, Class G-2, MBIA insured, 6.417% 20145		8,040			8,362
Northwest Airlines, Inc., Term Loan A, 2.06% 20183,5,7		60,043			53,438
Delta Air Lines, Inc., Series 2002-1, Class G-1, MBIA insured, 6.718% 20245		4,484			4,596
Union Pacific Corp. 5.125% 2014		8,430			9,139
Union Pacific Corp. 5.75% 2017		22,965			25,822
Union Pacific Corp. 5.70% 2018		4,000			4,497
Union Pacific Corp. 4.00% 2021		14,500			14,322
Union Pacific Railroad Co. Pass Through Trust, Series 2001-1, 6.63% 20225		6,391			7,264
Union Pacific Corp. 6.15% 2037		10,930			11,951
Burlington Northern Santa Fe Corp. 4.30% 2013		2,640			2,827
Burlington Northern Santa Fe Corp. 7.00% 2014		5,125			5,861
Burlington Northern Santa Fe Corp. 5.65% 2017		12,500			13,950
Burlington Northern Santa Fe Corp. 5.75% 2018		10,035			11,324
Burlington Northern Santa Fe Corp. 4.70% 2019		9,800			10,261
Burlington Northern Santa Fe Corp. 3.60% 2020		7,500			7,195
Burlington Northern Santa Fe Corp. 6.15% 2037		4,500			4,855
AMR Corp., Series B, 10.45% 2011		150			152
American Airlines, Inc., Series 2001-1, Class A-2, 6.817% 20125		1,750			1,774
American Airlines, Inc., Series 2001-2, Class A-1, 6.978% 20125		1,915			1,925
American Airlines, Inc., Series 2001-2, Class B, 8.608% 20125		9,015			9,128
AMR Corp. 9.00% 2012		1,300			1,319
American Airlines, Inc., Series 2001-2, Class A-2, 7.858% 20135		34,650			35,819
American Airlines, Inc., Series 2001-1, Class B, 7.377% 20195		481			464
Norfolk Southern Corp. 6.75% 2011		991			997
Norfolk Southern Corp. 5.75% 2016		6,740			7,582
Norfolk Southern Corp. 5.75% 2018		5,000			5,655
Norfolk Southern Corp. 5.90% 2019		11,250			12,759
Norfolk Southern Corp. 7.05% 2037		3,400			4,076
CSX Corp. 5.75% 2013		8,385			9,147
CSX Corp. 7.375% 2019		15,000			18,122
CEVA Group PLC, Bridge Loan, 9.75% 20153,5,6,7		1,500			1,327
CEVA Group PLC 11.625% 20164		4,890			5,391
CEVA Group PLC 8.375% 20174		15,975			16,215
CEVA Group PLC 11.50% 20184		1,650			1,790
Kansas City Southern Railway Co. 13.00% 2013		2,190			2,617
Kansas City Southern Railway Co. 8.00% 2015		4,250			4,590
RailAmerica, Inc. 9.25% 2017		3,200			3,532
Navios Maritime Acquisition Corp. 8.625% 20174		2,950			3,031
Canadian National Railway Co. 6.375% 2037		1,000			1,157
					525,042
Capital goods — 1.33%
Volvo Treasury AB 5.95% 20154		60,603			65,888
Volvo Treasury AB 5.00% 2017	€	3,115			4,387
BAE Systems 2001 Asset Trust, Series 2001, Class B, 7.156% 20114,5	$	11,587			11,946
BAE Systems 2001 Asset Trust, Series 2001, Class G, MBIA insured, 6.664% 20134,5		25,450			27,526
BAE Systems Holdings Inc. 4.95% 20144		14,290			15,332
Nortek, Inc. 11.00% 2013		30,400			32,528
Nortek Inc. 10.00% 20184		6,550			6,796
Hawker Beechcraft Acquisition Co., LLC, Letter of Credit, 2.203% 20143,5,7		3,957			3,480
Hawker Beechcraft Acquisition Co., LLC, Term Loan B, 2.303% 20143,5,7		36,236			31,870
Hawker Beechcraft Acquisition Co., LLC, Term Loan B, 10.50% 20143,5,7		1,237			1,240
Hawker Beechcraft Acquisition Co., LLC 8.875% 20153,9		1,568			1,196
Hawker Beechcraft Acquisition Co., LLC 9.75% 2017		170			97
Northrop Grumman Systems Corp. 7.125% 2011		8,000			8,056
Northrop Grumman Corp. 3.70% 2014		9,500			9,985
Northrop Grumman Corp. 5.05% 2019		17,180			18,381
General Electric Capital Corp., Series A, 2.25% 2015		21,500			20,693
General Electric Capital Corp., Series A, 6.00% 2019		10,000			11,145
Hutchison Whampoa International Ltd. 7.00% 20114		23,300			23,467
Hutchison Whampoa International Ltd. 6.50% 20134		7,200			7,871
US Investigations Services, Inc., Term Loan B, 3.054% 20153,5,7		3,628			3,458
US Investigations Services, Inc., Term Loan B, 7.75% 20153,5,7		5,846			5,919
US Investigations Services, Inc. 10.50% 20154		9,200			9,487
US Investigations Services, Inc. 11.75% 20164		6,155			6,317
Lockheed Martin Corp. 4.121% 2013		6,000			6,380
Lockheed Martin Corp. 4.25% 2019		17,940			18,273
Raytheon Co. 6.40% 2018		9,500			11,130
Raytheon Co. 6.75% 2018		4,030			4,751
Raytheon Co. 4.40% 2020		7,895			8,088
United Technologies Corp. 4.50% 2020		14,430			15,176
United Technologies Corp. 5.70% 2040		5,000			5,471
DAE Aviation Holdings, Inc. and Standard Aero Ltd., Term Loan B1, 4.04% 20143,5,7		302			298
DAE Aviation Holdings, Inc. and Standard Aero Ltd., Term Loan B2, 4.04% 20143,5,7		292			288
DAE Aviation Holdings, Inc. 11.25% 20154		13,285			13,816
Ashtead Group PLC 8.625% 20154		4,675			4,868
Ashtead Capital, Inc. 9.00% 20164		7,450			7,804
Associated Materials, LLC  9.125% 20174		12,040			12,612
Ply Gem Industries, Inc. 11.75% 2013		11,600			12,470
Honeywell International Inc. 5.00% 2019		8,725			9,561
TransDigm Inc. 7.75% 20184		5,500			5,720
Atlas Copco AB 5.60% 20174		4,525			4,882
Esterline Technologies Corp. 6.625% 2017		2,400			2,436
Esterline Technologies Corp. 7.00% 20204		1,440			1,490
Sequa Corp., Term Loan B, 3.54% 20143,5,7		3,374			3,264
John Deere Capital Corp., Series D, 4.50% 2013		2,000			2,140
Manitowoc Company, Inc. 8.50% 2020		2,000			2,135
RBS Global, Inc. and Rexnord LLC 11.75% 2016		200			215
RBS Global, Inc. and Rexnord LLC 8.50% 2018		1,650			1,761
H&E Equipment Services, Inc. 8.375% 2016		1,750			1,794
Roofing Supply Group 8.625% 20174		800			828
RSC Equipment Rental, Inc. and RSC Holdings III, LLC 9.50% 2014		400			422
					485,138
Commercial & professional services — 0.15%
Nielsen Finance LLC and Nielsen Finance Co. 11.625% 2014		1,650			1,918
Nielsen Finance LLC and Nielsen Finance Co. 0%/12.50% 201610		34,775			36,688
Nielsen Finance LLC and Nielsen Finance Co. 11.50% 2016		475			551
ARAMARK Corp., Letter of Credit, 2.136% 20143,5,7		18			18
ARAMARK Corp., Term Loan B, 2.178% 20143,5,7		227			225
ARAMARK Corp. 3.787% 20153		3,450			3,390
ARAMARK Corp. 8.50% 2015		9,450			9,922
ARAMARK Corp., Letter of Credit, 3.361% 20163,5,7		33			33
ARAMARK Corp., Term Loan B, 3.553% 20163,5,7		502			504
					53,249
UTILITIES — 2.63%
Energy East Corp. 6.75% 2012		7,155			7,648
Iberdrola Finance Ireland 3.80% 20144		32,460			32,342
Scottish Power PLC 5.375% 2015		31,415			33,370
Iberdrola Finance Ireland 5.00% 20194		11,500			11,047
Jersey Central Power & Light Co. 5.625% 2016		1,310			1,444
Ohio Edison Co. 6.40% 2016		12,440			14,201
Jersey Central Power & Light Co. 5.65% 2017		3,000			3,283
Pennsylvania Electric Co. 6.05% 2017		5,165			5,597
Jersey Central Power & Light Co. 4.80% 2018		11,025			11,212
Cleveland Electric Illuminating Co. 8.875% 2018		24,600			31,324
Toledo Edison Co. 7.25% 2020		10,000			11,841
Toledo Edison Co. 6.15% 2037		3,815			3,954
National Rural Utilities Cooperative Finance Corp. 5.50% 2013		21,750			23,828
National Rural Utilities Cooperative Finance Corp. 10.375% 2018		41,425			57,225
MidAmerican Energy Holdings Co. 5.875% 2012		15,000			16,191
PacifiCorp, First Mortgage Bonds, 5.45% 2013		2,875			3,152
MidAmerican Energy Co. 4.65% 2014		5,000			5,408
MidAmerican Energy Holdings Co., Series D, 5.00% 2014		225			242
MidAmerican Energy Co. 5.95% 2017		3,000			3,430
MidAmerican Energy Co. 5.30% 2018		5,000			5,558
MidAmerican Energy Holdings Co. 5.75% 2018		37,700			42,546
E.ON International Finance BV 5.80% 20184		62,950			71,234
Niagara Mohawk Power 3.553% 20144		15,690			16,318
National Grid PLC 6.30% 2016		37,605			42,982
National Grid Co. PLC 5.875% 2024	£	170			287
Consumers Energy Co., First Mortgage Bonds, Series P, 5.50% 2016	$	2,500			2,813
Consumers Energy Co., First Mortgage Bonds, 5.15% 2017		5,000			5,475
Consumers Energy Co. 5.65% 2018		6,925			7,808
Consumers Energy Co., First Mortgage Bonds, 6.125% 2019		30,575			35,125
Consumers Energy Co., First Mortgage Bonds, 6.70% 2019		2,380			2,842
Veolia Environnement 5.25% 2013		18,235			19,710
Veolia Environnement 6.00% 2018		11,445			12,838
Veolia Environnement 6.125% 2033	€	12,275			17,960
Israel Electric Corp. Ltd. 7.25% 20194	$	24,800			27,335
Israel Electric Corp. 7.25% 2019		8,125			8,956
Israel Electric Corp. Ltd. 8.10% 20964		6,250			6,468
Enel Finance International SA 3.875% 20144		32,990			33,576
ENEL SpA 5.625% 2027	€	5,760			7,880
Northern States Power Co., First Mortgage Bonds, 5.25% 2018	$	6,500			7,180
Public Service Co. of Colorado 5.80% 2018		6,300			7,199
Public Service Co. of Colorado 5.125% 2019		4,350			4,752
Public Service Co. of Colorado 3.20% 2020		14,945			14,121
Carolina Power & Light Co. d/b/a Progress Energy Carolinas, Inc., First Mortgage Bonds, 5.125% 2013		5,000			5,488
Progress Energy, Inc. 6.05% 2014		2,100			2,334
Progress Energy, Inc. 7.05% 2019		15,175			18,033
Ohio Power Co., Series H, 4.85% 2014		5,965			6,325
Ohio Power Co., Series K, 6.00% 2016		15,000			16,906
Ohio Power Co., Series G, 6.60% 2033		1,500			1,673
Sierra Pacific Power Co., General and Refunding Mortgage Notes, Series Q, 5.45% 2013		4,275			4,664
Nevada Power Co., General and Refunding Mortgage Notes, Series L, 5.875% 2015		2,550			2,846
Nevada Power Co., General and Refunding Mortgage Notes, Series M, 5.95% 2016		1,000			1,124
Nevada Power Co., General and Refunding Mortgage Notes, Series S, 6.50% 2018		10,025			11,633
Teco Finance, Inc. 6.75% 2015		15,546			17,585
Teco Finance, Inc. 5.15% 2020		1,700			1,766
Abu Dhabi National Energy Co. PJSC (TAQA) 6.165% 20174		12,000			12,667
Abu Dhabi National Energy Co. PJSC (TAQA) 6.165% 2017		2,700			2,850
Abu Dhabi National Energy Co. PJSC (TAQA) 6.50% 20364		2,000			1,997
Union Electric Co. 4.65% 2013		3,000			3,209
Ameren Corp. 8.875% 2014		7,000			7,882
Union Electric Co. 5.40% 2016		5,750			6,336
Edison Mission Energy 7.75% 2016		2,025			1,752
Midwest Generation, LLC, Series B, 8.56% 20165		13,037			13,200
Homer City Funding LLC 8.734% 20265		1,868			1,728
Intergen Power 9.00% 20174		15,450			16,454
AES Corp. 7.75% 2015		11,575			12,414
AES Corp. 8.00% 2020		3,350			3,568
PSEG Power LLC 7.75% 2011		10,000			10,195
Public Service Electric and Gas Co., Series E, 5.30% 2018		4,990			5,590
Texas Competitive Electric Holdings Co. LLC, Term Loan B2, 3.764% 20143,5,7		14,951			11,595
Texas Competitive Electric Holdings Co. LLC, Series B, 10.25% 2015		3,005			1,698
Texas Competitive Electric Holdings Co. LLC, Series A, 10.25% 2015		1,820			1,037
Virginia Electric and Power Co., Series B, 5.95% 2017		10,000			11,511
Commonwealth Edison Co., First Mortgage Bonds, Series 105, 5.40% 2011		9,000			9,389
Empresa Nacional de Electricidad SA 8.35% 2013		5,000			5,609
Empresa Nacional de Electricidad SA 8.625% 2015		3,000			3,543
SP PowerAssets Ltd. 5.00% 20134		8,000			8,689
Old Dominion Electric Cooperative, Series 2003-A, 5.676% 20285		6,750			7,485
PG&E Corp. 5.75% 2014		2,000			2,191
Pacific Gas and Electric Co. 8.25% 2018		4,000			5,205
Kern River Funding Corp. 4.893% 20184,5		6,729			6,954
NRG Energy, Inc. 7.25% 2014		2,900			2,965
NRG Energy, Inc. 7.375% 2016		2,800			2,877
Colbun SA 6.00% 20204		5,400			5,636
Korea East-West Power Co., Ltd. 4.875% 20114		5,000			5,038
Tri-State Generation and Transmission Assn. Inc., Pass Through Trust, Series 2003-A, 6.04% 20184,5		2,414			2,561
CenterPoint Energy Houston Electric, LLC, General Mortgage Bonds, Series U, 7.00% 2014		1,700			1,944
					963,848
HEALTH CARE — 2.45%
Pharmaceuticals, biotechnology & life sciences — 1.42%
Roche Holdings Inc. 5.00% 20144		25,000			27,397
Roche Holdings Inc. 6.00% 20194		42,930			49,935
Roche Holdings Inc. 7.00% 20394		31,060			39,412
Pfizer Inc 4.45% 2012		11,040			11,523
Pfizer Inc 5.35% 2015		5,125			5,767
Pfizer Inc 6.20% 2019		39,900			46,814
Pfizer Inc 7.20% 2039		3,000			3,896
GlaxoSmithKline Capital Inc. 4.85% 2013		20,000			21,728
GlaxoSmithKline Capital Inc. 5.65% 2018		19,000			21,758
GlaxoSmithKline Capital Inc. 6.375% 2038		15,000			17,791
Schering-Plough Corp. 5.30% 20133		6,000			6,669
Schering-Plough Corp. 5.375% 2014	€	6,395			9,410
Merck & Co., Inc. 4.00% 2015	$	3,000			3,222
Schering-Plough Corp. 6.00% 2017		23,740			27,781
Merck & Co., Inc. 5.85% 2039		10,500			11,804
Biogen Idec Inc. 6.00% 2013		30,050			32,474
Biogen Idec Inc. 6.875% 2018		20,000			22,580
Elan Finance PLC and Elan Finance Corp. 8.875% 2013		16,400			16,728
Elan Finance PLC and Elan Finance Corp. 8.75% 2016		31,720			32,037
Elan Finance PLC and Elan Finance Corp. 8.75% 20164		1,500			1,511
Novartis Capital Corp. 1.90% 2013		15,000			15,248
Novartis Capital Corp. 4.125% 2014		11,025			11,774
Novartis Capital Corp. 2.90% 2015		7,750			7,970
Novartis Securities Investment Ltd. 5.125% 2019		4,530			5,019
Hospira, Inc. 6.05% 2017		26,473			29,697
Abbott Laboratories 2.70% 2015		11,500			11,737
Abbott Laboratories 5.125% 2019		10,000			11,029
AstraZeneca PLC 5.40% 2012		12,000			12,946
Quintiles Transnational 9.50% 20143,4,9		1,980			2,035
Patheon Inc. 8.625% 20174		2,010			2,015
Endo Pharmaceuticals Holdings Inc. 7.00% 20204		1,100			1,128
					520,835
Health care equipment & services — 1.03%
Cardinal Health, Inc. 5.50% 2013	$	12,535		$	13,586
Cardinal Health, Inc. 4.00% 2015		12,490			12,950
Cardinal Health, Inc. 4.625% 2020		6,020			6,018
Allegiance Corp. 7.00% 2026		9,635			10,822
UnitedHealth Group Inc. 5.25% 2011		2,463			2,484
UnitedHealth Group Inc. 6.00% 2017		26,892			30,031
UnitedHealth Group Inc. 3.875% 2020		7,100			6,787
UnitedHealth Group Inc. 5.70% 2040		1,250			1,249
Express Scripts Inc. 5.25% 2012		6,320			6,673
Express Scripts Inc. 6.25% 2014		28,133			31,476
HCA Inc. 9.125% 2014		295			310
HCA Inc. 9.25% 2016		530			567
HCA Inc. 9.625% 20163,9		557			598
HCA Inc. 7.75% 20214		31,475			31,554
Boston Scientific Corp. 6.25% 2015		14,265			15,148
Boston Scientific Corp. 5.125% 2017		4,265			4,262
Boston Scientific Corp. 6.00% 2020		8,000			8,354
Boston Scientific Corp. 7.375% 2040		400			438
VWR Funding, Inc., Series B, 10.25% 20153,9		25,784			27,202
Coventry Health Care, Inc. 6.30% 2014		13,395			14,156
Coventry Health Care, Inc. 5.95% 2017		11,440			11,646
PTS Acquisition Corp. 9.50% 20153,9		22,716			23,057
Aetna Inc. 5.75% 2011		17,500			17,890
Aetna Inc. 3.95% 2020		5,000			4,815
Medco Health Solutions, Inc. 2.75% 2015		19,150			19,020
Tenet Healthcare Corp. 7.375% 2013		8,195			8,441
Tenet Healthcare Corp. 9.25% 2015		6,770			7,244
Surgical Care Affiliates, Inc. 8.875% 20153,4,9		3,927			4,006
Surgical Care Affiliates, Inc. 10.00% 20174		6,845			6,982
Bausch & Lomb Inc. 9.875% 2015		9,625			10,347
Multiplan Inc. 9.875% 20184		9,500			10,117
WellPoint, Inc. 5.00% 2011		1,000			1,001
WellPoint, Inc. 4.35% 2020		4,000			3,976
WellPoint, Inc. 5.80% 2040		3,000			3,066
ConvaTec Healthcare 10.50% 20184		7,285			7,421
Symbion Inc. 11.75% 20153,9		8,383			6,939
HealthSouth Corp. 10.75% 2016		4,625			5,006
Merge Healthcare Inc 11.75% 2015		1,225			1,311
					376,950
TELECOMMUNICATION SERVICES — 2.15%
Olivetti Finance NV 7.25% 2012	€	8,830			12,567
Telecom Italia Capital SA 5.25% 2015	$	57,692			59,130
Telecom Italia Capital SA 6.999% 2018		31,400			33,295
Telecom Italia Capital SA 7.175% 2019		31,500			33,757
Telecom Italia Capital SA 6.375% 2033		2,833			2,438
Telecom Italia SpA 7.75% 2033	€	9,635			13,758
Telecom Italia Capital SA 7.721% 2038	$	5,917			5,880
Verizon Communications Inc. 3.75% 2011		47,625			48,213
ALLTEL Corp. 7.00% 2012		13,299			14,435
Verizon Global Funding Corp. 7.375% 2012		7,500			8,284
Verizon Communications Inc. 5.55% 2014		4,710			5,197
Verizon Communications Inc. 8.50% 2018		16,000			20,969
Verizon Communications Inc. 8.75% 2018		26,000			34,002
SBC Communications Inc. 5.875% 2012		12,587			13,567
AT&T Wireless Services, Inc. 8.125% 2012		12,630			13,801
