UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
Certified Shareholder Report of
Registered Management Investment Companies
Investment Company Act File Number: 811-01880
The Income Fund of America, Inc.
(Exact name of registrant as specified in charter)
P.O. Box 7650, One Market, Steuart Tower
San Francisco, California 94120
(Address of principal executive offices)
Registrant's telephone number, including area code: (415) 421-9360
Date of fiscal year end: July 31
Date of reporting period: July 31, 2007
Patrick F. Quan
Capital Research and Management Company
P.O. Box 7650, One Market, Steuart Tower
San Francisco, California 94120
(Name and address of agent for service)
Copies to:
Michael Glazer
Paul, Hastings, Janofsky & Walker LLP
515 South Flower Street, 25th Floor
Los Angeles, California 90071
(Counsel for the registrant)
ITEM 1 – Reports to Stockholders
[logo - American Funds®]
The right choice for the long term®
The Income Fund of America
Opportunity amid uncertainty
[photo of a Claret Cup Cactus flower]
Annual report for the year ended July 31, 2007
Annual report for the year ended July 31, 2007
The Income Fund of America® seeks current income while secondarily striving for capital growth through investments in stocks and fixed-income securities.
This fund is one of the 30 American Funds. American Funds ranks among the nation’s three largest mutual fund families. For 75 years, Capital Research and Management Company,SM the American Funds adviser, has invested with a long-term focus based on thorough research and attention to risk.
Contents | |
Letter to shareholders | 1 |
The value of a long-term perspective | 4 |
Feature article: Opportunity amid uncertainty | 6 |
About your fund | 12 |
The portfolio at a glance | 13 |
Summary investment portfolio | 14 |
Financial statements | 20 |
Board of directors and other officers | 35 |
What makes American Funds different? | back cover |
Fund results shown in this report, unless otherwise indicated, are for Class A shares at net asset value. If a sales charge (maximum 5.75%) had been deducted, the results would have been lower. Results are for past periods and are not predictive of results for future periods. Current and future results may be lower or higher than those shown. Share prices and returns will vary, so investors may lose money. Investing for short periods makes losses more likely. Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity. For current information and month-end results, visit americanfunds.com.
Here are the average annual total returns on a $1,000 investment with all distributions reinvested for periods ended June 30, 2007 (the most recent calendar quarter): | ||||||||||||
Class A shares | 1 year | 5 years | 10 years | |||||||||
Reflecting 5.75% maximum sales charge | +13.01 | % | +11.16 | % | +9.12 | % |
The total annual fund operating expense ratio for Class A shares as of the most recent fiscal year-end was 0.56%. This figure does not reflect a fee waiver currently in effect; therefore, the actual expense ratio is lower.
The fund’s investment adviser waived 5% of its management fees from September 1, 2004, through March 31, 2005, and increased it to 10% on April 1, 2005. Fund results shown reflect actual expenses, with the waiver applied. Fund results would have been lower without the waiver. Please see the Financial Highlights table on pages 29 and 30 for details.
The fund’s 30-day yield for Class A shares as of August 31, 2007, calculated in accordance with the Securities and Exchange Commission formula, was 4.00% (3.98% without the fee waiver). The fund’s distribution rate for Class A shares as of that date was 4.10%. Both reflect the 5.75% maximum sales charge. The SEC yield reflects the rate at which the fund is earning income on its current portfolio of securities while the distribution rate reflects the fund’s past dividends paid to shareholders. Accordingly, the fund’s SEC yield and distribution rate may differ.
Results for other share classes can be found on page 34.
The return of principal for the bond holdings in The Income Fund of America is not guaranteed. Fund shares are subject to the same interest rate, inflation and credit risks associated with the underlying bond holdings. High-yield bonds are subject to greater fluctuations in value and risk of loss of income and principal. Investing outside the United States may be subject to additional risks, such as currency fluctuations and political instability, which are detailed in the fund’s prospectus.
Fellow shareholders:
[photo of a Claret Cup Cactus flower among cactus plants]
For the 12 months ended July 31, 2007, shares of The Income Fund of America rose 13.7%. Although this figure trailed the 16.1% return of the unmanaged Standard & Poor’s 500 Composite Index (a broad measure of the U.S. stock market), it was well ahead of the 5.6% rise in the Lehman Brothers Aggregate Bond Index, a gauge of the U.S. bond market.
The fund’s return also significantly outpaced that of its peer group, as measured by the Lipper Income Funds Index, which rose 10.3%.
While The Income Fund of America seeks capital appreciation, its primary objective is providing regular quarterly income to shareholders. For the period, the fund’s 4.4% dividend yield was more than double the 1.8% yield of the S&P 500 and finished well above the 3.1% figure registered by the Lipper Income Funds Average.
Determining a sustainable dividend
We’re judicious in our approach to setting the fund’s dividend. When we believe that shifts within the dividend and interest rate environment allow for sustainable increases, we adjust our quarterly payout. During the fiscal year, we made one such change, increasing the dividend from 18.5 cents a share to 19.5 cents a share beginning with the December 2006 payment.
Over the last few years, more and more companies have used “special dividends” to pass along to their shareholders proceeds from non-recurring corporate actions such as the sale of a division or the distribution of excess capital. During the 12 months, the fund received a number of these special dividends from holdings including Esprit and Regal Entertainment. This, in some measure, accounted for the 15 cents a share special dividend the fund paid in December 2006. This year, we once again expect to pay a special dividend, which is unlikely to exceed the 2006 payment.
The Income Fund of America also paid a capital gain distribution of 46.4 cents a share in December.
[Begin Sidebar]
Class A share results at a glance (with dividends reinvested or interest compounded) | ||||||||||||||||
Average annual total returns for periods ended July 31, 2007 | ||||||||||||||||
1 year | 5 years | 10 years | Lifetime1 | |||||||||||||
The Income Fund of America | +13.7 | % | +13.1 | % | +8.9 | % | +12.6 | % | ||||||||
Standard & Poor’s 500 Composite Index | +16.1 | +11.8 | +6.0 | +12.0 | ||||||||||||
Lipper Income Funds Index2 | +10.3 | +8.4 | +5.8 | — | 3 | |||||||||||
Lehman Brothers Aggregate Bond Index | +5.6 | +4.4 | +5.8 | +8.3 | 4 | |||||||||||
Consumer Price Index (inflation)5 | +2.4 | +3.0 | +2.6 | +4.6 | ||||||||||||
1 Since December 1, 1973, when Capital Research and Management Company became the fund’s investment adviser. | ||||||||||||||||
2 Source: Lipper. Figures do not reflect the effect of sales charges. | ||||||||||||||||
3 The inception date for the index was December 31, 1988 . | ||||||||||||||||
4 From December 1, 1973, through December 31, 1975, the Lehman Brothers Government/Credit Bond Index was used because the Aggregate Bond Index did not yet exist. | ||||||||||||||||
5 Computed from data supplied by the U.S. Department of Labor, Bureau of Labor Statistics. |
The market indexes are unmanaged and their results do not reflect the effect of sales charges, commissions or expenses. Fund returns do not include sales charges.
[End Sidebar]
Strength gives way to volatility
For much of the 12 months, U.S. stock markets climbed steadily, borne higher by a number of favorable economic indicators. Though housing was weak, consumer spending was robust and inflation remained in check despite elevated energy costs. Corporate fundamentals remained solid, bolstered by strong export growth, earnings expansion and healthy balance sheets.
As the period drew to a close, however, financial markets grew more volatile. By and large, the trouble emanated from the bond market, where worries about subprime mortgages intensified with news of increasing defaults. As investors began seeing greater risk in the broader bond market, the appetite for higher yielding issues waned and much of the leveraged buyout activity those bonds had helped to facilitate stalled. This, in turn, affected equities since buyout activity has played an important role in recently rising stock markets.
Broad portfolio support
Notwithstanding the instability that closed the period, returns for the fund’s equity investments were strong. Share prices for many telecommunication services companies were aided by an increasingly favorable competitive environment and expanding revenue opportunities in the wireless area. Many investments in the materials and industrials sectors rose sharply as growth in the developing world fueled demand for their products. Within the health care sector, pharmaceutical stocks did well as the bleak revenue forecasts that had weighed on share prices began to appear overly pessimistic.
Returns for the fund’s financial services holdings were muted as weakness in the housing market and escalating problems within the subprime mortgage area took a toll on lenders. Should volatility continue to roil markets, financial institutions with businesses tied to trading in the capital markets may see their profitability affected.
Transition to higher quality bonds
At period’s end, 23.6% of the fund’s assets were in fixed-income securities. Though interest rates fluctuated during the year, they finished almost where they began. Yield spreads tightened to near-record levels before widening again. (The yield spread is the difference between the yields of lower rated, higher risk bonds and those of U.S. Treasury securities, which are generally regarded as risk-free investments.) We felt that, in many cases, the marginal increase in yield offered by lower quality bonds was not worth their added risk, and found better opportunity among higher quality issues.
If volatility endures, this strategy may take broader hold in the market as investors transition out of riskier issues in a so-called flight to quality. This could reverse the pattern of the past few years, when returns for lower quality bonds generally outpaced those of their higher quality counterparts.
The fund continues to maintain a sizable cash and equivalents position of 8.6%, up from 6.8% a year ago.
[Begin Sidebar]
Striking a balance between return and volatility
The Income Fund of America takes a prudent path to yield. Looking back 10 years, as shown at right, the fund has provided higher returns than bonds and the average income fund, and lower volatility than the broader stock market.
For the 10-year period ended July 31, 2007
[begin quadrant graph]
Average annual total return | Volatility | |||||||||
Less return, less volatility quadrant | The Income Fund of America | 8.92 | % | 8.06 | % | |||||
Less return, less volatility quadrant | Bonds | 5.82 | 3.47 | |||||||
Less return, less volatility quadrant | Income Funds Index | 5.85 | 6.12 | |||||||
Less return, more volatility quadrant | Stocks | 5.97 | 14.85 |
[end quadrant graph]
Sources: Stocks — S&P 500; Bonds — Lehman Brothers Aggregate Bond Index; Income Funds Index — Lipper. Returns include reinvestment of all distributions. Volatility is calculated at net asset value by Lipper using annualized standard deviation (based on monthly returns), a measure of how returns over time have varied from the mean; a lower number signifies lower volatility.
[End Sidebar]
Meeting the income challenge
In recent years, returns for companies in sectors long favored by The Income Fund of America — namely those with above-average dividends — have generally outpaced those in lower yielding sectors. The resulting share price increases have meant that the price-to-earnings ratios of companies in some traditionally higher yielding industries — utilities and real estate investment trusts among them — have begun to approach those of more traditional growth sectors. Their yields have declined as well. Yet it’s important to note that higher yielding stocks have traditionally traded at lower price-to-earnings ratios than their growth counterparts and we would not be surprised if, going forward, investors began to restore this balance by favoring companies fitting a more traditional growth profile.
In the meantime, we’re seeking select opportunities in our traditional higher yielding sectors while also searching for opportunities in another of the fund’s traditional hunting grounds — companies and industries that have fallen out of favor with investors. The feature article, “Opportunity amid uncertainty,” which begins on page 6, looks at how the fund has successfully employed this approach.
As the global economy continues to expand and evolve, we are finding more and more opportunities — including out-of-favor companies — beyond U.S. borders. To help maintain our ability to invest in the best of them, The Income Fund of America’s board of directors recently approved a change in the fund’s non-U.S. ownership limits, from 20% to 25% of net assets.
An unwavering commitment
Whatever direction the market is headed, we pay close attention to risk and emphasize real return in the form of income. Remaining committed to this objective has helped The Income Fund of America hold up better than the broader market and remain less volatile during major declines. We will not waver from this approach as we continue to pursue the interests of our shareholders.
Cordially,
/s/ Hilda L. Applbaum
Hilda L. Applbaum
Vice Chairman and Principal Executive Officer
/s/ David C. Barclay
David C. Barclay
President
September 4, 2007
For current information about the fund, visit americanfunds.com.
[Begin Sidebar]
A lifetime of high current income
The Income Fund of America’s 12-month dividend yield vs. benchmarks
Year ended July 31
[begin line chart]
Year-end | The Income Fund of America | Lipper Income Funds Average | S&P 500 | |||||||||
1/31/1975 | 7.30 | 7.34 | 4.71 | |||||||||
7/31/1975 | 7.24 | 6.98 | 4.18 | |||||||||
1/31/1976 | 6.30 | 6.53 | 3.65 | |||||||||
7/31/1976 | 7.06 | 6.54 | 3.66 | |||||||||
1/31/1977 | 6.94 | 6.31 | 4.01 | |||||||||
7/31/1977 | 6.15 | 6.26 | 4.47 | |||||||||
1/31/1978 | 6.61 | 6.83 | 5.28 | |||||||||
7/31/1978 | 6.70 | 6.68 | 4.92 | |||||||||
1/31/1979 | 7.56 | 7.07 | 5.12 | |||||||||
7/31/1979 | 7.38 | 7.04 | 5.19 | |||||||||
1/31/1980 | 7.83 | 7.36 | 4.99 | |||||||||
7/31/1980 | 7.63 | 7.37 | 4.95 | |||||||||
1/31/1981 | 8.07 | 7.95 | 4.81 | |||||||||
7/31/1981 | 8.16 | 8.45 | 4.91 | |||||||||
1/31/1982 | 8.75 | 9.52 | 5.53 | |||||||||
7/31/1982 | 9.81 | 10.39 | 6.37 | |||||||||
1/31/1983 | 7.95 | 8.74 | 4.74 | |||||||||
7/31/1983 | 7.95 | 8.36 | 4.28 | |||||||||
1/31/1984 | 7.86 | 8.54 | 4.36 | |||||||||
7/31/1984 | 8.60 | 9.42 | 4.87 | |||||||||
1/31/1985 | 7.69 | 8.40 | 4.22 | |||||||||
7/31/1985 | 7.45 | 8.20 | 4.07 | |||||||||
1/31/1986 | 7.30 | 7.80 | 3.75 | |||||||||
7/31/1986 | 7.27 | 7.43 | 3.45 | |||||||||
1/31/1987 | 6.85 | 6.84 | 3.03 | |||||||||
7/31/1987 | 7.02 | 6.90 | 2.69 | |||||||||
1/31/1988 | 7.62 | 7.33 | 3.31 | |||||||||
7/31/1988 | 6.96 | 7.53 | 3.27 | |||||||||
1/31/1989 | 6.69 | 7.45 | 3.34 | |||||||||
7/31/1989 | 6.67 | 7.25 | 3.04 | |||||||||
1/31/1990 | 6.99 | 8.05 | 3.37 | |||||||||
7/31/1990 | 7.07 | 8.12 | 3.31 | |||||||||
1/31/1991 | 8.12 | 9.10 | 3.52 | |||||||||
7/31/1991 | 7.09 | 7.96 | 3.11 | |||||||||
1/31/1992 | 6.33 | 7.22 | 2.96 | |||||||||
7/31/1992 | 6.05 | 6.72 | 2.89 | |||||||||
1/31/1993 | 6.44 | 6.19 | 2.83 | |||||||||
7/31/1993 | 6.19 | 5.54 | 2.79 | |||||||||
1/31/1994 | 5.56 | 5.12 | 2.64 | |||||||||
7/31/1994 | 6.06 | 5.21 | 2.80 | |||||||||
1/31/1995 | 6.14 | 5.64 | 2.81 | |||||||||
7/31/1995 | 5.55 | 5.22 | 2.41 | |||||||||
1/31/1996 | 5.07 | 4.89 | 2.18 | |||||||||
7/31/1996 | 5.19 | 5.02 | 2.28 | |||||||||
1/31/1997 | 5.09 | 4.60 | 1.89 | |||||||||
7/31/1997 | 4.74 | 4.24 | 1.61 | |||||||||
1/31/1998 | 4.27 | 4.43 | 1.59 | |||||||||
7/31/1998 | 4.32 | 4.35 | 1.43 | |||||||||
1/31/1999 | 4.79 | 4.16 | 1.29 | |||||||||
7/31/1999 | 4.86 | 4.39 | 1.24 | |||||||||
1/31/2000 | 5.40 | 4.82 | 1.19 | |||||||||
7/31/2000 | 5.49 | 4.92 | 1.15 | |||||||||
1/31/2001 | 4.78 | 4.87 | 1.20 | |||||||||
7/31/2001 | 4.80 | 4.68 | 1.30 | |||||||||
1/31/2002 | 5.01 | 4.26 | 1.40 | |||||||||
7/31/2002 | 5.49 | 4.01 | 1.75 | |||||||||
1/31/2003 | 5.45 | 3.71 | 1.88 | |||||||||
7/31/2003 | 4.69 | 3.34 | 1.66 | |||||||||
1/31/2004 | 4.05 | 2.79 | 1.54 | |||||||||
7/31/2004 | 3.98 | 2.73 | 1.69 | |||||||||
1/31/2005 | 3.57 | 2.46 | 1.64 | |||||||||
7/31/2005 | 3.44 | 2.37 | 1.70 | |||||||||
1/31/2006 | 3.75 | 2.68 | 1.75 | |||||||||
7/31/2006 | 3.84 | 2.76 | 1.83 | |||||||||
1/31/2007 | 4.52 | 2.98 | 1.75 | |||||||||
7/31/2007 | 4.43 | 3.12 | 1.81 |
All numbers calculated by Lipper.
[End Sidebar]
The value of a long-term perspective
How a $10,000 investment has grown
There have always been reasons not to invest. If you look beyond the negative headlines, however, you will find that despite occasional stumbles, financial markets have tended to reward investors over the long term. Active management — bolstered by experience and careful research — can add even more value. As the chart below shows, over its lifetime, The Income Fund of America (IFA) has delivered higher returns than both the broader stock and bond markets. Dividends, particularly when reinvested, have accounted for a large portion of the fund’s overall results.
Fund results shown are for past periods for Class A shares and are not predictive of results for future periods. Current and future results may be lower or higher than those shown. Share prices and returns will vary, so investors may lose money. For current information and month-end results, visit americanfunds.com. Fund figures reflect deduction of the maximum sales charge of 5.75% on the $10,000 investment.1 Thus, the net amount invested was $9,425.2
Average annual total returns based on a $1,000 investment | ||||||||||||
(for periods ended July 31, 2007)* | ||||||||||||
1 year | 5 years | 10 years | ||||||||||
Class A shares | +7.12 | % | +11.75 | % | +8.28 | % | ||||||
*Assumes reinvestment of all distributions and payment of the maximum 5.75% sales charge. |
The fund’s investment adviser waived 5% of its management fees from September 1, 2004, through March 31, 2005, and increased the waiver to 10% on April 1, 2005. Fund results shown reflect the waiver, without which they would have been lower. Please see the Financial Highlights table on pages 29 and 30 for details.
Expense ratios and turnover rates* | ||||||||
Year ended July 31, 2007 | ||||||||
The Income Fund of America | Industry average† | |||||||
Expense ratio | 0.54 | %†† | 0.72 | % | ||||
Portfolio turnover rate | 32 | % | 45 | % | ||||
* The expense ratio is the annual percentage of net assets used to pay fund expenses. The portfolio turnover rate is a measure of how often securities are bought and sold by a fund. | ||||||||
† Front-end load income funds, as measured by Lipper. | ||||||||
††Reflects the fee waiver, 0.56% without the fee waiver. |
[begin mountain chart]
Year end July 31 | IFA1,7,8 remaining amounts if dividends taken in cash | IFA1,4,8 with dividends reinvested | Lehman Bros. Aggregate Bond Index5,6 with interest compounded | Standard & Poor’s 500 Composite Index5 with dividends reinvested | ||||||||||||||||
1974# | 8,767 | 9,088 | 9,378 | 8,481 | ||||||||||||||||
1975 | 10,141 | 11,391 | 10,580 | 9,951 | ||||||||||||||||
1976 | 12,155 | 14,750 | 11,871 | 12,066 | ||||||||||||||||
1977 | 12,701 | 16,392 | 13,189 | 12,042 | ||||||||||||||||
1978 | 12,584 | 17,403 | 13,474 | 12,926 | ||||||||||||||||
1979 | 12,693 | 18,921 | 14,373 | 14,069 | ||||||||||||||||
1980 | 12,490 | 20,161 | 14,602 | 17,412 | ||||||||||||||||
1981 | 12,818 | 22,484 | 13,871 | 19,675 | ||||||||||||||||
1982 | 12,256 | 23,663 | 16,720 | 17,063 | ||||||||||||||||
1983 | 16,112 | 33,683 | 20,383 | 27,174 | ||||||||||||||||
1984 | 15,738 | 35,721 | 22,154 | 26,367 | ||||||||||||||||
1985 | 19,443 | 47,674 | 27,452 | 34,914 | ||||||||||||||||
1986 | 21,668 | 57,146 | 33,353 | 44,833 | ||||||||||||||||
1987 | 23,568 | 66,671 | 34,859 | 62,449 | ||||||||||||||||
1988 | 22,341 | 67,812 | 37,497 | 55,109 | ||||||||||||||||
1989 | 25,644 | 83,698 | 43,200 | 72,685 | ||||||||||||||||
1990 | 24,351 | 84,639 | 46,253 | 77,386 | ||||||||||||||||
1991 | 25,390 | 95,046 | 51,204 | 87,239 | ||||||||||||||||
1992 | 28,370 | 113,237 | 58,770 | 98,377 | ||||||||||||||||
1993 | 29,917 | 126,680 | 64,746 | 106,947 | ||||||||||||||||
1994 | 28,788 | 129,171 | 64,807 | 112,457 | ||||||||||||||||
1995 | 31,571 | 150,378 | 71,358 | 141,775 | ||||||||||||||||
1996 | 34,007 | 170,618 | 75,311 | 165,244 | ||||||||||||||||
1997 | 41,731 | 220,576 | 83,417 | 251,353 | ||||||||||||||||
1998 | 44,436 | 245,542 | 89,980 | 299,807 | ||||||||||||||||
1999 | 45,588 | 264,664 | 92,220 | 360,395 | ||||||||||||||||
2000 | 42,276 | 259,165 | 97,721 | 392,724 | ||||||||||||||||
2001 | 46,460 | 299,416 | 110,124 | 336,476 | ||||||||||||||||
2002 | 41,359 | 280,397 | 118,420 | 257,015 | ||||||||||||||||
2003 | 44,136 | 314,550 | 124,835 | 284,354 | ||||||||||||||||
2004 | 49,057 | 364,136 | 130,876 | 321,781 | ||||||||||||||||
2005 | 54,032 | 415,525 | 137,146 | 366,973 | ||||||||||||||||
2006 | 56,985 | 456,119 | 139,146 | 386,700 | ||||||||||||||||
2007 | 61,946 | 518,361 | 146,909 | 449,054 |
Year ended July 31 | 19743 | 1975 | 1976 | 1977 | 1978 | 1979 | 1980 |
Value of dividends | |||||||
Dividends in cash8 | $343 | 734 | 859 | 781 | 843 | 937 | 952 |
Dividends reinvested8 | $346 | 785 | 997 | 970 | 1,117 | 1,333 | 1,463 |
Value of investment | |||||||
Dividends in cash8 | $8,767 | 10,141 | 12,155 | 12,701 | 12,584 | 12,693 | 12,490 |
Dividends reinvested8 | $9,088 | 11,391 | 14,750 | 16,392 | 17,403 | 18,921 | 20,161 |
IFA total return | (9.1)% | 25.3 | 29.5 | 11.1 | 6.2 | 8.7 | 6.6 |
Year ended July 31 | 1981 | 1982 | 1983 | 1984 | 1985 | 1986 | 1987 |
Value of dividends | |||||||
Dividends in cash8 | 1,046 | 1,202 | 1,280 | 1,344 | 1,438 | 1,550 | 1,636 |
Dividends reinvested8 | 1,743 | 2,187 | 2,548 | 2,895 | 3,365 | 3,909 | 4,431 |
Value of investment | |||||||
Dividends in cash8 | 12,818 | 12,256 | 16,112 | 15,738 | 19,443 | 21,668 | 23,568 |
Dividends reinvested8 | 22,484 | 23,663 | 33,683 | 35,721 | 47,674 | 57,146 | 66,671 |
IFA total return | 11.5 | 5.2 | 42.3 | 6.0 | 33.5 | 19.9 | 16.7 |
Year ended July 31 | 1988 | 1989 | 1990 | 1991 | 1992 | 1993 | 1994 |
Value of dividends | |||||||
Dividends in cash8 | 1,542 | 1,710 | 1,577 | 1,764 | 1,715 | 1,713 | 1,727 |
Dividends reinvested8 | 4,479 | 5,337 | 5,269 | 6,311 | 6,579 | 6,995 | 7,471 |
Value of investment | |||||||
Dividends in cash8 | 22,341 | 25,644 | 24,351 | 25,390 | 28,370 | 29,917 | 28,788 |
Dividends reinvested8 | 67,812 | 83,698 | 84,639 | 95,046 | 113,237 | 126,680 | 129,171 |
IFA total return | 1.7 | 23.4 | 1.1 | 12.3 | 19.1 | 11.9 | 2.0 |
Year ended July 31 | 1995 | 1996 | 1997 | 1998 | 1999 | 2000 | 2001 |
Value of dividends | |||||||
Dividends in cash8 | 1,752 | 1,766 | 1,968 | 1,959 | 2,210 | 2,320 | 2,226 |
Dividends reinvested8 | 8,046 | 8,581 | 10,074 | 10,530 | 12,446 | 13,740 | 13,913 |
Value of investment | |||||||
Dividends in cash8 | 31,571 | 34,007 | 41,731 | 44,436 | 45,588 | 42,276 | 46,460 |
Dividends reinvested8 | 150,378 | 170,618 | 220,576 | 245,542 | 264,664 | 259,165 | 299,416 |
IFA total return | 16.4 | 13.5 | 29.3 | 11.3 | 7.8 | (2.1) | 15.5 |
Year ended July 31 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | |
Value of dividends | |||||||
Dividends in cash8 | 2,272 | 2,071 | 1,944 | 1,850 | 2,180 | 2,728 | |
Dividends reinvested8 | 14,927 | 14,311 | 14,072 | 13,921 | 17,020 | 24,301 | |
Value of investment | |||||||
Dividends in cash8 | 41,359 | 44,136 | 49,057 | 54,032 | 56,985 | 61,9467 | |
Dividends reinvested8 | 280,397 | 314,550 | 364,136 | 415,525 | 456,119 | 518,3614 | |
IFA total return | (6.4) | 12.2 | 15.8 | 14.1 | 9.8 | 13.6 | |
Average annual total return for fund’s lifetime: 12.44%1 |
1As outlined in the prospectus, the sales charge is reduced for accounts (and aggregated investments) of $25,000 or more and is eliminated for purchases of $1 million or more. There is no sales charge on dividends or capital gain distributions that are reinvested in additional shares. |
2The maximum initial sales charge was 8.5% prior to July 1, 1988. |
3For the period December 1, 1973 (when Capital Research and Management Company became the fund’s investment adviser), through July 31, 1974. |
4Includes reinvested dividends of $246,414 and reinvested capital gain distributions of $109,713. |
5The indexes are unmanaged and include reinvested distributions, but do not reflect the effect of sales charges, commissions or expenses. |
6From December 1, 1973, through December 31, 1975, the Lehman Brothers Government/Credit Bond Index was used because the Lehman Brothers Aggregate Bond Index did not exist. From January 1, 1976, through July 31, 2007, the Lehman Brothers Aggregate Bond Index was used. |
7Includes capital gain distributions of $20,519, but does not reflect income dividends of $53,938 taken in cash. |
8From April 1990 to September 1994 and from September 2003 to the present, the fund accrued dividends daily but paid quarterly. Dividends reflect quarterly dividends actually paid during the period, while year-end values are adjusted for cumulative dividends accrued but not yet paid. |
The results shown are before taxes on fund distributions and sale of fund shares.
Opportunity amid uncertainty
The Income Fund of America seeks to provide shareholders with current income and, secondarily, capital appreciation. In pursuit of these goals, the fund invests in a variable mix of stocks and bonds.
With income as its central objective, a large component of the fund’s stock holdings have traditionally been drawn from a handful of industries with a long history of paying above-average dividends. Among them are utilities, real estate investment trusts and financials.
Over the years, The Income Fund of America has also found significant opportunity in another area of the market; namely, among companies and industries that may have fallen out of favor with the investing public. When share prices fall and dividend payouts remain constant, the higher yield may make a company a candidate for the fund.
In the following pages, we will examine how the fund’s research-driven approach helps identify opportunity among companies caught up in industry and market downturns.
[photo of poppies growing in the desert]
An ongoing search
“As part of our research process, The Income Fund of America’s investment professionals are constantly monitoring companies and industries — even those that are not immediately eligible for the fund because of their low yields,” explains Hilda Applbaum, the fund’s vice chairman who is also one of its equity portfolio counselors. “So when an industry is struggling and its stock yields rise, we redouble our efforts to determine whether change signals opportunity for the fund. However, current yield is but one consideration. More important are a company’s long-term prospects and its ability to maintain, and in some cases grow, its dividend.”
Research in action
This was certainly the case when it came to the sizable investments the fund made in a number of telecommunications companies beginning in 2002.
Although companies from this sector had been mainstays of the fund for many years, the technology-telecommunications-internet bubble of the late 1990s changed the complexion of the industry. Many companies began to deemphasize dividends and started behaving — and viewing themselves — more like growth companies. They started favoring speculative and capital-intensive projects, expansions and mergers rather than returning cash to shareholders in the form of dividends. Investors also began treating them like growth companies and bid up share prices for many, causing yields to dip and making the companies less suitable for the fund. By 2001, The Income Fund of America’s equity holdings in the sector had fallen to 1.5% of net assets, down from 5.3% in 1999.
When the bubble burst and the predicted growth failed to materialize, many companies went out of business, and the stock prices of those left standing were battered. Lowered valuations brought an increase in stock yields and, eventually, an opportunity for the fund.
“In the wake of the bubble, investors were very disillusioned with the telecom sector and with good reason. There was brutal competition, a difficult regulatory environment, overcapacity and most companies were heavily burdened with debt,” notes Brad Vogt, a telecommunications analyst for the fund. “But as sometimes happens, many investors lost sight of the fact that some of the companies had real value.”
[Begin Pull Quote]
[photo of desert lilies]
“When an industry is struggling and its stock yields rise, we redouble our efforts to determine whether change signals opportunity for the fund.”
— Hilda Applbaum
[End Pull Quote]
[Begin Sidebar]
Declining share prices create buying opportunities
With income as its primary objective, your fund focuses on companies with above-average yields. Since elevated yields are often the result of flagging stock values, many of the fund’s investment opportunities are found among stocks and industries that appear to be faltering. Consider the following examples:
Diversified Telecommunication Services
Throughout much of the 1990s, telecommunications companies had been mainstays of the fund. But with the onset of the technology-telecommunications-internet bubble, share prices spiked and yields dropped significantly. As a result, by 2001, the fund’s holdings had sharply diminished.
When the bubble burst, most telecom stocks got caught in the downdraft — values plummeted and yields jumped. The fund made sizable investments — in both stocks and bonds — in 2003 and 2004. While the sector didn’t rebound immediately, companies continued paying sizable dividends, which meant investors were “paid to wait” before the recent recovery.
[begin line chart]
Index value | Yield | |||||||
30-Dec-94 | 31.817 | |||||||
31-Jan-95 | 33.252 | 3.97 | ||||||
28-Feb-95 | 33.586 | 3.943 | ||||||
31-Mar-95 | 33.862 | 3.93 | ||||||
28-Apr-95 | 34.474 | 3.893 | ||||||
31-May-95 | 34.486 | 3.905 | ||||||
30-Jun-95 | 35.645 | 3.785 | ||||||
31-Jul-95 | 36.446 | 3.714 | ||||||
31-Aug-95 | 38.51 | 3.524 | ||||||
29-Sep-95 | 42.347 | 3.239 | ||||||
31-Oct-95 | 42.636 | 3.226 | ||||||
30-Nov-95 | 43.439 | 3.175 | ||||||
29-Dec-95 | 45.295 | 3.053 | ||||||
31-Jan-96 | 45.929 | 3.019 | ||||||
29-Feb-96 | 44.016 | 3.158 | ||||||
29-Mar-96 | 42.446 | 3.334 | ||||||
30-Apr-96 | 43.877 | 3.251 | ||||||
31-May-96 | 43.831 | 3.248 | ||||||
28-Jun-96 | 44.319 | 3.219 | ||||||
31-Jul-96 | 40.446 | 3.537 | ||||||
30-Aug-96 | 39.859 | 3.558 | ||||||
30-Sep-96 | 40.466 | 3.349 | ||||||
31-Oct-96 | 40.823 | 3.68 | ||||||
29-Nov-96 | 43.405 | 3.466 | ||||||
31-Dec-96 | 45.094 | 3.345 | ||||||
31-Jan-97 | 46.061 | 3.182 | ||||||
28-Feb-97 | 48.033 | 3.059 | ||||||
31-Mar-97 | 43.193 | 3.438 | ||||||
30-Apr-97 | 45.056 | 3.32 | ||||||
30-May-97 | 48.508 | 3.082 | ||||||
30-Jun-97 | 50.335 | 2.978 | ||||||
31-Jul-97 | 50.53 | 2.973 | ||||||
29-Aug-97 | 48.848 | 3.069 | ||||||
30-Sep-97 | 54.519 | 2.786 | ||||||
31-Oct-97 | 56.444 | 2.697 | ||||||
28-Nov-97 | 63.247 | 2.412 | ||||||
31-Dec-97 | 65.443 | 2.334 | ||||||
30-Jan-98 | 68.966 | 2.219 | ||||||
27-Feb-98 | 68.849 | 2.223 | ||||||
31-Mar-98 | 76.491 | 2.005 | ||||||
30-Apr-98 | 72.361 | 2.126 | ||||||
29-May-98 | 72.339 | 2.123 | ||||||
30-Jun-98 | 72.617 | 2.119 | ||||||
31-Jul-98 | 75.265 | 2.053 | ||||||
31-Aug-98 | 68.066 | 2.274 | ||||||
30-Sep-98 | 77.381 | 1.844 | ||||||
30-Oct-98 | 83.578 | 1.708 | ||||||
30-Nov-98 | 87.499 | 1.661 | ||||||
31-Dec-98 | 100 | 1.455 | ||||||
29-Jan-99 | 107.078 | 1.359 | ||||||
26-Feb-99 | 105.19 | 1.385 | ||||||
31-Mar-99 | 101.544 | 1.457 | ||||||
30-Apr-99 | 104.388 | 1.423 | ||||||
31-May-99 | 107.791 | 1.379 | ||||||
30-Jun-99 | 112.078 | 1.328 | ||||||
30-Jul-99 | 108.948 | 1.368 | ||||||
31-Aug-99 | 97.742 | 1.526 | ||||||
30-Sep-99 | 98.444 | 1.491 | ||||||
29-Oct-99 | 103.902 | 1.456 | ||||||
30-Nov-99 | 107.885 | 1.387 | ||||||
31-Dec-99 | 103.848 | 1.442 | ||||||
31-Jan-00 | 98.553 | 1.522 | ||||||
29-Feb-00 | 90.029 | 1.658 | ||||||
31-Mar-00 | 100.582 | 1.484 | ||||||
28-Apr-00 | 96.573 | 1.547 | ||||||
31-May-00 | 85.394 | 1.75 | ||||||
30-Jun-00 | 86.514 | 1.785 | ||||||
31-Jul-00 | 80.52 | 1.654 | ||||||
31-Aug-00 | 78.875 | 1.691 | ||||||
29-Sep-00 | 79.329 | 1.552 | ||||||
31-Oct-00 | 80.792 | 1.747 | ||||||
30-Nov-00 | 70.134 | 2.016 | ||||||
29-Dec-00 | 64.85 | 1.699 | ||||||
31-Jan-01 | 73.358 | 1.504 | ||||||
28-Feb-01 | 67.254 | 1.64 | ||||||
30-Mar-01 | 64.783 | 1.704 | ||||||
30-Apr-01 | 66.995 | 1.659 | ||||||
31-May-01 | 65.863 | 1.762 | ||||||
29-Jun-01 | 62.307 | 2.036 | ||||||
31-Jul-01 | 64.699 | 2.017 | ||||||
31-Aug-01 | 59.029 | 2.212 | ||||||
28-Sep-01 | 63.823 | 1.908 | ||||||
31-Oct-01 | 54.849 | 2.23 | ||||||
30-Nov-01 | 55.211 | 2.179 | ||||||
31-Dec-01 | 56.533 | 2.13 | ||||||
31-Jan-02 | 53.663 | 2.287 | ||||||
28-Feb-02 | 51.409 | 2.387 | ||||||
29-Mar-02 | 50.153 | 2.474 | ||||||
30-Apr-02 | 41.141 | 3.034 | ||||||
31-May-02 | 43.344 | 2.877 | ||||||
28-Jun-02 | 39.06 | 3.19 | ||||||
31-Jul-02 | 34.108 | 3.586 | ||||||
30-Aug-02 | 32.624 | 3.749 | ||||||
30-Sep-02 | 28.041 | 4.364 | ||||||
31-Oct-02 | 36.706 | 3.366 | ||||||
29-Nov-02 | 40.715 | 3.385 | ||||||
31-Dec-02 | 38.16 | 3.612 | ||||||
31-Jan-03 | 35.414 | 3.923 | ||||||
28-Feb-03 | 31.699 | 4.416 | ||||||
31-Mar-03 | 31.408 | 4.457 | ||||||
30-Apr-03 | 35.304 | 4.077 | ||||||
30-May-03 | 37.237 | 3.865 | ||||||
30-Jun-03 | 37.964 | 3.849 | ||||||
31-Jul-03 | 35.144 | 4.2 | ||||||
29-Aug-03 | 35.072 | 4.209 | ||||||
30-Sep-03 | 33.166 | 4.519 | ||||||
31-Oct-03 | 35.253 | 4.302 | ||||||
28-Nov-03 | 34.682 | 4.373 | ||||||
31-Dec-03 | 37.793 | 4.225 | ||||||
30-Jan-04 | 38.707 | 4.164 | ||||||
27-Feb-04 | 38.196 | 4.22 | ||||||
31-Mar-04 | 37.662 | 4.276 | ||||||
30-Apr-04 | 37.758 | 4.306 | ||||||
31-May-04 | 35.59 | 4.57 | ||||||
30-Jun-04 | 36.602 | 4.506 | ||||||
30-Jul-04 | 38.834 | 4.292 | ||||||
31-Aug-04 | 38.97 | 4.277 | ||||||
30-Sep-04 | 39.273 | 4.247 | ||||||
29-Oct-04 | 39.463 | 4.266 | ||||||
30-Nov-04 | 40.633 | 4.143 | ||||||
31-Dec-04 | 41.119 | 4.145 | ||||||
31-Jan-05 | 37.912 | 4.54 | ||||||
28-Feb-05 | 38.027 | 4.526 | ||||||
31-Mar-05 | 37.664 | 4.663 | ||||||
29-Apr-05 | 38.276 | 4.638 | ||||||
31-May-05 | 38.054 | 4.665 | ||||||
30-Jun-05 | 38.134 | 4.371 | ||||||
29-Jul-05 | 39.449 | 4.321 | ||||||
31-Aug-05 | 38.149 | 4.846 | ||||||
30-Sep-05 | 38.149 | 4.846 | ||||||
31-Oct-05 | 38.02 | 4.924 | ||||||
30-Nov-05 | 39.505 | 4.777 | ||||||
30-Dec-05 | 38.462 | 4.904 | ||||||
31-Jan-06 | 41.14 | 4.709 | ||||||
28-Feb-06 | 44.03 | 4.4 | ||||||
31-Mar-06 | 44.877 | 4.315 | ||||||
28-Apr-06 | 44.074 | 4.443 | ||||||
31-May-06 | 43.095 | 4.534 | ||||||
30-Jun-06 | 46.248 | 4.219 | ||||||
31-Jul-06 | 49.13 | 4.025 | ||||||
31-Aug-06 | 51.187 | 3.863 | ||||||
29-Sep-06 | 53.604 | 3.686 | ||||||
31-Oct-06 | 55.766 | 3.576 | ||||||
30-Nov-06 | 54.931 | 3.676 | ||||||
29-Dec-06 | 58.175 | 3.566 | ||||||
31-Jan-07 | 61.426 | 3.766 | ||||||
28-Feb-07 | 60.227 | 3.84 | ||||||
30-Mar-07 | 63.125 | 3.593 | ||||||
30-Apr-07 | 63.038 | 3.65 | ||||||
31-May-07 | 68.831 | 3.342 | ||||||
29-Jun-07 | 67.707 | 3.401 | ||||||
31-Jul-07 | 66.081 | 3.514 |
[end line chart]
Source: MSCI US/Diversified Telecommunication Services Index
Pharmaceuticals
In the mid-1990s, the sweeping health care changes being proposed during the early years of the Clinton administration weighed heavily on the shares of pharmaceutical companies. Prices fell, yields rose and we invested. Eventually, stocks bounced back, the sector became less attractive from a yield standpoint and the fund pared holdings.
Recent years saw another industry downturn as litigation fears, patent expirations and a dearth of new products threatened profitability. Once again, stocks faltered, yields rose and the fund increased its holdings.
