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, 2009
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
Bingham McCutchen LLP
355 South Grand Avenue, Suite 4400
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
Positioned for the future
[photo of a hummingbird sitting on a flower covered branch]
Annual report for the year ended July 31, 2009
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 is one of the nation’s largest mutual fund families. For nearly 80 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.
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, so they may lose value. 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, 2009 (the most recent calendar quarter-end): | ||||||||||||
Class A shares | 1 year | 5 years | 10 years | |||||||||
Reflecting 5.75% maximum sales charge | –23.80 | % | –0.24 | % | 3.06 | % |
The total annual fund operating expense ratio was 0.64% for Class A shares as of July 31, 2009.
Investment results assume all distributions are reinvested and reflect applicable fees and expenses. The fund’s investment adviser waived a portion of its management fees from September 1, 2004, through December 31, 2008. 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.
The fund’s 30-day yield for Class A shares as of August 31, 2009, calculated in accordance with the Securities and Exchange Commission formula, was 4.47%. The fund’s distribution rate for Class A shares as of that date was 5.16%. 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.
Equity investments are subject to market fluctuations. The return of principal for bond funds and for funds with significant underlying bond holdings 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. See the prospectus and the Risk Factors section of this report for more information on these and other risks associated with investing in the fund.
In this report | |
Special Feature | |
6 | Positioned for the future |
Contents | |
1 | Letter to shareholders |
4 | The value of a long-term perspective |
12 | About your fund |
13 | The portfolio at a glance |
14 | Summary investment portfolio |
20 | Financial statements |
35 | Board of directors and other officers |
[photo of a hummingbird sitting on a flower covered branch]
Fellow shareholders:
For the 12 months ended July 31, 2009, The Income Fund of America (IFA) recorded a total return of –12.7%. This return was ahead of the –19.9% figure turned in by the unmanaged Standard & Poor’s 500 Composite Index, a broad measure of the U.S. stock market. The fund’s return trailed that of the Barclays Capital U.S. Aggregate Index, a proxy for the U.S. bond market, which gained 7.8%.
Results for IFA also lagged the 5.7% decline posted by the Lipper Income Funds Index, a measure of the fund’s category peers.
In the wake of this challenging year, the table below can offer some helpful perspective to long-term investors. For the tumultuous 10 years ended July 31, IFA’s income focus and sensitivity to risk helped it top both its peer group and the broader U.S. stock market. Perhaps not surprisingly, over the same period the fund trailed the Barclays index, which measures the generally less volatile bond market. However, over IFA’s lifetime — a period encompassing a wide variety of economic and market conditions — the fund has outdistanced the broader stock and bond markets.
Income challenges
Providing shareholders with regular quarterly income remains IFA’s primary objective. This commitment remains strong despite the multiple challenges currently facing income-oriented investors.
These challenges arise in large part from the fact that there have been almost unprecedented dividend reductions among stocks, principally banks caught up in the financial crisis. Until recently, payouts from firms in this sector made up nearly 30% of the income available in the equity market. Now they provide less than 10%. To compound the income challenge, a number of companies from other sectors have also enacted dividend reductions. In addition, historically low interest rates on short-term securities and cash have further reduced the pool of income available to the fund. It was against this backdrop that in June 2009, IFA’s board of directors approved a reduction in the fund’s regular quarterly dividend, from 19.5 to 16.5 cents per share.
As income is our primary objective, we did not take this step without significant deliberation. Yet we believed that maintaining the dividend would have required us to invest in securities whose risk/reward profiles were not attractive.
Despite the reduction, IFA’s yield is more than double that currently offered by the S&P 500, and is well ahead of its Lipper peer group as well.
[Begin Sidebar]
Results at a glance (with dividends reinvested or interest compounded) | ||||||||||||||||
Average annual total returns for periods ended July 31, 2009 | ||||||||||||||||
1 year | 5 years | 10 years | Lifetime1 | |||||||||||||
The Income Fund of America (Class A shares) | –12.7 | % | 2.4 | % | 4.5 | % | 11.2 | % | ||||||||
Standard & Poor’s 500 Composite Index | –19.9 | –0.1 | –1.2 | 10.2 | ||||||||||||
Lipper Income Funds Index2 | –5.7 | 3.0 | 3.4 | — | 3 | |||||||||||
Barclays Capital U.S. Aggregate Index | 7.8 | 5.1 | 6.2 | 8.2 | 4 | |||||||||||
Consumer Price Index (inflation)5 | –2.1 | 2.6 | 2.6 | 4.4 |
1Since December 1, 1973, when Capital Research and Management Company became the fund’s investment adviser. |
2Source: Lipper. Figures do not reflect the effect of sales charges. |
3The inception date for the index was December 31, 1988. |
4From December 1, 1973, through December 31, 1975, the Barclays Capital U.S. Government/Credit Index was used because the Barclays Capital U.S. Aggregate Index did not yet exist. |
5Computed 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 reflect the effect of sales charges.
[End Sidebar]
Broad market downturn, then a steady rise
A look at the market over the most recent 12 months reveals two contrasting phases. When we reported to you at this time last year, conditions were very difficult. Yet the apex of the financial crisis still lay ahead. The fall of 2008 saw several prominent U.S. financial institutions go bankrupt while others teetered on the brink of collapse. Credit markets seized up almost completely. These cascading events exacerbated the global economic slowdown and initiated a steep market slide that, after slowing in December, accelerated anew at the beginning of 2009 and didn’t stop until early March.
At that point, however, with the S&P 500 having lost more than 45% since the beginning of IFA’s fiscal period, markets reversed course as investors began to believe that the global stimulus packages were taking effect. Though corporate data and economic indicators remained relatively weak, investors began to spot opportunity among battered stocks.
As with stocks, the bond market experienced a roller coaster year. Amid the widespread uncertainty that marked the beginning of the period, investors seeking relative safety flooded into U.S. Treasury securities. Almost all other areas of the fixed-income market suffered. But several months before their equity counterparts, bond investors detected glimmers of hope on the economic horizon. The market, particularly high-yield corporate debt, recovered sharply in 2009.
Tough times across the board
While the fund outpaced the broader stock market for the period, it did not escape the damage wrought by the global economic turmoil. In fact, while all 10 sectors that make up the S&P 500 were down, stocks paying above-average dividends were among those hardest hit.
Financial companies fell furthest both in the market and the fund. Utilities, a traditional source of yield, also proved a drag on IFA’s results. Among areas of strength for both the market and the fund were telecommunication services and consumer staples. Bonds were likewise additive. As in the broader market, U.S. Treasuries provided support during the period’s first half and high-yield corporate debt posted very high returns beginning in 2009.
[Begin Sidebar]
Striking a balance between return and volatility
The Income Fund of America takes a prudent path to income. Looking back 10 years, as shown at right, the fund has provided higher returns than stocks and the average income fund as well as lower volatility than stocks. As this period was an unusually volatile one for equities, results for the fund, its peer groups and the broader stock market trailed the broader bond market. However, as can be seen on page 1, the fund’s lifetime results surpass those of both the stock and bond indexes.
For the 10-year period ended July 31, 2009
[begin chart]
5 Years | 10 Years | Since 12/31/75 | ||||||||||||||||||||||
Fund | Annual Return | Annual Std Dev | Annual Return | Annual Std Dev | Annual Return | Annual Std Dev | ||||||||||||||||||
Income Fund of America | 2.38 | 11.79 | 4.46 | 10.41 | 11.07 | 9.57 | ||||||||||||||||||
Barclays Capital U.S. Aggregate Index | 5.14 | 3.63 | 6.19 | 3.77 | 8.41 | 5.76 | ||||||||||||||||||
S&P 500 | -0.14 | 15.66 | -1.19 | 16.11 | 10.77 | 15.31 | ||||||||||||||||||
Lipper Income Funds Index | 2.96 | 8.38 | 3.45 | 7.34 |
[end chart]
Sources: Stocks — S&P 500; Bonds — Barclays Capital U.S. Aggregate 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]
Unusual conditions create opportunities
As we discuss in the feature article “Positioned for the future” that begins on page 6, unusual conditions in equity markets presented the fund not just with challenges but with appealing investment possibilities. While income available in the marketplace is much reduced, the number of non-financial companies featuring dividend yields appropriate for the fund has increased dramatically. This has enabled us to enhance the fund’s diversity by investing in companies from sectors that once had little representation within IFA’s portfolio. Moreover, the market downturn affected great companies as well as average ones to relatively equal degrees, allowing us to diversify through the addition of what we believe are top-flight companies.
Guided by fundamental research, we made sizable investments in several technology, industrial and retail firms, all sectors that have historically offered few income opportunities. We also built or added to positions among pharmaceutical companies.
We trimmed holdings among real estate investment trusts as we grew concerned about their stability in a soft real estate market where credit was difficult to come by. We likewise reduced our telecom and consumer staples holdings. Many had held up well during the downturn and we found opportunities we believe present more attractive total return possibilities.
The portion of fund assets invested in fixed-income securities rose sharply during the period, from 27.0% to 34.6%. This increase is partly attributable to the fact that the fund’s bond investments held up better than its stock portfolio. However, we also used some of IFA’s cash reserves — they now stand at 3.9%, down from 9.1% at the period’s outset — to invest selectively in bonds with prices and yields made more attractive due to 2008’s bond market selloff.
Cautious, but optimistic
Looking forward, we are optimistic. The global economy appears to be stabilizing, which could create conditions for a recovery. Though the timing is difficult to predict, we believe that IFA’s dividend discipline, along with its highly diversified portfolio, leave the fund and its shareholders well-positioned for the future.
We thank you for your commitment to long-term investing.
Cordially,
/s/ Hilda L. Applbaum
Hilda L. Applbaum
Vice Chairman and Principal Executive Officer
/s/ David C. Barclay
David C. Barclay
President
September 4, 2009
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
[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 | 6.18 | 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 | 5.06 | 2.28 | |||||||||
1/31/1997 | 5.09 | 4.59 | 1.89 | |||||||||
7/31/1997 | 4.74 | 4.23 | 1.61 | |||||||||
1/31/1998 | 4.27 | 4.38 | 1.59 | |||||||||
7/31/1998 | 4.32 | 4.29 | 1.43 | |||||||||
1/31/1999 | 4.79 | 4.12 | 1.29 | |||||||||
7/31/1999 | 4.86 | 4.35 | 1.24 | |||||||||
1/31/2000 | 5.40 | 4.80 | 1.19 | |||||||||
7/31/2000 | 5.49 | 4.88 | 1.15 | |||||||||
1/31/2001 | 4.78 | 4.80 | 1.20 | |||||||||
7/31/2001 | 4.80 | 4.62 | 1.30 | |||||||||
1/31/2002 | 5.01 | 4.21 | 1.40 | |||||||||
7/31/2002 | 5.49 | 3.96 | 1.75 | |||||||||
1/31/2003 | 5.45 | 3.73 | 1.88 | |||||||||
7/31/2003 | 4.69 | 3.35 | 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 | 2.51 | 1.64 | |||||||||
7/31/2005 | 3.44 | 2.42 | 1.70 | |||||||||
1/31/2006 | 3.75 | 2.71 | 1.75 | |||||||||
7/31/2006 | 3.84 | 2.79 | 1.83 | |||||||||
1/31/2007 | 4.24 | 3.03 | 1.75 | |||||||||
7/31/2007 | 4.43 | 3.12 | 1.81 | |||||||||
1/31/2008 | 4.68 | 3.63 | 2.03 | |||||||||
7/31/2008 | 5.23 | 3.91 | 2.29 | |||||||||
1/31/2009 | 6.72 | 4.60 | 3.39 | |||||||||
7/31/2009 | 5.64 | 3.87 | 2.53 |
[end line chart]
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 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, 2009)* | ||||||||||||
1 year | 5 years | 10 years | ||||||||||
Class A shares | –17.76 | % | 1.18 | % | 3.85 | % | ||||||
*Assumes reinvestment of all distributions and payment of the maximum 5.75% sales charge. |
Investment results assume all distributions are reinvested and reflect applicable fees and expenses. The fund’s investment adviser waived a portion of its management fees from September 1, 2004, through December 31, 2008. 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.
[begin mountain chart]
Year End July 31 | IFA1,7,8 remaining amounts if dividends taken in cash | IFA1,4,8 with dividends reinvested | Barclays Capital U.S. Aggregate 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 | ||||||||||||
2008 | 53,502 | 469,245 | 155,944 | 399,251 | ||||||||||||
2009 | 44,011 | 409,572 | 168,179 | 319,605 |
[end mountain chart]
Expense ratios and turnover rates* | ||||||||
Year ended July 31, 2009 | ||||||||
The Income Fund of America | Industry average† | |||||||
Expense ratio | 0.63 | %†† | 0.63 | % | ||||
Portfolio turnover rate | 49 | % | 48 | % | ||||
*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 (0.64% without the fee waiver). |
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 | 2008 |
Value of dividends | |||||||
Dividends in cash8 | 2,272 | 2,071 | 1,944 | 1,850 | 2,180 | 2,728 | 2,784 |
Dividends reinvested8 | 14,927 | 14,311 | 14,072 | 13,921 | 17,020 | 22,200 | 23,692 |
Value of investment | |||||||
Dividends in cash8 | 41,359 | 44,136 | 49,057 | 54,032 | 56,985 | 61,946 | 53,502 |
Dividends reinvested8 | 280,397 | 314,550 | 364,136 | 415,525 | 456,119 | 518,361 | 469,245 |
IFA total return | (6.4) | 12.2 | 15.8 | 14.1 | 9.8 | 13.6 | (9.5) |
Year ended July 31 | 2009 | ||||||
Value of dividends | |||||||
Dividends in cash8 | 2,483 | ||||||
Dividends reinvested8 | 22,231 | ||||||
Value of investment | |||||||
Dividends in cash8 | 44,011 | ||||||
Dividends reinvested8 | 409,572 | ||||||
IFA total return | (12.7) |
Average annual total return for fund’s lifetime: 11.0%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 advisor), through July 31, 1974. |
4Includes reinvested dividends of $290,237 and reinvested capital gain distributions of $131,223. |
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 Barclays Capital U.S. Government/Credit Index was used because the Barclays Capital U.S. Aggregate Index did not yet exist. |
7Includes capital gain distributions of $24,067, but does not reflect income dividends of $59,205 taken in cash. |
8From April 1990 to September 1994, and from September 2003 to March 2009, 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.
Positioned for the future
Though the current market environment presents significant challenges to income-focused investors, a closer look reveals unusual opportunities for The Income Fund of America and its shareholders.
[photo of a bird sitting on a flower covered tree branch]
It goes without saying that market downturns like the one we’ve recently experienced can be unsettling. As investment values decline, worry sets in and reminders about the importance of maintaining a long-term perspective or assurances that “opportunity is born of adversity” may ring hollow.
Yet though this guidance may seem trite, there is truth at the heart of it. Significant opportunity has historically emerged from difficult periods and the recent market shakeout does not appear to be an exception. Indeed, for The Income Fund of America (IFA), the broad-based market decline has actually created an opportunity for the fund’s investment professionals to practice on a grander scale one of the strategies they’ve successfully relied on for years. Namely, opportunistically investing in companies whose yields have risen as their share prices have fallen. In the past, those companies have been concentrated in certain out-of-favor sectors, but the widespread nature of the recent decline has meant an expanded set of potential investments distributed across virtually every industry.
In the following pages, we’ll take a closer look at how the current conditions came about and examine some of the challenges that remain. We’ll also discuss how our research-focused investment approach, along with the fund’s dividend discipline, are helping ensure that The Income Fund of America’s shareholders are well-positioned for the future.
[photo of a bird's nest with four green eggs inside]
The current dividend environment and how we got here
“It’s important to say that our optimism about the present conditions is not an attempt to gloss over the challenging circumstances that brought them about,” says fund vice chairman Hilda Applbaum, who is also one of its portfolio counselors. “We recognize the heavy toll that recent market conditions — arguably the most difficult since the Great Depression — have taken on investors. Furthermore, challenges remain, particularly for an income-focused fund like IFA, which must cope with a seismic shift in the dividend environment.”
That shift includes two seemingly contradictory changes of particular consequence to IFA: first, an increase in the number of companies with yields high enough to make them attractive to the fund, and second, a reduction in the overall amount of dividend income available within the fund’s investable universe.
The latter development has its origins in the recent troubles within the financial sector, a one-time bastion of high-yield companies. With the subprime mortgage crisis and the credit crunch having left the majority of financial institutions strapped for cash, paying dividends became a luxury most couldn’t afford. Compounding the problem was the fact that for those firms that had seized the financial lifelines extended by governments and central banks — and that was most of them — dividends became a political liability. Passing taxpayer bailout money to stockholders in the form of dividends was regarded as untenable. The numbers tell the story. Whereas in recent years, financial companies provided as much as 30% of the overall yield available in the S&P 500, they are set to provide less than 10% this year.
Cuts may have been deepest in the financial sector, but as the crisis boiled over into the broader economy, some non-financial companies began to see reducing or eliminating dividends as a way to conserve cash for the tough times ahead. This further depleted the amount of income available in the market.
Some companies stepped into the void by initiating or raising dividends, but these new and increased payouts were not nearly enough to offset the broad and deep cuts.
The net result is that, in dollar terms, 2009 will go down as the worst year for dividend reductions since 1938, with 2008 not too far behind.
[photo of a bird sitting on the end of a tree branch]
Significant opportunity emerges
Yet the same financial and economic uncertainty that drained considerable dividend income from the market also spawned unusual and, yes, favorable conditions for income-oriented investors. For as the global economic downturn gathered momentum, it took a toll on equities of every stripe — stocks with high dividends, those without yields, and middling payers. Yet many companies outside the financials area were able to hold the line on their dividends even as tough economic conditions caused their share prices to decline. And because yields rise when share prices fall and payouts remain steady, the overall number of non-financial companies that became candidates for investment by IFA began to increase.
In fact, since June 30, 2007, yields in all sectors save financials have recorded significant increases. As a result, the number of non-financial companies within IFA’s investment universe that have yields of 3.0% or more (the approximate yield at which companies become attractive to the fund) has risen sharply.
“Historically, certain sectors have consistently featured strong yields, while others offered few high dividend-paying companies. Still other areas of the market have been intermittently available to the fund based on investors’ views of the sector,” explains Hilda. “For example, pharmaceutical companies do not always feature high yields, but during certain stretches, investors have taken a dim view of the sector and stock prices declined. In turn, their yields spiked and many companies we believed had real value suddenly met IFA’s yield criteria. What makes the current environment particularly interesting is that the market downturn has been so widespread that, from a yield standpoint, companies within virtually every sector are now candidates for the fund. As portfolio counselors, I don’t think we’ve ever had such a long list of companies from which to choose.”
London-based portfolio counselor Jody Jonsson notes that the quality of those companies may have increased as well. “Outside certain traditional high-yield sectors, the companies historically available to the fund have generally been those with some clear flaws. Their high yields came about because their stock prices reflected the market’s concern about some area of the company,” she explains. “In many cases, our research helped us identify companies that, notwithstanding some of their problems, could benefit IFA shareholders. Recently, however, great companies and more average ones from a variety of sectors have been punished in equal measure. We as counselors have been able not only to diversify our portfolios but to do so through the addition of what we believe are very high-quality companies.”
[photo of four birds sitting on a tree branch]
A flexible path to the fund’s objective
A better stocked fishing pond adds to the considerable flexibility already enjoyed by the fund’s counselors. This flexibility takes several forms, but perhaps the most important is the ability of counselors to build portfolios that reflect their individual perspectives on companies, markets and the global economy.
[Begin Sidebar]
More choice, more opportunity
Though there are fewer yield opportunities within the financials area — where the economic crisis originated and companies have needed to redirect cash away from dividends and towards remaining viable — the recent market downturn has expanded the number of companies with yields suitable for The Income Fund of America. As you can see, as of June 30, 2009, the number of non-financial stocks with yields of 3.0% or more has increased significantly over the last two years.
Index | 6/30/07 | 6/30/08 | 6/30/09 | |||||||||
S&P 500 | 42 | 77 | 119 | |||||||||
MSCI World | 225 | 377 | 440 | |||||||||
MSCI World (ex USA) | 186 | 302 | 313 |
Number of non-financial companies in index with dividend yields of 3.0% or higher
[photo of a bird eating from a birdhouse]
[End Sidebar]
[Begin Sidebar]
[photo of a flock of red birds flying]
Income matters
It’s part of your fund’s name and one of its central objectives: Income. In the current market, finding it is a challenge as the dollar amount of dividends available has declined sharply and interest rates on cash and short-term securities are at near-record lows. Yet it’s with good reason that, regardless of the investment environment, IFA maintains its focus on providing shareholders with income in the form of quarterly dividends. To understand the vital role that income can play in an investor’s total return equation, consider the following example:
If you had invested $100 in the S&P 500 in December 1925 and … | ||||||||
… took your dividends in cash | … reinvested your dividends | |||||||
Your annual rate of return | ||||||||
would have been | 5.3 | % | 9.6 | % | ||||
The value of your investment | ||||||||
on June 30, 2009 would have been | $ | 7,205 | $ | 210,309 |
We cite this example not because we think every investor should reinvest dividends — we recognize that many shareholders use IFA’s quarterly payouts to cover living expenses — but because we believe it illustrates the potential benefits of an income-focused approach.
[End Sidebar]
For example, even within the current environment, where there is a greater breadth of investment options, Hong Kong-based portfolio counselor Steve Watson is paying closest attention to companies and sectors that, as measured by yield, have fallen further than the broader market. “One characteristic of our investment approach is to step aside from the crowd and try to determine why, for example, a company or sector has fallen out of favor with investors. In some cases, our research leads us to conclude that the majority of investors are overly concerned about a company that we believe has appealing long-term prospects. Even during the most recent widespread downturn, we found many such opportunities and invested with enthusiasm in those areas.”
Steve’s highly diverse portfolio also underscores the company-by-company approach that guides the fund’s investment professionals. “In the early part of 2009, a considerable portion of my portfolio was in cash. As I began to believe that the market was stabilizing, fund analysts representing a diverse range of sectors made compelling cases for some of the companies they covered. I rely heavily on their knowledge and made significant investments in the industrials, media, banking, utilities, telecom and consumer products areas.”
[photo of a bird sitting on a tree branch]
Yield, but not at any cost
Despite the additional opportunities in the current environment, the reality is that finding income remains challenging. True, there are more companies with yields in the 3.0% range, but companies that once featured dividends in the 5.0% range — principally those in the financials area — are fewer. To the high yielders that remain, we apply the bottom-up analysis that is central to our process.
“We won’t invest in a company simply because it has a high dividend. Instead, we focus our research resources on trying to determine the value of the company that pays the dividend,” explains Jody. “That means examining the company’s cash flow and balance sheet, its operational efficiency and market position. We also work hard to understand the management’s commitment to its dividend. And if a company is deemed attractive according to those measures, it often means that investors can not only receive quarterly income, but an increase in share price as well. This total return approach has historically served fund shareholders well.”
Help from bonds
Importantly, the fund’s equity investments aren’t the only contributors to its quarterly dividend. Bond investments are important as well and have provided significant income amid the recent dividend reductions among equities.
“With the deterioration in the financial system, the seizing up of the credit markets and recessionary conditions worldwide, prices for most bonds sold in the secondary market dropped sharply,” explains fund president David Barclay, who is also a fixed-income portfolio counselor based in Los Angeles. “And when bonds lose value, their yield effectively rises. In addition, companies issuing new bonds were offering very attractive interest rates to entice wary investors. We invested selectively in securities with high interest rates — some in the teens. They provided vital support to the fund’s dividend payout in the face of declining income from equities.”
With increased economic stability, however, has come a rise in bond prices and a corresponding drop in yield. This, coupled with historically low yields on cash and short-term securities, has heightened the challenge of finding income for the fund.
“Without a doubt, the current conditions are somewhat challenging from an income standpoint. But market conditions don’t last forever. When the economy improves, earnings will rise and so will dividends. As in the past, the Fed will raise interest rates, which will increase yields on shorter term securities. Invariably, IFA’s portfolio will look different,” says Hilda. “The good news is that we have a dividend discipline that helps keep us on course with the fund’s focus on income, capital appreciation and risk management. We can’t dictate the market conditions we’ll face in the coming months, but we can determine the approach we take to navigating them.” n
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 | S&P 500 Cumulative total return | IFA Cumulative total return | IFA advantage (percentage 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 | |||||||||
October 9, 2007, through March 9, 2009 | –55.2 | –43.5 | 11.7 |
*Periods show S&P 500 price declines of 15% or greater. All declines shown, except the most recent decline, end once the market has fully recovered. With respect to the most recent decline, the market has not returned to its high, reached in October 2007. Nonetheless, we have elected to include the period to give shareholders a sense of how IFA’s results compared with those of the broader stock market during this tumultuous time. 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 | 1,572,929 | |||
S&P 500 | 415,293 |
[end bar chart]
...... have helped to keep principal
intact, letting compounding do
its work.
[begin bar chart]
IFA | S&P 500 | |||||||
Amount withdrawn | 451,602 | 451,602 | ||||||
Ending value | 1,912,605 | 895,235 | ||||||
Initial investment | 100,000 | 100,000 |
[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, 2009. Example 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 $451,602.
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 35 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 | ||||||||||
S&P | ||||||||||||
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 | ||||||
7/31/2008 | $ | 26,068 | $ | 10,663 | $ | 3,842 | ||||||
7/31/2009 | $ | 24,461 | $ | 9,403 | $ | 2,098 |
[end bar chart]
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.