AT&T Inc. 4.95% 2013		20,950			22,467
SBC Communications Inc. 5.625% 2016		29,575			33,201
AT&T Inc. 6.55% 2039		8,500			9,283
AT&T Inc. 5.35% 20404		4,800			4,530
Sprint Capital Corp. 8.375% 2012		900			956
Nextel Communications, Inc., Series E, 6.875% 2013		13,515			13,616
Nextel Communications, Inc., Series F, 5.95% 2014		29,070			28,707
Nextel Communications, Inc., Series D, 7.375% 2015		19,100			19,219
France Télécom 4.375% 2014		13,930			14,896
France Télécom 2.125% 2015		41,960			40,891
Vodafone Group PLC, Term Loan, 6.875% 20155,6,7,9		4,600			4,715
Vodafone Group PLC 5.625% 2017		5,580			6,237
Vodafone Group PLC 5.45% 2019		25,000			27,519
Telefónica Emisiones, SAU 4.375% 2016	€	19,675			26,863
Telefónica Emisiones, SAU 5.134% 2020	$	4,200			4,051
Clearwire Communications and Clearwire Finance, Inc. 12.00% 20154		15,485			16,762
Clearwire Communications and Clearwire Finance, Inc. 12.00% 20154		1,500			1,624
Clearwire Communications and Clearwire Finance, Inc. 12.00% 20174		9,150			9,493
Cricket Communications, Inc. 10.00% 2015		12,760			13,733
Cricket Communications, Inc. 7.75% 2016		11,600			12,093
Wind Acquisition SA 11.75% 20174		17,275			19,564
Wind Acquisition SA 7.25% 20184		5,675			5,788
Deutsche Telekom International Finance BV 4.875% 2014		16,250			17,479
Deutsche Telekom International Finance BV 6.75% 2018		5,900			6,988
Koninklijke KPN NV 8.375% 2030		12,725			16,588
PCCW-HKT Capital Ltd. 8.00% 20113,4		15,000			15,792
American Tower Corp. 4.625% 2015		14,875			15,555
Digicel Group Ltd. 12.00% 20144		5,000			5,850
Digicel Group Ltd. 8.875% 20154		8,540			8,668
América Móvil, SAB de CV 5.00% 2020		6,700			6,998
América Móvil, SAB de CV 8.46% 2036	MXN27,000				2,025
Trilogy International Partners, LLC, 10.25% 20164	$	7,000			6,965
SK Telecom Co., Ltd. 4.25% 20114		6,000			6,033
Singapore Telecommunications Ltd. 6.375% 2011		3,475			3,634
Singapore Telecommunications Ltd. 6.375% 20114		2,050			2,144
Frontier Communications Corp. 8.25% 2017		4,000			4,410
LightSquared, Term Loan B, 12.00% 20145,7,9		4,750			4,384
Crown Castle International Corp. 9.00% 2015		2,550			2,830
Crown Castle International Corp. 7.75% 20174		300			329
Intelsat Jackson Holding Co. 8.50% 20194		1,175			1,284
Hawaiian Telcom, Inc. 9.00% 20153,5,7,9		1,076			1,085
Orascom Telecom 7.875% 20144		1,010			954
SBA Telecommunications, Inc. 8.00% 2016		725			788
Syniverse Holdings, Inc. 9.125% 20194		500			519
Sorenson Communications 10.50% 20154		575			354
					787,157
CONSUMER STAPLES — 1.88%
Food & staples retailing — 1.01%
Kroger Co. 5.00% 2013		18,000			19,403
Kroger Co. 7.50% 2014		9,343			10,779
Kroger Co. 3.90% 2015		10,000			10,518
Kroger Co. 6.40% 2017		41,905			48,180
The Kroger Co. 7.00% 2018		4,372			4,997
CVS Caremark Corp. 6.117% 20134,5		656			705
CVS Caremark Corp. 6.60% 2019		17,521			20,548
CVS Caremark Corp. 5.789% 20264,5		14,455			14,574
CVS Caremark Corp. 6.036% 20285		18,905			19,443
CVS Caremark Corp. 6.943% 20305		22,004			23,986
CVS Caremark Corp. 6.125% 2039		5,700			6,111
Tesco PLC 5.50% 20174		31,959			35,706
Delhaize Group 5.875% 2014		6,850			7,565
Delhaize Group 6.50% 2017		19,205			21,801
Delhaize Group 5.70% 20404		5,465			5,220
Wal-Mart Stores, Inc. 2.875% 2015		11,550			11,860
Wal-Mart Stores, Inc. 5.80% 2018		12,800			14,729
Wal-Mart Stores, Inc. 3.25% 2020		3,570			3,362
Rite Aid Corp. 9.75% 2016		26,650			29,482
Safeway Inc. 6.25% 2014		100			111
Safeway Inc. 6.35% 2017		15,000			16,773
Safeway Inc. 5.00% 2019		1,000			1,030
Safeway Inc. 3.95% 2020		6,360			6,034
Safeway Inc. 7.25% 2031		3,000			3,357
Tops Holding Corp. and Tops Markets, LLC. 10.125% 2015		7,625			7,873
SUPERVALU INC. 7.50% 2012		365			371
Albertson’s, Inc. 7.25% 2013		2,025			2,040
SUPERVALU INC. 7.50% 2014		830			805
SUPERVALU INC. 8.00% 2016		4,200			4,043
Stater Bros. Holdings Inc. 7.75% 2015		5,150			5,317
Stater Bros. Holdings Inc. 7.375% 20184		1,100			1,133
Walgreen Co. 4.875% 2013		5,000			5,465
Costco Wholesale Corp. 5.30% 2012		3,000			3,157
Ingles Markets, Inc. 8.875% 2017		2,550			2,741
					369,219
Food, beverage & tobacco — 0.87%
Anheuser-Busch InBev NV 2.50% 2013		5,000			5,119
Anheuser-Busch InBev NV 7.20% 20144		27,500			31,471
Anheuser-Busch InBev NV 3.625% 2015		29,250			30,221
Anheuser-Busch InBev NV 4.125% 2015		37,375			39,401
Anheuser-Busch InBev NV 8.625% 2017	€	2,500			4,278
Anheuser-Busch InBev NV 6.875% 20194	$	7,740			9,242
Anheuser-Busch InBev NV 7.75% 20194		18,367			22,891
Anheuser-Busch InBev NV 5.00% 2020		2,500			2,647
Anheuser-Busch InBev NV 5.375% 2020		17,600			19,106
Coca-Cola Co. 1.50% 2015		23,380			22,467
Coca-Cola Co. 3.15% 2020		12,565			11,814
Kraft Foods Inc. 2.625% 2013		10,215			10,511
Kraft Foods Inc. 4.125% 2016		5,000			5,255
Kraft Foods Inc. 5.375% 2020		13,390			14,437
Kraft Foods Inc. 6.50% 2040		2,000			2,249
Altria Group, Inc. 9.25% 2019		13,000			16,992
Altria Group, Inc. 9.95% 2038		4,100			5,794
Altria Group, Inc. 10.20% 2039		4,000			5,798
PepsiCo, Inc. 3.10% 2015		22,000			22,970
PepsiCo, Inc. 3.125% 2020		2,500			2,354
PepsiCo, Inc. 4.875% 2040		2,000			1,948
British American Tobacco International Finance PLC 9.50% 20184		13,000			17,133
Smithfield Foods, Inc., Series B, 7.75% 2013		150			161
Smithfield Foods, Inc. 10.00% 20144		2,475			2,865
Smithfield Foods, Inc. 7.75% 2017		725			758
CEDC Finance Corp. 9.125% 20164		3,500			3,736
BFF International Ltd. 7.25% 20204		3,000			3,135
Constellation Brands, Inc. 8.375% 2014		550			604
Constellation Brands, Inc. 7.25% 2017		750			798
Tyson Foods, Inc. 10.50% 2014		700			831
Tyson Foods, Inc. 7.35% 20163		500			551
TreeHouse Foods, Inc. 7.75% 2018		1,200			1,304
Cott Beverages Inc. 8.375% 2017		1,000			1,085
					319,926
Household & personal products — 0.00%
Elizabeth Arden, Inc. 7.75% 2014		1,625			1,656
Spectrum Brands Inc. 9.50% 20184		1,400			1,540
Procter & Gamble Co. 3.50% 2015		150			158
					3,354
MATERIALS — 0.87%
Dow Chemical Co. 7.60% 2014		21,250			24,528
Dow Chemical Co. 5.70% 2018		1,700			1,842
Dow Chemical Co. 8.55% 2019		14,800			18,577
Dow Chemical Co. 9.40% 2039		1,200			1,747
International Paper Co. 7.40% 2014		26,750			30,372
International Paper Co. 7.95% 2018		6,970			8,306
International Paper Co. 7.50% 2021		4,330			5,124
Rio Tinto Finance (USA) Ltd. 8.95% 2014		2,500			3,029
Rio Tinto Finance (USA) Ltd. 9.00% 2019		22,670			30,495
ArcelorMittal 3.75% 2015		28,500			28,767
ArcelorMittal 7.00% 2039		3,000			3,123
POSCO 4.25% 20204		31,210			29,694
Reynolds Group 7.75% 20164		13,700			14,556
Reynolds Group 8.50% 20184		5,540			5,595
Reynolds Group 7.125% 20194		2,465			2,520
BHP Billiton Finance (USA) Ltd. 5.50% 2014		16,045			17,769
Georgia Gulf Corp. 9.00% 20174		14,975			16,323
CEMEX Finance LLC 9.50% 2016		5,925			6,140
CEMEX Finance LLC 9.50% 20164		5,200			5,389
CEMEX SA 9.25% 20204		1,126			1,112
Vale Overseas Ltd. 6.25% 2016		9,295			10,363
Plastipak Holdings, Inc. 8.50% 20154		7,165			7,416
Anglo American Capital PLC 2.15% 20134		5,130			5,178
Praxair, Inc. 4.375% 2014		1,850			1,978
Praxair, Inc. 4.625% 2015		2,500			2,724
Ball Corp. 7.125% 2016		1,270			1,375
Ball Corp. 6.75% 2020		690			728
Ball Corp. 5.75% 2021		1,850			1,795
Airgas, Inc. 7.125% 2018		3,000			3,323
Mercer International Inc. 9.50% 20174		3,210			3,314
Yara International ASA 7.875% 20194		2,675			3,193
Nalco Finance Holdings LLC and Nalco Finance Holdings Inc. 9.00% 2014		2,254			2,310
Nalco Co. 8.25% 2017		300			327
Arbermarle Corp. 5.10% 2015		2,156			2,306
E.I. du Pont de Nemours and Co. 5.25% 2016		2,000			2,240
ICI Wilmington, Inc. 5.625% 2013		2,000			2,185
Georgia-Pacific Corp. 8.125% 2011		2,065			2,142
Owens-Brockway Glass Container Inc. 6.75% 2014		325			332
Owens-Brockway Glass Container Inc. 7.375% 2016		1,645			1,756
Graphic Packaging International, Inc. 9.50% 2017		1,195			1,310
Graphic Packaging International, Inc. 7.875% 2018		700			737
Smurfit Capital Funding PLC 7.50% 2025		2,150			1,994
Potash Corp. of Saskatchewan Inc. 5.875% 2036		1,600			1,661
Ardagh Packaging Finance 7.375% 2017	€	500			675
Ardagh Packaging Finance 7.375% 20174	$	200			207
Ardagh Packaging Finance 9.125% 20204		300			313
LBI Escrow Corp 8.00% 20174		810			898
Rockwood Specialties Group, Inc. 7.625% 2014	€	500			685
Solutia Inc. 8.75% 2017	$	610			671
Newpage Corp. 11.375% 2014		365			345
					319,489
INFORMATION TECHNOLOGY — 0.87%
Semiconductors & semiconductor equipment — 0.39%
Freescale Semiconductor, Inc. 8.875% 2014		4,300			4,515
Freescale Semiconductor, Inc. 9.125% 20143,9		19,834			20,826
Freescale Semiconductor, Inc. 10.125% 2016		8,780			9,285
Freescale Semiconductor, Inc. 9.25% 20184		5,250			5,801
Freescale Semiconductor, Inc. 10.125% 20184		3,925			4,435
NXP BV and NXP Funding LLC 3.039% 20133		3,245			3,208
NXP BV and NXP Funding LLC 10.00% 201311		6,882			7,863
NXP BV and NXP Funding LLC 7.875% 2014		1,000			1,045
NXP BV and NXP Funding LLC 8.625% 2015	€	5,125			7,088
NXP BV and NXP Funding LLC 9.50% 2015	$	16,120			17,289
NXP BV and NXP Funding LLC 9.75% 20184		6,075			6,865
National Semiconductor Corp. 6.15% 2012		3,850			4,098
National Semiconductor Corp. 6.60% 2017		23,000			25,443
KLA-Tencor Corp. 6.90% 2018		20,000			22,032
Advanced Micro Devices, Inc. 8.125% 2017		3,075			3,275
					143,068
Software & services — 0.35%
First Data Corp., Term Loan B2, 3.011% 20143,5,7		4,516			4,184
First Data Corp. 9.875% 2015		1,222			1,164
First Data Corp. 9.875% 2015		224			214
First Data Corp. 10.55% 20159		859			796
First Data Corp. 11.25% 2016		26,950			23,716
First Data Corp. 8.875% 20204		6,000			6,360
First Data Corp. 8.25% 20214		10,302			9,941
First Data Corp. 12.625% 20214		20,631			19,806
First Data Corp. 8.75% 20223,4,9		10,327			10,043
International Business Machines Corp. 2.00% 2016		35,500			34,752
International Business Machines Corp. 5.60% 2039		6,000			6,562
Serena Software, Inc. 10.375% 2016		7,645			7,855
SunGard Data Systems Inc. 7.375% 20184		765			773
SunGard Data Systems Inc. 7.625% 20204		636			647
					126,813
Technology hardware & equipment — 0.13%
Cisco Systems, Inc. 2.90% 2014		10,125			10,512
Cisco Systems, Inc. 5.50% 2016		2,000			2,285
Cisco Systems, Inc. 4.95% 2019		2,500			2,729
Cisco Systems, Inc. 4.45% 2020		6,500			6,823
Sanmina-SCI Corp. 3.052% 20143,4		7,871			7,478
Sanmina-SCI Corp. 8.125% 2016		11,490			11,662
Jabil Circuit, Inc. 8.25% 2018		5,850			6,654
					48,143
Total corporate bonds & notes				$	10,627,854
BONDS & NOTES OF GOVERNMENTS & GOVERNMENT AGENCIES OUTSIDE THE U.S. — 6.36%
Polish Government, Series 0414, 5.75% 2014	PLN166,821				57,543
Polish Government 3.875% 2015	$	7,805			7,972
Polish Government, Series 1017, 5.25% 2017	PLN255,245				84,298
Polish Government 6.375% 2019	$	74,825			84,194
United Mexican States Government Global 6.375% 2013		5,150			5,652
United Mexican States Government, Series MI10, 9.50% 2014	MXN262,800				23,854
United Mexican States Government, Series M10, 7.25% 2016		435,000			36,646
United Mexican States Government 3.50% 20172		235,145			20,169
United Mexican States Government Global 5.95% 2019	$	11,170			12,510
United Mexican States Government, Series M20, 10.00% 2024	MXN549,800				55,608
United Mexican States Government Global, Series A, 6.75% 2034	$	2,495			2,819
United Mexican States Government, Series M30, 10.00% 2036	MXN138,000				13,877
United Mexican States Government 4.00% 20402		133,852			11,266
South Korean Government, Series 1303, 5.25% 2013	KRW31,498,750				28,848
South Korean Government 4.25% 2014		29,650,000			26,415
South Korean Government 4.75% 2014		48,640,000			44,524
South Korean Government 5.00% 2014		11,870,000			10,950
South Korean Government 5.75% 2014	$	21,100			23,085
South Korean Government 5.25% 2015	KRW24,200,000				22,475
South Korean Government 5.50% 2017		10,100,000			9,551
Turkey (Republic of) 10.00% 20122	TRY29,232				21,369
Turkey (Republic of) 16.00% 2012		9,555			6,774
Turkey (Republic of) 10.00% 2013		13,350			9,201
Turkey (Republic of) 16.00% 2013		21,045			16,493
Turkey (Republic of) 10.00% 2015		13,000			9,118
Turkey (Republic of) 7.50% 2017	$	5,725			6,798
Turkey (Republic of) 6.75% 2018		17,250			19,794
Turkey (Republic of) 5.625% 2021		8,000			8,360
Turkey (Republic of) 8.00% 2034		1,250			1,572
Turkey (Republic of) 6.75% 2040		9,300			10,183
Brazilian Treasury Bill 0% 2011	BRL 8,980				5,411
Brazil (Federal Republic of) 6.00% 20152		7,803			4,739
Brazil (Federal Republic of) Global 12.50% 2016		30,400			21,298
Brazil (Federal Republic of) 10.00% 2017		28,515			15,769
Brazil (Federal Republic of) 6.00% 20172		66,199			40,615
Brazil (Federal Republic of) Global 4.875% 2021	$	5,250			5,381
Brazil (Federal Republic of) Global 12.25% 2030		425			771
Brazil (Federal Republic of) Global 7.125% 2037		750			898
Brazil (Federal Republic of) Global 11.00% 2040		1,135			1,532
Hungarian Government, Series 14/C, 5.50% 2014	HUF4,427,730				20,019
Hungarian Government, Series 17/B, 6.75% 2017		738,000			3,357
Hungarian Government, Series 19/A, 6.50% 2019		500,000			2,180
Hungarian Government 6.25% 2020	$	66,950			64,998
Malaysian Government, Series 0109, 2.509% 2012	MYR22,045				7,098
Malaysian Government, Series 509, 3.21% 2013		61,000			19,833
Malaysian Government, Series 3/03, 3.702% 2013		38,870			12,773
Malaysian Government, Series 204, 5.094% 2014		75,350			25,861
Malaysian Government, Series 0409, 3.741% 2015		63,870			21,036
Indonesia (Republic of), Series 23, 11.00% 2012	IDR 4,090,000				496
Indonesia (Republic of), Series 33, 12.50% 2013		8,710,000			1,094
Indonesia (Republic of), Series 20, 14.275% 2013		2,110,000			283
Indonesia (Republic of), Series 51, 11.25% 2014		1,260,000			160
Indonesia (Republic of) 9.50% 2015		28,000,000			3,425
Indonesia (Republic of), Series 30, 10.75% 2016		176,767,000			22,875
Indonesia (Republic of) 11.50% 2019		107,388,000			14,826
Indonesia (Republic of) 11.625% 2019	$	10,254			15,253
Indonesia (Republic of) 5.875% 2020		6,800			7,497
Indonesia (Republic of) 5.875% 20204		6,200			6,835
Indonesia (Republic of) 7.75% 2038		10,500			12,862
Canadian Government 2.00% 2014	$	C83,205			83,204
Australia Government Agency-Guaranteed, National Australia Bank 0.79% 20143,4	$	25,000			25,037
Australia Government Agency-Guaranteed, National Australia Bank 3.375% 20144		50,550			52,552
United Kingdom 3.75% 2019	£	39,905			64,232
Russian Federation 5.00% 2020	$	21,000			21,105
Russian Federation 7.50% 20305		32,945			38,216
Russian Federation 7.50% 20304,5		130			151
France Government Agency-Guaranteed, Société Finance 2.25% 20124		12,585			12,832
France Government Agency-Guaranteed, Société Finance 2.875% 20144		33,200			34,280
France Government Agency-Guaranteed, Société Finance 3.375% 20144		10,000			10,518
Colombia (Republic of) Global 12.00% 2015	COP39,750,000				27,684
Colombia (Republic of) Global 7.75% 2021		4,035,000			2,506
Colombia (Republic of) Global 9.85% 2027		12,551,000			9,266
Colombia (Republic of) Global 7.375% 2037	$	13,600			16,184
Argentina (Republic of) 0.169% 20123,5		24,755			5,899
Argentina (Republic of) 7.00% 2015		9,345			8,827
Argentina (Republic of) 8.28% 20335,9		40,004			37,304
Argentina (Republic of) GDP-Linked 2035	ARS 9,238				341
Argentina (Republic of) 1.18% 20382,5		10,066			1,018
Australia Government Agency-Guaranteed, Commonwealth Bank of Australia 2.50% 20124	$	7,250			7,461
Australia Government Agency-Guaranteed, Commonwealth Bank of Australia 2.90% 20144		23,005			23,926