[begin line chart]
Index value | Yield | |||||||
30-Dec-94 | 21.281 | |||||||
31-Jan-95 | 22.626 | 3.107 | ||||||
28-Feb-95 | 22.967 | 3.095 | ||||||
31-Mar-95 | 23.483 | 3.033 | ||||||
28-Apr-95 | 24.581 | 2.925 | ||||||
31-May-95 | 25.344 | 2.881 | ||||||
30-Jun-95 | 26.418 | 2.772 | ||||||
31-Jul-95 | 27.426 | 2.745 | ||||||
31-Aug-95 | 27.045 | 2.791 | ||||||
29-Sep-95 | 29.597 | 2.554 | ||||||
31-Oct-95 | 30.737 | 2.486 | ||||||
30-Nov-95 | 32.299 | 2.37 | ||||||
29-Dec-95 | 33.939 | 2.266 | ||||||
31-Jan-96 | 35.894 | 2.18 | ||||||
29-Feb-96 | 35.16 | 2.252 | ||||||
29-Mar-96 | 35.36 | 2.244 | ||||||
30-Apr-96 | 34.842 | 2.336 | ||||||
31-May-96 | 36.56 | 2.23 | ||||||
28-Jun-96 | 37.606 | 2.172 | ||||||
31-Jul-96 | 36.174 | 2.342 | ||||||
30-Aug-96 | 37.212 | 2.28 | ||||||
30-Sep-96 | 40.443 | 2.102 | ||||||
31-Oct-96 | 41.682 | 2.06 | ||||||
29-Nov-96 | 45.601 | 1.886 | ||||||
31-Dec-96 | 43.065 | 2.014 | ||||||
31-Jan-97 | 48.959 | 1.803 | ||||||
28-Feb-97 | 49.615 | 1.82 | ||||||
31-Mar-97 | 46.402 | 1.949 | ||||||
30-Apr-97 | 51.39 | 1.808 | ||||||
30-May-97 | 54.058 | 1.722 | ||||||
30-Jun-97 | 60.106 | 1.55 | ||||||
31-Jul-97 | 61.196 | 1.549 | ||||||
29-Aug-97 | 55.893 | 1.698 | ||||||
30-Sep-97 | 60.146 | 1.601 | ||||||
31-Oct-97 | 61.992 | 1.556 | ||||||
28-Nov-97 | 64.26 | 1.503 | ||||||
31-Dec-97 | 67.182 | 1.445 | ||||||
30-Jan-98 | 73.165 | 1.358 | ||||||
27-Feb-98 | 76.732 | 1.308 | ||||||
31-Mar-98 | 79.049 | 1.271 | ||||||
30-Apr-98 | 81.162 | 1.27 | ||||||
29-May-98 | 79.178 | 1.306 | ||||||
30-Jun-98 | 85.94 | 1.205 | ||||||
31-Jul-98 | 86.343 | 1.249 | ||||||
31-Aug-98 | 78.014 | 1.38 | ||||||
30-Sep-98 | 88.057 | 1.229 | ||||||
30-Oct-98 | 90.704 | 1.195 | ||||||
30-Nov-98 | 96.743 | 1.121 | ||||||
31-Dec-98 | 100 | 1.132 | ||||||
29-Jan-99 | 100.225 | 1.134 | ||||||
26-Feb-99 | 102.615 | 1.134 | ||||||
31-Mar-99 | 104.133 | 1.119 | ||||||
30-Apr-99 | 96.578 | 1.217 | ||||||
31-May-99 | 93.108 | 1.281 | ||||||
30-Jun-99 | 97.805 | 1.221 | ||||||
30-Jul-99 | 90.947 | 1.348 | ||||||
31-Aug-99 | 95.23 | 1.289 | ||||||
30-Sep-99 | 88.773 | 1.43 | ||||||
29-Oct-99 | 102.287 | 1.242 | ||||||
30-Nov-99 | 99.351 | 1.28 | ||||||
31-Dec-99 | 87.462 | 1.471 | ||||||
31-Jan-00 | 92.465 | 1.393 | ||||||
29-Feb-00 | 79.581 | 1.639 | ||||||
31-Mar-00 | 84.428 | 1.547 | ||||||
28-Apr-00 | 92.085 | 1.372 | ||||||
31-May-00 | 96.442 | 1.312 | ||||||
30-Jun-00 | 105.115 | 1.211 | ||||||
31-Jul-00 | 97.802 | 1.35 | ||||||
31-Aug-00 | 95.575 | 1.38 | ||||||
29-Sep-00 | 100.881 | 1.309 | ||||||
31-Oct-00 | 105.895 | 1.248 | ||||||
30-Nov-00 | 111.233 | 1.189 | ||||||
29-Dec-00 | 113.585 | 1.231 | ||||||
31-Jan-01 | 103.13 | 1.366 | ||||||
28-Feb-01 | 104.143 | 1.367 | ||||||
30-Mar-01 | 97.355 | 1.463 | ||||||
30-Apr-01 | 100.481 | 1.419 | ||||||
31-May-01 | 100.596 | 1.443 | ||||||
29-Jun-01 | 93.953 | 1.552 | ||||||
31-Jul-01 | 99.795 | 1.472 | ||||||
31-Aug-01 | 95.137 | 1.557 | ||||||
28-Sep-01 | 98.422 | 1.505 | ||||||
31-Oct-01 | 98.754 | 1.501 | ||||||
30-Nov-01 | 102.984 | 1.442 | ||||||
31-Dec-01 | 98.132 | 1.584 | ||||||
31-Jan-02 | 97.984 | 1.588 | ||||||
28-Feb-02 | 99.412 | 1.584 | ||||||
29-Mar-02 | 98.06 | 1.607 | ||||||
30-Apr-02 | 90.059 | 1.786 | ||||||
31-May-02 | 88.354 | 1.825 | ||||||
28-Jun-02 | 79.545 | 2.03 | ||||||
31-Jul-02 | 77.695 | 2.082 | ||||||
30-Aug-02 | 79.704 | 2.056 | ||||||
30-Sep-02 | 73.299 | 2.238 | ||||||
31-Oct-02 | 79.894 | 2.057 | ||||||
29-Nov-02 | 83.262 | 1.979 | ||||||
31-Dec-02 | 79.065 | 2.103 | ||||||
31-Jan-03 | 78.426 | 2.191 | ||||||
28-Feb-03 | 75.774 | 2.28 | ||||||
31-Mar-03 | 79.501 | 2.175 | ||||||
30-Apr-03 | 82.533 | 2.202 | ||||||
30-May-03 | 82.007 | 2.223 | ||||||
30-Jun-03 | 86.542 | 2.108 | ||||||
31-Jul-03 | 83.478 | 2.2 | ||||||
29-Aug-03 | 79.323 | 2.344 | ||||||
30-Sep-03 | 79.971 | 2.329 | ||||||
31-Oct-03 | 80.285 | 2.323 | ||||||
28-Nov-03 | 81.002 | 2.31 | ||||||
31-Dec-03 | 86.348 | 2.263 | ||||||
30-Jan-04 | 87.256 | 2.241 | ||||||
27-Feb-04 | 88.191 | 2.235 | ||||||
31-Mar-04 | 82.816 | 2.387 | ||||||
30-Apr-04 | 86.79 | 2.347 | ||||||
31-May-04 | 87.066 | 2.36 | ||||||
30-Jun-04 | 85.705 | 2.402 | ||||||
30-Jul-04 | 81.658 | 2.535 | ||||||
31-Aug-04 | 84.168 | 2.469 | ||||||
30-Sep-04 | 78.753 | 2.644 | ||||||
29-Oct-04 | 77.374 | 2.692 | ||||||
30-Nov-04 | 76.246 | 2.744 | ||||||
31-Dec-04 | 79.765 | 2.728 | ||||||
31-Jan-05 | 75.394 | 2.89 | ||||||
28-Feb-05 | 79.734 | 2.745 | ||||||
31-Mar-05 | 80.536 | 2.735 | ||||||
29-Apr-05 | 83.995 | 2.624 | ||||||
31-May-05 | 83.523 | 2.725 | ||||||
30-Jun-05 | 82.184 | 2.772 | ||||||
29-Jul-05 | 80.842 | 2.819 | ||||||
31-Aug-05 | 78.943 | 2.904 | ||||||
30-Sep-05 | 77.515 | 2.956 | ||||||
31-Oct-05 | 73.593 | 3.118 | ||||||
30-Nov-05 | 72.32 | 3.211 | ||||||
30-Dec-05 | 76.294 | 3.054 | ||||||
31-Jan-06 | 78.931 | 2.957 | ||||||
28-Feb-06 | 80.628 | 3.127 | ||||||
31-Mar-06 | 80.057 | 3.171 | ||||||
28-Apr-06 | 80.074 | 3.175 | ||||||
31-May-06 | 78.584 | 3.339 | ||||||
30-Jun-06 | 79.84 | 3.287 | ||||||
31-Jul-06 | 85.308 | 3.081 | ||||||
31-Aug-06 | 87.655 | 3.017 | ||||||
29-Sep-06 | 90.037 | 2.944 | ||||||
31-Oct-06 | 90.129 | 2.945 | ||||||
30-Nov-06 | 89.653 | 2.976 | ||||||
29-Dec-06 | 89.123 | 3.214 | ||||||
31-Jan-07 | 91.548 | 3.133 | ||||||
28-Feb-07 | 88.826 | 3.272 | ||||||
30-Mar-07 | 89.077 | 3.264 | ||||||
30-Apr-07 | 95.72 | 3.042 | ||||||
31-May-07 | 97.717 | 3.055 | ||||||
29-Jun-07 | 94.11 | 3.177 | ||||||
31-Jul-07 | 88.863 | 3.369 |
[end line chart]
Source: MSCI US/Pharmaceuticals Index
[End Sidebar]
[photo of poppies growing in the desert - rock formations in the backgroup]
Beginning in 2003, well before a recovery was assured, the fund began making sizable investments in select telecom companies. As it turned out, the opportunity to invest at attractive levels was fairly lengthy, as stock prices remained relatively flat for several years.
“It felt uncertain at the time, but our analysis led us to the conclusion that eventually regulations would relax and the U.S. competitive environment would get better. The industry was still fragmented and we thought there was a chance that we might see meaningful consolidation,” adds Brad. “Moreover, we were confident that certain companies had the cash flow to at least continue paying their dividends. As it turned out, these predictions by and large came to pass, although we had to be patient. As the companies got back to basics and their earnings, cash flow and balance sheets improved, they actually started to buy back stock and grow their dividends.”
Stock prices took time to recover, but the above-average yields “paid us to wait” and over the last 18 months, shares have appreciated significantly.
Opportunity beyond stocks
Interestingly, the factors driving down stock prices were also influencing the bond market, where many telecommunications securities were selling at deep discounts to their face values. Since The Income Fund of America is able to invest in both high-grade and high-yield corporate debt, there was still another opportunity for the fund.
“With the bond component of the fund’s portfolio, we’re primarily looking for higher sources of income than can typically be found on the equity side. Additionally, over the long term, bonds have added stability to the portfolio,” says David Barclay, president of the fund and one of its fixed-income portfolio counselors. “Yet we also recognize that opportunities among out-of-favor areas of the market exist for bond investors too.”
“In 2002, some of the telecommunications-related bonds were trading at 60 cents on the dollar, which often meant they were yielding in excess of 20%,” explains David Daigle, a fixed-income analyst focused on the wireless telecommunications sector. “But like our colleagues on the equity side, we could see brighter prospects for the sector on the horizon. And our analysis led us to conclude that certain companies would be able to service the debt and that bond values would rebound. In the meantime, the yields were virtually unprecedented.”
Indeed, when the fund’s telecom stocks were relatively flat, the bond holdings were experiencing significant capital appreciation.
Building conviction through research
When it comes to investing, going against the grain is often difficult. To build conviction in sometimes contrarian investments, the fund relies on the research capability of its investment adviser, Capital Research and Management Company. David Daigle and Brad are among the over 34 equity and 20 fixed-income analysts serving the fund. They share information, visit companies and meet managements, all with the goal of deepening their understanding of the firms and industries they cover.
“In the case of the telecommunications sector, the combined efforts of the equity and fixed-income analysts allowed us to have a robust discussion about all of the factors affecting the business,” explains David Barclay. “Having multiple people working to understand a company’s balance sheet, its ability to service debt, its industry, as well as its operations and prospects enables us to have deeper insights and more confident views on how things might work out.”
Industry cycles create opportunities
Experience through differing market conditions can help too, and this was recently instrumental in evaluating the prospects of select companies in another out-of-favor sector, pharmaceuticals.
“During certain periods, pharmaceutical companies are viewed by investors as growth companies, and they typically have higher price-to-earnings ratios and lower dividend yields than the market average,” explains Rick Beleson, an investment analyst who has spent 23 years covering the pharmaceutical industry for Capital Research and Management Company. “During these times, the stocks don’t really meet the needs of the fund. But when stocks in the sector fall out of favor, their prices come down and their yields rise, which may make them investment candidates for the fund.”
This has been the case over the last few years, as concerns about lawsuits, product life cycles, generic competition and a dearth of new products in the pipelines of many companies have taken a toll on valuations. With yields higher, the fund renewed its focus on the sector.
In analyzing the most recent downturn, Rick was able to draw upon his experience in the early 1990s when the sweeping health care changes being considered during the early years of the Clinton administration precipitated a significant downturn in pharmaceutical stock prices.
“In that case, the regulatory threat many thought would hurt growth and profit margins actually turned out to be a much more moderate business change,” he explains. “The positive industry fundamentals were still in place and strong, but the perception that the impact would be more widespread presented an opportunity for the fund. There are some similarities to the current cycle.”
Now, as then, rising yields drew the attention of the fund’s investment professionals, but were only one of the considerations Rick and his fellow investment professionals had to weigh against the considerable challenges facing the industry.
“Especially when it comes to the issue of product pipelines, there are some genuine near-term concerns,” notes Hilda. “But our seasoned global pharmaceutical analysts have both the experience and the insight that led us to conclude that, for a given set of companies, there are some potentially great products on the horizon. In addition, our understanding of the cash flows and research and development needs of certain companies give us confidence that they can maintain their dividend payouts.”
Recently, the fund’s willingness to see beyond the immediate trouble spots has been rewarded, as some of these investments have rebounded sharply and significantly contributed to returns.
[photo of purple poppies growing in the desert]
The benefits of multiple outlooks
“In some sense, investing for the fund forces you to be a contrarian because you are almost always investing in some companies that are out of favor,” explains equity portfolio counselor Dina Perry. “That’s because it’s often the case that stocks with above-average yields have prospects and fundamentals that are in dispute or unclear.”
In some cases, the fund’s investment professionals draw differing conclusions about the outlook for a particular company or industry. Fortunately, the investment method used to manage the fund accommodates varied perspectives. The multiple portfolio counselor system divides the fund into slices, each of which is independently managed — according to fund objectives — by one of The Income Fund of America’s six equity and four fixed-income portfolio counselors.
In addition, one slice, known as the research portfolio, is managed by the fund’s investment analysts who are able to invest in the companies within their sectors that they believe in most strongly. This can be especially beneficial when it comes to out-of-favor companies, since the system enables analysts to concretely demonstrate the strength of their convictions.
When to sell
When the stock prices for once out-of-favor fund holdings recover, yields may fall. But just as a company’s high yield doesn’t prompt us to invest, we don’t automatically sell a stock when its yield declines. Yet the fund always remains true to its primary objective: providing shareholders with income.
“If we are fortunate enough to have our investment thesis come to fruition and a recovering stock price results in a reduced yield, there is no tap on the shoulder saying ‘You must sell today,’” explains Hilda. “But all of us who invest money for the fund have a reverence and respect for the discipline that the mandate for yield provides. We recognize that trees don’t grow to the sky and that valuations have cycles. Thankfully, the market has historically provided us with rolling opportunities to find great investments for the fund.”
[Begin Pull Quote]
[photo of desert lilies]
“In some sense, investing for the fund forces you to be a contrarian because you are almost always investing in some companies that are out of favor.”
— Dina Perry
[End Pull Quote]
About your fund
Fund results shown in this report, unless otherwise indicated, are for Class A shares at net asset value. If a sales charge (maximum 5.75%) had been deducted, the results would have been lower. Results are for past periods and are not predictive of results for future periods. Current and future results may be lower or higher than those shown. Share prices and returns will vary, so investors may lose money. For current information and month-end results, visit americanfunds.com.
Resilience during stock declines | The Income Fund of America (IFA) vs. the S&P 500 during market declines* | |||||||||||
Dates of decline | IFA | |||||||||||
S&P 500 | IFA | advantage | ||||||||||
cumulative | cumulative | (percentage | ||||||||||
total return | total return | points) | ||||||||||
September 21, 1976, through March 6, 1978 | –13.5 | % | +1.9 | % | +15.4 | |||||||
November 28, 1980, through August 12, 1982 | –20.2 | +19.0 | +39.2 | |||||||||
August 25 through December 4, 1987 | –32.8 | –13.6 | +19.2 | |||||||||
July 16 through October 11, 1990 | –19.2 | –10.2 | +9.0 | |||||||||
July 17 through August 31, 1998 | –19.1 | –9.5 | +9.6 | |||||||||
March 24, 2000, through October 9, 2002 | –47.4 | +0.7 | +48.1 | |||||||||
*Periods show S&P 500 price declines of 15% or greater. S&P 500 total returns, which include reinvestment of all distributions, may be higher. There have been times when the index, which is unmanaged, has done better. |
Withdrawing income: the dividend advantage
Most fund shareholders reinvest their dividends, but some — including many nonprofit organizations — use dividends to meet current expenses. As the charts below show, the fund’s income has allowed withdrawals to be made without invading principal.
Higher dividends...
[Begin bar chart]
Dividends produced | |||
IFA | $ | 1,355,324 | |
S&P 500 | 366,221 |
[End bar chart]
...have helped to keep principal intact, letting compounding do its work.
[Begin bar chart]
IFA | S&P 500 | ||||||
Amount withdrawn | $ | 400,319 | $ | 400,319 | |||
Ending value | 2,472,156 | 1,323,364 | |||||
Initial investment | 100,000 | 100,000 |
[End bar chart]
Historical benefits of income
This chart shows one-year snapshots of the annual income produced by three hypothetical $10,000 investments made on July 31, 1974, in each of The Income Fund of America, the S&P 500, and three-month certificates of deposit (CDs). Over the past 33 years, income from the fund has been substantially higher.
Year ended July 31
[begin bar chart]
The Income Fund of America | S&P 500 | CDs | ||||||||||
7/31/1975 | $ | 864 | $ | 479 | $ | 924 | ||||||
7/31/1976 | $ | 1,097 | $ | 511 | $ | 652 | ||||||
7/31/1977 | $ | 1,067 | $ | 617 | $ | 598 | ||||||
7/31/1978 | $ | 1,229 | $ | 728 | $ | 814 | ||||||
7/31/1979 | $ | 1,467 | $ | 838 | $ | 1,283 | ||||||
7/31/1980 | $ | 1,610 | $ | 980 | $ | 1,998 | ||||||
7/31/1981 | $ | 1,918 | $ | 1,110 | $ | 2,302 | ||||||
7/31/1982 | $ | 2,407 | $ | 1,241 | $ | 3,003 | ||||||
7/31/1983 | $ | 2,804 | $ | 1,339 | $ | 2,235 | ||||||
7/31/1984 | $ | 3,186 | $ | 1,477 | $ | 2,376 | ||||||
7/31/1985 | $ | 3,702 | $ | 1,637 | $ | 2,617 | ||||||
7/31/1986 | $ | 4,301 | $ | 1,788 | $ | 2,217 | ||||||
7/31/1987 | $ | 4,876 | $ | 1,948 | $ | 1,940 | ||||||
7/31/1988 | $ | 4,928 | $ | 2,084 | $ | 2,417 | ||||||
7/31/1989 | $ | 5,873 | $ | 2,555 | $ | 3,240 | ||||||
7/31/1990 | $ | 5,797 | $ | 2,969 | $ | 3,382 | ||||||
7/31/1991 | $ | 6,944 | $ | 3,140 | $ | 3,171 | ||||||
7/31/1992 | $ | 7,239 | $ | 3,303 | $ | 2,226 | ||||||
7/31/1993 | $ | 7,696 | $ | 3,469 | $ | 1,548 | ||||||
7/31/1994 | $ | 8,220 | $ | 3,658 | $ | 1,680 | ||||||
7/31/1995 | $ | 8,853 | $ | 3,963 | $ | 2,920 | ||||||
7/31/1996 | $ | 9,442 | $ | 4,388 | $ | 3,049 | ||||||
7/31/1997 | $ | 11,085 | $ | 4,713 | $ | 3,189 | ||||||
7/31/1998 | $ | 11,587 | $ | 4,955 | $ | 3,414 | ||||||
7/31/1999 | $ | 13,694 | $ | 5,236 | $ | 3,313 | ||||||
7/31/2000 | $ | 15,119 | $ | 5,333 | $ | 4,011 | ||||||
7/31/2001 | $ | 15,308 | $ | 5,130 | $ | 4,233 | ||||||
7/31/2002 | $ | 16,425 | $ | 5,265 | $ | 1,806 | ||||||
7/31/2003 | $ | 15,747 | $ | 5,526 | $ | 1,164 | ||||||
7/31/2004 | $ | 15,484 | $ | 6,344 | $ | 837 | ||||||
7/31/2005 | $ | 15,318 | $ | 7,290 | $ | 1,844 | ||||||
7/31/2006 | $ | 18,727 | $ | 8,261 | $ | 3,532 | ||||||
7/31/2007 | $ | 24,427 | $ | 9,483 | $ | 4,586 |
[end bar chart]
Charts show hypothetical $100,000 investments in the fund (at net asset value) and the S&P 500 from January 1, 1974, to July 31, 2007. It assumes a 5% withdrawal, increased 5% annually. The first withdrawal, on December 31, 1974, was $5,000. Total withdrawals over the fund’s lifetime come to $400,319.
All results are calculated at net asset value with dividends and capital gains (where applicable) reinvested. Source for CDs is the Federal Reserve. CD income assumes reinvestment of both principal and interest at prevailing rates at the time of purchase. CDs are guaranteed; the fund is not.
The portfolio at a glance
The following summary investment portfolio is designed to streamline the report and help investors better focus on a fund’s principal holdings. For details on how to obtain a complete schedule of portfolio holdings, please see the inside back cover.
July 31, 2007
[begin pie chart]
Percent | ||||
of net | ||||
Investment portfolio | assets | |||
U.S. common stocks | 46.5 | % | ||
Non-U.S. common stocks | 17.6 | |||
U.S. & non-U.S. convertible securities & preferred stocks | 3.7 | |||
U. S. Treasury & agency bonds & notes | 2.2 | |||
Other fixed-income securities | 21.4 | |||
Short-term securities & other assets less liabilities | 8.6 |
[end pie chart]
Percent | ||||
of net | ||||
Five largest sectors in common stock holdings | assets | |||
Financials | 14.5 | % | ||
Telecommunication services | 7.9 | |||
Utilities | 6.9 | |||
Consumer staples | 6.5 | |||
Industrials | 6.4 | |||
Percent | ||||
of net | ||||
Ten largest common stock holdings | assets | |||
AT&T | 2.9 | % | ||
Chevron | 2.6 | |||
General Electric | 2.3 | |||
Verizon Communications | 2.0 | |||
Citigroup | 1.5 | |||
Merck | 1.5 | |||
Bristol-Myers Squibb | 1.5 | |||
Coca-Cola | 1.1 | |||
Washington Mutual | 1.1 | |||
Vodafone | 1.0 |
July 31, 2006
[begin pie chart]
Percent | ||||
of net | ||||
Investment portfolio | assets | |||
U.S. common stocks | 49.5 | % | ||
Non-U.S. common stocks | 17.2 | |||
U.S. & non-U.S. convertible securities & preferred stocks | 4.6 | |||
U. S. Treasury & agency bonds & notes | 1.9 | |||
Other fixed-income securities | 20.0 | |||
Short-term securities & other assets less liabilities | 6.8 |
[end pie chart]
Percent | ||||
of net | ||||
Five largest sectors in common stock holdings | assets | |||
Financials | 17.9 | % | ||
Utilities | 8.0 | |||
Telecommunication services | 7.8 | |||
Consumer staples | 7.6 | |||
Energy | 5.6 | |||
Percent | ||||
of net | ||||
Ten largest common stock holdings | assets | |||
AT&T | 2.2 | % | ||
Chevron | 2.1 | |||
BellSouth | 1.9 | |||
Royal Dutch Shell | 1.8 | |||
Citigroup | 1.7 | |||
General Electric | 1.6 | |||
Bristol-Myers Squibb | 1.5 | |||
Altria Group | 1.3 | |||
Merck | 1.1 | |||
Washington Mutual | 1.1 |
Summary investment portfolio
July 31, 2007
Market | Percent | |||||||||||
value | of net | |||||||||||
Common stocks - 64.14% | Shares | (000 | ) | assets | ||||||||
Financials - 14.50% | ||||||||||||
Citigroup Inc. | 28,464,500 | $ | 1,325,592 | 1.54 | % | |||||||
Washington Mutual, Inc. | 24,300,000 | 911,979 | 1.06 | |||||||||
Wells Fargo & Co. | 21,540,000 | 727,406 | .84 | |||||||||
Fannie Mae | 11,304,322 | 676,451 | .78 | |||||||||
Société Générale (1) | 3,811,500 | 653,086 | .76 | |||||||||
SunTrust Banks, Inc. | 7,340,000 | 574,722 | .67 | |||||||||
Bank of America Corp. | 10,766,550 | 510,550 | .59 | |||||||||
Lloyds TSB Group PLC (1) | 42,839,900 | 481,342 | .56 | |||||||||
Fifth Third Bancorp | 12,000,000 | 442,680 | .51 | |||||||||
Equity Residential, shares of beneficial interest | 10,092,800 | 401,794 | .46 | |||||||||
Other securities | 5,806,617 | 6.73 | ||||||||||
12,512,219 | 14.50 | |||||||||||
Telecommunication services - 7.90% | ||||||||||||
AT&T Inc. | 63,399,871 | 2,482,739 | 2.88 | |||||||||
Verizon Communications Inc. | 39,689,000 | 1,691,545 | 1.96 | |||||||||
Vodafone Group PLC (1) | 273,610,000 | 831,630 | .96 | |||||||||
Koninklijke KPN NV (1) | 52,115,000 | 805,092 | .93 | |||||||||
Other securities | 1,006,610 | 1.17 | ||||||||||
6,817,616 | 7.90 | |||||||||||
Utilities - 6.89% | ||||||||||||
E.ON AG (1) | 4,100,000 | 647,194 | .75 | |||||||||
Entergy Corp. | 5,022,600 | 502,059 | .58 | |||||||||
SUEZ SA (1) | 8,098,500 | 424,761 | .49 | |||||||||
Duke Energy Corp. | 23,080,000 | 393,052 | .46 | |||||||||
RWE AG (1) | 3,520,000 | 371,980 | .43 | |||||||||
Other securities | 3,604,697 | 4.18 | ||||||||||
5,943,743 | 6.89 | |||||||||||
Consumer staples - 6.45% | ||||||||||||
Coca-Cola Co. | 17,560,000 | 915,052 | 1.06 | |||||||||
H.J. Heinz Co. (2) | 18,104,640 | 792,259 | .92 | |||||||||
Altria Group, Inc. | 10,530,000 | 699,929 | .81 | |||||||||
Reynolds American Inc. | 8,380,000 | 512,604 | .59 | |||||||||
General Mills, Inc. | 8,171,800 | 454,515 | .53 | |||||||||
Other securities | 2,190,727 | 2.54 | ||||||||||
5,565,086 | 6.45 | |||||||||||
Industrials - 6.38% | ||||||||||||
General Electric Co. | 50,370,000 | 1,952,341 | 2.26 | |||||||||
Waste Management, Inc. | 14,450,000 | 549,534 | .64 | |||||||||
Sandvik AB (1) | 23,580,000 | 475,195 | .55 | |||||||||
Emerson Electric Co. | 9,370,000 | 441,046 | .51 | |||||||||
Other securities | 2,091,820 | 2.42 | ||||||||||
5,509,936 | 6.38 | |||||||||||
Health care - 5.27% | ||||||||||||
Merck & Co., Inc. | 26,260,000 | 1,303,809 | 1.51 | |||||||||
Bristol-Myers Squibb Co. | 44,375,500 | 1,260,708 | 1.46 | |||||||||
Eli Lilly and Co. | 14,485,000 | 783,494 | .91 | |||||||||
Pfizer Inc | 26,050,000 | 612,436 | .71 | |||||||||
Other securities | 586,972 | .68 | ||||||||||
4,547,419 | 5.27 | |||||||||||
Energy - 4.95% | ||||||||||||
Chevron Corp. | 26,275,000 | 2,240,207 | 2.60 | |||||||||
Royal Dutch Shell PLC, Class A (ADR) | 6,919,000 | 536,845 | .62 | |||||||||
Marathon Oil Corp. | 7,790,000 | 430,008 | .50 | |||||||||
Other securities | 1,066,219 | 1.23 | ||||||||||
4,273,279 | 4.95 | |||||||||||
Materials - 4.40% | ||||||||||||
Weyerhaeuser Co. | 10,728,000 | 764,263 | .89 | |||||||||
E.I. du Pont de Nemours and Co. | 14,869,200 | 694,838 | .80 | |||||||||
International Paper Co. | 14,973,820 | 555,080 | .64 | |||||||||
Dow Chemical Co. | 8,980,000 | 390,450 | .45 | |||||||||
Other securities | 1,398,035 | 1.62 | ||||||||||
3,802,666 | 4.40 | |||||||||||
Consumer discretionary - 2.74% | ||||||||||||
Esprit Holdings Ltd. (1) | 40,949,000 | 554,663 | .64 | |||||||||
Other securities | 1,807,060 | 2.10 | ||||||||||
2,361,723 | 2.74 | |||||||||||
Information technology - 1.12% | ||||||||||||
Microchip Technology Inc. (2) | 11,265,000 | 409,032 | .47 | |||||||||
Other securities | 554,572 | .65 | ||||||||||
963,604 | 1.12 | |||||||||||
Miscellaneous - 3.54% | ||||||||||||
Other common stocks in initial period of acquisition | 3,055,878 | 3.54 | ||||||||||
Total common stocks (cost: $43,156,500,000) | 55,353,169 | 64.14 | ||||||||||
Market | Percent | |||||||||||
value | of net | |||||||||||
Preferred stocks - 1.14% | Shares | (000 | ) | assets | ||||||||
Financials - 1.08% | ||||||||||||
Fannie Mae, Series O, 7.495% (3) (4) | 2,190,000 | 114,017 | .13 | |||||||||
Other securities | 819,896 | .95 | ||||||||||
933,913 | 1.08 | |||||||||||
Miscellaneous - 0.06% | ||||||||||||
Other preferred stocks in initial period of acquisition | 46,313 | .06 | ||||||||||
Total preferred stocks (cost: $1,002,594,000) | 980,226 | 1.14 | ||||||||||
Market | Percent | |||||||||||
value | of net | |||||||||||
Warrants - 0.00% | (000 | ) | assets | |||||||||
Telecommunication services - 0.00% | ||||||||||||
Other securities | 23 | .00 | ||||||||||
Total warrants (cost: $816,000) | 23 | .00 | ||||||||||
Market | Percent | |||||||||||
value | of net | |||||||||||
Convertible securities - 2.54% | Shares | (000 | ) | assets | ||||||||
Financials - 0.50% | ||||||||||||
Fannie Mae, Series 2004-1, 5.375% convertible preferred | 1,690 | 166,042 | .19 | |||||||||
Other securities | 268,114 | .31 | ||||||||||
434,156 | .50 | |||||||||||
Other - 1.76% | ||||||||||||
Other securities | 1,517,701 | 1.76 | ||||||||||
Miscellaneous - 0.28% | ||||||||||||
Other convertible securities in initial period of acquisition | 237,592 | .28 | ||||||||||
Total convertible securities (cost: $1,816,186,000) | 2,189,449 | 2.54 | ||||||||||
Principal | Market | Percent | ||||||||||
amount | value | of net | ||||||||||
Bonds & notes - 23.62% | (000 | ) | (000 | ) | assets | |||||||
Mortgage-backed obligations (5) - 4.72% | ||||||||||||
Fannie Mae 4.00%-11.882% 2010-2042 (4) | $ | 1,400,092 | 1,372,544 | 1.59 | ||||||||
Freddie Mac 2.64%-11.424% 2008-2037 (4) | 388,167 | 381,623 | .44 | |||||||||
Other securities | 2,318,476 | 2.69 | ||||||||||
4,072,643 | 4.72 | |||||||||||
Consumer discretionary - 3.95% | ||||||||||||
Other securities | 3,410,778 | 3.95 | ||||||||||
Financials - 3.56% | ||||||||||||
Washington Mutual Preferred Funding I Ltd., Series A-1, 6.534% (undated) (3) (4) | 72,100 | 67,375 | ||||||||||
Washington Mutual, Inc. 4.625%-5.66% 2012-2014 (4) | 28,000 | 27,228 | ||||||||||
Washington Mutual Preferred Funding III Ltd. 6.895% (undated) (3) (4) | 26,200 | 24,876 | ||||||||||
Washington Mutual Preferred Funding II Ltd. 6.665% (undated) (3) (4) | 17,100 | 15,251 | ||||||||||
Washington Mutual Bank 5.78% 2013 (4) | 10,000 | 9,769 | ||||||||||
Washington Mutual Bank, FA 5.65% 2014 | 5,000 | 4,871 | .17 | |||||||||
MBNA Global Capital Funding, Series B, 6.156% 2027 (4) | 35,000 | 34,980 | ||||||||||
MBNA Corp. 5.625% 2007 | 10,000 | 10,007 | ||||||||||
Bank of America Corp. 4.25% 2010 | 10,000 | 9,702 | .06 | |||||||||
Citigroup Inc. 5.125% 2011 | 12,500 | 12,383 | .02 | |||||||||
Other securities | 2,853,059 | 3.31 | ||||||||||
3,069,501 | 3.56 | |||||||||||
U.S. government & government agency bonds & notes - 2.16% | ||||||||||||
U.S. Treasury: | ||||||||||||
4.25% 2014 | 469,500 | 455,964 | ||||||||||
3.625%-8.875% 2008-2036 | 686,575 | 748,675 | 1.39 | |||||||||
Freddie Mac 4.125%-5.25% 2010-2018 | 413,125 | 403,418 | .47 | |||||||||
Fannie Mae 4.625%-7.25% 2012-2030 | 220,000 | 225,400 | .26 | |||||||||
Other securities | 33,519 | .04 | ||||||||||
1,866,976 | 2.16 | |||||||||||
Telecommunication services - 2.05% | ||||||||||||
SBC Communications Inc. 4.125%-6.25% 2009-2016 | 81,465 | 78,545 | ||||||||||
AT&T Wireless Services, Inc. 8.125% 2012 | 34,935 | 38,520 | ||||||||||
AT&T Corp. 7.30%-8.00% 2011-2031 (4) | 19,789 | 21,782 | ||||||||||
AT&T Inc. 6.80% 2036 | 11,235 | 11,668 | .18 | |||||||||
Verizon Communications Inc. 5.50%-6.25% 2017-2037 | 88,800 | 85,418 | ||||||||||
Verizon Global Funding Corp. 4.90%-7.75% 2015-2030 | 11,735 | 12,398 | .11 | |||||||||
Other securities | 1,519,624 | 1.76 | ||||||||||
1,767,955 | 2.05 | |||||||||||
Industrials - 1.32% | ||||||||||||
General Electric Capital Corp., Series A, 5.736% 2026 (4) | 25,000 | 25,014 | ||||||||||
General Electric Co. 5.00% 2013 | 5,000 | 4,887 | .03 | |||||||||
Other securities | 1,112,691 | 1.29 | ||||||||||
1,142,592 | 1.32 | |||||||||||
Energy - 1.17% | ||||||||||||
Other securities | 1,009,125 | 1.17 | ||||||||||
Other - 4.69% | ||||||||||||
Other securities | 4,043,885 | 4.69 | ||||||||||
Total bonds & notes (cost: $20,662,718,000) | 20,383,455 | 23.62 | ||||||||||
Principal | Market | Percent | ||||||||||
amount | value | of net | ||||||||||
Short-term securities - 8.79% | (000 | ) | (000 | ) | assets | |||||||
Federal Home Loan Bank 5.113%-5.137% due 8/10-10/24/2007 | $ | 654,955 | 650,548 | .75 | ||||||||
Freddie Mac 5.11%-5.145% due 8/13-10/22/2007 | 539,000 | 534,334 | .62 | |||||||||
Procter & Gamble International Funding S.C.A. 5.20%-5.26% due 8/1-10/26/2007 (3) (6) | 483,632 | 480,226 | .56 | |||||||||
JPMorgan Chase & Co. 5.21%-5.23% due 8/17-10/22/2007 | 252,000 | 250,506 | ||||||||||
Park Avenue Receivables Co., LLC 5.23%-5.24% due 8/28-10/15/2007 (3) | 176,791 | 175,871 | ||||||||||
Jupiter Securitization Co., LLC 5.28% due 8/2/2007 (3) | 51,327 | 51,312 | .55 | |||||||||
Variable Funding Capital Corp. 5.235%-5.27% due 8/2-10/10/2007 (3) (6) | 474,150 | 471,470 | .55 | |||||||||
Bank of America Corp. 5.205%-5.245% due 8/2-11/13/2007 | 449,100 | 445,455 | ||||||||||
Ranger Funding Co. LLC 5.26% due 9/10/2007 (3) (6) | 22,600 | 22,466 | .54 | |||||||||
Wal-Mart Stores Inc. 5.18%-5.19% due 8/7-10/23/2007 (3) | 460,200 | 456,984 | .53 | |||||||||
Clipper Receivables Co., LLC 5.23%-5.26% due 8/1-10/11/2007 (3) | 383,100 | 380,257 | ||||||||||
State Street Corp. 5.22% due 8/2/2007 | 50,000 | 49,986 | .50 | |||||||||
CAFCO, LLC 5.225%-5.245% due 8/9-9/14/2007 (3) | 150,000 | 149,314 | ||||||||||
Ciesco LLC 5.24%-5.25% due 9/6-10/4/2007 (3) (6) | 139,100 | 137,970 | .33 | |||||||||
Coca-Cola Co. 5.15%-5.22% due 8/22-10/30/2007 (3) | 244,700 | 242,395 | .28 | |||||||||
General Electric Capital Services, Inc. 5.21%-5.22% due 8/1-9/21/2007 | 239,500 | 238,562 | ||||||||||
General Electric Capital Corp. 5.34% due 8/1/2007 | 400 | 400 | .28 | |||||||||
Fannie Mae 5.09%-5.12% due 8/8-9/7/2007 (6) | 96,350 | 96,031 | .11 | |||||||||
Other securities | 2,752,414 | 3.19 | ||||||||||
Total short-term securities (cost: $7,585,706,000) | 7,586,501 | 8.79 | ||||||||||
Total investment securities (cost: $74,224,520,000) | 86,492,823 | 100.23 | ||||||||||
Other assets less liabilities | (197,362 | ) | (.23 | ) | ||||||||
Net assets | $ | 86,295,461 | 100.00 | % | ||||||||
"Miscellaneous" securities include holdings in their initial period of acquisition that have not previously been publicly disclosed. | ||||||||||||
"Other securities" includes all issues that are not disclosed separately in the summary investment portfolio. |
Investments in affiliates |
A company is considered to be an affiliate of the fund under the Investment Company Act of 1940 if the |
fund's holdings in that company represent 5% or more of the outstanding voting shares of that company. |
The fund's affiliated holdings listed below are either shown in the preceding summary investment portfolio |
or included in the market value of "Other securities" under their respective industry sectors. Further |
details on these holdings and related transactions during the year ended July 31, 2007, appear below. |
Dividend | Market | |||||||||||||||||||||||
Beginning | Ending | or | value of | |||||||||||||||||||||
shares or | shares or | interest | affiliates | |||||||||||||||||||||
principal | principal | income | at 7/31/07 | |||||||||||||||||||||
Company | amount | Purchases | Sales | amount | (000 | ) | (000 | ) | ||||||||||||||||
H.J. Heinz Co. | 14,535,000 | 3,569,640 | - | 18,104,640 | $ | 20,785 | $ | 792,259 | ||||||||||||||||
Microchip Technology Inc. | - | 11,265,000 | - | 11,265,000 | 5,974 | 409,032 | ||||||||||||||||||
MeadWestvaco Corp. | 10,565,696 | 1,300,000 | 1,000,000 | 10,865,696 | 9,490 | 353,570 | ||||||||||||||||||
iStar Financial, Inc. | 7,240,000 | 967,550 | - | 8,207,550 | 21,085 | 298,180 | ||||||||||||||||||
iStar Financial, Inc. 5.375% 2010 | $ | 10,925,000 | $ | - | $ | - | $ | 10,925,000 | 593 | 10,762 | ||||||||||||||
iStar Financial, Inc., Series B, 5.125% 2011 | $ | 10,000,000 | $ | - | $ | - | $ | 10,000,000 | 547 | 9,705 | ||||||||||||||
iStar Financial, Inc., Series F, 7.80% cumulative redeemable | 400,000 | - | - | 400,000 | 780 | 9,520 | ||||||||||||||||||
iStar Financial, Inc. 7.00% 2008 | $ | 6,525,000 | $ | - | $ | - | $ | 6,525,000 | 346 | 6,577 | ||||||||||||||
iStar Financial, Inc. 5.80% 2011 | $ | 5,000,000 | $ | - | $ | - | $ | 5,000,000 | 291 | 4,991 | ||||||||||||||
iStar Financial, Inc., Series B, 4.875% 2009 | $ | 5,000,000 | $ | - | $ | - | $ | 5,000,000 | 283 | 4,954 | ||||||||||||||
iStar Financial, Inc. 6.05% 2015 | $ | 4,285,000 | $ | - | $ | - | $ | 4,285,000 | 260 | 4,177 | ||||||||||||||
iStar Financial, Inc. 6.00% 2010 | $ | 3,750,000 | $ | - | $ | - | $ | 3,750,000 | 228 | 3,772 | ||||||||||||||
iStar Financial, Inc. 8.75% 2008 | $ | 1,028,000 | $ | - | $ | 1,028,000 | $ | - | 10 | - | ||||||||||||||
Brookdale Senior Living Inc. | 4,785,000 | 1,121,600 | - | 5,906,600 | 9,692 | 236,323 | ||||||||||||||||||
SunCom Wireless Holdings, Inc., Class A (7) | - | 47,322,770 | 42,590,493 | 4,732,277 | - | 115,610 | ||||||||||||||||||
Triton PCS, Inc. 8.50% 2013 | $ | 94,050,000 | $ | - | $ | - | $ | 94,050,000 | 8,227 | 94,991 | ||||||||||||||
Triton PCS, Inc. 8.75% 2011 | $ | 25,200,000 | $ | 1,500,000 | $ | 26,700,000 | $ | - | 2,484 | - | ||||||||||||||
Triton PCS, Inc. 9.375% 2011 | $ | 39,845,000 | $ | - | $ | 39,845,000 | $ | - | 3,669 | - | ||||||||||||||
Packaging Corp. of America | 6,736,800 | 56,000 | - | 6,792,800 | 6,779 | 173,352 | ||||||||||||||||||
Packaging Corp. of America 4.375% 2008 | $ | 2,500,000 | $ | - | $ | - | $ | 2,500,000 | 112 | 2,467 | ||||||||||||||
Macquarie Korea Infrastructure Fund (1) | - | 21,023,070 | - | 21,023,070 | 9,755 | 168,693 | ||||||||||||||||||
Arthur J. Gallagher & Co. | 5,403,700 | - | - | 5,403,700 | 6,592 | 149,034 | ||||||||||||||||||
Goodman Fielder Ltd. (1) | 67,000,000 | - | - | 67,000,000 | 5,776 | 143,709 | ||||||||||||||||||
Tupperware Brands Corp. | 3,865,000 | - | - | 3,865,000 | 3,401 | 100,529 | ||||||||||||||||||
Sunstone Hotel Investors, Inc. | 3,593,400 | 445,000 | - | 4,038,400 | 4,763 | 100,233 | ||||||||||||||||||
Beverly Hills Bancorp Inc. | 1,848,400 | - | 898,400 | 950,000 | 636 | 7,106 | ||||||||||||||||||
Clarent Hospital Corp. (1) (7) | 484,684 | - | - | 484,684 | - | 48 | ||||||||||||||||||
ConAgra Foods, Inc. (8) | 26,327,600 | - | 14,180,400 | 12,147,200 | 8,767 | - | ||||||||||||||||||
Montpelier Re Holdings Ltd. (8) | 4,465,000 | - | 4,465,000 | - | 152 | - | ||||||||||||||||||
Premier Farnell PLC (8) | 21,050,000 | - | 21,050,000 | - | - | - | ||||||||||||||||||
Worthington Industries, Inc. (8) | 3,414,900 | 2,358,100 | 4,938,600 | 834,400 | 3,056 | - | ||||||||||||||||||
$ | 134,533 | $ | 3,199,594 |
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) Valued under fair value procedures adopted by authority of the board of directors. The total value of all such securities, including those in "Miscellaneous" and "Other securities," was $13,477,985,000. | ||||||||||||
(2) Represents an affiliated company as defined under the Investment Company Act of 1940. | ||||||||||||
(3) Purchased in a private placement transaction; resale may be limited to qualified institutional buyers; resale to the public may require registration. The total value of all such restricted securities, including those in "Other securities" in the summary investment portfolio, was $8,590,213,000, which represented 9.95% of the net assets of the fund. | ||||||||||||
(4) Coupon rate may change periodically. | ||||||||||||
(5) Principal payments may be made periodically. Therefore, the effective maturity date may be earlier than the stated maturity date. | ||||||||||||
(6) This security, or a portion of this security, has been segregated to cover funding requirements on investment transactions settling in the future. | ||||||||||||
(7) Security did not produce income during the last 12 months. | ||||||||||||
(8) Unaffiliated issuer at 7/31/2007. | ||||||||||||
The industry classifications shown in the summary investment portfolio were obtained from sources believed to be reliable and are not covered by the Report of Independent Registered Public Accounting Firm. | ||||||||||||
ADR = American Depositary Receipts | ||||||||||||
See Notes to Financial Statements |
Financial statements
Statement of assets and liabilities | ||||||||
at July 31, 2007 | (dollars and shares in thousands, except per-share amounts) | |||||||
Assets: | ||||||||
Investment securities at market: | ||||||||
Unaffiliated issuers (cost: $71,336,978) | $ | 83,293,229 | ||||||
Affiliated issuers (cost: $2,887,542) | 3,199,594 | $ | 86,492,823 | |||||
Cash | 7,926 | |||||||
Receivables for: | ||||||||
Sales of investments | 483,468 | |||||||
Sales of fund's shares | 197,501 | |||||||
Dividends and interest | 471,920 | |||||||
Other | 324 | 1,153,213 | ||||||
87,653,962 | ||||||||
Liabilities: | ||||||||
Payables for: | ||||||||
Purchases of investments | 886,521 | |||||||
Repurchases of fund's shares | 73,752 | |||||||
Dividends on fund's shares | 334,950 | |||||||
Investment advisory services | 15,094 | |||||||
Services provided by affiliates | 44,857 | |||||||
Deferred directors' compensation | 2,847 | |||||||
Other | 480 | 1,358,501 | ||||||
Net assets at July 31, 2007 | $ | 86,295,461 | ||||||
Net assets consist of: | ||||||||
Capital paid in on shares of capital stock | $ | 70,868,624 | ||||||
Undistributed net investment income | 461,625 | |||||||
Undistributed net realized gain | 2,696,674 | |||||||
Net unrealized appreciation | 12,268,538 | |||||||
Net assets at July 31, 2007 | $ | 86,295,461 |
Total authorized capital stock - 5,500,000 shares, $.001 par value (4,205,628 total shares outstanding) | ||||||||||||
Net assets | Shares outstanding | Net asset value per share * | ||||||||||
Class A | $ | 65,712,685 | 3,198,530 | $ | 20.54 | |||||||
Class B | 5,094,499 | 249,422 | 20.43 | |||||||||
Class C | 8,911,519 | 436,959 | 20.39 | |||||||||
Class F | 3,075,407 | 149,896 | 20.52 | |||||||||
Class 529-A | 654,957 | 31,912 | 20.52 | |||||||||
Class 529-B | 117,285 | 5,728 | 20.47 | |||||||||
Class 529-C | 284,845 | 13,904 | 20.49 | |||||||||
Class 529-E | 32,385 | 1,580 | 20.49 | |||||||||
Class 529-F | 19,822 | 966 | 20.52 | |||||||||
Class R-1 | 75,233 | 3,673 | 20.48 | |||||||||
Class R-2 | 538,962 | 26,396 | 20.42 | |||||||||
Class R-3 | 977,717 | 47,691 | 20.50 | |||||||||
Class R-4 | 450,568 | 21,952 | 20.53 | |||||||||
Class R-5 | 349,577 | 17,019 | 20.54 | |||||||||
*Maximum offering price and redemption price per share were equal to the net asset value per share for all share classes, except for Class A and 529-A, for which the maximum offering prices per share were $21.79 and $21.77, respectively. | ||||||||||||
See Notes to Financial Statements |
Statement of operations | ||||||||
for the year ended July 31, 2007 | (dollars in thousands) | |||||||
Investment income: | ||||||||
Income: | ||||||||
Dividends (net of non-U.S. taxes of $58,113; | ||||||||
also includes $117,483 from affiliates) | $ | 2,153,555 | ||||||
Interest (net of non-U.S. taxes of $1; | ||||||||
also includes $17,050 from affiliates) | 1,639,543 | $ | 3,793,098 | |||||
Fees and expenses*: | ||||||||
Investment advisory services | 193,966 | |||||||
Distribution services | 298,930 | |||||||
Transfer agent services | 39,000 | |||||||
Administrative services | 17,690 | |||||||
Reports to shareholders | 1,930 | |||||||
Registration statement and prospectus | 2,629 | |||||||
Postage, stationery and supplies | 3,891 | |||||||
Directors' compensation | 891 | |||||||
Auditing and legal | 188 | |||||||
Custodian | 2,958 | |||||||
State and local taxes | 1 | |||||||
Other | 146 | |||||||
Total fees and expenses before reimbursements/waivers | 562,220 | |||||||
Less reimbursements/waivers of fees and expenses: | ||||||||
Investment advisory services | 19,397 | |||||||
Administrative services | 107 | |||||||
Total fees and expenses after reimbursements/waivers | 542,716 | |||||||
Net investment income | 3,250,382 | |||||||
Net realized gain and unrealized appreciation on | ||||||||
investments and non-U.S. currency: | ||||||||
Net realized gain (loss) on: | ||||||||
Investments (including $80,066 net loss from affiliates) | 2,820,830 | |||||||
Non-U.S. currency transactions | (1,789 | ) | 2,819,041 | |||||
Net unrealized appreciation on: | ||||||||
Investments | 3,452,796 | |||||||
Non-U.S. currency translations | 77 | 3,452,873 | ||||||
Net realized gain and unrealized appreciation | ||||||||
on investments and non-U.S. currency | 6,271,914 | |||||||
Net increase in net assets resulting from operations | $ | 9,522,296 | ||||||
*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 July 31 | ||||||||
2007 | 2006 | |||||||
Operations: | ||||||||
Net investment income | $ | 3,250,382 | $ | 2,667,261 | ||||
Net realized gain on investments and non-U.S. currency transactions | 2,819,041 | 1,718,266 | ||||||
Net unrealized appreciation on investments and non-U.S. currency translations | 3,452,873 | 1,592,617 | ||||||
Net increase in net assets resulting from operations | 9,522,296 | 5,978,144 | ||||||
Dividends and distributions paid or accrued to shareholders: | ||||||||
Dividends from net investment income and non-U.S. currency gain | (3,454,007 | ) | (2,496,685 | ) | ||||
Distributions from net realized gain on investments | (1,728,252 | ) | (1,211,543 | ) | ||||
Total dividends and distributions paid or accrued to shareholders | (5,182,259 | ) | (3,708,228 | ) | ||||
Net capital share transactions | 13,497,369 | 6,036,571 | ||||||
Total increase in net assets | 17,837,406 | 8,306,487 | ||||||
Net assets: | ||||||||
Beginning of year | 68,458,055 | 60,151,568 | ||||||
End of year (including undistributed net investment | ||||||||
income: $461,625 and $674,755, respectively) | $ | 86,295,461 | $ | 68,458,055 | ||||
See Notes to Financial Statements |
Notes to financial statements
1. | Organization and significant accounting policies |
Organization – The Income 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 current income while secondarily striving for capital growth through investments in stocks and fixed-income securities.
