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, 2010
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
The Income Fund of America
[photo of two plums on a branch]
Special feature
The many benefits of
an income focus
u See page 6
Annual report for the year ended July 31, 2010
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, 2010 (the most recent calendar quarter-end): | ||||||||||||
Class A shares | 1 year | 5 years | 10 years | |||||||||
Reflecting 5.75% maximum sales charge | 9.63 | % | 0.63 | % | 5.10 | % |
The total annual fund operating expense ratio was 0.61% for Class A shares as of the most recent fiscal year-end.
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. Applicable fund results shown reflect the waiver, without which they would have been lower. 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, 2010, calculated in accordance with the Securities and Exchange Commission formula, was 3.89%. The fund’s distribution rate for Class A shares as of that date was 4.06%. 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 than investment-grade bonds. Bond ratings, which typically range from Aaa/AAA (highest) to D (lowest), are assigned by credit rating agencies such as Moody’s, Standard & Poor’s and/or Fitch as an indication of an issuer’s creditworthiness. Investing outside the United States may be subject to additional risks, such as currency fluctuations, periods of illiquidity and price volatility. Thes e risks may be heightened in connection with investments in developing countries. 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.
Fellow shareholders:
The Income Fund of America (IFA) gained 15.1% for the fiscal year ended July 31, 2010. The fund’s increase topped that of the unmanaged Standard & Poor’s 500 Composite Index, a broad measure of the U.S. stock market, which rose 13.8%. IFA’s gain likewise surpassed that of the unmanaged Barclays Capital U.S. Aggregate Index, a proxy for the U.S. fixed-income market, which climbed 8.9%.
IFA’s results also exceeded those of its category peers, as represented by the Lipper Income Funds Index, which appreciated 12.3%.
We are gratified by the fund’s excellent one-year results, but as always we urge shareholders to take a long-term perspective on their investments. Accordingly, we direct your attention to the longer time frames shown in the table below.
Over its lifetime, IFA has outgained all its benchmark indexes. Moreover, the fund posted better five- and 10-year returns than the S&P 500 and a better 10-year result than its Lipper peer group for periods ending July 31, 2010.
As the past decade began in the midst of the deflating tech bubble and came to a close in the aftermath of the financial crisis, it’s not surprising that bonds, which typically hold up better than stocks during difficult economic conditions, fared well during the 10-year period. This fact is evident in results for the Barclays index, which bested the S&P 500 and Lipper index during that stretch, and narrowly edged out IFA. Yet as you can see on the previous page, the fund holds a lifetime advantage over that benchmark as well.
[Begin Sidebar]
Results at a glance (with dividends reinvested or interest compounded) | ||||||||||||||||
Average annual total returns for periods ended July 31, 2010 | ||||||||||||||||
1 year | 5 years | 10 years | Lifetime1 | |||||||||||||
The Income Fund of America (Class A shares) | 15.1 | % | 2.6 | % | 6.2 | % | 11.3 | % | ||||||||
Standard & Poor’s 500 Composite Index | 13.8 | –0.2 | –0.8 | 10.3 | ||||||||||||
Lipper Income Funds Index2 | 12.3 | 3.5 | 4.2 | — | 3 | |||||||||||
Barclays Capital U.S. Aggregate Index | 8.9 | 6.0 | 6.5 | 8.3 | 4 | |||||||||||
Consumer Price Index (inflation)5 | 1.2 | 2.2 | 2.4 | 4.3 |
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 include reinvested distributions but do not reflect the effect of sales charges, commissions or expenses. Fund returns do not reflect the effect of sales charges.
[End Sidebar]
[photo of two plums on a branch]
[Begin Sidebar]
In this report | |
Special feature | |
6 | The many benefits of an income focus |
How a focus on current income helps guide IFA’s investment professionals. | |
Contents | |
1 | Letter to shareholders |
4 | The value of a long-term perspective |
11 | About your fund |
12 | The portfolio at a glance |
13 | Summary investment portfolio |
19 | Financial statements |
35 | Board of directors and other officers |
[End Sidebar]
A continuing income focus
For the 12 months, the fund paid quarterly dividends totaling 66 cents a share. This translated into a dividend yield more than double that of the S&P 500.
Yet the low interest rate environment remains challenging, as IFA’s cash holdings provide negligible income, and high-quality fixed-income securities such as U.S. Treasury bonds have historically low yields.
To help meet the fund’s current income objective, we continue to maintain significant investments in high-yield bonds, which represent about 13% of fund assets. (Overall, fixed-income securities account for 31.8% of IFA’s portfolio.) In addition to offering sizable payouts, high-yield bonds actually posted higher returns than stocks for the 12 months. This is not entirely surprising as these holdings often behave like certain stocks, notching strong gains when the economic outlook appears to be improving. Within the fixed-income area, higher quality bonds and mortgage-backed securities also registered solid gains.
Sectors trace familiar patterns
For much of IFA’s fiscal year, increasing investor optimism and glimmers of recovery helped sustain a stock market turnaround that lasted into the spring. Low interest rates, solid corporate profits, and the belief that the global economy had avoided a full-scale collapse fueled the rally. However, markets faltered in April, when Europe’s debt troubles began to create worry for investors.