Australia Government Agency-Guaranteed, Commonwealth Bank of Australia 3.625% 20144		20,000			21,321
Irish Government 4.00% 2014	€	24,455			29,751
Irish Government 4.40% 2019		12,235			12,222
Irish Government 5.00% 2020		10,335			10,138
Japanese Government, Series 231, 1.30% 2011	¥	50			1
Japanese Government, Series 296, 1.50% 2018		2,468,700			31,987
Japanese Government 2.40% 2038		1,342,250			18,006
Israeli Government, Series 2683, 6.50% 2016	ILS64,800				20,397
Israeli Government 5.50% 2017		63,060			18,996
Israeli Government 5.125% 2019	$	7,250			7,796
Croatian Government 6.75% 20194		22,450			23,534
Croatian Government 6.75% 2019		19,650			20,599
Croatian Government 6.625% 20204		2,915			3,015
Italian Government 4.25% 2013	€	14,100			19,336
Italian Government 3.00% 2015		20,310			26,362
Sweden Government Agency-Guaranteed, Swedbank AB 2.80% 20124	$	9,000			9,207
Sweden Government Agency-Guaranteed, Swedbank AB 2.90% 20134		35,000			36,249
New Zealand Government Agency-Guaranteed, Westpac Securities Co. 2.50% 20124		8,250			8,392
New Zealand Government Agency-Guaranteed, Westpac Securities Co. 3.45% 20144		33,320			35,563
Denmark Government Agency-Guaranteed, Danish Finance Co. 2.45% 20124		42,220			43,108
New South Wales Treasury Corp., Series 19, 6.00% 2019	$	A33,350			34,449
Venezuela (Republic of) 8.50% 2014	$	245			208
Venezuela (Republic of) 7.65% 2025		985			623
Venezuela (Republic of) 9.25% 2027		31,745			23,809
Venezuela (Republic of) 9.25% 2028		11,160			7,589
Uruguay (Republic of) 5.00% 20182	UYU515,909				30,259
Uruguay (Republic of) 7.625% 20365	$	1,250			1,491
Peru (Republic of) 8.75% 2033		8,226			11,331
Peru (Republic of) 6.55% 20375		14,200			15,620
Europe Government Agency-Guaranteed, Dexia Credit Local 0.539% 20123,4		25,000			24,961
Aries Vermögensverwaltungs GmbH, Series C, 9.60% 2014		19,250			24,935
Iraq (Republic of) 5.80% 20285		25,300			23,339
Australia and New Zealand Government Agency-Guaranteed, Australia and New Zealand Banking Group Ltd. 3.25% 20124		21,750			22,321
South Africa (Republic of) 6.875% 2019		5,715			6,722
South Africa (Republic of) 5.50% 2020		12,000			12,825
Ireland Government Agency-Guaranteed, Irish Life & Permanent 3.60% 20134		19,600			17,849
Province of Ontario, Series 1, 1.875% 2012		17,375			17,717
Philippines (Republic of) 6.375% 2034		15,500			16,507
Egypt (Arab Republic of) 11.50% 2011	EGP30,000				5,292
Egypt (Arab Republic of) 11.55% 2013		61,000			10,279
United Kingdom Government Agency-Guaranteed, Lloyds TSB Bank PLC 2.80% 20124	$	15,000			15,283
Bermudan Government 5.603% 2020		6,090			6,345
Bermudan Government 5.603% 20204		6,000			6,251
German Government, Series 05, 3.25% 2015	€	4,590			6,520
German Government 3.75% 2019		2,060			2,949
Corporación Andina de Fomento 6.875% 2012	$	5,895			6,274
Corporación Andina de Fomento 5.125% 2015		2,000			2,121
Corporación Andina de Fomento 8.125% 2019		890			1,051
Dominican Republic 9.50% 20114,5		469			485
Dominican Republic 9.04% 20184,5		4,481			5,109
Dominican Republic 7.50% 20214,5		3,500			3,789
Banque Centrale de Tunisie 4.75% 2011	€	3,000			4,054
Banque Centrale de Tunisie 7.375% 2012	$	4,500			4,826
Netherlands Government Agency-Guaranteed, ING Bank NV 3.90% 20144		7,000			7,442
Panama (Republic of) Global 7.25% 2015		2,275			2,639
Panama (Republic of) Global 7.125% 2026		300			362
Panama (Republic of) Global 8.875% 2027		250			344
Panama (Republic of) Global 9.375% 2029		340			479
Panama (Republic of) Global 6.70% 20365		2,159			2,418
Gabonese Republic 8.20% 2017		5,300			6,227
El Salvador (Republic of) 7.375% 2019		4,800			5,328
Guatemala (Republic of) 10.25% 20114		1,000			1,077
LCR Finance PLC 5.10% 2051	£	165			296
					2,329,411
ASSET-BACKED OBLIGATIONS5 — 1.50%
CPS Auto Receivables Trust, Series 2005-D, Class A-2, FSA insured, 5.06% 20124	$	898			910
CPS Auto Receivables Trust, Series 2006-A, Class 1-A-4, FSA insured, 5.33% 20124		2,047			2,050
CPS Auto Receivables Trust, Series 2006-B, Class A-4, MBIA insured, 5.81% 20124		8,622			8,690
CPS Auto Receivables Trust, Series 2007-A, Class A-4, MBIA insured, 5.05% 20134		10,070			10,260
CPS Auto Receivables Trust, Series 2006-C, Class A-4, XLCA insured, 5.14% 20134		9,778			9,953
CPS Auto Receivables Trust, Series 2007-B, Class A-4, FSA insured, 5.60% 20144		14,215			14,579
CPS Auto Receivables Trust, Series 2007-C, Class A-4, FSA insured, 5.92% 20144		18,950			19,565
Aesop Funding II LLC, Series 2010-2A, Class A, 3.63% 20144		12,400			12,814
Aesop Funding II LLC, Series 2010-3A, Class B, 6.74% 20164		3,000			3,112
Aesop Funding II LLC, Series 2010-5A, Class A, 3.15% 20174		20,000			19,556
Washington Mutual Master Note Trust, Series 2006-A2A, Class A, 0.31% 20153,4		31,000			30,930
Vega ContainerVessel PLC, Series 2006-1, Class A, XLCA insured, 5.562% 20214		32,722			28,685
Hertz Vehicle Financing LLC, Rental Car Asset-backed Notes, Series 2009-2A, Class A-1, 4.26% 20144		9,000			9,422
Hertz Vehicle Financing LLC, Rental Car Asset-backed Notes, Series 2009-2A, Class A-2, 5.29% 20164		17,500			19,027
Long Beach Acceptance Auto Receivables Trust, Series 2006-B, Class A-4, FSA insured, 5.18% 2013		14,077			14,170
Long Beach Acceptance Auto Receivables Trust, Series 2007-A, Class A-4, FSA insured, 5.025% 2014		8,680			8,834
Vanderbilt Mortgage and Finance, Inc., Series 2002-C, Class A-4, 6.57% 2024		6,361			6,598
Vanderbilt Mortgage and Finance, Inc., Series 1999-B, Class I-A-6, 6.925% 2024		2,642			2,649
Vanderbilt Mortgage and Finance, Inc., Series 2000-C, Class A-4, 7.905% 2026		1,014			1,041
Vanderbilt Mortgage and Finance, Inc., Series 1997-C, Class II-A-1, 0.685% 20273		268			239
Vanderbilt Mortgage and Finance, Inc., Series 2000-D, Class A-4, 7.715% 2027		1,089			1,113
Vanderbilt Mortgage and Finance, Inc., Series 2000-C, Class A-5, 8.195% 2030		6,889			7,363
Vanderbilt Mortgage and Finance, Inc., Series 2001-C, Class M-1, 6.76% 2032		739			696
Vanderbilt Mortgage and Finance, Inc., Series 2002-C, Class M-1, 7.82% 2032		1,923			1,836
Capital One Auto Finance Trust, Series 2006-C, Class A-4, FGIC insured, 0.29% 20133		11,872			11,809
Capital One Auto Finance Trust, Series 2007-B, Class A-4, MBIA insured, 0.29% 20143		9,688			9,639
CarMax Auto Owner Trust, Series 2008-2, Class A-3a, 4.99% 2012		5,631			5,716
CarMax Auto Owner Trust, Series 2007-2, Class A-4, 5.27% 2012		15,315			15,607
Chase Issuance Trust, Series 2008-4, Class A, 4.65% 2015		18,000			19,350
AEP Texas Central Transitioning Funding II LLC, Secured Transition Bonds, Series A, Class A-3, 5.09% 2017		16,720			18,490
AmeriCredit Automobile Receivables Trust, Series 2006-B-G, Class A-4, FGIC insured, 5.21% 2013		13,667			13,924
AmeriCredit Automobile Receivables Trust, Series 2007-C-M, Class A-4-A, MBIA insured, 5.55% 2014		4,110			4,248
Spirit Master Funding LLC, Net-Lease Mortgage Notes, Series 2005-1, Class A-1, AMBAC insured, 5.05% 20234,6		22,004			18,044
RAMP Trust, Series 2004-RS10, Class A-I-6, 4.55% 2034		18,125			17,250
Prestige Auto Receivables Trust, Series 2007-1, Class A-3, FSA insured, 5.58% 20144		16,187			16,659
Vanderbilt Acquisition Loan Trust, Series 2002-1, Class B-1, 7.30% 2021		3,759			3,827
Vanderbilt Acquisition Loan Trust, Series 2002-1, Class A-4, 6.57% 2027		7,316			7,790
Vanderbilt Acquisition Loan Trust, Series 2002-1, Class A-5, 7.12% 2032		3,000			3,270
Morgan Stanley ABS Capital I Inc., Series 2004-NC3, Class M-1, 1.056% 20343		18,564			14,177
USAA Auto Owner Trust, Series 2007-1, Class A-4, 5.55% 2013		13,940			14,055
AmeriCredit Prime Automobile Receivables Trust, Series 2007-2-M, Class A-4-A, MBIA insured, 5.35% 2016		9,411			9,876
MBNA Credit Card Master Note Trust, Series 2006-1, Class C, 0.68% 20153		10,000			9,709
Lehman ABS Manufactured Housing Contract Trust, Series 2001-B, Class A-3, 4.35% 2014		1,822			1,838
Lehman ABS Manufactured Housing Contract Trust, Series 2001-B, Class A-4, 5.27% 2018		934			935
Lehman ABS Manufactured Housing Contract Trust, Series 2001-B, Class A-5, 5.873% 2022		3,067			3,127
Lehman ABS Manufactured Housing Contract Trust, Series 2002-A, Class A, 0.71% 20333		3,933			3,655
Residential Asset Securities Corp. Trust, Series 2001-KS3, Class A-I-6, 5.96% 2031		8,463			8,205
First Horizon ABS Trust, Series 2006-HE2, Class A, FSA insured, 0.391% 20263		599			429
First Horizon ABS Trust, Series 2007-HE1, Class A, FSA insured, 0.391% 20293		9,727			7,303
CWHEQ Revolving Home Equity Loan Trust, Series 2006-I, Class 2-A, FSA insured, 0.40% 20373		5,936			4,595
CWHEQ Revolving Home Equity Loan Trust, Series 2007-B, Class A, FSA insured, 0.41% 20373		3,147			2,427
Ford Credit Auto Owner Trust, Series 2006-B, Class B, 5.43% 2012		6,632			6,659
Conseco Finance Securitizations Corp., Series 2002-2, Class A-2, 6.03% 2033		6,228			6,500
CWHEQ Home Equity Loan Trust, Series 2006-S2, Class A-5, FGIC insured, 5.753% 2027		10,740			5,825
Triad Automobile Receivables Trust, Series 2006-C, Class A-4, AMBAC insured, 5.31% 2013		5,654			5,709
Home Equity Asset Trust, Series 2004-7, Class M-1, 0.881% 20353		6,500			5,378
Green Tree Financial Corp., Series 1996-10, Class A-6, 7.30% 2028		848			871
Green Tree Financial Corp., Series 1997-6, Class A-7, 7.14% 2029		3,546			3,708
Conseco Finance Home Equity Loan Trust, Series 2002-B, Class M-1, 2.01% 20333		808			499
UCFC Manufactured Housing Contract, Series 1996-2, Class A, MBIA insured, 7.135% 2028		4,129			3,859
Consumers Funding LLC, Series 2001-1, Class A-5, 5.43% 2015		3,283			3,465
Origen Manufactured Housing Contract Trust, Series 2004-B, Class M-1, 5.73% 2035		1,932			1,931
Origen Manufactured Housing Contract Trust, Series 2004-B, Class M-2, 6.51% 2035		1,547			1,481
UPFC Auto Receivables Trust, Series 2007-A, Class A-3, MBIA insured, 5.53% 2013		3,358			3,375
Residential Funding Mortgage Securities II, Inc., Series 2005-HS1, Class A-1-2, FGIC insured, 4.66% 20353		1,651			1,598
Residential Funding Mortgage Securities II, Inc., Series 2006-HSA3, Class A, FSA insured, 0.391% 20363		1,630			1,271
Cendant Timeshare Receivables Funding, LLC, Series 2005-1, Class A-1, FGIC insured, 4.67% 20174		2,695			2,690
Wachovia Auto Loan Owner Trust, Series 2006-1, Class B, 5.15% 20124		2,469			2,470
World Omni Auto Receivables Trust, Series 2010-A, Class A-4, 2.21% 2015		2,350			2,400
Franklin Auto Trust, Series 2006-1, Class A-4, 5.03% 2014		276			276
Franklin Auto Trust, Series 2006-1, Class B, 5.14% 2014		2,000			2,009
SLM Student Loan Trust, Series 2003-10, Class A-4, 5.15% 20394	£	1,160			1,734
IndyMac Home Equity Mortgage Loan Asset-backed Trust, Series 2007-H1, Class A-1, FSA insured, 0.421% 20373	$	1,356			1,049
New Century Home Equity Loan Trust, Series 2004-A, Class A-II-5, FGIC insured, 5.25% 2034		945			942
Home Equity Mortgage Trust, Series 2006-2, Class 1A-1, 5.367% 20363		1,450			499
Home Equity Mortgage Trust, Series 2006-5, Class A-1, 5.50% 20373		2,020			365
IndyMac Home Equity Mortgage Loan Asset-backed Trust, Series SPMD 2001-A, Class AF-6, 6.537% 2030		636			558
Honda Auto Receivables Owner Trust, Series 2007-2, Class A-4, 5.57% 2013		138			138
ACLC Business Loan Receivables Trust, Series 2002-1, Class A-2, 7.462% 20224		147			129
					547,434
MUNICIPALS — 0.28%
State of New York, Long Island Power Authority, Electric System General Revenue Bonds, Series 2009-A, 5.75% 2039		24,330			25,167
Illinois General Obligation Bonds, Taxable Build America Bonds, Series 2010-3, 5.727% 2020		17,000			16,684
State of South Dakota, Educational Enhancement Funding Corp., Tobacco Settlement Asset-backed Bonds,
Series 2002-A, Class A, 6.72% 2025		17,346			15,189
State of Indiana, Health and Educational Facility Financing Authority, Hospital Revenue Refunding Bonds
(Clarian Health Obligated Group), Series 2006-B, 5.00% 2033		13,860			12,828
State of Illinois, Regional Transportation Authority of Cook, DuPage, Kane, Lake, McHenry and Will Counties,
General Obligation Bonds, Series 2003-A, FGIC-National insured, 6.00% 2033		12,120			12,709
State of Wisconsin, General Fund Annual Appropriation Bonds, Series 2009-A, 5.75% 2033		6,000			6,293
State of Texas, SA Energy Acquisition Public Facility Corp., Gas Supply Revenue Bonds, Series 2007, 5.50% 2023		6,000			6,259
State of New York, Metropolitan Transportation Authority, Dedicated Tax Fund Bonds (Federally Taxable-Issuer
Subsidy-Build America Bonds), Series 2009-C, 7.336% 2039		5,500			6,118
State of Maryland, Howard Hughes Medical Institute, Taxable Bonds, 3.45% 2014		125			132
					101,379
Total bonds & notes (cost: $34,478,676,000)					35,529,939
Convertible securities — 0.04%
INFORMATION TECHNOLOGY — 0.04%
Linear Technology Corp., Series A, 3.00% convertible notes 2027	$	11,500			12,247
Advanced Micro Devices, Inc. 6.00% convertible notes 2015		2,963			3,000
Total convertible securities (cost: $11,663,000)					15,247
Preferred securities — 0.46%	Shares
FINANCIALS — 0.45%
AXA SA, Series B, 6.379%3,4		35,730,000			32,648
QBE Capital Funding II LP 6.797%3,4		36,255,000			31,610
Catlin Insurance Ltd. 7.249%3,4		32,375,000			28,652
BNP Paribas 7.195%3,4		23,600,000			22,774
HVB Funding Trust III 9.00% 20314		13,696,000			13,696
XL Capital Ltd., Series E, 6.50%3		13,215,000			11,497
HSBC Holdings PLC, Series 2, 8.00%		378,800			10,142
PNC Preferred Funding Trust I 6.517%3,4		10,700,000			8,502
SMFG Preferred Capital GBP 2 Ltd. 10.231%3		3,100,000			5,558
Barclays Bank PLC 7.434%3,4		1,500,000			1,481
					166,560
U.S. GOVERNMENT AGENCY SECURITIES  — 0.01%
US AgBank 6.11%3,4		5,000,000			3,325
Total preferred securities (cost: $160,629,000)					169,885
				Value
Common stocks — 0.04%	Shares				(000	)
CONSUMER DISCRETIONARY — 0.03%
American Media, Inc.6,11,12		453,779		$	7,602
Cooper-Standard Holdings Inc.4,12		60,544			2,725
Cooper-Standard Holdings Inc.4,12		24,906			1,121
					11,448
TELECOMMUNICATION SERVICES — 0.01%
Hawaiian Telcom Holdco, Inc.12		35,819			1,003
INDUSTRIALS— 0.00%
Atrium Corp.6,11,12		985			89
Total common stocks (cost: $11,276,000)					12,540
Warrants — 0.00%
TELECOMMUNICATION SERVICES — 0.00%
Hawaiian Telcom Holdco, Inc., warrants, expire 20156,12		47,929			192
CONSUMER DISCRETIONARY — 0.00%
Cooper-Standard Holdings Inc., warrants, expire 20174,12		5,096			132
Total warrants (cost: $11,356,000)					324
	Principal amount
Short-term securities — 2.98%		(000	)
Freddie Mac 0.165%–0.25% due 1/11–7/6/2011	$	261,850			261,700
Federal Home Loan Bank 0.16%–0.36% due 1/4–11/14/2011		234,783			234,594
General Electric Capital Corp. 0.17% due 1/19/2011		100,000			99,991
General Electric Capital Services, Inc. 0.23% due 2/28/2011		50,000			49,984
Private Export Funding Corp. 0.16%–0.26% due 1/20–2/14/20114		120,000			119,973
ExxonMobil Corp. 0.15% due 1/20/2011		75,000			74,994
Coca-Cola Co. 0.25% due 4/5/20114		51,900			51,869
Johnson & Johnson 0.15% due 1/3/20114		38,000			38,000
Google, Inc. 0.18%–0.20% due 1/10–3/4/20114		37,400			37,384
Fannie Mae 0.14% due 2/9/2011		33,200			33,195
Straight-A Funding LLC 0.24% due 2/22/20114		30,000			29,988
U.S. Treasury Bill 0.178% due 5/19/2011		22,100			22,087
Procter & Gamble Co. 0.22% due 1/4/20114		20,000			20,000
Federal Farm Credit Banks 0.35% due 2/10/2011		10,000			9,998
NetJets Inc. 0.17% due 1/20/20114		5,500			5,499
Total short-term securities (cost: $1,089,204,000)					1,089,256
Total investment securities (cost: $35,762,804,000)					36,817,191
Other assets less liabilities					(196,451	)
Net assets				$	36,620,740