[begin pie chart]
Investment mix by security type | July 31, 2009 | |||
U.S. common stocks | 38.7 | % | ||
Common stocks of issuers outside the U.S. | 18.5 | |||
Convertible securities & preferred stocks | 3.8 | |||
U. S. Treasury & agency bonds & notes | 5.5 | |||
Other fixed-income securities | 29.1 | |||
Short-term securities & other assets less liabilities | 4.4 |
[end pie chart]
Five largest sectors in common stock holdings | ||||
Percent of net assets | ||||
Consumer staples | 7.2 | % | ||
Industrials | 7.2 | |||
Telecommunication services | 7.1 | |||
Utilities | 6.6 | |||
Health care | 5.3 | |||
Ten largest common stock holdings | ||||
Percent of net assets | ||||
Verizon Communications | 2.3 | % | ||
AT&T | 2.0 | |||
Merck | 1.7 | |||
GDF Suez | 1.4 | |||
Royal Dutch Shell | 1.3 | |||
Waste Management | 1.3 | |||
Kraft Foods | 1.3 | |||
Bristol-Myers Squibb | 1.2 | |||
Chevron | 1.2 | |||
Philip Morris International | 1.2 | |||
Country diversification | ||||
Percent of net assets | ||||
United States | 70.9 | % | ||
Euro zone* | 10.7 | |||
United Kingdom | 5.1 | |||
Australia | 2.2 | |||
Canada | 1.3 | |||
Japan | 0.8 | |||
Other countries | 4.6 | |||
Short-term securities & other assets less liabilities | 4.4 | |||
*Countries using the euro as a common currency; those represented in the fund's portfolio are Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, the Netherlands and Spain. |
[begin pie chart]
Investment mix by security type | July 31, 2008 | |||
U.S. common stocks | 42.6 | % | ||
Common stocks of issuers outside the U.S. | 17.9 | |||
Convertible securities & preferred stocks | 3.5 | |||
U. S. Treasury & agency bonds & notes | 2.4 | |||
Other fixed-income securities | 24.6 | |||
Short-term securities & other assets less liabilities | 9.0 |
[end pie chart]
Five largest sectors in common stock holdings | ||||
Percent of net assets | ||||
Financials | 10.1 | % | ||
Telecommunication services | 8.0 | |||
Utilities | 7.2 | |||
Consumer staples | 6.5 | |||
Industrials | 6.4 | |||
Ten largest common stock holdings | ||||
Percent of net assets | ||||
AT&T | 2.3 | % | ||
Verizon Communications | 2.0 | |||
Chevron | 1.9 | |||
General Electric | 1.8 | |||
Merck | 1.2 | |||
Bank of America | 1.2 | |||
Citigroup Inc. | 1.2 | |||
McDonald's | 1.1 | |||
Kraft Foods | 1.0 | |||
H.J. Heinz | 1.0 | |||
Country diversification | ||||
Percent of net assets | ||||
United States | 68.3 | % | ||
Euro zone* | 10.5 | |||
United Kingdom | 3.3 | |||
Canada | 1.1 | |||
Australia | 1.1 | |||
Hong Kong | 1.1 | |||
Other countries | 5.6 | |||
Short-term securities & other assets less liabilities | 9.0 | |||
*Countries using the euro as a common currency; those represented in the fund's portfolio are Austria, Belgium, Finland, France, Germany, Ireland, Italy, the Netherlands and Spain. |
Summary investment portfolio
July 31, 2009
Percent | ||||||||||||||
Value | of net | |||||||||||||
Common stocks - 57.24% | Shares | (000 | ) | assets | ||||||||||
Consumer staples - 7.23% | ||||||||||||||
Kraft Foods Inc., Class A | 26,500,821 | $ | 751,033 | 1.25 | % | |||||||||
Philip Morris International Inc. | 15,252,096 | 710,748 | 1.19 | |||||||||||
Coca-Cola Co. | 9,000,000 | 448,560 | .75 | |||||||||||
H.J. Heinz Co. | 10,111,700 | 388,896 | .65 | |||||||||||
Unilever NV, depository receipts | 7,880,000 | 215,305 | ||||||||||||
Unilever NV (New York registered) | 5,051,750 | 137,408 | .59 | |||||||||||
Hershey Co. | 6,904,100 | 275,819 | .46 | |||||||||||
Diageo PLC | 15,650,000 | 245,136 | .41 | |||||||||||
Other securities | 1,161,514 | 1.93 | ||||||||||||
4,334,419 | 7.23 | |||||||||||||
Industrials - 7.21% | ||||||||||||||
Waste Management, Inc. (1) | 26,835,500 | 754,346 | 1.26 | |||||||||||
United Technologies Corp. | 11,560,000 | 629,673 | 1.05 | |||||||||||
Schneider Electric SA | 5,311,115 | 482,508 | .80 | |||||||||||
Emerson Electric Co. | 11,245,000 | 409,093 | .68 | |||||||||||
Other securities | 2,047,768 | 3.42 | ||||||||||||
4,323,388 | 7.21 | |||||||||||||
Telecommunication services - 7.07% | ||||||||||||||
Verizon Communications Inc. | 42,935,600 | 1,376,945 | 2.30 | |||||||||||
AT&T Inc. | 45,359,621 | 1,189,783 | 1.99 | |||||||||||
Koninklijke KPN NV | 45,739,757 | 687,459 | 1.15 | |||||||||||
Telefónica, SA | 24,752,800 | 615,815 | 1.03 | |||||||||||
Other securities | 366,039 | .60 | ||||||||||||
4,236,041 | 7.07 | |||||||||||||
Utilities - 6.57% | ||||||||||||||
GDF Suez | 22,188,284 | 847,707 | 1.41 | |||||||||||
Entergy Corp. | 4,942,600 | 397,039 | .66 | |||||||||||
Duke Energy Corp. | 23,431,172 | 362,714 | .61 | |||||||||||
FirstEnergy Corp. | 8,096,500 | 333,576 | .55 | |||||||||||
Exelon Corp. | 5,300,000 | 269,558 | .45 | |||||||||||
RWE AG | 3,075,663 | 259,737 | .43 | |||||||||||
E.ON AG | 6,460,000 | 244,549 | .41 | |||||||||||
Other securities | 1,224,969 | 2.05 | ||||||||||||
3,939,849 | 6.57 | |||||||||||||
Health care - 5.33% | ||||||||||||||
Merck & Co., Inc. | 34,875,000 | 1,046,599 | 1.75 | |||||||||||
Bristol-Myers Squibb Co. | 33,025,500 | 717,974 | 1.20 | |||||||||||
Eli Lilly and Co. | 12,890,000 | 449,732 | .75 | |||||||||||
Pfizer Inc | 24,050,000 | 383,117 | .64 | |||||||||||
Other securities | 597,736 | .99 | ||||||||||||
3,195,158 | 5.33 | |||||||||||||
Energy - 4.94% | ||||||||||||||
Royal Dutch Shell PLC, Class B (ADR) | 8,100,000 | 425,493 | ||||||||||||
Royal Dutch Shell PLC, Class A (ADR) | 5,000,000 | 263,200 | ||||||||||||
Royal Dutch Shell PLC, Class B | 3,797,147 | 98,537 | 1.31 | |||||||||||
Chevron Corp. | 10,265,000 | 713,109 | 1.19 | |||||||||||
TOTAL SA | 3,855,000 | 213,792 | ||||||||||||
TOTAL SA (ADR) | 3,640,000 | 202,566 | .70 | |||||||||||
Spectra Energy Corp | 18,311,414 | 336,198 | .56 | |||||||||||
Diamond Offshore Drilling, Inc. | 3,030,000 | 272,306 | .45 | |||||||||||
ConocoPhillips | 5,500,000 | 240,405 | .40 | |||||||||||
Other securities | 198,418 | .33 | ||||||||||||
2,964,024 | 4.94 | |||||||||||||
Financials - 4.77% | ||||||||||||||
Unibail-Rodamco SE, non-registered shares | 1,693,800 | 295,978 | .49 | |||||||||||
HSBC Holdings PLC (Hong Kong) | 14,326,382 | 142,534 | ||||||||||||
HSBC Holdings PLC (United Kingdom) | 10,000,000 | 101,154 | ||||||||||||
HSBC Holdings PLC (ADR) | 350,000 | 17,745 | .44 | |||||||||||
Other securities | 2,303,410 | 3.84 | ||||||||||||
2,860,821 | 4.77 | |||||||||||||
Consumer discretionary - 3.56% | ||||||||||||||
McDonald's Corp. | 11,916,400 | 656,117 | 1.10 | |||||||||||
Home Depot, Inc. | 20,150,000 | 522,691 | .87 | |||||||||||
Other securities | 953,684 | 1.59 | ||||||||||||
2,132,492 | 3.56 | |||||||||||||
Information technology - 3.33% | ||||||||||||||
Intel Corp. | 20,000,000 | 385,000 | .64 | |||||||||||
Microchip Technology Inc. (1) | 14,128,000 | 380,467 | .64 | |||||||||||
Automatic Data Processing, Inc. | 9,625,000 | 358,531 | .60 | |||||||||||
Microsoft Corp. | 12,095,000 | 284,474 | .48 | |||||||||||
Paychex, Inc. | 9,293,000 | 246,265 | .41 | |||||||||||
Other securities | 341,267 | .56 | ||||||||||||
1,996,004 | 3.33 | |||||||||||||
Materials - 2.94% | ||||||||||||||
E.I. du Pont de Nemours and Co. | 13,940,000 | 431,164 | .72 | |||||||||||
Weyerhaeuser Co. (1) | 10,728,000 | 375,909 | .63 | |||||||||||
Other securities | 957,643 | 1.59 | ||||||||||||
1,764,716 | 2.94 | |||||||||||||
Miscellaneous - 4.29% | ||||||||||||||
Other common stocks in initial period of acquisition | 2,569,145 | 4.29 | ||||||||||||
Total common stocks (cost: $35,976,713,000) | 34,316,057 | 57.24 | ||||||||||||
Percent | ||||||||||||||
Value | of net | |||||||||||||
Preferred stocks - 1.55% | Shares | (000 | ) | assets | ||||||||||
Financials - 1.54% | ||||||||||||||
Fannie Mae, Series O, 7.00% (2) (3) | 3,275,507 | 8,189 | ||||||||||||
Fannie Mae, Series S, 8.25% noncumulative | 1,511,450 | 2,966 | .02 | |||||||||||
Freddie Mac, Series W, 5.66% (4) | 1,912,800 | 2,032 | ||||||||||||
Freddie Mac, Series Z, 8.375% (4) | 1,100,000 | 1,444 | ||||||||||||
Freddie Mac, Series V, 5.57% (4) | 759,375 | 807 | .01 | |||||||||||
Other securities | 905,047 | 1.51 | ||||||||||||
920,485 | 1.54 | |||||||||||||
Miscellaneous - 0.01% | ||||||||||||||
Other preferred stocks in initial period of acquisition | 6,428 | .01 | ||||||||||||
Total preferred stocks (cost: $1,243,701,000) | 926,913 | 1.55 | ||||||||||||
Percent | ||||||||||||||
Value | of net | |||||||||||||
Warrants - 0.00% | (000 | ) | assets | |||||||||||
Other - 0.00% | ||||||||||||||
Other securities | 1 | .00 | ||||||||||||
Total warrants (cost: $779,000) | 1 | .00 | ||||||||||||
Percent | ||||||||||||||
Value | of net | |||||||||||||
Convertible securities - 2.25% | (000 | ) | assets | |||||||||||
Other - 1.80% | ||||||||||||||
Other securities | 1,077,453 | 1.80 | ||||||||||||
Miscellaneous - 0.45% | ||||||||||||||
Other convertible securities in initial period of acquisition | 271,079 | .45 | ||||||||||||
Total convertible securities (cost: $1,487,695,000) | 1,348,532 | 2.25 | ||||||||||||
Principal | Percent | |||||||||||||
amount | Value | of net | ||||||||||||
Bonds & notes - 34.61% | (000 | ) | (000 | ) | assets | |||||||||
Mortgage-backed obligations (5) - 6.29% | ||||||||||||||
Fannie Mae: | ||||||||||||||
6.00% 2037 | $ | 320,698 | 336,871 | |||||||||||
4.00%-11.838% 2010-2047 (3) | 1,471,906 | 1,545,057 | 3.14 | |||||||||||
Freddie Mac 4.50%-11.347% 2009-2039 (3) | 353,238 | 368,381 | .61 | |||||||||||
Other securities | 1,518,401 | 2.54 | ||||||||||||
3,768,710 | 6.29 | |||||||||||||
Bonds & notes of U.S. government & government agencies - 5.54% | ||||||||||||||
U.S. Treasury: | ||||||||||||||
4.625% 2011 | 407,750 | 439,701 | ||||||||||||
3.50% 2018 | 351,940 | 354,537 | ||||||||||||
0%-8.875% 2011-2039 (6) (7) | 1,916,642 | 2,059,001 | 4.76 | |||||||||||
Fannie Mae 4.625%-6.25% 2012-2029 | 201,000 | 217,609 | .36 | |||||||||||
Federal Home Loan Bank 1.75%-5.25% 2012-2014 | 87,900 | 90,150 | .15 | |||||||||||
Freddie Mac 6.625% 2009 | 39,355 | 39,650 | .07 | |||||||||||
Other securities | 120,713 | .20 | ||||||||||||
3,321,361 | 5.54 | |||||||||||||
Consumer discretionary - 4.26% | ||||||||||||||
Other securities | 2,557,067 | 4.26 | ||||||||||||
Financials - 4.20% | ||||||||||||||
Other securities | 2,515,564 | 4.20 | ||||||||||||
Telecommunication services - 2.63% | ||||||||||||||
Verizon Communications Inc. 3.75%-8.75% 2011-2037 (2) | 218,770 | 238,531 | ||||||||||||
Verizon Global Funding Corp. 4.90%-7.75% 2015-2030 | 10,265 | 11,718 | ||||||||||||
ALLTEL Corp. 7.00% 2012 | 17,686 | 19,628 | .45 | |||||||||||
AT&T Inc. 4.95%-6.70% 2013-2039 | 64,000 | 69,426 | ||||||||||||
SBC Communications Inc. 5.10%-6.25% 2011-2016 | 19,000 | 20,311 | ||||||||||||
AT&T Wireless Services, Inc. 8.125% 2012 | 16,935 | 19,236 | ||||||||||||
AT&T Corp. 7.30%-8.00% 2011-2031 (3) | 13,205 | 15,343 | .21 | |||||||||||
Koninklijke KPN NV 8.375% 2030 | 4,660 | 5,849 | .01 | |||||||||||
Other securities | 1,176,617 | 1.96 | ||||||||||||
1,576,659 | 2.63 | |||||||||||||
Industrials - 2.15% | ||||||||||||||
United Technologies Corp. 6.125% 2019 | 15,000 | 16,890 | .03 | |||||||||||
Other securities | 1,269,916 | 2.12 | ||||||||||||
1,286,806 | 2.15 | |||||||||||||
Health care - 1.93% | ||||||||||||||
Merck & Co., Inc. 5.00% 2019 | 6,000 | 6,242 | .01 | |||||||||||
Other securities | 1,151,591 | 1.92 | ||||||||||||
1,157,833 | 1.93 | |||||||||||||
Information technology - 1.69% | ||||||||||||||
Other securities | 1,015,956 | 1.69 | ||||||||||||
Consumer staples - 1.50% | ||||||||||||||
Kraft Foods Inc. 6.75%-6.875% 2014-2038 | 21,695 | 24,623 | .04 | |||||||||||
Other securities | 872,593 | 1.46 | ||||||||||||
897,216 | 1.50 | |||||||||||||
Energy - 1.39% | ||||||||||||||
Chevron Corp. 4.95% 2019 | 25,000 | 26,617 | .04 | |||||||||||
Shell International Finance B.V. 4.00% 2014 | 20,000 | 21,040 | .04 | |||||||||||
Other securities | 787,531 | 1.31 | ||||||||||||
835,188 | 1.39 | |||||||||||||
Utilities - 1.38% | ||||||||||||||
Other securities | 830,016 | 1.38 | ||||||||||||
Other - 1.63% | ||||||||||||||
Other securities | 978,102 | 1.63 | ||||||||||||
Miscellaneous - 0.02% | ||||||||||||||
Other bonds & notes in initial period of acquisition | 10,168 | .02 | ||||||||||||
Total bonds & notes (cost: $21,871,898,000) | 20,750,646 | 34.61 | ||||||||||||
Principal | Percent | |||||||||||||
amount | Value | of net | ||||||||||||
Short-term securities - 3.87% | (000 | ) | (000 | ) | assets | |||||||||
Federal Home Loan Bank 0.163%-0.85% due 8/3-10/27/2009 | 738,813 | 738,656 | 1.23 | |||||||||||
Fannie Mae 0.19%-0.45% due 8/17-11/17/2009 | 387,200 | 387,067 | .65 | |||||||||||
U.S. Treasury Bills 0.135%-0.40% due 8/6-10/8/2009 | 240,300 | 240,262 | .40 | |||||||||||
Freddie Mac 0.22%-0.51% due 8/10-10/13/2009 | 231,400 | 231,353 | .39 | |||||||||||
Merck & Co. Inc. 0.20% due 8/17/2009 | 17,200 | 17,198 | .03 | |||||||||||
Other securities | 707,115 | 1.17 | ||||||||||||
Total short-term securities (cost: $2,321,404,000) | 2,321,651 | 3.87 | ||||||||||||
Total investment securities (cost: $62,902,190,000) | 59,663,800 | 99.52 | ||||||||||||
Other assets less liabilities | 285,369 | .48 | ||||||||||||
Net assets | $ | 59,949,169 | 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. One of these securities (with a value of $33,687,000, which represented .06% of the net assets of the fund) may be subject to legal or contractual restrictions on resale. |
Investments in affiliates |
A company is considered to be an affiliate of the fund under the Investment Company Act of 1940 if the fund's holdings in that company represent 5% or more of the outstanding voting shares of that company. The fund's affiliated holdings listed below are either shown in the preceding summary investment portfolio or included in the value of "Other securities" under their respective industry sectors. Further details on these holdings and related transactions during the year ended July 31, 2009, appear below. |
Beginning shares or principal amount | Additions | Reductions | Ending shares or principal amount | Dividend or interest income | ) | Value of affiliates at 7/31/09 (000 | ) | |||||||||||||||||
Waste Management, Inc. | 19,150,500 | 7,685,000 | - | 26,835,500 | $ | 25,484 | $ | 754,346 | ||||||||||||||||
WMX Technologies, Inc. 7.10% 2026 | $ | 10,125,000 | - | - | $ | 10,125,000 | 719 | 10,752 | ||||||||||||||||
Waste Management, Inc. 7.375% 2019 | - | $ | 7,200,000 | - | $ | 7,200,000 | 228 | 8,193 | ||||||||||||||||
Waste Management, Inc. 5.00% 2014 | $ | 7,000,000 | - | - | $ | 7,000,000 | 352 | 6,961 | ||||||||||||||||
Waste Management, Inc. 6.50% 2008 | $ | 5,000,000 | - | $ | 5,000,000 | - | 6 | - | ||||||||||||||||
Microchip Technology Inc. | 14,128,000 | - | - | 14,128,000 | 19,143 | 380,467 | ||||||||||||||||||
Weyerhaeuser Co. | 10,728,000 | - | - | 10,728,000 | 12,337 | 375,909 | ||||||||||||||||||
Weyerhaeuser Co. 6.875% 2033 | $ | 2,500,000 | - | - | $ | 2,500,000 | 174 | 1,939 | ||||||||||||||||
Weyerhaeuser Co. 7.375% 2032 | $ | 3,500,000 | - | $ | 2,000,000 | $ | 1,500,000 | 257 | 1,287 | |||||||||||||||
MeadWestvaco Corp. | 11,500,696 | - | 900,000 | 10,600,696 | 10,374 | 206,608 | ||||||||||||||||||
Hospitality Properties Trust | 4,500,000 | 1,500,000 | - | 6,000,000 | 7,154 | 94,740 | ||||||||||||||||||
Hospitality Properties Trust 6.75% 2013 | $ | 18,365,000 | $ | 24,665,000 | $ | 14,115,000 | $ | 28,915,000 | 3,108 | 26,956 | ||||||||||||||
Hospitality Properties Trust 6.70% 2018 | $ | 16,175,000 | - | - | $ | 16,175,000 | 1,088 | 13,144 | ||||||||||||||||
Hospitality Properties Trust 6.30% 2016 | $ | 2,368,000 | $ | 3,687,000 | $ | 3,655,000 | $ | 2,400,000 | 260 | 1,950 | ||||||||||||||
Hospitality Properties Trust 5.125% 2015 | $ | 2,160,000 | $ | 3,710,000 | $ | 3,710,000 | $ | 2,160,000 | 276 | 1,747 | ||||||||||||||
Hospitality Properties Trust 5.625% 2017 | $ | 1,485,000 | $ | 3,530,000 | $ | 3,530,000 | $ | 1,485,000 | 142 | 1,148 | ||||||||||||||
Hospitality Properties Trust 6.85% 2012 | - | $ | 6,000,000 | $ | 6,000,000 | - | 379 | - | ||||||||||||||||
First Niagara Financial Group, Inc. | - | 9,730,000 | - | 9,730,000 | 2,513 | 127,949 | ||||||||||||||||||
Alexandria Real Estate Equities, Inc. | - | 2,450,000 | - | 2,450,000 | 2,272 | 93,369 | ||||||||||||||||||
Alexandria Real Estate Equities, Inc. 8.00% convertible notes 2029 (2) | - | $ | 463,000 | - | $ | 463,000 | 1 | 521 | ||||||||||||||||
De La Rue PLC | - | 8,876,271 | 2,506,553 | 6,369,718 | 35,352 | 88,551 | ||||||||||||||||||
De La Rue PLC, Class B | - | 6,982,526 | 6,982,526 | - | - | - | ||||||||||||||||||
Macquarie Korea Infrastructure Fund | 21,023,070 | 518,008 | - | 21,541,078 | 6,345 | 88,477 | ||||||||||||||||||
Applied Industrial Technologies, Inc. | - | 2,738,790 | - | 2,738,790 | 451 | 60,582 | ||||||||||||||||||
Georgia Gulf Corp. 10.00% convertible preferred (2) (4) (7) | - | 2,545,684 | 2,545,684 | - | 35,212 | |||||||||||||||||||
Georgia Gulf Corp., Term Loan B, 9.50% 2013 (3) (5) (8) | - | $ | 6,246,177 | - | $ | 6,246,177 | - | 5,758 | ||||||||||||||||
Georgia Gulf Corp., Term Loan, Revolver, 6.50% 2011 (3) (5) (8) (9) | - | $ | 4,250,000 | - | $ | 4,250,000 | - | 3,889 | ||||||||||||||||
Georgia Gulf Corp. (2) (4) (7) | - | 113,556 | - | 113,556 | - | 1,571 | ||||||||||||||||||
Clarent Hospital Corp. (4) (7) | 484,684 | - | - | 484,684 | - | 24 | ||||||||||||||||||
Arthur J. Gallagher & Co. (10) | 5,403,700 | 5,000,000 | 5,403,700 | 5,000,000 | 4,289 | - | ||||||||||||||||||
Goodman Fielder Ltd. (10) | 67,000,000 | - | 67,000,000 | - | 5,717 | - | ||||||||||||||||||
Hershey Co. (10) | 10,821,000 | - | 3,916,900 | 6,904,100 | 11,301 | - | ||||||||||||||||||
iStar Financial, Inc. 8.625% 2013 (10) | $ | 35,675,000 | $ | 2,542,000 | $ | 30,717,000 | $ | 7,500,000 | 2,844 | - | ||||||||||||||
iStar Financial, Inc., Series B, 5.125% 2011 (10) | $ | 15,000,000 | $ | 1,930,000 | $ | 16,930,000 | - | 752 | - | |||||||||||||||
iStar Financial, Inc. 5.375% 2010 (10) | $ | 14,010,000 | - | $ | 14,010,000 | - | 684 | - | ||||||||||||||||
iStar Financial, Inc. 5.50% 2012 (10) | $ | 3,700,000 | $ | 4,000,000 | $ | 7,700,000 | - | 593 | - | |||||||||||||||
iStar Financial, Inc. 2.536% 2010 (10) | $ | 3,248,000 | $ | 3,500,000 | $ | 6,748,000 | - | 578 | - | |||||||||||||||
iStar Financial, Inc. 6.00% 2010 (10) | $ | 6,950,000 | - | $ | 6,950,000 | - | 488 | - | ||||||||||||||||
iStar Financial, Inc., Series B, 1.66% 2009 (10) | - | $ | 2,420,000 | $ | 2,420,000 | - | 423 | - | ||||||||||||||||
iStar Financial, Inc. 6.50% 2013 (10) | $ | 5,133,000 | - | $ | 5,133,000 | - | 404 | - | ||||||||||||||||
iStar Financial, Inc. 5.875% 2016 (10) | - | $ | 7,165,000 | $ | 7,165,000 | - | 359 | - | ||||||||||||||||
iStar Financial, Inc. 5.65% 2011 (10) | $ | 3,418,000 | $ | 217,000 | $ | 3,635,000 | - | 301 | - | |||||||||||||||
iStar Financial, Inc. 5.15% 2012 (10) | - | $ | 3,400,000 | $ | 3,400,000 | - | 232 | - | ||||||||||||||||
iStar Financial, Inc. 6.05% 2015 (10) | $ | 4,152,000 | $ | 460,000 | $ | 4,612,000 | - | 205 | - | |||||||||||||||
iStar Financial, Inc., Series B, 5.70% 2014 (10) | $ | 2,918,000 | - | $ | 2,918,000 | - | 173 | - | ||||||||||||||||
iStar Financial, Inc., Series B, 5.95% 2013 (10) | $ | 808,000 | - | $ | 808,000 | - | 50 | - | ||||||||||||||||
iStar Financial, Inc., Series F, 7.80% cumulative redeemable (10) | 400,000 | - | 400,000 | - | 42 | - | ||||||||||||||||||
iStar Financial, Inc. 5.80% 2011 (10) | - | $ | 485,000 | $ | 485,000 | - | 40 | - | ||||||||||||||||
iStar Financial, Inc. (10) | 8,574,350 | - | 8,574,350 | - | - | - | ||||||||||||||||||
Lite-On Technology Corp. (10) | 107,917,127 | 8,789,585 | 116,706,712 | - | 8,242 | - | ||||||||||||||||||
Polaris Industries Inc. (10) | 1,707,000 | - | 1,707,000 | - | - | - | ||||||||||||||||||
$ | 166,132 | $ | 2,392,050 |
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) Represents an affiliated company as defined under the Investment Company Act of 1940. |
(2) Purchased in a transaction exempt from registration under the Securities Act of 1933. May be resold in the U.S. in transactions exempt from registration, normally to qualified institutional buyers. The total value of all such securities, including those in "Other securities," was $4,802,201,000, which represented 8.01% of the net assets of the fund. |
(3) Coupon rate may change periodically. |
(4) Security did not produce income during the last 12 months. |
(5) Principal payments may be made periodically. Therefore, the effective maturity date may be earlier than the stated maturity date. |
(6) Index-linked bond whose principal amount moves with a government retail price index. |
(7) Valued under fair value procedures adopted by authority of the board of directors. The total value of all such securities, including those in "Other securities," was $629,071,000, which represented 1.05% of the net assets of the fund. |
(8) Loan participations and assignments; may be subject to legal or contractual restrictions on resale. The total value of all such loans, including those in “Other securities,” was $802,748,000, which represented 1.34% of the net assets of the fund. |
(9) Unfunded loan commitment; the total value of all unfunded loan commitments was $1,711,000, which represented less than .01% of the net assets of the fund. |
(10) Unaffiliated issuer at 7/31/2009. |
Key to abbreviation |
ADR = American Depositary Receipts |
See Notes to Financial Statements |
Financial statements
Statement of assets and liabilities at July 31, 2009 | (dollars in thousands) | |||||||
Assets: | ||||||||
Investment securities, at value: | ||||||||
Unaffiliated issuers (cost: $59,782,537) | $ | 57,271,750 | ||||||
Affiliated issuers (cost: $3,119,653) | 2,392,050 | $ | 59,663,800 | |||||
Cash denominated in currencies other than U.S. dollars (cost: $2,915) | 2,915 | |||||||
Cash | 520 | |||||||
Receivables for: | ||||||||
Sales of investments | 271,484 | |||||||
Sales of fund's shares | 57,907 | |||||||
Dividends and interest | 447,652 | |||||||
Other | 1,163 | 778,206 | ||||||
60,445,441 | ||||||||
Liabilities: | ||||||||
Payables for: | ||||||||
Purchases of investments | 365,317 | |||||||
Repurchases of fund's shares | 83,694 | |||||||
Investment advisory services | 12,111 | |||||||
Services provided by affiliates | 32,462 | |||||||
Directors' deferred compensation | 2,414 | |||||||
Other | 274 | 496,272 | ||||||
Net assets at July 31, 2009 | $ | 59,949,169 | ||||||
Net assets consist of: | ||||||||
Capital paid in on shares of capital stock | $ | 74,080,736 | ||||||
Undistributed net investment income | 367,574 | |||||||
Accumulated net realized loss | (11,261,198 | ) | ||||||
Net unrealized depreciation | (3,237,943 | ) | ||||||
Net assets at July 31, 2009 | $ | 59,949,169 |
(dollars and shares in thousands, except per-share amounts) | ||||||||||||
Total authorized capital stock - 5,500,000 shares, $.001 par value (4,274,747 total shares outstanding) | ||||||||||||
Net assets | Shares outstanding | Net asset value per share* | ||||||||||
Class A | $ | 45,569,324 | 3,244,718 | $ | 14.04 | |||||||
Class B | 2,835,081 | 203,370 | 13.94 | |||||||||
Class C | 5,636,893 | 405,110 | 13.91 | |||||||||
Class F-1 | 1,801,398 | 128,463 | 14.02 | |||||||||
Class F-2 | 349,533 | 24,893 | 14.04 | |||||||||
Class 529-A | 607,527 | 43,312 | 14.03 | |||||||||
Class 529-B | 91,477 | 6,545 | 13.98 | |||||||||
Class 529-C | 240,956 | 17,228 | 13.99 | |||||||||
Class 529-E | 28,956 | 2,069 | 14.00 | |||||||||
Class 529-F-1 | 18,650 | 1,330 | 14.03 | |||||||||
Class R-1 | 74,146 | 5,301 | 13.99 | |||||||||
Class R-2 | 462,723 | 33,213 | 13.93 | |||||||||
Class R-3 | 936,265 | 66,851 | 14.01 | |||||||||
Class R-4 | 629,080 | 44,846 | 14.03 | |||||||||
Class R-5 | 394,640 | 28,101 | 14.04 | |||||||||
Class R-6 | 272,520 | 19,397 | 14.05 | |||||||||
(*) Maximum offering price and redemption price per share were equal to the net asset value per share for all share classes, except for Classes A and 529-A, for which the maximum offering prices per share were $14.90 and $14.89, respectively. | ||||||||||||
See Notes to Financial Statements |
Statement of operations for the year ended July 31, 2009 | (dollars in thousands) | |||||||
Investment income: | ||||||||
Income: | ||||||||
Dividends (net of non-U.S. taxes of $70,570; also includes $151,016 from affiliates) | $ | 1,860,177 | ||||||
Interest (includes $15,116 from affiliates) | 1,706,544 | $ | 3,566,721 | |||||
Fees and expenses*: | ||||||||
Investment advisory services | 161,670 | |||||||
Distribution services | 207,733 | |||||||
Transfer agent services | 50,610 | |||||||
Administrative services | 18,313 | |||||||
Reports to shareholders | 5,678 | |||||||
Registration statement and prospectus | 2,221 | |||||||
Directors' compensation | (3 | ) | ||||||
Auditing and legal | 157 | |||||||
Custodian | 2,151 | |||||||
Other | 2,551 | |||||||
Total fees and expenses before waiver | 451,081 | |||||||
Less investment advisory services waiver | 7,501 | |||||||
Total fees and expenses after waiver | 443,580 | |||||||
Net investment income | 3,123,141 | |||||||
Net realized loss and unrealized depreciation on investments and currency: | ||||||||
Net realized loss on: | ||||||||
Investments (includes $494,644 net loss from affiliates) | (11,233,999 | ) | ||||||
Currency transactions | (13,295 | ) | (11,247,294 | ) | ||||
Net unrealized depreciation on: | ||||||||
Investments | (2,332,205 | ) | ||||||
Currency translations | (321 | ) | (2,332,526 | ) | ||||
Net realized loss and unrealized depreciation on investments and currency | (13,579,820 | ) | ||||||
Net decrease in net assets resulting from operations | $ | (10,456,679 | ) | |||||
(*) 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 | ||||||||
2009 | 2008 | |||||||
Operations: | ||||||||
Net investment income | $ | 3,123,141 | $ | 3,704,181 | ||||
Net realized (loss) gain on investments and currency transactions | (11,247,294 | ) | 1,080,635 | |||||
Net unrealized depreciation on investments and currency translations | (2,332,526 | ) | (13,173,955 | ) | ||||
Net decrease in net assets resulting from operations | (10,456,679 | ) | (8,389,139 | ) | ||||
Dividends and distributions paid or accrued to shareholders: | ||||||||
Dividends from net investment income | (2,991,184 | ) | (3,903,711 | ) | ||||
Distributions from net realized gain on investments | - | (3,639,343 | ) | |||||
Total dividends and distributions paid or accrued to shareholders | (2,991,184 | ) | (7,543,054 | ) | ||||
Net capital share transactions | (3,089,104 | ) | 6,122,868 | |||||
Total decrease in net assets | (16,536,967 | ) | (9,809,325 | ) | ||||
Net assets: | ||||||||
Beginning of year | 76,486,136 | 86,295,461 | ||||||
End of year (including undistributed | ||||||||
net investment income: $367,574 and $245,333, respectively) | $ | 59,949,169 | $ | 76,486,136 | ||||
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 has 16 share classes consisting of five retail share classes, five 529 college savings plan share classes and six retirement plan share classes. The 529 college savings plan share classes (529-A, 529-B, 529-C, 529-E and 529-F-1) can be used to save for college education. The six retirement plan share classes (R-1, R-2, R-3, R-4, R-5 and R-6) are generally offered only through eligible employer-sponsored retirement plans. The fund’s share classes are described below:
Share class | Initial sales charge | Contingent deferred sales charge upon redemption | Conversion feature |
Classes A and 529-A | Up to 5.75% | None (except 1% for certain redemptions within one year of purchase without an initial sales charge) | None |
Classes B and 529-B* | None | Declines from 5% to 0% for redemptions within six years of purchase | Classes B and 529-B convert to Classes A and 529-A, respectively, after eight years |
Class C | None | 1% for redemptions within one year of purchase | Class C converts to Class F-1 after 10 years |
Class 529-C | None | 1% for redemptions within one year of purchase | None |
Class 529-E | None | None | None |
Classes F-1, F-2 and 529-F-1 | None | None | None |
Classes R-1, R-2, R-3, R-4, R-5 and R-6 | None | None | None |
*Effective April 21, 2009, Class B and 529-B shares of the fund are no longer available for purchase.
On May 1, 2009, the fund made an additional retirement plan share class (Class R-6) available for sale pursuant to an amendment to its registration statement filed with the Securities and Exchange Commission (“SEC”). Refer to the fund’s retirement plan prospectus for more details.
Holders of all share classes have equal pro rata rights to assets, dividends and liquidation proceeds. Each share class has identical voting rights, except for the exclusive right to vote on matters affecting only its class. Share classes have different fees and expenses ("class-specific fees and expenses"), primarily due to different arrangements for distribution, administrative and shareholder services. Differences in class-specific fees and expenses will result in differences in net investment income and, therefore, the payment of different per-share dividends by each class.
Significant accounting policies – The financial statements have been prepared to comply with accounting principles generally accepted in the United States of America. These principles require management to make estimates and assumptions that affect reported amounts and disclosures. Actual results could differ from those estimates. The following is a summary of the significant accounting policies followed by the fund:
Net asset value – The fund generally determines its net asset value as of approximately 4:00 p.m. New York time each day the New York Stock Exchange is open.
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 one or more independent pricing vendors when such prices are available. However, where the investment adviser deems it appropriate to do so, such securities will be valued in good faith at the mean quoted bid and asked prices that are reasonably and timely available (or bid prices, if asked prices are not available) or at prices for securities of comparable maturity, quality and type. Vendors base bond prices on, among other things, valuation matrices that incorporate dealer-supplied valuations, proprietary pricing models and evaluations of the yield curve as of approximately 3:00 p.m. New York time. 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.
Securities and other assets for which representative market quotations are not readily available or are considered unreliable by the investment adviser are fair valued as determined in good faith under guidelines adopted by authority of the fund's board of directors. Market quotations may be considered unreliable if events occur that materially affect the value of securities (particularly securities outside the U.S.) 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. Fair valuations and valuations of investments that are not actively trading involve judgment and may differ materially from valuations that would have been used had greater market activity occurred.
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) and 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 – Prior to March 21, 2009, dividends paid to shareholders were declared daily from net investment income and paid to shareholders quarterly. Effective March 21, 2009, the fund no longer declared daily dividends and began to declare and distribute dividends on a periodic basis, usually in March, June, September and December. Dividends and distributions paid to shareholders are recorded on the ex-dividend date.
Currency translation – Assets and liabilities, including investment securities, denominated in currencies other than U.S. dollars are translated into U.S. dollars at the exchange rates in effect on the valuation date. Purchases and sales of investment securities and income and expenses are translated into U.S. dollars at the exchange rates on the dates of such transactions. On the accompanying financial statements, the effects of changes in exchange rates on investment securities are included with the net realized gain or loss and net unrealized appreciation or depreciation on investments. The realized gain or loss and unrealized appreciation or depreciation resulting from all other transactions denominated in currencies other than U.S. dollars are disclosed separately.
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.
2. Risk factors
Investing in the fund may involve certain risks including, but not limited to, those described below.
The prices of, and the income generated by, the common stocks and other securities held by the fund may decline in response to certain events taking place around the world, including those directly involving the companies whose securities are owned by the fund; conditions affecting the general economy; overall market changes; local, regional or global political, social or economic instability; and currency, interest rate and commodity price fluctuations.
The values of, and the income generated by, most debt securities held by the fund may be affected by changing interest rates and by changes in the effective maturities and credit ratings of these securities. For example, the values of debt securities in the fund’s portfolio generally will decline when interest rates rise and increase when interest rates fall. In addition, falling interest rates may cause an issuer to redeem, “call” or refinance a security before its stated maturity, which may result in the fund having to reinvest the proceeds in lower yielding securities. Debt securities are also subject to credit risk, which is the possibility that the credit strength of an issuer will weaken and/or an issuer of a debt security will fail to make timely payments of principal or interest and the security will go into default. Lower quality or longer maturity debt securities generally have higher rates of interest and may be subject to greater price fluctuations than higher quality or shorter maturity debt securities. The fund’s investment adviser attempts to reduce these risks through diversification of the portfolio and ongoing credit analysis, as well as by monitoring economic and legislative developments, but there can be no assurance that it will be successful at doing so.
Investments in securities issued by entities based outside the United States may be subject to the risks described on the previous page to a greater extent and may also be affected by currency controls; different accounting, auditing, financial reporting, and legal standards and practices; expropriation; changes in tax policy; greater market volatility; differing securities market structures; higher transaction costs; and various administrative difficulties, such as delays in clearing and settling portfolio transactions or in receiving payment of dividends. These risks may be heightened in connection with investments in developing countries. Investments in securities issued by entities domiciled in the United States may also be subject to many of these risks.
3. Taxation and distributions
Federal income taxation – The fund complies with the requirements under Subchapter M of the Internal Revenue Code applicable to mutual funds and intends to distribute substantially all of its net taxable income and net capital gains each year. The fund is not subject to income taxes to the extent such distributions are made. Therefore, no federal income tax provision is required.
As of and during the period ended July 31, 2009, the fund did not have a liability for any unrecognized tax benefits. The fund recognizes interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the statement of operations. During the period, the fund did not incur any interest or penalties.
The fund is not subject to examination by U.S. federal tax authorities for tax years before 2005 and by state tax authorities for tax years before 2004.
Non-U.S. taxation – Dividend and interest income is recorded net of non-U.S. taxes paid.
Distributions – Distributions paid to shareholders are based on net investment income and net realized gains determined on a tax basis, which may differ from net investment income and net realized gains for financial reporting purposes. These differences are due primarily to differing treatment for items such as currency gains and losses; short-term capital gains and losses; capital losses related to sales of certain securities within 30 days of purchase; paydowns on fixed-income securities; net capital losses; and income on certain investments. The fiscal year in which amounts are distributed may differ from the year in which the net investment income and net realized gains are recorded by the fund for financial reporting purposes.
During the year ended July 31, 2009, the fund reclassified $9,064,000 from undistributed net investment income to accumulated net realized loss, and $652,000 from undistributed net investment income to capital paid in on shares of capital stock to align financial reporting with tax reporting.
As of July 31, 2009, the tax basis components of distributable earnings, unrealized appreciation (depreciation) and cost of investment securities were as follows:
(dollars in thousands) | ||||
Undistributed ordinary income | $ | 384,422 | ||
Post-October currency loss deferrals (realized during the period November 1, 2008, through July 31, 2009)* | (5,010 | ) | ||
Capital loss carryforward expiring in 2017† | (1,328,267 | ) | ||
Post-October capital loss deferrals (realized during the period November 1, 2008, through July 31, 2009)* | (9,914,222 | ) | ||
Gross unrealized appreciation on investment securities | 3,716,352 | |||
Gross unrealized depreciation on investment securities | (6,976,639 | ) | ||
Net unrealized depreciation on investment securities | (3,260,287 | ) | ||
Cost of investment securities | 62,924,087 | |||
*These deferrals are considered incurred in the subsequent year. | ||||
†The capital loss carryforward will be used to offset any capital gains realized by the fund in future years through the expiration date. The fund will not make distributions from capital gains while a capital loss carryforward remains. |
The tax character of distributions paid or accrued to shareholders was as follows (dollars in thousands):
Year ended July 31, 2009 | Year ended July 31, 2008 | |||||||||||||||||||||||
Share class | Ordinary income | Long-term capital gains | Total distributions paid | Ordinary income | Long-term capital gains | Total distributions paid or accrued | ||||||||||||||||||
Class A | $ | 2,325,379 | $ | - | $ | 2,325,379 | $ | 3,047,396 | $ | 2,754,859 | $ | 5,802,255 | ||||||||||||
Class B | 136,968 | - | 136,968 | 192,964 | 209,621 | 402,585 | ||||||||||||||||||
Class C | 256,919 | - | 256,919 | 345,974 | 379,554 | 725,528 | ||||||||||||||||||
Class F-1 | 100,766 | - | 100,766 | 143,928 | 131,893 | 275,821 | ||||||||||||||||||
Class F-2* | 7,086 | - | 7,086 | - | - | - | ||||||||||||||||||
Class 529-A | 28,341 | - | 28,341 | 32,028 | 28,944 | 60,972 | ||||||||||||||||||
Class 529-B | 3,910 | - | 3,910 | 4,561 | 5,017 | 9,578 | ||||||||||||||||||
Class 529-C | 9,875 | - | 9,875 | 11,330 | 12,364 | 23,694 | ||||||||||||||||||
Class 529-E | 1,290 | - | 1,290 | 1,467 | 1,412 | 2,879 | ||||||||||||||||||
Class 529-F-1 | 884 | - | 884 | 1,060 | 924 | 1,984 | ||||||||||||||||||
Class R-1 | 3,112 | - | 3,112 | 3,369 | 3,565 | 6,934 | ||||||||||||||||||
Class R-2 | 18,615 | - | 18,615 | 21,554 | 23,660 | 45,214 | ||||||||||||||||||
Class R-3 | 42,400 | - | 42,400 | 47,747 | 46,144 | 93,891 | ||||||||||||||||||
Class R-4 | 27,738 | - | 27,738 | 26,228 | 22,570 | 48,798 | ||||||||||||||||||
Class R-5 | 24,864 | - | 24,864 | 24,105 | 18,816 | 42,921 | ||||||||||||||||||
Class R-6† | 3,037 | - | 3,037 | - | - | - | ||||||||||||||||||
Total | $ | 2,991,184 | $ | - | $ | 2,991,184 | $ | 3,903,711 | $ | 3,639,343 | $ | 7,543,054 | ||||||||||||
*Class F-2 was offered beginning August 1, 2008. | ||||||||||||||||||||||||
†Class R-6 was offered beginning May 1, 2009. |
4. Fees and transactions with related parties
Capital Research and Management Company ("CRMC"), the fund’s investment adviser, is the parent company of American Funds Service Company® ("AFS"), the fund’s transfer agent, and American Funds Distributors,® Inc. ("AFD"), the principal underwriter of the fund’s shares.