During the different environments, certain sectors within the equity market traced fairly familiar patterns. Economically sensitive areas such as energy, materials and consumer discretionary companies climbed with the market; stocks in the generally less volatile health care, telecommunications, utilities and consumer staples areas held up better as markets retreated.
For the fund, strength among materials, financials and consumer discretionary companies helped offset weaker results among investments in the utilities and telecommunication services sectors.
Industrials stand out for IFA
For IFA, perhaps the greatest source of strength during the period could be found among industrials companies such as Boeing (58.8%), Emerson Electric (36.2%), United Technologies (30.5%) and Schneider Electric (27.0%). These holdings belong to a category of investments called cyclicals, whose fortunes are closely linked to the economic cycle. Such companies are not always candidates for IFA’s portfolio, as their yields generally drop when their share prices rise at certain points during an economic cycle.
Yet our ongoing commitment to research means that we remain engaged with these firms even when they may not be eligible for the fund. Thus, when their yields rise, as happened during the recent market downturn, we generally have formulated an opinion on their prospects and can invest with conviction.
[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 broader stock market and the fund’s Lipper peer group significantly lagged the broader bond market. IFA trailed too, but less than the other benchmarks. And, 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, 2010
[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 | ||||||||||||||||||
The Income Fund of America | 2.55 | 12.49 | 6.16 | 10.66 | 11.19 | 9.62 | ||||||||||||||||||
Bonds | 5.96 | 3.63 | 6.48 | 3.79 | 8.42 | 5.69 | ||||||||||||||||||
Stocks | -0.17 | 16.88 | -0.76 | 16.22 | 10.86 | 15.33 | ||||||||||||||||||
Income Funds Index | 3.49 | 8.77 | 4.15 | 7.44 |
[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]
New opportunities
While cyclical stocks presented some of the best opportunities of the past few years, we’ve recently been drawn to companies in sectors that are among IFA’s more traditional hunting grounds. During the period, we increased our investments within the financials sector, building positions in a number of regional U.S. banks. These included firms that, thanks to solid and conservative management, were able to maintain their dividends throughout the financial crisis. In addition to providing income, we believe that many are positioned to grow their market share, which could translate into solid gains in stock price. At the same time, we reduced our holdings in a number of larger U.S. financial institutions whose dividends and prospects had become less appealing.
We have also been finding select opportunities among pharmaceuticals companies, as well as a number of attractively priced telecommunications providers domiciled abroad.
Looking ahead
As it became increasingly apparent that the worst-case scenario for the global economy would not materialize, valuations among economically sensitive stocks climbed back to levels more in line with their long-term averages. Dividend-paying companies, which hadn’t fallen as far, did not rebound as high. Yet with the trajectory of the global economic cycle less than clear, these traditionally solid companies may begin to attract more attention. As those companies are key building blocks in IFA’s portfolio, your fund could benefit.
We also believe that with the low interest rate environment keeping many bond yields below the historic rate of inflation, IFA’s approach to delivering return — which utilizes both stocks and bonds to generate income — makes it an attractive investment option. To learn more about this approach and how it helps guide our investment professionals, we invite you to read the feature article that begins on page 6.
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 7, 2010
For current information about the fund, visit americanfunds.com
[Begin Sidebar]
A lifetime of high current income
The Income Fund of America’s 12-month dividend yield vs. benchmarks
Year ended July 31
[begin line chart]
The Income Fund of America | Lipper Income Funds Average | S&P 500 | ||||||||||
1/31/1976 | 6.30 | 6.53 | 3.65 | |||||||||
7/31/1976 | 7.06 | 6.54 | 3.66 | |||||||||
1/31/1977 | 6.94 | 6.30 | 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 | 9.57 | 4.91 | |||||||||
1/31/1982 | 8.75 | 10.55 | 5.53 | |||||||||