1A portion of this security was pledged as collateral for losses on unsettled forward currency contracts with certain counterparties. The total value of pledged collateral was $252,000, which represented .07% of the net assets of the fund.

2  Index-linked bond whose principal amount moves with a government retail price index.

3  Coupon rate may change periodically.

4Acquired 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 $4,147,679,000, which represented 11.33% of the net assets of the fund.

5  Principal payments may be made periodically. Therefore, the effective maturity date may be earlier than the stated maturity date.

6Valued under fair value procedures adopted by authority of the board of directors. The total value of all such securities was $97,072,000, which represented .27% of the net assets of the fund.

7Loan participations and assignments; may be subject to legal or contractual restrictions on resale. The total value of all such loans was $213,372,000, which represented .58% of the net assets of the fund.

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

9  Payment in kind; the issuer has the option of paying additional securities in lieu of cash.

10Step bond; coupon rate will increase at a later date.

11Acquired 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	Cost			Value			Percent of
	date		(000	)		(000	)	net assets
NXP BV and NXP Funding LLC 10.00% 2013	7/17/2009	$	5,806		$	7,863			.02	%
American Media, Inc.	11/17/2010		7,603			7,602			.02
Atrium Corp.	4/30/2010		89			89			.00
Total restricted securities		$	13,498		$	15,554			.04	%

12Security did not produce income during the last 12 months.

Key to abbreviations and symbols
ARS = Argentine pesos	DKr = Danish kroner	IDR = Indonesian rupiah	MYR = Malaysian ringgits
A$ = Australian dollars	EGP = Egyptian pounds	ILS = Israeli shekels	PLN = Polish zloty
BRL = Brazilian reais	€ = Euros	¥ = Japanese yen	TRY = Turkish liras
C$ = Canadian dollars	£ = British pounds	KRW = South Korean won	UYU = Uruguayan pesos
COP = Colombian pesos	HUF = Hungarian forints	MXN = Mexican pesos

Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value.

Investors should carefully consider the investment objectives, risks, charges and expenses of the American Funds. This and other important information is contained in the fund’s prospectus and summary prospectus, which can be obtained from your financial professional and should be read carefully before investing. You may also call American Funds Service Company (AFS) at 800/421-0180 or visit the American Funds website at americanfunds.com.

MFGEFP-908-0211O-S25557

Summary investment portfolio, December 31, 2010

The following summary investment portfolio is designed to streamline the report and help investors better focus on a fund’s principal holdings.  See the inside back cover for details on how to obtain a complete schedule of portfolio holdings.

[begin pie chart]

Portfolio by type of security (percent of net assets)
Bonds & notes of U.S. government & government agencies	30.79	%
Mortgage-backed obligations	29.08
Corporate bonds & notes	29.01
Bonds & notes of governments & government agencies outside the U.S.	6.36
Other bonds & notes	1.78
Other securities	0.54
Short-term securities & other assets less liabilities	2.44

[end pie chart]