Investment advisory services - The Investment Advisory and Service Agreement with CRMC provides for monthly fees accrued daily. These fees are based on a declining series of annual rates beginning with 0.250% on the first $500 million of daily net assets and decreasing to 0.123% on such assets in excess of $89 billion. The agreement also provides for monthly fees, accrued daily, of 2.25% of the fund’s monthly gross income. CRMC waived a portion of its investment advisory services fee commencing on September 1, 2004, and terminating on December 31, 2008. During the year ended July 31, 2009, total investment advisory services fees waived by CRMC were $7,501,000. As a result, the fee shown on the accompanying financial statements of $161,670,000, which was equivalent to an annualized rate of 0.278%, was reduced to $154,169,000, or 0.265% of average daily net assets.
Class-specific fees and expenses – Expenses that are specific to individual share classes are accrued directly to the respective share class. The principal class-specific fees and expenses are described below:
Distribution services – The fund has adopted plans of distribution for all share classes, except Classes F-2, R-5 and R-6. Under the plans, the board of directors approves certain categories of expenses that are used to finance activities primarily intended to sell fund shares and service existing accounts. The plans provide for payments, based on an annualized percentage of average daily net assets, ranging from 0.25% to 1.00% as noted on the following page. In some cases, the board of directors has limited the amounts that may be paid to less than the maximum allowed by the plans. All share classes with a plan may use up to 0.25% of average daily net assets to pay service fees, or to compensate AFD for paying service fees, to firms that have entered into agreements with AFD to provide certain shareholder services. The remaining amounts available to be paid under each plan are paid to dealers to compensate them for their sales activities.
For Classes A and 529-A, the board of directors has also approved the reimbursement of dealer and wholesaler commissions paid by AFD for certain shares sold without a sales charge. These classes reimburse AFD for amounts billed within the prior 15 months but only to the extent that the overall annual expense limit of 0.25% is not exceeded. As of July 31, 2009, there were no unreimbursed expenses subject to reimbursement for Classes A or 529-A.
Share class | Currently approved limits | Plan limits |
Class A | 0.25% | 0.25% |
Class 529-A | 0.25 | 0.50 |
Classes B and 529-B | 1.00 | 1.00 |
Classes C, 529-C and R-1 | 1.00 | 1.00 |
Class R-2 | 0.75 | 1.00 |
Classes 529-E and R-3 | 0.50 | 0.75 |
Classes F-1, 529-F-1 and R-4 | 0.25 | 0.50 |
Transfer agent services – The fund has a transfer agent agreement with AFS for Classes A and B. Under this agreement, these share classes compensate AFS for transfer agent services including shareholder recordkeeping, communications and transaction processing. AFS is also compensated for certain transfer agent services provided to all other share classes from the administrative services fees paid to CRMC described below.
Administrative services – The fund has an administrative services agreement with CRMC to provide transfer agent and other related shareholder services for all share classes other than Classes A and B. Each relevant share class pays CRMC annual fees up to 0.15% (0.10% for Class R-5 and 0.05% for Class R-6) based on its respective average daily net assets. Each relevant share class also pays AFS additional amounts for certain transfer agent services. CRMC and AFS may use these fees to compensate third parties for performing these services. Each 529 share class is subject to an additional administrative services fee payable to the Commonwealth of Virginia for the maintenance of the 529 college savings plan. The quarterly fee is based on a declining series of annual rates beginning with 0.10% on the first $30 billion of the net assets invested in Class 529 shares of the American Funds and decreasing to 0.06% on such assets between $120 billion and $150 billion. The fee for any given calendar quarter is accrued and calculated on the basis of the average net assets of Class 529 shares of the American Funds for the last month of the prior calendar quarter. Although these amounts are included with administrative services fees on the accompanying financial statements, the Commonwealth of Virginia is not considered a related party.
Expenses under the agreements described above for the year ended July 31, 2009, 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 | $103,168 | $47,413 | Not applicable | Not applicable | Not applicable |
Class B | 29,790 | 3,197 | Not applicable | Not applicable | Not applicable |
Class C | 56,271 | Included in administrative services | $7,717 | $950 | Not applicable |
Class F-1 | 4,738 | 2,085 | 211 | Not applicable | |
Class F-2 | Not applicable | 149 | 8 | Not applicable | |
Class 529-A | 1,093 | 464 | 67 | $546 | |
Class 529-B | 871 | 74 | 25 | 87 | |
Class 529-C | 2,200 | 187 | 52 | 221 | |
Class 529-E | 131 | 22 | 3 | 26 | |
Class 529-F-1 | - | 14 | 2 | 17 | |
Class R-1 | 689 | 82 | 28 | Not applicable | |
Class R-2 | 3,149 | 628 | 1,517 | Not applicable | |
Class R-3 | 4,308 | 1,283 | 519 | Not applicable | |
Class R-4 | 1,325 | 799 | 35 | Not applicable | |
Class R-5 | Not applicable | 453 | 13 | Not applicable | |
Class R-6* | Not applicable | 29 | -† | Not applicable | |
Total | $207,733 | $50,610 | $13,986 | $3,430 | $897 |
(*)Class R-6 was offered beginning May 1, 2009.
(†)Amount less than one thousand.
Directors’ deferred compensation – Since the adoption of the deferred compensation plan in 1993, directors who are unaffiliated with CRMC may elect to defer the cash payment of part or all of their compensation. These deferred amounts, which remain as liabilities of the fund, are treated as if invested in shares of the fund or other American Funds. These amounts represent general, unsecured liabilities of the fund and vary according to the total returns of the selected funds. Directors’ compensation of $(3,000), shown on the accompanying financial statements, includes $505,000 in current fees (either paid in cash or deferred) and a net decrease of $508,000 in the value of the deferred amounts.
Affiliated officers and directors – Officers and certain directors of the fund are or may be considered to be affiliated with CRMC, AFS and AFD. No affiliated officers or directors received any compensation directly from the fund.
5. Disclosure of fair value measurements
The fund classifies its assets and liabilities into three levels based on the method used to value the assets or liabilities. Level 1 values are based on quoted prices in active markets for identical securities. Level 2 values are based on significant observable market inputs, such as quoted prices for similar securities and quoted prices in inactive markets. Level 3 values are based on significant unobservable inputs that reflect the fund’s determination of assumptions that market participants might reasonably use in valuing the securities. The valuation levels are not necessarily an indication of the risk or liquidity associated with the underlying investment. For example, U.S. government securities are generally high-quality and liquid; however, they are reflected as Level 2 because the inputs used to determine fair value may not always be quoted prices in an active market. The following table presents the fund’s valuation levels as of July 31, 2009 (dollars in thousands):
Investment securities: | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Common stocks: | ||||||||||||||||
Consumer staples | $ | 4,334,419 | $ | - | $ | - | $ | 4,334,419 | ||||||||
Industrials | 4,323,388 | - | - | 4,323,388 | ||||||||||||
Telecommunication services | 4,236,041 | - | - | 4,236,041 | ||||||||||||
Utilities | 3,939,849 | - | - | 3,939,849 | ||||||||||||
Health care | 3,195,134 | - | 24 | 3,195,158 | ||||||||||||
Energy | 2,964,024 | - | - | 2,964,024 | ||||||||||||
Financials | 2,860,821 | - | - | 2,860,821 | ||||||||||||
Consumer discretionary | 2,132,489 | - | 3 | 2,132,492 | ||||||||||||
Information technology | 1,996,004 | - | - | 1,996,004 | ||||||||||||
Materials | 1,763,145 | - | 1,571 | 1,764,716 | ||||||||||||
Miscellaneous | 2,569,145 | - | - | 2,569,145 | ||||||||||||
Preferred stocks | 103,388 | 823,525 | - | 926,913 | ||||||||||||
Warrants | - | 1 | - | 1 | ||||||||||||
Convertible securities | 633,736 | 679,584 | 35,212 | 1,348,532 | ||||||||||||
Bonds & notes: | ||||||||||||||||
Corporate bonds & notes | - | 12,666,478 | 5,827 | 12,672,305 | ||||||||||||
Mortgage-backed obligations | - | 3,704,540 | 64,170 | 3,768,710 | ||||||||||||
Bonds & notes of U.S. government & government agencies | - | 3,321,361 | - | 3,321,361 | ||||||||||||
Other | - | 974,954 | 3,148 | 978,102 | ||||||||||||
Miscellaneous | - | 10,168 | - | 10,168 | ||||||||||||
Short-term securities | - | 2,321,651 | - | 2,321,651 | ||||||||||||
Total | $ | 35,051,583 | $ | 24,502,262 | $ | 109,955 | $ | 59,663,800 |
The following table reconciles the valuation of the fund's Level 3 investment securities and related transactions for the year ended July 31, 2009 (dollars in thousands): | ||||||||||||||||||||||||
Beginning value at 8/1/2009 | Net purchases and sales | Net realized loss (*) | Net unrealized appreciation (*) | Net transfers into Level 3 | Ending value at 7/31/2009 | |||||||||||||||||||
Investment securities | $ | 13,973 | $ | (6,810 | ) | $ | (12,495 | ) | $ | 24,283 | $ | 91,004 | $ | 109,955 | ||||||||||
Net unrealized depreciation during the period on Level 3 investment securities held at July 31, 2009 (dollars in thousands) (*): | $ | (9,010 | ) | |||||||||||||||||||||
(*) Net realized loss and unrealized appreciation (depreciation) are included in the related amounts on investments in the statement of operations. |
6. Capital share transactions
Capital share transactions in the fund were as follows (dollars and shares in thousands):
Share class | Sales(1) | Reinvestments of dividends and distributions | Repurchases(1) | Net (decrease) increase | ||||||||||||||||||||||||||||
Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | |||||||||||||||||||||||||
Year ended July 31, 2009 | ||||||||||||||||||||||||||||||||
Class A | $ | 7,205,248 | 549,358 | $ | 2,373,774 | 178,565 | $ | (11,841,997 | ) | (900,906 | ) | $ | (2,262,975 | ) | (172,983 | ) | ||||||||||||||||
Class B | 225,316 | 17,290 | 138,270 | 10,469 | (920,167 | ) | (70,319 | ) | (556,581 | ) | (42,560 | ) | ||||||||||||||||||||
Class C | 878,445 | 67,357 | 254,471 | 19,314 | (1,801,420 | ) | (137,322 | ) | (668,504 | ) | (50,651 | ) | ||||||||||||||||||||
Class F-1 | 590,677 | 45,076 | 93,918 | 7,046 | (1,108,912 | ) | (83,595 | ) | (424,317 | ) | (31,473 | ) | ||||||||||||||||||||
Class F-2(2) | 383,801 | 28,528 | 3,803 | 299 | (49,989 | ) | (3,934 | ) | 337,615 | 24,893 | ||||||||||||||||||||||
Class 529-A | 109,544 | 8,299 | 31,358 | 2,373 | (84,367 | ) | (6,378 | ) | 56,535 | 4,294 | ||||||||||||||||||||||
Class 529-B | 8,754 | 662 | 4,324 | 329 | (12,210 | ) | (936 | ) | 868 | 55 | ||||||||||||||||||||||
Class 529-C | 47,175 | 3,597 | 10,888 | 826 | (46,838 | ) | (3,523 | ) | 11,225 | 900 | ||||||||||||||||||||||
Class 529-E | 5,281 | 403 | 1,428 | 108 | (4,485 | ) | (340 | ) | 2,224 | 171 | ||||||||||||||||||||||
Class 529-F-1 | 4,831 | 364 | 975 | 74 | (4,473 | ) | (338 | ) | 1,333 | 100 | ||||||||||||||||||||||
Class R-1 | 20,173 | 1,525 | 3,405 | 259 | (20,485 | ) | (1,541 | ) | 3,093 | 243 | ||||||||||||||||||||||
Class R-2 | 144,128 | 11,008 | 20,373 | 1,553 | (130,743 | ) | (9,974 | ) | 33,758 | 2,587 | ||||||||||||||||||||||
Class R-3 | 261,898 | 19,795 | 47,120 | 3,570 | (251,304 | ) | (19,136 | ) | 57,714 | 4,229 | ||||||||||||||||||||||
Class R-4 | 257,894 | 19,483 | 30,577 | 2,325 | (158,713 | ) | (12,150 | ) | 129,758 | 9,658 | ||||||||||||||||||||||
Class R-5 | 267,248 | 20,467 | 26,549 | 2,013 | (349,808 | ) | (27,338 | ) | (56,011 | ) | (4,858 | ) | ||||||||||||||||||||
Class R-6(3) | 242,772 | 19,212 | 3,035 | 233 | (646 | ) | (48 | ) | 245,161 | 19,397 | ||||||||||||||||||||||
Total net increase | ||||||||||||||||||||||||||||||||
(decrease) | $ | 10,653,185 | 812,424 | $ | 3,044,268 | 229,356 | $ | (16,786,557 | ) | (1,277,778 | ) | $ | (3,089,104 | ) | (235,998 | ) | ||||||||||||||||
Year ended July 31, 2008 | ||||||||||||||||||||||||||||||||
Class A | $ | 8,146,230 | 423,511 | $ | 5,292,485 | 276,012 | $ | (9,068,488 | ) | (480,352 | ) | $ | 4,370,227 | 219,171 | ||||||||||||||||||
Class B | 335,424 | 17,532 | 359,218 | 18,809 | (743,435 | ) | (39,833 | ) | (48,793 | ) | (3,492 | ) | ||||||||||||||||||||
Class C | 1,289,999 | 67,111 | 638,186 | 33,450 | (1,521,685 | ) | (81,759 | ) | 406,500 | 18,802 | ||||||||||||||||||||||
Class F-1 | 879,704 | 45,563 | 226,732 | 11,841 | (893,923 | ) | (47,364 | ) | 212,513 | 10,040 | ||||||||||||||||||||||
Class 529-A | 150,265 | 7,824 | 60,016 | 3,138 | (72,570 | ) | (3,856 | ) | 137,711 | 7,106 | ||||||||||||||||||||||
Class 529-B | 15,162 | 792 | 9,456 | 495 | (9,895 | ) | (525 | ) | 14,723 | 762 | ||||||||||||||||||||||
Class 529-C | 67,666 | 3,539 | 23,327 | 1,220 | (43,922 | ) | (2,335 | ) | 47,071 | 2,424 | ||||||||||||||||||||||
Class 529-E | 7,434 | 387 | 2,834 | 149 | (4,142 | ) | (218 | ) | 6,126 | 318 | ||||||||||||||||||||||
Class 529-F-1 | 7,451 | 385 | 1,936 | 101 | (4,146 | ) | (222 | ) | 5,241 | 264 | ||||||||||||||||||||||
Class R-1 | 43,273 | 2,254 | 6,695 | 351 | (23,119 | ) | (1,220 | ) | 26,849 | 1,385 | ||||||||||||||||||||||
Class R-2 | 202,674 | 10,639 | 44,310 | 2,325 | (164,675 | ) | (8,734 | ) | 82,309 | 4,230 | ||||||||||||||||||||||
Class R-3 | 511,403 | 26,501 | 91,683 | 4,801 | (307,548 | ) | (16,371 | ) | 295,538 | 14,931 | ||||||||||||||||||||||
Class R-4 | 391,084 | 20,374 | 47,284 | 2,481 | (180,160 | ) | (9,619 | ) | 258,208 | 13,236 | ||||||||||||||||||||||
Class R-5 | 378,573 | 19,654 | 38,894 | 2,045 | (108,822 | ) | (5,759 | ) | 308,645 | 15,940 | ||||||||||||||||||||||
Total net increase | ||||||||||||||||||||||||||||||||
(decrease) | $ | 12,426,342 | 646,066 | $ | 6,843,056 | 357,218 | $ | (13,146,530 | ) | (698,167 | ) | $ | 6,122,868 | 305,117 | ||||||||||||||||||
(1)Includes exchanges between share classes of the fund. | ||||||||||||||||||||||||||||||||
(2)Class F-2 was offered beginning August 1, 2008. | ||||||||||||||||||||||||||||||||
(3)Class R-6 was offered beginning May 1, 2009. |
7. Investment transactions
The fund made purchases and sales of investment securities, excluding short-term securities and U.S. government obligations, if any, of $24,924,194,000 and $25,289,406,000, respectively, during the year ended July 31, 2009.
8. Subsequent events
As of September 4, 2009, the date the financial statements were available to be issued, no subsequent events or transactions had occurred that would have materially impacted the financial statements as presented.
Financial highlights(1)
(Loss) income from investment operations(2) | Dividends and distributions | |||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | Net investment income | Net (losses) gains on securities (both realized and unrealized) | Total from investment operations | Dividends (from net investment income) | 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 7/31/2009 | $ | 16.98 | $ | .74 | $ | (2.98 | ) | $ | (2.24 | ) | $ | (.70 | ) | $ | - | $ | (.70 | ) | $ | 14.04 | (12.72 | )% | $ | 45,569 | .64 | % | .63 | % | 5.50 | % | ||||||||||||||||||||||
Year ended 7/31/2008 | 20.54 | .87 | (2.67 | ) | (1.80 | ) | (.91 | ) | (.85 | ) | (1.76 | ) | 16.98 | (9.46 | ) | 58,029 | .57 | .54 | 4.53 | |||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||
Class B: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2009 | 16.87 | .63 | (2.95 | ) | (2.32 | ) | (.61 | ) | - | (.61 | ) | 13.94 | (13.37 | ) | 2,835 | 1.41 | 1.39 | 4.74 | ||||||||||||||||||||||||||||||||||
Year ended 7/31/2008 | 20.43 | .72 | (2.66 | ) | (1.94 | ) | (.77 | ) | (.85 | ) | (1.62 | ) | 16.87 | (10.16 | ) | 4,149 | 1.33 | 1.31 | 3.76 | |||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||
Class C: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2009 | 16.84 | .62 | (2.94 | ) | (2.32 | ) | (.61 | ) | - | (.61 | ) | 13.91 | (13.43 | ) | 5,637 | 1.45 | 1.44 | 4.69 | ||||||||||||||||||||||||||||||||||
Year ended 7/31/2008 | 20.39 | .71 | (2.65 | ) | (1.94 | ) | (.76 | ) | (.85 | ) | (1.61 | ) | 16.84 | (10.22 | ) | 7,676 | 1.38 | 1.35 | 3.72 | |||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||
Class F-1: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2009 | 16.95 | .74 | (2.97 | ) | (2.23 | ) | (.70 | ) | - | (.70 | ) | 14.02 | (12.71 | ) | 1,801 | .66 | .65 | 5.49 | ||||||||||||||||||||||||||||||||||
Year ended 7/31/2008 | 20.52 | .86 | (2.68 | ) | (1.82 | ) | (.90 | ) | (.85 | ) | (1.75 | ) | 16.95 | (9.56 | ) | 2,712 | .61 | .58 | 4.48 | |||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||
Class F-2: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2009 | 16.91 | .68 | (2.82 | ) | (2.14 | ) | (.73 | ) | - | (.73 | ) | 14.04 | (12.19 | ) | 350 | .44 | .43 | 5.39 | ||||||||||||||||||||||||||||||||||
Class 529-A: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2009 | 16.96 | .73 | (2.96 | ) | (2.23 | ) | (.70 | ) | - | (.70 | ) | 14.03 | (12.72 | ) | 608 | .70 | .68 | 5.44 | ||||||||||||||||||||||||||||||||||
Year ended 7/31/2008 | 20.52 | .85 | (2.66 | ) | (1.81 | ) | (.90 | ) | (.85 | ) | (1.75 | ) | 16.96 | (9.55 | ) | 662 | .65 | .63 | 4.46 | |||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||
Class 529-B: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2009 | 16.92 | .62 | (2.96 | ) | (2.34 | ) | (.60 | ) | - | (.60 | ) | 13.98 | (13.47 | ) | 91 | 1.51 | 1.50 | 4.63 | ||||||||||||||||||||||||||||||||||
Year ended 7/31/2008 | 20.47 | .69 | (2.65 | ) | (1.96 | ) | (.74 | ) | (.85 | ) | (1.59 | ) | 16.92 | (10.25 | ) | 110 | 1.46 | 1.43 | 3.65 | |||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||
Class 529-C: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2009 | 16.93 | .62 | (2.96 | ) | (2.34 | ) | (.60 | ) | - | (.60 | ) | 13.99 | (13.45 | ) | 241 | 1.50 | 1.49 | 4.63 | ||||||||||||||||||||||||||||||||||
Year ended 7/31/2008 | 20.49 | .70 | (2.67 | ) | (1.97 | ) | (.74 | ) | (.85 | ) | (1.59 | ) | 16.93 | (10.29 | ) | 276 | 1.45 | 1.43 | 3.66 | |||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||
Class 529-E: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2009 | 16.93 | .68 | (2.95 | ) | (2.27 | ) | (.66 | ) | - | (.66 | ) | 14.00 | (12.98 | ) | 29 | 1.00 | .98 | 5.14 | ||||||||||||||||||||||||||||||||||
Year ended 7/31/2008 | 20.49 | .79 | (2.66 | ) | (1.87 | ) | (.84 | ) | (.85 | ) | (1.69 | ) | 16.93 | (9.83 | ) | 32 | .94 | .92 | 4.17 | |||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||
Class 529-F-1: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2009 | $ | 16.96 | $ | .75 | $ | (2.96 | ) | $ | (2.21 | ) | $ | (.72 | ) | $ | - | $ | (.72 | ) | $ | 14.03 | (12.56 | )% | $ | 19 | .50 | % | .48 | % | 5.64 | % | ||||||||||||||||||||||
Year ended 7/31/2008 | 20.52 | .89 | (2.66 | ) | (1.77 | ) | (.94 | ) | (.85 | ) | (1.79 | ) | 16.96 | (9.35 | ) | 21 | .44 | .42 | 4.67 | |||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||
Class R-1: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2009 | 16.92 | .62 | (2.95 | ) | (2.33 | ) | (.60 | ) | - | (.60 | ) | 13.99 | (13.36 | ) | 74 | 1.46 | 1.44 | 4.68 | ||||||||||||||||||||||||||||||||||
Year ended 7/31/2008 | 20.48 | .71 | (2.67 | ) | (1.96 | ) | (.75 | ) | (.85 | ) | (1.60 | ) | 16.92 | (10.25 | ) | 86 | 1.39 | 1.37 | 3.73 | |||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||
Class R-2: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2009 | 16.86 | .61 | (2.95 | ) | (2.34 | ) | (.59 | ) | - | (.59 | ) | 13.93 | (13.54 | ) | 463 | 1.56 | 1.54 | 4.58 | ||||||||||||||||||||||||||||||||||
Year ended 7/31/2008 | 20.42 | .70 | (2.66 | ) | (1.96 | ) | (.75 | ) | (.85 | ) | (1.60 | ) | 16.86 | (10.26 | ) | 516 | 1.44 | 1.42 | 3.66 | |||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||
Class R-3: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2009 | 16.94 | .68 | (2.95 | ) | (2.27 | ) | (.66 | ) | - | (.66 | ) | 14.01 | (12.99 | ) | 936 | 1.00 | .99 | 5.14 | ||||||||||||||||||||||||||||||||||
Year ended 7/31/2008 | 20.50 | .79 | (2.66 | ) | (1.87 | ) | (.84 | ) | (.85 | ) | (1.69 | ) | 16.94 | (9.83 | ) | 1,061 | .95 | .93 | 4.16 | |||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||
Class R-4: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2009 | 16.96 | .72 | (2.95 | ) | (2.23 | ) | (.70 | ) | - | (.70 | ) | 14.03 | (12.72 | ) | 629 | .70 | .69 | 5.43 | ||||||||||||||||||||||||||||||||||
Year ended 7/31/2008 | 20.53 | .85 | (2.68 | ) | (1.83 | ) | (.89 | ) | (.85 | ) | (1.74 | ) | 16.96 | (9.56 | ) | 597 | .66 | .63 | 4.49 | |||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||
Class R-5: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2009 | 16.97 | .76 | (2.96 | ) | (2.20 | ) | (.73 | ) | - | (.73 | ) | 14.04 | (12.53 | ) | 395 | .40 | .38 | 5.72 | ||||||||||||||||||||||||||||||||||
Year ended 7/31/2008 | 20.54 | .91 | (2.68 | ) | (1.77 | ) | (.95 | ) | (.85 | ) | (1.80 | ) | 16.97 | (9.26 | ) | 559 | .36 | .33 | 4.80 | |||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||
Class R-6: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Period from 5/1/2009 to 7/31/2009 | 12.55 | .19 | 1.48 | 1.67 | (.17 | ) | - | (.17 | ) | 14.05 | 13.42 | 272 | .09 | .09 | 1.45 |
Year ended July 31 | ||||||||||||||||||||
2009 | 2008 | 2007 | 2006 | 2005 | ||||||||||||||||
Portfolio turnover rate for all classes of shares | 49 | % | 38 | % | 32 | % | 35 | % | 24 | % |
(1)Based on operations for the periods shown (unless otherwise noted) and, accordingly, may not be representative of a full year. | |||||||||||||
(2)Based on average shares outstanding. | |||||||||||||
(3)Total returns exclude any applicable sales charges, including contingent deferred sales charges. | |||||||||||||
(4)This column reflects the impact, if any, of certain reimbursements/waivers from CRMC. During some of the periods shown, CRMC reduced fees for investment advisory services. In addition, during some of the periods shown, CRMC paid a portion of the fund's transfer agent fees for certain retirement plan share classes. | |||||||||||||
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, 2009, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods presented. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of July 31, 2009, 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, 2009, 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 4, 2009
Expense example
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, 2009, through July 31, 2009).
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-1, F-2 and 529-F-1 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 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 2/1/2009 | Ending account value 7/31/2009 | Expenses paid during period* | Annualized expense ratio | |||||||||||||
Class A -- actual return | $ | 1,000.00 | $ | 1,174.33 | $ | 3.56 | .66 | % | ||||||||
Class A -- assumed 5% return | 1,000.00 | 1,021.52 | 3.31 | .66 | ||||||||||||
Class B -- actual return | 1,000.00 | 1,171.17 | 7.64 | 1.42 | ||||||||||||
Class B -- assumed 5% return | 1,000.00 | 1,017.75 | 7.10 | 1.42 | ||||||||||||
Class C -- actual return | 1,000.00 | 1,170.47 | 7.91 | 1.47 | ||||||||||||
Class C -- assumed 5% return | 1,000.00 | 1,017.50 | 7.35 | 1.47 | ||||||||||||
Class F-1 -- actual return | 1,000.00 | 1,174.51 | 3.67 | .68 | ||||||||||||
Class F-1 -- assumed 5% return | 1,000.00 | 1,021.42 | 3.41 | .68 | ||||||||||||
Class F-2 -- actual return | 1,000.00 | 1,176.61 | 2.37 | .44 | ||||||||||||
Class F-2 -- assumed 5% return | 1,000.00 | 1,022.61 | 2.21 | .44 | ||||||||||||
Class 529-A -- actual return | 1,000.00 | 1,175.18 | 3.88 | .72 | ||||||||||||
Class 529-A -- assumed 5% return | 1,000.00 | 1,021.22 | 3.61 | .72 | ||||||||||||
Class 529-B -- actual return | 1,000.00 | 1,170.20 | 8.18 | 1.52 | ||||||||||||
Class 529-B -- assumed 5% return | 1,000.00 | 1,017.26 | 7.60 | 1.52 | ||||||||||||
Class 529-C -- actual return | 1,000.00 | 1,170.15 | 8.12 | 1.51 | ||||||||||||
Class 529-C -- assumed 5% return | 1,000.00 | 1,017.31 | 7.55 | 1.51 | ||||||||||||
Class 529-E -- actual return | 1,000.00 | 1,173.33 | 5.39 | 1.00 | ||||||||||||
Class 529-E -- assumed 5% return | 1,000.00 | 1,019.84 | 5.01 | 1.00 | ||||||||||||
Class 529-F-1 -- actual return | 1,000.00 | 1,176.19 | 2.70 | .50 | ||||||||||||
Class 529-F-1 -- assumed 5% return | 1,000.00 | 1,022.32 | 2.51 | .50 | ||||||||||||
Class R-1 -- actual return | 1,000.00 | 1,171.35 | 7.86 | 1.46 | ||||||||||||
Class R-1 -- assumed 5% return | 1,000.00 | 1,017.55 | 7.30 | 1.46 | ||||||||||||
Class R-2 -- actual return | 1,000.00 | 1,169.86 | 8.34 | 1.55 | ||||||||||||
Class R-2 -- assumed 5% return | 1,000.00 | 1,017.11 | 7.75 | 1.55 | ||||||||||||
Class R-3 -- actual return | 1,000.00 | 1,173.16 | 5.44 | 1.01 | ||||||||||||
Class R-3 -- assumed 5% return | 1,000.00 | 1,019.79 | 5.06 | 1.01 | ||||||||||||
Class R-4 -- actual return | 1,000.00 | 1,175.32 | 3.78 | .70 | ||||||||||||
Class R-4 -- assumed 5% return | 1,000.00 | 1,021.32 | 3.51 | .70 | ||||||||||||
Class R-5 -- actual return | 1,000.00 | 1,176.48 | 2.16 | .40 | ||||||||||||
Class R-5 -- assumed 5% return | 1,000.00 | 1,022.81 | 2.01 | .40 | ||||||||||||
Class R-6 -- actual return † | 1,000.00 | 1,134.21 | .93 | .35 | ||||||||||||
Class R-6 -- assumed 5% return † | 1,000.00 | 1,011.59 | .88 | .35 |
*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, and divided by 365 (to reflect the one-half year period).
† The period for the “annualized expense ratio” and “actual return” line is based on the number of days from May 1, 2009 (the initial sale of the share class), through July 31, 2009, and accordingly, is not representative of a full period. The “assumed 5% return” line is based on 181 days.
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, 2009:
Qualified dividend income | $ | 2,074,422,000 | ||
Corporate dividends received deduction | $ | 1,295,781,000 | ||
U.S. government income that may be exempt from state taxation | $ | 70,594,000 |
Individual shareholders should refer to their Form 1099 or other tax information, which will be mailed in January 2010, to determine the calendar year amounts to be included on their 2009 tax returns. Shareholders should consult their tax advisers.
Other share class results
unaudited
Classes B, C, F and 529
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.
Average annual total returns for periods ended June 30, 2009 (the most recent calendar quarter-end): | ||||||||||||
1 year | 5 years | Life of class | ||||||||||
Class B shares1 — 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 | –23.59 | % | –0.13 | % | 4.12 | % | ||||||
Not reflecting CDSC | –19.78 | 0.17 | 4.12 | |||||||||
Class C shares — first sold 3/15/01 | ||||||||||||
Reflecting CDSC, maximum of 1%, payable only | ||||||||||||
if shares are sold within one year of purchase | –20.55 | 0.12 | 2.72 | |||||||||
Not reflecting CDSC | –19.79 | 0.12 | 2.72 | |||||||||
Class F-1 shares2 — first sold 3/15/01 | ||||||||||||
Not reflecting annual asset-based fee charged | ||||||||||||
by sponsoring firm | –19.20 | 0.88 | 3.51 | |||||||||
Class F-2 shares2 — first sold 8/1/08 | ||||||||||||
Not reflecting annual asset-based fee charged | ||||||||||||
by sponsoring firm | — | — | –17.94 | 3 | ||||||||
Class 529-A shares4 — first sold 2/15/02 | ||||||||||||
Reflecting 5.75% maximum sales charge | –23.87 | –0.34 | 2.56 | |||||||||
Not reflecting maximum sales charge | –19.22 | 0.85 | 3.39 | |||||||||
Class 529-B shares1,4 — first sold 2/19/02 | ||||||||||||
Reflecting applicable CDSC, maximum of 5%, payable | ||||||||||||
only if shares are sold within six years of purchase | –23.74 | –0.29 | 2.65 | |||||||||
Not reflecting CDSC | –19.93 | 0.02 | 2.65 | |||||||||
Class 529-C shares4 — first sold 2/19/02 | ||||||||||||
Reflecting CDSC, maximum of 1%, payable only | ||||||||||||
if shares are sold within one year of purchase | –20.67 | 0.04 | 2.66 | |||||||||
Not reflecting CDSC | –19.91 | 0.04 | 2.66 | |||||||||
Class 529-E shares2,4 — first sold 2/25/02 | –19.44 | 0.55 | 3.03 | |||||||||
Class 529-F-1 shares2,4 — first sold 9/17/02 | ||||||||||||
Not reflecting annual asset-based fee charged | ||||||||||||
by sponsoring firm | –19.06 | 1.00 | 4.89 |
1These shares are no longer available for purchase. |
2These shares are sold without any initial or contingent deferred sales charge. |
3Results are cumulative total returns; they are not annualized. |
4Results shown do not reflect the $10 account setup fee and an annual $10 account maintenance fee. |
Investment results assume all distributions are reinvested and reflect applicable fees and expenses. The fund’s investment adviser waived a portion of its management fees from September 1, 2004, through December 31, 2008. 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 |
Mary Jane Elmore, 55 | 2008 | Managing Director and General Partner, Institutional Venture Partners; former Product Marketing Manager, Intel Corporation’s Development Systems Division |
Robert A. Fox, 72 | 1972 | Managing General Partner, Fox Investments LP; corporate director; retired President and CEO, |
Foster Farms (poultry producer) | ||
Leonade D. Jones, 61 | 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 | |
William D. Jones, 54 | 2008 | Real estate developer/owner, President and CEO, CityLink Investment Corporation (acquires, develops and manages real estate ventures in selected urban communities) and City Scene Management Company (provides commercial asset and property management services) |
John M. Lillie, 72 | 2003 | Former President, Sequoia Associates LLC (investment firm specializing in medium-size buyouts); former CEO, American President Companies (container shipping and transportation services); former CEO, Lucky Stores; former CEO, Leslie Salt |
John G. McDonald, 72 | 1976 | Stanford Investors Professor, Graduate School of Business, Stanford University |
James J. Postl, 63 | 2008 | Former President and CEO, Pennzoil-Quaker State Company (automotive products and services) |
Henry E. Riggs, 74 | 1989 | President Emeritus, Keck Graduate Institute of Applied Life Sciences |
Isaac Stein, 62 | 2004 | President, Waverly Associates (private investment fund); Chairman Emeritus of the Board of Trustees, Stanford University |
Patricia K. Woolf, Ph.D., 75 | 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 |
Mary Jane Elmore, 55 | 3 | None |
Robert A. Fox, 72 | 8 | None |
Leonade D. Jones, 61 | 7 | None |
Chairman of the Board | ||
(Independent and Non-Executive) | ||
William D. Jones, 54 | 5 | Sempra Energy; SouthWest Water Company |
John M. Lillie, 72 | 3 | None |
John G. McDonald, 72 | 9 | iStar Financial, Inc.; Plum Creek Timber Co.; Scholastic Corporation; Varian, Inc. |
James J. Postl, 63 | 3 | Cooper Industries; Pulte, Inc. |
Henry E. Riggs, 74 | 5 | None |
Isaac Stein, 62 | 3 | Alexza Pharmaceuticals, Inc.; Maxygen, Inc. |
Patricia K. Woolf, Ph.D., 75 | 7 | None |
“Interested” director4 | ||
Year first | ||
elected a | ||
director or | Principal occupation(s) during past five years and | |
Name, age and | officer of | positions held with affiliated entities or the |
position with fund | the fund1 | principal underwriter of the fund |
Hilda L. Applbaum, 48 | 1998 | Senior Vice President — Capital World Investors, |
Vice Chairman of the Board | Capital Research and Management Company | |
“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, 48 | 1 | None |
Vice Chairman of the Board |
The fund’s 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: Secretary.