7/31/1982 | 9.81 | 11.02 | 6.37 | |||||||||
1/31/1983 | 7.95 | 9.22 | 4.74 | |||||||||
7/31/1983 | 7.95 | 8.42 | 4.28 | |||||||||
1/31/1984 | 7.86 | 8.50 | 4.36 | |||||||||
7/31/1984 | 8.60 | 9.37 | 4.87 | |||||||||
1/31/1985 | 7.69 | 8.57 | 4.22 | |||||||||
7/31/1985 | 7.45 | 8.22 | 4.07 | |||||||||
1/31/1986 | 7.30 | 7.71 | 3.75 | |||||||||
7/31/1986 | 7.27 | 7.34 | 3.45 | |||||||||
1/31/1987 | 6.85 | 6.70 | 3.03 | |||||||||
7/31/1987 | 7.02 | 6.66 | 2.69 | |||||||||
1/31/1988 | 7.62 | 7.11 | 3.31 | |||||||||
7/31/1988 | 6.96 | 7.40 | 3.27 | |||||||||
1/31/1989 | 6.69 | 7.40 | 3.34 | |||||||||
7/31/1989 | 6.67 | 7.31 | 3.04 | |||||||||
1/31/1990 | 6.99 | 8.06 | 3.37 | |||||||||
7/31/1990 | 7.07 | 8.02 | 3.31 | |||||||||
1/31/1991 | 8.12 | 8.82 | 3.52 | |||||||||
7/31/1991 | 7.09 | 7.76 | 3.11 | |||||||||
1/31/1992 | 6.33 | 7.01 | 2.96 | |||||||||
7/31/1992 | 6.05 | 6.45 | 2.89 | |||||||||
1/31/1993 | 6.44 | 5.86 | 2.83 | |||||||||
7/31/1993 | 6.19 | 5.25 | 2.79 | |||||||||
1/31/1994 | 5.56 | 4.90 | 2.64 | |||||||||
7/31/1994 | 6.06 | 5.06 | 2.80 | |||||||||
1/31/1995 | 6.14 | 5.53 | 2.81 | |||||||||
7/31/1995 | 5.55 | 5.19 | 2.41 | |||||||||
1/31/1996 | 5.07 | 4.89 | 2.18 | |||||||||
7/31/1996 | 5.19 | 5.04 | 2.28 | |||||||||
1/31/1997 | 5.09 | 4.53 | 1.89 | |||||||||
7/31/1997 | 4.74 | 4.22 | 1.61 | |||||||||
1/31/1998 | 4.27 | 4.39 | 1.59 | |||||||||
7/31/1998 | 4.32 | 4.27 | 1.43 | |||||||||
1/31/1999 | 4.79 | 4.13 | 1.29 | |||||||||
7/31/1999 | 4.86 | 4.37 | 1.24 | |||||||||
1/31/2000 | 5.40 | 4.80 | 1.19 | |||||||||
7/31/2000 | 5.49 | 4.90 | 1.15 | |||||||||
1/31/2001 | 4.78 | 4.87 | 1.20 | |||||||||
7/31/2001 | 4.80 | 4.67 | 1.30 | |||||||||
1/31/2002 | 5.01 | 4.22 | 1.40 | |||||||||
7/31/2002 | 5.49 | 3.94 | 1.75 | |||||||||
1/31/2003 | 5.45 | 3.68 | 1.88 | |||||||||
7/31/2003 | 4.69 | 3.33 | 1.66 | |||||||||
1/31/2004 | 4.05 | 2.77 | 1.54 | |||||||||
7/31/2004 | 3.98 | 2.71 | 1.69 | |||||||||
1/31/2005 | 3.57 | 2.49 | 1.64 | |||||||||
7/31/2005 | 3.44 | 2.39 | 1.70 | |||||||||
1/31/2006 | 3.75 | 2.71 | 1.75 | |||||||||
7/31/2006 | 3.84 | 2.78 | 1.83 | |||||||||
1/31/2007 | 4.24 | 3.02 | 1.75 | |||||||||
7/31/2007 | 4.43 | 3.11 | 1.81 | |||||||||
1/31/2008 | 4.68 | 3.62 | 2.03 | |||||||||
7/31/2008 | 5.23 | 3.90 | 2.29 | |||||||||
1/31/2009 | 6.72 | 4.55 | 3.39 | |||||||||
7/31/2009 | 5.64 | 3.86 | 2.53 | |||||||||
1/31/2010 | 4.56 | 3.18 | 2.07 | |||||||||
7/31/2010 | 4.26 | 2.91 | 2.00 |
[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.
Average annual total returns based on a $1,000 investment | ||||||||||||
(for periods ended July 31, 2010)* | ||||||||||||
1 year | 5 years | 10 years | ||||||||||
Class A shares | 8.45 | % | 1.35 | % | 5.54 | % | ||||||
*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. Applicable fund results shown reflect the waiver, without which they would have been lower. See the Financial Highlights table on pages 29 and 30 for details.
Fund results shown are for Class A shares and 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 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.
Expense ratios and turnover rates* | ||||||||
Year ended July 31, 2010 | ||||||||
The Income Fund of America | Industry average† | |||||||
Expense ratio | 0.61 | % | 1.07 | % | ||||
Portfolio turnover rate | 35 | % | 49 | % | ||||
*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. |
[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 | ||||||||||||
2010 | 48,525 | 471,376 | 183,163 | 363,849 |
[end mountain chart]
Year ended July 31 | 1974 | 3 | 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 | 2010 | ||||||||||||||||||||||||||
Value of dividends | ||||||||||||||||||||||||||||
Dividends in cash8 | 2,483 | 2,069 | ||||||||||||||||||||||||||
Dividends reinvested8 | 22,231 | 19,569 | ||||||||||||||||||||||||||
Value of investment | ||||||||||||||||||||||||||||
Dividends in cash8 | 44,011 | 48,525 | ||||||||||||||||||||||||||
Dividends reinvested8 | 409,572 | 471,376 | ||||||||||||||||||||||||||
IFA total return | (12.7 | ) | 15.1 |
Average annual total return for fund’s lifetime: 11.1%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 $309,806 and reinvested capital gain distributions of $131,223. |
5The indexes are unmanaged, and their results 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 $61,274 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.
The many benefits of an income focus
A look at how The Income Fund of America’s primary objective of delivering high current income to its shareholders provides a focus and framework for the fund’s investment professionals.