Portfolio quality summary (percent of net assets)*
U.S. government obligations†	31.4	%
Federal agencies	22.8
AAA	6.4
AA	5.3
A	10.6
BBB	14.4
BB or below	6.2
Unrated	0.5
Short-term securities & other assets less liabilities	2.4
* 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 - 97.02%		(000	)		(000	)	assets
Bonds & notes of U.S. government & government agencies - 30.79%
U.S. Treasury:
0.875% 2011	$	156,250		$	156,613
1.125% 2011  (1)		262,675			264,677
4.625% 2011		133,500			139,163
4.875% 2011		115,250			117,002
1.00% 2012		617,590			622,376
1.00% 2012		185,250			186,769
4.25% 2012		232,000			247,189
4.875% 2012		395,480			415,345
1.125% 2013		431,575			435,166
1.375% 2013		184,900			187,710
1.50% 2013		110,000			111,594
3.375% 2013		154,250			164,258
3.875% 2013		100,000			106,867
4.25% 2013		715,808			779,501
4.25% 2015		100,000			110,746
2.375% 2016		150,000			151,933
2.625% 2016		268,000			274,437
4.50% 2017		159,500			178,516
4.625% 2017		110,700			124,671
3.50% 2018		223,850			235,542
3.75% 2018		387,300			412,021
4.00% 2018		120,000			130,064
8.125% 2019		75,000			104,525
2.625% 2020		149,260			140,806
3.625% 2020		112,800			117,088
7.125% 2023		103,050			138,507
6.875% 2025		124,400			166,346
4.50% 2036		356,707			369,509
4.25% 2039		231,860			228,484
4.50% 2039		225,210			231,392
3.875% 2040		156,750			144,401
4.625% 2040		425,950			446,362
0%-11.25% 2011-2040 (2)		2,040,452			2,168,706			26.78	%
Federal Home Loan Bank:
3.625% 2013		185,000			197,828
1.75%-5.375% 2012-2016		144,000			152,736			.96
Fannie Mae:
1.75% 2013		125,000			127,708
0.625%-6.125% 2011-2014		200,350			202,935			.90
Freddie Mac:
2.50% 2014		100,600			104,266
1.125%-5.25% 2011-2014		173,950			179,210			.77
Other securities					500,650			1.38
					11,273,619			30.79
Mortgage-backed obligations - 29.08%
Federal agency mortgage-backed obligations (3)- 23.72%
Fannie Mae:
3.50% 2025		167,093			168,686
4.50% 2025		102,124			107,326
3.50% 2026		359,500			362,084
6.00% 2038		109,202			118,846
6.50% 2038		128,168			142,572
4.00% 2040		127,414			126,918
4.50% 2040		154,132			158,404
4.50% 2040		112,490			115,608
0%-11.71% 2012-2047 (4)		4,825,525			5,004,990			17.22
Government National Mortgage Assn.:
4.00% 2040		155,623			157,084
4.00% 2040		127,886			129,087
4.50% 2040		141,821			147,479
0%-10.00% 2021-2041 (5)		849,774			864,012			3.54
Freddie Mac 0%-7.50% 2019-2047 (4)		1,002,894			1,061,949			2.90
Other securities					20,664			.06
					8,685,709			23.72
Commercial mortgage-backed securities (3) - 3.87%
Fannie Mae 4.491%-6.088% 2011-2012		94,475			98,147			.27
Other securities					1,320,826			3.60
					1,418,973			3.87
Other mortgage-backed securities - 1.49%
Other securities					545,560			1.49
Total mortgage-backed obligations					10,650,242			29.08
Corporate bonds & notes - 29.01%
Financials - 8.64%
Other securities					3,167,355			8.64
Consumer discretionary - 3.49%
Other securities					1,276,755			3.49
Energy - 3.12%
Other securities					1,141,513			3.12
Industrials - 2.91%
Other securities					1,063,429			2.91
Utilities - 2.63%
Other securities					963,848			2.63
Health care - 2.45%
Other securities					897,785			2.45
Telecommunication services - 2.15%
Other securities					787,157			2.15
Consumer staples - 1.88%
Other securities					692,499			1.88
Other corporate bonds & notes - 1.74%
Other securities					637,513			1.74
Total corporate bonds & notes					10,627,854			29.01
Bonds & notes of governments & government agencies outside the U.S. - 6.36%
Other securities					2,329,411			6.36
Asset-backed obligations - 1.50%
Other securities					547,434			1.50
Municipals - 0.28%
Other securities					101,379			.28
Total bonds & notes (cost: $34,478,676,000)					35,529,939			97.02
							Percent
				Value			of net
Convertible securities - 0.04%					(000	)	assets
Information technology - 0.04%
Other securities					15,247			.04
Total convertible securities (cost: $11,663,000)					15,247			.04
							Percent
				Value			of net
Preferred securities - 0.46%					(000	)	assets
Other - 0.46%
Other securities					169,885			.46
Total preferred securities (cost: $160,629,000)					169,885			.46
							Percent
				Value			of net
Common stocks - 0.04%					(000	)	assets
Other - 0.04%
Other securities					12,540			.04
Total common stocks (cost: $11,276,000)					12,540			.04
							Percent
				Value			of net
Warrants - 0.00%					(000	)	assets
Other - 0.00%
Other securities					324			.00
Total warrants (cost: $11,356,000)					324			.00
	Principal						Percent
	amount			Value			of net
Short-term securities - 2.98%		(000	)		(000	)	assets
Freddie Mac 0.165%-0.25% due 1/11-7/6/2011	$	261,850		$	261,700			.72	%
Federal Home Loan Bank 0.16%-0.36% due 1/4-11/14/2011		234,783			234,594			.64
General Electric Capital Corp. 0.17% due 1/19/2011		100,000			99,991
General Electric Capital Services, Inc. 0.23% due 2/28/2011		50,000			49,984			.41
Private Export Funding Corp. 0.16%-0.26% due 1/20-2/14/2011 (6)		120,000			119,973			.33
Fannie Mae 0.14% due 2/9/2011		33,200			33,195			.09
U.S. Treasury Bill 0.178% due 5/19/2011		22,100			22,087			.06
Other securities					267,732			.73
Total short-term securities (cost: $1,089,204,000)					1,089,256			2.98
Total investment securities (cost: $35,762,804,000)					36,817,191			100.54
Other assets less liabilities					(196,451	)		(.54	)
Net assets				$	36,620,740			100.00	%

"Other securities" includes all issues that are not disclosed separately in the summary investment portfolio. Some of these securities (with an aggregate value of $15,554,000, 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. Further details on such holdings and related transactions during the year ended December 31, 2010, appear below.

	Beginning shares		Additions		Reductions			Ending shares		Dividend income (000)		Value of affiliate at 12/31/2010 (000)
Clarent Hospital Corp. Liquidating Trust (7)		331,291		-		(331,291	)		-		-		-

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) A portion of this security was pledged as collateral for losses on unsettled forward currency contracts with certain counterparties. The total value of pledged collateral was $252,000, which represented .07% of the net assets of the fund.

(2) Index-linked bond whose principal amount moves with a government retail price index.

(3) Principal payments may be made periodically. Therefore, the effective maturity date may be earlier than the stated maturity date.

(4) Coupon rate may change periodically.

(5) 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 $97,072,000, which represented .27% of the net assets of the fund.

(6) Acquired 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 $4,147,679,000, which represented 11.33% of the net assets of the fund.

(7) Unaffiliated issuer at 12/31/2010.

See Notes to Financial Statements

Financial statements

Statement of assets and liabilities
at December 31, 2010	(dollars in thousands)
Assets:
Investment securities, at value (cost: $35,762,804)			$	36,817,191
Cash				17,033
Unrealized appreciation on open forward currency contracts				4,550
Receivables for:
Sales of investments		591,907
Sales of fund's shares		39,513
Closed forward currency contracts		3,164
Interest		328,657		963,241
				37,802,015
Liabilities:
Unrealized depreciation on open forward currency contracts				4,409
Payables for:
Purchases of investments		1,002,011
Repurchases of fund's shares		151,671
Closed forward currency contracts		324
Investment advisory services		6,506
Services provided by related parties		15,391
Directors' deferred compensation		482
Other		481		1,176,866
Net assets at December 31, 2010			$	36,620,740
Net assets consist of:
Capital paid in on shares of capital stock			$	39,385,765
Undistributed net investment income				12,164
Accumulated net realized loss				(3,831,982	)
Net unrealized appreciation				1,054,793
Net assets at December 31, 2010			$	36,620,740

	(dollars and shares in thousands, except per-share amounts)
Total authorized capital stock - 5,000,000 shares, $.001 par value (3,003,388 total shares outstanding)
	Net assets		Shares outstanding		Net asset value per share
Class A	$	25,627,312		2,101,781	$	12.19
Class B		891,024		73,076		12.19
Class C		2,931,497		240,422		12.19
Class F-1		1,865,958		153,033		12.19
Class F-2		401,675		32,943		12.19
Class 529-A		898,134		73,659		12.19
Class 529-B		72,640		5,958		12.19
Class 529-C		427,654		35,073		12.19
Class 529-E		48,519		3,979		12.19
Class 529-F-1		53,855		4,417		12.19
Class R-1		99,314		8,145		12.19
Class R-2		831,900		68,227		12.19
Class R-3		1,053,373		86,390		12.19
Class R-4		768,169		63,000		12.19
Class R-5		369,506		30,304		12.19
Class R-6		280,210		22,981		12.19
See Notes to Financial Statements

Statement of operations
for the year ended December 31, 2010	(dollars in thousands)
Investment income:
Income:
Interest (net of non-U.S. taxes of $679)	$	1,650,973
Dividends		809		$	1,651,782
Fees and expenses*:
Investment advisory services		83,015
Distribution services		135,726
Transfer agent services		34,233
Administrative services		20,030
Reports to shareholders		1,990
Registration statement and prospectus		903
Directors' compensation		371
Auditing and legal		187
Custodian		1,026
State and local taxes		308
Other		1,517			279,306
Net investment income					1,372,476
Net realized gain and unrealized appreciation
on investments, forward currency contracts and currency:
Net realized gain (loss) on:
Investments (net of non-U.S. taxes of $61; also includes $2,078 net loss from affiliate)		636,618
Forward currency contracts		43,690
Currency transactions		(3,037	)		677,271
Net unrealized appreciation (depreciation) on:
Investments		729,578
Forward currency contracts		(20,210	)
Currency translations		602			709,970
Net realized gain and unrealized appreciation
on investments, forward currency contracts and currency					1,387,241
Net increase in net assets resulting
from operations				$	2,759,717
(*) 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
		2010			2009
Operations:
Net investment income	$	1,372,476		$	1,707,337
Net realized gain (loss) on investments, forward currency contracts and currency transactions		677,271			(2,638,920	)
Net unrealized appreciation on investments, forward currency contracts and currency translations		709,970			6,138,102
Net increase in net assets resulting from operations		2,759,717			5,206,519
Dividends paid to shareholders from net investment income		(1,450,072	)		(1,665,583	)
Net capital share transactions		(4,283,059	)		3,865,207
Total (decrease) increase in net assets		(2,973,414	)		7,406,143
Net assets:
Beginning of year		39,594,154			32,188,011
End of year (including undistributed net investment income:
$12,164 and $9,590, respectively)	$	36,620,740		$	39,594,154
See Notes to Financial Statements

Notes to financial statements

1.   Organization

The Bond Fund of America, Inc. (the "fund") is registered under the Investment Company Act of 1940 as an open-end, diversified management investment company. The fund seeks as high a level of current income as is consistent with preservation of capital through a diversified portfolio of bonds and other fixed-income obligations. In 2009, shareholders approved a proposal to reorganize the fund from a Maryland corporation to a Delaware statutory trust. The reorganization is expected to be completed on March 1, 2011; however, the fund reserves the right to delay the implementation.

The fund has 16 share classes consisting of five retail share classes, five 529 college savings plan share classes and six 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 six retirement plan share classes (R-1, R-2, R-3, R-4, R-5 and R-6) 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, R-5 and R-6	None	None	None

*Class B and 529-B shares of the fund are not available for purchase.

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.

2.   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 fund follows the significant accounting policies described below, as well as the valuation policies described in the next section on valuation.

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 recognizedon 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.

Mortgage dollar rolls — The fund may enter into mortgage dollar roll transactions in which the fund sells a mortgage-backed security to a counterparty and simultaneously enters into an agreement with the same counterparty to buy back a similar security on a specific future date at a predetermined price. Risks may arise due to the delayed payment date and the potential inability of counterparties to complete the transaction. Mortgage dollar rolls are accounted for as purchase and sale transactions, which may increase the fund’s port­folio turnover rate.

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.

3.   Valuation

The fund’s investments are reported at fair value as defined by accounting principles generally accepted in the United States of America. The fund generally determines its net asset value as of approximately 4:00 p.m. New York time each day the New York Stock Exchange is open.

Methods and inputs – The fund uses the following methods and inputs to establish the fair value of its assets and liabilities. Use of particular methods and inputs may vary over time based on availability and relevance as market and economic conditions evolve.

Equity securities are generally 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 generally valued at prices obtained as of approximately 3:00 p.m. New York time from one or more pricing vendors. Vendors value such securities based on one or more of the inputs described in the following table. The table provides examples of inputs that are commonly relevant for valuing particular classes of fixed-income securities in which the fund is authorized to invest. However, these classifications are not exclusive, and any of the inputs may be used to value any other class of fixed-income security.

Fixed-income class	Examples of standard inputs
All	Benchmark yields, transactions, bids, offers, quotations from dealers and trading systems, new issues, spreads and other relationships observed in the markets among comparable securities; and proprietary pricing models such as yield measures calculated using factors such as cash flows, financial or collateral performance and other reference data (collectively referred to as “standard inputs”)
Corporate bonds & notes; convertible securities	Standard inputs and underlying equity of the issuer
Bonds & notes of governments & government agencies	Standard inputs and interest rate volatilities
Mortgage-backed; asset-backed obligations	Standard inputs and cash flows, prepayment information, default rates, delinquency and loss assumptions, collateral characteristics, credit enhancements and specific deal information
Municipal securities	Standard inputs and, for certain distressed securities, cash flows or liquidation values using a net present value calculation based on inputs that include, but are not limited to, financial statements and debt contracts

Where the investment adviser deems it appropriate to do so (such as when vendor prices are unavailable or not deemed to be representative), fixed-income 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.

Securities with both fixed-income and equity characteristics, or equity securities traded principally among fixed-income dealers, are generally 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 fair 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. 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 guidelines adopted by authority of the fund's board of directors. Various inputs may be reviewed in order to make a good faith determination of a security’s fair value. These inputs 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. Fair valuations 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.

Classifications - The fund classifies its assets and liabilities into three levels based on the inputs 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 reflected as Level 2 because the inputs used to determine fair value may not always be quoted prices in an active market.The following tables presentthe fund’s valuation levels as of December 31, 2010 (dollars in thousands):

Investment securities:	Level 1		Level 2			Level 3		Total
Bonds & notes:
Bonds & notes of U.S. government & government agencies	$	-	$	11,273,619		$	-	$	11,273,619
Mortgage-backed obligations		-		10,608,977			41,265		10,650,242
Corporate bonds & notes		-		10,620,528			7,326		10,627,854
Bonds & notes of governments & government agencies outside the U.S.		-		2,329,411			-		2,329,411
Asset-backed obligations		-		529,390			18,044		547,434
Municipals		-		101,379			-		101,379
Convertible securities		-		15,247			-		15,247
Preferred securities		-		169,885			-		169,885
Common stocks		4,849		-			7,691		12,540
Warrants		132		-			192		324
Short-term securities		-		1,089,256			-		1,089,256
Total	$	4,981	$	36,737,692		$	74,518	$	36,817,191
Forward currency contracts (1):	Level 1		Level 2			Level 3		Total
Unrealized appreciation on open forward currency contracts	$	-	$	4,550		$	-	$	4,550
Unrealized depreciation on open forward currency contracts		-		(4,409	)		-		(4,409	)
Total	$	-	$	141		$	-	$	141
(1) Forward currency contracts are not included in the investment portfolio.

The following table reconciles the valuation of the fund's Level 3 investment securities and related transactions for the year ended December 31, 2010 (dollars in thousands):
	Beginning value at 1/1/2010		Net purchases and sales		Net realized loss (2)			Net unrealized appreciation (2)		Net transfers into Level 3(3)		Ending value at 12/31/2010
Investment securities	$	27,221	$	11,216	$	(2,523	)	$	4,053	$	34,551	$	74,518
Net unrealized depreciation during the period on Level 3 investment securities held at December 31, 2010 (dollars in thousands) (2):												$	(2,930	)
(2) Net realized loss and unrealized appreciation (depreciation) are included in the related amounts on investments in the statement of operations.
(3) Transfers into or out of Level 3 are based on the beginning market value of the quarter in which they occurred.

4.   Risk factors

Investing in the fund may involve certain risks including, but not limited to, those described below.

Market conditions — The prices of, and the income generated by, the securities held by the fund may decline due to market conditions and other factors, including those directly involving the issuers of securities held by the fund.

Investing in bonds — Rising interest rates will generally cause the prices of bonds and other debt securities to fall. Longer maturity debt securities may be subject to greater price fluctuations than shorter maturity debt securities. Bonds and other debt securities are 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.

Investing in mortgage-backed and asset-backed securities — Many types of bonds and other debt securities, including mortgage-backed securities, are subject to prepayment risk. If interest rates fall and the loans underlying these securities are prepaid faster than expected, the fund may have to reinvest the prepaid principal in lower yielding securities, thus reducing the fund’s income. Conversely, if interest rates increase and the loans underlying the securities are prepaid more slowly than expected, the expected duration of the securities may be extended. This reduces the potential for the fund to invest the principal in higher yielding securities.

Investing in securities backed by the U.S. government — Securities backed by the U.S. Treasury or the full faith and credit of the U.S. government are guaranteed only as to the timely payment of interest and principal when held to maturity. Accordingly, the current market values 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. government.

Thinly traded securities — There may be little trading in the secondary market for particular bonds or other debt securities, which may make them more difficult to value or sell.

Investing outside the U.S. — Securities of issuers domiciled outside the U.S., or with significant operations outside the U.S., may lose value because of political, social or economic developments in the country or region in which the issuer operates. These securities may also lose value due to changes in the exchange rate of the country’s currency against the U.S. dollar. Securities markets in certain countries may be more volatile and/or less liquid than those in the U.S. Investments outside the U.S. may also be subject to different settlement and account­ing practices and different regulatory, legal and reporting standards than those in the U.S. These risks may be heightened in connection with investments in developing countries.

Management — The investment adviser to the fund actively manages the fund’s investments. Consequently, the fund is subject to the risk that the techniques and risk analyses employed by the investment adviser in this process may not produce the desired results. This could cause the fund to lose value or its results to lag relevant benchmarks or other funds with similar objectives.

5. 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, 2010, 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 2007, by state tax authorities for tax years before 2006 and by tax authorities outside the U.S. for tax years before 2005.

Non-U.S. taxation – Dividend and interest income is recorded net of non-U.S. taxes paid. Gains realized by the fund on the sale of securities in certain countries are subject to non-U.S. taxes.

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 gainsfor financial reporting purposes. These differences are due primarily to different 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.; deferred expenses; cost of investments sold; paydowns on fixed-income securities; net capital losses; amortization of premiums; 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, 2010, the fund reclassified $31,000 from undistributed net investment income and $11,250,000 from accumulated net realized loss to capital paid in on shares of capital stock; and $80,201,000 from accumulated net realized loss to undistributed net investment income to align financial reporting with tax reporting.