The fund offers 14 share classes consisting of four retail share classes, five 529 college savings plan share classes and five retirement plan share classes. The 529 college savings plan share classes (529-A, 529-B, 529-C, 529-E and 529-F) can be utilized to save for college education. The five retirement plan share classes (R-1, R-2, R-3, R-4 and R-5) are sold without any sales charges and do not carry any conversion rights. The fund’s share classes are described below:
Share class | Initial sales charge | Contingent deferred sales charge upon redemption | Conversion feature |
Class A and 529-A | Up to 5.75% | None (except 1% for certain redemptions within one year of purchase without an initial sales charge) | None |
Class B and 529-B | None | Declines from 5% to 0% for redemptions within six years of purchase | Class B and 529-B convert to Class 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 after 10 years |
Class 529-C | None | 1% for redemptions within one year of purchase | None |
Class 529-E | None | None | None |
Class F and 529-F | None | None | None |
Class R-1, R-2, R-3, R-4 and R-5 | None | None | None |
Holders of all share classes have equal pro rata rights to assets, dividends and liquidation proceeds. Each share class has identical voting rights, except for the exclusive right to vote on matters affecting only its class. Share classes have different fees and expenses ("class-specific fees and expenses"), primarily due to different arrangements for distribution, administrative and shareholder services. Differences in class-specific fees and expenses will result in differences in net investment income and, therefore, the payment of different per-share dividends by each class.
Significant accounting policies – The financial statements have been prepared to comply with accounting principles generally accepted in the United States of America. These principles require management to make estimates and assumptions that affect reported amounts and disclosures. Actual results could differ from those estimates. The following is a summary of the significant accounting policies followed by the fund:
Security valuation – Equity securities are valued at the official closing price of, or the last reported sale price on, the exchange or market on which such securities are traded, as of the close of business on the day the securities are being valued or, lacking any sales, at the last available bid price. Prices for each security are taken from the principal exchange or market in which the security trades. Fixed-income securities, including short-term securities purchased with more than 60 days left to maturity, are valued at prices obtained from an independent pricing service when such prices are available. However, where the investment adviser deems it appropriate, such securities will be valued at the mean quoted bid and asked prices (or bid prices, if asked prices are not available) or at prices for securities of comparable maturity, quality and type. Securities with both fixed-income and equity characteristics, or equity securities traded principally among fixed-income dealers, are valued in the manner described above for either equity or fixed-income securities, depending on which method is deemed most appropriate by the investment adviser. Short-term securities purchased within 60 days to maturity are valued at amortized cost, which approximates market value. The value of short-term securities originally purchased with maturities greater than 60 days is determined based on an amortized value to par when they reach 60 days or less remaining to maturity. The ability of the issuers of the debt securities held by the fund to meet their obligations may be affected by economic developments in a specific industry, state or region.
Securities and other assets for which representative market quotations are not readily available or are considered unreliable by the investment adviser are fair valued as determined in good faith under procedures adopted by authority of the fund's board of directors. Market quotations may be considered unreliable if events occur that materially affect the value of securities (particularly non-U.S. securities) between the close of trading in those securities and the close of regular trading on the New York Stock Exchange. Various factors may be reviewed in order to make a good faith determination of a security’s fair value. These factors include, but are not limited to, the type and cost of the security; contractual or legal restrictions on resale of the security; relevant financial or business developments of the issuer; actively traded similar or related securities; conversion or exchange rights on the security; related corporate actions; significant events occurring after the close of trading in the security; and changes in overall market conditions.
Security transactions and related investment income – Security transactions are recorded by the fund as of the date the trades are executed with brokers. Realized gains and losses from security transactions are determined based on the specific identified cost of the securities. In the event a security is purchased with a delayed payment date, the fund will segregate liquid assets sufficient to meet its payment obligations. Dividend income is recognized on the ex-dividend date and interest income is recognized on an accrual basis. Market discounts, premiums and original issue discounts on fixed-income securities are amortized daily over the expected life of the security.
Class allocations – Income, fees and expenses (other than class-specific fees and expenses) are allocated daily among the various share classes based on the relative value of their settled shares. Realized and unrealized gains and losses are allocated daily among the various share classes based on their relative net assets. Class-specific fees and expenses, such as distribution, administrative and shareholder services, are charged directly to the respective share class.
Dividends and distributions to shareholders – Dividends paid to shareholders are declared daily from net investment income and are paid to shareholders quarterly. Distributions paid to shareholders are recorded on the ex-dividend date.
Non-U.S. currency translation – Assets and liabilities, including investment securities, denominated in non-U.S. currencies 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 non-U.S. 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 non-U.S. currencies 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. Each mortgage dollar roll is treated as a financing transaction; therefore, any gain or loss is considered unrealized until the roll reaches completion. Risks may arise due to the delayed payment date and the potential inability of counterparties to complete the transaction. Income is generated as consideration for entering into these transactions and is included in interest income on the accompanying financial statements.
Loan transactions – The fund may enter into loan transactions in which the fund acquires a loan either through an agent, by assignment from another holder, or as a participation interest in another holder's portion of a loan. The loan is often administered by a financial institution that acts as agent for the holders of the loan, and the fund may be required to receive approval from the agent and/or borrower prior to the sale of the investment. The loan's interest rate and maturity date may change based on the terms of the loan, including potential early payments of principal. Risks may arise due to the delayed settlement date of the loan transaction and the ability of the agent and/or borrower to meet the obligations of the loan.
2. | Non-U.S. investments |
Investment risk – The risks of investing in securities of non-U.S. issuers may include, but are not limited to, investment and repatriation restrictions; revaluation of currencies; adverse political, social and economic developments; government involvement in the private sector; limited and less reliable investor information; lack of liquidity; certain local tax law considerations; and limited regulation of the securities markets.
Taxation – Dividend and interest income is recorded net of non-U.S. taxes paid.
3. Federal income taxation and distributions |
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.
The fund adopted the provisions of Financial Accounting Standards Board Interpretation No. 48 (“FIN 48”), Accounting for Uncertainty in Income Taxes, on June 29, 2007. The implementation of FIN 48 resulted in no material liability for unrecognized tax benefits and no material change to the beginning net asset value of the fund.
As of and during the period ended July 31, 2007, 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 2003 and by state tax authorities for tax years before 2002.
Distributions – Distributions paid to shareholders are based on net investment income and net realized gains determined on a tax basis, which may differ from net investment income and net realized gains for financial reporting purposes. These differences are due primarily to differing treatment for items such as non-U.S. currency gains and losses; short-term capital gains and losses; capital losses related to sales of certain securities within 30 days of purchase; paydowns on fixed-income securities; 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. The fund may also designate a portion of the amount paid to redeeming shareholders as a distribution for tax purposes.
During the year ended July 31, 2007, the fund reclassified $9,330,000 from undistributed net investment income to undistributed net realized gain, and $175,000 from undistributed net investment income and $111,937,000 from undistributed net realized gain to capital paid in on shares of capital stock to align financial reporting with tax reporting.
As of July 31, 2007, the tax basis components of distributable earnings, unrealized appreciation (depreciation) and cost of investment securities were as follows:
(dollars in thousands) | ||||
Undistributed ordinary income | $ | 796,599 | ||
Post-October non-U.S. currency loss deferrals (realized during the period November 1, 2006, through July 31, 2007)* | (1,487 | ) | ||
Undistributed long-term capital gain | 2,732,234 | |||
Gross unrealized appreciation on investment securities | 13,534,219 | |||
Gross unrealized depreciation on investment securities | (1,298,044 | ) | ||
Net unrealized appreciation on investment securities | 12,236,175 | |||
Cost of investment securities | 74,256,648 | |||
*These deferrals are considered incurred in the subsequent year. |
The tax character of distributions paid or accrued to shareholders was as follows (dollars in thousands):
Year ended July 31, 2007 | Year ended July 31, 2006 | |||||||||||||||||||||||
Ordinary income | Long-term capital gains | Total distributions paid or accrued | Ordinary income | Long-term capital gains | Total distributions paid or accrued | |||||||||||||||||||
Share class | ||||||||||||||||||||||||
Class A | $ | 2,741,287 | $ | 1,330,299 | $ | 4,071,586 | $ | 2,018,662 | $ | 945,614 | $ | 2,964,276 | ||||||||||||
Class B | 184,596 | 108,711 | 293,307 | 140,500 | 81,514 | 222,014 | ||||||||||||||||||
Class C | 296,266 | 174,425 | 470,691 | 201,163 | 117,973 | 319,136 | ||||||||||||||||||
Class F | 115,303 | 55,201 | 170,504 | 70,225 | 33,305 | 103,530 | ||||||||||||||||||
Class 529-A | 24,723 | 11,936 | 36,659 | 15,421 | 7,171 | 22,592 | ||||||||||||||||||
Class 529-B | 3,874 | 2,332 | 6,206 | 2,598 | 1,542 | 4,140 | ||||||||||||||||||
Class 529-C | 8,909 | 5,270 | 14,179 | 5,562 | 3,248 | 8,810 | ||||||||||||||||||
Class 529-E | 1,167 | 605 | 1,772 | 740 | 373 | 1,113 | ||||||||||||||||||
Class 529-F | 678 | 297 | 975 | 313 | 134 | 447 | ||||||||||||||||||
Class R-1 | 2,010 | 1,091 | 3,101 | 864 | 485 | 1,349 | ||||||||||||||||||
Class R-2 | 17,170 | 10,098 | 27,268 | 10,343 | 5,960 | 16,303 | ||||||||||||||||||
Class R-3 | 32,101 | 16,294 | 48,395 | 17,725 | 8,906 | 26,631 | ||||||||||||||||||
Class R-4 | 15,313 | 7,141 | 22,454 | 7,679 | 3,433 | 11,112 | ||||||||||||||||||
Class R-5 | 10,610 | 4,552 | 15,162 | 4,890 | 1,885 | 6,775 | ||||||||||||||||||
Total | $ | 3,454,007 | $ | 1,728,252 | $ | 5,182,259 | $ | 2,496,685 | $ | 1,211,543 | $ | 3,708,228 |
4. | Fees and transactions with related parties |
Capital Research and Management Company ("CRMC"), the fund’s investment adviser, is the parent company of American Funds Service Company SM ("AFS"), the fund’s transfer agent, and American Funds Distributors, SM Inc. ("AFD"), the principal underwriter of the fund’s shares.
Investment advisory services – The Investment Advisory and Service Agreement with CRMC provides for monthly fees accrued daily. These fees are based on a declining series of annual rates beginning with 0.250% on the first $500 million of daily net assets and decreasing to 0.125% on such assets in excess of $71 billion. The agreement also provides for monthly fees, accrued daily, of 2.25% of the fund’s monthly gross income. During the year ended July 31, 2007, CRMC reduced investment advisory services rates to a proposed rate that would continue the series of rates to include an additional rate of 0.123% on daily net assets in excess of $89 billion. CRMC is currently waiving 10% of investment advisory services fees. During the year ended July 31, 2007, total investment advisory services fees waived by CRMC were $19,397,000. As a result, the fee shown on the accompanying financial statements of $193,966,000, which was equivalent to an annualized rate of 0.243%, was reduced to $174,569,000, or 0.219% of average daily net assets.
Class-specific fees and expenses – Expenses that are specific to individual share classes are accrued directly to the respective share class. The principal class-specific fees and expenses are described below:
Distribution services – The fund has adopted plans of distribution for all share classes, except Class R-5. Under the plans, the board of directors approves certain categories of expenses that are used to finance activities primarily intended to sell fund shares and service existing accounts. The plans provide for payments, based on an annualized percentage of average daily net assets, ranging from 0.25% to 1.00% as noted below. In some cases, the board of directors has limited the amounts that may be paid to less than the maximum allowed by the plans. All share classes 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 Class 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 July 31, 2007, there were no unreimbursed expenses subject to reimbursement for Class A or 529-A.
Share class | Currently approved limits | Plan limits |
Class A | 0.25% | 0.25% |
Class 529-A | 0.25 | 0.50 |
Class B and 529-B | 1.00 | 1.00 |
Class C, 529-C and R-1 | 1.00 | 1.00 |
Class R-2 | 0.75 | 1.00 |
Class 529-E and R-3 | 0.50 | 0.75 |
Class F, 529-F and R-4 | 0.25 | 0.50 |
Transfer agent services – The fund has a transfer agent agreement with AFS for Class A and B. Under this agreement, these share classes compensate AFS for transfer agent services including shareholder recordkeeping, communications and transaction processing. AFS is also compensated for certain transfer agent services provided to all other share classes from the administrative services fees paid to CRMC described below.
Administrative services – The fund has an administrative services agreement with CRMC to provide transfer agent and other related shareholder services for all share classes other than Class A and B. Each relevant share class pays CRMC annual fees up to 0.15% (0.10% for Class R-5) based on its respective average daily net assets. Each relevant share class also pays AFS additional amounts for certain transfer agent services. CRMC and AFS may use these fees to compensate third parties for performing these services. CRMC has agreed to pay AFS on the fund's behalf for a portion of the transfer agent services fees for some of the retirement plan share classes. For the year ended July 31, 2007, the total administrative services fees paid by CRMC were $107,000 for Class R-2. Administrative services fees are presented gross of any payments made by CRMC. Each 529 share class is subject to an additional annual administrative services fee of 0.10% of its respective average daily net assets; this fee is payable to the Commonwealth of Virginia for the maintenance of the 529 college savings plan. 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 above for the year ended July 31, 2007, were as follows (dollars in thousands):
Share class | Distribution services | Transfer agent services | Administrative services | ||
CRMC administrative services | Transfer agent services | Commonwealth of Virginia administrative services | |||
Class A | $148,828 | $35,842 | Not applicable | Not applicable | Not applicable |
Class B | 49,263 | 3,158 | Not applicable | Not applicable | Not applicable |
Class C | 80,425 | Included in administrative services | $8,235 | $908 | Not applicable |
Class F | 6,546 | 2,159 | 271 | Not applicable | |
Class 529-A | 1,220 | 398 | 48 | $566 | |
Class 529-B | 1,077 | 76 | 22 | 108 | |
Class 529-C | 2,485 | 175 | 40 | 248 | |
Class 529-E | 143 | 20 | 2 | 29 | |
Class 529-F | - | 10 | 1 | 15 | |
Class R-1 | 564 | 67 | 21 | Not applicable | |
Class R-2 | 3,547 | 682 | 1,370 | Not applicable | |
Class R-3 | 3,950 | 1,101 | 377 | Not applicable | |
Class R-4 | 882 | 490 | 19 | Not applicable | |
Class R-5 | Not applicable | 224 | 8 | Not applicable | |
Total | $298,930 | $39,000 | $13,637 | $3,087 | $966 |
Deferred directors’ compensation – Since the adoption of the deferred compensation plan in 1993, directors who are unaffiliated with CRMC may elect to defer the cash payment of part or all of their compensation. These deferred amounts, which remain as liabilities of the fund, are treated as if invested in shares of the fund or other American Funds. These amounts represent general, unsecured liabilities of the fund and vary according to the total returns of the selected funds. Directors’ compensation of $891,000, shown on the accompanying financial statements, includes $400,000 in current fees (either paid in cash or deferred) and a net increase of $491,000 in the value of the deferred amounts.
Affiliated officers and directors – Officers and certain directors of the fund are or may be considered to be affiliated with CRMC, AFS and AFD. No affiliated officers or directors received any compensation directly from the fund.
5. | 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 increase | ||||||||||||||||||||||||||||
Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | |||||||||||||||||||||||||
Year ended July 31, 2007 | ||||||||||||||||||||||||||||||||
Class A | $ | 11,380,559 | 552,805 | $ | 3,645,817 | 179,124 | $ | (5,882,210 | ) | (285,623 | ) | $ | 9,144,166 | 446,306 | ||||||||||||||||||
Class B | 592,214 | 28,970 | 258,866 | 12,801 | (479,658 | ) | (23,462 | ) | 371,422 | 18,309 | ||||||||||||||||||||||
Class C | 2,229,591 | 109,165 | 410,555 | 20,323 | (824,465 | ) | (40,327 | ) | 1,815,681 | 89,161 | ||||||||||||||||||||||
Class F | 1,294,485 | 63,019 | 133,621 | 6,566 | (435,975 | ) | (21,103 | ) | 992,131 | 48,482 | ||||||||||||||||||||||
Class 529-A | 178,893 | 8,686 | 35,737 | 1,756 | (39,519 | ) | (1,922 | ) | 175,111 | 8,520 | ||||||||||||||||||||||
Class 529-B | 19,217 | 936 | 6,115 | 301 | (5,615 | ) | (273 | ) | 19,717 | 964 | ||||||||||||||||||||||
Class 529-C | 85,314 | 4,147 | 13,876 | 684 | (27,708 | ) | (1,349 | ) | 71,482 | 3,482 | ||||||||||||||||||||||
Class 529-E | 8,454 | 411 | 1,734 | 85 | (2,660 | ) | (130 | ) | 7,528 | 366 | ||||||||||||||||||||||
Class 529-F | 9,629 | 468 | 930 | 46 | (1,175 | ) | (57 | ) | 9,384 | 457 | ||||||||||||||||||||||
Class R-1 | 46,174 | 2,246 | 2,924 | 144 | (12,774 | ) | (619 | ) | 36,324 | 1,771 | ||||||||||||||||||||||
Class R-2 | 226,310 | 11,043 | 26,541 | 1,312 | (116,865 | ) | (5,682 | ) | 135,986 | 6,673 | ||||||||||||||||||||||
Class R-3 | 516,588 | 25,057 | 46,778 | 2,300 | (200,112 | ) | (9,691 | ) | 363,254 | 17,666 | ||||||||||||||||||||||
Class R-4 | 235,448 | 11,404 | 21,573 | 1,058 | (76,506 | ) | (3,699 | ) | 180,515 | 8,763 | ||||||||||||||||||||||
Class R-5 | 206,608 | 9,878 | 12,745 | 625 | (44,685 | ) | (2,169 | ) | 174,668 | 8,334 | ||||||||||||||||||||||
Total net increase | ||||||||||||||||||||||||||||||||
(decrease) | $ | 17,029,484 | 828,235 | $ | 4,617,812 | 227,125 | $ | (8,149,927 | ) | (396,106 | ) | $ | 13,497,369 | 659,254 | ||||||||||||||||||
Year ended July 31, 2006 | ||||||||||||||||||||||||||||||||
Class A | $ | 7,526,901 | 404,213 | $ | 2,634,343 | 142,882 | $ | (5,936,400 | ) | (318,528 | ) | $ | 4,224,844 | 228,567 | ||||||||||||||||||
Class B | 417,059 | 22,507 | 194,060 | 10,594 | (449,190 | ) | (24,223 | ) | 161,929 | 8,878 | ||||||||||||||||||||||
Class C | 1,279,488 | 69,133 | 275,082 | 15,037 | (854,118 | ) | (46,137 | ) | 700,452 | 38,033 | ||||||||||||||||||||||
Class F | 579,266 | 31,091 | 80,258 | 4,359 | (369,396 | ) | (19,859 | ) | 290,128 | 15,591 | ||||||||||||||||||||||
Class 529-A | 115,828 | 6,225 | 21,870 | 1,187 | (29,602 | ) | (1,587 | ) | 108,096 | 5,825 | ||||||||||||||||||||||
Class 529-B | 15,280 | 823 | 4,043 | 220 | (4,608 | ) | (248 | ) | 14,715 | 795 | ||||||||||||||||||||||
Class 529-C | 51,850 | 2,790 | 8,560 | 465 | (19,447 | ) | (1,044 | ) | 40,963 | 2,211 | ||||||||||||||||||||||
Class 529-E | 6,516 | 351 | 1,079 | 59 | (2,291 | ) | (123 | ) | 5,304 | 287 | ||||||||||||||||||||||
Class 529-F | 4,653 | 250 | 424 | 23 | (938 | ) | (50 | ) | 4,139 | 223 | ||||||||||||||||||||||
Class R-1 | 21,603 | 1,163 | 1,257 | 69 | (6,100 | ) | (329 | ) | 16,760 | 903 | ||||||||||||||||||||||
Class R-2 | 164,063 | 8,842 | 15,707 | 857 | (83,808 | ) | (4,514 | ) | 95,962 | 5,185 | ||||||||||||||||||||||
Class R-3 | 275,744 | 14,822 | 25,650 | 1,394 | (135,565 | ) | (7,291 | ) | 165,829 | 8,925 | ||||||||||||||||||||||
Class R-4 | 163,310 | 8,773 | 10,477 | 568 | (48,034 | ) | (2,576 | ) | 125,753 | 6,765 | ||||||||||||||||||||||
Class R-5 | 96,681 | 5,189 | 5,091 | 276 | (20,075 | ) | (1,077 | ) | 81,697 | 4,388 | ||||||||||||||||||||||
Total net increase | ||||||||||||||||||||||||||||||||
(decrease) | $ | 10,718,242 | 576,172 | $ | 3,277,901 | 177,990 | $ | (7,959,572 | ) | (427,586 | ) | $ | 6,036,571 | 326,576 | ||||||||||||||||||
*Includes exchanges between share classes of the fund. |
6. Investment transactions
The fund made purchases and sales of investment securities, excluding short-term securities, of $32,316,489,000 and $23,464,810,000, respectively, during the year ended July 31, 2007.
Financial highlights(1)
Income from investment operations(2) | Dividends and distributions | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | Net investment income | Net gains on securities (both realized and unrealized) | Total from investment operations | Dividends (from net investment income) | Distributions (from capital gains) | Total dividends and distributions | 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 7/31/2007 | $ | 19.33 | $ | .87 | $ | 1.73 | $ | 2.60 | $ | (.93 | ) | $ | (.46 | ) | $ | (1.39 | ) | $ | 20.54 | 13.66 | % | $ | 65,713 | .56 | % | .54 | % | 4.22 | % | |||||||||||||||||||||||||||||||||||
Year ended 7/31/2006 | 18.70 | .81 | .94 | 1.75 | (.76 | ) | (.36 | ) | (1.12 | ) | 19.33 | 9.77 | 53,188 | .56 | .53 | 4.35 | ||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2005 | 17.10 | .77 | 1.61 | 2.38 | (.65 | ) | (.13 | ) | (.78 | ) | 18.70 | 14.12 | 47,196 | .55 | .54 | 4.26 | ||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2004 | 15.44 | .70 | 1.70 | 2.40 | (.74 | ) | - | (.74 | ) | 17.10 | 15.76 | 36,075 | .57 | .57 | 4.15 | |||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2003 | 14.49 | .72 | .98 | 1.70 | (.73 | ) | (.02 | ) | (.75 | ) | 15.44 | 12.18 | 25,891 | .61 | .61 | 4.98 | ||||||||||||||||||||||||||||||||||||||||||||||||
Class B: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2007 | 19.22 | .70 | 1.74 | 2.44 | (.77 | ) | (.46 | ) | (1.23 | ) | 20.43 | 12.83 | 5,094 | 1.32 | 1.30 | 3.46 | ||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2006 | 18.61 | .66 | .93 | 1.59 | (.62 | ) | (.36 | ) | (.98 | ) | 19.22 | 8.87 | 4,442 | 1.33 | 1.31 | 3.58 | ||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2005 | 17.01 | .63 | 1.61 | 2.24 | (.51 | ) | (.13 | ) | (.64 | ) | 18.61 | 13.32 | 4,135 | 1.34 | 1.32 | 3.48 | ||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2004 | 15.36 | .56 | 1.69 | 2.25 | (.60 | ) | - | (.60 | ) | 17.01 | 14.84 | 3,231 | 1.35 | 1.35 | 3.37 | |||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2003 | 14.42 | .61 | .97 | 1.58 | (.62 | ) | (.02 | ) | (.64 | ) | 15.36 | 11.37 | 2,015 | 1.39 | 1.39 | 4.17 | ||||||||||||||||||||||||||||||||||||||||||||||||
Class C: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2007 | 19.19 | .69 | 1.73 | 2.42 | (.76 | ) | (.46 | ) | (1.22 | ) | 20.39 | 12.80 | 8,911 | 1.37 | 1.35 | 3.41 | ||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2006 | 18.58 | .65 | .93 | 1.58 | (.61 | ) | (.36 | ) | (.97 | ) | 19.19 | 8.83 | 6,675 | 1.38 | 1.36 | 3.52 | ||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2005 | 16.99 | .61 | 1.60 | 2.21 | (.49 | ) | (.13 | ) | (.62 | ) | 18.58 | 13.17 | 5,756 | 1.43 | 1.41 | 3.38 | ||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2004 | 15.34 | .55 | 1.69 | 2.24 | (.59 | ) | - | (.59 | ) | 16.99 | 14.75 | 3,833 | 1.44 | 1.44 | 3.26 | |||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2003 | 14.41 | .59 | .97 | 1.56 | (.61 | ) | (.02 | ) | (.63 | ) | 15.34 | 11.23 | 1,850 | 1.48 | 1.48 | 4.07 | ||||||||||||||||||||||||||||||||||||||||||||||||
Class F: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2007 | 19.30 | .86 | 1.74 | 2.60 | (.92 | ) | (.46 | ) | (1.38 | ) | 20.52 | 13.69 | 3,075 | .60 | .57 | 4.18 | ||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2006 | 18.68 | .80 | .93 | 1.73 | (.75 | ) | (.36 | ) | (1.11 | ) | 19.30 | 9.68 | 1,957 | .60 | .57 | 4.30 | ||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2005 | 17.08 | .75 | 1.61 | 2.36 | (.63 | ) | (.13 | ) | (.76 | ) | 18.68 | 14.01 | 1,603 | .67 | .65 | 4.14 | ||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2004 | 15.42 | .67 | 1.71 | 2.38 | (.72 | ) | - | (.72 | ) | 17.08 | 15.65 | 1,000 | .69 | .69 | 4.02 | |||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2003 | 14.47 | .71 | .97 | 1.68 | (.71 | ) | (.02 | ) | (.73 | ) | 15.42 | 12.11 | 471 | .72 | .72 | 4.83 | ||||||||||||||||||||||||||||||||||||||||||||||||
Class 529-A: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2007 | 19.31 | .85 | 1.73 | 2.58 | (.91 | ) | (.46 | ) | (1.37 | ) | 20.52 | 13.57 | 655 | .65 | .63 | 4.14 | ||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2006 | 18.68 | .80 | .94 | 1.74 | (.75 | ) | (.36 | ) | (1.11 | ) | 19.31 | 9.70 | 452 | .63 | .61 | 4.27 | ||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2005 | 17.08 | .75 | 1.61 | 2.36 | (.63 | ) | (.13 | ) | (.76 | ) | 18.68 | 13.98 | 328 | .70 | .68 | 4.13 | ||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2004 | 15.42 | .68 | 1.70 | 2.38 | (.72 | ) | - | (.72 | ) | 17.08 | 15.61 | 195 | .67 | .67 | 4.06 | |||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2003 | 14.48 | .71 | .97 | 1.68 | (.72 | ) | (.02 | ) | (.74 | ) | 15.42 | 12.10 | 93 | .68 | .68 | 4.87 | ||||||||||||||||||||||||||||||||||||||||||||||||
Class 529-B: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2007 | 19.26 | .68 | 1.73 | 2.41 | (.74 | ) | (.46 | ) | (1.20 | ) | 20.47 | 12.71 | 117 | 1.45 | 1.43 | 3.34 | ||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2006 | 18.65 | .64 | .92 | 1.56 | (.59 | ) | (.36 | ) | (.95 | ) | 19.26 | 8.71 | 92 | 1.47 | 1.44 | 3.44 | ||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2005 | 17.05 | .59 | 1.61 | 2.20 | (.47 | ) | (.13 | ) | (.60 | ) | 18.65 | 13.05 | 74 | 1.55 | 1.53 | 3.28 | ||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2004 | 15.36 | .53 | 1.70 | 2.23 | (.54 | ) | - | (.54 | ) | 17.05 | 14.67 | 51 | 1.57 | 1.57 | 3.16 | |||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2003 | 14.46 | .58 | .97 | 1.55 | (.63 | ) | (.02 | ) | (.65 | ) | 15.36 | 11.10 | 28 | 1.60 | 1.60 | 3.95 | ||||||||||||||||||||||||||||||||||||||||||||||||
Class 529-C: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2007 | 19.27 | .69 | 1.74 | 2.43 | (.75 | ) | (.46 | ) | (1.21 | ) | 20.49 | 12.77 | 285 | 1.45 | 1.42 | 3.35 | ||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2006 | 18.65 | .64 | .93 | 1.57 | (.59 | ) | (.36 | ) | (.95 | ) | 19.27 | 8.77 | 201 | 1.46 | 1.43 | 3.45 | ||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2005 | 17.06 | .59 | 1.60 | 2.19 | (.47 | ) | (.13 | ) | (.60 | ) | 18.65 | 13.00 | 153 | 1.54 | 1.52 | 3.29 | ||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2004 | 15.39 | .53 | 1.71 | 2.24 | (.57 | ) | - | (.57 | ) | 17.06 | 14.69 | 95 | 1.56 | 1.56 | 3.17 | |||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2003 | 14.46 | .58 | .97 | 1.55 | (.60 | ) | (.02 | ) | (.62 | ) | 15.39 | 11.10 | 44 | 1.59 | 1.59 | 3.96 | ||||||||||||||||||||||||||||||||||||||||||||||||
Class 529-E: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2007 | 19.28 | .79 | 1.73 | 2.52 | (.85 | ) | (.46 | ) | (1.31 | ) | 20.49 | 13.27 | 32 | .94 | .91 | 3.86 | ||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2006 | 18.66 | .74 | .93 | 1.67 | (.69 | ) | (.36 | ) | (1.05 | ) | 19.28 | 9.32 | 23 | .94 | .92 | 3.96 | ||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2005 | 17.06 | .69 | 1.61 | 2.30 | (.57 | ) | (.13 | ) | (.70 | ) | 18.66 | 13.63 | 17 | 1.02 | 1.01 | 3.80 | ||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2004 | 15.40 | .62 | 1.70 | 2.32 | (.66 | ) | - | (.66 | ) | 17.06 | 15.24 | 10 | 1.04 | 1.04 | 3.69 | |||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2003 | 14.47 | .66 | .96 | 1.62 | (.67 | ) | (.02 | ) | (.69 | ) | 15.40 | 11.66 | 5 | 1.06 | 1.06 | 4.48 | ||||||||||||||||||||||||||||||||||||||||||||||||
Class 529-F: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2007 | $ | 19.30 | $ | .90 | $ | 1.73 | $ | 2.63 | $ | (.95 | ) | $ | (.46 | ) | $ | (1.41 | ) | $ | 20.52 | 13.87 | % | $ | 20 | .44 | % | .41 | % | 4.37 | % | |||||||||||||||||||||||||||||||||||
Year ended 7/31/2006 | 18.68 | .83 | .93 | 1.76 | (.78 | ) | (.36 | ) | (1.14 | ) | 19.30 | 9.85 | 10 | .44 | .42 | 4.46 | ||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2005 | 17.08 | .75 | 1.60 | 2.35 | (.62 | ) | (.13 | ) | (.75 | ) | 18.68 | 13.96 | 5 | .70 | .68 | 4.14 | ||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2004 | 15.42 | .67 | 1.69 | 2.36 | (.70 | ) | - | (.70 | ) | 17.08 | 15.53 | 3 | .79 | .79 | 3.95 | |||||||||||||||||||||||||||||||||||||||||||||||||
Period from 9/17/2002 to 7/31/2003 | 14.11 | .60 | 1.24 | 1.84 | (.51 | ) | (.02 | ) | (.53 | ) | 15.42 | 13.38 | 1 | .81 | (5 | ) | .81 | (5 | ) | 4.68 | (5 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class R-1: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2007 | 19.27 | .70 | 1.72 | 2.42 | (.75 | ) | (.46 | ) | (1.21 | ) | 20.48 | 12.75 | 75 | 1.41 | 1.39 | 3.41 | ||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2006 | 18.65 | .64 | .94 | 1.58 | (.60 | ) | (.36 | ) | (.96 | ) | 19.27 | 8.79 | 37 | 1.45 | 1.41 | 3.46 | ||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2005 | 17.05 | .61 | 1.61 | 2.22 | (.49 | ) | (.13 | ) | (.62 | ) | 18.65 | 13.15 | 19 | 1.50 | 1.45 | 3.36 | ||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2004 | 15.39 | .55 | 1.70 | 2.25 | (.59 | ) | - | (.59 | ) | 17.05 | 14.75 | 8 | 1.55 | 1.48 | 3.27 | |||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2003 | 14.47 | .60 | .96 | 1.56 | (.62 | ) | (.02 | ) | (.64 | ) | 15.39 | 11.19 | 2 | 1.92 | 1.50 | 4.02 | ||||||||||||||||||||||||||||||||||||||||||||||||
Class R-2: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2007 | 19.22 | .69 | 1.72 | 2.41 | (.75 | ) | (.46 | ) | (1.21 | ) | 20.42 | 12.73 | 539 | 1.44 | 1.39 | 3.38 | ||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2006 | 18.60 | .64 | .94 | 1.58 | (.60 | ) | (.36 | ) | (.96 | ) | 19.22 | 8.83 | 379 | 1.52 | 1.40 | 3.48 | ||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2005 | 17.01 | .61 | 1.60 | 2.21 | (.49 | ) | (.13 | ) | (.62 | ) | 18.60 | 13.16 | 271 | 1.58 | 1.42 | 3.39 | ||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2004 | 15.36 | .55 | 1.69 | 2.24 | (.59 | ) | - | (.59 | ) | 17.01 | 14.75 | 139 | 1.75 | 1.44 | 3.30 | |||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2003 | 14.48 | .59 | .95 | 1.54 | (.64 | ) | (.02 | ) | (.66 | ) | 15.36 | 11.12 | 52 | 1.81 | 1.46 | 4.02 | ||||||||||||||||||||||||||||||||||||||||||||||||
Class R-3: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2007 | 19.29 | .79 | 1.73 | 2.52 | (.85 | ) | (.46 | ) | (1.31 | ) | 20.50 | 13.26 | 978 | .94 | .92 | 3.86 | ||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2006 | 18.67 | .73 | .93 | 1.66 | (.68 | ) | (.36 | ) | (1.04 | ) | 19.29 | 9.29 | 579 | .96 | .94 | 3.94 | ||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2005 | 17.07 | .70 | 1.60 | 2.30 | (.57 | ) | (.13 | ) | (.70 | ) | 18.67 | 13.68 | 394 | .97 | .96 | 3.85 | ||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2004 | 15.41 | .62 | 1.70 | 2.32 | (.66 | ) | - | (.66 | ) | 17.07 | 15.25 | 176 | 1.02 | 1.02 | 3.70 | |||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2003 | 14.48 | .65 | .98 | 1.63 | (.68 | ) | (.02 | ) | (.70 | ) | 15.41 | 11.68 | 56 | 1.12 | 1.08 | 4.42 | ||||||||||||||||||||||||||||||||||||||||||||||||
Class R-4: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2007 | 19.31 | .85 | 1.74 | 2.59 | (.91 | ) | (.46 | ) | (1.37 | ) | 20.53 | 13.57 | 451 | .65 | .63 | 4.15 | ||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2006 | 18.69 | .79 | .93 | 1.72 | (.74 | ) | (.36 | ) | (1.10 | ) | 19.31 | 9.60 | 255 | .66 | .64 | 4.22 | ||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2005 | 17.09 | .76 | 1.60 | 2.36 | (.63 | ) | (.13 | ) | (.76 | ) | 18.69 | 14.00 | 120 | .67 | .65 | 4.17 | ||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2004 | 15.43 | .68 | 1.70 | 2.38 | (.72 | ) | - | (.72 | ) | 17.09 | 15.64 | 30 | .69 | .69 | 4.05 | |||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2003 | 14.49 | .70 | .98 | 1.68 | (.72 | ) | (.02 | ) | (.74 | ) | 15.43 | 12.07 | 12 | .72 | .72 | 4.81 | ||||||||||||||||||||||||||||||||||||||||||||||||
Class R-5: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2007 | 19.32 | .91 | 1.74 | 2.65 | (.97 | ) | (.46 | ) | (1.43 | ) | 20.54 | 13.94 | 350 | .36 | .33 | 4.42 | ||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2006 | 18.70 | .85 | .93 | 1.78 | (.80 | ) | (.36 | ) | (1.16 | ) | 19.32 | 9.92 | 168 | .36 | .34 | 4.56 | ||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2005 | 17.10 | .80 | 1.61 | 2.41 | (.68 | ) | (.13 | ) | (.81 | ) | 18.70 | 14.33 | 81 | .37 | .35 | 4.45 | ||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2004 | 15.44 | .73 | 1.71 | 2.44 | (.78 | ) | - | (.78 | ) | 17.10 | 16.01 | 57 | .37 | .37 | 4.35 | |||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2003 | 14.49 | .75 | .98 | 1.73 | (.76 | ) | (.02 | ) | (.78 | ) | 15.44 | 12.43 | 39 | .40 | .40 | 5.17 |
Year ended July 31 | ||||||||||||||||||||
2007 | 2006 | 2005 | 2004 | 2003 | ||||||||||||||||
Portfolio turnover rate for all classes of shares | 32 | % | 35 | % | 24 | % | 27 | % | 28 | % | ||||||||||
(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 all 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 for all share classes. 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 Income Fund of America, Inc.:
We have audited the accompanying statement of assets and liabilities, including the summary investment portfolio, of The Income Fund of America, Inc. (the “Fund”) as of July 31, 2007, 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 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 July 31, 2007, 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 Income Fund of America, Inc. as of July 31, 2007, 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
September 10, 2007
Expense example
0; unaudited
As a shareholder of the fund, you incur two types of costs: (1) transaction costs such as initial sales charges on purchase payments and contingent deferred sales charges on redemptions (loads); and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the fund so you can compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (February 1, 2007, through July 31, 2007).