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, 52 | 1998 | Senior Vice President — Fixed Income, Capital |
President | Research and Management Company; Director, The Capital Group Companies, Inc.5 | |
Abner D. Goldstine, 79 | 1993 | Senior Vice President — Fixed Income, Capital |
Senior Vice President | Research and Management Company; Director, Capital Research and Management Company | |
Dina N. Perry, 63 | 1994 | Senior Vice President — Capital World Investors, |
Senior Vice President | Capital Research and Management Company; Director, Capital Research and Management Company | |
Paul F. Roye, 55 | 2007 | Senior Vice President — Fund Business Management |
Senior Vice President | Group, Capital Research and Management Company; Director, American Funds Service Company;5 former Director of Investment Management, United States Securities and Exchange Commission | |
Andrew B. Suzman, 42 | 2004 | Senior Vice President — Capital World Investors, |
Senior Vice President | Capital Research Company5 | |
Joanna F. Jonsson, 46 | 2006 | Senior Vice President — Capital World Investors, |
Vice President | Capital Research Company;5 Director, The Capital Group Companies, Inc.;5 Director, American Funds Distributors, Inc.;5 Director, Capital International Limited5 | |
John H. Smet, 53 | 1994 | Senior Vice President — Fixed Income, Capital |
Vice President | Research and Management Company; Director, American Funds Distributors, Inc.5 | |
Steven T. Watson, 54 | 2006 | Senior Vice President — Capital World Investors, |
Vice President | Capital Research Company5; Director, Capital Research Company;5 Director, The Capital Group Companies, Inc.5 | |
Patrick F. Quan, 51 | 1986 | Vice President — Fund Business Management |
Secretary | Group, Capital Research and Management Company | |
Jennifer M. Buchheim, 36 | 2005 | Vice President — Fund Business Management |
Treasurer | Group, Capital Research and Management Company | |
Bryan K. Nielsen, 36 | 2008 | Vice President, Capital Guardian Trust Company;5 |
Assistant Treasurer | Vice President, Capital International, Inc.5 |
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 is composed of 16 funds and serves as the underlying investment vehicle for certain variable insurance contracts; American Funds Target Date Retirement Series,® Inc., which is composed of nine funds and is available through tax-deferred retirement plans and IRAs; and Endowments, which is composed of two portfolios and is available to certain nonprofit organizations. |
3This includes all directorships (other than those in the American Funds or other funds managed by Capital Research and Management Company) that are held by each director as a director of a public company or a registered investment company. |
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 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 near you.)
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
Bingham McCutchen LLP
355 South Grand Avenue, Suite 4400
Los Angeles, CA 90071-3106
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 summary prospectus and prospectus, which can be obtained from your financial professional and should be read carefully before investing. You may also call American Funds Service Company (AFS) at 800/421-0180 or visit the American Funds website at americanfunds.com.
“American Funds Proxy Voting Procedures and Principles” — which describes how we vote proxies relating to portfolio securities — is available on the American Funds website or upon request by calling AFS. The fund files its proxy voting record with the U.S. Securities and Exchange Commission (SEC) for the 12 months ended June 30 by August 31. The proxy voting record is available free of charge on the SEC website at sec.gov and on the American Funds website.
A complete July 31, 2009, 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. Additional information regarding the operation of the Public Reference Room may be obtained by calling the SEC’s Office of Investor Education and Advocacy at 800/SEC-0330. Additionally, the list of portfolio holdings 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 summary prospectus or prospectus, which gives details about charges, expenses, investment objectives and operating policies of the fund. If used as sales material after September 30, 2009, 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 nearly 80 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 50 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 approach to portfolio management, developed 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 25 years of investment experience, providing a depth of knowledge and broad perspective that few organizations have. |
•A commitment to low management fees |
The American Funds provide exceptional value for shareholders, with management fees 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 Fund® |
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 |
International Growth and Income FundSM |
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-exempt current income through municipal bonds |
American Funds Short-Term Tax-Exempt Bond FundSM |
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 fund |
American Funds Money Market FundSM |
•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-906-0909P
Litho in USA BAG/Q/8061-S20674
Printed on paper containing 10% post-consumer waste
Printed with inks containing soy and/or vegetable oil
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, Suite 1800, San Francisco, California 94105.
ITEM 3 – Audit Committee Financial Expert
The Registrant’s board has determined that James J. Postl, 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: | ||||
2008 | $113,000 | |||
2009 | $141,000 | |||
b) Audit-Related Fees: | ||||
2008 | $27,000 | |||
2009 | $23,000 | |||
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: | ||||
2008 | $7,000 | |||
2009 | $7,000 | |||
The tax fees consist of professional services relating to the preparation of the Registrant’s tax returns. | ||||
d) All Other Fees: | ||||
2008 | None | |||
2009 | 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) Audit Fees: | ||||
Not Applicable | ||||
b) Audit-Related Fees: | ||||
2008 | $1,109,000 | |||
2009 | $968,000 | |||
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: | ||||
2008 | $8,000 | |||
2009 | None | |||
The tax fees consist of consulting services relating to the Registrant’s investments. | ||||
d) All Other Fees: | ||||
2008 | None | |||
2009 | $2,000 | |||
The other fees consist of subscription services related to an accounting research tool. |
All audit and permissible non-audit services that the Registrant’s audit committee considers compatible with maintaining the independent registered public accounting firm’s independence are required to be pre-approved by the committee. 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, adviser and affiliates that provide ongoing services to the Registrant, were $1,458,000 for fiscal year 2008 and $1,323,000 for fiscal year 2009. 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, 2009
Common stocks — 57.24% | Shares | Value (000) | ||||||
CONSUMER STAPLES — 7.23% | ||||||||
Kraft Foods Inc., Class A | 26,500,821 | $ | 751,033 | |||||
Philip Morris International Inc. | 15,252,096 | 710,748 | ||||||
Coca-Cola Co. | 9,000,000 | 448,560 | ||||||
H.J. Heinz Co. | 10,111,700 | 388,896 | ||||||
Unilever NV, depository receipts | 7,880,000 | 215,305 | ||||||
Unilever NV (New York registered) | 5,051,750 | 137,408 | ||||||
Hershey Co. | 6,904,100 | 275,819 | ||||||
Diageo PLC | 15,650,000 | 245,136 | ||||||
Kimberly-Clark Corp. | 3,325,000 | 194,346 | ||||||
Clorox Co. | 3,050,000 | 186,080 | ||||||
Reynolds American Inc. | 3,650,000 | 158,812 | ||||||
Tesco PLC | 24,525,000 | 150,507 | ||||||
SYSCO Corp. | 6,210,000 | 147,550 | ||||||
General Mills, Inc. | 2,060,000 | 121,355 | ||||||
SABMiller PLC | 3,876,000 | 89,774 | ||||||
Coca-Cola Amatil Ltd. | 11,162,990 | 86,778 | ||||||
ConAgra Foods, Inc. | 1,340,400 | 26,312 | ||||||
4,334,419 | ||||||||
INDUSTRIALS — 7.21% | ||||||||
Waste Management, Inc.1 | 26,835,500 | 754,346 | ||||||
United Technologies Corp. | 11,560,000 | 629,673 | ||||||
Schneider Electric SA | 5,311,115 | 482,508 | ||||||
Emerson Electric Co. | 11,245,000 | 409,093 | ||||||
Masco Corp. | 16,253,200 | 226,407 | ||||||
Cooper Industries, Ltd., Class A | 6,005,000 | 197,865 | ||||||
Finmeccanica SpA | 12,066,442 | 182,990 | ||||||
Atlas Copco AB, Class A | 13,000,000 | 154,676 | ||||||
United Parcel Service, Inc., Class B | 2,650,000 | 142,384 | ||||||
Avery Dennison Corp. | 5,101,582 | 136,365 | ||||||
Rockwell Automation | 3,000,000 | 124,230 | ||||||
Hubbell Inc., Class B | 3,272,100 | 122,115 | ||||||
Vallourec SA | 773,982 | 101,821 | ||||||
Qantas Airways Ltd. | 50,541,438 | 97,697 | ||||||
AB SKF, Class B | 6,275,786 | 93,989 | ||||||
Watsco, Inc. | 1,707,900 | 89,596 | ||||||
De La Rue PLC1 | 6,369,718 | 88,551 | ||||||
Macquarie Korea Infrastructure Fund1 | 21,541,078 | 88,477 | ||||||
Applied Industrial Technologies, Inc.1 | 2,738,790 | 60,582 | ||||||
Österreichische Post AG | 1,372,283 | 42,111 | ||||||
R.R. Donnelley & Sons Co. | 2,845,400 | 39,551 | ||||||
SembCorp Industries Ltd | 16,689,500 | 37,250 | ||||||
Delta Air Lines, Inc.2 | 1,588,066 | 11,005 | ||||||
Corporate Executive Board Co. | 525,000 | 9,859 | ||||||
UAL Corp.2 | 59,995 | 247 | ||||||
4,323,388 | ||||||||
TELECOMMUNICATION SERVICES — 7.07% | ||||||||
Verizon Communications Inc. | 42,935,600 | 1,376,945 | ||||||
AT&T Inc. | 45,359,621 | 1,189,783 | ||||||
Koninklijke KPN NV | 45,739,757 | 687,459 | ||||||
Telefónica, SA | 24,752,800 | 615,815 | ||||||
Telstra Corp. Ltd. | 45,368,954 | 133,439 | ||||||
Bell Aliant Regional Communications Income Fund | 4,109,700 | 101,256 | ||||||
Vodafone Group PLC | 30,000,000 | 61,469 | ||||||
Telefónica 02 Czech Republic, AS | 2,018,317 | 55,154 | ||||||
Telekomunikacja Polska SA | 1,674,900 | 8,598 | ||||||
Sprint Nextel Corp., Series 12 | 760,501 | 3,042 | ||||||
CenturyTel, Inc. | 52,094 | 1,635 | ||||||
American Tower Corp., Class A2 | 42,271 | 1,441 | ||||||
XO Holdings, Inc.2 | 9,158 | 5 | ||||||
4,236,041 | ||||||||
UTILITIES — 6.57% | ||||||||
GDF Suez | 22,188,284 | 847,707 | ||||||
Entergy Corp. | 4,942,600 | 397,039 | ||||||
Duke Energy Corp. | 23,431,172 | 362,714 | ||||||
FirstEnergy Corp. | 8,096,500 | 333,576 | ||||||
Exelon Corp. | 5,300,000 | 269,558 | ||||||
RWE AG | 3,075,663 | 259,737 | ||||||
E.ON AG | 6,460,000 | 244,549 | ||||||
PG&E Corp. | 4,654,665 | 187,909 | ||||||
DTE Energy Co. | 5,000,000 | 172,300 | ||||||
Hongkong Electric Holdings Ltd. | 26,754,000 | 147,588 | ||||||
Snam Rete Gas SpA | 29,708,326 | 130,100 | ||||||
Consolidated Edison, Inc. | 3,000,000 | 118,080 | ||||||
PPL Corp. | 3,300,000 | 111,507 | ||||||
Progress Energy, Inc. | 2,045,400 | 80,671 | ||||||
American Electric Power Co., Inc. | 2,500,000 | 77,400 | ||||||
NiSource Inc. | 4,859,596 | 62,640 | ||||||
DUET Group | 38,369,915 | 52,591 | ||||||
Spark Infrastructure | 50,400,000 | 44,933 | ||||||
Southern Co. | 1,250,000 | 39,250 | ||||||
3,939,849 | ||||||||
HEALTH CARE — 5.33% | ||||||||
Merck & Co., Inc. | 34,875,000 | 1,046,599 | ||||||
Bristol-Myers Squibb Co. | 33,025,500 | 717,974 | ||||||
Eli Lilly and Co. | 12,890,000 | 449,732 | ||||||
Pfizer Inc | 24,050,000 | 383,117 | ||||||
Alcon, Inc. | 1,577,400 | 201,276 | ||||||
Novartis AG (ADR) | 3,000,000 | 136,860 | ||||||
Johnson & Johnson | 2,150,000 | 130,914 | ||||||
AstraZeneca PLC (United Kingdom) | 2,500,000 | 117,018 | ||||||
Schering-Plough Corp. | 439,243 | 11,644 | ||||||
Clarent Hospital Corp.1,2,3 | 484,684 | 24 | ||||||
3,195,158 | ||||||||
ENERGY — 4.94% | ||||||||
Royal Dutch Shell PLC, Class B (ADR) | 8,100,000 | 425,493 | ||||||
Royal Dutch Shell PLC, Class A (ADR) | 5,000,000 | 263,200 | ||||||
Royal Dutch Shell PLC, Class B | 3,797,147 | 98,537 | ||||||
Chevron Corp. | 10,265,000 | 713,109 | ||||||
TOTAL SA | 3,855,000 | 213,792 | ||||||
TOTAL SA (ADR) | 3,640,000 | 202,566 | ||||||
Spectra Energy Corp | 18,311,414 | 336,198 | ||||||
Diamond Offshore Drilling, Inc. | 3,030,000 | 272,306 | ||||||
ConocoPhillips | 5,500,000 | 240,405 | ||||||
Penn West Energy Trust | 10,775,000 | 140,435 | ||||||
ARC Energy Trust | 3,569,700 | 57,983 | ||||||
2,964,024 | ||||||||
FINANCIALS — 4.77% | ||||||||
Unibail-Rodamco SE, non-registered shares | 1,693,800 | 295,978 | ||||||
HSBC Holdings PLC (Hong Kong) | 14,326,382 | 142,534 | ||||||
HSBC Holdings PLC (United Kingdom) | 10,000,000 | 101,154 | ||||||
HSBC Holdings PLC (ADR) | 350,000 | 17,745 | ||||||
People’s United Financial, Inc. | 13,000,000 | 211,250 | ||||||
Bank of America Corp. | 13,926,233 | 205,969 | ||||||
Banco Santander, SA | 12,846,200 | 186,026 | ||||||
Macquarie Group Ltd. | 4,500,000 | 165,048 | ||||||
Equity Residential, shares of beneficial interest | 6,842,800 | 164,227 | ||||||
U.S. Bancorp | 7,994,000 | 163,158 | ||||||
Crédit Agricole SA | 10,492,341 | 149,772 | ||||||
First Niagara Financial Group, Inc.1 | 9,730,000 | 127,949 | ||||||
Arthur J. Gallagher & Co. | 5,000,000 | 114,500 | ||||||
JPMorgan Chase & Co. | 2,695,000 | 104,162 | ||||||
Hospitality Properties Trust1 | 6,000,000 | 94,740 | ||||||
Alexandria Real Estate Equities, Inc.1 | 2,450,000 | 93,369 | ||||||
SunTrust Banks, Inc. | 4,000,000 | 78,000 | ||||||
QBE Insurance Group Ltd. | 4,662,792 | 75,759 | ||||||
HCP, Inc. | 2,442,300 | 62,914 | ||||||
Itaúsa — Investimentos Itaú SA, preferred nominative | 11,967,770 | 61,487 | ||||||
Citigroup Inc. | 18,459,230 | 58,516 | ||||||
Wells Fargo & Co. | 2,200,000 | 53,812 | ||||||
Itaú Unibanco Banco Múltiplo SA (ADR) | 2,313,048 | 41,380 | ||||||
Boardwalk Real Estate Investment Trust | 1,199,000 | 36,760 | ||||||
ING Groep NV, depository receipts | 2,816,200 | 36,117 | ||||||
AXA SA | 875,000 | 18,495 | ||||||
2,860,821 | ||||||||
CONSUMER DISCRETIONARY — 3.56% | ||||||||
McDonald’s Corp. | 11,916,400 | 656,117 | ||||||
Home Depot, Inc. | 20,150,000 | 522,691 | ||||||
Nordstrom, Inc. | 8,807,400 | 232,867 | ||||||
Vivendi SA | 6,374,470 | 163,767 | ||||||
H & M Hennes & Mauritz AB, Class B | 2,277,000 | 135,145 | ||||||
Tatts Group Ltd. | 53,500,000 | 109,212 | ||||||
VF Corp. | 1,065,000 | 68,895 | ||||||
Regal Entertainment Group, Class A | 4,827,018 | 60,048 | ||||||
CBS Corp., Class B, nonvoting shares | 7,000,000 | 57,330 | ||||||
Tupperware Brands Corp. | 1,477,844 | 50,350 | ||||||
Leggett & Platt, Inc. | 1,874,000 | 32,514 | ||||||
Kesa Electricals PLC | 10,900,000 | 23,708 | ||||||
Ford Motor Co.2 | 2,169,728 | 17,358 | ||||||
Time Warner Cable Inc.2 | 66,361 | 2,194 | ||||||
Adelphia Recovery Trust, Series ACC-12 | 19,531,478 | 293 | ||||||
American Media Operations, Inc.2,3,4 | 281,006 | 3 | ||||||
2,132,492 | ||||||||
INFORMATION TECHNOLOGY — 3.33% | ||||||||
Intel Corp. | 20,000,000 | 385,000 | ||||||
Microchip Technology Inc.1 | 14,128,000 | 380,467 | ||||||
Automatic Data Processing, Inc. | 9,625,000 | 358,531 | ||||||
Microsoft Corp. | 12,095,000 | 284,474 | ||||||
Paychex, Inc. | 9,293,000 | 246,265 | ||||||
Maxim Integrated Products, Inc. | 12,650,000 | 224,158 | ||||||
Taiwan Semiconductor Manufacturing Co. Ltd. (ADR) | 11,054,998 | 115,746 | ||||||
Taiwan Semiconductor Manufacturing Co. Ltd. | 127,995 | 230 | ||||||
ZiLOG, Inc.2 | 455,000 | 1,133 | ||||||
1,996,004 | ||||||||
MATERIALS — 2.94% | ||||||||
E.I. du Pont de Nemours and Co. | 13,940,000 | 431,164 | ||||||
Weyerhaeuser Co.1 | 10,728,000 | 375,909 | ||||||
Dow Chemical Co. | 10,630,000 | 225,037 | ||||||
MeadWestvaco Corp.1 | 10,600,696 | 206,608 | ||||||
PPG Industries, Inc. | 2,837,100 | 156,041 | ||||||
Grupo México, SAB de CV, Series B | 85,993,834 | 121,681 | ||||||
Fletcher Building Ltd. | 25,461,500 | 120,693 | ||||||
Impala Platinum Holdings Ltd. | 4,437,112 | 107,922 | ||||||
Freeport-McMoRan Copper & Gold Inc. | 300,000 | 18,090 | ||||||
Georgia Gulf Corp.1,2,3,4 | 113,556 | 1,571 | ||||||
1,764,716 | ||||||||
MISCELLANEOUS — 4.29% | ||||||||
Other common stocks in initial period of acquisition | 2,569,145 | |||||||
Total common stocks (cost: $35,976,713,000) | 34,316,057 | |||||||
Preferred stocks — 1.55% | ||||||||
FINANCIALS — 1.54% | ||||||||
SMFG Preferred Capital USD 3 Ltd. 9.50%4,5 | 177,055,000 | 190,026 | ||||||
SMFG Preferred Capital USD 1 Ltd. 6.078%4,5 | 11,200,000 | 9,856 | ||||||
SMFG Preferred Capital USD 2 Ltd. 8.75% noncumulative4 | 9,400,000 | 9,398 | ||||||
Mizuho Capital Investment (USD) 2 Ltd. 14.95%4,5 | 167,300,000 | 194,370 | ||||||
Mizuho Capital Investment (USD) 1 Ltd. 6.686% noncumulative4,5 | 50,000 | 40 | ||||||
Barclays Bank PLC 7.434%3,4,5 | 77,913,000 | 61,162 | ||||||
Barclays Bank PLC 8.55%4,5 | 8,061,000 | 6,368 | ||||||
Barclays Bank PLC 6.86%4,5 | 5,207,000 | 3,497 | ||||||
Barclays Bank PLC, Series 1, 6.278% noncumulative5 | 3,200,000 | 2,128 | ||||||
Barclays Bank PLC 7.375%4,5 | 2,457,000 | 1,796 | ||||||
Barclays Bank PLC 5.926%4,5 | 1,000,000 | 641 | ||||||
Vornado Realty Trust, Series I, 6.625% | 3,380,000 | 66,552 | ||||||
JPMorgan Chase & Co., Series I, 7.90%5 | 49,330,000 | 47,030 | ||||||
HSBC Capital Funding LP, Series 1, 9.547% noncumulative step-up4,5 | 25,000,000 | 24,750 | ||||||
HSBC Capital Funding LP, Series 2, 10.176% noncumulative step-up4,5 | 10,000,000 | 10,850 | ||||||
BNP Paribas 7.195%4,5 | 35,100,000 | 25,950 | ||||||
BNP Paribas Capital Trust 9.003% noncumulative trust4,5 | 9,135,000 | 7,818 | ||||||
Woori Bank 6.208%4,5 | 45,000,000 | 32,013 | ||||||
Société Générale 5.922%4,5 | 48,073,000 | 30,809 | ||||||
Public Storage, Inc., Series F, 6.45% | 1,000,000 | 20,600 | ||||||
Public Storage, Inc., Series V, 7.50% cumulative depositary shares | 400,000 | 9,808 | ||||||
Santander Finance Preferred S.A., Unipersonal, 6.50% | 820,000 | 18,132 | ||||||
PNC Preferred Funding Trust I 6.517%4,5 | 30,900,000 | 18,303 | ||||||
Shinsei Finance II (Cayman) Ltd. 7.16% noncumulative4,5 | 39,475,000 | 18,233 | ||||||
ILFC E-Capital Trust I 5.90%4,5 | 25,300,000 | 8,223 | ||||||
ILFC E-Capital Trust II 6.25%4,5 | 18,790,000 | 6,107 | ||||||
QBE Capital Funding II LP 6.797%4,5 | 18,715,000 | 13,880 | ||||||
General Motors Corp. 9.00%4 | 28,785 | 13,256 | ||||||
Fannie Mae, Series O, 7.00%4,5 | 3,275,507 | 8,189 | ||||||
Fannie Mae, Series S, 8.25% noncumulative | 1,511,450 | 2,966 | ||||||
AXA SA, Series B, 6.379%4,5 | 15,625,000 | 10,966 | ||||||
Resona Preferred Global Securities (Cayman) Ltd. 7.191%4,5 | 11,772,000 | 8,603 | ||||||
Royal Bank of Scotland Group PLC, Series U, 7.64%5 | 16,800,000 | 7,737 | ||||||
Standard Chartered PLC 6.409%4,5 | 10,000,000 | 6,709 | ||||||
XL Capital Ltd., Series E, 6.50%5 | 10,000,000 | 5,958 | ||||||
BAC Capital Trust XIV 5.63%5 | 10,000,000 | 5,903 | ||||||
Banco Bilbao Vizcaya Argentaria, SA, 5.919%5 | 8,805,000 | 5,731 | ||||||
Freddie Mac, Series W, 5.66%2 | 1,912,800 | 2,032 | ||||||
Freddie Mac, Series Z, 8.375%2 | 1,100,000 | 1,444 | ||||||
Freddie Mac, Series V, 5.57%2 | 759,375 | 807 | ||||||
Shinhan Bank 5.663% 20355 | 2,075,000 | 1,531 | ||||||
Shinhan Bank 6.819% 20365 | 400,000 | 283 | ||||||
IndyMac Bancorp, Inc., Series A, 8.50% noncumulative2,4 | 2,948,000 | 30 | ||||||
920,485 | ||||||||
MISCELLANEOUS — 0.01% | ||||||||
Other preferred stocks in initial period of acquisition | 6,428 | |||||||
Total preferred stocks (cost: $1,243,701,000) | 926,913 | |||||||
Warrants — 0.00% | ||||||||
TELECOMMUNICATION SERVICES — 0.00% | ||||||||
XO Holdings, Inc., Series A, warrants, expire 20102,3 | 18,316 | 1 | ||||||
XO Holdings, Inc., Series B, warrants, expire 20102 | 13,738 | — | ||||||
XO Holdings, Inc., Series C, warrants, expire 20102 | 13,738 | — | ||||||
GT Group Telecom Inc., warrants, expire 20102,3,4 | 15,000 | — | ||||||
1 | ||||||||
INDUSTRIALS — 0.00% | ||||||||
Atrium Corp., warrants, expire 20182,3,4 | 3,456 | — | ||||||
FINANCIALS — 0.00% | ||||||||
Citigroup Inc., warrants, expire 20192,3 | 54.923077 | — | ||||||
Total warrants (cost: $779,000) | 1 | |||||||
Shares or | ||||||||
Convertible securities — 2.25% | principal amount | |||||||
HEALTH CARE — 0.62% | ||||||||
Schering-Plough Corp., 6.00% convertible preferred 2010 | 1,000,000 | 233,240 | ||||||
Mylan Inc. 6.50% convertible preferred 2010 | 140,000 | 123,480 | ||||||
Incyte Corp. 3.50% convertible notes 20114 | $ | 15,000,000 | 13,050 | |||||
369,770 | ||||||||
MATERIALS — 0.35% | ||||||||
Cia. Vale do Rio Doce, Class A, 5.50% convertible preferred 2010 | 1,000,000 | 41,810 | ||||||
Cia. Vale do Rio Doce, Series 1, 5.50% convertible preferred 2010 | 2,590,000 | 107,071 | ||||||
Georgia Gulf Corp. 10.00% convertible preferred1,2,3,4 | 2,545,684 | 35,212 | ||||||
Freeport-McMoRan Copper & Gold Inc. 6.75% convertible preferred 2010 | 290,000 | 26,749 | ||||||
210,842 | ||||||||
FINANCIALS — 0.28% | ||||||||
Citigroup, Series M, Common Stock Equivalent2,3 | 54.923077 | 165,401 | ||||||
Alexandria Real Estate Equities, Inc. 8.00% convertible notes 20291,4 | $ | 463,000 | 521 | |||||
165,922 | ||||||||
CONSUMER STAPLES — 0.22% | ||||||||
Archer Daniels Midland Co., 6.25% convertible preferred 2011, units | 2,570,000 | 101,386 | ||||||
Bunge Ltd. 5.125% convertible preferred 2010 | 13,300 | 9,144 | ||||||
Bunge Ltd. 4.875% convertible preferred | 272,700 | 24,894 | ||||||
135,424 | ||||||||
INFORMATION TECHNOLOGY — 0.17% | ||||||||
Advanced Micro Devices, Inc. 6.00% convertible notes 2015 | $ | 92,245,000 | 56,269 | |||||
Advanced Micro Devices, Inc. 5.75% convertible notes 2012 | $ | 63,525,000 | 47,088 | |||||
103,357 | ||||||||
ENERGY — 0.11% | ||||||||
El Paso Corp., 4.99% convertible preferred | 73,150 | 63,641 | ||||||
INDUSTRIALS — 0.05% | ||||||||
UAL Corp. 4.50% convertible notes 2021 | $ | 72,600,000 | 28,496 | |||||
CONSUMER DISCRETIONARY — 0.00% | ||||||||
Ford Motor Co. 4.25% convertible notes 2036 | $ | 700 | 1 | |||||
MISCELLANEOUS — 0.45% | ||||||||
Other convertible securities in initial period of acquisition | 271,079 | |||||||
Total convertible securities (cost: $1,487,695,000) | 1,348,532 | |||||||
Principal amount | ||||||||
Bonds & notes — 34.61% | (000 | ) | ||||||
MORTGAGE-BACKED OBLIGATIONS6 — 6.29% | ||||||||
Fannie Mae, Series 2000-T5, Class B, 7.30% 2010 | $ | 36,750 | 38,263 | |||||
Fannie Mae 4.89% 2012 | 10,000 | 10,509 | ||||||
Fannie Mae 4.00% 2015 | 3,676 | 3,796 | ||||||
Fannie Mae 7.00% 2016 | 125 | 134 | ||||||
Fannie Mae 5.00% 2018 | 10,667 | 11,250 | ||||||
Fannie Mae 5.50% 2018 | 9,252 | 9,824 | ||||||
Fannie Mae 10.00% 2018 | 184 | 210 | ||||||
Fannie Mae 5.50% 2020 | 25,676 | 27,199 | ||||||
Fannie Mae 6.00% 2021 | 1,025 | 1,092 | ||||||
Fannie Mae, Series 2003-48, Class TJ, 4.50% 2022 | 16,643 | 17,109 | ||||||
Fannie Mae 5.00% 2022 | 16,537 | 17,229 | ||||||
Fannie Mae 9.50% 2022 | 178 | 200 | ||||||
Fannie Mae 5.50% 2023 | 46,932 | 49,306 | ||||||
Fannie Mae 5.50% 2023 | 22,953 | 24,114 | ||||||
Fannie Mae 7.50% 2023 | 7 | 7 | ||||||
Fannie Mae 4.00% 2024 | 34,468 | 34,849 | ||||||
Fannie Mae 4.00% 2024 | 20,761 | 20,991 | ||||||
Fannie Mae 4.00% 2024 | 19,858 | 20,077 | ||||||
Fannie Mae 4.00% 2024 | 3,173 | 3,207 | ||||||
Fannie Mae 4.50% 2024 | 32,081 | 32,987 | ||||||
Fannie Mae 5.50% 2017 | 20,155 | 21,116 | ||||||
Fannie Mae 10.00% 2025 | 125 | 129 | ||||||
Fannie Mae, Series 2001-4, Class GA, 10.086% 20255 | 635 | 722 | ||||||
Fannie Mae, Series 2001-4, Class NA, 11.838% 20255 | 47 | 53 | ||||||
Fannie Mae 6.00% 2026 | 15,716 | 16,571 | ||||||
Fannie Mae 7.00% 2026 | 2,054 | 2,241 | ||||||
Fannie Mae 6.00% 2028 | 23,164 | 24,350 | ||||||
Fannie Mae 7.00% 2028 | 6,301 | 6,875 | ||||||
Fannie Mae 7.00% 2028 | 1,107 | 1,208 | ||||||
Fannie Mae 7.50% 2031 | 267 | 293 | ||||||
Fannie Mae, Series 2001-20, Class E, 9.626% 20315 | 526 | 598 | ||||||
Fannie Mae 5.50% 2033 | 3,516 | 3,663 | ||||||
Fannie Mae 4.567% 20355 | 4,017 | 4,173 | ||||||
Fannie Mae 5.00% 2035 | 92,721 | 95,227 | ||||||
Fannie Mae 5.50% 2035 | 13,087 | 13,622 | ||||||
Fannie Mae 5.50% 2035 | 6,048 | 6,306 | ||||||
Fannie Mae 6.50% 2035 | 385 | 415 | ||||||