As of December 31, 2010, the tax basis components of distributable earnings, unrealized appreciation (depreciation) and cost of investment securities were as follows:

	(dollars in thousands)
Undistributed ordinary income				$	25,126
Capital loss carryforwards*:
Expiring 2014	$	(265	)
Expiring 2015		(218	)
Expiring 2016		(841,762	)
Expiring 2017		(2,938,200	)		(3,780,445	)
Gross unrealized appreciation on investment securities					1,368,824
Gross unrealized depreciation on investment securities					(376,176	)
Net unrealized appreciation on investment securities					992,648
Cost of investment securities					35,824,543
*Reflects the utilization of capital loss carryforwards of $559,485,000. 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.

Under the Regulated Investment Company Modernization Act of 2010 (the “Act”), net capital losses recognized after December 31, 2010, may be carried forward indefinitely, and their character is retained as short-term and/or long-term losses. Under the law in effect prior to the Act, pre-enactment net capital losses were carried forward for eight years and treated as short-term losses. As a transition rule, the Act requires that post-enactment net capital losses be used before pre-enactment net capital losses.

Tax-basis distributions paid to shareholders from ordinary income were as follows (dollars in thousands):

	Year ended December 31
Share class	2010		2009
Class A	$	1,039,685	$	1,171,526
Class B		32,389		49,620
Class C		95,182		108,139
Class F-1		83,521		126,279
Class F-2		21,639		20,625
Class 529-A		31,721		29,648
Class 529-B		2,435		3,028
Class 529-C		12,078		11,797
Class 529-E		1,574		1,491
Class 529-F-1		2,000		1,600
Class R-1		3,106		3,811
Class R-2		25,249		26,641
Class R-3		38,239		44,173
Class R-4		30,505		34,735
Class R-5		18,226		27,537
Class R-6*		12,523		4,933
Total	$	1,450,072	$	1,665,583
*Class R-6 was offered beginning May 1, 2009.

6. Fees and transactions with related parties

Capital Research and Management Company ("CRMC"), the fund’s investment adviser, is the parent company of American Funds Distributors,® Inc. ("AFD"), the principal underwriter of the fund’s shares, and American Funds Service Company® ("AFS"), the fund’s transfer agent.

Investment advisory services - The Investment Advisory and Service Agreement with CRMC provides for monthly fees accrued daily. These fees are based on a series of decreasing 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 series of decreasing 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. For the year ended December 31, 2010, the investment advisory services fee was $83,015,000, which was equivalent to an annualized rate of 0.211% of average dailynet 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, R-5 and R-6. 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 with a plan 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, 2010, there were no unreimbursed expenses subject to reimbursement for Classes A or 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 hasa 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 as described below.

Administrative services – The fund has an administrative services agreement with CRMC for all share classes, except Classes A and B, to provide certain services, including transfer agent and recordkeeping services; coordinating, monitoring, assisting and overseeing third-party service providers; and educating advisers and shareholders about the impact of market-related events, tax laws affecting investments, retirement plan restrictions, exchange limitations and other related matters. Each relevant share class pays CRMC annual fees up to 0.15% (0.10% for Class R-5 and 0.05% for Class R-6) 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 series of decreasing 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, 2010, were as follows (dollars in thousands):

					Administrative services
Share class	Distribution services		Transfer agent services		CRMC administrative services		Transfer agent services		Commonwealth of Virginia administrative services
Class A	$	66,283	$	32,997	Not applicable		Not applicable		Not applicable
Class B		10,557		1,236	Not applicable		Not applicable		Not applicable
Class C		31,627	Included in administrative services		$	4,461	$	743	Not applicable
Class F-1		5,468				2,982		224	Not applicable
Class F-2	Not applicable					680		35	Not applicable
Class 529-A		1,811				766		153	$	849
Class 529-B		823				74		29		82
Class 529-C		4,089				370		109		410
Class 529-E		228				41		8		46
Class 529-F-1		-				46		9		51
Class R-1		1,015				128		42	Not applicable
Class R-2		6,318				1,244		2,315	Not applicable
Class R-3		5,487				1,585		734	Not applicable
Class R-4		2,020				1,182		34	Not applicable
Class R-5	Not applicable					432		13	Not applicable
Class R-6	Not applicable					152		1	Not applicable
Total	$	135,726	$	34,233	$	14,143	$	4,449	$	1,438

Directors’ deferred compensation – Directors who are unaffiliated with CRMCmay 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 $371,000, shown on the accompanying financial statements, includes $337,000 in current fees (either paid in cash or deferred) and a net increase of $34,000 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.

7. Capital share transactions

Capital share transactions in the fund were as follows (dollars and shares in thousands):

Share class	Sales(*)				Reinvestments of dividends and distributions				Repurchases(*)						Net (decrease) increase
	Amount		Shares		Amount		Shares		Amount			Shares			Amount			Shares
Year ended December 31, 2010
Class A	$	4,624,435		380,821	$	964,456		79,244	$	(8,217,301	)		(675,397	)	$	(2,628,410	)		(215,332	)
Class B		89,940		7,395		30,081		2,474		(478,979	)		(39,446	)		(358,958	)		(29,577	)
Class C		560,234		46,123		85,538		7,029		(1,008,776	)		(82,905	)		(363,004	)		(29,753	)
Class F-1		598,525		49,211		77,018		6,331		(1,217,084	)		(99,820	)		(541,541	)		(44,278	)
Class F-2		178,617		14,696		16,299		1,342		(550,601	)		(45,543	)		(355,685	)		(29,505	)
Class 529-A		213,708		17,574		31,601		2,595		(131,217	)		(10,771	)		114,092			9,398
Class 529-B		9,746		802		2,412		198		(28,978	)		(2,378	)		(16,820	)		(1,378	)
Class 529-C		112,286		9,237		12,025		987		(78,819	)		(6,469	)		45,492			3,755
Class 529-E		12,886		1,059		1,567		129		(7,601	)		(625	)		6,852			563
Class 529-F-1		17,020		1,400		1,989		163		(11,236	)		(923	)		7,773			640
Class R-1		31,352		2,580		3,071		252		(41,182	)		(3,393	)		(6,759	)		(561	)
Class R-2		290,256		23,876		25,004		2,054		(304,919	)		(25,034	)		10,341			896
Class R-3		357,644		29,422		37,864		3,111		(469,110	)		(38,562	)		(73,602	)		(6,029	)
Class R-4		304,919		25,093		30,205		2,481		(380,651	)		(31,331	)		(45,527	)		(3,757	)
Class R-5		171,239		14,109		18,013		1,480		(286,498	)		(23,505	)		(97,246	)		(7,916	)
Class R-6		105,738		8,701		12,522		1,028		(98,317	)		(8,078	)		19,943			1,651
Total net increase
(decrease)	$	7,678,545		632,099	$	1,349,665		110,898	$	(13,311,269	)		(1,094,180	)	$	(4,283,059	)		(351,183	)
Year ended December 31, 2009
Class A	$	8,658,161		782,590	$	1,064,353		95,240	$	(6,787,523	)		(604,967	)	$	2,934,991			272,863
Class B		258,257		23,640		44,500		3,996		(437,963	)		(39,085	)		(135,206	)		(11,449	)
Class C		1,306,870		118,167		94,973		8,498		(762,734	)		(67,922	)		639,109			58,743
Class F-1		1,658,840		150,099		109,818		9,879		(2,355,758	)		(209,330	)		(587,100	)		(49,352	)
Class F-2		723,216		65,057		15,631		1,368		(149,439	)		(13,148	)		589,408			53,277
Class 529-A		219,770		19,609		29,524		2,638		(99,735	)		(8,863	)		149,559			13,384
Class 529-B		15,490		1,398		3,016		270		(10,965	)		(975	)		7,541			693
Class 529-C		130,705		11,657		11,741		1,050		(60,952	)		(5,395	)		81,494			7,312
Class 529-E		13,309		1,189		1,484		133		(6,541	)		(574	)		8,252			748
Class 529-F-1		21,956		1,931		1,590		141		(7,963	)		(702	)		15,583			1,370
Class R-1		49,412		4,420		3,722		334		(47,225	)		(4,184	)		5,909			570
Class R-2		315,716		28,235		26,421		2,366		(229,867	)		(20,531	)		112,270			10,070
Class R-3		411,155		36,770		43,747		3,920		(399,873	)		(35,607	)		55,029			5,083
Class R-4		289,937		25,938		34,544		3,095		(313,682	)		(27,975	)		10,799			1,058
Class R-5		281,846		25,451		25,360		2,289		(568,691	)		(51,568	)		(261,485	)		(23,828	)
Class R-6(†)		237,322		21,177		4,926		425		(3,194	)		(272	)		239,054			21,330
Total net increase
(decrease)	$	14,591,962		1,317,328	$	1,515,350		135,642	$	(12,242,105	)		(1,091,098	)	$	3,865,207			361,872
* Includes exchanges between share classes of the fund.
(†)Class R-6 was offered beginning May 1, 2009.

8. Investment transactions

The fund made purchases and sales of investment securities, excluding short-term securities and U.S. government obligations, if any, of $23,927,591,000 and $27,156,678,000, respectively, during the year ended December 31, 2010.

9. Forward currency contracts

The fund has entered 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. 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. To reduce these risks, the fund has entered into a collateral program with certain counterparties. The program calls for the fund to either receive or pledge collateral based on the net gain or loss on unsettled forward currency contracts by counterparty.The purpose of the collateral is to cover potential losses that could occur in the event that either party can not meet their contractual obligations.

On a daily basis, the fund values forward currency contracts based on the applicable exchange rate and records unrealized appreciation or depreciation for open forward currency contracts in the statement of assets and liabilities. 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 settlement date are included in the respective receivables or payables for closed forward currency contracts in the statement of assets and liabilities. Net realized gains or losses from closed forward currency contracts and net unrealized appreciation or depreciation from open forward currency contracts are recorded in the statement of operations.

As of December 31, 2010, the fund had open forward currency contracts to purchase or sell currencies, as shown on the following table. The open forward currency contracts shown are generally indicative of the level of activity over the prior 12-month period.

							(amounts in thousands)
			Contract amount				Unrealized appreciation (depreciation) at 12/31/2010
	Settlement date	Counterparty	Receive		Deliver
Purchases:
Australian dollars	1/14/2011	JPMorgan Chase	$	A19,825	$	19,500		739
Singapore dollars	1/12/2011	HSBC Bank	$	S25,381	$	19,500		277
								1,016
Sales:
Brazilian reais	1/13/2011	JPMorgan Chase	$	34,099	BRL58,800			(1,218	)
British pounds	2/15/2011	UBS AG	$	54,195	£	33,640		1,597
Danish kroner	1/10/2011	UBS AG	$	47,374	DKr265,000			(141	)
Euros	1/6/2011	Societe Generale	$	672	€	500		13
Euros	1/6/2011	JPMorgan Chase	$	61,825	€	46,680		(554	)
Euros	1/11/2011	Barclays Bank PLC	$	36,926	€	28,230		(798	)
Euros	1/11/2011	HSBC Bank	$	20,658	€	14,830		841
Euros	1/13/2011	Bank of New York Mellon	$	7,150	€	5,500		(194	)
Euros	2/17/2011	Societe Generale	$	14,120	€	10,375		258
Euros	2/23/2011	JPMorgan Chase	$	102	€	75		2
Euros	2/23/2011	UBS AG	$	55	€	40		1
Euros	2/25/2011	HSBC Bank	$	337	€	250		3
Euros	3/8/2011	JPMorgan Chase	$	1,324	€	1,000		(12	)
Euros	3/8/2011	Bank of New York Mellon	$	1,985	€	1,500		(19	)
Euros	3/15/2011	UBS AG	$	65,823	€	49,640		(495	)
Euros	3/16/2011	UBS AG	$	4,877	€	3,625		35
Euros	3/29/2011	Barclays Bank PLC	$	43,533	€	33,140		(738	)
Hungarian forints	2/10/2011	HSBC Bank	$	16,735	HUF3,332,855			784
Polish zloty	3/3/2011	HSBC Bank	$	3,724	PLN11,500			(145	)
Polish zloty	3/15/2011	UBS AG	$	3,772	PLN11,500			(95	)
								(875	)
Forward currency contracts - net								141

Financial highlights(1)

			Income (loss) from investment operations(2)
	Net asset value, beginning of period		Net investment income		Net gains (losses) 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 12/31/2010	$	11.80	$	.44	$	.41		$	.85		$	(.46	)	$	12.19		7.30	%	$	25,627		.59	%		.59	%		3.61	%
Year ended 12/31/2009		10.76		.53		1.03			1.56			(.52	)		11.80		14.91			27,349		.65			.65			4.74
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
Class B:
Year ended 12/31/2010		11.80		.35		.41			.76			(.37	)		12.19		6.50			891		1.35			1.35			2.88
Year ended 12/31/2009		10.76		.45		1.03			1.48			(.44	)		11.80		14.06			1,212		1.40			1.40			4.05
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
Class C:
Year ended 12/31/2010		11.80		.35		.41			.76			(.37	)		12.19		6.45			2,931		1.39			1.39			2.81
Year ended 12/31/2009		10.76		.44		1.03			1.47			(.43	)		11.80		14.00			3,189		1.44			1.44			3.91
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
Class F-1:
Year ended 12/31/2010		11.80		.44		.41			.85			(.46	)		12.19		7.27			1,866		.62			.62			3.59
Year ended 12/31/2009		10.76		.53		1.03			1.56			(.52	)		11.80		14.91			2,329		.65			.65			4.80
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
Class F-2:
Year ended 12/31/2010		11.80		.47		.41			.88			(.49	)		12.19		7.55			402		.36			.36			3.89
Year ended 12/31/2009		10.76		.56		1.03			1.59			(.55	)		11.80		15.19			737		.39			.39			4.66
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 12/31/2010		11.80		.44		.41			.85			(.46	)		12.19		7.24			898		.65			.65			3.53
Year ended 12/31/2009		10.76		.53		1.03			1.56			(.52	)		11.80		14.86			758		.70			.70			4.67
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
Class 529-B:
Year ended 12/31/2010		11.80		.34		.41			.75			(.36	)		12.19		6.39			73		1.45			1.45			2.76
Year ended 12/31/2009		10.76		.44		1.03			1.47			(.43	)		11.80		13.94			86		1.50			1.50			3.89
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
Class 529-C:
Year ended 12/31/2010		11.80		.34		.41			.75			(.36	)		12.19		6.40			428		1.44			1.44			2.74
Year ended 12/31/2009		10.76		.44		1.03			1.47			(.43	)		11.80		13.95			370		1.49			1.49			3.87
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
Class 529-E:
Year ended 12/31/2010		11.80		.40		.41			.81			(.42	)		12.19		6.93			49		.93			.93			3.24
Year ended 12/31/2009		10.76		.49		1.03			1.52			(.48	)		11.80		14.52			40		.99			.99			4.38
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
Class 529-F-1:
Year ended 12/31/2010	$	11.80	$	.46	$	.41		$	.87		$	(.48	)	$	12.19		7.47	%	$	54		.44	%		.44	%		3.74	%
Year ended 12/31/2009		10.76		.55		1.03			1.58			(.54	)		11.80		15.09			44		.49			.49			4.84
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
Class R-1:
Year ended 12/31/2010		11.80		.35		.41			.76			(.37	)		12.19		6.47			99		1.38			1.38			2.82
Year ended 12/31/2009		10.76		.44		1.03			1.47			(.43	)		11.80		14.02			103		1.43			1.43			3.96
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
Class R-2:
Year ended 12/31/2010		11.80		.34		.41			.75			(.36	)		12.19		6.44			832		1.39			1.39			2.79
Year ended 12/31/2009		10.76		.44		1.03			1.47			(.43	)		11.80		13.95			795		1.49			1.49			3.89
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
Class R-3:
Year ended 12/31/2010		11.80		.40		.41			.81			(.42	)		12.19		6.94			1,053		.93			.93			3.26
Year ended 12/31/2009		10.76		.50		1.03			1.53			(.49	)		11.80		14.54			1,091		.97			.97			4.43
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
Class R-4:
Year ended 12/31/2010		11.80		.44		.41			.85			(.46	)		12.19		7.27			768		.62			.62			3.57
Year ended 12/31/2009		10.76		.53		1.03			1.56			(.52	)		11.80		14.90			788		.66			.66			4.75
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
Class R-5:
Year ended 12/31/2010		11.80		.48		.41			.89			(.50	)		12.19		7.59			370		.32			.32			3.88
Year ended 12/31/2009		10.76		.56		1.03			1.59			(.55	)		11.80		15.24			451		.37			.37			5.20
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
Class R-6:
Year ended 12/31/2010		11.80		.48		.41			.89			(.50	)		12.19		7.64			280		.27			.27			3.90
Period from 5/1/2009 to 12/31/2009		10.78		.35		1.01			1.36			(.34	)		11.80		12.75			252		.31	(5)		.31	(5)		4.59	(5)

	Year ended December 31
	2010			2009			2008			2007			2006
Portfolio turnover rate for all share classes		99	%		84	%		57	%		58	%		53	%

(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 some of 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.

(5)Annualized.