[photo of five plums on a branch]
During a decade that seemed rife with uncertainty, current income in the form of quarterly dividends proved beneficial for investors in The Income Fund of America (IFA). By emphasizing dividend-paying stocks as well as bonds, and enjoying the risk management and capital appreciation benefits that can come with doing so, IFA was able to deliver solid results during a period when stock markets did not. Yet seeking to provide current income to shareholders isn’t merely a strategy we follow during challenging times; it’s a guiding light during all types of market and economic environments.
In the following pages, we’ll examine why we have held fast to our income-focused approach even during periods when dividend investing fell out of favor or low interest rate environments increased the challenge of providing high current income to shareholders. We’ll also examine how pursuing this objective has made IFA less volatile than the broader stock market while delivering solid lifetime results. Lastly, we’ll take a closer look at how the fund’s commitment to paying shareholders a healthy quarterly dividend has imposed an investment discipline that has stood as a helpful guide for IFA’s investment professionals.
Income is the centerpiece
The centerpiece of the fund’s approach is an emphasis on current income. That means focusing on bonds and dividend-paying stocks and passing the income from those investments through to shareholders in the form of quarterly dividends. This tangible return differs from capital appreciation, which is the return — unrealized until a security is sold — that comes from an increase in the value of a stock or bond.
In addition to producing a tangible result, an income emphasis provides clear direction for the fund’s investment professionals. “For us to consider investing in a company’s stock, its dividend yield must be at or above a certain threshold. This leads us to a specific subset of companies within the overall equity market,” says Hilda Applbaum, IFA’s vice chairman and one of its equity portfolio counselors. “While that might seem limiting, as investors who ourselves are charged with paying a significant quarterly dividend, we know how such a commitment can actually be beneficial. In our experience, companies that pay a meaningful dividend often take a more disciplined approach to allocating capital; when contemplating an acquisition or sizable capital investment, ma nagement must consider how that could affect its quarterly payout. Historically, this dividend discipline has served companies well operationally, which often translates into solid gains in their stock prices.”
[photo of rows of trees]
[photo of grapes on a vine]
A look at the history of the S&P 500 underscores this point. Companies with above-average dividends have historically outgained the market as a whole. And from a total return perspective, dividends have contributed over 40% of the annualized return of the S&P 500 Composite Index since 1928. Not surprisingly, IFA, which has generally had a higher yield than the broader market, has seen more of its return come courtesy of reinvested dividends. Indeed, over the decade ended December 31, 2009, reinvested dividends accounted for over 80% of the fund’s annualized total return.
Contrarian by definition
The dividend-paying stocks in IFA’s equity portfolio represent a diverse group of holdings and varied categories of investment opportunity. Naturally, certain sectors with strong dividend traditions are typically well-represented. These would include utilities, real-estate investment trusts (REITs), telecommunications and pharmaceuticals companies.
Yet a focus on income also leads Hilda and her colleagues to another subset of opportunities — companies whose yields have risen due to declining stock prices.
“It’s easy to talk about being a contrarian investor, but in many ways pursuing a high level of income within the equity world makes that mindset a must,” explains Hilda. “That’s because a stock’s yield typically rises when its share price falls, so many of the companies that are attractive candidates for the fund have fallen out of favor with investors. Investors lose interest in companies for any number of reasons, but a high yield draws our attention and prompts us to take an even harder look at the company. We do extensive research to determine if we think the dividend is solid and whether we see value where the market might not, and there may be opportunity for capital appreciation. Many such investments have historically made significant contributions to IFA ’s return.”
Remaining flexible
The common denominator among all the fund’s investments is the potential to contribute to IFA’s current income objective. Yet within those parameters, there’s room for flexibility.
“As equity counselors, our overall portfolios must meet a yield target, but we have considerable flexibility in how we achieve that goal,” explains equity portfolio counselor Dina Perry. “Some companies I invest in have yields that far exceed the target and others that are lower. The flexibility to invest across that spectrum broadens my universe of choices, which means I am able to create a portfolio of companies that I really believe in, rather than simply a collection of high-yielding stocks.”
[photo of a basket full of grapes]
The importance of bonds
Relying exclusively on equities to deliver the level of income IFA seeks to provide could expose shareholders to excessive risks. That’s why bonds play an important role in meeting fund objectives. In investing parlance, bonds are known as “fixed-income” securities, so named because the amount and timing of a security’s payouts are determined at the time of its creation and generally remain fixed over its lifetime. The consistent and predictable income stream from bonds has been a necessary and welcome complement to the contribution made by equities, which can be less predictable.
“IFA’s fixed-income portfolio houses a diverse group of securities — from conservative U.S. Treasury bonds to mortgage- and asset-backed securities to high-yield corporate debt, which carries more risk,” says fund president and fixed-income portfolio counselor David Barclay. “The higher yield securities have been crucial contributors to the fund’s dividend, but we know they carry risks. That’s why we also invest in conservative securities like Treasury bonds, which can add stability to the fund.”
Utilizing a mix of fixed-income securities provides diversification that would be missing if the fund’s investment professionals were to chart a middle course — for example, heavily concentrating investments in high-grade corporate bonds that offer less yield but greater security than their high-yield counterparts.
[Begin Sidebar]
Fund results shown 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.