Actual expenses:
The first line of each share class in the table on the next page provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses paid during period" to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes:
The second line of each share class in the table on the next page provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio for the share class and an assumed rate of return of 5.00% per year before expenses, which is not the actual return of the share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the fund and other funds. To do so, compare this 5.00% hypothetical example with the 5.00% hypothetical examples that appear in the shareholder reports of the other funds.
Notes:
There are some account fees that are charged to certain types of accounts, such as Individual Retirement Accounts and 529 college savings plan accounts (generally, a $10 fee is charged to set up the account and an additional $10 fee is charged to the account annually) that would increase the amount of expenses paid on your account. In addition, retirement plan participants may be subject to certain fees charged by the plan sponsor, and Class F and 529-F shareholders may be subject to fees charged by financial intermediaries, typically ranging from 0.75% to 1.50% of assets annually depending on services offered. You can estimate the impact of these fees by adding the amount of the fees to the total estimated expenses you paid on your account during the period as calculated above. In addition, your ending account value would also be lower by the amount of these fees.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads). Therefore, the second line of each share class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Beginning account value 2/1/2007 | Ending account value 7/31/2007 | Expenses paid during period* | Annualized expense ratio | |||||||||||||
Class A -- actual return | $ | 1,000.00 | $ | 1,019.75 | $ | 2.70 | .54 | % | ||||||||
Class A -- assumed 5% return | 1,000.00 | 1,022.12 | 2.71 | .54 | ||||||||||||
Class B -- actual return | 1,000.00 | 1,015.58 | 6.50 | 1.30 | ||||||||||||
Class B -- assumed 5% return | 1,000.00 | 1,018.35 | 6.51 | 1.30 | ||||||||||||
Class C -- actual return | 1,000.00 | 1,015.33 | 6.75 | 1.35 | ||||||||||||
Class C -- assumed 5% return | 1,000.00 | 1,018.10 | 6.76 | 1.35 | ||||||||||||
Class F -- actual return | 1,000.00 | 1,019.59 | 2.90 | .58 | ||||||||||||
Class F -- assumed 5% return | 1,000.00 | 1,021.92 | 2.91 | .58 | ||||||||||||
Class 529-A -- actual return | 1,000.00 | 1,019.26 | 3.25 | .65 | ||||||||||||
Class 529-A -- assumed 5% return | 1,000.00 | 1,021.57 | 3.26 | .65 | ||||||||||||
Class 529-B -- actual return | 1,000.00 | 1,015.38 | 7.10 | 1.42 | ||||||||||||
Class 529-B -- assumed 5% return | 1,000.00 | 1,017.75 | 7.10 | 1.42 | ||||||||||||
Class 529-C -- actual return | 1,000.00 | 1,015.37 | 7.10 | 1.42 | ||||||||||||
Class 529-C -- assumed 5% return | 1,000.00 | 1,017.75 | 7.10 | 1.42 | ||||||||||||
Class 529-E -- actual return | 1,000.00 | 1,017.89 | 4.60 | .92 | ||||||||||||
Class 529-E -- assumed 5% return | 1,000.00 | 1,020.23 | 4.61 | .92 | ||||||||||||
Class 529-F -- actual return | 1,000.00 | 1,020.39 | 2.10 | .42 | ||||||||||||
Class 529-F -- assumed 5% return | 1,000.00 | 1,022.71 | 2.11 | .42 | ||||||||||||
Class R-1 -- actual return | 1,000.00 | 1,015.50 | 7.00 | 1.40 | ||||||||||||
Class R-1 -- assumed 5% return | 1,000.00 | 1,017.85 | 7.00 | 1.40 | ||||||||||||
Class R-2 -- actual return | 1,000.00 | 1,015.57 | 7.00 | 1.40 | ||||||||||||
Class R-2 -- assumed 5% return | 1,000.00 | 1,017.85 | 7.00 | 1.40 | ||||||||||||
Class R-3 -- actual return | 1,000.00 | 1,017.87 | 4.60 | .92 | ||||||||||||
Class R-3 -- assumed 5% return | 1,000.00 | 1,020.23 | 4.61 | .92 | ||||||||||||
Class R-4 -- actual return | 1,000.00 | 1,019.34 | 3.15 | .63 | ||||||||||||
Class R-4 -- assumed 5% return | 1,000.00 | 1,021.67 | 3.16 | .63 | ||||||||||||
Class R-5 -- actual return | 1,000.00 | 1,020.79 | 1.70 | .34 | ||||||||||||
Class R-5 -- assumed 5% return | 1,000.00 | 1,023.11 | 1.71 | .34 |
*The “expenses paid during period” are equal to the “annualized expense ratio,” multiplied by the average account value over the period, multiplied by the number of days in the period (181), and divided by 365 (to reflect the one-half year period).
Tax information
unaudited
We are required to advise you within 60 days of the fund’s fiscal year-end regarding the federal tax status of certain distributions received by shareholders during such fiscal year. The fund hereby designates the following amounts for the fund’s fiscal year ended July 31, 2007:
Long-term capital gains | $ | 1,730,881,000 | ||
Qualified dividend income | 2,200,650,000 | |||
Corporate dividends received deduction | 1,380,621,000 | |||
U.S. government income that may be exempt from state taxation | 85,557,000 |
Individual shareholders should refer to their Form 1099 or other tax information, which will be mailed in January 2008, to determine the calendar year amounts to be included on their 2007 tax returns. Shareholders should consult their tax advisers.
Other share class results
unaudited
Fund results shown are for past periods and are not predictive of results for future periods. Current and future results may be lower or higher than those shown. Share prices and returns will vary, so investors may lose money. For current information and month-end results, visit americanfunds.com.
Class B, Class C, Class F and Class 529 | ||||||||||||
Average annual total returns for periods ended June 30, 2007 (the most recent calendar quarter): | ||||||||||||
1 year | 5 years | Life of class | ||||||||||
Class B shares — first sold 3/15/00 | ||||||||||||
Reflecting applicable contingent deferred sales | ||||||||||||
charge (CDSC), maximum of 5%, payable only | ||||||||||||
if shares are sold within six years of purchase | +14.03 | % | +11.38 | % | +10.30 | % | ||||||
Not reflecting CDSC | +19.03 | % | +11.64 | % | +10.30 | % | ||||||
Class C shares — first sold 3/15/01 | ||||||||||||
Reflecting CDSC, maximum of 1%, payable only | ||||||||||||
if shares are sold within one year of purchase | +17.94 | % | +11.54 | % | +9.53 | % | ||||||
Not reflecting CDSC | +18.94 | % | +11.54 | % | +9.53 | % | ||||||
Class F shares* — first sold 3/15/01 | ||||||||||||
Not reflecting annual asset-based fee charged | ||||||||||||
by sponsoring firm | +19.84 | % | +12.39 | % | +10.37 | % | ||||||
Class 529-A shares†— first sold 2/15/02 | ||||||||||||
Reflecting 5.75% maximum sales charge | +12.87 | % | +11.06 | % | +10.22 | % | ||||||
Not reflecting maximum sales charge | +19.77 | % | +12.39 | % | +11.44 | % | ||||||
Class 529-B shares†— first sold 2/19/02 | ||||||||||||
Reflecting applicable CDSC, maximum of 5%, | ||||||||||||
payable only if shares are sold within six | ||||||||||||
years of purchase | +13.89 | % | +11.17 | % | +10.58 | % | ||||||
Not reflecting CDSC | +18.89 | % | +11.43 | % | +10.70 | % | ||||||
Class 529-C shares†— first sold 2/19/02 | ||||||||||||
Reflecting CDSC, maximum of 1%, payable only | ||||||||||||
if shares are sold within one year of purchase | +17.88 | % | +11.44 | % | +10.71 | % | ||||||
Not reflecting CDSC | +18.88 | % | +11.44 | % | +10.71 | % | ||||||
Class 529-E shares*†— first sold 2/25/02 | +19.41 | % | +12.00 | % | +11.07 | % | ||||||
Class 529-F shares*†— first sold 9/17/02 | ||||||||||||
Not reflecting annual asset-based fee charged | ||||||||||||
by sponsoring firm | +20.03 | % | — | +14.68 | % | |||||||
*These shares are sold without any initial or contingent deferred sales charge. | ||||||||||||
† Results shown do not reflect the $10 initial account setup fee and an annual $10 account maintenance fee. |
The fund’s investment adviser waived 5% of its management fees from September 1, 2004, through March 31, 2005, and increased it to 10% on April 1, 2005. Fund results shown reflect the waiver, without which they would have been lower. Please see the Financial Highlights table on pages 29 and 30 for details.
For information regarding the differences among the various share classes, please refer to the fund’s prospectus.
Board of directors and other officers
“Independent” directors | ||
Year first | ||
elected | ||
a director | ||
Name and age | of the fund1 | Principal occupation(s) during past five years |
Robert A. Fox, 70 | 1972 | Managing General Partner, Fox Investments LP; corporate director; retired President and CEO, |
Foster Farms (poultry producer) | ||
Leonade D. Jones, 59 | 1993 | Co-founder, VentureThink LLC (developed and |
Chairman of the Board | managed e-commerce businesses) and Versura Inc. | |
(Independent and Non-Executive) | (education loan exchange); former Treasurer, | |
The Washington Post Company | ||
John M. Lillie, 70 | 2003 | Business consultant; former President, Sequoia |
Associates LLC (investment firm specializing in | ||
medium-size buyouts); former Vice Chairman of the | ||
Board, Gap Inc. (specialty apparel retailing) | ||
John G. McDonald, 70 | 1976 | Stanford Investors Professor, Graduate School of |
Business, Stanford University | ||
Henry E. Riggs, 72 | 1989 | President Emeritus, Keck Graduate Institute of Applied Life Sciences |
Isaac Stein, 60 | 2004 | President, Waverly Associates (private investment fund); Chairman Emeritus, Stanford University Board of Trustees |
Patricia K. Woolf, Ph.D., 73 | 1985 | Private investor; corporate director; former Lecturer, Department of Molecular Biology, Princeton University |
“Independent” directors | ||
Number of | ||
portfolios | ||
in fund | ||
complex2 | ||
overseen by | ||
Name and age | director | Other directorships3 held by director |
Robert A. Fox, 70 | 7 | Chemtura Corporation |
Leonade D. Jones, 59 | 6 | None |
Chairman of the Board | ||
(Independent and Non-Executive) | ||
John M. Lillie, 70 | 2 | None |
John G. McDonald, 70 | 8 | iStar Financial, Inc.; Plum Creek Timber Co.; Scholastic Corporation; Varian, Inc. |
Henry E. Riggs, 72 | 4 | None |
Isaac Stein, 60 | 2 | Alexza Pharmaceuticals, Inc.; Maxygen, Inc. |
Patricia K. Woolf, Ph.D., 73 | 6 | None |
“Interested” director4 | ||
Year first | ||
elected a | ||
director or | ||
Name, age and | officer of | Principal occupation(s) during past five years and |
position with fund | the fund1 | positions held with affiliated entities of the fund |
Hilda L. Applbaum, 46 | 1998 | Senior Vice President, Capital Research |
Vice Chairman of the Board | Company5 | |
“Interested” director4 | ||
Number of | ||
portfolios | ||
in fund | ||
complex2 | ||
Name, age and | overseen by | |
position with fund | director | Other directorships3 held by director |
Hilda L. Applbaum, 46 | 1 | None |
Vice Chairman of the Board | ||
Please see page 36 for footnotes |
Other officers6
Year first | ||
elected | Principal occupation(s) during past five years | |
Name, age and | an officer | and positions held with affiliated entities or the |
position with fund | of the fund1 | principal underwriter of the fund |
David C. Barclay, 50 | 1998 | Senior Vice President, Capital Research and |
President | Management Company; Director, The Capital Group Companies, Inc.5 | |
Abner D. Goldstine, 77 | 1993 | Senior Vice President and Director, Capital |
Senior Vice President | Research and Management Company | |
Dina N. Perry, 61 | 1994 | Senior Vice President and Director, Capital |
Senior Vice President | Research and Management Company | |
Andrew B. Suzman, 40 | 2004 | Executive Vice President and Director, Capital |
Senior Vice President | Research Company5 | |
Joanna F. Jonsson, 44 | 2006 | Senior Vice President, Capital Research Company;5 |
Vice President | Director, The Capital Group Companies, Inc.;5 | |
Director, American Funds Distributors, Inc.5 | ||
Mary E. Sheridan, 57 | 2004 | Vice President, Capital Research Company5 |
Vice President | ||
John H. Smet, 51 | 1994 | Senior Vice President, Capital Research and |
Vice President | Management Company; Director, American Funds Distributors, Inc.5 | |
Steven T. Watson, 52 | 2006 | Senior Vice President and Director, Capital |
Vice President | Research Company5; Director, The Capital Group | |
Companies, Inc.5 | ||
Patrick F. Quan, 49 | 1986 | Vice President — Fund Business Management |
Secretary | Group, Capital Research and Management Company | |
Jennifer M. Buchheim, 34 | 2005 | Vice President — Fund Business Management |
Treasurer | Group, Capital Research and Management Company | |
R. Marcia Gould, 53 | 1999 | Vice President — Fund Business Management |
Assistant Treasurer | Group, Capital Research and Management Company |
The statement of additional information includes additional information about fund directors and is available without charge upon request by calling American Funds Service Company at 800/421-0180. The address for all directors and officers of the fund is 333 South Hope Street, Los Angeles, CA 90071, Attention: Fund Secretary.
1Directors and officers of the fund serve until their resignation, removal or retirement. |
2Capital Research and Management Company manages the American Funds, consisting of 30 funds. Capital Research and Management Company also manages American Funds Insurance Series,® which serves as the underlying investment vehicle for certain variable insurance contracts, American Funds Target Date Retirement Series,® Inc., which is available to investors in tax-deferred retirement plans and IRAs, and Endowments, whose shareholders are limited to certain nonprofit organizations. |
3This includes all directorships (other than those in the American Funds) that are held by each director as a director of a public company or a registered investment company. |
4“Interested persons” within the meaning of the 1940 Act, on the basis of their affiliation with the fund’s investment adviser, Capital Research and Management Company, or affiliated entities (including the fund’s principal underwriter). |
5Company affiliated with Capital Research and Management Company. |
6All of the officers listed, except Joanna F. Jonsson and Mary E. Sheridan, 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. |
Office of the fund
One Market
Steuart Tower, Suite 1800
Mailing address: P.O. Box 7650
San Francisco, CA 94120-7650
Investment adviser
Capital Research and
Management Company
333 South Hope Street
Los Angeles, CA 90071-1406
6455 Irvine Center Drive
Irvine, CA 92618
Transfer agent for shareholder accounts
American Funds Service Company
(Please write to the address nearest you.)
P.O. Box 25065
Santa Ana, CA 92799-5065
P.O. Box 659522
San Antonio, TX 78265-9522
P.O. Box 6007
Indianapolis, IN 46206-6007
P.O. Box 2280
Norfolk, VA 23501-2280
Custodian of assets
JPMorgan Chase Bank
270 Park Avenue
New York, NY 10017-2070
Counsel
Paul, Hastings, Janofsky & Walker LLP
515 South Flower Street
Los Angeles, CA 90071-2228
Independent registered public accounting firm
Deloitte & Touche LLP
695 Town Center Drive
Suite 1200
Costa Mesa, CA 92626-7188
Principal underwriter
American Funds Distributors, Inc.
333 South Hope Street
Los Angeles, CA 90071-1406
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, which can be obtained from your financial adviser 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.
“American Funds Proxy Voting Guidelines” — which describes how we vote proxies relating to portfolio securities — is available free of charge on the U.S. Securities and Exchange Commission (SEC) website at sec.gov, on the American Funds website or upon request by calling AFS. The fund files its proxy voting record with the SEC for the 12 months ended June 30 by August 31. The report also is available on the SEC and American Funds websites.
A complete July 31, 2007, portfolio of The Income Fund of America’s investments is available free of charge by calling AFS or visiting the SEC website (where it is part of Form N-CSR).
The Income Fund of America files a complete list of its portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. This filing is available free of charge on the SEC website. You may also review or, for a fee, copy this filing at the SEC’s Public Reference Room in Washington, D.C. (800/SEC-0330). Additionally, the list of portfolio holdings also is available by calling AFS.
This report is for the information of shareholders of The Income Fund of America, but it also may be used as sales literature when preceded or accompanied by the current prospectus, which gives details about charges, expenses, investment objectives and operating policies of the fund. If used as sales material after September 30, 2007, this report must be accompanied by an American Funds statistical update for the most recently completed calendar quarter.
[logo - American Funds®]
The right choice for the long term®
What makes American Funds different?
For 75 years, we have followed a consistent philosophy to benefit our investors. Our 30 carefully conceived, broadly diversified funds in addition to the target date retirement series, offer opportunities that have attracted over 40 million shareholder accounts.
Our unique combination of strengths includes these five factors:
•A long-term, value-oriented approach |
We seek to buy securities at reasonable prices relative to their prospects and hold them for the long term. |
•An extensive global research effort |
Our investment professionals travel the world to find the best investment opportunities and gain a comprehensive understanding of companies and markets. |
•The multiple portfolio counselor system |
Our unique method of portfolio management, developed nearly 50 years ago, blends teamwork with individual accountability and has provided American Funds with a sustainable method of achieving fund objectives. |
•Experienced investment professionals |
American Funds portfolio counselors have an average of 24 years of investment experience, providing a wealth of knowledge and experience that few organizations have. |
•A commitment to low operating expenses |
The American Funds provide exceptional value for shareholders, with operating expenses that are among the lowest in the mutual fund industry. |
American Funds span a range of investment objectives
•Growth funds |
Emphasis on long-term growth through stocks |
AMCAP Fund® |
EuroPacific Growth Fund® |
The Growth Fund of America® |
The New Economy Fund® |
New Perspective Fund® |
New World FundSM |
SMALLCAP World Fund® |
•Growth-and-income funds |
Emphasis on long-term growth and dividends through stocks |
American Mutual Fund® |
Capital World Growth and Income FundSM |
Fundamental InvestorsSM |
The Investment Company of America® |
Washington Mutual Investors FundSM |
•Equity-income funds |
Emphasis on above-average income and growth through stocks and/or bonds |
Capital Income Builder® |
> | The Income Fund of America® |
•Balanced fund |
Emphasis on long-term growth and current income through stocks and bonds |
American Balanced Fund® |
•Bond funds |
Emphasis on current income through bonds |
American High-Income TrustSM |
The Bond Fund of AmericaSM |
Capital World Bond Fund® |
Intermediate Bond Fund of America® |
Short-Term Bond Fund of AmericaSM
U.S. Government Securities FundSM |
•Tax-exempt bond funds |
Emphasis on tax-free current income through municipal bonds |
American High-Income Municipal Bond Fund® |
Limited Term Tax-Exempt Bond Fund of AmericaSM |
The Tax-Exempt Bond Fund of America® |
State-specific tax-exempt funds |
The Tax-Exempt Fund of California® |
The Tax-Exempt Fund of Maryland® |
The Tax-Exempt Fund of Virginia® |
•Money market funds |
The Cash Management Trust of America® |
The Tax-Exempt Money Fund of AmericaSM |
The U.S. Treasury Money Fund of AmericaSM |
•American Funds Target Date Retirement Series® |
The Capital Group Companies
American Funds Capital Research and Management Capital International Capital Guardian Capital Bank and Trust
Lit. No. MFGEAR-906-0907P
Litho in USA BAG/LPT/8061-S10039
Printed on recycled paper
ITEM 2 – Code of Ethics
The Registrant has adopted a Code of Ethics that applies to its Principal Executive Officer and Principal Financial Officer. The Registrant undertakes to provide to any person without charge, upon request, a copy of the Code of Ethics. Such request can be made to American Funds Service Company at 800/421-0180 or to the Secretary of the Registrant, One Market, Steuart Tower, San Francisco, California 94120.
ITEM 3 – Audit Committee Financial Expert
The Registrant’s board has determined that John M. Lillie, a member of the Registrant’s audit committee, is an “audit committee financial expert” and "independent," as such terms are defined in this Item. This designation will not increase the designee’s duties, obligations or liability as compared to his or her duties, obligations and liability as a member of the audit committee and of the board, nor will it reduce the responsibility of the other audit committee members. There may be other individuals who, through education or experience, would qualify as "audit committee financial experts" if the board had designated them as such. Most importantly, the board believes each member of the audit committee contributes significantly to the effective oversight of the Registrant’s financial statements and condition.
ITEM 4 – Principal Accountant Fees and Services
Registrant: | ||||
a) Audit Fees: | ||||
2006 | $101,000 | |||
2007 | $108,000 | |||
b) Audit-Related Fees: | ||||
2006 | $18,000 | |||
2007 | $27,000 | |||
The audit-related fees consist of assurance and related services relating to the examination of the Registrant’s investment adviser conducted in accordance with Statement on Auditing Standards Number 70 issued by the American Institute of Certified Public Accountants. | ||||
c) Tax Fees: | ||||
2006 | $6,000 | |||
2007 | $6,000 | |||
The tax fees consist of professional services relating to the preparation of the Registrant’s tax returns. | ||||
d) All Other Fees: | ||||
2006 | None | |||
2007 | None | |||
Adviser and affiliates (includes only fees for non-audit services billed to the adviser and affiliates for engagements that relate directly to the operations and financial reporting of the Registrant and were subject to the pre-approval policies described below): | ||||
a) Not Applicable | ||||
b) Audit-Related Fees: | ||||
2006 | $374,000 | |||
2007 | $1,093,000 | |||
The audit–related fees consist of assurance and related services relating to the examination of the Registrant’s transfer agent, principal underwriter and investment adviser conducted in accordance with Statement on Auditing Standards Number 70 issued by the American Institute of Certified Public Accountants. | ||||
c) Tax Fees: | ||||
2006 | None | |||
2007 | $12,000 | |||
The tax fees consist of consulting services relating to the Registrant’s investments. | ||||
d) All Other Fees: | ||||
2006 | $21,000 | |||
2007 | None | |||
The other fees consist of consulting services related to the Registrant’s compliance program. |
The Registrant’s audit committee will pre-approve all audit and permissible non-audit services that the committee considers compatible with maintaining the independent registered public accounting firm’s independence. The pre-approval requirement will extend to all non-audit services provided to the Registrant, the investment adviser, and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the Registrant, if the engagement relates directly to the operations and financial reporting of the Registrant. The committee will not delegate its responsibility to pre-approve these services to the investment adviser. The committee may delegate to one or more committee members the authority to review and pre-approve audit and permissible non-audit services. Actions taken under any such delegation will be reported to the full committee at its next meeting. The pre-approval requirement is waived with respect to non-audit services if certain conditions are met. The pre-approval requirement was not waived for any of the non-audit services listed above provided to the Registrant, adviser, and affiliates.
Aggregate non-audit fees paid to the Registrant’s auditors, including fees for all services billed to the Registrant and the adviser and affiliates that provide ongoing services to the Registrant were $826,000 for fiscal year 2006 and $1,406,000 for fiscal year 2007. The non-audit services represented by these amounts were brought to the attention of the committee and considered to be compatible with maintaining the auditors’ independence.
ITEM 5 – Audit Committee of Listed Registrants
Not applicable to this Registrant, insofar as the Registrant is not a listed issuer as defined in Rule 10A-3 under the Securities Exchange Act of 1934.