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 investment portfolio and the summary investment portfolio, of The Bond Fund of America, Inc. (the “Fund”), as of December 31, 2010, 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, 2010, 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, 2010, 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 7, 2011

..

The Bond Fund of America

Part C

Other Information

Item 28. Exhibits for Registration Statement (1940 Act No. 002-50700 and 1933 Act No. 811-02444)

(a) Articles of Incorporation – Certificate of Trust filed 8/20/09 and Agreement and Declaration of Trust dated 8/20/09

(b) By-laws – By-laws

(c) Instruments Defining Rights of Security Holders – None

(d) Investment Advisory Contracts – Investment Advisory and Service Agreement dated 3/1/11

(e) Underwriting Contracts – Form of Principal Underwriting Agreement dated 3/1/11; Form of Selling Group Agreement effective 3/1/10; Form of Amendment to Selling Group Agreement effective 12/1/10; Form of Amendment to Selling Group Agreement effective 2/1/11; Form of Bank/Trust Company Selling Group Agreement effective 3/1/10; Form of Amendment to Bank/Trust Company Selling Group Agreement effective 12/1/10; Form of Amendment to Bank/Trust Company Selling Group Agreement effective 2/1/11; Form of Class F Share Participation Agreement effective 3/1/10; Form of Amendment to Class F Share Participation Agreement effective 12/1/10; Form of Amendment to Class F Share Participation Agreement effective 2/1/11; Form of Bank/Trust Company Participation Agreement for Class F Shares effective 3/1/10; Form of Amendment to Bank/Trust Company Participation Agreement for Class F Shares effective 12/1/10; and Form of Amendment to Bank/Trust Company Participation Agreement for Class F Shares effective 2/1/11

(f) Bonus or Profit Sharing Contracts – Form of Deferred Compensation Plan effective 12/10/10

(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) Other Material Contracts – Form of Shareholder Services Agreement dated 3/1/11; Form of Indemnification Agreement; Form of Administrative Services Agreement dated 3/1/11; and Form of Agreement and Plan of Reorganization dated 8/24/09

(i) Legal Opinion – 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 for Classes A, B, C, F-1, 529-A, 529-B, 529-C, 529-E, 529-F-1 and R-1, R-2, R-3 and R-4 dated 3/1/11

(n) Rule 18f-3 – Form of Multiple Class Plan dated 3/1/11

(o) Reserved

(p) Code of Ethics – Code of Ethics for The Capital Group Companies dated September 2010; and Code of Ethics for Registrant dated December 2005

Item 29. Persons Controlled by or Under Common Control with the Fund

None

Item 30.            Indemnification

The Registrant is a joint-insured under Investment Adviser/Mutual Fund Errors and Omissions Policies, which insure its officers and trustees against certain liabilities. However, in no event will Registrant maintain insurance to indemnify any such person for any act for which Registrant itself is not permitted to indemnify the individual.

Article 8 of the Registrant’s Declaration of Trust as well as the indemnification agreements that the Registrant has entered into with each of its trustees 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 trustees 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 trustees, 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 trustee, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such trustee, 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 31.           Business and Other Connections of the Investment Adviser

None

Item 32.           Principal Underwriters

(a)           American Funds Distributors, Inc. is the Principal Underwriter of shares of: AMCAP Fund, American Balanced Fund, American Funds Fundamental Investors, American Funds Global Balanced Fund, The American Funds Income Series, American Funds Money Market Fund, American Funds Mortgage Fund, American Funds Short-Term Tax-Exempt Bond Fund, American Funds Target Date Retirement Series, American Funds Tax-Exempt Fund of New York, The American Funds Tax-Exempt Series I, The American Funds Tax-Exempt Series II, American High-Income Municipal Bond Fund, American High-Income Trust, American Mutual Fund, The Bond Fund of America, Inc., Capital Income Builder, Capital Private Client Services Funds, Capital World Bond Fund, Capital World Growth and Income Fund, Inc., Emerging Markets Growth Fund, Inc., Endowments, EuroPacific Growth Fund, The Growth Fund of America, Inc., The Income Fund of America, Intermediate Bond Fund of America, International Growth and Income Fund, 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, SMALLCAP World Fund, Inc., The Tax-Exempt Bond Fund of America and Washington Mutual Investors Fund

(b)

	(1) Name and Principal Business Address	(2) Positions and Offices with Underwriter	(3) Positions and Offices with Registrant
LAO	David L. Abzug	Vice President	None
IRV	Laurie M. Allen	Director, Senior Vice President	None
LAO	Dianne L. Anderson	Vice President	None
LAO	William C. Anderson	Director, Senior Vice President & Director of Retirement Plan Business	None
LAO	Robert B. Aprison	Senior Vice President	None
LAO	T. Patrick Bardsley	Regional Vice President	None
LAO	Shakeel A. Barkat	Vice President	None
IRV	Carl R. Bauer	Vice President	None
LAO	Roger J. Bianco, Jr.	Regional Vice President	None
LAO	John A. Blanchard	Senior Vice President	None
LAO	Gerard M. Bockstie, Jr.	Vice President	None
LAO	Jonathan W. Botts	Vice President	None
LAO	Bill Brady	Director, 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
LAO	Steven Calabria	Vice President	None
LAO	Thomas E. Callahan	Regional Vice President	None
LAO	Damian F. Carroll	Director, Senior Vice President	None
LAO	James D. Carter	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 Intermediary Relations	None
LAO	David D. Charlton	Director, Senior Vice President and Director of Marketing	None
LAO	Thomas M. Charon	Vice President	None
LAO	Paul A. Cieslik	Vice President	None
LAO	Kevin G. Clifford	Director, President and Chief Executive Officer	None
LAO	Ruth M. Collier	Senior Vice President	None
LAO	Charles H. Cote	Vice President	None
SNO	Kathleen D. Cox	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	William F. Daugherty	Senior 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	James A. DePerno, Jr.	Senior Vice President	None
LAO	Bruce L. DePriester	Director, Senior Vice President, Treasurer and Controller	None
LAO	Dianne M. Dexter	Assistant Vice President	None
LAO	Thomas J. Dickson	Vice President	None
LAO	Hedy B. Donahue	Assistant Vice President	None
LAO	Michael J. Downer	Director	None
LAO	Craig A. Duglin	Vice President	None
LAO	Timothy L. Ellis	Senior 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	Senior Vice President	None
LAO	J. Christopher Gies	Senior Vice President	None
LAO	Jack E. Goldin	Vice President	None
LAO	Earl C. Gottschalk	Vice President	None
LAO	Jeffrey J. Greiner	Senior Vice President	None
LAO	Eric M. Grey	Senior 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
LAO	Derek S. Hansen	Vice President	None
LAO	Robert J. Hartig, Jr.	Senior Vice President	None
LAO	Craig W. Hartigan	Vice President	None
LAO	Russell K. Holliday	Vice President	None
LAO	Heidi Horwitz-Marcus	Vice President	None
LAO	Kevin B. Hughes	Vice President	None
LAO	Marc Ialeggio	Vice President	None
HRO	Jill Jackson-Chavis	Vice President	None
IND	David K. Jacocks	Assistant Vice President	None
LAO	Linda Johnson	Vice President	None
LAO	Marc J. Kaplan	Vice President	None
LAO	John P. Keating	Senior Vice President	None
LAO	Brian G. Kelly	Vice President	None
LAO	Ryan C. Kidwell	Regional Vice President	None
LAO	Mark Kistler	Vice President	None
NYO	Dorothy Klock	Senior Vice President	None
IRV	Elizabeth K. Koster	Vice President	None
LAO	Christopher F. Lanzafame	Vice President	None
IRV	Laura Lavery	Vice President	None
LAO	R. Andrew LeBlanc	Senior 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	Lorin E. Liesy	Vice President	None
LAO	Louis K. Linquata	Senior Vice President	None
LAO	Brendan T. Mahoney	Director, Senior Vice President	None
LAO	Nathan G. Mains	Regional Vice President	None
LAO	Paul R. Mayeda	Assistant Vice President	None
LAO	Eleanor P. Maynard	Vice President	None
LAO	Joseph A. McCreesh, III	Regional Vice President	None
LAO	Timothy W. McHale	Secretary	None
LAO	Will McKenna	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	Sean C. Minor	Regional Vice President	None
LAO	James R. Mitchell III	Regional Vice President	None
LAO	Charles L. Mitsakos	Vice President	None
LAO	Linda M. Molnar	Vice President	None
LAO	Monty L. Moncrief	Vice President	None
LAO	David H. Morrison	Vice President	None
LAO	Andrew J. Moscardini	Vice President	None
LAO	Brian D. Munson	Regional Vice President	None
LAO	Jon Christian Nicolazzo	Regional Vice President	None
LAO	Earnest M. Niemi	Regional Vice President	None
LAO	Jack Nitowitz	Vice President	None
LAO	William E. Noe	Senior Vice President	None
LAO	Matthew P. O’Connor	Senior 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	Vice President	None
LAO	Shawn M. O’Sullivan	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	David K. Petzke	Senior Vice President	None
IRV	John H. Phelan, Jr.	Director	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
SNO	John P. Raney	Assistant Vice President	None
LAO	James P. Rayburn	Vice President	None
LAO	Rene M. Reincke	Vice President	None
LAO	Steven J. Reitman	Senior Vice President	None
LAO	Jeffrey Robinson	Vice President	None
LAO	Suzette M. Rothberg	Vice President	None
LAO	James F. Rothenberg	Non-Executive Chairman and Director	None
LAO	Romolo D. Rottura	Senior Vice President	None
LAO	William M. Ryan	Vice President	None
LAO	Dean B. Rydquist	Director, Senior Vice President and Chief Compliance Officer	None
LAO	Richard A. Sabec, Jr.	Vice President	None
LAO	Paul V. Santoro	Senior Vice President	None
LAO	Joseph D. Scarpitti	Senior Vice President	None
IRV	MaryAnn Scarsone	Assistant Vice President	None
LAO	Kim D. Schmidt	Assistant Vice President	None
LAO	David L. Schroeder	Assistant Vice President	None
LAO	James J. Sewell III	Regional Vice President	None
LAO	Arthur M. Sgroi	Senior Vice President	None
LAO	Steven D. Shackelford	Regional Vice President	None
LAO	Michael J. Sheldon	Vice President	None
LAO	Brad Short	Vice President	None
LAO	Nathan W. Simmons	Regional Vice President	None
LAO	Connie F. Sjursen	Vice President	None
LAO	Jerry L. Slater	Senior Vice President	None
LAO	Matthew Smith	Assistant Vice President	None
SNO	Stacy D. Smolka	Assistant Vice President	None
LAO	J. Eric Snively	Vice President	None
LAO	Therese L. Soullier	Vice President	None
LAO	Kristen J. Spazafumo	Vice President	None
LAO	Mark D. Steburg	Vice President	None
LAO	Michael P. Stern	Vice President	None
LAO	Brad Stillwagon	Vice President	None
LAO	Craig R. Strauser	Senior Vice President	None
NYO	Andrew B. Suzman	Director	None
LAO	Libby J. Syth	Vice President	None
LAO	Drew W. Taylor	Senior Vice President	None
LAO	David R. Therrien	Assistant Vice President	None
LAO	Gary J. Thoma	Vice President	None
LAO	John B. Thomas	Regional Vice President	None
LAO	Cynthia M. Thompson	Senior 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. Trammell	Regional Vice President	None
IND	Christopher E. Trede	Vice President	None
LAO	Scott W. Ursin-Smith	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	Senior Vice President	None
LAO	Jason M. Weybrecht	Vice President	None
LAO	Brian E. Whalen	Vice President	None
LAO	N. Dexter Williams, Jr.	Senior Vice President	None
LAO	Andrew L. Wilson	Vice President	None
LAO	Steven C. Wilson	Vice President	None
LAO	Timothy J. Wilson	Director, Senior Vice President and National Sales Manager	None
LAO	Kurt A. Wuestenberg	Vice President	None
LAO	Jason P. Young	Vice President	None
LAO	Jonathan A. Young	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, 12811 North Meridian Street, Carmel, IN 46032
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 2000, San Francisco, CA 94105
SNO	Business Address, 3500 Wiseman Boulevard, San Antonio, TX  78251

(c)           None

Item 33. 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; 12811 Meridian Street, Carmel, Indiana 46032; 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 34.            Management Services

None

Item 35.            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 23rd day of February, 2011.

THE BOND FUND OF AMERICA

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 February 23, 2011, by the following persons in the capacities indicated.

	Signature		Title
(1)	Principal Executive Officer:
	/s/ John H. Smet	President/PEO
	(John H. Smet)
(2)	Principal Financial Officer and Principal Accounting Officer:
	/s/ Ari M. Vinocor	Treasurer
	(Ari M. Vinocor)
(3)	Trustees:
	Lee A. Ault III*	Trustee
	William H. Baribault*	Trustee
	James G. Ellis*	Trustee
	Martin Fenton*	Chairman of the Board (Independent and Non-Executive)
	Leonard R. Fuller*	Trustee
	/s/ Abner D. Goldstine	Trustee
	(Abner D. Goldstine)
	/s/ Paul G. Haaga, Jr.	Vice Chairman and Trustee
	(Paul G. Haaga, Jr.)
	W. Scott Hedrick*	Trustee
	R. Clark Hooper*	Trustee
	Merit E. Janow*	Trustee
	Laurel B. Mitchell*	Trustee
	Frank M. Sanchez*	Trustee
	Margaret Spellings*	Trustee
	Steadman Upham*	Trustee
	*By: /s/ Courtney R. Taylor
	(Courtney R. Taylor, 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, Lee A. Ault III, 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 Insurance Series (File No. 002-86838, File No. 811-03857)

-   American Funds Money Market Fund (File No. 333-157162, File No. 811-22277)

-   American Funds Mortgage Fund (File No. 333-168595, File No. 811-22449)

-   American Funds Short-Term Tax-Exempt Bond Fund (File No. 033-26431, File No. 811-05750)

-   American Funds Target Date Retirement Series (File No. 333-138648, File No. 811-21981)

-   American Funds Tax-Exempt Fund of New York (File No. 333-168594, File No. 811-22448)

-   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 (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 (File No. 002-50700, File No. 811-02444)

-   Capital World Bond Fund (File No. 033-12447, File No. 811-05104)

-   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)

-   Short-Term Bond Fund of America (File No. 333-135770, File No. 811-21928)

-   The Tax-Exempt Bond Fund of America (File No. 002-49291, File No. 811-02421)

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 Patrick F. Quan Kimberly S. Verdick Steven I. Koszalka Julie E. Lawton Tanya Schneider Raymond F. Sullivan, Jr. Courtney R. Taylor Brian D. Bullard Karl C. Grauman M. Susan Gupton Gregory F. Niland 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, any and all subsequent Amendments, or Post-Effective Amendments to said Registration Statement on Form N-1A 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 San Francisco, CA, this 15th day of September, 2010.

    (City, State)

/s/ Lee A. Ault III

Lee A. Ault III, Board member

POWER OF ATTORNEY

I, William H. Baribault, 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 Insurance Series (File No. 002-86838, File No. 811-03857)

-   American Funds Money Market Fund (File No. 333-157162, File No. 811-22277)

-   American Funds Mortgage Fund (File No. 333-168595, File No. 811-22449)

-   American Funds Short-Term Tax-Exempt Bond Fund (File No. 033-26431, File No. 811-05750)

-   American Funds Target Date Retirement Series (File No. 333-138648, File No. 811-21981)

-   American Funds Tax-Exempt Fund of New York (File No. 333-168594, File No. 811-22448)

-   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 (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 (File No. 002-50700, File No. 811-02444)

-   Capital World Bond Fund (File No. 033-12447, File No. 811-05104)

-   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)

-   Short-Term Bond Fund of America (File No. 333-135770, File No. 811-21928)

-   The Tax-Exempt Bond Fund of America (File No. 002-49291, File No. 811-02421)

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 Patrick F. Quan Kimberly S. Verdick Steven I. Koszalka Julie E. Lawton Tanya Schneider Raymond F. Sullivan, Jr. Courtney R. Taylor Brian D. Bullard Karl C. Grauman M. Susan Gupton Gregory F. Niland 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, any and all subsequent Amendments, or Post-Effective Amendments to said Registration Statement on Form N-1A 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 San Francisco, CA, this 15th day of September, 2010.