Fannie Mae 7.00% 2035 | 6,795 | 7,419 | ||||||
Fannie Mae 5.50% 2036 | 30,911 | 32,150 | ||||||
Fannie Mae 6.00% 2036 | 17,565 | 18,470 | ||||||
Fannie Mae, Series 2006-43, Class PX, 6.00% 2036 | 7,045 | 7,427 | ||||||
Fannie Mae 6.50% 2036 | 13,441 | 14,346 | ||||||
Fannie Mae 5.50% 2037 | 83,128 | 86,538 | ||||||
Fannie Mae, Series 2007-33, Class HE, 5.50% 2037 | 21,339 | 22,254 | ||||||
Fannie Mae 5.50% 2037 | 16,443 | 17,118 | ||||||
Fannie Mae 5.63% 20375 | 14,212 | 15,037 | ||||||
Fannie Mae 6.00% 2037 | 320,698 | 336,871 | ||||||
Fannie Mae 6.00% 2037 | 66,683 | 70,045 | ||||||
Fannie Mae 6.00% 2037 | 28,562 | 30,020 | ||||||
Fannie Mae 6.00% 2037 | 26,147 | 27,539 | ||||||
Fannie Mae 6.00% 2037 | 18,337 | 19,262 | ||||||
Fannie Mae 6.00% 2037 | 17,424 | 18,227 | ||||||
Fannie Mae, Series 2007-24, Class P, 6.00% 2037 | 16,141 | �� | 17,036 | |||||
Fannie Mae 6.00% 2037 | 9,446 | 9,955 | ||||||
Fannie Mae 6.00% 2037 | 8,781 | 9,224 | ||||||
Fannie Mae 6.00% 2037 | 2,114 | 2,215 | ||||||
Fannie Mae 6.50% 2037 | 50,846 | 54,272 | ||||||
Fannie Mae 6.50% 2037 | 14,337 | 15,357 | ||||||
Fannie Mae 6.50% 2037 | 12,366 | 13,199 | ||||||
Fannie Mae 6.50% 2037 | 12,156 | 13,020 | ||||||
Fannie Mae 6.50% 2037 | 11,211 | 11,940 | ||||||
Fannie Mae 6.50% 2037 | 6,527 | 6,966 | ||||||
Fannie Mae 7.00% 2037 | 30,714 | 33,340 | ||||||
Fannie Mae 7.00% 2037 | 21,417 | 23,369 | ||||||
Fannie Mae 7.00% 2037 | 11,869 | 12,884 | ||||||
Fannie Mae 7.00% 2037 | 9,674 | 10,502 | ||||||
Fannie Mae 7.00% 2037 | 8,828 | 9,583 | ||||||
Fannie Mae 7.00% 2037 | 6,664 | 7,234 | ||||||
Fannie Mae 7.00% 2037 | 3,593 | 3,868 | ||||||
Fannie Mae 7.00% 2037 | 3,115 | 3,353 | ||||||
Fannie Mae 7.00% 2037 | 1,867 | 2,026 | ||||||
Fannie Mae 7.50% 2037 | 20,650 | 22,399 | ||||||
Fannie Mae 7.50% 2037 | 3,822 | 4,146 | ||||||
Fannie Mae 7.50% 2037 | 2,924 | 3,171 | ||||||
Fannie Mae 7.50% 2037 | 1,252 | 1,358 | ||||||
Fannie Mae 7.50% 2037 | 946 | 1,019 | ||||||
Fannie Mae 7.50% 2037 | 747 | 804 | ||||||
Fannie Mae 8.00% 2037 | 1,211 | 1,271 | ||||||
Fannie Mae 8.00% 2037 | 1,121 | 1,177 | ||||||
Fannie Mae 4.50% 2038 | 13,043 | 13,130 | ||||||
Fannie Mae 5.50% 2038 | 86,022 | 89,321 | ||||||
Fannie Mae 6.00% 2038 | 27,847 | 29,242 | ||||||
Fannie Mae 5.00% 2038 | 23,736 | 24,289 | ||||||
Fannie Mae 6.00% 2039 | 87,733 | 92,089 | ||||||
Fannie Mae: 6.00% 2037 | 13,160 | 13,795 | ||||||
Fannie Mae 6.50% 2039 | 30,000 | 32,086 | ||||||
Fannie Mae, Series 2001-50, Class BA, 7.00% 2041 | 1,255 | 1,354 | ||||||
Fannie Mae, Series 2001-T10, Class A-1, 7.00% 2041 | 858 | 939 | ||||||
Fannie Mae, Series 2002-W3, Class A-5, 7.50% 2041 | 600 | 668 | ||||||
Fannie Mae, Series 2002-W1, Class 2A, 7.50% 2042 | 1,357 | 1,489 | ||||||
Fannie Mae 6.50% 2047 | 5,238 | 5,581 | ||||||
Fannie Mae 6.50% 2047 | 5,223 | 5,565 | ||||||
Fannie Mae 6.50% 2047 | 4,987 | 5,314 | ||||||
Fannie Mae 6.50% 2047 | 3,632 | 3,869 | ||||||
Fannie Mae 6.50% 2047 | 3,401 | 3,624 | ||||||
Fannie Mae 6.50% 2047 | 2,021 | 2,153 | ||||||
Fannie Mae 6.50% 2047 | 1,409 | 1,501 | ||||||
Fannie Mae 6.50% 2047 | 1,034 | 1,102 | ||||||
Fannie Mae 7.00% 2047 | 5,539 | 5,995 | ||||||
Fannie Mae 7.00% 2047 | 3,346 | 3,621 | ||||||
Fannie Mae 7.00% 2047 | 3,019 | 3,267 | ||||||
Fannie Mae 7.00% 2047 | 2,684 | 2,905 | ||||||
Fannie Mae 7.00% 2047 | 1,574 | 1,703 | ||||||
Freddie Mac 8.50% 2009 | — | — | ||||||
Freddie Mac 8.50% 2010 | 6 | 6 | ||||||
Freddie Mac 5.00% 2018 | 6,554 | 6,904 | ||||||
Freddie Mac 5.50% 2018 | 3,248 | 3,443 | ||||||
Freddie Mac 11.00% 2018 | 114 | 129 | ||||||
Freddie Mac, Series 2890, Class KT, 4.50% 2019 | 25,425 | 25,753 | ||||||
Freddie Mac 5.50% 2019 | 8,788 | 9,317 | ||||||
Freddie Mac, Series 178, Class Z, 9.25% 2021 | 66 | 72 | ||||||
Freddie Mac, Series 2289, Class NB, 11.347% 20225 | 115 | 132 | ||||||
Freddie Mac 5.00% 2023 | 23,194 | 24,115 | ||||||
Freddie Mac 5.00% 2023 | 20,412 | 21,222 | ||||||
Freddie Mac 5.00% 2023 | 13,899 | 14,451 | ||||||
Freddie Mac 5.00% 2023 | 7,328 | 7,632 | ||||||
Freddie Mac 5.00% 2024 | 27,365 | 28,395 | ||||||
Freddie Mac 6.00% 2026 | 3,586 | 3,781 | ||||||
Freddie Mac 6.00% 2027 | 6,233 | 6,554 | ||||||
Freddie Mac 4.627% 20355 | 5,720 | 5,958 | ||||||
Freddie Mac 5.00% 2035 | 10,422 | 10,694 | ||||||
Freddie Mac, Series 3061, Class PN, 5.50% 2035 | 4,919 | 5,173 | ||||||
Freddie Mac 5.00% 2036 | 8,991 | 9,213 | ||||||
Freddie Mac, Series 3257, Class PA, 5.50% 2036 | 21,044 | 22,083 | ||||||
Freddie Mac 7.00% 2036 | 1,688 | 1,826 | ||||||
Freddie Mac 5.00% 2037 | 2,650 | 2,715 | ||||||
Freddie Mac, Series 3286, Class JN, 5.50% 2037 | 28,382 | 29,595 | ||||||
Freddie Mac, Series 3312, Class PA, 5.50% 2037 | 21,646 | 22,569 | ||||||
Freddie Mac, Series 3318, Class JT, 5.50% 2037 | 15,923 | 16,604 | ||||||
Freddie Mac, Series 3271, Class OA, 6.00% 2037 | 19,981 | 21,357 | ||||||
Freddie Mac 6.50% 2037 | 6,576 | 7,030 | ||||||
Freddie Mac 5.932% 20385 | 3,766 | 3,962 | ||||||
Freddie Mac 6.50% 2038 | 27,487 | 29,358 | ||||||
Freddie Mac 5.00% 2039 | 27,710 | 28,338 | ||||||
Countrywide Alternative Loan Trust, Series 2005-49CB, Class A-1, 5.50% 2035 | 63,503 | 57,295 | ||||||
Countrywide Alternative Loan Trust, Series 2005-40CB, Class A-1, 5.50% 2035 | 12,471 | 8,520 | ||||||
Countrywide Alternative Loan Trust, Series 2005-54CB, Class 2-A-5, 5.50% 2035 | 11,354 | 5,734 | ||||||
Countrywide Alternative Loan Trust, Series 2005-50CB, Class 3-A-1, 6.00% 2035 | 11,598 | 7,419 | ||||||
Countrywide Alternative Loan Trust, Series 2004-36CB, Class 1-A-1, 6.00% 2035 | 3,644 | 2,622 | ||||||
Countrywide Alternative Loan Trust, Series 2006-14CB, Class A-2, 0.685% 20365 | 4,891 | 2,100 | ||||||
Countrywide Alternative Loan Trust, Series 2006-6CB, Class 1-A-4, 5.50% 2036 | 10,000 | 6,029 | ||||||
Countrywide Alternative Loan Trust, Series 2007-14T2, Class A-4, 0.635% 20375 | 26,195 | 11,882 | ||||||
Countrywide Alternative Loan Trust, Series 2007-2CB, Class 1-A-9, 5.75% 2037 | 14,423 | 8,645 | ||||||
Countrywide Alternative Loan Trust, Series 2007-7T2, Class A-27, 6.00% 2037 | 35,051 | 19,952 | ||||||
Countrywide Alternative Loan Trust, Series 2007-HY4, Class 3-A-1, 5.84% 20475 | 27,337 | 14,285 | ||||||
Countrywide Alternative Loan Trust, Series 2007-HY4, Class 4-A-1, 5.904% 20475 | 15,623 | 8,458 | ||||||
Government National Mortgage Assn. 9.50% 2009 | 1 | 1 | ||||||
Government National Mortgage Assn. 9.00% 2016 | 29 | 33 | ||||||
Government National Mortgage Assn. 8.50% 2017 | 7 | 7 | ||||||
Government National Mortgage Assn. 8.50% 2017 | 3 | 3 | ||||||
Government National Mortgage Assn. 8.50% 2021 | 146 | 163 | ||||||
Government National Mortgage Assn. 8.50% 2021 | 26 | 28 | ||||||
Government National Mortgage Assn. 8.50% 2021 | 5 | 5 | ||||||
Government National Mortgage Assn. 9.50% 2021 | 93 | 106 | ||||||
Government National Mortgage Assn. 10.00% 2021 | 975 | 1,124 | ||||||
Government National Mortgage Assn. 10.00% 2025 | 889 | 1,019 | ||||||
Government National Mortgage Assn. 6.00% 2038 | 66,000 | 69,468 | ||||||
Government National Mortgage Assn. 6.50% 2038 | 38,262 | 40,732 | ||||||
Government National Mortgage Assn. 6.50% 2038 | 2,948 | 3,139 | ||||||
WaMu Mortgage Pass-Through Certificates Trust, Series 2006-AR12, Class 1-A2, 5.787% 20365 | 10,000 | 5,965 | ||||||
WaMu Mortgage Pass-Through Certificates Trust, Series 2007-HY3, Class 4-A1, 5.324% 20375 | 18,744 | 14,288 | ||||||
WaMu Mortgage Pass-Through Certificates Trust, Series 2007-HY6, Class 2-A3, 5.737% 20375 | 47,319 | 32,354 | ||||||
WaMu Mortgage Pass-Through Certificates Trust, Series 2007-HY7, Class 2-A1, 5.798% 20375 | 16,110 | 9,046 | ||||||
WaMu Mortgage Pass-Through Certificates Trust, Series 2007-HY5, Class 3-A1, 5.808% 20375 | 31,643 | 23,596 | ||||||
WaMu Mortgage Pass-Through Certificates Trust, Series 2007-HY7, Class 4-A2, 5.846% 20375 | 15,599 | 10,237 | ||||||
American Tower Trust I, Series 2007-1A, Class A-FX, 5.42% 20374 | 7,250 | 6,764 | ||||||
American Tower Trust I, Series 2007-1A, Class B, 5.537% 20374 | 20,000 | 18,947 | ||||||
American Tower Trust I, Series 2007-1A, Class D, 5.957% 20374 | 37,375 | 34,673 | ||||||
American Tower Trust I, Series 2007-1A, Class E, 6.249% 20374 | 20,500 | 18,816 | ||||||
American Tower Trust I, Series 2007-1A, Class F, 6.639% 20374 | 5,550 | 5,066 | ||||||
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2002-CIBC5, Class A-1, 4.372% 2037 | 2,027 | 2,046 | ||||||
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2005-CIBC12, Class A-2, 4.739% 2037 | 1,615 | 1,615 | ||||||
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2005-CIBC11, Class A-2, 5.016% 2037 | 14,040 | 14,075 | ||||||
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2003-ML1, Class A-1, 3.972% 2039 | 750 | 758 | ||||||
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2004-C3, Class A-2, 4.223% 2042 | 11,687 | 11,453 | ||||||
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2005-LDP4, Class A-2, 4.79% 2042 | 2,807 | 2,812 | ||||||
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2006-CIBC14, Class A-4, 5.481% 20445 | 3,840 | 3,333 | ||||||
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2006-LDP7, Class A-4, 5.875% 20455 | 27,700 | 24,529 | ||||||
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2005-LDP1, Class A-2, 4.625% 2046 | 9,857 | 9,858 | ||||||
SBA CMBS Trust, Series 2005-1, Class A, 5.369% 20353,4 | 10,000 | 9,900 | ||||||
SBA CMBS Trust, Series 2005-1, Class B, 5.565% 20353,4 | 7,000 | 6,860 | ||||||
SBA CMBS Trust, Series 2006-1A, Class A, 5.314% 20364 | 12,000 | 11,731 | ||||||
SBA CMBS Trust, Series 2006-1A, Class D, 5.852% 20363,4 | 5,000 | 4,850 | ||||||
SBA CMBS Trust, Series 2006-1A, Class F, 6.709% 20364 | 18,000 | 17,091 | ||||||
SBA CMBS Trust, Series 2006-1A, Class G, 6.904% 20364 | 17,000 | 15,949 | ||||||
SBA CMBS Trust, Series 2006-1A, Class H, 7.389% 20364 | 1,670 | 1,553 | ||||||
CS First Boston Mortgage Securities Corp., Series 2001-CKN5, Class A-4, 5.435% 2034 | 3,638 | 3,730 | ||||||
CS First Boston Mortgage Securities Corp., Series 2004-5, Class IV-A-1, 6.00% 2034 | 2,653 | 2,388 | ||||||
CS First Boston Mortgage Securities Corp., Series 2001-CP4, Class A-4, 6.18% 2035 | 7,345 | 7,617 | ||||||
CS First Boston Mortgage Securities Corp., Series 2005-5, Class IV-A-1, 6.25% 2035 | 4,607 | 3,501 | ||||||
CS First Boston Mortgage Securities Corp., Series 2001-CK1, Class A-3, 6.38% 2035 | 8,767 | 9,036 | ||||||
CS First Boston Mortgage Securities Corp., Series 2005-C3, Class A-AB, 4.614% 2037 | 10,000 | 10,038 | ||||||
CS First Boston Mortgage Securities Corp., Series 2002-CKN2, Class A-3, 6.133% 2037 | 6,910 | 7,162 | ||||||
CS First Boston Mortgage Securities Corp., Series 2005-C5, Class A-2, 5.10% 20385 | 8,000 | 7,811 | ||||||
CS First Boston Mortgage Securities Corp., Series 2005-C6, Class A-2FX, 5.207% 20405 | 3,050 | 2,958 | ||||||
CS First Boston Mortgage Securities Corp., Series 2005-C6, Class A-3, 5.23% 20405 | 10,900 | 10,510 | ||||||
Crown Castle Towers LLC, Series 2005-1, Class D, 5.612% 20354 | 37,750 | 36,425 | ||||||
Crown Castle Towers LLC, Series 2006-1, Class E, 6.065% 20363,4 | 9,000 | 8,820 | ||||||
Crown Castle Towers LLC, Series 2006-1, Class F, 6.650% 20363,4 | 16,575 | 16,243 | ||||||
Crown Castle Towers LLC, Series 2006-1, Class G, 6.795% 20363,4 | 1,250 | 1,225 | ||||||
CHL Mortgage Pass-Through Trust, Series 2005-HYB8, Class 4-A-1, 5.493% 20355 | 5,775 | 3,527 | ||||||
CHL Mortgage Pass-Through Trust, Series 2007-HY5, Class 3-A-1, 6.175% 20375 | 17,864 | 12,445 | ||||||
CHL Mortgage Pass-Through Trust, Series 2007-8, Class 1-A-1, 6.00% 2038 | 8,138 | 6,367 | ||||||
CHL Mortgage Pass-Through Trust, Series 2007-HY5, Class 1-A-1, 5.92% 20475 | 34,883 | 23,201 | ||||||
CHL Mortgage Pass-Through Trust, Series 2007-HY4, Class 1-A-1, 6.075% 20475 | 19,978 | 13,292 | ||||||
Wells Fargo Alternative Loan Trust, Series 2007-PA1, Class A-1, 0.605% 20375 | 10,142 | 5,774 | ||||||
Wells Fargo Alternative Loan Trust, Series 2007-PA4, Class III-A-1, 6.065% 20375 | 14,623 | 6,966 | ||||||
Wells Fargo Alternative Loan Trust, Series 2007-PA3, Class III-A-1, 6.25% 2037 | 30,996 | 20,916 | ||||||
Wells Fargo Alternative Loan Trust, Series 2007-PA3, Class IV-A-1, 6.50% 2037 | 41,015 | 23,413 | ||||||
Wachovia Bank Commercial Mortgage Trust, Series 2005-C16, Class A-PB, 4.692% 2041 | 15,000 | 14,965 | ||||||
Wachovia Bank Commercial Mortgage Trust, Series 2005-C17, Class A-4, 5.083% 20425 | 5,000 | 4,852 | ||||||
Wachovia Bank Commercial Mortgage Trust, Series 2005-C22, Class A-4, 5.265% 20445 | 22,000 | 21,329 | ||||||
Wachovia Bank Commercial Mortgage Trust, Series 2006-C23, Class A-PB, 5.446% 2045 | 12,500 | 11,992 | ||||||
Wells Fargo Mortgage-backed Securities Trust, Series 2006-1, Class A-3, 5.00% 2021 | 6,065 | 5,514 | ||||||
Wells Fargo Mortgage-backed Securities Trust, Series 2006-AR15, Class A-1, 5.715% 20365 | 12,021 | 8,745 | ||||||
Wells Fargo Mortgage-backed Securities Trust, Series 2007-11, Class A-96, 6.00% 2037 | 41,887 | 35,300 | ||||||
Structured Adjustable Rate Mortgage Loan Trust, Series 2006-8, Class 3-AF, 0.665% 20365 | 6,150 | 3,636 | ||||||
Structured Adjustable Rate Mortgage Loan Trust, Series 2006-4, Class 5-A-1, 5.879% 20365 | 10,534 | 6,544 | ||||||
Structured Adjustable Rate Mortgage Loan Trust, Series 2006-4, Class 6-A, 5.884% 20365 | 25,834 | 16,473 | ||||||
Structured Adjustable Rate Mortgage Loan Trust, Series 2006-12, Class 2-A1, 5.88% 20375 | 10,019 | 5,726 | ||||||
Structured Adjustable Rate Mortgage Loan Trust, Series 2007-9, Class 2-A1, 5.901% 20475 | 6,177 | 3,858 | ||||||
GE Commercial Mortgage Corp., Series 2004-C1, Class A-2, 3.915% 2038 | 2,494 | 2,370 | ||||||
GE Commercial Mortgage Corp., Series 2006-C1, Class A-4, 5.336% 20445 | 13,000 | 12,405 | ||||||
GE Commercial Mortgage Corp., Series 2005-C4, Class A-3A, 5.334% 20455 | 17,000 | 16,265 | ||||||
IndyMac INDX Mortgage Loan Trust, Series 2006-AR5, Class 2-A-1, 5.625% 20365 | 15,101 | 9,599 | ||||||
IndyMac INDX Mortgage Loan Trust, Series 2006-AR25, Class 3-A-1, 5.922% 20365 | 38,572 | 20,110 | ||||||
Banc of America Commercial Mortgage Inc., Series 2001-1, Class A-2, 6.503% 2036 | 9,717 | 10,070 | ||||||
Banc of America Commercial Mortgage Inc., Series 2005-5, Class A-4, 5.115% 20455 | 3,000 | 2,743 | ||||||
Banc of America Commercial Mortgage Inc., Series 2005-5, Class A-3B, 5.219% 20455 | 17,730 | 16,268 | ||||||
Citigroup Mortgage Loan Trust, Inc., Series 2005-8, Class I-A4A, 5.557% 20355 | 17,701 | 11,996 | ||||||
Citigroup Mortgage Loan Trust, Inc., Series 2006-AR5, Class 2-A7A, 6.219% 20365 | 23,183 | 13,152 | ||||||
Citigroup Mortgage Loan Trust, Inc., Series 2007-AR5, Class 1-A2A, 5.604% 20375 | 5,263 | 2,645 | ||||||
Banc of America Mortgage Securities, Inc., Series 2004-7, Class 7-A-1, 5.00% 2019 | 24,214 | 23,646 | ||||||
Bear Stearns ARM Trust, Series 2005-6, Class I-A-1, 4.039% 20355 | 12,370 | 8,282 | ||||||
Bear Stearns ARM Trust, Series 2005-10, Class A-3, 4.65% 20355 | 20,000 | 11,656 | ||||||
Bear Stearns ARM Trust, Series 2006-2, Class 2-A-1, 5.65% 20365 | 4,798 | 3,220 | ||||||
Bank of America 5.50% 20124 | 22,500 | 23,044 | ||||||
ML-CFC Commercial Mortgage Trust, Series 2006-4, Class A-3, 5.172% (undated)5 | 27,410 | 21,568 | ||||||
IndyMac IMSC Mortgage Loan Trust, Series 2007-F3, Class 2-A-1, 6.50% 2037 | 18,800 | 10,733 | ||||||
IndyMac IMSC Mortgage Loan Trust, Series 2007-F3, Class 3-A-1, 7.00% 2037 | 18,195 | 10,366 | ||||||
Residential Accredit Loans, Inc., Series 2005-QR1, Class A, 6.00% 2034 | 6,051 | 4,400 | ||||||
Residential Accredit Loans, Inc., Series 2005-QA12, Class CB-I, 5.436% 20355 | 9,008 | 4,706 | ||||||
Residential Accredit Loans, Inc., Series 2007-QS5, Class A-5, 0.585% 20375 | 19,621 | 7,808 | ||||||
Residential Accredit Loans, Inc., Series 2007-QS11, Class A-1, 7.00% 2037 | 6,710 | 3,822 | ||||||
L.A. Arena Funding, LLC, Series 1, Class A, 7.656% 20264 | 21,353 | 20,096 | ||||||
J.P. Morgan Chase Commercial Mortgage Securities Trust, Series 2006-LDP6, Class A-4, 5.475% 20435 | 20,250 | 18,915 | ||||||
Greenwich Capital Commercial Funding Corp., Series 2005-GG5, Class A-2, 5.117% 2037 | 9,890 | 9,890 | ||||||
Greenwich Capital Commercial Funding Corp., Series 2005-GG5, Class A-4-1, 5.243% 20375 | 10,000 | 8,890 | ||||||
Morgan Stanley Capital I Trust, Series 2005-HQ7, Class A-2, 5.207% 20425 | 17,875 | 18,040 | ||||||
Nationwide Building Society, Series 2007-2, 5.50% 20124 | 17,500 | 17,460 | ||||||
Structured Products Asset Return Certificates Trust, Series 2001-CF1, Class A, 6.36% 20333 | 16,095 | 16,272 | ||||||
Citigroup-Deutsche Bank Commercial Mortgage Trust, Series 2006-CD3, Class A-5, 5.617% 2048 | 20,000 | 16,102 | ||||||
GSR Mortgage Loan Trust, Series 2004-2F, Class VIIA-1, 4.50% 2019 | 12,681 | 12,244 | ||||||
GSR Mortgage Loan Trust, Series 2004-15F, Class 5A-1, 5.50% 2020 | 3,110 | 3,063 | ||||||
Thornburg Mortgage Securities Trust, Series 2006-5, Class A-1, 0.405% 20465 | 14,800 | 13,789 | ||||||
GMAC Commercial Mortgage Securities, Inc., Series 2001-C1, Class A-2, 6.465% 2034 | 11,545 | 11,976 | ||||||
LB-UBS Commercial Mortgage Trust, Series 2005-C7, Class A-4, 5.197% 20305 | 11,422 | 11,034 | ||||||
Lehman Mortgage Trust, Series 2005-2, Class 5-A1, 1.185% 20355 | 15,686 | 10,857 | ||||||
Banc of America Funding Trust, Series 2007-7, Class 2-A-1, 6.00% 2037 | 15,452 | 10,806 | ||||||
Morgan Stanley Dean Witter Capital I Trust, Series 2000-LIFE2, Class A-2, 7.20% 2033 | 9,881 | 10,413 | ||||||
J.P. Morgan Mortgage Trust, Series 2006-A3, Class 3-A-3, 5.73% 20365 | 2,000 | 1,193 | ||||||
J.P. Morgan Mortgage Trust, Series 2006-A7, Class 2-A-4, 5.782% 20375 | 13,875 | 8,476 | ||||||
Structured Asset Securities Corp., Series 1998-RF2, Class A, 8.428% 20274,5 | 213 | 154 | ||||||
Structured Asset Securities Corp., Series 1998-RF1, Class A, 8.536% 20274,5 | 181 | 159 | ||||||
Structured Asset Securities Corp., Series 2005-3, Class 1-A-5, 5.00% 2035 | 11,162 | 8,790 | ||||||
American Home Mortgage Assets Trust, Series 2007-3, Class II-2A-1, 6.25% 20375 | 16,152 | 7,716 | ||||||
American General Mortgage Loan Trust, Series 2006-1, Class A-5, 5.75% 20354,5 | 9,504 | 7,397 | ||||||
Commercial Mortgage Trust, Series 2003-LNB1, Class A-2, 4.084% 2038 | 6,925 | 6,759 | ||||||
GS Mortgage Securities Corp. II, Series 2001-ROCK, Class D, 6.878% 20184 | 6,000 | 6,484 | ||||||
Four Times Square Trust, Series 2000-4TS, Class C, 7.86% 20154 | 6,000 | 6,280 | ||||||
BCAP LLC Trust, Series 2006-AA2, Class A-1, 0.455% 20375 | 13,308 | 6,279 | ||||||
Bear Stearns Asset-backed Securities I Trust, Series 2005-AC3, Class II-A-1, 5.25% 2020 | 6,497 | 5,950 | ||||||
Bear Stearns ALT-A Trust, Series 2006-2, Class II-4-A-1, 5.866% 20365 | 10,046 | 4,959 | ||||||
GE Capital Commercial Mortgage Corp., Series 2001-1, Class A-1, 6.079% 2033 | 401 | 404 | ||||||
GE Capital Commercial Mortgage Corp., Series 2002-3, Class A-1, 4.229% 2037 | 3,900 | 3,909 | ||||||
Chase Commercial Mortgage Securities Corp., Series 2000-1, Class A-2, 7.757% 2032 | 3,819 | 4,002 | ||||||
GSAA Home Equity Trust, Series 2007-10, Class A-1A, 6.00% 2037 | 4,678 | 2,805 | ||||||
Merrill Lynch Mortgage Investors, Inc., Series 1999-C1, Class A-2, 7.56% 2031 | 2,652 | 2,651 | ||||||
Bear Stearns Commercial Mortgage Securities Inc., Series 1999-C1, Class X, interest only, 0.658% 20314,5 | 18,430 | 401 | ||||||
Bear Stearns Commercial Mortgage Securities Inc., Series 2002-PBW1, Class A-1, 3.97% 2035 | 1,466 | 1,474 | ||||||
Harborview Mortgage Loan Trust, Series 2006-6, Class 1A, 4.808% 20365 | 2,947 | 1,485 | ||||||
Morgan Stanley Mortgage Loan Trust, Series 2006-3AR, Class 3-A-1, 5.964% 20365 | 874 | 472 | ||||||
Financial Asset Securitization, Inc., Series 1997-NAM1, Class B-1, 7.75% 2027 | 263 | 248 | ||||||
3,768,710 | ||||||||
BONDS & NOTES OF U.S. GOVERNMENT & GOVERNMENT AGENCIES — 5.54% | ||||||||
U.S. Treasury 1.125% 2011 | 57,260 | 57,003 | ||||||
U.S. Treasury 4.50% 2011 | 16,165 | 17,358 | ||||||
U.S. Treasury 4.625% 2011 | 407,750 | 439,701 | ||||||
U.S. Treasury 4.875% 2011 | 53,820 | 57,430 | ||||||
U.S. Treasury 3.00% 20123,7 | 114,173 | 120,818 | ||||||
U.S. Treasury 2.75% 2013 | 10,345 | 10,566 | ||||||
U.S. Treasury 3.375% 2013 | 146,750 | 154,111 | ||||||
U.S. Treasury 3.50% 2013 | 52,000 | 54,852 | ||||||
U.S. Treasury 3.625% 2013 | 171,910 | 182,144 | ||||||
U.S. Treasury 4.25% 2013 | 110,582 | 119,782 | ||||||
U.S. Treasury 1.875% 2014 | 50,000 | 48,699 | ||||||
U.S. Treasury 2.25% 2014 | 70,000 | 69,229 | ||||||
U.S. Treasury 4.25% 2014 | 91,000 | 98,237 | ||||||
U.S. Treasury 1.875% 20153,7 | 74,756 | 75,800 | ||||||
U.S. Treasury 2.375% 2016 | 8,600 | 8,233 | ||||||
U.S. Treasury 3.25% 2016 | 70,695 | 71,347 | ||||||
U.S. Treasury 3.25% 2016 | 41,620 | 41,935 | ||||||
U.S. Treasury 8.875% 2017 | 7,500 | 10,380 | ||||||
U.S. Treasury 1.625% 20183,7 | 20,414 | 20,329 | ||||||
U.S. Treasury 3.50% 2018 | 351,940 | 354,537 | ||||||
U.S. Treasury 3.75% 2018 | 42,900 | 43,770 | ||||||
U.S. Treasury 2.75% 2019 | 2,800 | 2,631 | ||||||
U.S. Treasury 3.125% 2019 | 65,100 | 63,081 | ||||||
U.S. Treasury 8.125% 2019 | 24,000 | 32,923 | ||||||
U.S. Treasury 7.875% 2021 | 50,000 | 68,097 | ||||||
U.S. Treasury 6.25% 2023 | 175,190 | 214,306 | ||||||
U.S. Treasury 6.00% 2026 | 20,000 | 24,188 | ||||||
U.S. Treasury 6.50% 2026 | 14,385 | 18,352 | ||||||
U.S. Treasury 5.50% 2028 | 49,375 | 57,075 | ||||||
U.S. Treasury 4.50% 2036 | 204,890 | 211,293 | ||||||
U.S. Treasury 4.375% 2038 | 39,755 | 40,159 | ||||||
U.S. Treasury 3.50% 2039 | 70,000 | 60,517 | ||||||
U.S. Treasury Principal Strip 0% 2039 | 16,000 | 4,356 | ||||||
Fannie Mae 5.25% 2012 | 74,000 | 78,345 | ||||||
Fannie Mae 4.625% 2013 | 80,000 | 83,192 | ||||||
Fannie Mae 6.25% 2029 | 47,000 | 56,072 | ||||||
Federal Home Loan Bank 1.75% 2012 | 46,960 | 46,747 | ||||||
Federal Home Loan Bank 3.625% 2013 | 29,815 | 31,070 | ||||||
Federal Home Loan Bank 5.25% 2014 | 11,125 | 12,333 | ||||||
Freddie Mac 6.625% 2009 | 39,355 | 39,650 | ||||||
United States Government Agency-Guaranteed (FDIC insured), General Electric Capital Corp., Series G, 1.625% 2011 | 4,400 | 4,441 | ||||||
United States Government Agency-Guaranteed (FDIC insured), General Electric Capital Corp., Series G, 2.20% 2012 | 11,750 | 11,842 | ||||||
CoBank ACB 7.875% 20184 | 10,000 | 9,616 | ||||||
CoBank ACB 1.229% 20224,5 | 8,315 | 5,682 | ||||||
Federal Agricultural Mortgage Corp. 4.875% 20114 | 11,000 | 11,653 | ||||||
Federal Agricultural Mortgage Corp. 5.50% 20114 | 3,000 | 3,214 | ||||||
United States Government Agency-Guaranteed (FDIC insured), Regions Bank 3.25% 2011 | 13,375 | 13,885 | ||||||
United States Government Agency-Guaranteed (FDIC insured), Sovereign Bancorp, Inc. 2.75% 2012 | 12,500 | 12,646 | ||||||
United States Government Agency-Guaranteed (FDIC insured), PNC Funding Corp. 2.30% 2012 | 12,500 | 12,634 | ||||||
United States Government Agency-Guaranteed (FDIC insured), Bank of America Corp., Series L, 3.125% 2012 | 12,000 | 12,402 | ||||||
United States Government Agency-Guaranteed (FDIC insured), Citigroup Inc. 2.875% 2011 | 12,000 | 12,337 | ||||||
United States Agency for International Development, Republic of Egypt 4.45% 2015 | 10,000 | 10,361 | ||||||
3,321,361 | ||||||||
CONSUMER DISCRETIONARY — 4.26% | ||||||||
CCH II, LLC and CCH II Capital Corp. 10.25% 2010 | 39,050 | 41,979 | ||||||
Charter Communications Operating, LLC and Charter Communications Operating Capital Corp. 8.00% 20124 | 48,548 | 48,669 | ||||||
CCO Holdings, LLC and CCO Holdings Capital Corp. 8.75% 2013 | 23,350 | 23,408 | ||||||
Charter Communications Operating, LLC, Term Loan B, 4.25% 20145,6,8 | 49,570 | 45,564 | ||||||
Charter Communications Operating, LLC, Term Loan B, 7.25% 20145,6,8 | 6,913 | 6,921 | ||||||
Charter Communications Operating, LLC and Charter Communications Operating Capital Corp. 8.375% 20144 | 15,000 | 15,038 | ||||||
Charter Communications Operating, LLC and Charter Communications Operating Capital Corp. 10.875% 20144 | 24,550 | 26,637 | ||||||
CCH I, LLC and CCH I Capital Corp. 11.00% 20159 | 1,725 | 222 | ||||||