ITEM 6 – Schedule of Investments
[logo – American Funds®]
The Income Fund of America®
Investment portfolio
July 31, 2007
Common stocks — 64.14% | Shares | Market value (000) | ||||||
FINANCIALS — 14.50% | ||||||||
Citigroup Inc. | 28,464,500 | $ | 1,325,592 | |||||
Washington Mutual, Inc. | 24,300,000 | 911,979 | ||||||
Wells Fargo & Co. | 21,540,000 | 727,406 | ||||||
Fannie Mae | 11,304,322 | 676,451 | ||||||
Société Générale1 | 3,811,500 | 653,086 | ||||||
SunTrust Banks, Inc. | 7,340,000 | 574,722 | ||||||
Bank of America Corp. | 10,766,550 | 510,550 | ||||||
Lloyds TSB Group PLC1 | 42,839,900 | 481,342 | ||||||
Fifth Third Bancorp | 12,000,000 | 442,680 | ||||||
Equity Residential, shares of beneficial interest | 10,092,800 | 401,794 | ||||||
iStar Financial, Inc.2 | 8,207,550 | 298,180 | ||||||
Insurance Australia Group Ltd.1 | 58,599,325 | 282,939 | ||||||
PNC Financial Services Group, Inc. | 3,800,000 | 253,270 | ||||||
ING Groep NV1 | 5,376,202 | 227,561 | ||||||
Kimco Realty Corp. | 5,986,800 | 223,487 | ||||||
Fidelity National Financial, Inc. | 10,634,000 | 222,144 | ||||||
Boston Properties, Inc. | 2,295,000 | 216,855 | ||||||
St. George Bank Ltd.1 | 6,846,552 | 199,595 | ||||||
Wachovia Corp. | 4,200,000 | 198,282 | ||||||
Banco Itaú Holding Financeira SA, preferred nominative | 4,110,000 | 190,005 | ||||||
Hang Lung Properties Ltd.1 | 48,836,000 | 178,752 | ||||||
AMP Ltd.1 | 20,680,000 | 176,380 | ||||||
U.S. Bancorp | 5,761,400 | 172,554 | ||||||
CapitalSource Inc. | 8,828,441 | 167,740 | ||||||
JPMorgan Chase & Co. | 3,800,000 | 167,238 | ||||||
Hospitality Properties Trust | 4,100,000 | 157,276 | ||||||
Unibail-Rodamco, non-registered shares1 | 650,000 | 153,446 | ||||||
American Capital Strategies, Ltd. | 4,020,000 | 152,639 | ||||||
Arthur J. Gallagher & Co.2 | 5,403,700 | 149,034 | ||||||
BNP Paribas SA1 | 1,237,500 | 136,069 | ||||||
Standard Bank Group Ltd.1 | 8,860,000 | 127,256 | ||||||
Allied Capital Corp. | 4,459,020 | 126,280 | ||||||
XL Capital Ltd., Class A | 1,613,541 | 125,630 | ||||||
Popular, Inc. | 9,350,000 | 123,327 | ||||||
Bank of Ireland1 | 5,885,000 | 112,439 | ||||||
Developers Diversified Realty Corp. | 2,255,000 | 108,240 | ||||||
Cathay Financial Holding Co., Ltd.1 | 38,729,373 | 100,619 | ||||||
Sunstone Hotel Investors, Inc.2 | 4,038,400 | 100,233 | ||||||
DnB NOR ASA1 | 7,500,000 | 99,625 | ||||||
Banco Santander Central Hispano, SA1 | 5,030,828 | 94,379 | ||||||
HRPT Properties Trust | 9,850,000 | 92,098 | ||||||
Unibanco-União de Bancos Brasileiros SA, units (GDR) | 697,000 | 81,298 | ||||||
Archstone-Smith Trust | 1,400,000 | 80,374 | ||||||
Boardwalk REIT | 1,734,000 | 73,965 | ||||||
Regions Financial Corp. | 2,350,000 | 70,665 | ||||||
Health Care Property Investors, Inc. | 2,442,300 | 66,528 | ||||||
Itaúsa — Investimentos Itaú SA, preferred nominative | 9,967,138 | 63,534 | ||||||
Hysan Development Co. Ltd.1 | 21,815,601 | 56,329 | ||||||
Associated Banc-Corp | 1,400,000 | 40,236 | ||||||
First Midwest Bancorp, Inc. | 1,200,000 | 39,468 | ||||||
Camden Property Trust | 700,000 | 38,472 | ||||||
Crescent Real Estate Equities Co. | 1,680,000 | �� | 37,934 | |||||
Cousins Properties Inc. | 666,525 | 17,136 | ||||||
Beverly Hills Bancorp Inc.2 | 950,000 | 7,106 | ||||||
12,512,219 | ||||||||
TELECOMMUNICATION SERVICES — 7.90% | ||||||||
AT&T Inc. | 63,399,871 | 2,482,739 | ||||||
Verizon Communications Inc. | 39,689,000 | 1,691,545 | ||||||
Vodafone Group PLC1 | 273,610,000 | 831,630 | ||||||
Koninklijke KPN NV1 | 52,115,000 | 805,092 | ||||||
Telstra Corp. Ltd., installment receipts1 | 95,368,954 | 250,793 | ||||||
Telstra Corp. Ltd.1 | 7,500,000 | 29,200 | ||||||
Chunghwa Telecom Co., Ltd. (ADR) | 8,524,395 | 141,334 | ||||||
Chunghwa Telecom Co., Ltd.1 | 48,024,966 | 81,208 | ||||||
France Télécom SA1 | 7,000,000 | 188,034 | ||||||
SunCom Wireless Holdings, Inc., Class A2,3 | 4,732,277 | 115,610 | ||||||
SK Telecom Co., Ltd. (ADR) | 2,775,000 | 78,088 | ||||||
Telekomunikacja Polska SA1 | 9,355,000 | 74,062 | ||||||
Dobson Communications Corp., Class A3 | 2,290,483 | 28,516 | ||||||
Sprint Nextel Corp., Series 1 | 760,501 | 15,613 | ||||||
Embarq Corp. | 38,025 | 2,350 | ||||||
American Tower Corp., Class A3 | 42,271 | 1,761 | ||||||
XO Holdings, Inc.3 | 9,158 | 41 | ||||||
6,817,616 | ||||||||
UTILITIES — 6.89% | ||||||||
E.ON AG1 | 4,100,000 | 647,194 | ||||||
Entergy Corp. | 5,022,600 | 502,059 | ||||||
SUEZ SA1 | 8,098,500 | 424,761 | ||||||
Duke Energy Corp. | 23,080,000 | 393,052 | ||||||
RWE AG1 | 3,520,000 | 371,980 | ||||||
Exelon Corp. | 5,098,600 | 357,667 | ||||||
Dominion Resources, Inc. | 4,133,498 | 348,123 | ||||||
Public Service Enterprise Group Inc. | 3,502,000 | 301,697 | ||||||
DTE Energy Co. | 6,500,000 | 301,470 | ||||||
Equitable Resources, Inc. | 5,470,000 | 257,692 | ||||||
Ameren Corp. | 5,000,000 | 239,900 | ||||||
Southern Co. | 6,880,000 | 231,443 | ||||||
Progress Energy, Inc. | 4,884,900 | 213,275 | ||||||
American Electric Power Co., Inc. | 4,250,000 | 184,833 | ||||||
Consolidated Edison, Inc. | 3,880,000 | 169,478 | ||||||
Hongkong Electric Holdings Ltd.1 | 33,080,000 | 163,901 | ||||||
PPL Corp. | 3,125,000 | 147,313 | ||||||
FirstEnergy Corp. | 2,240,000 | 136,080 | ||||||
Edison International | 2,500,000 | 132,225 | ||||||
NiSource Inc. | 6,198,500 | 118,205 | ||||||
Xcel Energy Inc. | 5,225,000 | 106,068 | ||||||
KeySpan Corp. | 2,160,000 | 89,748 | ||||||
MDU Resources Group, Inc. | 2,655,000 | 72,375 | ||||||
Northeast Utilities | 1,214,500 | 33,204 | ||||||
5,943,743 | ||||||||
CONSUMER STAPLES — 6.45% | ||||||||
Coca-Cola Co. | 17,560,000 | 915,052 | ||||||
H.J. Heinz Co.2 | 18,104,640 | 792,259 | ||||||
Altria Group, Inc. | 10,530,000 | 699,929 | ||||||
Reynolds American Inc. | 8,380,000 | 512,604 | ||||||
General Mills, Inc. | 8,171,800 | 454,515 | ||||||
Kraft Foods Inc., Class A | 11,094,988 | 363,361 | ||||||
Diageo PLC1 | 17,650,000 | 360,202 | ||||||
ConAgra Foods, Inc. | 12,147,200 | 307,931 | ||||||
Kimberly-Clark Corp. | 3,450,000 | 232,081 | ||||||
Unilever NV (New York registered) | 4,551,750 | 137,736 | ||||||
Unilever NV1 | 2,355,000 | 71,108 | ||||||
Scottish & Newcastle PLC1 | 14,892,000 | 179,025 | ||||||
Goodman Fielder Ltd.1,2 | 67,000,000 | 143,709 | ||||||
SABMiller PLC1 | 4,311,000 | 111,142 | ||||||
UST Inc. | 2,000,000 | 107,100 | ||||||
Tesco PLC1 | 11,540,000 | 94,921 | ||||||
Woolworths Ltd.1 | 3,565,632 | 82,411 | ||||||
5,565,086 | ||||||||
INDUSTRIALS — 6.38% | ||||||||
General Electric Co. | 50,370,000 | 1,952,341 | ||||||
Waste Management, Inc. | 14,450,000 | 549,534 | ||||||
Sandvik AB1 | 23,580,000 | 475,195 | ||||||
Emerson Electric Co. | 9,370,000 | 441,046 | ||||||
Atlas Copco AB, Class A1 | 20,350,000 | 350,105 | ||||||
R.R. Donnelley & Sons Co. | 7,400,000 | 312,724 | ||||||
Deutsche Post AG1 | 10,521,400 | 306,873 | ||||||
Cooper Industries, Ltd., Class A | 3,800,000 | 201,096 | ||||||
Bidvest Group Ltd.1 | 9,570,000 | 194,000 | ||||||
Hubbell Inc., Class B | 3,213,100 | 185,235 | ||||||
Macquarie Korea Infrastructure Fund1,2 | 21,023,070 | 168,693 | ||||||
PACCAR Inc | 1,805,700 | 147,742 | ||||||
Avery Dennison Corp. | 1,498,182 | 91,898 | ||||||
Brambles Ltd.1,3 | 9,053,000 | 84,733 | ||||||
Singapore Technologies Engineering Ltd.1 | 10,330,000 | 24,891 | ||||||
Singapore Post Private Ltd.1 | 25,900,000 | 21,193 | ||||||
UAL Corp.3 | 59,741 | 2,637 | ||||||
5,509,936 | ||||||||
HEALTH CARE — 5.27% | ||||||||
Merck & Co., Inc. | 26,260,000 | 1,303,809 | ||||||
Bristol-Myers Squibb Co. | 44,375,500 | 1,260,708 | ||||||
Eli Lilly and Co. | 14,485,000 | 783,494 | ||||||
Pfizer Inc | 26,050,000 | 612,436 | ||||||
Brookdale Senior Living Inc.2 | 5,906,600 | 236,323 | ||||||
Abbott Laboratories | 3,500,000 | 177,415 | ||||||
Baxter International Inc. | 1,972,048 | 103,730 | ||||||
Wyeth | 1,431,500 | 69,456 | ||||||
Clarent Hospital Corp.1,2,3 | 484,684 | 48 | ||||||
4,547,419 | ||||||||
ENERGY — 4.95% | ||||||||
Chevron Corp. | 26,275,000 | 2,240,207 | ||||||
Royal Dutch Shell PLC, Class A (ADR) | 6,919,000 | 536,845 | ||||||
Royal Dutch Shell PLC, Class B1 | 3,297,147 | 130,583 | ||||||
Royal Dutch Shell PLC, Class B (ADR) | 948,199 | 75,173 | ||||||
Marathon Oil Corp. | 7,790,000 | 430,008 | ||||||
Spectra Energy Corp | 8,540,000 | 217,514 | ||||||
TOTAL SA1 | 1,390,000 | 110,013 | ||||||
TOTAL SA (ADR) | 1,290,000 | 101,407 | ||||||
Occidental Petroleum Corp. | 3,600,000 | 204,192 | ||||||
Exxon Mobil Corp. | 1,385,000 | 117,905 | ||||||
ENI SpA1 | 2,400,000 | 83,935 | ||||||
Centennial Coal Co. Ltd.1 | 8,916,417 | 25,497 | ||||||
4,273,279 | ||||||||
MATERIALS — 4.40% | ||||||||
Weyerhaeuser Co. | 10,728,000 | 764,263 | ||||||
E.I. du Pont de Nemours and Co. | 14,869,200 | 694,838 | ||||||
International Paper Co. | 14,973,820 | 555,080 | ||||||
Dow Chemical Co. | 8,980,000 | 390,450 | ||||||
MeadWestvaco Corp.2 | 10,865,696 | 353,570 | ||||||
PPG Industries, Inc. | 4,230,000 | 322,622 | ||||||
Packaging Corp. of America2 | 6,792,800 | 173,352 | ||||||
RPM International, Inc. | 5,385,000 | 126,601 | ||||||
Alcoa Inc. | 3,036,400 | 115,991 | ||||||
Eastman Chemical Co. | 1,500,000 | 103,230 | ||||||
UPM-Kymmene Corp.1 | 4,100,000 | 91,200 | ||||||
Lyondell Chemical Co. | 1,470,000 | 66,003 | ||||||
Freeport-McMoRan Copper & Gold Inc. | 300,000 | 28,194 | ||||||
Worthington Industries, Inc. | 834,400 | 17,272 | ||||||
3,802,666 | ||||||||
CONSUMER DISCRETIONARY — 2.74% | ||||||||
Esprit Holdings Ltd.1 | 40,949,000 | 554,663 | ||||||
Vivendi SA1 | 5,680,000 | 241,201 | ||||||
DSG International PLC1 | 74,250,000 | 233,977 | ||||||
CBS Corp., Class B | 7,000,000 | 222,040 | ||||||
General Motors Corp. | 6,442,559 | 208,739 | ||||||
VF Corp. | 2,040,000 | 175,012 | ||||||
Leggett & Platt, Inc. | 6,500,000 | 134,745 | ||||||
Kesa Electricals PLC1 | 16,003,258 | 104,039 | ||||||
Tupperware Brands Corp.2 | 3,865,000 | 100,529 | ||||||
Kingfisher PLC1 | 20,678,565 | 89,366 | ||||||
Regal Entertainment Group, Class A | 4,022,000 | 86,031 | ||||||
H & M Hennes & Mauritz AB, Class B1 | 1,300,000 | 75,304 | ||||||
Compagnie Générale des Etablissements Michelin, Class B1 | 550,000 | 71,999 | ||||||
Marks and Spencer Group PLC1 | 3,195,000 | 40,644 | ||||||
Macquarie Media Group1 | 6,055,676 | 23,434 | ||||||
2,361,723 | ||||||||
INFORMATION TECHNOLOGY — 1.12% | ||||||||
Microchip Technology Inc.2 | 11,265,000 | 409,032 | ||||||
Microsoft Corp. | 9,200,000 | 266,708 | ||||||
Acer Inc.1 | 74,250,000 | 163,607 | ||||||
Lite-On Technology Corp.1 | 36,692,964 | 60,971 | ||||||
Taiwan Semiconductor Manufacturing Co. Ltd. (ADR) | 3,912,828 | 39,715 | ||||||
Delta Electronics, Inc.1 | 4,410,000 | 17,364 | ||||||
Micron Technology, Inc.3,4 | 339,328 | 4,028 | ||||||
ZiLOG, Inc.3 | 455,000 | 2,179 | ||||||
963,604 | ||||||||
MISCELLANEOUS — 3.54% | ||||||||
Other common stocks in initial period of acquisition | 3,055,878 | |||||||
Total common stocks (cost: $43,156,500,000) | 55,353,169 | |||||||
Market value | ||||||||
Preferred stocks — 1.14% | Shares | (000 | ) | |||||
FINANCIALS — 1.08% | ||||||||
SB Treasury Co. LLC, Series A, 9.40% noncumulative4,5 | 124,434,000 | $ | 128,578 | |||||
Sumitomo Mitsui Banking Corp. 6.078%4,5 | 31,750,000 | 30,560 | ||||||
Fannie Mae, Series O, 7.495%4,5 | 2,190,000 | 114,017 | ||||||
Fuji JGB Investment LLC, Series A, 9.87% noncumulative4,5 | 71,950,000 | 74,667 | ||||||
IBJ Preferred Capital Co. LLC, Series A, 8.79% noncumulative4,5 | 31,300,000 | 32,187 | ||||||
MUFG Capital Finance 1 Ltd. 6.346% noncumulative5 | 68,580,000 | 65,849 | ||||||
Tokai Preferred Capital Co. LLC, Series A, 9.98% noncumulative4,5 | 19,000,000 | 19,727 | ||||||
Vornado Realty Trust, Series I, 6.625% | 3,380,000 | 76,895 | ||||||
IndyMac Bancorp, Inc., Series A, 8.50% noncumulative3,4 | 2,948,000 | 58,223 | ||||||
Shinsei Finance II (Cayman) Ltd. 7.16% noncumulative4,5 | 45,950,000 | 43,849 | ||||||
HSBC Capital Funding LP, Series 1, 9.547% noncumulative step-up4,5 | 25,000,000 | 27,664 | ||||||
HSBC Capital Funding LP, Series 2, 10.176% noncumulative step-up4,5 | 10,000,000 | 13,994 | ||||||
Banco Santander Central Hispano, SA 6.50%4 | 1,524,000 | 34,957 | ||||||
Chuo Mitsui Trust and Banking Co., Ltd. 5.506%4,5 | 36,590,000 | 34,310 | ||||||
Public Storage, Inc., Series F, 6.45% | 1,000,000 | 22,400 | ||||||
Public Storage, Inc., Series V, 7.50% cumulative depositary shares | 400,000 | 10,056 | ||||||
Standard Chartered PLC 7.014% noncumulative redeemable preference shares4,5 | 25,100,000 | 22,687 | ||||||
Wachovia Capital Trust III 5.80%5 | 20,000,000 | 19,631 | ||||||
Duke Realty Corp., Series B, 7.99% cumulative step-up premium rate | 300,000 | 14,991 | ||||||
National Bank of Canada, Series A, 8.35% exchangeable depositary shares | 520,000 | 13,536 | ||||||
BNP Paribas Capital Trust 9.003% noncumulative trust4,5 | 8,000,000 | 8,796 | ||||||
BNP U.S. Funding LLC, Series A, 7.738% noncumulative4,5 | 4,360,000 | 4,389 | ||||||
Simon Property Group, Inc., Series G, 7.89% cumulative step-up premium rate | 200,000 | 10,281 | ||||||
Resona Preferred Global Securities (Cayman) Ltd. 7.191%4,5 | 9,825,000 | 9,935 | ||||||
Royal Bank of Scotland Group PLC 5.512% noncumulative trust5 | 10,000,000 | 9,607 | ||||||
iStar Financial, Inc., Series F, 7.80% cumulative redeemable2 | 400,000 | 9,520 | ||||||
CBG Florida REIT Corp., Series A, Class A, 7.114%4,5 | 9,000,000 | 8,668 | ||||||
DBS Capital Funding Corp., Series A, 7.657% noncumulative guaranteed preference shares4,5 | 6,500,000 | 6,971 | ||||||
Nationwide Health Properties, Inc., Series A, 7.677% cumulative step-up premium rate | 50,000 | 5,187 | ||||||
Barclays Bank PLC, Series 1, 6.278% noncumulative5 | 1,990,000 | 1,781 | ||||||
933,913 | ||||||||
MISCELLANEOUS — 0.06% | ||||||||
Other preferred stocks in initial period of acquisition | 46,313 | |||||||
Total preferred stocks (cost: $1,002,594,000) | 980,226 | |||||||
Warrants — 0.00% | ||||||||
TELECOMMUNICATION SERVICES — 0.00% | ||||||||
XO Holdings, Inc., Series A, warrants, expire 20103 | 18,316 | 13 | ||||||
XO Holdings, Inc., Series B, warrants, expire 20103 | 13,738 | 7 | ||||||
XO Holdings, Inc., Series C, warrants, expire 20103 | 13,738 | 3 | ||||||
Allegiance Telecom, Inc., warrants, expire 20081,3,4 | 20,000 | 0 | ||||||
GT Group Telecom Inc., warrants, expire 20101,3,4 | 15,000 | 0 | ||||||
Total warrants (cost: $816,000) | 23 | |||||||
Shares or | ||||||||
Convertible securities — 2.54% | principal amount | |||||||
FINANCIALS — 0.50% | ||||||||
Metropolitan Life Insurance Co., Class B, 6.375% convertible preferred 2008 | 6,400,000 units | 191,232 | ||||||
Fannie Mae, Series 2004-1, 5.375% convertible preferred | 1,690 | 166,042 | ||||||
XL Capital Ltd. 7.00% convertible preferred 2009 | 2,810,000 units | 76,882 | ||||||
434,156 | ||||||||
HEALTH CARE — 0.37% | ||||||||
Schering-Plough Corp. 6.00% convertible preferred 2007 | 2,499,900 | $ | 161,344 | |||||
Medtronic, Inc. 1.625% convertible notes 2013 | $ | 45,500,000 | 47,661 | |||||
Medtronic, Inc. 1.50% convertible notes 2011 | $ | 69,900,000 | 73,308 | |||||
Teva Pharmaceutical Industries Ltd., Series D, 1.75% convertible debenture 2026 | $ | 20,000,000 | 20,400 | |||||
Incyte Corp. 3.50% convertible notes 20114 | $ | 15,000,000 | 12,656 | |||||
315,369 | ||||||||
INFORMATION TECHNOLOGY — 0.29% | ||||||||
Nortel Networks Corp. 4.25% convertible notes 20084 | $ | 40,000,000 | 39,400 | |||||
Nortel Networks Corp. 4.25% convertible notes 2008 | $ | 80,000,000 | 78,800 | |||||
Advanced Micro Devices, Inc. 6.00% convertible debentures 2015 | $ | 4,678,000 | 4,234 | |||||
Advanced Micro Devices, Inc. 6.00% convertible debentures 20154 | $ | 87,567,000 | 79,248 | |||||
Liberty Media Holding Corp. 2.921% exchangeable debentures 20315 | $ | 52,000,000 | 42,988 | |||||
Fairchild Semiconductor Corp. 5.00% convertible notes 2008 | $ | 2,500,000 | 2,481 | |||||
247,151 | ||||||||
MATERIALS — 0.22% | ||||||||
Freeport-McMoRan Copper & Gold Inc. 5.50% convertible preferred | 25,000 | 50,870 | ||||||
Freeport-McMoRan Copper & Gold Inc. 6.75% convertible preferred 2010 | 1,000,000 | 140,750 | ||||||
191,620 | ||||||||
INDUSTRIALS — 0.22% | ||||||||
UAL Corp. 4.50% convertible notes 20214 | $ | 72,600,000 | 105,648 | |||||
Allied Waste Industries, Inc., Series D, 6.25% convertible preferred 2008 | 240,000 | 80,258 | ||||||
185,906 | ||||||||
UTILITIES — 0.19% | ||||||||
PG&E Corp. 9.50% convertible notes 2010 | $ | 28,000,000 | 86,940 | |||||
NRG Energy, Inc. 5.75% convertible preferred 20091 | 200,000 | 69,236 | ||||||
AES Trust VII 6.00% convertible preferred 2008 | 125,000 | 6,234 | ||||||
162,410 | ||||||||
TELECOMMUNICATION SERVICES — 0.18% | ||||||||
Qwest Communications International Inc. 3.50% convertible debenture 2025 | $ | 100,000,000 | 157,375 | |||||
CONSUMER DISCRETIONARY — 0.17% | ||||||||
Amazon.com, Inc. 4.75% convertible debentures 2009 | $ | 59,137,000 | 63,720 | |||||
Ford Motor Co. 4.25% convertible notes 2036 | $ | 50,000,000 | 58,125 | |||||
Liberty Media Holding Corp. 3.25% exchangeable debentures 2031 | $ | 35,000,000 | 28,963 | |||||
150,808 | ||||||||
ENERGY — 0.12% | ||||||||
El Paso Corp. 4.99% convertible preferred4 | 75,000 | 107,062 | ||||||
MISCELLANEOUS — 0.28% | ||||||||
Other convertible securities in initial period of acquisition | 237,592 | |||||||
Total convertible securities (cost: $1,816,186,000) | 2,189,449 | |||||||
MORTGAGE-BACKED OBLIGATIONS6— 4.72% | ||||||||
Fannie Mae, Series 2000-T5, Class B, 7.30% 2010 | 36,750 | 38,669 | ||||||
Fannie Mae 9.00% 2010 | 131 | 134 | ||||||
Fannie Mae 4.89% 2012 | 10,000 | 9,714 | ||||||
Fannie Mae 4.00% 2015 | 6,352 | 6,117 | ||||||
Fannie Mae 7.00% 2016 | 221 | 229 | ||||||
Fannie Mae 5.00% 2018 | 16,028 | 15,628 | ||||||
Fannie Mae 5.50% 2018 | 13,843 | 13,746 | ||||||
Fannie Mae 10.00% 2018 | 292 | 325 | ||||||
Fannie Mae 5.50% 2020 | 37,318 | 36,974 | ||||||
Fannie Mae 5.50% 2021 | 47,154 | 46,719 | ||||||
Fannie Mae 6.00% 2021 | 1,769 | 1,780 | ||||||
Fannie Mae, Series 2003-48, Class TJ, 4.50% 2022 | 26,337 | 25,304 | ||||||
Fannie Mae 9.50% 2022 | 276 | 303 | ||||||
Fannie Mae 7.50% 2023 | 57 | 60 | ||||||
Fannie Mae 7.50% 2023 | 12 | 13 | ||||||
Fannie Mae 10.00% 2025 | 184 | 204 | ||||||
Fannie Mae, Series 2001-4, Class GA, 10.267% 20255 | 1,001 | 1,103 | ||||||
Fannie Mae, Series 2001-4, Class NA, 11.882% 20255 | 89 | 99 | ||||||
Fannie Mae 6.00% 2026 | 21,740 | 21,673 | ||||||
Fannie Mae 6.00% 2027 | 78,296 | 78,052 | ||||||
Fannie Mae, Series 2002-W3, Class A-5, 7.50% 2028 | 830 | 859 | ||||||
Fannie Mae 7.50% 2031 | 357 | 377 | ||||||
Fannie Mae, Series 2001-20, Class E, 9.619% 20315 | 838 | 916 | ||||||
Fannie Mae 5.50% 2033 | 63,249 | 61,406 | ||||||
Fannie Mae 4.50% 2035 | 64,795 | 59,224 | ||||||
Fannie Mae 4.50% 2035 | 31,528 | 28,749 | ||||||
Fannie Mae 4.50% 2035 | 12,200 | 11,125 | ||||||
Fannie Mae 4.551% 20355 | 6,506 | 6,419 | ||||||
Fannie Mae 5.00% 2035 | 48,444 | 45,564 | ||||||
Fannie Mae 5.00% 2035 | 25,173 | 23,676 | ||||||
Fannie Mae 5.00% 2035 | 6,599 | 6,207 | ||||||
Fannie Mae 5.50% 2035 | 62,238 | 60,415 | ||||||
Fannie Mae 5.50% 2035 | 50,869 | 49,323 | ||||||
Fannie Mae 5.50% 2035 | 16,846 | 16,321 | ||||||
Fannie Mae 5.50% 2035 | 7,841 | 7,597 | ||||||
Fannie Mae 6.50% 2035 | 539 | 549 | ||||||
Fannie Mae 4.50% 2036 | 2,619 | 2,392 | ||||||
Fannie Mae 5.00% 2036 | 975 | 916 | ||||||
Fannie Mae 5.50% 2036 | 3,948 | 3,822 | ||||||
Fannie Mae 6.00% 2036 | 21,595 | 21,427 | ||||||
Fannie Mae, Series 2006-43, Class PX, 6.00% 2036 | 9,164 | 9,171 | ||||||
Fannie Mae 6.50% 2036 | 19,781 | 19,955 | ||||||
Fannie Mae 5.50% 2037 | 108,091 | 104,434 | ||||||
Fannie Mae 5.50% 2037 | 34,101 | 32,947 | ||||||
Fannie Mae, Series 2007-33, Class HE, 5.50% 2037 | 25,987 | 25,499 | ||||||
Fannie Mae 5.50% 2037 | 26,177 | 25,291 | ||||||
Fannie Mae 5.50% 2037 | 24,818 | 23,979 | ||||||
Fannie Mae 5.50% 2037 | 19,670 | 19,004 | ||||||
Fannie Mae 5.50% 2037 | 14,941 | 14,332 | ||||||
Fannie Mae 5.50% 2037 | 11,813 | 11,413 | ||||||
Fannie Mae 5.50% 2037 | 8,152 | 7,876 | ||||||
Fannie Mae 5.50% 2037 | 3,048 | 2,945 | ||||||
Fannie Mae 6.00% 2037 | 30,113 | 29,860 | ||||||
Fannie Mae 6.00% 2037 | 28,092 | 27,852 | ||||||
Fannie Mae 6.00% 2037 | 22,379 | 22,036 | ||||||
Fannie Mae, Series 2007-24, Class P, 6.00% 2037 | 19,682 | 19,745 | ||||||
Fannie Mae 6.00% 2037 | 18,605 | 18,448 | ||||||
Fannie Mae 6.00% 2037 | 11,409 | 11,308 | ||||||
Fannie Mae 6.00% 2037 | 2,562 | 2,530 | ||||||
Fannie Mae 6.50% 2037 | 63,357 | 63,874 | ||||||
Fannie Mae 6.50% 2037 | 15,936 | 16,030 | ||||||
Fannie Mae 6.50% 2037 | 15,000 | 15,122 | ||||||
Fannie Mae 6.50% 2037 | 8,158 | 8,206 | ||||||
Fannie Mae 7.00% 2037 | 47,543 | 48,615 | ||||||
Fannie Mae 7.00% 2037 | 17,223 | 17,698 | ||||||
Fannie Mae 7.00% 2037 | 14,377 | 14,701 | ||||||
Fannie Mae 7.00% 2037 | 10,950 | 11,272 | ||||||
Fannie Mae 7.00% 2037 | 10,146 | 10,375 | ||||||
Fannie Mae 7.00% 2037 | 5,264 | 5,374 | ||||||
Fannie Mae 7.00% 2037 | 4,130 | 4,217 | ||||||
Fannie Mae 7.50% 2037 | 5,302 | 5,475 | ||||||
Fannie Mae 7.50% 2037 | 3,885 | 4,012 | ||||||
Fannie Mae 7.50% 2037 | 1,993 | 2,049 | ||||||
Fannie Mae 7.50% 2037 | 1,697 | 1,752 | ||||||
Fannie Mae 7.50% 2037 | 1,006 | 1,035 | ||||||
Fannie Mae 8.00% 2037 | 3,151 | 3,241 | ||||||
Fannie Mae 8.00% 2037 | 1,989 | 2,045 | ||||||
Fannie Mae, Series 2001-50, Class BA, 7.00% 2041 | 1,636 | 1,675 | ||||||
Fannie Mae, Series 2001-T10, Class A-1, 7.00% 2041 | 1,122 | 1,152 | ||||||
Fannie Mae, Series 2002-W1, Class 2A, 7.50% 2042 | 1,803 | 1,869 | ||||||
Freddie Mac 8.50% 2008 | 0 | 0 | ||||||
Freddie Mac, Series SF02, Class GC, 2.64% 2009 | 2,108 | 2,090 | ||||||
Freddie Mac 8.50% 2009 | 29 | 29 | ||||||
Freddie Mac 8.50% 2010 | 49 | 50 | ||||||
Freddie Mac 5.00% 2018 | 9,876 | 9,627 | ||||||
Freddie Mac 5.50% 2018 | 4,916 | 4,880 | ||||||
Freddie Mac 11.00% 2018 | 231 | 255 | ||||||
Freddie Mac 5.50% 2019 | 13,636 | 13,520 | ||||||
Freddie Mac, Series 178, Class Z, 9.25% 2021 | 89 | 89 | ||||||
Freddie Mac, Series 2289, Class NB, 11.424% 20225 | 207 | 232 | ||||||
Freddie Mac 6.00% 2026 | 5,900 | 5,884 | ||||||
Freddie Mac 6.00% 2027 | 9,724 | 9,698 | ||||||
Freddie Mac 4.646% 20355 | 8,087 | 7,961 | ||||||
Freddie Mac 5.00% 2035 | 17,765 | 16,705 | ||||||
Freddie Mac 5.00% 2035 | 13,283 | 12,496 | ||||||
Freddie Mac 5.50% 2035 | 8,540 | 8,270 | ||||||
Freddie Mac 5.50% 2035 | 8,522 | 8,253 | ||||||
Freddie Mac, Series 3061, Class PN, 5.50% 2035 | 6,377 | 6,382 | ||||||
Freddie Mac 5.00% 2036 | 11,293 | 10,605 | ||||||
Freddie Mac, Series 3257, Class PA, 5.50% 2036 | 24,804 | 24,401 | ||||||
Freddie Mac 7.00% 2036 | 2,079 | 2,125 | ||||||
Freddie Mac 5.00% 2037 | 3,473 | 3,260 | ||||||
Freddie Mac, Series 3286, Class JN, 5.50% 2037 | 33,299 | 32,567 | ||||||
Freddie Mac, Series 3312, Class PA, 5.50% 2037 | 25,379 | 24,820 | ||||||
Freddie Mac, Series 3318, Class JT, 5.50% 2037 | 18,413 | 17,999 | ||||||
Freddie Mac 6.00% 2037 | 75,000 | 74,303 | ||||||
Freddie Mac 6.00% 2037 | 60,525 | 60,038 | ||||||
Freddie Mac, Series 3271, Class OA, 6.00% 2037 | 24,563 | 25,084 | ||||||
Countrywide Alternative Loan Trust, Series 2003-12CB, Class 2-A-1, 5.00% 2018 | 11,759 | 11,269 | ||||||
Countrywide Alternative Loan Trust, Series 2006-J3, Class 2-A-1, 4.75% 2020 | 7,625 | 7,266 | ||||||
Countrywide Alternative Loan Trust, Series 2005-49CB, Class A-1, 5.50% 2035 | 113,620 | 112,963 | ||||||
Countrywide Alternative Loan Trust, Series 2005-46CB, Class A-8, 5.50% 2035 | 21,657 | 21,547 | ||||||
Countrywide Alternative Loan Trust, Series 2005-40CB, Class A-1, 5.50% 2035 | 15,391 | 14,773 | ||||||
Countrywide Alternative Loan Trust, Series 2005-64CB, Class 1-A-7, 5.50% 2035 | 7,750 | 7,734 | ||||||
Countrywide Alternative Loan Trust, Series 2005-54CB, Class 1-A-7, 5.50% 2035 | 7,629 | 7,603 | ||||||
Countrywide Alternative Loan Trust, Series 2005-23CB, Class A-15, 5.50% 2035 | 7,275 | 6,956 | ||||||
Countrywide Alternative Loan Trust, Series 2005-50CB, Class 3-A-1, 6.00% 2035 | 14,457 | 14,181 | ||||||
Countrywide Alternative Loan Trust, Series 2005-21CB, Class A-17, 6.00% 2035 | 9,715 | 9,613 | ||||||
Countrywide Alternative Loan Trust, Series 2004-36CB, Class 1-A-1, 6.00% 2035 | 4,723 | 4,700 | ||||||
Countrywide Alternative Loan Trust, Series 2005-62, Class 2-A-1, 6.029% 20355 | 5,230 | 5,231 | ||||||
Countrywide Alternative Loan Trust, Series 2006-6CB, Class 1-A-1, 5.50% 2036 | 8,625 | 8,542 | ||||||
Countrywide Alternative Loan Trust, Series 2007-J1, Class 3-A-4, 5.755% 20365 | 20,000 | 19,856 | ||||||
Countrywide Alternative Loan Trust, Series 2006-24CB, Class A-1, 6.00% 2036 | 15,943 | 15,905 | ||||||
Countrywide Alternative Loan Trust, Series 2006-16CB, Class A-2, 6.00% 2036 | 5,520 | 5,512 | ||||||
Countrywide Alternative Loan Trust, Series 2007-8CB, Class A-1, 5.50% 2037 | 28,719 | 28,096 | ||||||
Countrywide Alternative Loan Trust, Series 2007-2CB, Class 1-A-9, 5.75% 2037 | 17,217 | 16,740 | ||||||
Countrywide Alternative Loan Trust, Series 2007-HY4, Class 3-A-1, 5.898% 20475 | 33,834 | 33,683 | ||||||
WaMu Mortgage Pass-Through Certificates Trust, Series 2003-S8, Class A-2, 5.00% 2018 | 75,349 | 72,197 | ||||||
WaMu Mortgage Pass-Through Certificates Trust, Series 2003-S10, Class A-2, 5.00% 2018 | 45,185 | 43,295 | ||||||
WaMu Mortgage Pass-Through Certificates Trust, Series 2003-S6, Class II-A-1, 5.00% 2018 | 14,572 | 13,962 | ||||||
WaMu Mortgage Pass-Through Certificates Trust, Series 2003-AR1, Class A-6, 4.474% 20335 | 673 | 670 | ||||||
WaMu Mortgage Pass-Through Certificates Trust, Series 2004-AR11, Class A, 4.55% 20345 | 4,904 | 4,842 | ||||||
WaMu Mortgage Pass-Through Certificates Trust, Series 2007-HY5, Class 3-A1, 5.828% 20375 | 23,181 | 22,905 | ||||||
WaMu Mortgage Pass-Through Certificates Trust, Series 2005-AR15, Class A-1-A, 5.58% 20455 | 13,025 | 13,046 | ||||||
CS First Boston Mortgage Securities Corp., Series 2004-6, Class II-A-1, 4.75% 2019 | 33,775 | 32,078 | ||||||
CS First Boston Mortgage Securities Corp., Series 2005-7, Class III-A-1, 5.00% 2020 | 6,549 | 6,276 | ||||||
CS First Boston Mortgage Securities Corp., Series 2004-5, Class IV-A-1, 6.00% 2034 | 3,580 | 3,511 | ||||||
CS First Boston Mortgage Securities Corp., Series 2001-CF2, Class A-3, 6.238% 2034 | 3,574 | 3,569 | ||||||
CS First Boston Mortgage Securities Corp., Series 2005-6, Class VI-A-1, 6.00% 2035 | 6,975 | 6,979 | ||||||
CS First Boston Mortgage Securities Corp., Series 2005-5, Class IV-A-1, 6.25% 2035 | 5,666 | 5,571 | ||||||
CS First Boston Mortgage Securities Corp., Series 2001-CK1, Class A-3, 6.38% 2035 | 10,100 | 10,333 | ||||||
CS First Boston Mortgage Securities Corp., Series 2006-2R, Class A-PO, principal only, 0% 20364 | 20,357 | 12,926 | ||||||
CS First Boston Mortgage Securities Corp., Series 2004-C5, Class A-2, 4.183% 2037 | 10,000 | 9,717 | ||||||
CS First Boston Mortgage Securities Corp., Series 2005-C3, Class A-AB, 4.614% 2037 | 10,000 | 9,524 | ||||||
CS First Boston Mortgage Securities Corp., Series 2007-2, Class 3-A-4, 5.50% 2037 | 23,283 | 21,711 | ||||||
CS First Boston Mortgage Securities Corp., Series 2002-CKN2, Class A-3, 6.133% 2037 | 6,910 | 7,059 | ||||||
CS First Boston Mortgage Securities Corp., Series 2005-C5, Class A-2, 5.10% 20385 | 8,000 | 7,886 | ||||||
CS First Boston Mortgage Securities Corp., Series 2005-C6, Class A-2FX, 5.207% 2040 | 3,050 | 3,017 | ||||||
CS First Boston Mortgage Securities Corp., Series 2005-C6, Class A-3, 5.23% 20405 | 10,000 | 9,725 | ||||||
Wells Fargo Alternative Loan Trust, Series 2007-PA3, Class II-A-4, 6.00% 2037 | 14,000 | 13,868 | ||||||
Wells Fargo Alternative Loan Trust, Series 2007-PA3, Class III-A-1, 6.25% 2037 | 34,573 | 34,575 | ||||||
Wells Fargo Alternative Loan Trust, Series 2007-PA3, Class IV-A-1, 6.50% 2037 | 48,351 | 48,641 | ||||||
Wells Fargo Alternative Loan Trust, Series 2007-PA3, Class V-A-1, 7.00% 2037 | 25,602 | 26,141 | ||||||
Wells Fargo Mortgage-backed Securities Trust, Series 2003-13, Class A-1, 4.50% 2018 | 17,083 | 16,089 | ||||||
Wells Fargo Mortgage-backed Securities Trust, Series 2003-16, Class I-A-1, 4.75% 2018 | 8,170 | 7,759 | ||||||
Wells Fargo Mortgage-backed Securities Trust, Series 2003-6, Class I-A-1, 5.00% 2018 | 7,289 | 7,030 | ||||||
Wells Fargo Mortgage-backed Securities Trust, Series 2004-7, Class II-A-1, 4.50% 2019 | 23,955 | 22,550 | ||||||
Wells Fargo Mortgage-backed Securities Trust, Series 2006-1, Class A-3, 5.00% 2021 | 13,416 | 12,857 | ||||||
Wells Fargo Mortgage-backed Securities Trust, Series 2003-3, Class II-A-1, 5.25% 2033 | 7,375 | 7,232 | ||||||
Wells Fargo Mortgage-backed Securities Trust, Series 2006-AR15, Class A-1, 5.657% 20365 | 26,574 | 26,320 | ||||||
American Tower Trust I, Series 2007-1A, Class A-FX, 5.42% 20374 | 7,250 | 7,090 | ||||||
American Tower Trust I, Series 2007-1A, Class B, 5.537% 20374 | 20,000 | 19,477 | ||||||
American Tower Trust I, Series 2007-1A, Class D, 5.957% 20374 | 37,375 | 36,878 | ||||||
American Tower Trust I, Series 2007-1A, Class E, 6.249% 20374 | 20,500 | 20,229 | ||||||
American Tower Trust I, Series 2007-1A, Class F, 6.639% 20374 | 5,550 | 5,478 | ||||||
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2005-CIBC12, Class A-2, 4.739% 2037 | 2,000 | 1,962 | ||||||
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2005-CIBC11, Class A-2, 5.016% 2037 | 14,040 | 13,864 | ||||||
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2004-C1, Class A-3, 4.719% 2038 | 7,000 | 6,601 | ||||||
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2004-C3, Class A-2, 4.223% 2042 | 11,687 | 11,339 | ||||||
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2005-LDP4, Class A-2, 4.79% 2042 | 3,155 | 3,097 | ||||||
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2006-CIBC14, Class A-4, 5.471% 20445 | 3,840 | 3,725 | ||||||
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2006-LDP7, Class A-4, 5.875% 20455 | 27,700 | 27,646 | ||||||
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2005-LDP1, Class A-2, 4.625% 2046 | 20,000 | 19,614 | ||||||
CHL Mortgage Pass-Through Trust, Series 2003-35, Class 1-A-1, 4.75% 2018 | 6,926 | 6,578 | ||||||
CHL Mortgage Pass-Through Trust, Series 2003-56, Class 6-A-1, 4.827% 20335 | 1,233 | 1,221 | ||||||
CHL Mortgage Pass-Through Trust, Series 2004-22, Class A-2, 4.629% 20345 | 4,299 | 4,226 | ||||||
CHL Mortgage Pass-Through Trust, Series 2005-HYB8, Class 4-A-1, 5.636% 20355 | 7,006 | 6,994 | ||||||
CHL Mortgage Pass-Through Trust, Series 2007-HY5, Class 1-A-1, 5.974% 20375 | 45,000 | 44,986 | ||||||