The benefits of downside resilience
Over its 37-year lifetime, The Income Fund of America has remained less volatile than the broader stock market — generally not rising as high during bull markets or falling as far when stocks are declining.
The fiscal year ended July 31, 2010, provides an interesting case study in how downside resilience can benefit shareholders. As you can see, in each of the eight months when the S&P 500 posted positive returns, IFA trailed the index. In each of the four months when the index finished in the red, the fund held up better. Holding up better when markets were sliding helped the fund’s results surpass those of the S&P for the full year.
Of course there are periods that don’t conform to the pattern, but the fund’s long-term results remain a testament to IFA’s risk-sensitive approach.
Monthly returns | |||||||
August | September | October | November | December | January | February | |
2009 | 2009 | 2009 | 2009 | 2009 | 2010 | 2010 | |
IFA | 3.1% | 3.5 | –0.1 | 3.9 | 1.7 | –2.3 | 1.3 |
S&P 500 | 3.6% | 3.7 | –1.9 | 6.0 | 1.9 | –3.6 | 3.1 |
Total return for | |||||||
March | April | May | June | July | year ended | ||
2010 | 2010 | 2010 | 2010 | 2010 | 2010 | ||
IFA | 4.1 | 0.9 | –5.8 | –1.4 | 5.8 | 15.1% | |
S&P 500 | 6.0 | 1.6 | –8.0 | –5.2 | 7.0 | 13.8% |
[End Sidebar]
[photo of canisters filled with different types of beans]
[photo of a shelf filled with bottles of oil]
“Different types of bonds respond to markets forces in different ways. For example, U.S. Treasury securities are seen as safe havens, so they generally hold their value better during times of uncertainty,” notes David. “High-yield bonds, on the other hand, are more economically sensitive, so they tend to behave more like stocks. Having a diverse mix means that IFA’s whole portfolio is not generally moving in the same direction, which has helped smooth out the ride for investors.”
Lower relative volatility
This smoother ride means the fund has been less volatile than the broader stock market, generally holding up better during downturns but trailing during bullish periods.
“The fund typically hasn’t beaten the stock market when it’s rising quickly, but it hasn’t generally fallen as far when the market’s in decline,” explains David. “Holding up slightly better than the market might not seem too significant, but collectively these individual results have been very beneficial over time.”
Consider the following: The stock market, as measured by the S&P 500, posted positive returns in 72 of the 120 months that made up the 10-year period ended July 31, 2010. IFA outpaced the market in only 22 of those 72 one-month periods. Yet during that same 10-year stretch, IFA trailed the market in only seven of the 48 months in which the stock market registered negative returns.
This tendency to hold up better during downturns — a direct outgrowth of IFA’s income focus — can be seen in the fund’s results over the last 10 years. Though beating the S&P 500 is not the fund’s goal and there have been 10-year stretches during which the fund trailed that index, over the last decade the fund returned an average of 6.2% per year, while the S&P lost an average 0.8%.
“To use a baseball analogy, you can develop a pretty good record with an approach that relies on lots of singles and doubles rather than home runs,” says equity portfolio counselor Steve Watson. “IFA’s long-term track record is kind of a testament to that approach.”
Signals to sell
The ongoing commitment to high current income doesn’t just provide guidance on the types of investments the fund can make; it also imposes a kind of natural discipline in terms of when it’s time to sell. “We often invest in companies whose stocks are, for any number of reasons, at fairly depressed levels,” says Steve. “Our hope is that they can contribute to IFA’s income objective and, if share prices rise, provide capital appreciation. Yet a rise in share price often comes with a corresponding decline in yield, which makes the investments less suited to the fund from an income standpoint. Once holdings reach this stage, it’s often time to sell and direct the proceeds from those sales into higher yielding investments.”
Selling or trimming investments that have turned in solid results seems counterintuitive, but ultimately, portfolio counselors are grateful for the dividend discipline imposed by the income focus.
Adds Hilda: “The dividend discipline means that rather than trying to extract every last bit of return out of these investments, we generally lock in a return by selling, and then steer those assets to investments that can better contribute to the fund’s current income objective. It’s an approach that we believe is in the best interest of IFA shareholders.”
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.
The Income Fund of America (IFA) vs. the S&P 500 during market declines* | ||||||||||||
Resilience during stock declines | ||||||||||||
Dates of decline | S&P 500 | IFA cumulative | IFA advantage | |||||||||
cumulative total return | total return | (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. The index is unmanaged. |
Withdrawing income: the dividend advantage
Most fund shareholders reinvest their dividends, but some 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 | 1,671,737 | |||
S&P 500 | 435,159 |
[end bar chart]
...have helped to keep principal
intact, letting compounding do
its work.
[begin bar chart]
IFA | S&P 500 | |||||||
Amount withdrawn | 479,182 | 479,182 | ||||||
Ending value | 2,180,385 | 991,611 | ||||||
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, 2010. Example assumes an annual withdrawal equaling 5% of the initial investment, increased by 5% annually. The first withdrawal, on December 31, 1974, was $5,000. Over the period, total withdrawals from each of the fund and the index come to $479,182.
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 36 years, income from the fund has been substantially higher.