Allison Transmission Holdings, Inc., Term Loan B, 3.06% 20145,6,8 | 112,644 | 98,106 | ||||||
Allison Transmission Holdings, Inc. 11.00% 20154 | 24,300 | 22,235 | ||||||
Allison Transmission Holdings, Inc. 12.00% 20154,5,10 | 60,950 | 50,284 | ||||||
NTL Cable PLC 8.75% 2014 | 30,564 | 31,022 | ||||||
NTL Cable PLC 9.125% 2016 | 32,000 | 32,480 | ||||||
NTL Cable PLC 9.50% 2016 | 86,065 | 88,647 | ||||||
Univision Communications, Inc., First Lien Term Loan B, 2.535% 20145,6,8 | 78,344 | 63,491 | ||||||
Univision Communications Inc. 12.00% 20144 | 11,435 | 12,235 | ||||||
Univision Communications Inc. 10.50% 20154,5,10 | 104,290 | 69,874 | ||||||
News America Inc. 5.30% 2014 | 29,150 | 30,331 | ||||||
News America Holdings Inc. 8.00% 2016 | 6,000 | 6,862 | ||||||
News America Inc. 7.25% 2018 | 1,405 | 1,582 | ||||||
News America Holdings Inc. 8.25% 2018 | 4,000 | 4,765 | ||||||
News America Inc. 6.90% 20194 | 30,000 | 34,030 | ||||||
News America Inc. 6.40% 2035 | 750 | 750 | ||||||
News America Inc. 6.65% 2037 | 22,000 | 22,874 | ||||||
News America Inc. 6.75% 2038 | 15,000 | 15,270 | ||||||
News America Inc. 7.85% 20394 | 3,500 | 4,040 | ||||||
Michaels Stores, Inc., Term Loan B, 2.563% 20135,6,8 | 30,882 | 25,419 | ||||||
Michaels Stores, Inc. 10.00% 2014 | 85,125 | 80,443 | ||||||
Michaels Stores, Inc. 0%/13.00% 201611 | 2,245 | 1,033 | ||||||
Time Warner Inc. 5.50% 2011 | 5,185 | 5,497 | ||||||
AOL Time Warner Inc. 6.75% 2011 | 3,815 | 4,069 | ||||||
AOL Time Warner Inc. 6.875% 2012 | 18,450 | 20,151 | ||||||
Time Warner Companies, Inc. 9.125% 2013 | 5,000 | 5,793 | ||||||
Time Warner Inc. 5.875% 2016 | 19,985 | 21,007 | ||||||
Time Warner Companies, Inc. 7.25% 2017 | 9,500 | 10,468 | ||||||
AOL Time Warner Inc. 7.625% 2031 | 10,750 | 11,692 | ||||||
Time Warner Inc. 6.50% 2036 | 19,000 | 19,136 | ||||||
Cox Communications, Inc. 7.875% 2009 | 12,500 | 12,521 | ||||||
Cox Communications, Inc. 4.625% 2010 | 8,250 | 8,332 | ||||||
Cox Communications, Inc. 7.75% 2010 | 10,000 | 10,527 | ||||||
Cox Communications, Inc. 5.45% 2014 | 13,500 | 14,255 | ||||||
Cox Communications, Inc. 5.875% 20164 | 25,000 | 26,072 | ||||||
Cox Communications, Inc. 8.375% 20394 | 16,845 | 21,115 | ||||||
Time Warner Cable Inc. 7.50% 2014 | 22,400 | 25,562 | ||||||
Time Warner Cable Inc. 6.75% 2018 | 29,000 | 32,288 | ||||||
Time Warner Cable Inc. 8.25% 2019 | 3,500 | 4,258 | ||||||
Time Warner Cable Inc. 6.55% 2037 | 25,000 | 26,763 | ||||||
Federated Retail Holdings, Inc. 5.35% 2012 | 4,490 | 4,406 | ||||||
Macy’s Retail Holdings, Inc. 8.875% 20155 | 17,510 | 18,155 | ||||||
Federated Retail Holdings, Inc. 5.90% 2016 | 56,600 | 51,374 | ||||||
Federated Retail Holdings, Inc. 6.375% 2037 | 14,300 | 10,741 | ||||||
Toys “R” Us, Inc. 7.625% 2011 | 38,345 | 36,044 | ||||||
Toys “R” Us-Delaware, Inc., Term Loan B, 4.536% 20125,6,8 | 14,940 | 14,427 | ||||||
Toys “R” Us, Inc. 10.75% 20174 | 30,000 | 30,900 | ||||||
MGM MIRAGE 8.50% 2010 | 49,305 | 46,717 | ||||||
MGM MIRAGE 6.75% 2012 | 9,150 | 7,000 | ||||||
MGM MIRAGE 6.75% 2013 | 8,200 | 6,294 | ||||||
MGM MIRAGE 13.00% 20134 | 10,725 | 12,146 | ||||||
MGM MIRAGE 10.375% 20144 | 1,675 | 1,805 | ||||||
MGM MIRAGE 7.50% 2016 | 4,000 | 2,940 | ||||||
MGM MIRAGE 11.125% 20174 | 2,450 | 2,707 | ||||||
Sally Holdings LLC and Sally Capital Inc. 9.25% 2014 | 63,375 | 65,593 | ||||||
Sally Holdings LLC and Sally Capital Inc. 10.50% 2016 | 2,650 | 2,743 | ||||||
J.C. Penney Co., Inc. 8.00% 2010 | 35,705 | 36,147 | ||||||
J.C. Penney Co., Inc. 9.00% 2012 | 12,006 | 12,618 | ||||||
J.C. Penney Corp., Inc. 5.75% 2018 | 13,000 | 11,911 | ||||||
Comcast Cable Communications, Inc. 6.75% 2011 | 4,660 | 4,964 | ||||||
Comcast Corp. 5.85% 2015 | 13,200 | 14,326 | ||||||
Comcast Corp. 5.90% 2016 | 10,000 | 10,718 | ||||||
Comcast Corp. 6.30% 2017 | 4,000 | 4,412 | ||||||
Comcast Corp. 6.45% 2037 | 13,500 | 14,499 | ||||||
Comcast Corp. 6.95% 2037 | 10,275 | 11,709 | ||||||
Royal Caribbean Cruises Ltd. 8.75% 2011 | 27,025 | 27,160 | ||||||
Royal Caribbean Cruises Ltd. 11.875% 2015 | 18,175 | 18,811 | ||||||
Staples, Inc. 7.75% 2011 | 16,115 | 17,163 | ||||||
Staples, Inc. 7.375% 2012 | 9,000 | 9,582 | ||||||
Staples, Inc. 9.75% 2014 | 15,625 | 18,322 | ||||||
AMC Entertainment Inc. 8.75% 20194 | 42,400 | 41,976 | ||||||
TL Acquisitions, Inc., Term Loan B, 2.79% 20145,6,8 | 15,115 | 13,017 | ||||||
Thomson Learning 10.50% 20154 | 33,050 | 28,588 | ||||||
Warner Music Group 7.375% 2014 | 22,665 | 20,625 | ||||||
Warner Music Group 9.50% 20164 | 17,300 | 18,425 | ||||||
Dollar General Corp., Term Loan B2, 3.06% 20145,6,8 | 5,000 | 4,857 | ||||||
Dollar General Corp. 10.625% 2015 | 19,125 | 21,420 | ||||||
Dollar General Corp. 11.875% 20175,10 | 11,200 | 12,600 | ||||||
Regal Cinemas Corp., Series B, 9.375% 2012 | 7,250 | 7,286 | ||||||
Regal Cinemas Corp. 8.625% 20194 | 29,095 | 30,113 | ||||||
Boyd Gaming Corp. 7.75% 2012 | 28,400 | 27,761 | ||||||
Boyd Gaming Corp. 6.75% 2014 | 10,504 | 9,427 | ||||||
Tenneco Automotive Inc., Series B, 10.25% 2013 | 5,144 | 5,195 | ||||||
Tenneco Automotive Inc. 8.625% 2014 | 27,750 | 24,004 | ||||||
Tenneco Inc. 8.125% 2015 | 6,950 | 6,342 | ||||||
Cinemark USA, Inc., Term Loan B, 2.21% 20135,6,8 | 3,696 | 3,546 | ||||||
Cinemark USA, Inc. 8.625% 20194 | 30,375 | 31,590 | ||||||
Quebecor Media Inc. 7.75% 2016 | 24,450 | 23,350 | ||||||
Quebecor Media Inc. 7.75% 2016 | 11,195 | 10,691 | ||||||
DaimlerChrysler North America Holding Corp., Series E, 5.75% 2011 | 14,150 | 14,597 | ||||||
DaimlerChrysler North America Holding Corp. 7.30% 2012 | 7,875 | 8,439 | ||||||
DaimlerChrysler North America Holding Corp. 6.50% 2013 | 5,400 | 5,718 | ||||||
Marriott International, Inc., Series J, 5.625% 2013 | 8,745 | 8,748 | ||||||
Marriott International, Inc., Series I, 6.375% 2017 | 19,500 | 18,689 | ||||||
Target Corp. 6.00% 2018 | 24,500 | 26,741 | ||||||
Walt Disney Co. 6.375% 2012 | 15,000 | 16,542 | ||||||
Walt Disney Co. 5.625% 2016 | 3,000 | 3,301 | ||||||
Walt Disney Co. 5.875% 2017 | 4,000 | 4,417 | ||||||
UPC Holding BV 9.875% 20184 | 23,000 | 23,000 | ||||||
Wynn Las Vegas, LLC and Wynn Las Vegas Capital Corp. 6.625% 2014 | 24,535 | 22,879 | ||||||
DIRECTV Holdings LLC and DIRECTV Financing Co., Inc. 8.375% 2013 | 7,187 | 7,376 | ||||||
DIRECTV Holdings LLC and DIRECTV Financing Co., Inc. 7.625% 2016 | 15,000 | 15,263 | ||||||
CSC Holdings, Inc., Series B, 6.75% 2012 | 400 | 400 | ||||||
CSC Holdings, Inc. 8.50% 20144 | 7,000 | 7,245 | ||||||
CSC Holdings, Inc. 8.625% 20194 | 14,375 | 14,842 | ||||||
Thomson Reuters Corp. 5.95% 2013 | 3,625 | 3,917 | ||||||
Thomson Reuters Corp. 6.50% 2018 | 14,260 | 15,770 | ||||||
Seminole Tribe of Florida 6.535% 20204,6 | 10,000 | 8,417 | ||||||
Seminole Tribe of Florida 7.804% 20204,6 | 9,980 | 8,200 | ||||||
Viacom Inc. 5.75% 2011 | 2,500 | 2,613 | ||||||
Viacom Inc. 6.25% 2016 | 12,750 | 13,482 | ||||||
Kabel Deutschland GmbH 10.625% 2014 | 14,825 | 15,603 | ||||||
Princeton University 4.95% 2019 | 15,000 | 15,538 | ||||||
KB Home 6.25% 2015 | 16,905 | 15,384 | ||||||
Beazer Homes USA, Inc. 8.375% 2012 | 11,298 | 7,965 | ||||||
Beazer Homes USA, Inc. 8.125% 2016 | 13,050 | 7,373 | ||||||
Meritage Corp. 7.00% 2014 | 4,960 | 4,216 | ||||||
Meritage Homes Corp. 6.25% 2015 | 5,350 | 4,400 | ||||||
Meritage Corp. 7.731% 20174 | 9,500 | 6,413 | ||||||
Mohegan Tribal Gaming Authority 8.00% 2012 | 2,100 | 1,733 | ||||||
Mohegan Tribal Gaming Authority 6.125% 2013 | 4,175 | 3,444 | ||||||
Mohegan Tribal Gaming Authority 7.125% 2014 | 4,950 | 3,490 | ||||||
Mohegan Tribal Gaming Authority 6.875% 2015 | 8,775 | 6,099 | ||||||
President & Fellows of Harvard University 5.00% 20144 | 12,000 | 12,861 | ||||||
Vidéotron Ltée 6.875% 2014 | 7,169 | 7,061 | ||||||
Vidéotron Ltée 6.375% 2015 | 4,905 | 4,586 | ||||||
Seneca Gaming Corp. 7.25% 2012 | 8,000 | 7,440 | ||||||
Seneca Gaming Corp., Series B, 7.25% 2012 | 3,275 | 3,046 | ||||||
Hanesbrands Inc., Series B, 4.593% 20145 | 12,300 | 10,455 | ||||||
LBI Media, Inc. 8.50% 20174 | 19,605 | 10,391 | ||||||
Education Management LLC and Education Management Finance Corp. 8.75% 2014 | 8,640 | 8,716 | ||||||
Education Management LLC and Education Management Finance Corp. 10.25% 2016 | 1,570 | 1,605 | ||||||
Neiman Marcus Group, Inc. 9.75% 20155,10 | 11,858 | 8,834 | ||||||
ERAC USA Finance Co. 7.00% 20374 | 10,000 | 8,410 | ||||||
American Media Operation 9.00% 20134,10 | 966 | 493 | ||||||
American Media Operation 14.00% 20134,5,10 | 15,329 | 7,741 | ||||||
CBS Corp. 8.875% 2019 | 7,100 | 7,404 | ||||||
Radio One, Inc. 6.375% 2013 | 22,565 | 7,164 | ||||||
Bon-Ton Department Stores, Inc. 10.25% 2014 | 12,850 | 6,232 | ||||||
Claire’s Stores, Inc., Term Loan B, 3.035% 20145,6,8 | 9,059 | 5,997 | ||||||
Technical Olympic USA, Inc. 9.00% 20109 | 10,675 | 1,228 | ||||||
Technical Olympic USA, Inc. 9.00% 20109 | 7,815 | 899 | ||||||
Technical Olympic USA, Inc. 9.25% 20114,9 | 33,175 | 3,815 | ||||||
Wendy’s/Arby’s Group Inc. 10.00% 20164 | 5,400 | 5,589 | ||||||
Standard Pacific Corp. 6.25% 2014 | 2,800 | 2,086 | ||||||
Standard Pacific Corp. 7.00% 2015 | 3,830 | 2,892 | ||||||
Sealy Mattress Co. 8.25% 2014 | 3,325 | 3,051 | ||||||
Sealy Mattress Co. 10.875% 20164 | 1,425 | 1,560 | ||||||
Cooper-Standard Automotive Inc. 7.00% 20129 | 19,650 | 4,520 | ||||||
WPP Finance (UK) 8.00% 2014 | 4,000 | 4,269 | ||||||
Liberty Media Corp. 8.25% 2030 | 4,325 | 3,136 | ||||||
Goodyear Tire & Rubber Co. 5.01% 20095 | 3,000 | 3,004 | ||||||
Pinnacle Entertainment, Inc. 7.50% 2015 | 3,075 | 2,744 | ||||||
Fox Acquisition LLC 13.375% 20164 | 4,175 | 2,401 | ||||||
Delphi Automotive Systems Corp. 6.55% 20069 | 17,105 | 107 | ||||||
Delphi Automotive Systems Corp. 6.50% 20099 | 54,466 | 340 | ||||||
Delphi Corp. 6.50% 20139 | 72,580 | 272 | ||||||
Delphi Automotive Systems Corp. 7.125% 20299 | 104,355 | 652 | ||||||
Delphi Trust I 8.25% 20333,9 | 30,031 | — | ||||||
Local T.V. Finance LLC 10.00% 20154,5,10 | 5,014 | 1,141 | ||||||
Ford Motor Co. 9.50% 2011 | 1,000 | 895 | ||||||
Kohl’s Corp. 6.00% 2033 | 180 | 170 | ||||||
Kohl’s Corp. 6.875% 2037 | 320 | 337 | ||||||
Visteon Corp. 7.00% 20149 | 18,000 | 405 | ||||||
2,557,067 | ||||||||
FINANCIALS — 4.20% | ||||||||
Simon Property Group, LP 4.875% 2010 | 5,000 | 5,043 | ||||||
Simon Property Group, LP 5.375% 2011 | 32,700 | 33,569 | ||||||
Simon Property Group, LP 6.35% 2012 | 5,000 | 5,083 | ||||||
Simon Property Group, LP 5.30% 2013 | 6,000 | 5,987 | ||||||
Simon Property Group, LP 5.25% 2016 | 89,670 | 81,748 | ||||||
Simon Property Group, LP 6.10% 2016 | 5,550 | 5,320 | ||||||
Simon Property Group, LP 5.875% 2017 | 32,510 | 30,589 | ||||||
Simon Property Group, LP 6.125% 2018 | 48,390 | 45,830 | ||||||
Simon Property Group, LP 10.35% 2019 | 5,000 | 5,990 | ||||||
Ford Motor Credit Co. 7.375% 2009 | 26,200 | 26,154 | ||||||
Ford Motor Credit Co. 9.75% 20105 | 58,100 | 57,843 | ||||||
Ford Motor Credit Co. 7.25% 2011 | 4,450 | 4,181 | ||||||
Ford Motor Credit Co. 7.375% 2011 | 1,800 | 1,736 | ||||||
Ford Motor Credit Co. 9.875% 2011 | 7,500 | 7,435 | ||||||
Ford Motor Credit Co. 3.26% 20125 | 63,005 | 53,633 | ||||||
Ford Motor Credit Co. 7.80% 2012 | 3,500 | 3,292 | ||||||
Ford Motor Credit Co. 8.00% 2016 | 9,925 | 8,908 | ||||||
Westfield Group 5.40% 20124 | 15,490 | 15,581 | ||||||
Westfield Capital Corp. Ltd., WT Finance (Australia) Pty Ltd. and WEA Finance LLC 5.125% 20144 | 25,275 | 23,280 | ||||||
Westfield Group 7.50% 20144 | 20,000 | 20,414 | ||||||
Westfield Group 5.70% 20164 | 47,925 | 43,268 | ||||||
Westfield Group 7.125% 20184 | 50,890 | 49,440 | ||||||
Bank of America Corp. 4.25% 2010 | 840 | 854 | ||||||
Bank of America Corp. 4.375% 2010 | 10,199 | 10,401 | ||||||
Countrywide Financial Corp., Series A, 4.50% 2010 | 2,695 | 2,719 | ||||||
Bank of America Corp. 4.50% 2010 | 1,625 | 1,652 | ||||||
Countrywide Financial Corp., Series B, 5.80% 2012 | 16,495 | 16,941 | ||||||
Bank of America Corp., Series L, 7.375% 2014 | 12,000 | 13,085 | ||||||
Bank of America Corp. 5.30% 2017 | 61,990 | 56,542 | ||||||
Bank of America Corp. 6.10% 2017 | 12,500 | 11,913 | ||||||
Bank of America Corp. 5.65% 2018 | 6,850 | 6,545 | ||||||
Merrill Lynch & Co., Inc. 6.875% 2018 | 7,500 | 7,572 | ||||||
NB Capital Trust II 7.83% 2026 | 5,575 | 4,767 | ||||||
NB Capital Trust IV 8.25% 2027 | 6,205 | 5,460 | ||||||
Residential Capital Corp. 8.375% 2010 | 14,500 | 10,150 | ||||||
General Motors Acceptance Corp. 6.875% 20114 | 58,489 | 54,541 | ||||||
General Motors Acceptance Corp. 7.25% 20114 | 13,998 | 13,333 | ||||||
General Motors Acceptance Corp. 6.875% 20124 | 6,851 | 6,269 | ||||||
General Motors Acceptance Corp. 7.00% 20124 | 21,516 | 19,687 | ||||||
General Motors Acceptance Corp. 7.50% 20134 | 6,484 | 5,576 | ||||||
General Motors Acceptance Corp. 2.868% 20144,5 | 10,438 | 7,633 | ||||||
General Motors Acceptance Corp. 8.00% 20184 | 6,366 | 4,902 | ||||||
CIT Group Inc., Series A, 0.974% 20095 | 13,250 | 10,352 | ||||||
CIT Group Inc. 6.50% 20093 | 15 | 8 | ||||||
CIT Group Inc. 6.875% 2009 | 15,000 | 8,874 | ||||||
CIT Group Inc. 0.759% 20105 | 5,000 | 2,931 | ||||||
CIT Group Inc. 4.25% 2010 | 14,774 | 8,643 | ||||||
CIT Group Inc. 7.625% 2012 | 8,310 | 4,536 | ||||||
CIT Group Inc., Term Loan, 13.00% 20125,6,8 | 70,000 | 73,045 | ||||||
CIT Group Inc. 5.40% 2013 | 511 | 274 | ||||||
CIT Group Inc. 12.00% 20184 | 21,073 | 2,845 | ||||||
Liberty Mutual Group Inc. 6.50% 20354 | 21,275 | 15,062 | ||||||
Liberty Mutual Group Inc. 7.50% 20364 | 10,530 | 7,707 | ||||||
Liberty Mutual Group Inc., Series A, 7.80% 20874,5 | 9,070 | 6,090 | ||||||
Liberty Mutual Group Inc., Series C, 10.75% 20884,5 | 79,430 | 67,049 | ||||||
Zions Bancorporation 5.65% 2014 | 30,260 | 19,867 | ||||||
Zions Bancorporation 5.50% 2015 | 44,392 | 29,208 | ||||||
Zions Bancorporation 6.00% 2015 | 59,970 | 39,445 | ||||||
Independence Community Bank Corp. 4.90% 2010 | 5,000 | 4,985 | ||||||
Sovereign Bancorp, Inc. 2.738% 20135 | 7,710 | 6,487 | ||||||
Santander Issuances, SA Unipersonal 0.969% 20164,5 | 15,200 | 12,729 | ||||||
Santander Issuances, SA Unipersonal 5.805% 20164,5 | 15,700 | 12,565 | ||||||
Sovereign Bancorp, Inc. 8.75% 2018 | 37,380 | 40,214 | ||||||
Santander Perpetual, SA Unipersonal 6.671% (undated)4,5 | 12,800 | 10,706 | ||||||
Realogy Corp., Term Loan B, 3.309% 20135,6,8 | 43,696 | 33,927 | ||||||
Realogy Corp., Term Loan DD, 3.309% 20135,6,8 | 4,987 | 3,872 | ||||||
Realogy Corp., Letter of Credit, 3.37% 20135,6,8 | 13,024 | 10,112 | ||||||
Realogy Corp. 10.50% 2014 | 47,810 | 21,993 | ||||||
Realogy Corp. 11.75% 20145,10 | 20,177 | 7,365 | ||||||
Capital One Financial Corp. 6.25% 2013 | 20,000 | 20,125 | ||||||
Capital One Capital III 7.686% 20365 | 19,750 | 15,602 | ||||||
Capital One Capital IV 6.745% 20375 | 10,850 | 7,831 | ||||||
Capital One Capital V 10.25% 2039 | 13,250 | 13,514 | ||||||
Rouse Co. 3.625% 20099 | 32,561 | 23,607 | ||||||
Rouse Co. 7.20% 20129 | 28,039 | 20,889 | ||||||
Rouse Co. 5.375% 20139 | 2,770 | 2,036 | ||||||
Rouse Co. 6.75% 20134,9 | 13,400 | 9,782 | ||||||
JPMorgan Chase & Co. 4.891% 20155 | 10,000 | 8,789 | ||||||
JPMorgan Chase Bank NA 6.00% 2017 | 14,567 | 15,161 | ||||||
JPMorgan Chase Capital XXV, Series Y, 6.80% 2037 | 27,612 | 25,316 | ||||||
JPMorgan Chase Capital XX, Series T, 6.55% 20665 | 2,726 | 2,332 | ||||||
JPMorgan Chase Capital XXII, Series V, 6.45% 20875 | 3,100 | 2,622 | ||||||
UniCredito Italiano SpA 5.584% 20174,5 | 32,750 | 28,416 | ||||||
UniCredito Italiano SpA 6.00% 20174 | 23,150 | 20,359 | ||||||
HVB Funding Trust I 8.741% 20314 | 4,670 | 3,246 | ||||||
SLM Corp., Series A, 5.40% 2011 | 15,000 | 12,555 | ||||||
SLM Corp., Series A, 0.804% 20145 | 10,000 | 6,618 | ||||||
SLM Corp., Series A, 5.00% 2015 | 12,000 | 8,302 | ||||||
SLM Corp., Series A, 8.45% 2018 | 24,500 | 19,628 | ||||||
Hospitality Properties Trust 6.75% 20131 | 28,915 | 26,956 | ||||||
Hospitality Properties Trust 5.125% 20151 | 2,160 | 1,747 | ||||||
Hospitality Properties Trust 6.30% 20161 | 2,400 | 1,950 | ||||||
Hospitality Properties Trust 5.625% 20171 | 1,485 | 1,148 | ||||||
Hospitality Properties Trust 6.70% 20181 | 16,175 | 13,144 | ||||||
Scotland International Finance No. 2 BV 4.25% 20134 | 35 | 29 | ||||||
HBOS PLC 6.75% 20184 | 34,625 | 26,641 | ||||||
HBOS PLC 6.00% 20334 | 300 | 199 | ||||||
HBOS PLC 5.375% (undated)4,5 | 20,000 | 10,448 | ||||||
HBOS Capital Funding LP 6.071% (undated)4,5 | 12,400 | 4,745 | ||||||
Kimco Realty Corp. 6.00% 2012 | 3,250 | 3,107 | ||||||
Kimco Realty Corp., Series C, 5.783% 2016 | 22,000 | 19,050 | ||||||
Kimco Realty Corp. 5.70% 2017 | 21,985 | 18,583 | ||||||
Resona Bank, Ltd. 5.85% (undated)4,5 | 48,929 | 39,194 | ||||||
National City Preferred Capital Trust I 12.00% (undated)5 | 37,250 | 39,112 | ||||||
Goldman Sachs Group, Inc. 6.25% 2017 | 4,805 | 5,154 | ||||||
Goldman Sachs Group, Inc. 5.95% 2018 | 7,095 | 7,488 | ||||||
Goldman Sachs Group, Inc. 6.15% 2018 | 24,490 | 26,213 | ||||||
HSBC Finance Corp. 4.625% 2010 | 14,000 | 14,138 | ||||||
HSBC Finance Corp. 5.70% 2011 | 7,500 | 7,609 | ||||||
HSBC Holdings PLC 6.50% 2037 | 18,000 | 17,014 | ||||||
Standard Chartered Bank 6.40% 20174 | 40,995 | 36,948 | ||||||
Korea Development Bank 5.30% 2013 | 29,600 | 29,233 | ||||||
Korea Development Bank 8.00% 2014 | 6,050 | 6,577 | ||||||
Fifth Third Capital Trust IV 6.50% 20675 | 58,155 | 35,184 | ||||||
Lazard Group LLC 7.125% 2015 | 29,222 | 29,203 | ||||||
Lazard Group LLC 6.85% 2017 | 5,322 | 5,175 | ||||||
ProLogis 5.50% 2012 | 2,292 | 2,167 | ||||||
ProLogis 5.625% 2015 | 6,765 | 5,773 | ||||||
ProLogis 5.625% 2016 | 3,750 | 3,196 | ||||||
ProLogis 6.625% 2018 | 25,175 | 21,418 | ||||||
Metropolitan Life Global Funding I, 5.125% 20134 | 10,000 | 10,204 | ||||||
MetLife Inc. 10.75% 20395 | 2,500 | 2,681 | ||||||
MetLife Capital Trust IV 7.875% 20674,5 | 21,500 | 18,321 | ||||||
MetLife Capital Trust X 9.25% 20684,5 | 1,000 | 964 | ||||||
International Lease Finance Corp., Series R, 5.40% 2012 | 10,000 | 7,361 | ||||||
International Lease Finance Corp., Series R, 6.625% 2013 | 3,500 | 2,425 | ||||||
American General Finance Corp., Series I, 5.40% 2015 | 17,250 | 10,001 | ||||||
American General Finance Corp., Series J, 6.90% 2017 | 12,500 | 7,235 | ||||||
Host Marriott, LP, Series M, 7.00% 2012 | 15,050 | 14,975 | ||||||
Host Marriott, LP, Series K, 7.125% 2013 | 7,000 | 6,825 | ||||||
Host Marriott, LP, Series O, 6.375% 2015 | 950 | 883 | ||||||
Host Hotels & Resorts, LP, Series Q, 6.75% 2016 | 3,550 | 3,310 | ||||||
Host Hotels & Resorts LP 9.00% 20174 | 900 | 911 | ||||||
HSBK (Europe) BV 7.75% 20134 | 2,165 | 1,781 | ||||||
HSBK (Europe) BV 7.25% 20174 | 36,110 | 24,284 | ||||||
Prudential Financial, Inc., Series D, 6.10% 2017 | 5,000 | 4,916 | ||||||
Prudential Holdings, LLC, Series C, 8.695% 20234,6 | 17,250 | 16,566 | ||||||
Prudential Financial, Inc. 8.875% 20685 | 5,000 | 4,496 | ||||||
UnumProvident Finance Co. PLC 6.85% 20154 | 28,500 | 23,585 | ||||||
ERP Operating LP 5.50% 2012 | 4,000 | 4,064 | ||||||
ERP Operating LP 6.625% 2012 | 2,000 | 2,066 | ||||||
ERP Operating LP 5.20% 2013 | 2,500 | 2,483 | ||||||
ERP Operating LP 6.584% 2015 | 2,705 | 2,654 | ||||||
ERP Operating LP 5.75% 2017 | 1,660 | 1,589 | ||||||
ERP Operating LP 7.125% 2017 | 10,000 | 10,153 | ||||||
Development Bank of Singapore Ltd. 7.875% 20104 | 10,000 | 10,355 | ||||||
Development Bank of Singapore Ltd. 7.125% 20114 | 5,000 | 5,353 | ||||||
DBS Bank Ltd. 1.119% 20214,5 | 7,250 | 5,965 | ||||||
ZFS Finance (USA) Trust II 6.45% 20654,5 | 12,500 | 11,375 | ||||||
ZFS Finance (USA) Trust V 6.50% 20674,5 | 11,950 | 10,157 | ||||||
Lincoln National Corp. 5.65% 2012 | 12,000 | 11,887 | ||||||
Lincoln National Corp. 7.00% 20665 | 11,040 | 7,342 | ||||||
Citigroup Inc. 6.50% 2013 | 5,000 | 5,099 | ||||||
Citigroup Inc. 6.00% 2017 | 6,375 | 5,844 | ||||||
Citigroup Inc. 6.125% 2017 | 8,000 | 7,369 | ||||||
Catlin Insurance Ltd. 7.249% (undated)4,5 | 34,090 | 18,089 | ||||||
American Express Co. 6.15% 2017 | 12,610 | 12,437 | ||||||
American Express Co. 8.15% 2038 | 4,500 | 5,088 | ||||||
New York Life Global Funding 4.65% 20134 | 17,000 | 17,461 | ||||||
Wells Fargo & Co. 4.375% 2013 | 10,850 | 11,116 | ||||||
Corestates Capital I 8.00% 20264 | 5,714 | 4,942 | ||||||
Monumental Global Funding 5.50% 20134 | 10,000 | 9,711 | ||||||
Monumental Global Funding III 0.709% 20144,5 | 8,000 | 6,307 | ||||||
Hartford Financial Services Group, Inc. 6.30% 2018 | 9,250 | 7,752 | ||||||
Glen Meadow Pass-Through Trust 6.505% 20674,5 | 15,500 | 8,022 | ||||||
Morgan Stanley, Series F, 6.00% 2015 | 8,000 | 8,292 | ||||||
Morgan Stanley, Series F, 5.95% 2017 | 5,000 | 5,157 | ||||||
Royal Bank of Scotland Group PLC 5.00% 2013 | 6,427 | 5,553 | ||||||
Royal Bank of Scotland Group PLC 5.00% 2014 | 1,836 | 1,551 | ||||||
Royal Bank of Scotland Group PLC 5.05% 2015 | 6,136 | 4,848 | ||||||
Developers Diversified Realty Corp. 4.625% 2010 | 6,165 | 5,955 | ||||||
Developers Diversified Realty Corp. 5.375% 2012 | 2,000 | 1,706 | ||||||
Developers Diversified Realty Corp. 5.50% 2015 | 5,000 | 3,622 | ||||||
Barclays Bank PLC 5.20% 2014 | 10,050 | 10,434 | ||||||
Protective Life Insurance Co., Series 2005-C, 4.85% 2010 | 10,000 | 10,134 | ||||||
Principal Life Insurance Co. 5.30% 2013 | 10,000 | 10,109 | ||||||
AXA SA 6.463% (undated)4,5 | 15,000 | 10,066 | ||||||
Genworth Financial, Inc. 6.15% 20665 | 17,665 | 8,401 | ||||||
Banco Mercantil del Norte, SA 6.135% 20164,5 | 2,000 | 1,794 | ||||||
Banco Mercantil del Norte, SA 6.862% 20214,5 | 6,850 | 5,750 | ||||||
Société Générale 5.75% 20164 | 7,400 | 6,995 | ||||||
Paribas, New York Branch 6.95% 2013 | 6,000 | 6,078 | ||||||
BNP Paribas 4.80% 20154 | 195 | 170 | ||||||
BNP Paribas 5.125% 20154 | 245 | 231 | ||||||
Nationwide Mutual Insurance 5.81% 20244,5 | 10,000 | 6,287 | ||||||
Charles Schwab Corp., Series A, 6.375% 2017 | 4,000 | 4,331 | ||||||
Schwab Capital Trust I 7.50% 20375 | 1,795 | 1,546 | ||||||
Nationwide Financial Services, Inc. 6.75% 20675 | 8,780 | 5,593 | ||||||
Northern Rock PLC 5.60% (undated)3,4,5 | 16,380 | 1,638 | ||||||
Northern Rock PLC 6.594% (undated)3,4,5 | 33,985 | 3,398 | ||||||
Huntington National Bank 5.50% 2016 | 510 | 379 | ||||||
Huntington National Bank 6.60% 2018 | 5,750 | 4,283 | ||||||
Huntington National Bank 5.375% 2019 | 384 | 266 | ||||||
CNA Financial Corp. 5.85% 2014 | 5,625 | 4,849 | ||||||
Brandywine Operating Partnership, LP 5.75% 2012 | 4,190 | 3,829 | ||||||
iStar Financial, Inc. 8.625% 2013 | 7,500 | 3,750 | ||||||
Lehman Brothers Holdings Inc., Series I, 6.875% 20189 | 20,000 | 3,650 | ||||||
Credit Suisse Group AG 5.50% 2014 | 3,000 | 3,194 | ||||||
First Tennessee Bank 5.05% 2015 | 3,400 | 2,601 | ||||||
United Dominion Realty Trust, Inc. 5.00% 2012 | 2,500 | 2,419 | ||||||
TuranAlem Finance BV 8.25% 20374 | 10,000 | 2,150 | ||||||
Assurant, Inc. 5.625% 2014 | 2,295 | 2,057 | ||||||
LaBranche & Co Inc. 11.00% 2012 | 1,750 | 1,623 | ||||||
Plum Creek Timberlands, LP 5.875% 2015 | 1,500 | 1,343 | ||||||
Chubb Corp. 6.375% 20675 | 1,000 | 811 | ||||||
Ambac Financial Group, Inc. 6.15% 20875 | 8,405 | 756 | ||||||
Capmark Financial Group Inc. 3.606% 20105 | 1,555 | 531 | ||||||
2,515,564 | ||||||||
TELECOMMUNICATION SERVICES — 2.63% | ||||||||
Verizon Communications Inc. 3.75% 20114 | 33,750 | 34,781 | ||||||
ALLTEL Corp. 7.00% 2012 | 17,686 | 19,628 | ||||||
Verizon Communications Inc. 5.55% 20144 | 64,695 | 70,429 | ||||||
Verizon Global Funding Corp. 4.90% 2015 | 3,560 | 3,698 | ||||||
Verizon Communications Inc. 5.50% 2017 | 18,000 | 19,123 | ||||||
Verizon Communications Inc. 6.10% 2018 | 11,300 | 12,480 | ||||||
Verizon Communications Inc. 8.75% 2018 | 15,000 | 19,215 | ||||||
Verizon Communications Inc. 6.35% 2019 | 26,025 | 29,377 | ||||||
Verizon Global Funding Corp. 7.75% 2030 | 6,705 | 8,020 | ||||||
Verizon Communications Inc. 6.25% 2037 | 50,000 | 53,126 | ||||||
Nextel Communications, Inc., Series E, 6.875% 2013 | 89,000 | 81,658 | ||||||
Nextel Communications, Inc., Series F, 5.95% 2014 | 49,255 | 42,852 | ||||||