CHL Mortgage Pass-Through Trust, Series 2007-HY5, Class 3-A-1, 6.234% 20375 | 21,228 | 21,195 | ||||||
Lehman Mortgage Trust, Series 2005-2, Class 3-A3, 5.50% 2035 | 10,788 | 10,757 | ||||||
Lehman Mortgage Trust, Series 2007-6, Class 2-A1, 6.946% 20375 | 50,884 | 51,423 | ||||||
Lehman Mortgage Trust, Series 2007-7, Class 6-A4, 7.00% 2037 | 22,568 | 22,808 | ||||||
Crown Castle Towers LLC, Series 2005-1, Class A-FX, 4.643% 20354 | 10,000 | 9,795 | ||||||
Crown Castle Towers LLC, Series 2005-1, Class D, 5.612% 20354 | 37,750 | 36,838 | ||||||
Crown Castle Towers LLC, Series 2006-1, Class E, 6.065% 20364 | 9,000 | 8,939 | ||||||
Crown Castle Towers LLC, Series 2006-1, Class F, 6.650% 20364 | 16,575 | 16,464 | ||||||
Crown Castle Towers LLC, Series 2006-1, Class G, 6.795% 20364 | 1,250 | 1,251 | ||||||
Residential Accredit Loans, Inc., Series 2003-QS16, Class A-1, 5.00% 2018 | 14,069 | 13,485 | ||||||
Residential Accredit Loans, Inc., Series 2004-QS6, Class A-1, 5.00% 2019 | 11,187 | 10,719 | ||||||
Residential Accredit Loans, Inc., Series 2005-QR1, Class A, 6.00% 2034 | 7,946 | 7,849 | ||||||
Residential Accredit Loans, Inc., Series 2005-QS13, Class I-A-5, 5.50% 2035 | 12,894 | 12,717 | ||||||
Residential Accredit Loans, Inc., Series 2005-QS9, Class A-6, 5.50% 2035 | 100 | 95 | ||||||
Residential Accredit Loans, Inc., Series 2005-QS10, Class I-A, 6.00% 2035 | 9,048 | 8,946 | ||||||
Residential Accredit Loans, Inc., Series 2007-QS7, Class II-A-1, 6.75% 2037 | 17,178 | 17,391 | ||||||
SBA CMBS Trust, Series 2005-1, Class A, 5.369% 20354 | 10,000 | 9,977 | ||||||
SBA CMBS Trust, Series 2005-1, Class B, 5.565% 20354 | 7,000 | 6,974 | ||||||
SBA CMBS Trust, Series 2006-1A, Class A, 5.314% 20364 | 12,000 | 11,869 | ||||||
SBA CMBS Trust, Series 2006-1A, Class D, 5.852% 20364 | 5,000 | 4,856 | ||||||
SBA CMBS Trust, Series 2006-1A, Class F, 6.709% 20364 | 18,000 | 17,511 | ||||||
SBA CMBS Trust, Series 2006-1A, Class G, 6.904% 20364 | 17,000 | 16,364 | ||||||
Wachovia Bank Commercial Mortgage Trust, Series 2002-C1, Class A-2, 5.681% 2034 | 2,372 | 2,374 | ||||||
Wachovia Bank Commercial Mortgage Trust, Series 2005-C16, Class A-PB, 4.692% 2041 | 15,000 | 14,398 | ||||||
Wachovia Bank Commercial Mortgage Trust, Series 2005-C17, Class A-2, 4.782% 2042 | 11,000 | 10,837 | ||||||
Wachovia Bank Commercial Mortgage Trust, Series 2005-C17, Class A-4, 5.083% 20425 | 5,000 | 4,745 | ||||||
Wachovia Bank Commercial Mortgage Trust, Series 2005-C22, Class A-4, 5.266% 20445 | 22,000 | 21,110 | ||||||
Wachovia Bank Commercial Mortgage Trust, Series 2006-C23, Class A-PB, 5.446% 2045 | 12,500 | 12,274 | ||||||
Tower Ventures, LLC, Series 2006-1, Class A1-FX, 5.361% 20364 | 12,000 | 11,939 | ||||||
Tower Ventures, LLC, Series 2006-1, Class A-2, 5.45% 20364 | 11,100 | 11,068 | ||||||
Tower Ventures, LLC, Series 2006-1, Class C, 5.707% 20364 | 8,000 | 7,873 | ||||||
Tower Ventures, LLC, Series 2006-1, Class D, 6.052% 20364 | 29,000 | 28,977 | ||||||
IndyMac IMSC Mortgage Loan Trust, Series 2007-F3, Class 3-A-1, 7.00% 2037 | 44,000 | 44,523 | ||||||
First Horizon Alternative Mortgage Securities Trust, Series 2005-FA11, Class I-A-5, 5.75% 2036 | 1,527 | 1,518 | ||||||
First Horizon Alternative Mortgage Securities Trust, Series 2006-FA3, Class A-6, 6.00% 2036 | 13,817 | 13,913 | ||||||
First Horizon Alternative Mortgage Securities Trust, Series 2007-FA4, Class I-A-10, 6.25% 2037 | 28,443 | 28,684 | ||||||
Morgan Stanley Mortgage Loan Trust, Series 2004-3, Class 4-A, 5.683% 20345 | 9,566 | 9,291 | ||||||
Morgan Stanley Mortgage Loan Trust, Series 2005-10, Class 5-A-1, 6.00% 2035 | 12,235 | 12,200 | ||||||
Morgan Stanley Mortgage Loan Trust, Series 2006-3AR, Class 3-A-1, 6.022% 20365 | 1,097 | 1,097 | ||||||
Morgan Stanley Mortgage Loan Trust, Series 2007-11AR, Class 2-A-1, 6.639% 20375 | 15,174 | 15,323 | ||||||
Chase Mortgage Finance Trust, Series 2003-S9, Class A-1, 5.00% 2018 | 23,433 | 22,453 | ||||||
Chase Mortgage Finance Trust, Series 2003-S2, Class A-1, 5.00% 2018 | 16,046 | 15,375 | ||||||
GE Commercial Mortgage Corp., Series 2004-C1, Class A-2, 3.915% 2038 | 5,550 | 5,369 | ||||||
GE Commercial Mortgage Corp., Series 2006-C1, Class A-4, 5.339% 20445 | 13,000 | 12,526 | ||||||
GE Commercial Mortgage Corp., Series 2005-C4, Class A-3A, 5.333% 20455 | 17,000 | 16,802 | ||||||
GE Commercial Mortgage Corp., Series 2005-C4, Class A-M, 5.333% 20455 | 1,650 | 1,583 | ||||||
Banc of America Mortgage Securities, Inc., Series 2004-7, Class 7-A-1, 5.00% 2019 | 33,272 | 31,888 | ||||||
Banc of America Mortgage Securities, Inc., Series 2003-G, Class 2-A-1, 4.088% 20335 | 2,702 | 2,694 | ||||||
Citigroup Mortgage Loan Trust, Inc., Series 2003-UST1, Class A-3, 5.00% 2018 | 7,079 | 6,827 | ||||||
Citigroup Mortgage Loan Trust, Inc., Series 2006-AR5, Class 2-A7A, 6.214% 20365 | 24,893 | 24,966 | ||||||
IndyMac INDX Mortgage Loan Trust, Series 2006-AR5, Class 2-A-1, 5.851% 20365 | 31,558 | 31,182 | ||||||
Structured Asset Securities Corp., Series 2003-29, Class 1-A-1, 4.75% 2018 | 9,042 | 8,588 | ||||||
Structured Asset Securities Corp., Series 2004-15, Class 2-A-1, 4.75% 2019 | 21,885 | 20,786 | ||||||
Structured Asset Securities Corp., Series 1998-RF2, Class A, 8.515% 20274,5 | 290 | 289 | ||||||
Structured Asset Securities Corp., Series 1998-RF1, Class A, 8.737% 20274,5 | 236 | 235 | ||||||
Banc of America Commercial Mortgage Inc., Series 2001-1, Class A-2, 6.503% 2036 | 9,285 | 9,522 | ||||||
Banc of America Commercial Mortgage Inc., Series 2005-5, Class A-3B, 5.228% 20455 | 17,730 | 17,422 | ||||||
GSR Mortgage Loan Trust, Series 2004-2F, Class VIIA-1, 4.50% 2019 | 18,979 | 17,998 | ||||||
GSR Mortgage Loan Trust, Series 2004-15F, Class 5A-1, 5.50% 2020 | 4,817 | 4,703 | ||||||
L.A. Arena Funding, LLC, Series 1, Class A, 7.656% 20264 | 21,865 | 22,576 | ||||||
Residential Asset Securitization Trust, Series 2004-A6, Class A-1, 5.00% 2019 | 22,576 | 21,779 | ||||||
Bear Stearns ARM Trust, Series 2003-9, Class III-A-2, 4.965% 20345 | 2,157 | 2,118 | ||||||
Bear Stearns ARM Trust, Series 2005-10, Class A-3, 4.65% 20355 | 20,000 | 19,475 | ||||||
GS Mortgage Securities Corp. II, Series 1998-C1, Class D, 7.103% 20305 | 20,000 | 20,302 | ||||||
J.P. Morgan Alternative Loan Trust, Series 2006-S1, Class 3-A-5, 5.73% 20365 | 19,462 | 19,352 | ||||||
Bear Stearns Asset-backed Securities I Trust, Series 2005-AC3, Class II-A-1, 5.25% 2020 | 8,687 | 8,555 | ||||||
Bear Stearns Asset-backed Securities I Trust, Series 2005-AC8, Class A-4, 5.50% 2035 | 6,782 | 6,776 | ||||||
Bear Stearns Asset-backed Securities I Trust, Series 2006-AC2, Class II-1A-1, 6.00% 2036 | 3,687 | 3,684 | ||||||
Washington Mutual Mortgage, WMALT Series 2005-AR1, Class A-1-A, 5.58% 20355 | 10,899 | 10,889 | ||||||
Washington Mutual Mortgage, WMALT Series 2006-1, Class 4-CB, 6.50% 2036 | 7,458 | 7,460 | ||||||
Morgan Stanley Capital I Trust, Series 2005-HQ7, Class A-2, 5.203% 20425 | 17,875 | 17,579 | ||||||
CitiMortgage Alternative Loan Trust, Series 2005-A1, Class IIA-1, 5.00% 2020 | 18,270 | 17,531 | ||||||
Residential Funding Mortgage Securities I, Inc., Series 2004-S9, Class II-A-1, 4.75% 2019 | 18,120 | 17,287 | ||||||
Bear Stearns Commercial Mortgage Securities Inc., Series 1999-C1, Class X, interest only, 1.004% 20314,5 | 72,949 | 1,488 | ||||||
Bear Stearns Commercial Mortgage Securities Inc., Series 2002-PBW1, Class A-1, 3.97% 2035 | 6,314 | 6,176 | ||||||
Bear Stearns Commercial Mortgage Securities Inc., Series 2001-TOP2, Class A-2, 6.48% 2035 | 7,665 | 7,877 | ||||||
Commercial Mortgage Trust, Series 2003-LNB1, Class A-2, 4.084% 2038 | 6,925 | 6,401 | ||||||
Commercial Mortgage Trust, Series 2004-LNB2, Class A-2, 3.60% 2039 | 7,203 | 7,026 | ||||||
GMAC Commercial Mortgage Securities, Inc., Series 2001-C1, Class A-2, 6.465% 2034 | 12,250 | 12,584 | ||||||
Bear Stearns ALT-A Trust, Series 2006-2, Class II-4-A-1, 5.926% 20365 | 12,196 | 12,157 | ||||||
Host Marriott Pool Trust, Series 1999-HMTA, Class D, 7.97% 20154 | 10,990 | 11,523 | ||||||
Chase Commercial Mortgage Securities Corp., Series 1998-1, Class A-2, 6.56% 2030 | 4,572 | 4,578 | ||||||
Chase Commercial Mortgage Securities Corp., Series 2000-1, Class A-2, 7.757% 2032 | 6,026 | 6,284 | ||||||
Merrill Lynch Mortgage Investors, Inc., Series 1999-C1, Class A-2, 7.56% 2031 | 10,236 | 10,535 | ||||||
Greenwich Capital Commercial Funding Corp., Series 2005-GG5, Class A-4-1, 5.243% 20375 | 10,000 | 9,813 | ||||||
American General Mortgage Loan Trust, Series 2006-1, Class A-5, 5.75% 20354,5 | 10,000 | 9,808 | ||||||
GMAC Mortgage Loan Trust, Series 2006-AR1, Class 2-A-1, 5.646% 20365 | 8,665 | 8,578 | ||||||
GE Capital Commercial Mortgage Corp., Series 2001-1, Class A-1, 6.079% 2033 | 1,444 | 1,456 | ||||||
GE Capital Commercial Mortgage Corp., Series 2002-3, Class A-1, 4.229% 2037 | 6,918 | 6,775 | ||||||
Banc of America Alternative Loan Trust, Series 2003-11, Class 5-A-1, 5.50% 2019 | 7,200 | 7,028 | ||||||
CSAB Mortgage-backed Trust, Series 2006-2, Class A-6-A, 5.72% 20365 | 6,923 | 6,881 | ||||||
American Home Mortgage Investment Trust, Series 2004-1, Class III-A, 3.28% 2044 | 6,642 | 6,320 | ||||||
Residential Asset Mortgage Products, Trust, Series 2003-RZ4, Class A-7, 4.79% 20335 | 6,529 | 6,260 | ||||||
Government National Mortgage Assn. 9.50% 2009 | 183 | 187 | ||||||
Government National Mortgage Assn. 9.00% 2016 | 41 | 45 | ||||||
Government National Mortgage Assn. 8.50% 2017 | 9 | 10 | ||||||
Government National Mortgage Assn. 8.50% 2017 | 4 | 4 | ||||||
Government National Mortgage Assn. 10.00% 2020 | 928 | 1,049 | ||||||
Government National Mortgage Assn. 8.50% 2021 | 213 | 230 | ||||||
Government National Mortgage Assn. 8.50% 2021 | 44 | 47 | ||||||
Government National Mortgage Assn. 8.50% 2021 | 7 | 7 | ||||||
Government National Mortgage Assn. 9.50% 2021 | 103 | 115 | ||||||
Government National Mortgage Assn. 10.00% 2021 | 1,338 | 1,512 | ||||||
Government National Mortgage Assn. 10.00% 2025 | 1,268 | 1,426 | ||||||
Metropolitan Asset Funding, Inc., Series 1998-A, Class B-1, 7.728% 20144 | 4,669 | 4,607 | ||||||
HarborView Mortgage Loan Trust, Series 2005-15, Class 2-A1A2, 6.12% 20455 | 4,134 | 4,173 | ||||||
Salomon Brothers Commercial Mortgage Trust, Series 2000-C1, Class A-1, 7.46% 2008 | 106 | 105 | ||||||
Salomon Brothers Commercial Mortgage Trust, Series 2000-C3, Class A-1, 6.341% 2033 | 1,073 | 1,074 | ||||||
Financial Asset Securitization, Inc., Series 1997-NAM1, Class B-1, 7.75% 2027 | 364 | 363 | ||||||
4,072,643 | ||||||||
CONSUMER DISCRETIONARY — 3.95% | ||||||||
Delphi Automotive Systems Corp. 6.55% 20067 | 17,105 | 19,500 | ||||||
Delphi Automotive Systems Corp. 6.50% 20097 | 54,466 | 62,091 | ||||||
Delphi Corp. 6.50% 20137 | 72,580 | 82,741 | ||||||
Delphi Automotive Systems Corp. 7.125% 20297 | 104,355 | 120,530 | ||||||
Delphi Trust I 8.25% 20337 | 30,031 | 35,887 | ||||||
General Motors Nova Scotia Finance Co. 6.85% 2008 | 1,675 | 1,616 | ||||||
General Motors Corp. 7.20% 2011 | 138,470 | 124,969 | ||||||
General Motors Corp. 7.125% 2013 | 68,665 | 58,537 | ||||||
General Motors Corp. 7.70% 2016 | 40,145 | 34,424 | ||||||
General Motors Corp. 8.80% 2021 | 27,375 | 23,953 | ||||||
General Motors Corp. 9.40% 2021 | 7,775 | 7,114 | ||||||
General Motors Corp. 8.25% 2023 | 7,000 | 5,740 | ||||||
General Motors Corp. 8.375% 2033 | 10,000 | 8,275 | ||||||
CCH II, LLC and CCH II Capital Corp. 10.25% 2010 | 9,000 | 9,203 | ||||||
Charter Communications Holdings, LLC and Charter Communications Holdings Capital Corp. 13.50% 2011 | 4,375 | 4,495 | ||||||
Charter Communications Operating, LLC and Charter Communications Operating Capital Corp. 8.00% 20124 | 59,548 | 58,357 | ||||||
CCO Holdings, LLC and CCO Holdings Capital Corp. 8.75% 2013 | 23,350 | 23,233 | ||||||
Charter Communications Operating, LLC, Term Loan Facilities B, Delayed Draw, 7.36% 20145,6 | 65,150 | 62,300 | ||||||
Charter Communications Operating, LLC, Term Loan Facilities B, 7.36% 20145,6 | 28,500 | 27,253 | ||||||
Charter Communications Operating, LLC and Charter Communications Operating Capital Corp. 8.375% 20144 | 20,000 | 19,850 | ||||||
CCH I, LLC and CCH I Capital Corp. 11.00% 2015 | 20,000 | 20,100 | ||||||
Univision Communications Inc., Second Lien Term Loan, 7.82% 20095,6 | 4,315 | 4,196 | ||||||
Univision Communications Inc. 7.85% 2011 | 14,040 | 13,829 | ||||||
Univision Communications Inc., First Lien Term Loan B, 7.61% 20145,6 | 41,349 | 38,170 | ||||||
Univision Communications Inc. 9.75% 20154,8 | 90,305 | 82,629 | ||||||
Comcast Cable Communications, Inc. 6.20% 2008 | 49,000 | 49,452 | ||||||
Lenfest Communications, Inc. 7.625% 2008 | 2,000 | 2,019 | ||||||
Comcast Corp. 5.66% 20095 | 1,250 | 1,248 | ||||||
Comcast Cable Communications, Inc. 6.875% 2009 | 8,000 | 8,198 | ||||||
Comcast Cable Communications, Inc. 7.125% 2013 | 8,100 | 8,573 | ||||||
Comcast Corp. 5.85% 2015 | 19,200 | 18,757 | ||||||
Comcast Corp. 5.90% 2016 | 8,475 | 8,274 | ||||||
Comcast Corp. 5.65% 2035 | 2,650 | 2,274 | ||||||
Comcast Corp. 6.45% 2037 | 10,000 | 9,542 | ||||||
DaimlerChrysler North America Holding Corp. 4.05% 2008 | 2,560 | 2,524 | ||||||
DaimlerChrysler North America Holding Corp. 4.75% 2008 | 1,440 | 1,434 | ||||||
DaimlerChrysler North America Holding Corp., Series E, 5.71% 20095 | 10,000 | 10,004 | ||||||
DaimlerChrysler North America Holding Corp. 5.79% 20095 | 15,000 | 15,037 | ||||||
DaimlerChrysler North America Holding Corp. 7.20% 2009 | 11,000 | 11,346 | ||||||
DaimlerChrysler North America Holding Corp. 8.00% 2010 | 15,000 | 15,920 | ||||||
DaimlerChrysler North America Holding Corp. 7.75% 2011 | 26,500 | 28,172 | ||||||
Chrysler Finance, First Lien Term Loan, 9.359% 20125,6 | 13,245 | 12,583 | ||||||
Chrysler Finance, Second Lien Term Loan, 11.859% 20135,6 | 5,000 | 4,750 | ||||||
MGM MIRAGE 6.00% 2009 | 35,100 | 34,574 | ||||||
Mandalay Resort Group 6.50% 2009 | 7,122 | 7,051 | ||||||
MGM MIRAGE 8.50% 2010 | 22,830 | 23,172 | ||||||
MGM MIRAGE 6.75% 2012 | 9,150 | 8,601 | ||||||
MGM MIRAGE 6.75% 2013 | 8,200 | 7,606 | ||||||
MGM MIRAGE 7.50% 2016 | 4,000 | 3,740 | ||||||
Dex Media West LLC, Dex Media West Finance Co., Series B, 8.50% 2010 | 5,000 | 5,038 | ||||||
R.H. Donnelley Inc. 10.875% 20124 | 1,000 | 1,058 | ||||||
Dex Media, Inc., Series B, 0%/9.00% 20139 | 9,000 | 8,145 | ||||||
R.H. Donnelley Corp., Series A-2, 6.875% 2013 | 25,975 | 23,507 | ||||||
R.H. Donnelley Corp., Series A-1, 6.875% 2013 | 20,650 | 18,688 | ||||||
R.H. Donnelley Corp., Series A-3, 8.875% 2016 | 25,375 | 24,804 | ||||||
Michaels Stores, Inc., Term Loan B, 7.625% 20135,6 | 24,500 | 22,867 | ||||||
Michaels Stores, Inc. 10.00% 20144 | 43,000 | 41,925 | ||||||
Michaels Stores, Inc. 0%/13.00% 20164,9 | 17,700 | 9,647 | ||||||
Michaels Stores, Inc. 11.375% 20164 | 6,800 | 6,596 | ||||||
K. Hovnanian Enterprises, Inc. 10.50% 2007 | 6,000 | 6,030 | ||||||
K. Hovnanian Enterprises, Inc. 8.00% 2012 | 3,000 | 2,565 | ||||||
K. Hovnanian Enterprises, Inc. 8.875% 2012 | 10,515 | 8,675 | ||||||
K. Hovnanian Enterprises, Inc. 7.75% 2013 | 13,215 | 10,176 | ||||||
K. Hovnanian Enterprises, Inc. 6.375% 2014 | 2,000 | 1,550 | ||||||
K. Hovnanian Enterprises, Inc. 6.50% 2014 | 11,555 | 9,071 | ||||||
K. Hovnanian Enterprises, Inc. 6.25% 2016 | 7,000 | 5,355 | ||||||
K. Hovnanian Enterprises, Inc. 7.50% 2016 | 9,365 | 7,539 | ||||||
K. Hovnanian Enterprises, Inc. 8.625% 2017 | 34,655 | 28,764 | ||||||
Time Warner Inc. 8.18% 2007 | 20,000 | 20,050 | ||||||
Time Warner Inc. 5.59% 20095 | 10,000 | 10,011 | ||||||
Time Warner Inc. 5.50% 2011 | 1,000 | 994 | ||||||
AOL Time Warner Inc. 6.875% 2012 | 6,950 | 7,262 | ||||||
Time Warner Companies, Inc. 9.125% 2013 | 5,000 | 5,773 | ||||||
Time Warner Inc. 5.875% 2016 | 8,700 | 8,401 | ||||||
Time Warner Companies, Inc. 7.25% 2017 | 9,500 | 10,134 | ||||||
AOL Time Warner Inc. 7.625% 2031 | 10,750 | 11,506 | ||||||
Time Warner Inc. 6.50% 2036 | 500 | 476 | ||||||
Federated Retail Holdings, Inc. 5.35% 2012 | 13,660 | 13,579 | ||||||
Federated Retail Holdings, Inc. 5.90% 2016 | 46,300 | 44,861 | ||||||
Federated Department Stores, Inc. 6.79% 2027 | 500 | 431 | ||||||
Federated Department Stores, Inc. 7.00% 2028 | 1,692 | 1,527 | ||||||
Federated Department Stores, Inc. 6.90% 2029 | 8,890 | 7,869 | ||||||
Liberty Media Corp. 7.75% 2009 | 10,950 | 11,290 | ||||||
Liberty Media Corp. 7.875% 2009 | 37,983 | 39,743 | ||||||
Liberty Media Corp. 8.25% 2030 | 13,870 | 13,293 | ||||||
Clear Channel Communications, Inc. 4.625% 2008 | 14,000 | 13,843 | ||||||
Chancellor Media Corp. of Los Angeles 8.00% 2008 | 23,750 | 23,916 | ||||||
Clear Channel Communications, Inc. 7.65% 2010 | 15,000 | 14,969 | ||||||
Clear Channel Communications, Inc. 5.75% 2013 | 3,580 | 3,019 | ||||||
Clear Channel Communications, Inc. 5.50% 2014 | 9,170 | 7,202 | ||||||
NTL Cable PLC 8.75% 2014 | 26,689 | 26,822 | ||||||
NTL Cable PLC 9.125% 2016 | 32,000 | 32,480 | ||||||
J.C. Penney Co., Inc. 8.00% 2010 | 35,705 | 37,755 | ||||||
J.C. Penney Co., Inc. 9.00% 2012 | 10,506 | 11,861 | ||||||
J.C. Penney Corp., Inc. 5.75% 2018 | 2,000 | 1,917 | ||||||
J.C. Penney Corp., Inc. 6.375% 2036 | 4,800 | 4,471 | ||||||
Neiman Marcus Group, Inc. 9.00% 20158 | 52,810 | 55,318 | ||||||
Cox Communications, Inc. 5.91% 20075 | 8,250 | 8,265 | ||||||
Cox Communications, Inc. 7.875% 2009 | 12,500 | 13,048 | ||||||
Cox Communications, Inc. 4.625% 2010 | 8,250 | 8,063 | ||||||
Cox Communications, Inc. 7.75% 2010 | 10,000 | 10,613 | ||||||
Cox Communications, Inc. 5.45% 2014 | 13,500 | 12,891 | ||||||
Claire’s Stores, Inc., Term Loan, 8.11% 20135,6 | 22,030 | 20,157 | ||||||
Claire’s Stores, Inc. 9.25% 20154 | 32,075 | 28,386 | ||||||
Claire’s Stores, Inc. 10.50% 20174 | 4,700 | 3,737 | ||||||
Standard Pacific Corp. 6.50% 2008 | 6,675 | 6,408 | ||||||
Standard Pacific Corp. 5.125% 2009 | 17,750 | 15,886 | ||||||
Standard Pacific Corp. 6.50% 2010 | 8,532 | 7,466 | ||||||
Standard Pacific Corp. 6.875% 2011 | 6,500 | 5,493 | ||||||
Standard Pacific Corp. 7.75% 2013 | 4,975 | 4,179 | ||||||
Standard Pacific Corp. 6.25% 2014 | 7,910 | 6,229 | ||||||
Standard Pacific Corp. 7.00% 2015 | 5,075 | 4,085 | ||||||
Time Warner Cable Inc. 5.40% 20124 | 25,000 | 24,653 | ||||||
Time Warner Cable Inc. 6.55% 20374 | 25,000 | 23,955 | ||||||
Thomson Learning, Term Loan B, 8.10% 20145,6 | 13,625 | �� | 12,893 | |||||
Thomson Learning 0%/13.25% 20154,9 | 1,750 | 1,277 | ||||||
Thomson Learning 10.50% 20154 | 30,800 | 28,490 | ||||||
Thomson Corp. 5.50% 2035 | 5,000 | 4,358 | ||||||
CanWest Media Inc., Series B, 8.00% 2012 | 41,773 | 40,311 | ||||||
CanWest MediaWorks Inc. 9.25% 20154 | 2,775 | 2,706 | ||||||
Toys “R” Us, Inc. 7.625% 2011 | 35,015 | 30,813 | ||||||
Toys “R” Us-Delaware, Inc., Term Loan B, 9.61% 20125,6 | 12,000 | 11,880 | ||||||
Technical Olympic USA, Inc. 9.00% 2010 | 13,000 | 10,465 | ||||||
Technical Olympic USA, Inc. 9.00% 2010 | 9,990 | 7,942 | ||||||
Technical Olympic USA, Inc. 7.50% 2011 | 5,000 | 2,575 | ||||||
Technical Olympic USA, Inc. 9.00% 20114 | 19,000 | 15,105 | ||||||
Technical Olympic USA, Inc. 10.375% 2012 | 2,500 | 1,437 | ||||||
Technical Olympic USA, Inc. 7.50% 2015 | 7,600 | 3,724 | ||||||
Tenneco Automotive Inc., Series B, 10.25% 2013 | 15,325 | 16,398 | ||||||
Tenneco Automotive Inc. 8.625% 2014 | 24,000 | 24,120 | ||||||
Ford Motor Co. 9.50% 2011 | 1,000 | 972 | ||||||
Ford Motor Co., Term Loan B, 8.36% 20135,6 | 31,000 | 29,256 | ||||||
Ford Motor Co. 6.50% 2018 | 7,062 | 5,473 | ||||||
Ford Motor Co. 7.45% 2031 | 6,000 | 4,650 | ||||||
Mohegan Tribal Gaming Authority 6.375% 2009 | 19,780 | 19,409 | ||||||
Mohegan Tribal Gaming Authority 8.00% 2012 | 2,100 | 2,137 | ||||||
Mohegan Tribal Gaming Authority 6.125% 2013 | 4,175 | 3,914 | ||||||
Mohegan Tribal Gaming Authority 7.125% 2014 | 4,950 | 4,814 | ||||||
Mohegan Tribal Gaming Authority 6.875% 2015 | 8,775 | 8,216 | ||||||
Centex Corp. 5.25% 2015 | 17,315 | 14,821 | ||||||
Centex Corp. 6.50% 2016 | 24,930 | 22,759 | ||||||
KB Home 6.375% 2011 | 4,000 | 3,720 | ||||||
KB Home 5.875% 2015 | 6,270 | 5,235 | ||||||
KB Home 6.25% 2015 | 32,750 | 27,346 | ||||||
Boyd Gaming Corp. 7.75% 2012 | 28,400 | 28,542 | ||||||
Boyd Gaming Corp. 6.75% 2014 | 8,004 | 7,564 | ||||||
Wynn Las Vegas, LLC and Wynn Las Vegas Capital Corp. 6.625% 2014 | 36,535 | 34,069 | ||||||
Radio One, Inc., Series B, 8.875% 2011 | 16,750 | 16,792 | ||||||
Radio One, Inc. 6.375% 2013 | 17,550 | 15,970 | ||||||
News America Holdings Inc. 8.00% 2016 | 6,000 | 6,782 | ||||||
News America Inc. 7.25% 2018 | 1,405 | 1,503 | ||||||
News America Holdings Inc. 8.25% 2018 | 7,000 | 8,032 | ||||||
News America Inc. 6.40% 2035 | 750 | 707 | ||||||
News America Inc. 6.75% 2038 | 15,000 | 15,694 | ||||||
Idearc Inc. 8.00% 2016 | 33,500 | 31,909 | ||||||
Royal Caribbean Cruises Ltd. 7.00% 2007 | 3,000 | 3,018 | ||||||
Royal Caribbean Cruises Ltd. 8.75% 2011 | 26,850 | 28,368 | ||||||
Harrah’s Operating Co., Inc. 5.50% 2010 | 26,375 | 24,017 | ||||||
Harrah’s Operating Co., Inc. 5.625% 2015 | 8,800 | 6,389 | ||||||
Vidéotron Ltée 6.875% 2014 | 21,069 | 19,805 | ||||||
Vidéotron Ltée 6.375% 2015 | 10,435 | 9,339 | ||||||
CSC Holdings, Inc. 7.25% 2008 | 8,000 | 8,010 | ||||||
CSC Holdings, Inc., Series B, 8.125% 2009 | 17,625 | 17,625 | ||||||
CSC Holdings, Inc., Series B, 6.75% 2012 | 400 | 365 | ||||||
Cablevision Systems Corp., Series B, 8.00% 2012 | 2,050 | 1,922 | ||||||
LBI Media, Inc. 10.125% 2012 | 10,395 | 10,941 | ||||||
LBI Media, Inc. 8.50% 20174 | 14,190 | 13,835 | ||||||
Beazer Homes USA, Inc. 8.375% 2012 | 11,298 | 9,660 | ||||||
Beazer Homes USA, Inc. 8.125% 2016 | 16,810 | 14,036 | ||||||
Limited Brands, Inc. 6.90% 2017 | 22,855 | 22,813 | ||||||
Hilton Hotels Corp. 7.625% 2008 | 2,450 | 2,481 | ||||||
Hilton Hotels Corp. 7.20% 2009 | 9,850 | 10,035 | ||||||
Hilton Hotels Corp. 8.25% 2011 | 9,618 | 10,051 | ||||||
American Media Operations, Inc., Series B, 10.25% 2009 | 16,005 | 14,605 | ||||||
American Media Operations, Inc. 8.875% 2011 | 8,930 | 7,948 | ||||||
Kabel Deutschland GmbH 10.625% 2014 | 19,675 | 20,462 | ||||||
Gap, Inc. 10.05% 20085 | 18,840 | 19,831 | ||||||
Warner Music Group 7.375% 2014 | 22,000 | 19,800 | ||||||
Viacom Inc. 5.75% 2011 | 3,000 | 2,992 | ||||||
Viacom Inc. 6.25% 2016 | 15,750 | 15,387 | ||||||
Viacom Inc. 6.875% 2036 | 1,500 | 1,415 | ||||||
Telenet Group Holding NV 0%/11.50% 20144,9 | 20,027 | 19,326 | ||||||
Education Management LLC and Education Management Finance Corp. 8.75% 2014 | 7,775 | 7,775 | ||||||
Education Management LLC and Education Management Finance Corp. 10.25% 2016 | 11,175 | 11,175 | ||||||
D.R. Horton, Inc. 8.00% 2009 | 16,650 | 16,590 | ||||||
D.R. Horton, Inc. 7.875% 2011 | 550 | 559 | ||||||
Bon-Ton Department Stores, Inc. 10.25% 2014 | 18,850 | 17,059 | ||||||
Goodyear Tire & Rubber Co. 9.135% 20094,5 | 7,125 | 7,125 | ||||||
Goodyear Tire & Rubber Co. 8.625% 20114 | 9,392 | 9,603 | ||||||
Meritage Corp. 7.00% 2014 | 1,250 | 1,069 | ||||||
Meritage Homes Corp. 6.25% 2015 | 19,350 | 15,383 | ||||||
Quebecor Media Inc. 7.75% 2016 | 16,675 | 15,758 | ||||||
Young Broadcasting Inc. 10.00% 2011 | 16,890 | 15,454 | ||||||
William Lyon Homes, Inc. 7.625% 2012 | 17,000 | 13,260 | ||||||
William Lyon Homes, Inc. 10.75% 2013 | 2,500 | 2,137 | ||||||
AMC Entertainment Inc., Series B, 8.625% 2012 | 14,650 | 15,053 | ||||||
Visteon Corp. 7.00% 2014 | 18,000 | 14,130 | ||||||
MDC Holdings, Inc. 7.00% 2012 | 5,000 | 5,069 | ||||||
MDC Holdings, Inc. 5.50% 2013 | 8,250 | 7,762 | ||||||
Toll Brothers, Inc. 4.95% 2014 | 5,000 | 4,514 | ||||||
Toll Brothers, Inc. 5.15% 2015 | 9,215 | 8,058 | ||||||
DIRECTV Holdings LLC and DIRECTV Financing Co., Inc. 8.375% 2013 | 12,187 | 12,400 | ||||||
Cooper-Standard Automotive Inc. 7.00% 2012 | 13,500 | 12,217 | ||||||
Ryland Group, Inc. 5.375% 2012 | 12,350 | 11,627 | ||||||
WCI Communities, Inc. 9.125% 2012 | 13,700 | 11,234 | ||||||
Seneca Gaming Corp. 7.25% 2012 | 8,000 | 7,920 | ||||||
Seneca Gaming Corp., Series B, 7.25% 2012 | 3,275 | 3,242 | ||||||
Burlington Coat Factory Warehouse Corp. 11.125% 2014 | 12,075 | 10,867 | ||||||
YUM! Brands, Inc. 7.70% 2012 | 10,000 | 10,843 | ||||||
British Sky Broadcasting Group PLC 6.875% 2009 | 10,000 | 10,216 | ||||||
Hanesbrands Inc., Series B, 8.784% 20145 | 10,295 | 10,141 | ||||||
NVR, Inc. 5.00% 2010 | 10,000 | 9,849 | ||||||
Staples, Inc. 7.375% 2012 | 9,000 | 9,757 | ||||||
Seminole Tribe of Florida 6.535% 20204,6 | 10,000 | 9,735 | ||||||
EchoStar DBS Corp. 5.75% 2008 | 9,300 | 9,253 | ||||||
Pinnacle Entertainment, Inc. 7.50% 20154 | 9,400 | 8,695 | ||||||
Regal Cinemas Corp., Series B, 9.375% 20121 | 7,250 | 7,604 | ||||||
Linens ‘n Things, Inc. 10.985% 20145 | 10,775 | 7,058 | ||||||
Walt Disney Co. 5.70% 2011 | 1,000 | 1,017 | ||||||
Walt Disney Co. 5.625% 2016 | 2,000 | 1,969 | ||||||
Walt Disney Co. 6.00% 2017 | 3,000 | 3,035 | ||||||
Warnaco, Inc. 8.875% 2013 | 5,625 | 5,934 | ||||||
Morris Publishing Group, LLC and Morris Publishing Finance Co., Series B, 7.00% 2013 | 6,700 | 5,879 | ||||||
Gamestop Corp. 8.00% 2012 | 5,000 | 5,081 | ||||||
Sealy Mattress Co. 8.25% 2014 | 5,125 | 5,074 | ||||||
Pulte Homes, Inc. 7.875% 2011 | 5,000 | 5,068 | ||||||
Carnival Corp. 3.75% 2007 | 5,000 | 4,975 | ||||||
Marriott International, Inc., Series I, 6.375% 2017 | 4,500 | 4,506 | ||||||
Local T.V. Finance LLC 9.25% 20154,8 | 4,525 | 4,321 | ||||||
Gaylord Entertainment Co. 6.75% 2014 | 4,000 | 3,740 | ||||||
Cinemark USA, Inc., Term Loan B, 7.09% 20135,6 | 3,772 | 3,638 | ||||||
Entercom Radio, LLC 7.625% 2014 | 3,750 | 3,600 | ||||||
XM Satellite Radio Inc. and XM Satellite Radio Holdings Inc. 9.75% 2014 | 2,850 | 2,779 | ||||||
Dollar General Corp. 10.625% 20154 | 665 | 585 | ||||||
3,410,778 | ||||||||
FINANCIALS — 3.56% | ||||||||
General Motors Acceptance Corp. 6.125% 2007 | 12,500 | 12,486 | ||||||
General Motors Acceptance Corp. 6.125% 2008 | 50,000 | 49,586 | ||||||
Residential Capital Corp. 6.66% 20085 | 20,000 | 19,233 | ||||||
Residential Capital Corp. 6.46% 20095 | 20,000 | 18,802 | ||||||
Residential Capital Corp. 7.69% 20094,5 | 26,250 | 24,675 | ||||||
Residential Capital Corp. 6.375% 2010 | 23,025 | 21,689 | ||||||
Residential Capital Corp. 6.00% 2011 | 19,750 | 18,218 | ||||||
General Motors Acceptance Corp. 6.875% 2011 | 92,370 | 85,970 | ||||||
General Motors Acceptance Corp. 7.25% 2011 | 59,895 | 56,802 | ||||||
Residential Capital, LLC 6.50% 2012 | 3,000 | 2,724 | ||||||
General Motors Acceptance Corp. 6.875% 2012 | 11,145 | 10,262 | ||||||
General Motors Acceptance Corp. 7.00% 2012 | 66,305 | 62,042 | ||||||
Residential Capital Corp. 6.50% 2013 | 32,500 | 29,198 | ||||||
General Motors Acceptance Corp. 6.75% 2014 | 36,475 | 32,828 | ||||||
General Motors Acceptance Corp. 7.56% 20145 | 37,000 | 34,479 | ||||||
Ford Motor Credit Co. 5.80% 2009 | 4,000 | 3,843 | ||||||
Ford Motor Credit Co. 7.875% 2010 | 7,000 | 6,698 | ||||||
Ford Motor Credit Co. 9.75% 20105 | 83,730 | 84,612 | ||||||
Ford Motor Credit Co. 7.25% 2011 | 4,450 | 4,071 | ||||||
Ford Motor Credit Co. 7.375% 2011 | 1,800 | 1,683 | ||||||
Ford Motor Credit Co. 9.875% 2011 | 7,500 | 7,601 | ||||||
Ford Motor Credit Co. 7.80% 2012 | 3,500 | 3,336 | ||||||
Ford Motor Credit Co. 8.11% 20125 | 68,405 | 65,376 | ||||||
Ford Motor Credit Co. 8.00% 2016 | 9,000 | 8,308 | ||||||
Washington Mutual, Inc. 5.00% 2012 | 7,000 | 6,795 | ||||||
Washington Mutual, Inc. 5.66% 20125 | 16,000 | 15,833 | ||||||
Washington Mutual Bank 5.78% 20135 | 10,000 | 9,769 | ||||||
Washington Mutual, Inc. 4.625% 2014 | 5,000 | 4,600 | ||||||
Washington Mutual Bank, FA 5.65% 2014 | 5,000 | 4,871 | ||||||
Washington Mutual Preferred Funding I Ltd., Series A-1, 6.534% (undated)4,5 | 72,100 | 67,375 | ||||||
Washington Mutual Preferred Funding II Ltd. 6.665% (undated)4,5 | 17,100 | 15,251 | ||||||
Washington Mutual Preferred Funding III Ltd. 6.895% (undated)4,5 | 26,200 | 24,876 | ||||||
ASIF Global Financing XVIII 3.85% 20074 | 8,500 | 8,459 | ||||||
International Lease Finance Corp. 5.00% 2010 | 10,000 | 9,883 | ||||||
International Lease Finance Corp. 5.125% 2010 | 15,000 | 14,897 | ||||||
International Lease Finance Corp. 5.00% 2012 | 5,000 | 4,874 | ||||||
International Lease Finance Corp., Series R, 5.40% 2012 | 10,000 | 9,970 | ||||||
American General Finance Corp., Series I, 5.40% 2015 | 17,250 | 16,619 | ||||||
ILFC E-Capital Trust I 5.90% 20654,5 | 10,000 | 9,886 | ||||||
ILFC E-Capital Trust II 6.25% 20654,5 | 18,790 | 18,137 | ||||||
American International Group, Inc., Series A-1, 6.25% 20875 | 15,850 | 14,647 | ||||||
Realogy Corp., Term Loan B, 8.36% 20135,6 | 18,392 | 17,277 | ||||||
Realogy Corp., Term Loan B, Letter of Credit, 8.36% 20135,6 | 3,908 | 3,671 | ||||||
Realogy Corp. 10.50% 20144 | 58,150 | 53,934 | ||||||
Realogy Corp. 11.00% 20144,8 | 10,000 | 8,863 | ||||||
Realogy Corp. 12.375% 20154 | 5,250 | 4,213 | ||||||
Rouse Co. 3.625% 2009 | 32,561 | 31,395 | ||||||
Rouse Co. 7.20% 2012 | 38,789 | 38,945 | ||||||
Rouse Co. 6.75% 20134 | 12,150 | 12,171 | ||||||
HSBK (Europe) B.V. 7.75% 2013 | 10,275 | 10,403 | ||||||
HSBK (Europe) B.V. 7.75% 20134 | 2,165 | 2,192 | ||||||
HSBK (Europe) B.V. 7.25% 20174 | 65,640 | 63,034 | ||||||
Simon Property Group, LP 4.875% 2010 | 11,375 | 11,219 | ||||||
Simon Property Group, LP 5.375% 2011 | 32,700 | 32,544 | ||||||
Simon Property Group, LP 5.00% 2012 | 8,000 | 7,807 | ||||||
Simon Property Group, LP 6.35% 2012 | 5,000 | 5,166 | ||||||
Simon Property Group, LP 5.25% 2016 | 5,000 | 4,760 | ||||||
Simon Property Group, LP 5.875% 2017 | 5,000 | 4,964 | ||||||
Capmark Financial Group, Inc. 6.007% 20104,5 | 35,000 | 35,095 | ||||||
Capmark Financial Group, Inc. 5.875% 20124 | 22,260 | 20,836 | ||||||
Capmark Financial Group, Inc. 6.30% 20174 | 7,000 | 6,212 | ||||||
TuranAlem Finance BV 8.00% 2014 | 2,390 | 2,175 | ||||||
TuranAlem Finance BV 8.50% 2015 | 19,110 | 17,486 | ||||||
TuranAlem Finance BV 8.50% 20154 | 10,000 | 9,150 | ||||||
TuranAlem Finance BV 8.25% 20374 | 35,000 | 31,063 | ||||||
E*TRADE Financial Corp. 8.00% 2011 | 22,775 | 23,344 | ||||||
E*TRADE Financial Corp. 7.375% 2013 | 8,750 | 8,838 | ||||||
E*TRADE Financial Corp. 7.875% 2015 | 24,700 | 25,565 | ||||||
Fifth Third Capital Trust IV 6.50% 20675 | 59,500 | 56,425 | ||||||
MBNA Corp. 5.625% 2007 | 10,000 | 10,007 | ||||||
Bank of America Corp. 4.25% 2010 | 10,000 | 9,702 | ||||||
MBNA Global Capital Funding, Series B, 6.156% 20275 | 35,000 | 34,980 | ||||||
Société Générale 5.922% (undated)4,5 | 900 | 866 | ||||||
SocGen Real Estate Co. LLC, Series A, 7.64% (undated)4,5 | 51,645 | 51,824 | ||||||