    (City, State)

/s/ William H. Baribault

William H. Baribault, Board member

POWER OF ATTORNEY

I, James G. Ellis, the undersigned Board member of the following registered investment companies (collectively, the “Funds”):

-   AMCAP Fund (File No. 002-26516, File No. 811-01435)

-   American  Funds Global Balanced Fund (File No. 333-170605, File No. 811-22496)

-   The American Funds Income Series – U.S. Government Securities Fund (File No. 002-98199, File No. 811-04318)

-   American Funds Insurance Series (File No. 002-86838, File No. 811-03857)

-   American Funds Money Market Fund (File No. 333-157162, File No. 811-22277)

-   American Funds Mortgage Fund (File No. 333-168595, File No. 811-22449)

-   American Funds Short-Term Tax-Exempt Bond Fund (File No. 033-26431, File No. 811-05750)

-   American Funds Target Date Retirement Series (File No. 333-138648, File No. 811-21981)

-   American Funds Tax-Exempt Fund of New York (File No. 333-168594, File No. 811-22448)

-   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 (File No. 033-80630, File No. 811-08576)

-   American High-Income Trust (File No. 033-17917, File No. 811-05364)

-   American Mutual Fund (File No. 002-10607, File No. 811-00572)

-   The Bond Fund of America (File No. 002-50700, File No. 811-02444)

-   Capital World Bond Fund (File No. 033-12447, File No. 811-05104)

-   Intermediate Bond Fund of America (File No. 033-19514, File No. 811-05446)

-   The Investment Company of America (File No. 002-10811, File No. 811-00116)

-   Limited Term Tax-Exempt Bond Fund of America (File No. 033-66214, File No. 811-07888)

-   Short-Term Bond Fund of America (File No. 333-135770, File No. 811-21928)

-   The Tax-Exempt Bond Fund of America (File No. 002-49291, File No. 811-02421)

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 Patrick F. Quan Kimberly S. Verdick Steven I. Koszalka Julie E. Lawton Tanya Schneider Raymond F. Sullivan, Jr. Courtney R. Taylor Jennifer M. Buchheim Brian D. Bullard Karl C. Grauman M. Susan Gupton Gregory F. Niland 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, any and all subsequent Amendments, or Post-Effective Amendments to said Registration Statement on Form N-1A 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 6th  day of December, 2010.

  (City, State)

/s/ James G. Ellis                                           

James G. Ellis, Board member

POWER OF ATTORNEY

I, Martin Fenton, the undersigned Board member of the following registered investment companies (collectively, the “Funds”):

-   AMCAP Fund (File No. 002-26516, File No. 811-01435)

-   The American Funds Income Series – U.S. Government Securities Fund (File No. 002-98199, File No. 811-04318)

-   American Funds Insurance Series (File No. 002-86838, File No. 811-03857)

-   American Funds Money Market Fund (File No. 333-157162, File No. 811-22277)

-   American Funds Mortgage Fund (File No. 333-168595, File No. 811-22449)

-   American Funds Short-Term Tax-Exempt Bond Fund (File No. 033-26431, File No. 811-05750)

-   American Funds Target Date Retirement Series (File No. 333-138648, File No. 811-21981)

-   American Funds Tax-Exempt Fund of New York (File No. 333-168594, File No. 811-22448)

-   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 (File No. 033-80630, File No. 811-08576)

-   American High-Income Trust (File No. 033-17917, File No. 811-05364)

-   American Mutual Fund (File No. 002-10607, File No. 811-00572)

-   The Bond Fund of America (File No. 002-50700, File No. 811-02444)

-   Capital World Bond Fund (File No. 033-12447, File No. 811-05104)

-   Intermediate Bond Fund of America (File No. 033-19514, File No. 811-05446)

-   The Investment Company of America (File No. 002-10811, File No. 811-00116)

-   Limited Term Tax-Exempt Bond Fund of America (File No. 033-66214, File No. 811-07888)

-   Short-Term Bond Fund of America (File No. 333-135770, File No. 811-21928)

-   The Tax-Exempt Bond Fund of America (File No. 002-49291, File No. 811-02421)

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 Patrick F. Quan Kimberly S. Verdick Steven I. Koszalka Julie E. Lawton Tanya Schneider Raymond F. Sullivan, Jr. Courtney R. Taylor Brian D. Bullard Karl C. Grauman M. Susan Gupton Gregory F. Niland 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, any and all subsequent Amendments, or Post-Effective Amendments to said Registration Statement on Form N-1A 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 San Francisco, CA, this 15th day of September, 2010.

    (City, State)

/s/ Martin Fenton

Martin Fenton, Board member

POWER OF ATTORNEY

I, Leonard R. Fuller, the undersigned Board member of the following registered investment companies (collectively, the “Funds”):

-   AMCAP Fund (File No. 002-26516, File No. 811-01435)

-   American  Funds Global Balanced Fund (File No. 333-170605, File No. 811-22496)

-   The American Funds Income Series – U.S. Government Securities Fund (File No. 002-98199, File No. 811-04318)

-   American Funds Insurance Series (File No. 002-86838, File No. 811-03857)

-   American Funds Money Market Fund (File No. 333-157162, File No. 811-22277)

-   American Funds Mortgage Fund (File No. 333-168595, File No. 811-22449)

-   American Funds Short-Term Tax-Exempt Bond Fund (File No. 033-26431, File No. 811-05750)

-   American Funds Target Date Retirement Series (File No. 333-138648, File No. 811-21981)

-   American Funds Tax-Exempt Fund of New York (File No. 333-168594, File No. 811-22448)

-   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 (File No. 033-80630, File No. 811-08576)

-   American High-Income Trust (File No. 033-17917, File No. 811-05364)

-   American Mutual Fund (File No. 002-10607, File No. 811-00572)

-   The Bond Fund of America (File No. 002-50700, File No. 811-02444)

-   Capital World Bond Fund (File No. 033-12447, File No. 811-05104)

-   Intermediate Bond Fund of America (File No. 033-19514, File No. 811-05446)

-   The Investment Company of America (File No. 002-10811, File No. 811-00116)

-   Limited Term Tax-Exempt Bond Fund of America (File No. 033-66214, File No. 811-07888)

-   Short-Term Bond Fund of America (File No. 333-135770, File No. 811-21928)

-   The Tax-Exempt Bond Fund of America (File No. 002-49291, File No. 811-02421)

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 Patrick F. Quan Kimberly S. Verdick Steven I. Koszalka Julie E. Lawton Tanya Schneider Raymond F. Sullivan, Jr. Courtney R. Taylor Jennifer M. Buchheim Brian D. Bullard Karl C. Grauman M. Susan Gupton Gregory F. Niland 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, any and all subsequent Amendments, or Post-Effective Amendments to said Registration Statement on Form N-1A 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 Marina del Rey, CA, this 10th day of December, 2010.

      (City, State)

/s/ Leonard R. Fuller

Leonard R. Fuller, Board member

POWER OF ATTORNEY

I, W. Scott Hedrick, 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 Insurance Series (File No. 002-86838, File No. 811-03857)

-   American Funds Money Market Fund (File No. 333-157162, File No. 811-22277)

-   American Funds Mortgage Fund (File No. 333-168595, File No. 811-22449)

-   American Funds Short-Term Tax-Exempt Bond Fund (File No. 033-26431, File No. 811-05750)

-   American Funds Target Date Retirement Series (File No. 333-138648, File No. 811-21981)

-   American Funds Tax-Exempt Fund of New York (File No. 333-168594, File No. 811-22448)

-   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 (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 (File No. 002-50700, File No. 811-02444)

-   Capital World Bond Fund (File No. 033-12447, File No. 811-05104)

-   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)

-   Short-Term Bond Fund of America (File No. 333-135770, File No. 811-21928)

-   The Tax-Exempt Bond Fund of America (File No. 002-49291, File No. 811-02421)

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 Patrick F. Quan Kimberly S. Verdick Steven I. Koszalka Julie E. Lawton Tanya Schneider Raymond F. Sullivan, Jr. Courtney R. Taylor Brian D. Bullard Karl C. Grauman M. Susan Gupton Gregory F. Niland 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, any and all subsequent Amendments, or Post-Effective Amendments to said Registration Statement on Form N-1A 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 San Francisco, CA, this 15th day of September, 2010.

    (City, State)

/s/ W. Scott Hedrick

W. Scott Hedrick, Board member

POWER OF ATTORNEY

I, R. Clark Hooper, 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 Insurance Series (File No. 002-86838, File No. 811-03857)

-   American Funds Money Market Fund (File No. 333-157162, File No. 811-22277)

-   American Funds Mortgage Fund (File No. 333-168595, File No. 811-22449)

-   American Funds Short-Term Tax-Exempt Bond Fund (File No. 033-26431, File No. 811-05750)

-   American Funds Target Date Retirement Series (File No. 333-138648, File No. 811-21981)

-   American Funds Tax-Exempt Fund of New York (File No. 333-168594, File No. 811-22448)

-   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 (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 (File No. 002-50700, File No. 811-02444)

-   Capital Income Builder (File No. 033-12967, File No. 811-05085)

-   Capital World Bond Fund (File No. 033-12447, File No. 811-05104)

-   Capital World Growth and Income Fund (File No. 033-54444, File No. 811-07338)

-   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 (File No. 333-135770, File No. 811-21928)

-   The Tax-Exempt Bond Fund of America (File No. 002-49291, File No. 811-02421)

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 Patrick F. Quan Kimberly S. Verdick Steven I. Koszalka Julie E. Lawton Tanya Schneider Raymond F. Sullivan, Jr. Courtney R. Taylor Brian D. Bullard Karl C. Grauman M. Susan Gupton Gregory F. Niland Ari M. Vinocor Neal F. Wellons

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, any and all subsequent Amendments, or Post-Effective Amendments to said Registration Statement on Form N-1A 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 San Francisco, CA, this 15th day of September, 2010.

    (City, State)

/s/ R. Clark Hooper

R. Clark Hooper, Board member

POWER OF ATTORNEY

I, Merit E. Janow, 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 Insurance Series (File No. 002-86838, File No. 811-03857)

-   American Funds Money Market Fund (File No. 333-157162, File No. 811-22277)

-   American Funds Mortgage Fund (File No. 333-168595, File No. 811-22449)

-   American Funds Short-Term Tax-Exempt Bond Fund (File No. 033-26431, File No. 811-05750)

-   American Funds Target Date Retirement Series (File No. 333-138648, File No. 811-21981)

-   American Funds Tax-Exempt Fund of New York (File No. 333-168594, File No. 811-22448)

-   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 (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 (File No. 002-50700, File No. 811-02444)

-   Capital Income Builder (File No. 033-12967, File No. 811-05085)

-   Capital World Bond Fund (File No. 033-12447, File No. 811-05104)

-   Capital World Growth and Income Fund (File No. 033-54444, File No. 811-07338)

-   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 (File No. 333-135770, File No. 811-21928)

-   The Tax-Exempt Bond Fund of America (File No. 002-49291, File No. 811-02421)

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 Patrick F. Quan Kimberly S. Verdick Steven I. Koszalka Julie E. Lawton Tanya Schneider Raymond F. Sullivan, Jr. Courtney R. Taylor Brian D. Bullard Karl C. Grauman M. Susan Gupton Gregory F. Niland Ari M. Vinocor Neal F. Wellons

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, any and all subsequent Amendments, or Post-Effective Amendments to said Registration Statement on Form N-1A 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 San Francisco, CA, this 15th day of September, 2010.

    (City, State)

/s/ Merit E. Janow                                           

Merit E. Janow, Board member

POWER OF ATTORNEY

I, Laurel B. Mitchell, 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 Insurance Series (File No. 002-86838, File No. 811-03857)

-   American Funds Money Market Fund (File No. 333-157162, File No. 811-22277)

-   American Funds Mortgage Fund (File No. 333-168595, File No. 811-22449)

-   American Funds Short-Term Tax-Exempt Bond Fund (File No. 033-26431, File No. 811-05750)

-   American Funds Target Date Retirement Series (File No. 333-138648, File No. 811-21981)

-   American Funds Tax-Exempt Fund of New York (File No. 333-168594, File No. 811-22448)

-   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 (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 (File No. 002-50700, File No. 811-02444)

-   Capital World Bond Fund (File No. 033-12447, File No. 811-05104)

-   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)

-   Short-Term Bond Fund of America (File No. 333-135770, File No. 811-21928)

-   The Tax-Exempt Bond Fund of America (File No. 002-49291, File No. 811-02421)

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 Patrick F. Quan Kimberly S. Verdick Steven I. Koszalka Julie E. Lawton Tanya Schneider Raymond F. Sullivan, Jr. Courtney R. Taylor Brian D. Bullard Karl C. Grauman M. Susan Gupton Gregory F. Niland 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, any and all subsequent Amendments, or Post-Effective Amendments to said Registration Statement on Form N-1A 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 San Francisco, CA, this 15th day of September, 2010.

    (City, State)

/s/ Laurel B. Mitchell

Laurel B. Mitchell, Board member

POWER OF ATTORNEY

I, Frank M. Sanchez, 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 Insurance Series (File No. 002-86838, File No. 811-03857)

-   American Funds Money Market Fund (File No. 333-157162, File No. 811-22277)

-   American Funds Mortgage Fund (File No. 333-168595, File No. 811-22449)

-   American Funds Short-Term Tax-Exempt Bond Fund (File No. 033-26431, File No. 811-05750)

-   American Funds Target Date Retirement Series (File No. 333-138648, File No. 811-21981)

-   American Funds Tax-Exempt Fund of New York (File No. 333-168594, File No. 811-22448)

-   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 (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 (File No. 002-50700, File No. 811-02444)

-   Capital World Bond Fund (File No. 033-12447, File No. 811-05104)

-   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)

-   Short-Term Bond Fund of America (File No. 333-135770, File No. 811-21928)

-   The Tax-Exempt Bond Fund of America (File No. 002-49291, File No. 811-02421)

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 Patrick F. Quan Kimberly S. Verdick Steven I. Koszalka Julie E. Lawton Tanya Schneider Raymond F. Sullivan, Jr. Courtney R. Taylor Brian D. Bullard Karl C. Grauman M. Susan Gupton Gregory F. Niland 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, any and all subsequent Amendments, or Post-Effective Amendments to said Registration Statement on Form N-1A 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 San Francisco, CA, this 15th day of September, 2010.

    (City, State)

/s/ Frank M. Sanchez

Frank M. Sanchez, Board member

POWER OF ATTORNEY

I, Margaret Spellings, 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 Insurance Series (File No. 002-86838, File No. 811-03857)

-   American Funds Money Market Fund (File No. 333-157162, File No. 811-22277)

-   American Funds Mortgage Fund (File No. 333-168595, File No. 811-22449)

-   American Funds Short-Term Tax-Exempt Bond Fund (File No. 033-26431, File No. 811-05750)

-   American Funds Target Date Retirement Series (File No. 333-138648, File No. 811-21981)

-   American Funds Tax-Exempt Fund of New York (File No. 333-168594, File No. 811-22448)

-   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 (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 (File No. 002-50700, File No. 811-02444)

-   Capital World Bond Fund (File No. 033-12447, File No. 811-05104)

-   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)

-   Short-Term Bond Fund of America (File No. 333-135770, File No. 811-21928)

-   The Tax-Exempt Bond Fund of America (File No. 002-49291, File No. 811-02421)

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 Patrick F. Quan Kimberly S. Verdick Steven I. Koszalka Julie E. Lawton Tanya Schneider Raymond F. Sullivan, Jr. Courtney R. Taylor Brian D. Bullard Karl C. Grauman M. Susan Gupton Gregory F. Niland 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, any and all subsequent Amendments, or Post-Effective Amendments to said Registration Statement on Form N-1A 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 San Francisco, CA, this 15th day of September, 2010.

    (City, State)

/s/ Margaret Spellings

Margaret Spellings, Board member

POWER OF ATTORNEY

I, Steadman Upham, 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 Insurance Series (File No. 002-86838, File No. 811-03857)

-   American Funds Money Market Fund (File No. 333-157162, File No. 811-22277)

-   American Funds Mortgage Fund (File No. 333-168595, File No. 811-22449)

-   American Funds Short-Term Tax-Exempt Bond Fund (File No. 033-26431, File No. 811-05750)

-   American Funds Target Date Retirement Series (File No. 333-138648, File No. 811-21981)

-   American Funds Tax-Exempt Fund of New York (File No. 333-168594, File No. 811-22448)

-   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 (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 (File No. 002-50700, File No. 811-02444)

-   Capital Income Builder (File No. 033-12967, File No. 811-05085)

-   Capital World Bond Fund (File No. 033-12447, File No. 811-05104)

-   Capital World Growth and Income Fund (File No. 033-54444, File No. 811-07338)

-   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 (File No. 333-135770, File No. 811-21928)

-   The Tax-Exempt Bond Fund of America (File No. 002-49291, File No. 811-02421)

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 Patrick F. Quan Kimberly S. Verdick Steven I. Koszalka Julie E. Lawton Tanya Schneider Raymond F. Sullivan, Jr. Courtney R. Taylor Brian D. Bullard Karl C. Grauman M. Susan Gupton Gregory F. Niland Ari M. Vinocor Neal F. Wellons

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, any and all subsequent Amendments, or Post-Effective Amendments to said Registration Statement on Form N-1A 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 San Francisco, CA, this 15th day of September, 2010.

    (City, State)

/s/ Steadman Upham

Steadman Upham, Board member