Nextel Communications, Inc., Series D, 7.375% 2015 | 136,815 | 123,476 | ||||||
Qwest Capital Funding, Inc. 7.90% 2010 | 42,010 | 42,535 | ||||||
Qwest Capital Funding, Inc. 7.25% 2011 | 83,120 | 82,704 | ||||||
Qwest Communications International Inc. 7.25% 2011 | 30,025 | 30,025 | ||||||
Qwest Corp. 8.875% 2012 | 12,400 | 12,927 | ||||||
Qwest Capital Funding, Inc. 7.625% 2021 | 3,900 | 3,218 | ||||||
U S WEST Capital Funding, Inc. 6.875% 2028 | 18,815 | 13,641 | ||||||
Qwest Capital Funding, Inc. 7.75% 2031 | 13,885 | 10,761 | ||||||
SBC Communications Inc. 6.25% 2011 | 5,500 | 5,855 | ||||||
AT&T Corp. 7.30% 20115 | 8,205 | 9,119 | ||||||
AT&T Wireless Services, Inc. 8.125% 2012 | 16,935 | 19,236 | ||||||
AT&T Inc. 4.95% 2013 | 28,750 | 30,393 | ||||||
AT&T Inc. 6.70% 2013 | 15,000 | 16,964 | ||||||
SBC Communications Inc. 5.10% 2014 | 3,500 | 3,754 | ||||||
SBC Communications Inc. 5.625% 2016 | 10,000 | 10,702 | ||||||
AT&T Inc. 5.80% 2019 | 17,250 | 18,727 | ||||||
AT&T Corp. 8.00% 20315 | 5,000 | 6,224 | ||||||
AT&T Inc. 6.55% 2039 | 3,000 | 3,342 | ||||||
Centennial Communications Corp. 6.347% 20135 | 47,300 | 46,295 | ||||||
Centennial Communications Corp. 10.00% 2013 | 3,775 | 3,907 | ||||||
Centennial Communications Corp. and Centennial Cellular Operating Co. LLC 10.125% 2013 | 15,500 | 15,926 | ||||||
Centennial Communications Corp., Centennial Cellular Operating Co. LLC | ||||||||
and Centennial Puerto Rico Operations Corp. 8.125% 20145 | 37,775 | 38,058 | ||||||
Telecom Italia Capital SA 4.00% 2010 | 1,470 | 1,481 | ||||||
Telecom Italia Capital SA 4.875% 2010 | 1,630 | 1,664 | ||||||
Telecom Italia Capital SA, Series B, 5.25% 2013 | 6,700 | 6,924 | ||||||
Telecom Italia Capital SA 5.25% 2015 | 29,500 | 30,079 | ||||||
Telecom Italia Capital SA 6.999% 2018 | 12,900 | 14,260 | ||||||
Telecom Italia Capital SA 7.175% 2019 | 25,000 | 27,900 | ||||||
Telecom Italia Capital SA 7.20% 2036 | 7,150 | 7,693 | ||||||
Telecom Italia Capital SA 7.721% 2038 | 6,600 | 7,461 | ||||||
American Tower Corp. 7.125% 2012 | 59,325 | 60,512 | ||||||
American Tower Corp. 7.00% 2017 | 11,200 | 11,074 | ||||||
American Tower Corp. 7.25% 20194 | 24,050 | 23,810 | ||||||
Cricket Communications, Inc. 9.375% 2014 | 60,900 | 62,118 | ||||||
Cricket Communications, Inc. 7.75% 20164 | 19,300 | 19,300 | ||||||
Windstream Corp. 8.125% 2013 | 6,000 | 6,090 | ||||||
Valor Telecommunications Enterprises, LLC and Valor Telecommunications Enterprises Finance Corp. 7.75% 2015 | 7,125 | 7,130 | ||||||
Windstream Corp. 8.625% 2016 | 58,100 | 59,262 | ||||||
Wind Acquisition SA 11.75% 20174 | 64,275 | 69,096 | ||||||
Crown Castle International Corp. 9.00% 2015 | 33,850 | 35,458 | ||||||
Crown Castle International Corp. 7.75% 20174 | 13,750 | 14,094 | ||||||
MetroPCS Wireless, Inc., Term Loan B, 3.313% 20135,6,8 | 8,674 | 8,319 | ||||||
MetroPCS Wireless, Inc. 9.25% 2014 | 17,300 | 17,992 | ||||||
MetroPCS Wireless, Inc. 9.25% 20144 | 17,050 | 17,732 | ||||||
Rogers Wireless Inc. 7.25% 2012 | 3,140 | 3,571 | ||||||
Rogers Wireless Inc. 7.50% 2015 | 16,750 | 19,410 | ||||||
Vodafone Group PLC 5.625% 2017 | 11,975 | 12,731 | ||||||
Vodafone Group PLC 6.15% 2037 | 7,810 | 8,360 | ||||||
Deutsche Telekom International Finance BV 5.875% 2013 | 5,625 | 6,073 | ||||||
Deutsche Telekom International Finance BV 4.875% 2014 | 10,000 | 10,395 | ||||||
Deutsche Telekom International Finance BV 6.75% 2018 | 2,000 | 2,256 | ||||||
Singapore Telecommunications Ltd. 6.375% 2011 | 4,825 | 5,229 | ||||||
Singapore Telecommunications Ltd. 7.375% 20314 | 3,800 | 4,561 | ||||||
Cincinnati Bell Inc. 7.25% 2013 | 9,500 | 9,274 | ||||||
France Télécom 7.75% 20115 | 8,500 | 9,245 | ||||||
SBA Telecommunications, Inc. 8.00% 20164 | 8,275 | 8,399 | ||||||
Koninklijke KPN NV 8.375% 2030 | 4,660 | 5,849 | ||||||
NTELOS Inc., Term Loan B, 2.54% 20115,6,8 | 5,746 | 5,741 | ||||||
Embarq Corp. 6.738% 2013 | 5,000 | 5,257 | ||||||
Trilogy International Partners LLC, Term Loan B, 4.098% 20125,6,8 | 5,250 | 3,570 | ||||||
Level 3 Financing, Inc. 9.25% 2014 | 4,000 | 3,510 | ||||||
PCCW-HKT Capital No. 3 Ltd. 5.25% 20154 | 1,305 | 1,221 | ||||||
Hawaiian Telcom Communications, Inc. 9.75% 20139 | 16,945 | 254 | ||||||
Hawaiian Telcom Communications, Inc. 8.765% 20135,9 | 15,920 | 119 | ||||||
Hawaiian Telcom Communications, Inc., Series B, 12.50% 20159 | 7,075 | 9 | ||||||
1,576,659 | ||||||||
INDUSTRIALS — 2.15% | ||||||||
Nielsen Finance LLC, Term Loan B, 2.30% 20135,6,8 | 8,881 | 8,242 | ||||||
Nielsen Finance LLC and Nielsen Finance Co. 10.00% 2014 | 65,850 | 66,509 | ||||||
Nielsen Finance LLC and Nielsen Finance Co. 11.625% 2014 | 38,275 | 40,476 | ||||||
Nielsen Finance LLC and Nielsen Finance Co. 0%/12.50% 201611 | 81,675 | 59,827 | ||||||
Nielsen Finance LLC and Nielsen Finance Co. 11.50% 2016 | 21,585 | 22,718 | ||||||
Nielsen Finance LLC, Term Loan 1L, 8.50% 20176,8 | 12,000 | 11,820 | ||||||
Continental Airlines, Inc. 8.75% 2011 | 27,750 | 17,760 | ||||||
Continental Airlines, Inc., Series 2000-2, Class A-2, 7.487% 20126 | 11,700 | 11,305 | ||||||
Continental Airlines, Inc., Series 1997-1, Class A, 7.461% 20166 | 9,356 | 8,117 | ||||||
Continental Airlines, Inc., Series 2001-1, Class B, 7.373% 20176 | 5,263 | 3,802 | ||||||
Continental Airlines, Inc., Series 1998-1, Class B, 6.748% 20186 | 953 | 724 | ||||||
Continental Airlines, Inc., Series 1998-1, Class A, 6.648% 20196 | 16,509 | 14,177 | ||||||
Continental Airlines, Inc., Series 1997-4, Class A, 6.90% 20196 | 4,778 | 4,219 | ||||||
Continental Airlines, Inc., Series 2000-2, Class B, 8.307% 20196 | 826 | 638 | ||||||
Continental Airlines, Inc., Series 1999-1, Class A, 6.545% 20206 | 15,490 | 14,473 | ||||||
Continental Airlines, Inc., Series 1999-1, Class B, 6.795% 20206 | 782 | 581 | ||||||
Continental Airlines, Inc., Series 2003-ERJ3, Class A, 7.875% 20206 | 11,393 | 7,035 | ||||||
Continental Airlines, Inc., Series 1999-2, Class A-1, 7.256% 20216 | 674 | 593 | ||||||
Continental Airlines, Inc., Series 1999-2, Class B, 7.566% 20216 | 5,204 | 4,384 | ||||||
Continental Airlines, Inc., Series 2001-1, Class A-1, 6.703% 20226 | 13,342 | 10,998 | ||||||
Continental Airlines, Inc., Series 2007-1, Class B, 6.903% 20226 | 11,380 | 7,731 | ||||||
Continental Airlines, Inc., Series 2000-2, Class A-1, 7.707% 20226 | 2,574 | 2,141 | ||||||
Continental Airlines, Inc., Series 2000-1, Class A-1, 8.048% 20226 | 6,468 | 5,494 | ||||||
Continental Airlines, Inc., Series 2000-1, Class B, 8.388% 20226 | 5,581 | 4,116 | ||||||
Delta Air Lines, Inc., Series 2000-1, Class A-2, 7.57% 20126 | 8,050 | 7,758 | ||||||
Northwest Airlines, Inc., Term Loan B, 4.10% 20135,6,8 | 5,475 | 4,407 | ||||||
Delta Air Lines, Inc., Series 2002-1, Class G-2, MBIA insured, 6.417% 20146 | 46,035 | 40,683 | ||||||
Delta Air Lines, Inc., Series 1992-A2, 9.20% 20143,6,9 | 3,174 | 3,031 | ||||||
Northwest Airlines, Inc., Term Loan A, 2.35% 20185,6,8 | 56,836 | 43,480 | ||||||
Delta Air Lines, Inc., Series 2002-1, Class G-1, MBIA insured, 6.718% 20246 | 18,109 | 14,306 | ||||||
US Investigations Services, Inc., Term Loan B, 3.359% 20155,6,8 | 18,667 | 17,236 | ||||||
US Investigations Services, Inc. 10.50% 20154 | 41,545 | 35,521 | ||||||
US Investigations Services, Inc. 11.75% 20164 | 15,775 | 12,699 | ||||||
United Air Lines, Inc., Series 2001-1, Class A-2, 6.201% 20106 | 367 | 363 | ||||||
United Air Lines, Inc., Series 2000-2, Class B, 7.811% 20116,9 | 5,302 | 6,323 | ||||||
United Air Lines, Inc., Series 2000-2, Class A-2, 7.186% 20126 | 14,554 | 14,190 | ||||||
United Air Lines, Inc., Term Loan B, 2.313% 20145,6,8 | 51,378 | 29,499 | ||||||
United Air Lines, Inc., Series 2001-1, Class A-1, 6.071% 20146 | 272 | 269 | ||||||
United Air Lines, Inc., Series 2001-1, Class A-3, 6.602% 20156 | 145 | 144 | ||||||
United Air Lines, Inc., Series 1996-A2, 7.87% 20193,6,9 | 2,421 | 53 | ||||||
United Air Lines, Inc., Series 2007-1, Class B, 7.336% 20214,6 | 5,051 | 2,576 | ||||||
United Air Lines, Inc., Series 2007-1, Class A, 6.636% 20246 | 8,926 | 6,555 | ||||||
American Airlines, Inc., Series 2003-1, Class G, AMBAC insured, 3.857% 20126 | 1,216 | 1,148 | ||||||
American Airlines, Inc., Series 2001-1, Class A-2, 6.817% 20126 | 17,745 | 14,728 | ||||||
American Airlines, Inc., Series 2001-2, Class A-1, 6.978% 20126 | 1,653 | 1,586 | ||||||
American Airlines, Inc., Series 2001-2, Class B, 8.608% 20126 | 4,595 | 3,791 | ||||||
AMR Corp. 9.00% 2012 | 11,000 | 5,115 | ||||||
American Airlines, Inc., Series 2001-2, Class A-2, 7.858% 20136 | 17,138 | 16,178 | ||||||
AMR Corp. 9.00% 2016 | 2,000 | 910 | ||||||
American Airlines, Inc., Series 2001-1, Class B, 7.377% 20196 | 13,303 | 6,785 | ||||||
AMR Corp. 10.00% 2021 | 3,000 | 1,410 | ||||||
American Airlines, Inc., Series 2001-1, Class A-1, 6.977% 20226 | 6,590 | 3,888 | ||||||
Hawker Beechcraft Acquisition Co., LLC, Term Loan B, 2.285% 20145,6,8 | 57,027 | 39,821 | ||||||
Hawker Beechcraft Acquisition Co., LLC, Letter of Credit, 2.598% 20145,6,8 | 3,325 | 2,322 | ||||||
Hawker Beechcraft Acquisition Co., LLC 8.50% 2015 | 5,300 | 3,114 | ||||||
Hawker Beechcraft Acquisition Co., LLC 9.625% 20155,10 | 11,530 | 5,592 | ||||||
Hawker Beechcraft Acquisition Co., LLC 9.75% 2017 | 4,105 | 2,073 | ||||||
Ashtead Group PLC 8.625% 20154 | 15,700 | 13,580 | ||||||
Ashtead Capital, Inc. 9.00% 20164 | 44,685 | 38,653 | ||||||
Allied Waste North America, Inc., Series B, 6.50% 2010 | 12,000 | 12,424 | ||||||
Allied Waste North America, Inc., Series B, 5.75% 2011 | 8,800 | 9,122 | ||||||
Allied Waste North America, Inc., Series B, 6.125% 2014 | 2,500 | 2,574 | ||||||
Allied Waste North America, Inc., Series B, 7.375% 2014 | 4,500 | 4,651 | ||||||
Allied Waste North America, Inc. 7.25% 2015 | 8,500 | 8,808 | ||||||
Allied Waste North America, Inc. 6.875% 2017 | 7,250 | 7,442 | ||||||
ARAMARK Corp., Letter of Credit, 2.025% 20145,6,8 | 765 | 728 | ||||||
ARAMARK Corp., Term Loan B, 2.473% 20145,6,8 | 12,047 | 11,467 | ||||||
ARAMARK Corp. 4.528% 20155 | 8,050 | 7,044 | ||||||
ARAMARK Corp. 8.50% 2015 | 24,575 | 24,882 | ||||||
RailAmerica Inc. 9.25% 20174 | 39,500 | 40,883 | ||||||
BAE SYSTEMS 2001 Asset Trust, Series 2001, Class B, 7.156% 20114,6 | 20,156 | 20,050 | ||||||
BAE SYSTEMS 2001 Asset Trust, Series 2001, Class G, MBIA insured, 6.664% 20134,6 | 8,304 | 8,329 | ||||||
BAE Systems Holdings Inc. 4.95% 20144 | 1,375 | 1,416 | ||||||
Norfolk Southern Corp. 5.75% 20164 | 15,760 | 16,538 | ||||||
Norfolk Southern Corp. 5.75% 2018 | 12,000 | 12,464 | ||||||
Burlington Northern Santa Fe Corp. 7.00% 2014 | 23,600 | 26,498 | ||||||
BNSF Funding Trust I 6.613% 20555 | 2,910 | 2,428 | ||||||
Union Pacific Corp. 5.125% 2014 | 15,325 | 16,056 | ||||||
Union Pacific Corp. 5.75% 2017 | 2,065 | 2,177 | ||||||
Union Pacific Corp. 5.70% 2018 | 8,000 | 8,376 | ||||||
Waste Management, Inc. 5.00% 20141 | 7,000 | 6,961 | ||||||
Waste Management, Inc. 7.375% 20191 | 7,200 | 8,193 | ||||||
WMX Technologies, Inc. 7.10% 20261 | 10,125 | 10,752 | ||||||
Koninklijke Philips Electronics NV 5.75% 2018 | 23,250 | 24,330 | ||||||
CSX Corp. 5.75% 2013 | 4,960 | 5,187 | ||||||
CSX Corp. 6.25% 2015 | 3,460 | 3,732 | ||||||
CSX Corp. 6.15% 2037 | 11,800 | 11,545 | ||||||
DynCorp International and DIV Capital Corp., Series B, 9.50% 2013 | 19,675 | 19,823 | ||||||
USG Corp. 6.30% 2016 | 10,000 | 7,875 | ||||||
USG Corp. 9.25% 20185 | 10,500 | 9,713 | ||||||
United Technologies Corp. 6.125% 2019 | 15,000 | 16,890 | ||||||
American Standard Inc. 7.625% 2010 | 16,501 | 16,845 | ||||||
Caterpillar Financial Services Corp., Series F, 4.85% 2012 | 8,335 | 8,724 | ||||||
Caterpillar Financial Services Corp., Series F, 6.20% 2013 | 2,500 | 2,668 | ||||||
Caterpillar Financial Services Corp., Series F, 5.50% 2016 | 5,000 | 5,111 | ||||||
Sequa Corp., Term Loan B, 3.85% 20145,6,8 | 19,263 | 16,149 | ||||||
Honeywell International Inc. 3.875% 2014 | 13,605 | 13,964 | ||||||
General Electric Co. 5.25% 2017 | 11,250 | 11,422 | ||||||
Atlas Copco AB 5.60% 20174 | 11,405 | 11,279 | ||||||
Kansas City Southern Railway Co. 13.00% 2013 | 8,625 | 9,617 | ||||||
Kansas City Southern Railway Co. 8.00% 2015 | 1,500 | 1,462 | ||||||
B/E Aerospace 8.50% 2018 | 9,525 | 9,501 | ||||||
Navios Maritime Holdings Inc. 9.50% 2014 | 11,095 | 9,378 | ||||||
CEVA Group PLC 10.00% 20144 | 8,825 | 6,575 | ||||||
CEVA Group PLC, Bridge Loan, 7.052% 20153,5,6,8 | 6,691 | 2,743 | ||||||
RBS Global, Inc. and Rexnord LLC 9.50% 2014 | 7,800 | 6,825 | ||||||
RBS Global, Inc. and Rexnord LLC 8.875% 2016 | 575 | 434 | ||||||
Esterline Technologies Corp. 6.625% 2017 | 7,500 | 7,050 | ||||||
Esco Corp. 4.504% 20134,5 | 3,725 | 3,148 | ||||||
Esco Corp. 8.625% 20134 | 4,000 | 3,700 | ||||||
TransDigm Inc. 7.75% 2014 | 6,865 | 6,779 | ||||||
Interface Inc. 11.375% 20134 | 5,600 | 5,922 | ||||||
H&E Equipment Services, Inc. 8.375% 2016 | 6,800 | 5,746 | ||||||
Atrium Companies, Inc., Term Loan B, 11.75% 20125,6,8,10 | 12,945 | 5,449 | ||||||
Atrium Companies, Inc. 15.00% 20124,10 | 7,408 | 148 | ||||||
John Deere Capital Corp. 5.40% 2011 | 2,000 | 2,144 | ||||||
John Deere Capital Corp. 5.10% 2013 | 500 | 536 | ||||||
John Deere Capital Corp., Series D, 5.50% 2017 | 2,500 | 2,603 | ||||||
Lockheed Martin Corp. 4.121% 2013 | 5,000 | 5,141 | ||||||
RSC Holdings III, LLC, Second Lien Term Loan B, 4.08% 20135,6,8 | 6,105 | 4,830 | ||||||
Accuride Corp. 8.50% 2015 | 9,655 | 1,762 | ||||||
RSC Equipment Rental, Inc. and RSC Holdings III, LLC 9.50% 2014 | 1,375 | 1,186 | ||||||
Alion Science and Technology Corp. 10.25% 2015 | 1,740 | 940 | ||||||
1,286,806 | ||||||||
HEALTH CARE — 1.93% | ||||||||
Tenet Healthcare Corp. 7.375% 2013 | 18,620 | 18,015 | ||||||
Tenet Healthcare Corp. 9.00% 20154 | 1,672 | 1,772 | ||||||
Tenet Healthcare Corp. 9.25% 2015 | 11,200 | 11,144 | ||||||
Tenet Healthcare Corp. 10.00% 20184 | 1,672 | 1,856 | ||||||
Tenet Healthcare Corp. 8.875% 20194 | 111,500 | 118,190 | ||||||
HealthSouth Corp. 7.218% 20145 | 40,525 | 38,093 | ||||||
HealthSouth Corp. 10.75% 2016 | 84,200 | 88,620 | ||||||
Boston Scientific Corp. 5.45% 2014 | 12,950 | 12,675 | ||||||
Boston Scientific Corp. 6.40% 2016 | 30,623 | 30,011 | ||||||
Boston Scientific Corp. 5.125% 2017 | 22,737 | 20,350 | ||||||
Boston Scientific Corp. 7.00% 2035 | 59,710 | 52,545 | ||||||
HCA Inc., Term Loan B, 2.848% 20135,6,8 | 25,220 | 23,742 | ||||||
HCA Inc. 9.125% 2014 | 5,090 | 5,255 | ||||||
HCA Inc. 9.25% 2016 | 5,480 | 5,727 | ||||||
HCA Inc. 9.625% 20165,10 | 3,000 | 3,135 | ||||||
HCA Inc. 8.50% 20194 | 50,980 | 52,509 | ||||||
HCA Inc. 7.875% 20204 | 21,365 | 21,018 | ||||||
Roche Holdings Inc. 4.50% 20124 | 33,000 | 34,803 | ||||||
Roche Holdings Inc. 6.00% 20194 | 45,000 | 49,089 | ||||||
Elan Finance PLC and Elan Finance Corp. 4.883% 20115 | 20,140 | 19,234 | ||||||
Elan Finance PLC and Elan Finance Corp. 7.75% 2011 | 15,911 | 15,871 | ||||||
Elan Finance PLC and Elan Finance Corp. 4.793% 20135 | 14,285 | 12,714 | ||||||
Elan Finance PLC and Elan Finance Corp. 8.875% 2013 | 22,665 | 22,325 | ||||||
Abbott Laboratories 5.60% 2017 | 17,480 | 19,022 | ||||||
Abbott Laboratories 5.125% 2019 | 44,000 | 46,572 | ||||||
VWR Funding, Inc. 11.25% 20155,10 | 70,410 | 62,313 | ||||||
Warner Chilcott Corp. 8.75% 2015 | 41,924 | 42,134 | ||||||
Pfizer Inc. 4.45% 2012 | 13,000 | 13,772 | ||||||
Pfizer Inc. 5.35% 2015 | 20,000 | 22,162 | ||||||
PTS Acquisition Corp. 9.50% 20155,10 | 56,135 | 35,926 | ||||||
Coventry Health Care, Inc. 5.875% 2012 | 8,000 | 7,861 | ||||||
Coventry Health Care, Inc. 6.30% 2014 | 26,750 | 24,181 | ||||||
Coventry Health Care, Inc. 5.95% 2017 | 2,000 | 1,683 | ||||||
Cardinal Health, Inc. 4.00% 2015 | 25,000 | 22,632 | ||||||
Cardinal Health, Inc. 5.80% 2016 | 10,000 | 9,867 | ||||||
GlaxoSmithKline Capital Inc. 4.85% 2013 | 13,500 | 14,338 | ||||||
GlaxoSmithKline Capital Inc. 5.65% 2018 | 7,705 | 8,379 | ||||||
GlaxoSmithKline Capital Inc. 6.375% 2038 | 8,100 | 9,358 | ||||||
Team Finance LLC and Health Finance Corp. 11.25% 2013 | 26,600 | 27,398 | ||||||
Novartis Capital Corp. 4.125% 2014 | 17,250 | 18,009 | ||||||
Schering-Plough Corp. 6.00% 2017 | 13,843 | 15,264 | ||||||
Express Scripts Inc. 5.25% 2012 | 3,160 | 3,340 | ||||||
Express Scripts Inc. 7.25% 2019 | 8,985 | 10,372 | ||||||
UnitedHealth Group 6.00% 2017 | 12,430 | 12,638 | ||||||
Surgical Care Affiliates, Inc. 9.625% 20154,5,10 | 6,289 | 4,622 | ||||||
Surgical Care Affiliates, Inc. 10.00% 20174 | 9,500 | 6,792 | ||||||
Symbion Inc. 11.75% 20155,10 | 15,786 | 11,050 | ||||||
WellPoint, Inc. 6.00% 2014 | 10,000 | 10,407 | ||||||
Humana Inc. 6.45% 20163 | 9,375 | 8,766 | ||||||
Viant Holdings Inc. 10.125% 20174 | 8,335 | 7,043 | ||||||
Merck & Co., Inc. 5.00% 2019 | 6,000 | 6,242 | ||||||
Biogen Idec Inc. 6.00% 2013 | 6,000 | 6,204 | ||||||
Hospira, Inc. 5.55% 2012 | 5,295 | 5,517 | ||||||
United Surgical Partners International Inc. 9.25% 20175,10 | 3,265 | 2,808 | ||||||
Bausch & Lomb Inc. 9.875% 2015 | 2,250 | 2,256 | ||||||
CHS/Community Health Systems, Inc. 8.875% 2015 | 205 | 212 | ||||||
1,157,833 | ||||||||
INFORMATION TECHNOLOGY — 1.69% | ||||||||
NXP BV and NXP Funding LLC 3.259% 20135 | 128,470 | 79,170 | ||||||
NXP BV and NXP Funding LLC 10.00% 20133,12 | 37,639 | 33,687 | ||||||
NXP BV and NXP Funding LLC 7.875% 2014 | 88,940 | 62,258 | ||||||
NXP BV and NXP Funding LLC 9.50% 2015 | 116,350 | 57,302 | ||||||
Electronic Data Systems Corp., Series B, 6.00% 20135 | 100,425 | 110,540 | ||||||
Hewlett-Packard Co. 6.125% 2014 | 35,000 | 39,345 | ||||||
Hewlett-Packard Co. 5.50% 2018 | 9,500 | 10,292 | ||||||
Electronic Data Systems Corp. 7.45% 2029 | 6,555 | 8,134 | ||||||
Sanmina-SCI Corp. 3.379% 20104,5 | 1,732 | 1,715 | ||||||
Sanmina-SCI Corp. 6.75% 2013 | 28,475 | 26,055 | ||||||
Sanmina-SCI Corp. 3.379% 20144,5 | 23,750 | 20,781 | ||||||
Sanmina-SCI Corp. 8.125% 2016 | 72,305 | 64,351 | ||||||
Freescale Semiconductor, Inc., Term Loan B, 2.059% 20135,6,8 | 61,193 | 45,305 | ||||||
Freescale Semiconductor, Inc. 4.504% 20145 | 15,500 | 8,293 | ||||||
Freescale Semiconductor, Inc. 8.875% 2014 | 47,875 | 32,316 | ||||||
Freescale Semiconductor, Inc. 10.125% 2016 | 18,374 | 9,554 | ||||||
Jabil Circuit, Inc. 5.875% 2010 | 49,890 | 51,511 | ||||||
Jabil Circuit, Inc. 8.25% 2018 | 40,725 | 40,114 | ||||||
First Data Corp., Term Loan B2, 3.035% 20145,6,8 | 73,332 | 62,439 | ||||||
First Data Corp. 9.875% 20154 | 12,500 | 10,609 | ||||||
SunGard Data Systems Inc. 9.125% 2013 | 48,785 | 50,005 | ||||||
KLA-Tencor Corp. 6.90% 2018 | 50,500 | 48,967 | ||||||
National Semiconductor Corp. 6.15% 2012 | 20,250 | 20,105 | ||||||
National Semiconductor Corp. 6.60% 2017 | 7,250 | 6,614 | ||||||
Ceridian Corp. 11.25% 2015 | 28,425 | 24,374 | ||||||
Celestica Inc. 7.625% 2013 | 23,320 | 23,670 | ||||||
Cisco Systems, Inc. 4.95% 2019 | 20,000 | 21,047 | ||||||
Hughes Communications, Inc. 9.50% 2014 | 15,750 | 15,829 | ||||||
Serena Software, Inc. 10.375% 2016 | 13,430 | 12,691 | ||||||
Oracle Corp. 3.75% 2014 | 10,000 | 10,325 | ||||||
Sensata Technologies BV, Term Loan B, 2.246% 20135,6,8 | 3,753 | 3,159 | ||||||
Sensata Technologies BV 8.00% 20145 | 6,625 | 5,399 | ||||||
1,015,956 | ||||||||
CONSUMER STAPLES — 1.50% | ||||||||
Altria Group, Inc. 8.50% 2013 | 20,000 | 23,125 | ||||||
Altria Group, Inc. 9.70% 2018 | 68,000 | 82,821 | ||||||
Altria Group, Inc. 9.25% 2019 | 84,485 | 101,205 | ||||||
Altria Group, Inc. 9.95% 2038 | 23,500 | 30,026 | ||||||
Altria Group, Inc. 10.20% 2039 | 18,000 | 23,489 | ||||||
PepsiCo, Inc. 7.90% 2018 | 65,000 | 81,942 | ||||||
Diageo Capital PLC 7.375% 2014 | 47,510 | 54,629 | ||||||
Diageo Capital PLC 5.50% 2016 | 7,490 | 7,876 | ||||||
SUPERVALU INC., Term Loan B, 1.535% 20125,6,8 | 1,518 | 1,464 | ||||||
SUPERVALU INC. 7.50% 2012 | 3,323 | 3,365 | ||||||
Albertson’s, Inc. 7.25% 2013 | 14,122 | 13,910 | ||||||
SUPERVALU INC. 7.50% 2014 | 1,000 | 973 | ||||||
SUPERVALU INC. 8.00% 2016 | 14,700 | 14,663 | ||||||
Albertson’s, Inc. 8.00% 2031 | 12,650 | 11,069 | ||||||
Kroger Co. 7.50% 2014 | 15,000 | 17,095 | ||||||
Kroger Co. 6.40% 2017 | 17,950 | 19,626 | ||||||
Kroger Co. 6.80% 2018 | 830 | 939 | ||||||
Kroger Co. 6.15% 2020 | 2,595 | 2,775 | ||||||
Stater Bros. Holdings Inc. 8.125% 2012 | 22,625 | 22,964 | ||||||
Stater Bros. Holdings Inc. 7.75% 2015 | 17,750 | 17,218 | ||||||
Anheuser-Busch InBev NV 7.75% 20194 | 25,000 | 29,250 | ||||||
British American Tobacco International Finance PLC 9.50% 20184 | 22,520 | 28,106 | ||||||
Duane Reade Inc. 9.75% 2011 | 14,120 | 13,485 | ||||||
Duane Reade Inc. 11.75% 20154 | 14,150 | 13,785 | ||||||
CVS Caremark Corp. 0.968% 20105 | 5,000 | 4,985 | ||||||
CVS Caremark Corp. 5.789% 20264,6 | 4,250 | 3,688 | ||||||
CVS Caremark Corp. 6.036% 20286 | 13,145 | 12,198 | ||||||
CVS Caremark Corp. 6.943% 20306 | 5,819 | 5,659 | ||||||
Coca-Cola Co. 4.875% 2019 | 25,000 | 26,271 | ||||||
Wesfarmers Ltd. 6.998% 20134 | 25,000 | 26,074 | ||||||
Rite Aid Corp., Term Loan T4 9.50% 20155,6,8 | 10,000 | 10,300 | ||||||
Rite Aid Corp. 9.75% 20164 | 10,000 | 10,600 | ||||||
Rite Aid Corp. 7.70% 2027 | 8,000 | 3,840 | ||||||
Rite Aid Corp. 6.875% 2028 | 2,300 | 1,046 | ||||||
Kraft Foods Inc. 6.75% 2014 | 10,820 | 12,170 | ||||||
Kraft Foods Inc. 6.875% 2038 | 10,875 | 12,453 | ||||||
Tyson Foods, Inc. 10.50% 20144 | 6,050 | 6,746 | ||||||
Tyson Foods, Inc. 7.85% 20165 | 11,500 | 11,672 | ||||||
Unilever Capital Corp. 3.65% 2014 | 17,500 | 17,923 | ||||||
Procter & Gamble Co. 3.50% 2015 | 17,250 | 17,596 | ||||||
Kimberly-Clark Corp. 7.50% 2018 | 13,500 | 16,561 | ||||||
Safeway Inc. 6.25% 2014 | 7,000 | 7,677 | ||||||
Safeway Inc. 6.35% 2017 | 8,000 | 8,776 | ||||||
Constellation Brands, Inc. 8.125% 2012 | 9,250 | 9,389 | ||||||
Constellation Brands, Inc. 8.375% 2014 | 3,675 | 3,822 | ||||||
Constellation Brands, Inc. 7.25% 2017 | 3,000 | 2,947 | ||||||
H.J. Heinz Co. 15.59% 20114,5 | 11,800 | 16,015 | ||||||
Vitamin Shoppe Industries Inc. 8.383% 20125 | 11,650 | 11,126 | ||||||
Smithfield Foods, Inc., Series B, 7.75% 2013 | 2,800 | 2,394 | ||||||
Smithfield Foods, Inc. 10.00% 20144 | 3,825 | 4,007 | ||||||
Dole Food Co., Inc. 8.875% 2011 | 6,085 | 6,070 | ||||||
Delhaize Group 6.50% 2017 | 3,850 | 4,072 | ||||||
Elizabeth Arden, Inc. 7.75% 2014 | 3,150 | 2,835 | ||||||
Pilgrim’s Pride Corp. 7.625% 20159 | 2,700 | 2,504 | ||||||
897,216 | ||||||||
ENERGY — 1.39% | ||||||||
TransCanada PipeLines Ltd. 6.50% 2018 | 19,595 | 22,233 | ||||||
TransCanada PipeLines Ltd. 7.125% 2019 | 19,060 | 22,671 | ||||||
TransCanada PipeLines Ltd. 6.20% 2037 | 400 | 434 | ||||||
TransCanada PipeLines Ltd. 7.625% 2039 | 11,000 | 14,018 | ||||||
TransCanada PipeLines Ltd. 6.35% 20675 | 82,975 | 64,813 | ||||||
Ras Laffan Liquefied Natural Gas Co. Ltd. 3.437% 20094,6 | 5,406 | 5,400 | ||||||
Ras Laffan Liquefied Natural Gas Co. Ltd. 3.437% 20096 | 104 | 104 | ||||||
Ras Laffan Liquefied Natural Gas III 5.50% 20144 | 2,950 | 3,030 | ||||||
Ras Laffan Liquefied Natural Gas Co. Ltd. 8.294% 20144,6 | 13,329 | 14,664 | ||||||
Ras Laffan Liquefied Natural Gas Co. Ltd. 8.294% 20146 | 4,325 | 4,758 | ||||||
Ras Laffan Liquefied Natural Gas III 6.75% 20194 | 4,715 | 4,924 | ||||||
Ras Laffan Liquefied Natural Gas II 5.298% 20204,6 | 44,850 | 43,719 | ||||||
Ras Laffan Liquefied Natural Gas III 5.838% 20274,6 | 52,650 | 46,808 | ||||||
Williams Companies, Inc. 2.597% 20104,5 | 8,000 | 7,603 | ||||||
Williams Companies, Inc. 6.375% 20104 | 4,700 | 4,795 | ||||||
Transcontinental Gas Pipe Line Corp., Series B, 7.00% 2011 | 10,000 | 10,750 | ||||||
Williams Companies, Inc. 7.125% 2011 | 38,750 | 40,697 | ||||||
Williams Companies, Inc. 8.125% 2012 | 14,810 | 15,901 | ||||||
Williams Companies, Inc. 8.75% 20204 | 5,625 | 6,367 | ||||||
Williams Companies, Inc. 7.875% 2021 | 14,900 | 16,236 | ||||||
Williams Companies, Inc. 8.75% 2032 | 10,530 | 11,904 | ||||||
Enbridge Energy Partners, LP, Series B, 6.50% 2018 | 5,225 | 5,422 | ||||||
Enbridge Energy Partners, LP 9.875% 2019 | 15,750 | 19,384 | ||||||
Enbridge Energy Partners, LP, Series B, 7.50% 2038 | 6,000 | 6,867 | ||||||
Enbridge Energy Partners, LP 8.05% 20775 | 20,045 | 15,264 | ||||||