PNC Funding Corp., Series II, 6.113% (undated)4,5 | 13,800 | 13,156 | ||||||
PNC Funding Corp., Series I, 6.517% (undated)4,5 | 35,400 | 35,738 | ||||||
Host Marriott, LP, Series M, 7.00% 2012 | 28,085 | 27,664 | ||||||
Host Marriott, LP, Series K, 7.125% 2013 | 10,000 | 9,775 | ||||||
Host Hotels & Resorts, LP, Series S, 6.875% 2014 | 10,500 | 10,185 | ||||||
UnumProvident Corp. 5.859% 2009 | 11,500 | 11,580 | ||||||
UnumProvident Finance Co. PLC 6.85% 20154 | 33,500 | 34,025 | ||||||
iStar Financial, Inc. 7.00% 20082 | 6,525 | 6,577 | ||||||
iStar Financial, Inc., Series B, 4.875% 20092 | 5,000 | 4,954 | ||||||
iStar Financial, Inc. 5.375% 20102 | 10,925 | 10,762 | ||||||
iStar Financial, Inc. 6.00% 20102 | 3,750 | 3,772 | ||||||
iStar Financial, Inc., Series B, 5.125% 20112 | 10,000 | 9,705 | ||||||
iStar Financial, Inc. 5.80% 20112 | 5,000 | 4,991 | ||||||
iStar Financial, Inc. 6.05% 20152 | 4,285 | 4,177 | ||||||
J.P. Morgan Chase & Co. 4.891% 20155 | 10,000 | 9,852 | ||||||
JPMorgan Chase Capital XXI, Series U, 6.305% 20375 | 12,500 | 11,702 | ||||||
JPMorgan Chase Capital XX, Series T, 6.55% 2066 | 19,290 | 17,722 | ||||||
JPMorgan Chase Capital XVIII, Series R, 6.95% 2066 | 5,100 | 4,903 | ||||||
Sumitomo Mitsui Banking Corp. 5.625% (undated)4,5 | 44,400 | 42,233 | ||||||
Capital One Bank 4.875% 2008 | 20,000 | 19,888 | ||||||
Capital One Financial Corp. 6.25% 2013 | 20,000 | 20,202 | ||||||
HBOS PLC 5.375% (undated)4,5 | 36,610 | 35,713 | ||||||
HBOS PLC, Series B, 5.92% (undated)4,5 | 2,100 | 1,883 | ||||||
Bank of Scotland 7.00% (undated)4,5 | 1,800 | 1,806 | ||||||
Glen Meadow Pass Through Trust 6.505% 20674,5 | 38,500 | 36,593 | ||||||
Liberty Mutual Group Inc. 6.50% 20354 | 23,150 | 20,798 | ||||||
Liberty Mutual Group Inc. 7.50% 20364 | 3,600 | 3,556 | ||||||
Liberty Mutual Group Inc., Series A, 7.80% 20874 | 12,560 | 10,949 | ||||||
Lehman Brothers Holdings Inc., Series I, 5.50% 20105 | 2,000 | 1,994 | ||||||
Lehman Brothers Holdings Inc. 6.50% 2017 | 24,910 | 24,509 | ||||||
Lehman Brothers Holdings Inc. 6.875% 2037 | 1,000 | 972 | ||||||
Lehman Brothers Holdings Capital Trust VII 5.857% (undated)5 | 7,700 | 7,316 | ||||||
Kimco Realty Corp. 6.00% 2012 | 3,250 | 3,293 | ||||||
Kimco Realty Corp., Series C, 5.783% 2016 | 15,000 | 14,782 | ||||||
Kimco Realty Corp. 5.70% 2017 | 16,985 | 16,477 | ||||||
Santander Issuances, SA Unipersonal 5.72% 20164,5 | 17,200 | 17,300 | ||||||
Santander Issuances, SA Unipersonal 5.805% 20164,5 | 13,100 | 13,247 | ||||||
Abbey National PLC 6.70% (undated)5 | 3,635 | 3,672 | ||||||
Mangrove Bay Pass Through Trust 6.102% 20334,5 | 25,180 | 24,758 | ||||||
Twin Reefs Asset Trust (XLFA), Series B, 6.32% (undated)4,5 | 7,200 | 7,223 | ||||||
XL Capital Ltd., Series E, 6.50% (undated)5 | 2,340 | 2,092 | ||||||
BNP Paribas 7.195% (undated)4,5 | 33,900 | 33,633 | ||||||
Household Finance Corp. 4.125% 2009 | 15,000 | 14,588 | ||||||
HSBC Finance Corp. 4.625% 2010 | 14,000 | 13,700 | ||||||
Midland Bank 5.625% Eurodollar note (undated)5 | 5,000 | 4,250 | ||||||
UniCredito Italiano SpA 5.584% 20174,5 | 32,750 | 32,459 | ||||||
SLM Corp., Series A, 5.40% 2011 | 15,000 | 13,734 | ||||||
SLM Corp., Series A, 5.66% 20145 | 10,000 | 8,535 | ||||||
SLM Corp., Series A, 5.00% 2015 | 12,000 | 9,941 | ||||||
Kazkommerts International BV 8.50% 20134 | 2,500 | 2,488 | ||||||
Kazkommerts International BV 7.875% 20144 | 10,000 | 9,500 | ||||||
Kazkommerts International BV 8.00% 2015 | 14,500 | 13,485 | ||||||
Kazkommerts International BV, Series 4, 7.50% 2016 | 7,500 | 6,604 | ||||||
Lazard Group LLC 7.125% 2015 | 18,265 | 18,672 | ||||||
Lazard Group LLC 6.85% 20174 | 11,500 | 11,544 | ||||||
Merrill Lynch & Co., Inc., Series C, 5.59% 20125 | 6,000 | 5,885 | ||||||
Merrill Lynch & Co., Inc. 5.70% 2017 | 4,000 | 3,781 | ||||||
Merrill Lynch & Co., Inc. 6.11% 2037 | 21,000 | 19,018 | ||||||
Skandinaviska Enskilda Banken AB 4.958% (undated)4,5 | 17,290 | 16,047 | ||||||
Skandinaviska Enskilda Banken AB 5.471% (undated)4,5 | 900 | 843 | ||||||
Skandinaviska Enskilda Banken AB 7.50% (undated)4,5 | 10,405 | 10,762 | ||||||
Prudential Holdings, LLC, Series C, 8.695% 20234,6 | 22,250 | 27,412 | ||||||
CNA Financial Corp. 6.45% 2008 | 2,406 | 2,413 | ||||||
CNA Financial Corp. 6.60% 2008 | 7,130 | 7,218 | ||||||
CNA Financial Corp. 5.85% 2014 | 5,625 | 5,509 | ||||||
CNA Financial Corp. 7.25% 2023 | 11,625 | 11,847 | ||||||
Hospitality Properties Trust 7.00% 2008 | 1,210 | 1,220 | ||||||
Hospitality Properties Trust 6.75% 2013 | 23,315 | 24,125 | ||||||
Hospitality Properties Trust 6.30% 2016 | 1,500 | 1,515 | ||||||
Westfield Group 5.40% 20124 | 5,000 | 4,956 | ||||||
Westfield Capital Corp. Ltd., WT Finance (Australia) Pty Ltd. and WEA Finance LLC 5.125% 20144 | 22,500 | 21,543 | ||||||
CIT Group Inc. 6.875% 2009 | 15,000 | 15,382 | ||||||
CIT Group Inc. 6.10% 20675 | 10,390 | 8,957 | ||||||
Development Bank of Singapore Ltd. 7.875% 20104 | 10,000 | 10,606 | ||||||
Development Bank of Singapore Ltd. 7.125% 20114 | 5,000 | 5,281 | ||||||
DBS Bank Ltd. 5.97% 20214,5 | 7,250 | 7,389 | ||||||
Standard Chartered Bank 5.563% Eurodollar note (undated)5 | 15,000 | 12,413 | ||||||
Standard Chartered PLC 6.409% (undated)4,5 | 9,100 | 8,319 | ||||||
Resona Bank, Ltd. 5.85% (undated)4,5 | 21,675 | 20,613 | ||||||
Countrywide Financial Corp., Series B, 5.78% 20125 | 8,500 | 8,369 | ||||||
Countrywide Financial Corp., Series B, 5.80% 2012 | 12,500 | 12,030 | ||||||
Downey Financial Corp. 6.50% 2014 | 20,000 | 19,711 | ||||||
BBVA International SA Unipersonal 5.919% (undated)4,5 | 22,300 | 19,551 | ||||||
State Street Capital Trust IV 6.355% 20775 | 20,000 | 18,966 | ||||||
Catlin Insurance Ltd. 7.249% (undated)4,5 | 20,145 | 18,529 | ||||||
ZFS Finance (USA) Trust V 6.50% 20374,5 | 8,500 | 7,974 | ||||||
ZFS Finance (USA) Trust I 6.15% 20654,5 | 4,000 | 3,978 | ||||||
ZFS Finance (USA) Trust II 6.45% 20654,5 | 6,500 | 6,123 | ||||||
Mizuho Capital Investment (USD) 1 Ltd. 6.686% noncumulative preferred (undated)4,5 | 18,850 | 17,936 | ||||||
AXA SA 6.379% (undated)4,5 | 4,815 | 4,127 | ||||||
AXA SA 6.463% (undated)4,5 | 15,000 | 13,403 | ||||||
Genworth Financial, Inc. 6.15% 20665 | 17,665 | 16,144 | ||||||
North Front Pass Through Trust 5.81% 20244,5 | 10,000 | 9,629 | ||||||
Nationwide Mutual Insurance Co. 7.875% 20334 | 5,000 | 5,849 | ||||||
Developers Diversified Realty Corp. 4.625% 2010 | 10,140 | 9,872 | ||||||
Developers Diversified Realty Corp. 5.50% 2015 | 5,000 | 4,830 | ||||||
Independence Community Bank Corp. 4.90% 2010 | 5,000 | 4,916 | ||||||
Independence Community Bank 3.75% 20145 | 10,000 | 9,710 | ||||||
Plum Creek Timberlands, LP 5.875% 2015 | 14,300 | 14,105 | ||||||
QBE Capital Funding II LP 6.797% (undated)4,5 | 14,765 | 13,810 | ||||||
American Express Co. 6.80% 20665 | 12,925 | 13,232 | ||||||
Banco Mercantil del Norte, SA 6.135% 20164 | 2,000 | 2,002 | ||||||
Banco Mercantil del Norte, SA 6.862% 20214 | 10,250 | 10,431 | ||||||
United Dominion Realty Trust, Inc., Series E, 4.50% 2008 | 10,000 | 9,948 | ||||||
United Dominion Realty Trust, Inc. 5.00% 2012 | 2,500 | 2,470 | ||||||
Citigroup Inc. 5.125% 2011 | 12,500 | 12,383 | ||||||
New York Life Global Funding 4.625% 20104 | 12,500 | 12,361 | ||||||
ORIX Corp. 5.48% 2011 | 12,000 | 11,950 | ||||||
Ambac Financial Group, Inc. 6.15% 20875 | 13,560 | 11,055 | ||||||
Federal Realty Investment Trust 6.125% 2007 | 10,000 | 10,010 | ||||||
Protective Life Insurance Co., Series 2005-C, 4.85% 2010 | 10,000 | 9,902 | ||||||
Popular North America, Inc., Series E, 3.875% 2008 | 10,000 | 9,789 | ||||||
United Overseas Bank Ltd. 5.375% 20194,5 | 10,000 | 9,649 | ||||||
Allstate Corp., Series B, 6.125% 20675 | 525 | 498 | ||||||
Allstate Corp., Series A, 6.50% 20675 | 9,775 | 9,050 | ||||||
Duke Realty LP 4.625% 2013 | 10,000 | 9,503 | ||||||
Credit Agricole SA 6.637% (undated)4,5 | 9,400 | 8,813 | ||||||
Goldman Sachs Group, Inc. 5.536% 20125 | 3,000 | 2,931 | ||||||
Goldman Sachs Group, Inc. 5.75% 2016 | 3,250 | 3,142 | ||||||
Goldman Sachs Group, Inc. 5.625% 2017 | 2,750 | 2,610 | ||||||
Canadian Imperial Bank of Commerce 5.563% Eurodollar note 20855 | 10,000 | 8,525 | ||||||
Bank of Nova Scotia 5.50% 20855 | 10,000 | 8,425 | ||||||
Monumental Global Funding III 5.56% 20144,5 | 8,000 | 8,079 | ||||||
Assurant, Inc. 5.625% 2014 | 7,500 | 7,263 | ||||||
Wells Fargo Bank, National Assn. 4.75% 2015 | 7,500 | 7,036 | ||||||
Lincoln National Corp. 7.00% 20665 | 5,940 | 5,978 | ||||||
BCI U.S. Funding Trust I 8.01% noncumulative preferred (undated)4,5 | 5,000 | 5,113 | ||||||
LaBranche & Co Inc. 9.50% 2009 | 5,000 | 4,975 | ||||||
Silicon Valley Bank 5.70% 2012 | 5,000 | 4,922 | ||||||
Brandywine Operating Partnership, LP 5.75% 2012 | 4,190 | 4,200 | ||||||
Zions Bancorporation 5.50% 2015 | 4,000 | 3,858 | ||||||
Barclays Bank PLC 5.926% (undated)4,5 | 3,300 | 3,158 | ||||||
National Westminster Bank PLC 7.75% (undated)5 | 3,024 | 3,033 | ||||||
ProLogis 5.625% 2015 | 2,605 | 2,557 | ||||||
BOI Capital Funding (No. 2) LP 5.571% (undated)4,5 | 2,500 | 2,350 | ||||||
Financial Security Assurance Holdings Ltd. 6.40% 20664,5 | 2,500 | 2,202 | ||||||
Nationwide Financial Services, Inc. 6.75% 20675 | 530 | 463 | ||||||
3,069,501 | ||||||||
U.S. GOVERNMENT & GOVERNMENT AGENCY BONDS & NOTES — 2.16% | ||||||||
U.S. Treasury 4.375% 2008 | 45,000 | 44,877 | ||||||
U.S. Treasury 4.50% 2009 | 30,000 | 29,939 | ||||||
U.S. Treasury 4.50% 2011 | 200,165 | 199,493 | ||||||
U.S. Treasury 3.625% 2013 | 40,000 | 37,984 | ||||||
U.S. Treasury 4.25% 2014 | 469,500 | 455,964 | ||||||
U.S. Treasury 8.875% 2017 | 120,000 | 158,156 | ||||||
U.S. Treasury 7.875% 2021 | 55,000 | 70,546 | ||||||
U.S. Treasury 6.875% 2025 | 66,750 | 81,394 | ||||||
U.S. Treasury 5.25% 2029 | 50,000 | 51,742 | ||||||
U.S. Treasury 4.50% 2036 | 79,660 | 74,544 | ||||||
Freddie Mac 4.125% 2010 | 40,375 | 39,375 | ||||||
Freddie Mac 5.25% 2011 | 202,750 | 203,940 | ||||||
Freddie Mac 5.00% 2018 | 170,000 | 160,103 | ||||||
Fannie Mae 5.25% 2012 | 74,000 | 73,710 | ||||||
Fannie Mae 4.625% 2013 | 80,000 | 77,164 | ||||||
Fannie Mae 6.25% 2029 | 41,000 | 44,238 | ||||||
Fannie Mae 7.25% 2030 | 25,000 | 30,288 | ||||||
Federal Home Loan Bank 5.625% 2016 | 10,000 | 10,030 | ||||||
Federal Agricultural Mortgage Corp. 4.25% 2008 | 6,000 | 5,953 | ||||||
Federal Agricultural Mortgage Corp. 4.875% 20114 | 1,000 | 996 | ||||||
Federal Agricultural Mortgage Corp. 5.50% 20114 | 3,000 | 3,040 | ||||||
United States Agency for International Development, Republic of Egypt 4.45% 2015 | 10,000 | 9,492 | ||||||
CoBank ACB 5.96% 20224,5 | 4,000 | 4,008 | ||||||
1,866,976 | ||||||||
TELECOMMUNICATION SERVICES — 2.05% | ||||||||
Nextel Communications, Inc., Series E, 6.875% 2013 | 96,350 | 92,579 | ||||||
Nextel Communications, Inc. 5.95% 2014 | 8,000 | 7,430 | ||||||
Nextel Communications, Inc., Series D, 7.375% 2015 | 134,905 | 130,969 | ||||||
U S WEST Communications, Inc. 5.625% 2008 | 18,020 | 17,952 | ||||||
U S WEST Capital Funding, Inc. 6.375% 2008 | 7,100 | 7,082 | ||||||
Qwest Capital Funding, Inc. 7.90% 2010 | 32,510 | 32,266 | ||||||
Qwest Capital Funding, Inc. 7.25% 2011 | 38,270 | 37,457 | ||||||
Qwest Communications International Inc. 7.25% 2011 | 30,025 | 29,274 | ||||||
Qwest Corp. 8.875% 2012 | 12,400 | 13,098 | ||||||
Qwest Capital Funding, Inc. 7.625% 2021 | 7,225 | 6,322 | ||||||
U S WEST Capital Funding, Inc. 6.875% 2028 | 21,175 | 16,755 | ||||||
Qwest Capital Funding, Inc. 7.75% 2031 | 39,335 | 33,041 | ||||||
Dobson Cellular Systems, Inc., Series B, 8.375% 2011 | 26,000 | 27,723 | ||||||
Dobson Cellular Systems, Inc. 8.375% 2011 | 6,000 | 6,398 | ||||||
American Cellular Corp., Series B, 10.00% 2011 | 9,877 | 10,334 | ||||||
Dobson Communications Corp. 9.61% 20125 | 21,000 | 21,315 | ||||||
Dobson Cellular Systems, Inc. 9.875% 2012 | 3,850 | 4,134 | ||||||
Dobson Communications Corp. 8.875% 2013 | 78,365 | 83,753 | ||||||
American Cellular Corp., Term Loan B, 7.36% 20145,6 | 20,075 | 19,918 | ||||||
SBC Communications Inc. 4.125% 2009 | 17,465 | 17,045 | ||||||
SBC Communications Inc. 6.25% 2011 | 5,500 | 5,628 | ||||||
AT&T Corp. 7.30% 20115 | 14,789 | 15,804 | ||||||
AT&T Wireless Services, Inc. 8.125% 2012 | 34,935 | 38,520 | ||||||
SBC Communications Inc. 5.10% 2014 | 38,500 | 36,516 | ||||||
SBC Communications Inc. 5.625% 2016 | 20,000 | 19,356 | ||||||
AT&T Corp 8.00% 2031 | 5,000 | 5,978 | ||||||
AT&T Inc. 6.80% 2036 | 11,235 | 11,668 | ||||||
Centennial Cellular Corp. 10.75% 2008 | 1,194 | 1,197 | ||||||
Centennial Communications Corp. and Centennial Cellular Operating Co. LLC 10.125% 2013 | 16,000 | 16,860 | ||||||
Centennial Communications Corp. 11.11% 20135 | 44,800 | 45,696 | ||||||
Centennial Communications Corp., Centennial Cellular Operating Co. LLC and | ||||||||
Centennial Puerto Rico Operations Corp. 8.125% 20145 | 60,275 | 59,974 | ||||||
Intelsat, Ltd. 6.50% 2013 | 18,375 | 13,620 | ||||||
Intelsat (Bermuda), Ltd. 8.25% 2013 | 39,135 | 39,135 | ||||||
Intelsat (Bermuda), Ltd. 0%/9.25% 20159 | 7,075 | 5,589 | ||||||
Intelsat (Bermuda), Ltd. 8.625% 2015 | 6,560 | 6,609 | ||||||
Intelsat Corp. 9.00% 2016 | 10,000 | 10,075 | ||||||
Intelsat (Bermuda), Ltd. 9.25% 2016 | 23,650 | 24,241 | ||||||
Intelsat (Bermuda), Ltd. 11.25% 2016 | 6,800 | 7,140 | ||||||
American Tower Corp. 7.125% 2012 | 60,225 | 59,322 | ||||||
American Tower Corp. 7.50% 2012 | 43,300 | 43,083 | ||||||
Verizon Global Funding Corp. 4.90% 2015 | 3,560 | 3,344 | ||||||
Verizon Communications Inc. 5.50% 2017 | 38,800 | 37,255 | ||||||
Verizon Global Funding Corp. 7.75% 2030 | 8,175 | 9,054 | ||||||
Verizon Communications Inc. 6.25% 2037 | 50,000 | 48,163 | ||||||
Triton PCS, Inc. 8.50% 20132 | 94,050 | 94,991 | ||||||
Windstream Corp. 8.125% 2013 | 7,500 | 7,622 | ||||||
Valor Telecommunications Enterprises, LLC and Valor Telecommunications Enterprises Finance Corp. 7.75% 2015 | 17,125 | 17,484 | ||||||
Windstream Corp. 8.625% 2016 | 63,950 | 65,069 | ||||||
Telecom Italia Capital SA, Series B, 5.25% 2013 | 5,000 | 4,761 | ||||||
Telecom Italia Capital SA 5.25% 2015 | 19,500 | 18,173 | ||||||
Telecom Italia Capital SA 7.20% 2036 | 31,350 | 31,922 | ||||||
Rural Cellular Corp. 8.25% 2012 | 4,000 | 4,120 | ||||||
Rural Cellular Corp. 11.106% 20125 | 11,590 | 11,764 | ||||||
Rural Cellular Corp. 8.36% 20134,5 | 36,300 | 36,663 | ||||||
Cricket Communications, Inc. 9.375% 2014 | 27,900 | 27,656 | ||||||
Cricket Communications, Inc. 9.375% 20144 | 19,000 | 18,834 | ||||||
Hawaiian Telcom Communications, Inc. 9.75% 2013 | 16,945 | 16,691 | ||||||
Hawaiian Telcom Communications, Inc. 10.86% 20135 | 15,920 | 15,681 | ||||||
Hawaiian Telcom Communications, Inc., Series B, 12.50% 2015 | 7,075 | 7,464 | ||||||
France Télécom 7.75% 20115 | 32,950 | 35,407 | ||||||
Rogers Wireless Inc. 7.25% 2012 | 11,825 | 12,495 | ||||||
Rogers Wireless Inc. 7.50% 2015 | 16,750 | 17,898 | ||||||
MetroPCS Wireless, Inc., Term Loan B, 7.625% 20135,6 | 13,942 | 13,472 | ||||||
MetroPCS Wireless, Inc. 9.25% 20144 | 14,300 | 14,085 | ||||||
Cincinnati Bell Inc. 7.25% 2013 | 26,275 | 26,012 | ||||||
Singapore Telecommunications Ltd. 6.375% 20114 | 12,000 | 12,437 | ||||||
Singapore Telecommunications Ltd. 6.375% 2011 | 4,825 | 5,001 | ||||||
Koninklijke KPN NV 8.00% 2010 | 8,400 | 9,008 | ||||||
Koninklijke KPN NV 8.375% 2030 | 2,000 | 2,238 | ||||||
Embarq Corp. 6.738% 2013 | 10,000 | 10,183 | ||||||
PCCW-HKT Capital No. 3 Ltd. 5.25% 20154 | 11,000 | 10,150 | ||||||
Level 3 Financing, Inc. 9.25% 2014 | 10,000 | 9,600 | ||||||
British Telecommunications PLC 8.625% 20105 | 2,000 | 2,194 | ||||||
British Telecommunications PLC 9.125% 20305 | 4,600 | 6,040 | ||||||
Deutsche Telekom International Finance BV 8.00% 20105 | 7,150 | 7,643 | ||||||
NTELOS Inc., Term Loan B, 7.57% 20115,6 | 5,866 | 5,690 | ||||||
Nordic Telephone Co. Holding ApS 8.875% 20164 | 4,000 | 3,980 | ||||||
Trilogy International Partners LLC, Term Loan B, 8.86% 20125,6 | 4,000 | 3,880 | ||||||
Millicom International Cellular SA 10.00% 2013 | 2,800 | 2,975 | ||||||
1,767,955 | ||||||||
INDUSTRIALS — 1.32% | ||||||||
Calair LLC and Calair Capital Corp. 8.125% 2008 | 8,500 | 8,553 | ||||||
Continental Airlines, Inc. 8.75% 2011 | 29,250 | 27,788 | ||||||
Continental Airlines, Inc., Series 2000-2, Class A-2, 7.487% 20126 | 11,700 | 12,154 | ||||||
Continental Airlines, Inc., Series 2001-1, Class B, 7.373% 20176 | 6,315 | 6,222 | ||||||
Continental Airlines, Inc., Series 1998-1, Class B, 6.748% 20186 | 2,010 | 1,950 | ||||||
Continental Airlines, Inc., Series 1998-1, Class A, 6.648% 20196 | 22,651 | 22,828 | ||||||
Continental Airlines, Inc., Series 1997-4, Class A, 6.90% 20196 | 5,450 | 5,557 | ||||||
Continental Airlines, Inc., Series 2000-2, Class B, 8.307% 20196 | 878 | 887 | ||||||
Continental Airlines, Inc., Series 1999-1, Class A, 6.545% 20206 | 16,677 | 16,860 | ||||||
Continental Airlines, Inc., Series 1999-1, Class B, 6.795% 20206 | 887 | 852 | ||||||
Continental Airlines, Inc., Series 2003-ERJ3, Class A, 7.875% 20206 | 13,201 | 13,341 | ||||||
Continental Airlines, Inc., Series 1999-2, Class A-1, 7.256% 20216 | 761 | 788 | ||||||
Continental Airlines, Inc., Series 1999-2, Class B, 7.566% 20216 | 5,537 | 5,428 | ||||||
Continental Airlines, Inc., Series 2001-1, Class A-1, 6.703% 20226 | 15,697 | 15,825 | ||||||
Continental Airlines, Inc., Series 2007-1, Class B, 6.903% 20226 | 3,000 | 3,028 | ||||||
Continental Airlines, Inc., Series 2000-2, Class A-1, 7.707% 20226 | 2,843 | 3,015 | ||||||
Continental Airlines, Inc., Series 2000-1, Class A-1, 8.048% 20226 | 7,191 | 7,753 | ||||||
Continental Airlines, Inc., Series 2000-1, Class B, 8.388% 20226 | 6,103 | 6,259 | ||||||
United Air Lines, Inc., Series 2001-1, Class A-2, 6.201% 20106 | 8,330 | 8,337 | ||||||
United Air Lines, Inc., Series 2000-2, Class B, 7.811% 20116,7 | 5,302 | 6,233 | ||||||
United Air Lines, Inc., Series 2000-2, Class A-2, 7.186% 20126 | 50,446 | 51,612 | ||||||
United Air Lines, Inc., Series 2001-1, Class A-1, 6.071% 20146 | 6,187 | 6,218 | ||||||
United Air Lines, Inc., Term Loan B, 7.375% 20145,6 | 18,830 | 17,700 | ||||||
United Air Lines, Inc., Series 2001-1, Class A-3, 6.602% 20156 | 3,261 | 3,287 | ||||||
United Air Lines, Inc., Series 1996-A2, 7.87% 20196,7 | 3,372 | 1,248 | ||||||
United Air Lines, Inc., Series 2007-1, Class B, 7.336% 20216 | 5,775 | 5,443 | ||||||
American Airlines, Inc., Series 2003-1, Class G, AMBAC insured, 3.857% 20126 | 1,600 | 1,536 | ||||||
American Airlines, Inc., Series 2001-1, Class A-2, 6.817% 20126 | 17,745 | 17,484 | ||||||
American Airlines, Inc., Series 2001-2, Class A-1, 6.978% 20126 | 3,037 | 3,060 | ||||||
American Airlines, Inc., Series 2001-2, Class B, 8.608% 20126 | 4,595 | 4,711 | ||||||
AMR Corp. 9.00% 2012 | 11,000 | 11,000 | ||||||
American Airlines, Inc., Series 2001-2, Class A-2, 7.858% 20136 | 17,138 | 18,129 | ||||||
AMR Corp. 9.00% 2016 | 2,000 | 1,940 | ||||||
American Airlines, Inc., Series 2001-1, Class B, 7.377% 20196 | 16,285 | 14,825 | ||||||
AMR Corp. 10.00% 2021 | 3,000 | 2,895 | ||||||
American Airlines, Inc., Series 2001-1, Class A-1, 6.977% 20226 | 8,073 | 7,633 | ||||||
Delta Air Lines, Inc., Series 2000-1, Class A-2, 7.57% 20126 | 8,050 | 8,171 | ||||||
Delta Air Lines, Inc., Series 2002-1, Class G-2, MBIA insured, 6.417% 20146 | 46,035 | 46,146 | ||||||
Delta Air Lines, Inc., Series 1992-A2, 9.20% 20146,7 | 4,312 | 4,458 | ||||||
Delta Air Lines, Inc., Series 2002-1, Class G-1, MBIA insured, 6.718% 20246 | 21,516 | 21,960 | ||||||
Nielsen Finance LLC, Term Loan B, 7.61% 20135,6 | 2,025 | 1,947 | ||||||
Nielsen Finance LLC and Nielsen Finance Co. 10.00% 20144 | 41,625 | 42,249 | ||||||
Nielsen Finance LLC and Nielsen Finance Co. 0%/12.50% 20164,9 | 51,090 | 33,719 | ||||||
Northwest Airlines, Inc., Term Loan B, 8.86% 20135,6 | 7,319 | 7,246 | ||||||
Northwest Airlines, Inc., Term Loan A, 7.10% 20185,6 | 63,075 | 61,459 | ||||||
Allied Waste North America, Inc., Series B, 6.50% 2010 | 16,000 | 15,720 | ||||||
Allied Waste North America, Inc., Series B, 5.75% 2011 | 18,800 | 17,766 | ||||||
Allied Waste North America, Inc. 7.875% 2013 | 2,500 | 2,487 | ||||||
Allied Waste North America, Inc., Series B, 6.125% 2014 | 13,275 | 12,230 | ||||||
Allied Waste North America, Inc., Series B, 7.375% 2014 | 4,500 | 4,264 | ||||||
Allied Waste North America, Inc. 7.25% 2015 | 8,500 | 8,245 | ||||||
Allied Waste North America, Inc. 6.875% 2017 | 7,250 | 6,779 | ||||||
BAE SYSTEMS 2001 Asset Trust, Series 2001, Class B, 7.156% 20114,6 | 30,574 | 31,609 | ||||||
BAE SYSTEMS 2001 Asset Trust, Series 2001, Class G, MBIA insured, 6.664% 20134,6 | 11,231 | 11,815 | ||||||
Ashtead Group PLC 8.625% 20154 | 12,700 | 12,636 | ||||||
Ashtead Capital, Inc. 9.00% 20164 | 21,900 | 22,119 | ||||||
NTK Holdings Inc. 0%/10.75% 20149 | 12,500 | 7,687 | ||||||
THL Buildco, Inc. 8.50% 2014 | 27,325 | 23,636 | ||||||
Hutchison Whampoa International Ltd. 7.00% 20114 | 5,000 | 5,219 | ||||||
Hutchison Whampoa International Ltd. 6.50% 20134 | 25,000 | 25,714 | ||||||
General Electric Co. 5.00% 2013 | 5,000 | 4,887 | ||||||
General Electric Capital Corp., Series A, 5.736% 20265 | 25,000 | 25,014 | ||||||
USG Corp. 6.30% 2016 | 28,500 | 28,211 | ||||||
American Standard Inc. 7.375% 2008 | 5,935 | 5,975 | ||||||
American Standard Inc. 7.625% 2010 | 16,501 | 17,309 | ||||||
ARAMARK Corp., Term Loan B, Letter of Credit, 5.35% 20145,6 | 554 | 523 | ||||||
ARAMARK Corp., Term Loan B, 7.36% 20145,6 | 7,875 | 7,434 | ||||||
ARAMARK Corp. 8.50% 20154 | 14,700 | 13,928 | ||||||
ARAMARK Corp. 8.856% 20154,5 | 1,425 | 1,332 | ||||||
Waste Management, Inc. 6.50% 2008 | 5,000 | 5,059 | ||||||
Waste Management, Inc. 5.00% 2014 | 7,000 | 6,648 | ||||||
WMX Technologies, Inc. 7.10% 2026 | 10,125 | 10,600 | ||||||
Tyco International Group SA 6.125% 2008 | 8,000 | 8,080 | ||||||
Tyco International Group SA 7.00% 2028 | 4,345 | 4,692 | ||||||
Tyco International Group SA 6.875% 2029 | 8,310 | 9,017 | ||||||
Hawker Beechcraft 8.50% 20154 | 5,300 | 5,313 | ||||||
Hawker Beechcraft 8.875% 20154,8 | 11,530 | 11,444 | ||||||
Hawker Beechcraft 9.75% 20174 | 4,105 | 4,074 | ||||||
Horizon Lines, LLC and Horizon Lines Holding Corp. 9.00% 2012 | 11,100 | 11,849 | ||||||
H-Lines Finance Holding Corp. 0%/11.00% 20139 | 8,448 | 8,427 | ||||||
John Deere Capital Corp., Series D, 4.375% 2008 | 9,000 | 8,942 | ||||||
John Deere Capital Corp. 4.875% 2009 | 4,000 | 3,977 | ||||||
John Deere Capital Corp. 5.40% 2011 | 2,000 | 2,003 | ||||||
John Deere Capital Corp., Series D, 5.50% 2017 | 3,000 | 2,944 | ||||||
ACIH, Inc. 0%/11.50% 20124,9 | 6,125 | 4,441 | ||||||
Atrium Companies, Inc., Term Loan B, 8.61% 20125,6 | 14,146 | 13,273 | ||||||
Accuride Corp. 8.50% 2015 | 17,200 | 16,426 | ||||||
Goodman Global Holdings, Inc., Series B, 7.875% 2012 | 15,550 | 15,628 | ||||||
Southwest Airlines Co. 5.25% 2014 | 15,000 | 14,024 | ||||||
Atlas Copco AB 5.60% 20174 | 11,405 | 11,095 | ||||||
DRS Technologies, Inc. 6.875% 2013 | 275 | 265 | ||||||
DRS Technologies, Inc. 6.625% 2016 | 10,250 | 9,789 | ||||||
DRS Technologies, Inc. 7.625% 2018 | 200 | 193 | ||||||
DynCorp International and DIV Capital Corp., Series A, 9.50% 2013 | 9,230 | 9,461 | ||||||
Caterpillar Financial Services Corp. 2.70% 2008 | 3,000 | 2,927 | ||||||
Caterpillar Financial Services Corp., Series F, 5.43% 20085 | 400 | 400 | ||||||
Caterpillar Financial Services Corp., Series F, 5.50% 2016 | 5,000 | 4,972 | ||||||
Esco Corp. 8.625% 20134 | 4,000 | 3,940 | ||||||
Esco Corp. 9.235% 20134,5 | 3,725 | 3,604 | ||||||
RSC Equipment Rental, Second Lien Term Loan B, 8.86% 20135,6 | 7,355 | 7,060 | ||||||
Esterline Technologies Corp. 6.625% 20174 | 7,500 | 7,031 | ||||||
TransDigm Group Inc. 7.75% 20144 | 6,865 | 6,762 | ||||||
RBS Global, Inc. and Rexnord LLC 9.50% 2014 | 5,500 | 5,335 | ||||||
RBS Global, Inc. and Rexnord LLC 8.875% 2016 | 575 | 535 | ||||||
Deluxe Corp. 7.375% 20154 | 5,000 | 4,900 | ||||||
Hertz Corp. 10.50% 2016 | 4,500 | 4,680 | ||||||
Terex Corp. 7.375% 2014 | 3,500 | 3,448 | ||||||
H&E Equipment Services, Inc. 8.375% 2016 | 3,025 | 3,101 | ||||||
Mobile Storage Group, Inc. 9.75% 20144 | 1,650 | 1,741 | ||||||
Alion Science and Technology Corp. 10.25% 2015 | 1,740 | 1,679 | ||||||
Williams Scotsman, Inc. 8.50% 2015 | 500 | 540 | ||||||
1,142,592 | ||||||||
ENERGY — 1.17% | ||||||||
Ras Laffan Liquefied Natural Gas Co. Ltd. 3.437% 20094,6 | 25,946 | 25,420 | ||||||
Ras Laffan Liquefied Natural Gas Co. Ltd. 3.437% 20096 | 499 | 489 | ||||||
Ras Laffan Liquefied Natural Gas Co. Ltd. 8.294% 20144,6 | 13,329 | 14,773 | ||||||
Ras Laffan Liquefied Natural Gas Co. Ltd. 8.294% 20146 | 4,325 | 4,794 | ||||||
Ras Laffan Liquefied Natural Gas II 5.298% 20204,6 | 49,350 | 47,129 | ||||||
Ras Laffan Liquefied Natural Gas III 5.838% 20274,6 | 55,650 | 52,940 | ||||||
Williams Companies, Inc. and Credit Linked Certificate Trust 6.75% 20094 | 8,000 | 8,000 | ||||||
Williams Companies, Inc. 6.375% 20104 | 4,700 | 4,630 | ||||||
Williams Companies, Inc. 7.36% 20104,5 | 8,000 | 8,050 | ||||||
Transcontinental Gas Pipe Line Corp., Series B, 7.00% 2011 | 10,000 | 10,375 | ||||||
Williams Companies, Inc. 7.125% 2011 | 38,750 | 38,944 | ||||||
Williams Companies, Inc. 8.125% 2012 | 14,810 | 15,402 | ||||||
Williams Partners L.P. and Williams Partners Finance Corp. 7.25% 2017 | 12,325 | 12,017 | ||||||
Williams Companies, Inc. 7.875% 2021 | 10,000 | 10,450 | ||||||
Williams Companies, Inc. 8.75% 2032 | 12,500 | 13,875 | ||||||
Southern Natural Gas Co. 5.90% 20174 | 11,740 | 11,401 | ||||||
El Paso Natural Gas Co. 5.95% 20174 | 7,500 | 7,309 | ||||||
Tennessee Gas Pipeline Co. 7.00% 2028 | 71,500 | 72,431 | ||||||
Newfield Exploration Co., Series B, 7.45% 2007 | 6,000 | 6,015 | ||||||
Newfield Exploration Co. 6.625% 2014 | 32,075 | 30,792 | ||||||
Newfield Exploration Co. 6.625% 2016 | 44,400 | 42,180 | ||||||
TransCanada PipeLines Ltd. 6.35% 20675 | 74,770 | 70,107 | ||||||
Pogo Producing Co. 7.875% 2013 | 31,250 | 31,797 | ||||||
Pogo Producing Co. 6.625% 2015 | 2,400 | 2,418 | ||||||
Pogo Producing Co. 6.875% 2017 | 33,650 | 33,986 | ||||||
Enterprise Products Operating LP, Series B, 5.00% 2015 | 7,000 | 6,511 | ||||||
Enterprise Products Operating LP 8.375% 20665 | 34,135 | 34,881 | ||||||
Enterprise Products Operating LP 7.034% 20685 | 21,365 | 19,569 | ||||||
Gaz Capital SA 6.51% 20224 | 42,310 | 40,567 | ||||||
Premcor Refining Group Inc. 6.125% 2011 | 14,500 | 14,708 | ||||||
Premcor Refining Group Inc. 6.75% 2011 | 11,150 | 11,539 | ||||||
Premcor Refining Group Inc. 9.50% 2013 | 12,275 | 12,996 | ||||||
Tengizchevroil Finance Co. S.àr.l., Series A, 6.124% 20144,6 | 28,500 | 27,930 | ||||||
Tengizchevroil Finance Co. S.àr.l., Series A, 6.124% 20146 | 9,000 | 8,820 | ||||||
Drummond Co., Inc. 7.375% 20164 | 37,705 | 35,254 | ||||||
Forest Oil Corp. 7.25% 20194 | 33,600 | 31,500 | ||||||
Devon Financing Corp., ULC 6.875% 2011 | 29,500 | 31,059 | ||||||
Kinder Morgan Inc., Term Loan B, 6.82% 20135,6 | 21,000 | 20,150 | ||||||
Sunoco, Inc. 4.875% 2014 | 10,060 | 9,541 | ||||||
Sunoco, Inc. 5.75% 2017 | 10,000 | 9,755 | ||||||
Qatar Petroleum 5.579% 20114,6 | 17,778 | 17,881 | ||||||
Enbridge Inc. 5.60% 2017 | 17,200 | 16,579 | ||||||
Canadian Natural Resources Ltd. 5.70% 2017 | 14,600 | 14,164 | ||||||
XTO Energy Inc. 5.65% 2016 | 10,000 | 9,769 | ||||||
Kinder Morgan Energy Partners LP 5.125% 2014 | 10,325 | 9,747 | ||||||
Petroplus Finance Ltd. 6.75% 20144 | 3,750 | 3,441 | ||||||
Petroplus Finance Ltd. 7.00% 20174 | 3,750 | 3,441 | ||||||
Massey Energy Co. 6.875% 2013 | 7,500 | 6,647 | ||||||
Pemex Project Funding Master Trust 7.875% 2009 | 1,600 | 1,651 | ||||||
Pemex Project Funding Master Trust 7.375% 2014 | 3,500 | 3,731 | ||||||
Pemex Project Funding Master Trust 8.625% 2022 | 750 | 896 | ||||||
Petrobas International Finance Co. 6.125% 2016 | 6,000 | 5,835 | ||||||
Sabine Pass LNG, L.P. 7.25% 20134 | 6,000 | 5,745 | ||||||
Energy Transfer Partners, LP 5.95% 2015 | 5,200 | 5,059 | ||||||
PETRONAS Capital Ltd. 7.00% 20124 | 4,000 | 4,211 | ||||||
Peabody Energy Corp., Series B, 6.875% 2013 | 4,300 | 4,203 | ||||||
Delek & Avner-Yam Tethys Ltd. 5.326% 20134,6 | 3,507 | 3,444 | ||||||
TNK-BP Finance SA 7.50% 20164 | 1,500 | 1,509 | ||||||
OXYMAR 7.50% 20164,6 | 670 | 668 | ||||||
1,009,125 | ||||||||
HEALTH CARE — 0.94% | ||||||||
HCA Inc., Term Loan B, 7.61% 20135,6 | 163,280 | 156,272 | ||||||
HCA Inc. 9.125% 20144 | 7,790 | 7,712 | ||||||
HCA Inc. 9.25% 20164 | 19,770 | 19,671 | ||||||
HCA Inc. 9.625% 20164,8 | 13,520 | 13,452 | ||||||
HealthSouth Corp. 11.409% 20145 | 41,025 | 41,640 | ||||||
HealthSouth Corp. 10.75% 2016 | 85,700 | 86,986 | ||||||
Tenet Healthcare Corp. 6.375% 2011 | 10,810 | 9,243 | ||||||
Tenet Healthcare Corp. 9.875% 2014 | 75,295 | 67,389 | ||||||
Tenet Healthcare Corp. 9.25% 2015 | 31,420 | 27,021 | ||||||
VWR International, Inc. 10.25% 20154,8 | 73,210 | 69,000 | ||||||
Warner Chilcott Corp. 8.75% 2015 | 51,369 | 50,342 | ||||||
PTS Acquisition Corp. 9.50% 20154,8 | 48,205 | 43,385 | ||||||
Cardinal Health, Inc. 4.00% 2015 | 25,000 | 21,948 | ||||||
Cardinal Health, Inc. 5.80% 20164 | 10,000 | 9,849 | ||||||
AMR HoldCo, Inc. and EmCare HoldCo, Inc. 10.00% 2015 | 28,340 | 29,899 | ||||||
Elan Finance PLC and Elan Finance Corp. 8.875% 2013 | 19,350 | 19,157 | ||||||
Elan Finance PLC and Elan Finance Corp. 9.485% 20135 | 10,095 | 9,843 | ||||||
Team Finance LLC and Health Finance Corp. 11.25% 2013 | 26,600 | 28,329 | ||||||
Hospira, Inc. 5.84% 20105 | 10,000 | 10,032 | ||||||
Hospira, Inc. 5.55% 2012 | 5,295 | 5,304 | ||||||
Hospira, Inc. 6.05% 2017 | 8,500 | 8,380 | ||||||
UnitedHealth Group Inc. 6.00% 20174 | 15,000 | 15,060 | ||||||
Community Health Systems Inc. 8.875% 20154 | 11,275 | 11,007 | ||||||
Humana Inc. 6.45% 2016 | 10,000 | 10,123 | ||||||
Boston Scientific Corp. 6.40% 2016 | 3,435 | 3,041 | ||||||
Boston Scientific Corp. 7.00% 2035 | 8,040 | 6,736 | ||||||
Amgen Inc. 4.00% 2009 | 9,125 | 8,857 | ||||||
Viant Holdings Inc. 10.125% 20174 | 8,685 | 8,207 | ||||||
Surgical Care Affiliates, Inc. 8.875% 20154,8 | 4,250 | 4,059 | ||||||
Surgical Care Affiliates, Inc. 10.00% 20174 | 2,500 | 2,388 | ||||||
Aetna Inc. 7.875% 2011 | 4,500 | 4,861 | ||||||
Accellent Inc. 10.50% 2013 | 3,105 | 2,996 | ||||||
Universal Hospital Services, Inc. 8.50% 20154,8 | 460 | 417 | ||||||
Universal Hospital Services, Inc. 8.759% 20154,5 | 1,040 | 975 | ||||||
813,581 | ||||||||
INFORMATION TECHNOLOGY — 0.90% | ||||||||
Electronic Data Systems Corp. 7.125% 2009 | 15,515 | 15,990 | ||||||