[begin bar chart]
The Income Fund of America | S&P 500 | CDs | ||||||||||
7/31/1975 | $ | 864 | $ | 479 | $ | 924 | ||||||
7/31/1976 | $ | 1,097 | $ | 511 | $ | 652 | ||||||
7/31/1977 | $ | 1,067 | $ | 617 | $ | 598 | ||||||
7/31/1978 | $ | 1,229 | $ | 728 | $ | 814 | ||||||
7/31/1979 | $ | 1,467 | $ | 838 | $ | 1,283 | ||||||
7/31/1980 | $ | 1,610 | $ | 980 | $ | 1,998 | ||||||
7/31/1981 | $ | 1,918 | $ | 1,110 | $ | 2,302 | ||||||
7/31/1982 | $ | 2,407 | $ | 1,241 | $ | 3,003 | ||||||
7/31/1983 | $ | 2,804 | $ | 1,339 | $ | 2,235 | ||||||
7/31/1984 | $ | 3,186 | $ | 1,477 | $ | 2,376 | ||||||
7/31/1985 | $ | 3,702 | $ | 1,637 | $ | 2,617 | ||||||
7/31/1986 | $ | 4,301 | $ | 1,788 | $ | 2,217 | ||||||
7/31/1987 | $ | 4,877 | $ | 1,948 | $ | 1,940 | ||||||
7/31/1988 | $ | 4,930 | $ | 2,084 | $ | 2,417 | ||||||
7/31/1989 | $ | 5,874 | $ | 2,555 | $ | 3,240 | ||||||
7/31/1990 | $ | 6,346 | $ | 2,969 | $ | 3,382 | ||||||
7/31/1991 | $ | 7,135 | $ | 3,140 | $ | 3,171 | ||||||
7/31/1992 | $ | 7,299 | $ | 3,303 | $ | 2,226 | ||||||
7/31/1993 | $ | 7,814 | $ | 3,469 | $ | 1,548 | ||||||
7/31/1994 | $ | 8,359 | $ | 3,658 | $ | 1,680 | ||||||
7/31/1995 | $ | 8,082 | $ | 3,963 | $ | 2,920 | ||||||
7/31/1996 | $ | 9,464 | $ | 4,388 | $ | 3,049 | ||||||
7/31/1997 | $ | 11,111 | $ | 4,713 | $ | 3,189 | ||||||
7/31/1998 | $ | 11,614 | $ | 4,955 | $ | 3,414 | ||||||
7/31/1999 | $ | 13,726 | $ | 5,236 | $ | 3,313 | ||||||
7/31/2000 | $ | 15,154 | $ | 5,333 | $ | 4,011 | ||||||
7/31/2001 | $ | 15,344 | $ | 5,130 | $ | 4,233 | ||||||
7/31/2002 | $ | 16,463 | $ | 5,265 | $ | 1,806 | ||||||
7/31/2003 | $ | 15,783 | $ | 5,526 | $ | 1,164 | ||||||
7/31/2004 | $ | 16,998 | $ | 6,344 | $ | 837 | ||||||
7/31/2005 | $ | 15,619 | $ | 7,290 | $ | 1,844 | ||||||
7/31/2006 | $ | 19,262 | $ | 8,261 | $ | 3,532 | ||||||
7/31/2007 | $ | 24,959 | $ | 9,483 | $ | 4,586 | ||||||
7/31/2008 | $ | 26,679 | $ | 10,663 | $ | 3,842 | ||||||
7/31/2009 | $ | 21,971 | $ | 9,403 | $ | 2,098 | ||||||
7/31/2010 | $ | 21,588 | $ | 8,491 | $ | 258 |
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. See the inside back cover for details on how to obtain a complete schedule of portfolio holdings.