Gaz Capital SA 6.51% 20224 | 26,200 | 21,091 | ||||||
Gaz Capital SA 7.288% 20374 | 20,650 | 16,262 | ||||||
Tengizchevroil Finance Co. S.àr.l., Series A, 6.124% 20144,6 | 22,398 | 21,054 | ||||||
Tengizchevroil Finance Co. S.àr.l., Series A, 6.124% 20146 | 10,217 | 9,604 | ||||||
Kinder Morgan Energy Partners LP 5.85% 2012 | 2,400 | 2,537 | ||||||
Kinder Morgan Energy Partners LP 5.125% 2014 | 10,325 | 10,661 | ||||||
Kinder Morgan Energy Partners LP 6.00% 2017 | 2,950 | 3,039 | ||||||
Kinder Morgan Energy Partners LP 9.00% 2019 | 11,770 | 14,357 | ||||||
Energy Transfer Partners, LP 8.50% 2014 | 10,860 | 12,562 | ||||||
Energy Transfer Partners, LP 9.00% 2019 | 6,535 | 8,027 | ||||||
Energy Transfer Partners, LP 9.70% 2019 | 7,140 | 8,967 | ||||||
Chevron Corp. 4.95% 2019 | 25,000 | 26,617 | ||||||
Premcor Refining Group Inc. 6.125% 2011 | 14,500 | 14,961 | ||||||
Premcor Refining Group Inc. 6.75% 2011 | 11,150 | 11,464 | ||||||
Drummond Co., Inc. 7.375% 20163,4 | 30,955 | 26,002 | ||||||
Shell International Finance B.V. 4.00% 2014 | 20,000 | 21,040 | ||||||
Petroplus Finance Ltd. 6.75% 20144 | 3,750 | 3,356 | ||||||
Petroplus Finance Ltd. 7.00% 20174 | 20,550 | 17,673 | ||||||
Enbridge Inc. 5.60% 2017 | 20,400 | 20,428 | ||||||
Arch Coal Inc. 8.75% 20164 | 20,000 | 20,300 | ||||||
ConocoPhillips 5.75% 2019 | 17,250 | 18,894 | ||||||
Enterprise Products Operating LP 4.95% 2010 | 2,400 | 2,443 | ||||||
Enterprise Products Operating LLC 5.65% 2013 | 10,000 | 10,480 | ||||||
Sunoco, Inc. 4.875% 2014 | 5,310 | 5,031 | ||||||
Sunoco, Inc. 5.75% 2017 | 8,000 | 7,611 | ||||||
Rockies Express Pipeline LLC 6.85% 20184 | 10,000 | 10,999 | ||||||
StatoilHydro ASA 3.875% 2014 | 10,000 | 10,299 | ||||||
BP Capital Markets PLC 3.625% 20144 | 10,000 | 10,257 | ||||||
Pemex Project Funding Master Trust 5.75% 2018 | 4,500 | 4,455 | ||||||
Pemex Project Funding Master Trust 6.625% 2035 | 5,000 | 4,746 | ||||||
Qatar Petroleum 5.579% 20114,6 | 8,890 | 9,127 | ||||||
XTO Energy Inc. 6.25% 2017 | 7,750 | 8,448 | ||||||
Canadian Natural Resources Ltd. 5.70% 2017 | 7,350 | 7,738 | ||||||
Williams Partners L.P. and Williams Partners Finance Corp. 7.25% 2017 | 7,200 | 7,066 | ||||||
TEPPCO Partners LP 7.00% 20675 | 7,475 | 5,781 | ||||||
Husky Energy Inc. 5.90% 2014 | 120 | 129 | ||||||
Husky Energy Inc. 7.25% 2019 | 155 | 178 | ||||||
Husky Energy Inc. 6.80% 2037 | 4,425 | 4,786 | ||||||
PETRONAS Capital Ltd. 7.00% 20124 | 4,000 | 4,423 | ||||||
Delek & Avner-Yam Tethys Ltd. 5.326% 20134,6 | 2,273 | 2,138 | ||||||
TNK-BP Finance SA 7.50% 20164 | 1,500 | 1,391 | ||||||
835,188 | ||||||||
UTILITIES — 1.38% | ||||||||
Edison Mission Energy 7.50% 2013 | 35,525 | 32,594 | ||||||
Edison Mission Energy 7.75% 2016 | 35,300 | 29,829 | ||||||
Midwest Generation, LLC, Series B, 8.56% 20166 | 11,625 | 11,683 | ||||||
Edison Mission Energy 7.00% 2017 | 19,525 | 15,644 | ||||||
Edison Mission Energy 7.20% 2019 | 39,450 | 30,081 | ||||||
Homer City Funding LLC 8.734% 20266 | 12,459 | 11,244 | ||||||
Edison Mission Energy 7.625% 2027 | 20,850 | 13,761 | ||||||
Southern California Edison Co., First and Refunding Mortgage Bonds, Series 2006-E, 5.55% 2037 | 6,500 | 6,788 | ||||||
Texas Competitive Electric Holdings Co. LLC, Term Loan B2, 3.802% 20145,6,8 | 19,182 | 14,899 | ||||||
Texas Competitive Electric Holdings Co. LLC, Series A, 10.25% 2015 | 111,144 | 87,804 | ||||||
Texas Competitive Electric Holdings Co. LLC, Series B, 10.25% 2015 | 41,665 | 32,915 | ||||||
Texas Competitive Electric Holdings Co. LLC 11.25% 20165,10 | 16,794 | 10,748 | ||||||
AES Corp. 9.375% 2010 | 4,802 | 4,934 | ||||||
AES Corp. 8.75% 20134 | 34,656 | 35,522 | ||||||
AES Corp. 7.75% 2015 | 10,000 | 9,725 | ||||||
AES Red Oak, LLC, Series A, 8.54% 20196 | 34,497 | 31,909 | ||||||
AES Red Oak, LLC, Series B, 9.20% 20296 | 7,000 | 6,125 | ||||||
MidAmerican Energy Co. 4.65% 2014 | 3,200 | 3,382 | ||||||
MidAmerican Energy Co. 5.95% 2017 | 10,625 | 11,625 | ||||||
MidAmerican Energy Holdings Co. 5.75% 2018 | 15,320 | 16,367 | ||||||
PacifiCorp. 5.50% 2019 | 5,000 | 5,411 | ||||||
MidAmerican Energy Holdings Co. 6.125% 2036 | 10,150 | 10,819 | ||||||
MidAmerican Energy Holdings Co. 6.50% 2037 | 3,000 | 3,360 | ||||||
Israel Electric Corp. Ltd. 7.25% 20194 | 1,800 | 1,860 | ||||||
Israel Electric Corp. Ltd. 9.375% 20204 | 36,715 | 42,426 | ||||||
Israel Electric Corp. Ltd. 8.10% 20964 | 4,905 | 4,575 | ||||||
Nevada Power Co., General and Refunding Mortgage Bonds, Series A, 8.25% 2011 | 6,000 | 6,537 | ||||||
Sierra Pacific Power Co., General and Refunding Mortgage Notes, Series H, 6.25% 2012 | 7,500 | 7,815 | ||||||
Nevada Power Co., General and Refunding Mortgage Notes, Series I, 6.50% 2012 | 4,250 | 4,538 | ||||||
Sierra Pacific Resources 8.625% 2014 | 2,725 | 2,780 | ||||||
Nevada Power Co., General and Refunding Mortgage Notes, Series L, 5.875% 2015 | 5,675 | 5,888 | ||||||
Nevada Power Co., General and Refunding Mortgage Notes, Series M, 5.95% 2016 | 13,700 | 14,132 | ||||||
Sierra Pacific Resources 6.75% 2017 | 3,000 | 2,792 | ||||||
NRG Energy, Inc. 7.25% 2014 | 7,825 | 7,708 | ||||||
NRG Energy, Inc. 7.375% 2016 | 36,625 | 35,526 | ||||||
National Rural Utilities Cooperative Finance Corp. 5.50% 2013 | 27,850 | 29,883 | ||||||
National Rural Utilities Cooperative Finance Corp., Collateral Trust Bonds, 10.375% 2018 | 6,000 | 7,777 | ||||||
Cilcorp Inc. 8.70% 2009 | 9,000 | 9,090 | ||||||
Ameren Corp. 8.875% 2014 | 10,000 | 10,714 | ||||||
Union Electric Co. 5.40% 2016 | 8,000 | 7,903 | ||||||
Cilcorp Inc. 9.375% 2029 | 3,000 | 3,705 | ||||||
Consumers Energy Co., First Mortgage Bonds, 6.70% 2019 | 26,800 | 30,389 | ||||||
Electricité de France SA 5.50% 20144 | 15,000 | 16,340 | ||||||
Electricité de France SA 6.95% 20394 | 8,000 | 9,760 | ||||||
PSEG Power LLC 7.75% 2011 | 7,500 | 8,103 | ||||||
PSEG Power LLC 5.00% 2014 | 10,000 | 10,384 | ||||||
Public Service Electric and Gas Co., Series E, 5.30% 2018 | 1,000 | 1,063 | ||||||
Abu Dhabi National Energy Co. PJSC (TAQA) 5.875% 20164 | 9,250 | 8,909 | ||||||
Abu Dhabi National Energy Co. PJSC (TAQA) 6.165% 20174 | 4,000 | 3,858 | ||||||
Abu Dhabi National Energy Co. PJSC (TAQA) 6.50% 20364 | 7,750 | 6,752 | ||||||
Alabama Power Co., Series R, 4.70% 2010 | 1,250 | 1,297 | ||||||
Alabama Power Co., Series 2008-B, 5.80% 2013 | 4,500 | 4,939 | ||||||
Alabama Power Co., Series Q, 5.50% 2017 | 1,000 | 1,073 | ||||||
Alabama Power Co. 6.00% 2039 | 9,000 | 9,874 | ||||||
PG&E Corp. 5.75% 2014 | 9,000 | 9,829 | ||||||
Pacific Gas and Electric Co., First Mortgage Bonds, 6.05% 2034 | 4,000 | 4,355 | ||||||
E.ON International Finance BV 5.80% 20184 | 13,000 | 13,893 | ||||||
Progress Energy, Inc. 6.05% 2014 | 4,500 | 4,858 | ||||||
Carolina Power & Light Co. d/b/a Progress Energy Carolinas, Inc. 5.25% 2015 | 6,000 | 6,356 | ||||||
Virginia Electric and Power Co., Series 2003-A, 4.75% 2013 | 6,000 | 6,284 | ||||||
Virginia Electric and Power Co., Series B, 5.95% 2017 | 4,500 | 4,931 | ||||||
Veolia Environnement 5.25% 2013 | 8,000 | 8,329 | ||||||
AES Panamá, SA 6.35% 20164 | 4,500 | 4,289 | ||||||
Enersis SA 7.375% 2014 | 3,500 | 3,790 | ||||||
Appalachian Power Co., Series M, 5.55% 2011 | 3,000 | 3,110 | ||||||
Intergen Power 9.00% 20174 | 3,000 | 2,970 | ||||||
FPL Energy National Wind Portfolio, LLC 6.125% 20194,6 | 1,572 | 1,463 | ||||||
830,016 | ||||||||
MATERIALS — 0.73% | ||||||||
Dow Chemical Co. 7.60% 2014 | 40,450 | 43,998 | ||||||
Dow Chemical Co. 8.55% 2019 | 38,300 | 42,089 | ||||||
Dow Chemical Co. 9.40% 2039 | 1,160 | 1,398 | ||||||
International Paper Co. 7.40% 2014 | 12,500 | 13,371 | ||||||
International Paper Co. 7.95% 2018 | 36,545 | 38,990 | ||||||
International Paper Co. 9.375% 2019 | 15,385 | 18,027 | ||||||
Owens-Brockway Glass Container Inc. 8.25% 2013 | 16,000 | 16,440 | ||||||
Owens-Brockway Glass Container Inc. 7.375% 20164 | 18,055 | 17,965 | ||||||
Nalco Co. 7.75% 2011 | 3,370 | 3,404 | ||||||
Nalco Co. 8.875% 2013 | 1,000 | 1,040 | ||||||
Nalco Finance Holdings LLC and Nalco Finance Holdings Inc. 9.00% 2014 | 7,200 | 7,308 | ||||||
Nalco Co., Term Loan B, 6.50% 20165,6,8 | 5,540 | 5,588 | ||||||
Nalco Co. 8.25% 20174 | 11,445 | 11,960 | ||||||
ArcelorMittal 6.125% 2018 | 26,525 | 25,662 | ||||||
Rio Tinto Finance (USA) Ltd. 5.875% 2013 | 10,000 | 10,601 | ||||||
Rio Tinto Finance (USA) Ltd. 8.95% 2014 | 6,500 | 7,560 | ||||||
Rio Tinto Finance (USA) Ltd. 9.00% 2019 | 5,000 | 5,892 | ||||||
Freeport-McMoRan Copper & Gold Inc. 6.875% 2014 | 3,100 | 3,210 | ||||||
Freeport-McMoRan Copper & Gold Inc. 8.25% 2015 | 16,880 | 17,871 | ||||||
BHP Billiton Finance (USA) Ltd. 5.50% 2014 | 17,595 | 19,132 | ||||||
Domtar Corp. 5.375% 2013 | 2,350 | 2,086 | ||||||
Domtar Corp. 7.125% 2015 | 17,145 | 15,431 | ||||||
Georgia-Pacific Corp. 8.125% 2011 | 4,000 | 4,120 | ||||||
Georgia-Pacific Corp., First Lien Term Loan B, 2.65% 20125,6,8 | 4,832 | 4,689 | ||||||
Georgia-Pacific LLC 8.25% 20164 | 7,315 | 7,608 | ||||||
Boise Cascade, LLC and Boise Cascade Finance Corp. 7.125% 2014 | 16,155 | 10,501 | ||||||
Georgia Gulf Corp., Term Loan, Revolver, 6.50% 20111,5,6,8,13 | 4,250 | 3,889 | ||||||
Georgia Gulf Corp., Term Loan B, 9.50% 20131,5,6,8 | 6,246 | 5,758 | ||||||
Graphic Packaging International, Inc. 8.50% 2011 | 6,088 | 6,134 | ||||||
Graphic Packaging International, Inc. 9.50% 20174 | 2,150 | 2,150 | ||||||
Jefferson Smurfit Corp. (U.S.) 8.25% 20129 | 1,205 | 615 | ||||||
Stone Container Corp. 8.375% 20129 | 5,438 | 2,828 | ||||||
Jefferson Smurfit Corp. (U.S.) 7.50% 20139 | 3,630 | 1,806 | ||||||
Smurfit-Stone Container Enterprises, Inc. 8.00% 20179 | 5,070 | 2,573 | ||||||
Stora Enso Oyj 6.404% 20164 | 4,500 | 3,334 | ||||||
Stora Enso Oyj 7.25% 20364 | 5,445 | 3,164 | ||||||
FMG Finance Pty Ltd. 10.625% 20164 | 6,000 | 6,225 | ||||||
Airgas, Inc. 6.25% 2014 | 2,450 | 2,456 | ||||||
Airgas, Inc. 7.125% 20184 | 3,500 | 3,412 | ||||||
AMH Holdings, Inc. 11.25% 2014 | 12,905 | 5,549 | ||||||
Ashland Inc., Term Loan B, 7.65% 20145,6,8 | 3,329 | 3,392 | ||||||
Weyerhaeuser Co. 7.375% 20321 | 1,500 | 1,287 | ||||||
Weyerhaeuser Co. 6.875% 20331 | 2,500 | 1,939 | ||||||
Rockwood Specialties Group, Inc. 7.50% 2014 | 3,240 | 3,127 | ||||||
AEP Industries Inc. 7.875% 2013 | 3,010 | 2,732 | ||||||
UPM-Kymmene Corp. 5.625% 20144 | 3,000 | 2,403 | ||||||
Arbermarle Corp. 5.10% 2015 | 2,570 | 2,280 | ||||||
CRH America, Inc. 6.00% 2016 | 110 | 103 | ||||||
CRH America, Inc. 8.125% 20183 | 2,045 | 2,106 | ||||||
Plastipak Holdings, Inc. 8.50% 20154 | 2,275 | 2,173 | ||||||
Momentive Performance Materials Inc. 9.75% 2014 | 2,665 | 1,746 | ||||||
Smurfit Capital Funding PLC 7.50% 2025 | 2,175 | 1,642 | ||||||
Corporación Nacional del Cobre de Chile 6.375% 20124 | 1,500 | 1,638 | ||||||
Rock-Tenn Co. 9.25% 20164 | 1,430 | 1,512 | ||||||
Praxair, Inc. 4.375% 2014 | 1,000 | 1,054 | ||||||
C10 Capital (SPV) Ltd. 6.722% (undated)4,5 | 1,300 | 735 | ||||||
Neenah Paper, Inc. 7.375% 2014 | 90 | 63 | ||||||
435,766 | ||||||||
ASSET-BACKED OBLIGATIONS6 — 0.70% | ||||||||
Honda Auto Receivables Owner Trust, Series 2006-3, Class A-4, 5.11% 2012 | 17,500 | 17,894 | ||||||
Honda Auto Receivables Owner Trust, Series 2007-2, Class A-4, 5.57% 2013 | 24,500 | 25,717 | ||||||
AmeriCredit Automobile Receivables Trust, Series 2007-C-M, Class A-4-A, MBIA insured, 5.55% 2014 | 12,000 | 11,608 | ||||||
AmeriCredit Automobile Receivables Trust, Series 2007-D-F, Class A-4-A, FSA insured, 5.56% 2014 | 7,000 | 6,339 | ||||||
AmeriCredit Automobile Receivables Trust, Series 2008-A-F, Class A-4, FSA insured, 6.96% 2014 | 15,000 | 13,820 | ||||||
Drive Auto Receivables Trust, Series 2005-3, Class A-4, FSA insured, 5.09% 20134 | 12,707 | 13,090 | ||||||
Drive Auto Receivables Trust, Series 2006-2, Class A-3, MBIA insured, 5.33% 20144 | 15,265 | 15,414 | ||||||
CPS Auto Receivables Trust, Series 2006-A, Class 1-A-4, FSA insured, 5.33% 20124 | 4,870 | 4,737 | ||||||
CPS Auto Receivables Trust, Series 2006-B, Class A-4, MBIA insured, 5.81% 20124 | 2,321 | 2,333 | ||||||
CPS Auto Receivables Trust, Series 2006-C, Class A-4, XLCA insured, 5.14% 20134 | 9,528 | 9,165 | ||||||
CPS Auto Receivables Trust, Series 2007-B, Class A-4, FSA insured, 5.60% 20144 | 10,000 | 10,016 | ||||||
UPFC Auto Receivables Trust, Series 2005-B, Class A-3, XLCA insured, 4.98% 2011 | 1,433 | 1,440 | ||||||
UPFC Auto Receivables Trust, Series 2007-B, Class A-3, AMBAC insured, 6.15% 2014 | 23,250 | 23,652 | ||||||
ARG Funding Corp., Series 2005-2, Class A-4, AMBAC insured, 4.84% 20114 | 20,000 | 19,168 | ||||||
Conseco Finance Home Loan Trust, Series 1999-G, Class B-2, 10.96% 2029 | 14,099 | 5,360 | ||||||
Green Tree Financial Corp., Series 2008-MH1, Class A-3, 8.97% 20384 | 13,039 | 12,588 | ||||||
PG&E Energy Recovery Funding LLC, Series 2005-1, Class A-3, 4.14% 2012 | 9,024 | 9,190 | ||||||
PG&E Energy Recovery Funding LLC, Series 2005-2, Class A-3, 5.12% 2014 | 8,040 | 8,563 | ||||||
American Express Issuance Trust, Series 2005-1, Class C, 0.618% 20115 | 17,500 | 16,235 | ||||||
Nissan Auto Lease Trust, Series 2008-A, Class A-3a, 5.14% 2011 | 14,000 | 14,474 | ||||||
Long Beach Acceptance Auto Receivables Trust, Series 2006-B, Class A-3, FSA insured, 5.17% 2011 | 891 | 894 | ||||||
Long Beach Acceptance Auto Receivables Trust, Series 2006-B, Class A-4, FSA insured, 5.18% 2013 | 11,500 | 11,025 | ||||||
BMW Vehicle Owner Trust, Series 2006-A, Class A-4, 5.07% 2011 | 10,381 | 10,609 | ||||||
Chase Issuance Trust, Series 2008-4, Class A, 4.65% 2015 | 10,000 | 10,368 | ||||||
CWHEQ Revolving Home Equity Loan Trust, Series 2006-I, Class 2-A, FSA insured, 0.428% 20375 | 6,019 | 3,586 | ||||||
CWHEQ Revolving Home Equity Loan Trust, Series 2007-C, Class A, FGIC insured, 0.438% 20375 | 25,079 | 6,070 | ||||||
Washington Mutual Master Note Trust, Series 2007-C1, Class C-1, 0.688% 20144,5 | 7,550 | 7,261 | ||||||
Washington Mutual Master Note Trust, Series 2006-C2A, Class C-2, 0.788% 20154,5 | 2,300 | 1,976 | ||||||
J.P. Morgan Mortgage Acquisition Corp., Series 2005-FRE1, Class A-F-4, 5.488% 20355 | 10,476 | 8,732 | ||||||
AEP Texas Central Transitioning Funding II LLC, Secured Transition Bonds, Series A, Class A-3, 5.09% 2017 | 8,265 | 8,680 | ||||||
First Horizon ABS Trust, Series 2006-HE2, Class A, FSA insured, 0.415% 20265 | 4,720 | 2,068 | ||||||
First Horizon ABS Trust, Series 2007-HE1, Class A, FSA insured, 0.405% 20295 | 9,101 | 4,621 | ||||||
Prestige Auto Receivables Trust, Series 2005-1A, Class A-2, FSA insured, 4.37% 20124 | 2,199 | 2,211 | ||||||
Prestige Auto Receivables Trust, Series 2006-1A, Class A-2, FSA insured, 5.25% 20134 | 4,346 | 4,402 | ||||||
Triad Automobile Receivables Trust, Series 2006-C, Class A-3, AMBAC insured, 5.26% 2011 | 2,200 | 2,207 | ||||||
Triad Automobile Receivables Trust, Series 2005-A, Class A-4, AMBAC insured, 4.22% 2012 | 4,368 | 4,373 | ||||||
Hertz Vehicle Financing LLC, Rental Car Asset-backed Notes, Series 2005-2, Class A-6, AMBAC insured, 5.08% 20114 | 6,375 | 6,256 | ||||||
GMAC Mortgage Loan Trust, Series 2007-HE2, Class A-2, FGIC insured, 6.054% 20375 | 5,000 | 2,110 | ||||||
GMAC Mortgage Loan Trust, Series 2007-HE2, Class A-3, FGIC insured, 6.193% 20375 | 10,000 | 3,783 | ||||||
Advanta Business Card Master Trust, Series 2005-A2, Class A-2, 0.419% 20135 | 5,932 | 5,457 | ||||||
Home Equity Asset Trust, Series 2004-7, Class M-1, 0.905% 20355 | 10,000 | 5,348 | ||||||
Capital One Multi-asset Execution Trust, Series 2006-1, Class C, 0.578% 20145 | 2,000 | 1,674 | ||||||
Capital One Multi-asset Execution Trust, Series 2003-3, Class C, 2.538% 20165 | 4,600 | 3,495 | ||||||
Citibank Credit Card Issuance Trust, Series 2008, Class C6, 6.30% 2014 | 2,000 | 1,953 | ||||||
Citibank Credit Card Issuance Trust, Series 2008, Class A5, 4.85% 2015 | 3,000 | 3,119 | ||||||
MBNA Credit Card Master Note Trust, Series 2001-C, Class C, 7.10% 20134 | 5,000 | 4,907 | ||||||
Susquehanna Auto Lease Trust, Series 2007-1, Class A-3, 5.25% 20104 | 4,879 | 4,899 | ||||||
Vanderbilt Mortgage and Finance, Inc., Series 1999-B, Class I-A-6, 6.925% 2024 | 4,878 | 4,880 | ||||||
RAMP Trust, Series 2003-RZ4, Class A-7, 4.79% 20335 | 5,319 | 4,870 | ||||||
MBNA Master Credit Card Trust II, Series 2000-H, Class B, 0.888% 20135 | 5,000 | 4,801 | ||||||
CarMax Auto Owner Trust, Series 2007-2, Class A-3, 5.23% 2011 | 3,987 | 4,065 | ||||||
Ameriquest Mortgage Securities Inc., Series 2003-12, Class M-1, 1.035% 20345 | 5,852 | 3,755 | ||||||
CWHEQ Home Equity Loan Trust, Series 2006-S2, Class A-5, FGIC insured, 5.753% 2027 | 9,468 | 3,637 | ||||||
Home Equity Mortgage Trust, Series 2006-2, Class 1A-1, 5.367% 20365 | 2,593 | 434 | ||||||
Home Equity Mortgage Trust, Series 2006-4, Class A-1, 5.671% 20365 | 5,377 | 489 | ||||||
Home Equity Mortgage Trust, Series 2006-6, Class 2A-1, 0.385% 20375 | 23,559 | 1,086 | ||||||
Home Equity Mortgage Trust, Series 2006-5, Class A-1, 5.50% 20375 | 13,952 | 1,341 | ||||||
Residential Asset Securities Corp. Trust, Series 2001-KS3, Class A-I-6, 5.96% 2031 | 4,201 | 3,166 | ||||||
Residential Asset Securities Corp. Trust, Series 2003-KS6, Class A-2, 0.885% 20335 | 124 | 97 | ||||||
BA Credit Card Trust, Series 2007-2, Class C-2, 0.558% 20125 | 3,315 | 3,182 | ||||||
Metropolitan Asset Funding, Inc., Series 1998-A, Class B-1, 7.728% 20143,4 | 3,577 | 3,148 | ||||||
SACO I Trust, Series 2006-7, Class A, 0.415% 20365 | 17,441 | 1,322 | ||||||
SACO I Trust, Series 2006-12, Class I-A, 0.425% 20365 | 10,451 | 1,796 | ||||||
Residential Funding Mortgage Securities II, Inc., Series 2006-HSA2, Class A-I-5, FGIC insured, 5.63% 20365 | 9,341 | 2,844 | ||||||
First Franklin Mortgage Loan Trust, Series 2006-FFA, Class A-3, 0.405% 20265 | 13,956 | 1,317 | ||||||
NovaStar Mortgage Funding Trust, Series 2004-4, Class B-1, 1.985% 20355 | 7,500 | 606 | ||||||
Long Beach Mortgage Loan Trust, Series 2006-A, Class A-1, 0.375% 20365 | 15,894 | 524 | ||||||
Merrill Lynch Mortgage Investors Trust, Series 2007-SL1, Class A-1, 0.585% 20375 | 3,613 | 86 | ||||||
420,333 | ||||||||
BONDS & NOTES OF GOVERNMENTS & GOVERNMENT AGENCIES OUTSIDE THE U.S. — 0.20% | ||||||||
United Mexican States Government Global 6.375% 2013 | 14,765 | 16,131 | ||||||
United Mexican States Government Global 5.875% 2014 | 20,000 | 21,258 | ||||||
United Mexican States Government Global 11.375% 2016 | 9,118 | 12,309 | ||||||
United Mexican States Government Global 5.625% 2017 | 3,640 | 3,731 | ||||||
United Mexican States Government Global 6.75% 2034 | 7,740 | 8,011 | ||||||
United Mexican States Government Global 6.05% 2040 | 2,000 | 1,885 | ||||||
Russian Federation 8.25% 20106 | 667 | 686 | ||||||
Russian Federation 7.50% 20306 | 18,499 | 18,661 | ||||||
Polish Government 6.375% 2019 | 9,985 | 10,392 | ||||||
Brazil (Federal Republic of) Global 6.00% 2017 | 6,000 | 6,261 | ||||||
Brazil (Federal Republic of) Global 8.00% 20186 | 3,022 | 3,430 | ||||||
State of Qatar 9.75% 2030 | 4,000 | 5,360 | ||||||
Banque Centrale de Tunisie 7.375% 2012 | 3,500 | 3,798 | ||||||
Aries Vermögensverwaltungs GmbH, Series C, 9.60% 2014 | 2,500 | 3,175 | ||||||
Corporación Andina de Fomento 5.75% 2017 | 2,000 | 1,935 | ||||||
Peru (Republic of) 7.125% 2019 | 1,080 | 1,172 | ||||||
South Africa (Republic of) 6.875% 2019 | 750 | 823 | ||||||
119,018 | ||||||||
MUNICIPALS — 0.00% | ||||||||
State of South Dakota, Educational Enhancement Funding Corp., Tobacco Settlement Asset-backed Bonds, | ||||||||
Series 2002-A, Class A, 6.72% 2025 | 3,087 | 2,522 | ||||||
State of Louisiana, Tobacco Settlement Financing Corp., Tobacco Settlement Asset-backed Bonds, | ||||||||
Series 2001-A, Class A, 6.36% 2025 | 534 | 463 | ||||||
2,985 | ||||||||
MISCELLANEOUS — 0.02% | ||||||||
Other bonds & notes in initial period of acquisition | 10,168 | |||||||
Total bonds & notes (cost: $21,871,898,000) | 20,750,646 | |||||||
Short-term securities — 3.87% | ||||||||
Federal Home Loan Bank 0.163%–0.85% due 8/3–10/27/2009 | 738,813 | 738,656 | ||||||
Fannie Mae 0.19%–0.45% due 8/17–11/17/2009 | 387,200 | 387,067 | ||||||
U.S. Treasury Bills 0.135%–0.40% due 8/6–10/8/2009 | 240,300 | 240,262 | ||||||
Freddie Mac 0.22%–0.51% due 8/10–10/13/2009 | 231,400 | 231,353 | ||||||
Pfizer Inc 0.21%–0.25% due 8/18–9/9/20094 | 149,991 | 149,954 | ||||||
Procter & Gamble International Funding S.C.A. 0.20% due 8/11–9/14/20094 | 95,100 | 95,082 | ||||||
Park Avenue Receivables Co., LLC 0.25% due 8/4–8/12/20094 | 47,100 | 47,097 | ||||||
JPMorgan Chase & Co. 0.18% due 8/4/2009 | 25,000 | 24,999 | ||||||
Jupiter Securitization Co., LLC 0.27% due 9/11/20094 | 12,500 | 12,496 | ||||||
Abbott Laboratories 0.20%–0.23% due 8/18–9/21/20094 | 72,800 | 72,786 | ||||||
Private Export Funding Corp. 0.22%–0.26% due 8/12–9/10/20094 | 56,100 | 56,096 | ||||||
Wal-Mart Stores Inc. 0.55% due 9/21/20094 | 45,000 | 44,981 | ||||||
Federal Farm Credit Banks 0.70% due 12/22/2009 | 44,600 | 44,542 | ||||||
Emerson Electric Co. 0.20%–0.21% due 8/19–8/24/20094 | 42,200 | 42,194 | ||||||
Coca-Cola Co. 0.23% due 8/20/20094 | 40,700 | 40,695 | ||||||
NetJets Inc. 0.21% due 8/13/20094 | 30,000 | 29,998 | ||||||
E.I. duPont de Nemours and Co. 0.18% due 8/31/20094 | 25,000 | 24,996 | ||||||
Johnson & Johnson 0.20% due 8/13/20094 | 21,200 | 21,199 | ||||||
Merck & Co. Inc. 0.20% due 8/17/2009 | 17,200 | 17,198 | ||||||
Total short-term securities (cost: $2,321,404,000) | 2,321,651 | |||||||
Total investment securities (cost: $62,902,190,000) | 59,663,800 | |||||||
Other assets less liabilities | 285,369 | |||||||
Net assets | $ | 59,949,169 |
“Miscellaneous” securities include holdings in their initial period of acquisition that have not previously been publicly disclosed.
1 | Represents an affiliated company as defined under the Investment Company Act of 1940. |
2 | Security did not produce income during the last 12 months. |
3 | Valued under fair value procedures adopted by authority of the board of directors. The total value of all such securities, was $629,071,000, which represented 1.05% of the net assets of the fund. |
4 | Purchased in a transaction exempt from registration under the Securities Act of 1933. May be resold in the U.S. in transactions exempt from registration, normally to qualified institutional buyers. The total value of all such securities was $4,802,201,000, which represented 8.01% 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 | Index-linked bond whose principal amount moves with a government retail price index. |
8 | Loan participations and assignments; may be subject to legal or contractual restrictions on resale. The total value of all such loans was $802,748,000, which represented 1.34% of the net assets of the fund. |
9 | Scheduled interest and/or principal payment was not received. |
10 | Payment in kind; the issuer has the option of paying additional securities in lieu of cash. |
11 | Step bond; coupon rate will increase at a later date. |
12 | Purchased in a transaction exempt from registration under the Securities Act of 1933. This security (acquired 7/17/2009 at a cost of $29,405,000) may be subject to legal or contractual restrictions on resale. |
13 | Unfunded loan commitment; the total value of all unfunded loan commitments was $1,711,000, which represented less than .01% of the net assets of the fund. |
Key to abbreviation
ADR = American 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 summary prospectus and prospectus, which can be obtained from your financial professional and should be read carefully before investing.
MFGEFP-906-0909O-S21428
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, 2009, and for the year then ended and have issued our report thereon dated September 4, 2009, 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, 2009, 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 4, 2009
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 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: September 30, 2009 |
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: September 30, 2009 |
By /s/ Jennifer M. Buchheim |
Jennifer M. Buchheim, Treasurer and Principal Financial Officer |
Date: September 30, 2009 |