Electronic Data Systems Corp., Series B, 6.50% 20135 | 127,650 | 125,206 | ||||||
Electronic Data Systems Corp. 7.45% 2029 | 10,555 | 10,605 | ||||||
NXP BV and NXP Funding LLC 8.11% 20135 | 15,700 | 14,699 | ||||||
NXP BV and NXP Funding LLC 7.875% 2014 | 46,850 | 43,512 | ||||||
NXP BV and NXP Funding LLC 9.50% 2015 | 99,375 | 84,966 | ||||||
Celestica Inc. 7.875% 2011 | 63,905 | 60,230 | ||||||
Celestica Inc. 7.625% 2013 | 36,945 | 33,435 | ||||||
Sanmina-SCI Corp. 8.11% 20104,5 | 3,500 | 3,465 | ||||||
Sanmina-SCI Corp. 6.75% 2013 | 11,000 | 9,735 | ||||||
Sanmina-SCI Corp. 8.11% 20144,5 | 15,500 | 15,345 | ||||||
Sanmina-SCI Corp. 8.125% 2016 | 70,650 | 62,878 | ||||||
SunGard Data Systems Inc. 3.75% 2009 | 11,050 | 10,580 | ||||||
SunGard Data Systems Inc. 9.125% 2013 | 48,900 | 49,389 | ||||||
Jabil Circuit, Inc. 5.875% 2010 | 54,140 | 53,915 | ||||||
Western Union Co. 5.51% 20085 | 22,000 | 22,002 | ||||||
Western Union Co. 5.40% 2011 | 5,000 | 4,929 | ||||||
Western Union Co. 5.93% 2016 | 24,000 | 23,558 | ||||||
Freescale Semiconductor, Inc., Term Loan B, 7.11% 20135,6 | 15,451 | 14,338 | ||||||
Firestone Acquisition Corp. 8.875% 20144 | 4,555 | 4,179 | ||||||
Firestone Acquisition Corp. 10.125% 20164 | 9,825 | 8,695 | ||||||
Xerox Corp. 7.125% 2010 | 21,000 | 21,852 | ||||||
Sensata Technologies BV, Term Loan B, 7.11% 20135,6 | 9,776 | 9,452 | ||||||
Sensata Technologies BV 8.00% 20145 | 11,000 | 10,175 | ||||||
Hughes Communications, Inc. 9.50% 2014 | 15,750 | 15,750 | ||||||
National Semiconductor Corp. 6.15% 2012 | 15,000 | 15,077 | ||||||
Serena Software, Inc. 10.375% 2016 | 9,635 | 9,876 | ||||||
Cisco Systems, Inc. 5.25% 2011 | 9,500 | 9,460 | ||||||
Nortel Networks Ltd. 9.61% 20114,5 | 6,500 | 6,614 | ||||||
MagnaChip Semiconductor SA and MagnaChip Semiconductor Finance Co. 8.00% 2014 | 7,505 | 4,578 | ||||||
774,485 | ||||||||
MATERIALS — 0.84% | ||||||||
Abitibi-Consolidated Co. of Canada 5.25% 2008 | 25,650 | 24,816 | ||||||
Abitibi-Consolidated Finance LP 7.875% 2009 | 6,136 | 5,875 | ||||||
Abitibi-Consolidated Inc. 8.55% 2010 | 12,693 | 11,804 | ||||||
Abitibi-Consolidated Inc. 7.75% 2011 | 6,025 | 5,332 | ||||||
Abitibi-Consolidated Co. of Canada 8.86% 20115 | 5,225 | 4,676 | ||||||
Abitibi-Consolidated Co. of Canada 6.00% 2013 | 3,960 | 3,148 | ||||||
Abitibi-Consolidated Co. of Canada 8.375% 2015 | 17,585 | 14,420 | ||||||
Owens-Illinois, Inc. 7.35% 2008 | 11,400 | 11,429 | ||||||
Owens-Brockway Glass Container Inc. 8.875% 2009 | 18,436 | 18,759 | ||||||
Owens-Illinois, Inc. 7.50% 2010 | 750 | 743 | ||||||
Owens-Brockway Glass Container Inc. 7.75% 2011 | 13,500 | 13,770 | ||||||
Owens-Brockway Glass Container Inc. 8.75% 2012 | 6,000 | 6,255 | ||||||
Owens-Brockway Glass Container Inc. 8.25% 2013 | 14,000 | 14,140 | ||||||
Jefferson Smurfit Corp. (U.S.) 8.25% 2012 | 3,700 | 3,580 | ||||||
Stone Container Corp. 8.375% 2012 | 19,558 | 18,336 | ||||||
Jefferson Smurfit Corp. (U.S.) 7.50% 2013 | 18,275 | 17,224 | ||||||
Smurfit-Stone Container Enterprises, Inc. 8.00% 2017 | 19,965 | 18,767 | ||||||
Domtar Inc. 5.375% 2013 | 13,350 | 11,481 | ||||||
Domtar Corp., Term Loan B, 6.695% 20145,6 | 2,025 | 1,960 | ||||||
Domtar Inc. 7.125% 2015 | 42,750 | 40,078 | ||||||
Freeport-McMoRan Copper & Gold Inc. 8.25% 2015 | 26,110 | 27,416 | ||||||
Freeport-McMoRan Copper & Gold Inc. 8.564% 20155 | 6,000 | 6,195 | ||||||
Freeport-McMoRan Copper & Gold Inc. 8.375% 2017 | 17,735 | 18,666 | ||||||
Georgia Gulf Corp. 9.50% 2014 | 42,230 | 40,330 | ||||||
Georgia Gulf Corp. 10.75% 2016 | 4,535 | 4,263 | ||||||
C5 Capital (SPV) Ltd. 6.196% (undated)4,5 | 3,000 | 2,955 | ||||||
C8 Capital (SPV) Ltd. 6.64% (undated)4,5 | 20,000 | 19,099 | ||||||
C10 Capital (SPV) Ltd. 6.722% (undated)4,5 | 17,895 | 16,907 | ||||||
Boise Cascade, LLC and Boise Cascade Finance Corp. 7.125% 2014 | 41,710 | 38,582 | ||||||
Nalco Co. 7.75% 2011 | 20,010 | 19,710 | ||||||
Nalco Co. 8.875% 2013 | 3,500 | 3,465 | ||||||
Nalco Finance Holdings LLC and Nalco Finance Holdings Inc. 0%/9.00% 20149 | 7,200 | 6,300 | ||||||
Stora Enso Oyj 6.404% 20164 | 14,500 | 14,503 | ||||||
Stora Enso Oyj 7.25% 20364 | 13,000 | 12,842 | ||||||
Georgia-Pacific Corp. 8.125% 2011 | 9,825 | 9,948 | ||||||
Georgia-Pacific Corp. 9.50% 2011 | 5,000 | 5,150 | ||||||
Georgia-Pacific Corp., First Lien Term Loan B, 7.11% 20125,6 | 11,310 | 10,749 | ||||||
Equistar Chemicals, LP 10.125% 2008 | 7,321 | 7,614 | ||||||
Equistar Chemicals, LP and Equistar Funding Corp. 8.75% 2009 | 625 | 644 | ||||||
Lyondell Chemical Co. 10.50% 2013 | 13,835 | 15,011 | ||||||
Graphic Packaging International, Inc. 8.50% 2011 | 20,750 | 20,698 | ||||||
Norske Skogindustrier ASA 7.625% 20114 | 19,640 | 20,149 | ||||||
Algoma Steel Inc. 9.875% 20154 | 19,750 | 18,763 | ||||||
NewPage Corp., Series A, 11.606% 20125 | 10,000 | 10,750 | ||||||
NewPage Corp., Series A, 12.00% 2013 | 5,000 | 5,231 | ||||||
FMG Finance Pty Ltd. 10.625% 20164 | 11,500 | 13,225 | ||||||
Momentive Performance Materials Inc. 9.75% 20144 | 12,000 | 11,580 | ||||||
Allegheny Technologies, Inc. 8.375% 2011 | 10,500 | 10,920 | ||||||
AEP Industries Inc. 7.875% 2013 | 10,500 | 10,448 | ||||||
AMH Holdings, Inc. 0%/11.25% 20149 | 16,795 | 10,413 | ||||||
Ainsworth Lumber Co. Ltd. 7.25% 2012 | 4,150 | 3,019 | ||||||
Ainsworth Lumber Co. Ltd. 6.75% 2014 | 10,000 | 6,825 | ||||||
Ainsworth Lumber Co. Ltd. 6.75% 2014 | 650 | 445 | ||||||
Metals USA Holdings Corp. 11.36% 20124,5,8 | 10,675 | 9,607 | ||||||
Building Materials Corp. of America 7.75% 2014 | 8,400 | 7,518 | ||||||
UPM-Kymmene Corp. 5.625% 20144 | 7,500 | 7,185 | ||||||
JSG Funding PLC 7.75% 2015 | 6,500 | 6,240 | ||||||
Weyerhaeuser Co. 5.95% 2008 | 5,331 | 5,367 | ||||||
Ispat Inland ULC 9.75% 2014 | 3,207 | 3,498 | ||||||
Rockwood Specialties Group, Inc. 7.50% 2014 | 3,240 | 3,151 | ||||||
Berry Plastics Holding Corp. 10.25% 2016 | 2,950 | 2,802 | ||||||
Packaging Corp. of America 4.375% 20082 | 2,500 | 2,467 | ||||||
Arbermarle Corp. 5.10% 2015 | 2,570 | 2,430 | ||||||
Plastipak Holdings, Inc. 8.50% 20154 | 2,275 | 2,309 | ||||||
Airgas, Inc. 6.25% 2014 | 1,750 | 1,662 | ||||||
Mosaic Co. 7.375% 20144 | 1,600 | 1,600 | ||||||
Corporación Nacional del Cobre de Chile 6.375% 20124 | 1,500 | 1,536 | ||||||
Neenah Paper, Inc. 7.375% 2014 | 332 | 314 | ||||||
727,094 | ||||||||
UTILITIES — 0.84% | ||||||||
AES Corp. 9.50% 2009 | 49,815 | 51,060 | ||||||
AES Corp. 9.375% 2010 | 17,502 | 18,027 | ||||||
AES Corp. 8.75% 20134 | 62,100 | 65,671 | ||||||
AES Red Oak, LLC, Series A, 8.54% 20196 | 32,415 | 33,792 | ||||||
AES Red Oak, LLC, Series B, 9.20% 20296 | 7,000 | 7,910 | ||||||
Edison Mission Energy 7.50% 2013 | 32,525 | 31,549 | ||||||
Edison Mission Energy 7.75% 2016 | 35,300 | 33,976 | ||||||
Midwest Generation, LLC, Series B, 8.56% 20166 | 11,625 | 12,006 | ||||||
Edison Mission Energy 7.00% 20174 | 34,875 | 31,649 | ||||||
Edison Mission Energy 7.20% 20194 | 39,450 | 35,406 | ||||||
Homer City Funding LLC 8.734% 20266 | 12,659 | 13,861 | ||||||
Edison Mission Energy 7.625% 20274 | 5,500 | 4,826 | ||||||
Southern California Edison Co., First and Refunding Mortgage Bonds, Series 2006-E, 5.55% 2037 | 6,500 | 6,013 | ||||||
NRG Energy, Inc. 7.25% 2014 | 24,525 | 23,728 | ||||||
NRG Energy, Inc. 7.375% 2016 | 76,625 | 74,135 | ||||||
Israel Electric Corp. Ltd. 7.95% 20114 | 5,000 | 5,330 | ||||||
Israel Electric Corp. Ltd. 7.70% 20184 | 22,500 | 24,872 | ||||||
Israel Electric Corp. Ltd. 8.10% 20964 | 4,905 | 5,539 | ||||||
Nevada Power Co., General and Refunding Mortgage Bonds, Series A, 8.25% 2011 | 6,000 | 6,521 | ||||||
Nevada Power Co., General and Refunding Mortgage Notes, Series I, 6.50% 2012 | 4,250 | 4,348 | ||||||
Sierra Pacific Resources 8.625% 2014 | 2,725 | 2,865 | ||||||
Nevada Power Co., General and Refunding Mortgage Notes, Series L, 5.875% 2015 | 5,675 | 5,547 | ||||||
Nevada Power Co., General and Refunding Mortgage Notes, Series M, 5.95% 2016 | 13,700 | 13,369 | ||||||
Sierra Pacific Resources 6.75% 2017 | 3,000 | 2,811 | ||||||
PSEG Energy Holdings Inc. 8.625% 2008 | 3,593 | 3,651 | ||||||
PSEG Power LLC 7.75% 2011 | 13,806 | 14,800 | ||||||
PSEG Power LLC 5.00% 2014 | 10,000 | 9,457 | ||||||
MidAmerican Energy Co. 4.65% 2014 | 3,200 | 3,014 | ||||||
MidAmerican Energy Co. 5.95% 2017 | 7,000 | 7,052 | ||||||
MidAmerican Energy Holdings Co. 6.125% 2036 | 11,650 | 11,170 | ||||||
Cilcorp Inc. 8.70% 2009 | 9,000 | 9,223 | ||||||
Union Electric Co. 5.40% 2016 | 8,000 | 7,685 | ||||||
Cilcorp Inc. 9.375% 2029 | 3,000 | 3,327 | ||||||
Abu Dhabi National Energy Co. PJSC (TAQA) 5.875% 20164 | 11,000 | 10,865 | ||||||
Abu Dhabi National Energy Co. PJSC (TAQA) 6.50% 20364 | 7,750 | 7,658 | ||||||
Dominion Resources, Inc., Series 2002-D, 5.125% 2009 | 8,500 | 8,460 | ||||||
Virginia Electric and Power Co., Series 2003-A, 4.75% 2013 | 6,000 | 5,731 | ||||||
Virginia Electric and Power Co., Series A, 6.00% 2037 | 2,250 | 2,159 | ||||||
Exelon Corp. 6.75% 2011 | 1,000 | 1,033 | ||||||
Exelon Generation Co., LLC 6.95% 2011 | 1,300 | 1,353 | ||||||
Commonwealth Edison Co., First Mortgage Bonds, Series 104, 5.95% 2016 | 5,000 | 4,956 | ||||||
Commonwealth Edison Co., First Mortgage Bonds, Series 103, 5.90% 2036 | 3,850 | 3,565 | ||||||
PECO Energy Co., First and Refunding Mortgage Bonds, 5.70% 2037 | 5,000 | 4,759 | ||||||
Appalachian Power Co., Series G, 3.60% 2008 | 6,770 | 6,675 | ||||||
Appalachian Power Co., Series M, 5.55% 2011 | 3,000 | 2,995 | ||||||
Ohio Power Co., Series K, 6.00% 2016 | 5,000 | 5,034 | ||||||
Alabama Power Co., Series X, 3.125% 2008 | 3,750 | 3,687 | ||||||
Alabama Power Co., Series R, 4.70% 2010 | 1,250 | 1,227 | ||||||
Alabama Power Co., Series Q, 5.50% 2017 | 5,000 | 4,904 | ||||||
Mirant Americas Generation, Inc. 8.30% 2011 | 9,000 | 8,865 | ||||||
Constellation Energy Group, Inc. 6.125% 2009 | 8,000 | 8,098 | ||||||
AES Panamá, SA 6.35% 20164 | 8,000 | 7,721 | ||||||
Intergen Power 9.00% 20174 | 7,000 | 6,930 | ||||||
Carolina Power & Light Co. d/b/a Progress Energy Carolinas, Inc. 5.25% 2015 | 6,000 | 5,834 | ||||||
NiSource Finance Corp. 7.875% 2010 | 5,000 | 5,337 | ||||||
Scottish Power PLC 5.375% 2015 | 5,000 | 4,925 | ||||||
Duke Energy Corp., First and Refunding Mortgage Bonds, 5.30% 2015 | 5,000 | 4,839 | ||||||
Pacific Gas and Electric Co., First Mortgage Bonds, 6.05% 2034 | 4,000 | 3,896 | ||||||
Enersis SA 7.375% 2014 | 3,500 | 3,628 | ||||||
Centerpoint Energy, Inc., Series B, 6.85% 2015 | 3,000 | 3,148 | ||||||
Tri-State Generation and Transmission Assn. Inc., Pass Through Trust, Series 2003-A, 6.04% 20184,6 | 2,657 | 2,644 | ||||||
FPL Energy National Wind Portfolio, LLC 6.125% 20194,6 | 1,928 | 1,907 | ||||||
727,023 | ||||||||
ASSET-BACKED OBLIGATIONS6— 0.57% | ||||||||
Drive Auto Receivables Trust, Series 2005-1, Class A-4, MBIA insured, 4.01% 2012 | 9,147 | 9,058 | ||||||
Drive Auto Receivables Trust, Series 2005-2, Class A-3, MBIA insured, 4.26% 20124 | 8,900 | 8,821 | ||||||
Drive Auto Receivables Trust, Series 2005-3, Class A-4, FSA insured, 5.09% 20134 | 20,000 | 19,994 | ||||||
Drive Auto Receivables Trust, Series 2006-2, Class A-3, MBIA insured, 5.33% 20144 | 20,000 | 20,103 | ||||||
GMAC Mortgage Loan Trust, Series 2007-HE2, Class A-2, FGIC insured, 6.054% 20375 | 12,500 | 12,535 | ||||||
GMAC Mortgage Loan Trust, Series 2007-HE2, Class A-3, FGIC insured, 6.193% 20375 | 18,000 | 18,096 | ||||||
GMAC Mortgage Loan Trust, Series 2007-HE2, Class A-6, FGIC insured, 6.249% 20375 | 7,500 | 7,494 | ||||||
Residential Funding Mortgage Securities II, Inc., Series 2006-HSA2, Class A-I-5, FGIC insured, 5.63% 20365 | 10,000 | 9,702 | ||||||
Residential Funding Mortgage Securities II, Inc., Series 2007-HSA2, Class A-1F, MBIA insured, 8.47% 20375 | 21,590 | 21,159 | ||||||
ARG Funding Corp., Series 2005-1, Class A-1, MBIA insured, 4.02% 20094 | 10,000 | 9,930 | ||||||
ARG Funding Corp., Series 2005-2, Class A-4, AMBAC insured, 4.84% 20114 | 20,000 | 19,849 | ||||||
CPS Auto Receivables Trust, Series 2006-A, Class 1-A-4, FSA insured, 5.33% 20124 | 7,500 | 7,528 | ||||||
CPS Auto Receivables Trust, Series 2006-C, Class A-4, XLCA insured, 5.14% 20134 | 10,000 | 10,000 | ||||||
CPS Auto Receivables Trust, Series 2007-B, Class A-4, FSA insured, 5.60% 20144 | 10,000 | 10,134 | ||||||
Green Tree Financial Corp., Series 1995-3, Class B-2, 8.10% 20257 | 12,449 | 3,735 | ||||||
Green Tree Financial Corp., Series 1995-2, Class B-2, 8.80% 20267 | 9,004 | 4,682 | ||||||
Green Tree Financial Corp., Series 1996-2, Class B-2, 7.90% 20277 | 8,186 | 1 | ||||||
Green Tree Financial Corp., Series 1997-6, Class B-2, 7.75% 20297 | 6,004 | 1 | ||||||
Conseco Finance Home Loan Trust, Series 1999-G, Class B-2, 10.96% 2029 | 17,267 | 13,750 | ||||||
Green Tree Financial Corp., Series 1998-4, Class B-2, 8.11% 20307 | 3,999 | 40 | ||||||
Triad Automobile Receivables Trust, Series 2006-C, Class A-3, AMBAC insured, 5.26% 2011 | 11,000 | 10,997 | ||||||
Triad Automobile Receivables Trust, Series 2005-A, Class A-4, AMBAC insured, 4.22% 2012 | 10,000 | 9,868 | ||||||
Prestige Auto Receivables Trust, Series 2005-1A, Class A-2, FSA insured, 4.37% 20124 | 8,216 | 8,154 | ||||||
Prestige Auto Receivables Trust, Series 2006-1A, Class A-2, FSA insured, 5.25% 20134 | 10,000 | 10,008 | ||||||
Advanta Business Card Master Trust, Series 2005-A2, Class A-2, 5.45% 20135 | 18,000 | 18,048 | ||||||
PG&E Energy Recovery Funding LLC, Series 2005-1, Class A-3, 4.14% 2012 | 10,000 | 9,806 | ||||||
PG&E Energy Recovery Funding LLC, Series 2005-2, Class A-3, 5.12% 2014 | 8,040 | 7,988 | ||||||
Drivetime Auto Owner Trust, Series 2005-C, Class A-3, MBIA insured, 5.006% 20114 | 6,709 | 6,696 | ||||||
Drivetime Auto Owner Trust, Series 2006-A, Class A-3, XLCA insured, 5.501% 20114,5 | 10,000 | 10,039 | ||||||
Santander Drive Auto Receivables Trust, Series 2007-1, Class A-3, FGIC insured, 5.05% 2011 | 15,000 | 14,984 | ||||||
Susquehanna Auto Lease Trust, Series 2007-1, Class A-3, 5.25% 20104 | 14,250 | 14,270 | ||||||
J.P. Morgan Mortgage Acquisition Corp., Series 2005-FRE1, Class A-F-4, 5.488% 20355 | 11,978 | 11,630 | ||||||
Long Beach Acceptance Auto Receivables Trust, Series 2006-B, Class A-4, FSA insured, 5.18% 2013 | 11,500 | 11,509 | ||||||
CWABS, Inc., Series 2005-11, Class AF-2, 4.657% 2036 | 11,330 | 11,241 | ||||||
BMW Vehicle Owner Trust, Series 2006-A, Class A-4, 5.07% 2011 | 11,044 | 11,041 | ||||||
UPFC Auto Receivables Trust, Series 2004-A, Class A-3, AMBAC insured, 3.27% 2010 | 1,432 | 1,418 | ||||||
UPFC Auto Receivables Trust, Series 2005-B, Class A-3, XLCA insured, 4.98% 2011 | 9,320 | 9,301 | ||||||
Capital One Multi-asset Execution Trust, Series 2006-10, Class A, 5.15% 2014 | 10,425 | 10,397 | ||||||
Home Equity Asset Trust, Series 2004-7, Class M-1, 5.94% 20355 | 10,000 | 10,025 | ||||||
Providian Master Note Trust, Series 2005-A1, Class A, 5.38% 20124,5 | 10,000 | 10,005 | ||||||
CWHEQ Home Equity Loan Trust, Series 2006-S2, Class A-5, FGIC insured, 5.753% 2027 | 10,000 | 9,869 | ||||||
AEP Texas Central Transitioning Funding II LLC, Senior Secured Transition Bonds, Series A, Class A-3, 5.09% 2015 | 8,265 | 8,070 | ||||||
Argent Securities Trust, Series 2006-M2, Class A-2D, 5.56% 20365 | 8,000 | 7,911 | ||||||
Vanderbilt Mortgage and Finance, Inc., Series 1999-B, Class I-A-6, 6.925% 2024 | 7,706 | 7,876 | ||||||
AmeriCredit Automobile Receivables Trust, Series 2007-C-M, Class A-4-A, MBIA insured, 5.55% 2014 | 7,000 | 7,061 | ||||||
Ameriquest Mortgage Securities Inc., Series 2003-12, Class M-1, 6.07% 20345 | 7,000 | 7,050 | ||||||
Hertz Vehicle Financing LLC, Rental Car Asset-backed Notes, Series 2005-2, Class A-6, AMBAC insured, 5.08% 20114 | 6,375 | 6,337 | ||||||
Residential Asset Securities Corp. Trust, Series 2001-KS3, Class A-I-6, 5.96% 2031 | 5,869 | 5,851 | ||||||
Residential Asset Securities Corp. Trust, Series 2003-KS6, Class A-2, 5.92% 20335 | 191 | 191 | ||||||
Bear Stearns Asset-backed Securities I Trust, Series 2005-CL1, Class A-1, 5.82% 20345 | 5,897 | 5,820 | ||||||
MBNA Master Credit Card Trust II, Series 2000-H, Class B, 5.92% 20135 | 5,000 | 5,069 | ||||||
First USA Credit Card Master Trust, Series 1998-6, Class C, 6.16% 20114 | 2,000 | 2,009 | ||||||
Nebhelp Trust, Student Loan Interest Margin Securities, Series 1, Class A, MBIA insured, 6.68% 20164 | 691 | 694 | ||||||
Specialty Underwriting and Residential Finance Trust, Series 2004-BC4, Class A-2B, 5.63% 20355 | 32 | 32 | ||||||
487,877 | ||||||||
CONSUMER STAPLES — 0.44% | ||||||||
Tyson Foods, Inc. 6.85% 20165 | 60,100 | 61,278 | ||||||
SUPERVALU INC., Term Loan B, 6.86% 20125,6 | 20,492 | 19,878 | ||||||
SUPERVALU INC. 7.50% 2012 | 5,090 | 5,104 | ||||||
Albertson’s, Inc. 7.25% 2013 | 21,355 | 20,756 | ||||||
Albertson’s, Inc. 8.00% 2031 | 12,650 | 11,797 | ||||||
Yankee Candle Co., Inc., Series B, 8.50% 2015 | 28,150 | 26,039 | ||||||
Yankee Candle Co., Inc., Series B, 9.75% 2017 | 23,445 | 20,983 | ||||||
Stater Bros. Holdings Inc. 8.125% 2012 | 30,625 | 29,706 | ||||||
Stater Bros. Holdings Inc. 7.75% 20154 | 13,500 | 12,623 | ||||||
Spectrum Brands, Inc., Term Loan B, Letter of Credit, 5.17% 20135,6 | 850 | 814 | ||||||
Spectrum Brands, Inc., Term Loan B2, 9.32% 20135,6 | 3,125 | 2,969 | ||||||
Spectrum Brands, Inc., Term Loan B, 9.357% 20135,6 | 17,675 | 16,924 | ||||||
Spectrum Brands, Inc. 7.375% 2015 | 27,850 | 17,963 | ||||||
Dole Food Co., Inc. 8.625% 2009 | 12,850 | 12,464 | ||||||
Dole Food Co., Inc. 7.25% 2010 | 8,825 | 8,141 | ||||||
Dole Food Co., Inc. 8.875% 2011 | 11,450 | 10,706 | ||||||
Rite Aid Corp. 7.50% 2015 | 2,500 | 2,350 | ||||||
Rite Aid Corp. 8.625% 2015 | 3,000 | 2,595 | ||||||
Rite Aid Corp. 7.50% 2017 | 2,500 | 2,306 | ||||||
Rite Aid Corp. 7.70% 2027 | 9,000 | 6,795 | ||||||
Rite Aid Corp. 6.875% 2028 | 2,500 | 1,787 | ||||||
Duane Reade Inc. 9.75% 2011 | 14,120 | 13,414 | ||||||
Ahold Finance U.S.A., Inc. 6.25% 2009 | 12,015 | 12,250 | ||||||
Vitamin Shoppe Industries Inc. 12.86% 20125 | 11,650 | 11,766 | ||||||
CVS Corp. 5.298% 20274,6 | 4,397 | 4,160 | ||||||
CVS Corp. 6.036% 20284,6 | 6,962 | 6,698 | ||||||
Playtex Products, Inc. 8.00% 2011 | 10,000 | 10,375 | ||||||
Delhaize Group 6.50% 20174 | 3,850 | 3,741 | ||||||
Delhaize America, Inc. 9.00% 2031 | 5,000 | 5,548 | ||||||
Smithfield Foods, Inc. 7.625% 2008 | 1,975 | 1,990 | ||||||
Smithfield Foods, Inc., Series B, 8.00% 2009 | 875 | 897 | ||||||
Smithfield Foods, Inc., Series B, 7.00% 2011 | 750 | 731 | ||||||
Smithfield Foods, Inc., Series B, 7.75% 2013 | 2,800 | 2,772 | ||||||
Smithfield Foods, Inc. 7.75% 2017 | 1,775 | 1,722 | ||||||
Elizabeth Arden, Inc. 7.75% 2014 | 3,675 | 3,556 | ||||||
Constellation Brands, Inc. 7.25% 20174 | 3,000 | 2,820 | ||||||
Winn-Dixie Pass Through Trust, Series 1999-1, Class A-1, 7.803% 20171,4,6,7 | 432 | 380 | ||||||
376,798 | ||||||||
NON-U.S. GOVERNMENT & GOVERNMENT AGENCY BONDS & NOTES — 0.14% | ||||||||
Russian Federation 8.25% 20106 | 16,834 | 17,522 | ||||||
Russian Federation 8.25% 20104,6 | 6,667 | 6,940 | ||||||
Russian Federation 7.50% 20306 | 24,646 | 27,064 | ||||||
United Mexican States Government Global 8.375% 2011 | 3,000 | 3,252 | ||||||
United Mexican States Government Global 7.50% 2012 | 5,470 | 5,867 | ||||||
United Mexican States Government Global 6.375% 2013 | 14,765 | 15,289 | ||||||
United Mexican States Government Global 11.375% 2016 | 9,118 | 12,569 | ||||||
United Mexican States Government Global 6.75% 2034 | 7,740 | 8,146 | ||||||
State of Qatar 9.75% 2030 | 4,000 | 5,710 | ||||||
El Salvador (Republic of) 7.75% 2023 | 3,000 | 3,375 | ||||||
El Salvador (Republic of) 7.75% 20234 | 1,250 | 1,406 | ||||||
El Salvador (Republic of) 7.65% 20354 | 750 | 834 | ||||||
Banque Centrale de Tunisie 7.375% 2012 | 3,500 | 3,756 | ||||||
Bulgaria (Republic of) 8.25% 2015 | 3,000 | 3,482 | ||||||
Aries Vermögensverwaltungs GmbH, Series C, 9.60% 2014 | 2,500 | 3,087 | ||||||
Corporación Andina de Fomento 5.75% 2017 | 2,000 | 1,986 | ||||||
120,285 | ||||||||
MUNICIPALS — 0.02% | ||||||||
State of California, Golden State Tobacco Securitization Corp., Tobacco Settlement Asset-backed Bonds, Series 2003-A-1, 6.25% 2033 (prerefunded 2013) | 8,500 | 9,292 | ||||||
State of South Dakota, Educational Enhancement Funding Corp., Tobacco Settlement Asset-backed Bonds, Series 2002-A, Class A, 6.72% 2025 | 4,048 | 4,063 | ||||||
State of Louisiana, Tobacco Settlement Financing Corp., Tobacco Settlement Asset-backed Bonds, | ||||||||
Series 2001-A, Class A, 6.36% 2025 | 3,388 | 3,387 | ||||||
16,742 | ||||||||
Total bonds & notes (cost: $20,662,718,000) | 20,383,455 | |||||||
Short-term securities — 8.79% | ||||||||
Federal Home Loan Bank 5.113%–5.137% due 8/10–10/24/2007 | 654,955 | 650,548 | ||||||
Freddie Mac 5.11%–5.145% due 8/13–10/22/2007 | 539,000 | 534,334 | ||||||
Procter & Gamble International Funding S.C.A. 5.20%–5.26% due 8/1–10/26/20074,10 | 483,632 | 480,226 | ||||||
JPMorgan Chase & Co. 5.21%–5.23% due 8/17–10/22/2007 | 252,000 | 250,506 | ||||||
Park Avenue Receivables Co., LLC 5.23%–5.24% due 8/28–10/15/20074 | 176,791 | 175,871 | ||||||
Jupiter Securitization Co., LLC 5.28% due 8/2/20074 | 51,327 | 51,312 | ||||||
Variable Funding Capital Corp. 5.235%–5.27% due 8/2–10/10/20074,10 | 474,150 | 471,470 | ||||||
Bank of America Corp. 5.205%–5.245% due 8/2–11/13/2007 | 449,100 | 445,455 | ||||||
Ranger Funding Co. LLC 5.26% due 9/10/20074,10 | 22,600 | 22,466 | ||||||
Wal-Mart Stores Inc. 5.18%–5.19% due 8/7–10/23/20074 | 460,200 | 456,984 | ||||||
Clipper Receivables Co., LLC 5.23%–5.26% due 8/1–10/11/20074 | 383,100 | 380,257 | ||||||
State Street Corp. 5.22% due 8/2/2007 | 50,000 | 49,986 | ||||||
International Lease Finance Corp. 5.19%–5.21% due 8/10–10/22/2007 | 285,996 | 284,225 | ||||||
American General Finance Corp. 5.21% due 9/11/2007 | 50,000 | 49,697 | ||||||
AIG Funding, Inc. 5.205% due 8/16/2007 | 30,000 | 29,933 | ||||||
IBM Corp. 5.19%–5.23% due 8/3–8/10/20074 | 199,400 | 199,222 | ||||||
IBM Capital Inc. 5.22%–5.23% due 9/18/20074 | 90,709 | 90,068 | ||||||
CAFCO, LLC 5.225%–5.245% due 8/9–9/14/20074 | 150,000 | 149,314 | ||||||
Ciesco LLC 5.24%–5.25% due 9/6–10/4/20074,10 | 139,100 | 137,970 | ||||||
HSBC Finance Corp. 5.22%–5.24% due 8/20–9/12/200710 | 275,000 | 273,561 | ||||||
Coca-Cola Co. 5.15%–5.22% due 8/22–10/30/20074 | 244,700 | 242,395 | ||||||
General Electric Capital Services, Inc. 5.21%–5.22% due 8/1–9/21/2007 | 239,500 | 238,562 | ||||||
General Electric Capital Corp. 5.34% due 8/1/2007 | 400 | 400 | ||||||
Johnson & Johnson 5.18%–5.20% due 8/23–10/26/20074 | 209,600 | 208,097 | ||||||
Paccar Financial Corp. 5.20%–5.22% due 8/2–10/17/2007 | 179,850 | 178,975 | ||||||
Honeywell International Inc. 5.18%–5.21% due 8/14–9/11/20074,10 | 150,000 | 149,396 | ||||||
Hewlett-Packard Co. 5.25%–5.26% due 8/1–9/20/20074 | 150,000 | 149,282 | ||||||
Private Export Funding Corp. 5.19%–5.22% due 8/21–10/10/20074 | 137,415 | 136,487 | ||||||
CIT Group, Inc. 5.24%–5.27% due 8/22–9/10/20074,10 | 136,700 | 136,130 | ||||||
Union Bank of California, N.A. 5.30% due 10/17–10/23/2007 | 100,000 | 99,996 | ||||||
Fannie Mae 5.09%–5.12% due 8/8–9/7/200710 | 96,350 | 96,031 | ||||||
E.I. duPont de Nemours and Co. 5.22% due 9/13/20074 | 85,000 | 84,458 | ||||||
NetJets Inc. 5.21%–5.23% due 8/27–9/27/20074 | 69,345 | 68,888 | ||||||
Three Pillars Funding, LLC 5.26%–5.28% due 8/29–9/17/20074 | 61,966 | 61,670 | ||||||
Caterpillar Financial Services Corp. 5.22% due 8/9–9/13/2007 | 52,000 | 51,795 | ||||||
Abbott Laboratories 5.24% due 8/21/20074 | 50,000 | 49,847 | ||||||
Anheuser-Busch Cos. Inc. 5.185%–5.20% due 8/27–9/17/20074 | 50,000 | 49,729 | ||||||
Prudential Funding, LLC 5.22% due 9/27/2007 | 50,000 | 49,579 | ||||||
Federal Farm Credit Banks 5.12% due 8/20/2007 | 48,000 | 47,875 | ||||||
Harvard University 5.20% due 8/6/2007 | 41,600 | 41,564 | ||||||
Wells Fargo Bank, N.A. 5.27% due 8/30/2007 | 39,000 | 39,000 | ||||||
Harley-Davidson Funding Corp. 5.22% due 10/26/20074 | 36,350 | 35,892 | ||||||
FCAR Owner Trust I 5.27% due 9/20/2007 | 32,449 | 32,218 | ||||||
Illinois Tool Works Inc. 5.24% due 8/16/2007 | 25,000 | 24,944 | ||||||
Brown-Forman Corp. 5.27% due 8/21/20074 | 25,000 | 24,924 | ||||||
Becton, Dickinson and Co. 5.21% due 9/6/200710 | 25,000 | 24,866 | ||||||
Wm. Wrigley Jr. Co. 5.22% due 9/21/20074 | 25,000 | 24,811 | ||||||
United Parcel Service Inc. 5.20% due 8/27/20074 | 22,000 | 21,915 | ||||||
USAA Capital Corp. 5.19% due 8/15/2007 | 20,000 | 19,958 | ||||||
Kimberly-Clark Worldwide Inc. 5.21% due 9/14/20074 | 13,500 | 13,412 | ||||||
Total short-term securities (cost: $7,585,706,000) | 7,586,501 | |||||||
Total investment securities (cost: $74,224,520,000) | 86,492,823 | |||||||
Other assets less liabilities | (197,362 | ) | ||||||
Net assets | $ | 86,295,461 |
“Miscellaneous” securities include holdings in their initial period of acquisition that have not previously been publicly disclosed.
1 | Valued under fair value procedures adopted by authority of the board of directors. The total value of all such securities, including those in “Miscellaneous,” was $13,477,985,000. |
2 | Represents an affiliated company as defined under the Investment Company Act of 1940. |
3 | Security did not produce income during the last 12 months. |
4 | Purchased in a private placement transaction; resale may be limited to qualified institutional buyers; resale to the public may require registration. The total value of all such restricted securities was $8,590,213,000, which represented 9.95% of the net assets of the fund. |
5 | Coupon rate may change periodically. |
6 | Principal payments may be made periodically. Therefore, the effective maturity date may be earlier than the stated maturity date. |
7 | Scheduled interest and/or principal payment was not received. |
8 | Payment in kind; the issuer has the option of paying additional securities in lieu of cash. |
9 | Step bond; coupon rate will increase at a later date. |
10 | This security, or a portion of this security, has been segregated to cover funding requirements on investment transactions settling in the future. |
ADR = American Depositary Receipts
GDR = Global Depositary Receipts
Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so you may lose money.
Investors should carefully consider the investment objectives, risks, charges and expenses of the American Funds. This and other important information is contained in each fund’s prospectus, which can be obtained from a financial adviser and should be read carefully before investing.
MFGEFP-906-0907O-S10922
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON INVESTMENT PORTFOLIO
To the Shareholders and Board of Directors of
The Income Fund of America, Inc.:
We have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the financial statements of The Income Fund of America, Inc., (the “Fund”) as of July 31, 2007, and for the year then ended and have issued our report thereon dated September 10, 2007, which report and financial statements are included in Item 1 of this Certified Shareholder Report on Form N-CSR. Our audit also included the Fund’s investment portfolio (the “Schedule”) as of July 31, 2007, appearing in Item 6 of this Form N-CSR. This Schedule is the responsibility of the Fund’s management. Our responsibility is to express an opinion based on our audit. In our opinion, the Schedule referred to above, when considered in relation to the basic financial statements taken as a whole of the Fund referred to above, presents fairly, in all material respects, the information set forth therein.
DELOITTE & TOUCHE LLP
Costa Mesa, California
September 10, 2007
ITEM 7 – Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies
Not applicable to this Registrant, insofar as the Registrant is not a closed-end management investment company.
ITEM 8 – Portfolio Managers of Closed-End Management Investment Companies
Not applicable to this Registrant, insofar as the Registrant is not a closed-end management investment company.
ITEM 9 – Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers
Not applicable to this Registrant, insofar as the Registrant is not a closed-end management investment company.
ITEM 10 – Submission of Matters to a Vote of Security Holders
There have been no material changes to the procedures by which shareholders may recommend nominees to the Registrant’s board of directors since the Registrant last submitted a proxy statement to its shareholders. The procedures are as follows. The Registrant has a nominating committee comprised solely of persons who are not considered ‘‘interested persons’’ of the Registrant within the meaning of the Investment Company Act of 1940, as amended. The committee periodically reviews such issues as the board’s composition, responsibilities, committees, compensation and other relevant issues, and recommends any appropriate changes to the full board of directors. While the committee normally is able to identify from its own 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 committee of the Registrant, c/o the Registrant’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 nominating committee.
ITEM 11 – Controls and Procedures
(a) | The Registrant’s Principal Executive Officer and Principal Financial Officer have concluded, based on their evaluation of the Registrant’s disclosure controls and procedures (as such term is defined in Rule 30a-3 under the Investment Company Act of 1940), that such controls and procedures are adequate and reasonably designed to achieve the purposes described in paragraph (c) of such rule. |
(b) | There were no changes in the Registrant’s internal controls over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) that occurred during the Registrant’s second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting. |
ITEM 12 – Exhibits
(a)(1) | The Code of Ethics that is the subject of the disclosure required by Item 2 is attached as an exhibit hereto. |
(a)(2) | The certifications required by Rule 30a-2 of the Investment Company Act of 1940, as amended, and Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 are attached as exhibits hereto. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
THE INCOME FUND OF AMERICA, INC. | |
By /s/ Hilda L. Applbaum | |
Hilda L. Applbaum, Vice Chairman and Principal Executive Officer | |
Date: October 5, 2007 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
By /s/ Hilda L. Applbaum |
Hilda L. Applbaum, Vice Chairman and Principal Executive Officer |
Date: October 5, 2007 |
By /s/ Jennifer M. Buchheim |
Jennifer M. Buchheim, Treasurer and Principal Financial Officer |
Date: October 5, 2007 |