[begin pie chart]
Investment mix by security type | July 31, 2010 | |||
U.S. common stocks | 42.1 | % | ||
Common stocks of issuers outside the U.S. | 18.6 | |||
Convertible securities & preferred stocks | 3.0 | |||
U. S. Treasury & agency bonds & notes | 5.7 | |||
Other fixed-income securities | 26.1 | |||
Short-term securities & other assets less liabilities | 4.5 |
[end pie chart]
Five largest sectors in common stock holdings | ||||
Percent of net assets | ||||
Industrials | 8.3 | % | ||
Consumer staples | 7.1 | |||
Financials | 6.9 | |||
Utilities | 6.8 | |||
Health care | 5.7 | |||
Ten largest common stock holdings | ||||
Percent of net assets | ||||
Merck | 2.2 | % | ||
Verizon Communications | 2.0 | |||
Home Depot | 1.5 | |||
Waste Management | 1.5 | |||
Chevron | 1.4 | |||
Bristol-Myers Squibb | 1.4 | |||
Royal Dutch Shell | 1.4 | |||
McDonald's | 1.3 | |||
Philip Morris International | 1.2 | |||
Emerson Electric | 1.2 | |||
Country diversification | ||||
Percent of net assets | ||||
United States | 71.2 | % | ||
Euro zone* | 9.0 | |||
United Kingdom | 5.1 | |||
Canada | 2.1 | |||
Australia | 2.0 | |||
Japan | 0.9 | |||
Other countries | 5.2 | |||
Short-term securities & other assets less liabilities | 4.5 | |||
*Countries using the euro as a common currency; those represented in the fund's portfolio are Austria, Belgium, France, Germany, Greece, Ireland, Italy, the Netherlands and Spain. |
[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, Ireland, Italy, the Netherlands and Spain. |
Summary Investment portfolio
July 31, 2010
Percent | ||||||||||||||
Value | of net | |||||||||||||
Common stocks - 60.74% | Shares | (000 | ) | assets | ||||||||||
Industrials - 8.28% | ||||||||||||||
Waste Management, Inc. (1) | 27,615,000 | $ | 937,529 | 1.48 | % | |||||||||
Emerson Electric Co. | 15,095,000 | 747,806 | 1.18 | |||||||||||
Lockheed Martin Corp. | 6,310,000 | 474,197 | .75 | |||||||||||
Schneider Electric SA (2) | 3,430,209 | 395,666 | .62 | |||||||||||
Honeywell International Inc. | 9,075,000 | 388,955 | .61 | |||||||||||
Boeing Co. | 5,160,000 | 351,603 | .55 | |||||||||||
United Technologies Corp. | 4,308,000 | 306,299 | .48 | |||||||||||
Other securities | 1,660,213 | 2.61 | ||||||||||||
5,262,268 | 8.28 | |||||||||||||
Consumer staples - 7.09% | ||||||||||||||
Philip Morris International Inc. | 14,715,000 | 751,054 | 1.18 | |||||||||||
Kraft Foods Inc., Class A | 21,000,821 | 613,434 | .96 | |||||||||||
H.J. Heinz Co. | 10,111,700 | 449,768 | .71 | |||||||||||
Unilever NV, depository receipts (2) | 9,045,000 | 266,043 | ||||||||||||
Unilever NV (New York registered) | 5,051,750 | 148,976 | .65 | |||||||||||
Coca-Cola Co. | 6,250,000 | 344,438 | .54 | |||||||||||
Other securities | 1,933,057 | 3.05 | ||||||||||||
4,506,770 | 7.09 | |||||||||||||
Financials - 6.91% | ||||||||||||||
HSBC Holdings PLC (United Kingdom) (2) | 23,650,749 | 241,263 | ||||||||||||
HSBC Holdings PLC (Hong Kong) (2) | 14,326,382 | 147,434 | ||||||||||||
HSBC Holdings PLC (ADR) | 1,460,000 | 74,577 | .73 | |||||||||||
Bank of Nova Scotia | 7,325,000 | 367,586 | .58 | |||||||||||
Australia and New Zealand Banking Group Ltd. (2) | 16,617,353 | 346,530 | .55 | |||||||||||
Equity Residential, shares of beneficial interest | 6,842,800 | 313,742 | .49 | |||||||||||
HCP, Inc. | 8,492,300 | 301,222 | .47 | |||||||||||
Other securities | 2,594,860 | 4.09 | ||||||||||||
4,387,214 | 6.91 | |||||||||||||
Utilities - 6.81% | ||||||||||||||
GDF SUEZ (2) | 19,586,965 | 648,975 | 1.02 | |||||||||||
Duke Energy Corp. | 36,316,172 | 621,006 | .98 | |||||||||||
Progress Energy, Inc. | 7,855,400 | 330,791 | .52 | |||||||||||
Hongkong Electric Holdings Ltd. (2) | 52,138,000 | 315,204 | .50 | |||||||||||
FirstEnergy Corp. | 8,096,500 | 305,238 | .48 | |||||||||||
Exelon Corp. | 7,000,000 | 292,810 | .46 | |||||||||||
Other securities | 1,813,687 | 2.85 | ||||||||||||
4,327,711 | 6.81 | |||||||||||||
Health care - 5.72% | ||||||||||||||
Merck & Co., Inc. | 39,858,511 | 1,373,524 | 2.16 | |||||||||||
Bristol-Myers Squibb Co. | 35,025,500 | 872,835 | 1.37 | |||||||||||
Eli Lilly and Co. | 14,940,000 | 531,864 | .84 | |||||||||||
Pfizer Inc | 26,050,000 | 390,750 | .62 | |||||||||||
Other securities | 463,540 | .73 | ||||||||||||
3,632,513 | 5.72 | |||||||||||||
Consumer discretionary - 5.60% | ||||||||||||||
Home Depot, Inc. | 33,870,000 | 965,634 | 1.52 | |||||||||||
McDonald's Corp. | 11,916,400 | 830,930 | 1.31 | |||||||||||
McGraw-Hill Companies, Inc. | 12,590,000 | 386,387 | .61 | |||||||||||
Time Warner Cable Inc. | 5,245,370 | 299,878 | .47 | |||||||||||
Other securities | 1,073,930 | 1.69 | ||||||||||||
3,556,759 | 5.60 | |||||||||||||
Energy - 5.24% | ||||||||||||||
Chevron Corp. | 11,625,000 | 885,941 | 1.39 | |||||||||||
Royal Dutch Shell PLC, Class B (ADR) | 8,100,000 | 432,702 | ||||||||||||
Royal Dutch Shell PLC, Class A (ADR) | 6,000,000 | 332,520 | ||||||||||||
Royal Dutch Shell PLC, Class B (2) | 3,797,147 | 100,082 | 1.36 | |||||||||||
Spectra Energy Corp | 22,411,414 | 465,933 | .73 | |||||||||||
TOTAL SA (ADR) | 3,640,000 | 184,293 | ||||||||||||
TOTAL SA (2) | 3,255,000 | 163,804 | .55 | |||||||||||
ConocoPhillips | 6,000,000 | 331,320 | .52 | |||||||||||
Other securities | 433,927 | .69 | ||||||||||||
3,330,522 | 5.24 | |||||||||||||
Telecommunication services - 5.11% | ||||||||||||||
Verizon Communications Inc. | 42,960,000 | 1,248,418 | 1.97 | |||||||||||
Telefónica, SA (2) | 27,042,800 | 613,994 | .97 | |||||||||||
AT&T Inc. | 19,184,621 | 497,649 | .78 | |||||||||||
Koninklijke KPN NV (2) | 31,219,757 | 434,529 | .68 | |||||||||||
Other securities | 450,857 | .71 | ||||||||||||
3,245,447 | 5.11 | |||||||||||||
Information technology - 3.44% | ||||||||||||||
Microchip Technology Inc. (1) | 14,128,000 | 430,198 | .68 | |||||||||||
Intel Corp. | 17,205,000 | 354,423 | .56 | |||||||||||
Automatic Data Processing, Inc. | 7,815,000 | 322,525 | .51 | |||||||||||
Nintendo Co., Ltd. (2) | 1,080,000 | 300,459 | .47 | |||||||||||
Other securities | 779,278 | 1.22 | ||||||||||||
2,186,883 | 3.44 | |||||||||||||
Materials - 2.99% | ||||||||||||||
E.I. du Pont de Nemours and Co. | 17,115,000 | 696,067 | 1.10 | |||||||||||
Nucor Corp. | 8,200,000 | 320,948 | .51 | |||||||||||
Other securities | 880,219 | 1.38 | ||||||||||||
1,897,234 | 2.99 | |||||||||||||
Miscellaneous - 3.55% | ||||||||||||||
Other common stocks in initial period of acquisition | 2,257,038 | 3.55 | ||||||||||||
Total common stocks (cost: $38,989,855,000) | 38,590,359 | 60.74 | ||||||||||||
Percent | ||||||||||||||
Value | of net | |||||||||||||
Preferred stocks - 1.62% | Shares | (000 | ) | assets | ||||||||||
Financials - 1.50% | ||||||||||||||
Fannie Mae, Series O, 0% (3) (4) (5) | 3,124,329 | 2,031 | ||||||||||||
Fannie Mae, Series S, 8.25% noncumulative (4) | 1,511,450 | 608 | .00 | |||||||||||
Freddie Mac, Series V, 5.57% (4) | 368,022 | 145 | .00 | |||||||||||
Other securities | 951,948 | 1.50 | ||||||||||||
954,732 | 1.50 | |||||||||||||
Miscellaneous - 0.12% | ||||||||||||||
Other preferred stocks in initial period of acquisition | 75,508 | .12 | ||||||||||||
Total preferred stocks (cost: $1,090,314,000) | 1,030,240 | 1.62 | ||||||||||||
Percent | ||||||||||||||
Value | of net | |||||||||||||
Convertible securities - 1.38% | (000 | ) | assets | |||||||||||
Other - 1.05% | ||||||||||||||
Other securities | 665,560 | 1.05 | ||||||||||||
Miscellaneous - 0.33% | ||||||||||||||
Other convertible securities in initial period of acquisition | 211,700 | .33 | ||||||||||||
Total convertible securities (cost: $783,625,000) | 877,260 | 1.38 | ||||||||||||
Principal | Percent | |||||||||||||
amount | Value | of net | ||||||||||||
Bonds & notes - 31.77% | (000 | ) | (000 | ) | assets | |||||||||
Bonds & notes of U.S. government & government agencies - 5.71% | ||||||||||||||
U.S. Treasury: | ||||||||||||||
3.50% 2018 | $ | 373,600 | $ | 403,428 | ||||||||||
3.625% 2019 | 272,250 | 290,232 | ||||||||||||
6.25% 2023 | 245,000 | 319,458 | ||||||||||||
U.S. Treasury 0.625%-8.875% 2011-2040 (6) | 2,190,085 | 2,407,852 | 5.38 | |||||||||||
Fannie Mae 6.25% 2029 | 47,000 | 58,915 | .09 | |||||||||||
Other securities | 151,358 | .24 | ||||||||||||
3,631,243 | 5.71 | |||||||||||||
Consumer discretionary - 4.59% | ||||||||||||||
Home Depot, Inc. 5.40%-5.875% 2016-2036 | 6,819 | 7,199 | .01 | |||||||||||
Other securities | 2,907,069 | 4.58 | ||||||||||||
2,914,268 | 4.59 | |||||||||||||
Financials - 4.58% | ||||||||||||||
Other securities | 2,908,582 | 4.58 | ||||||||||||
Mortgage-backed obligations (7) - 4.40% | ||||||||||||||
Fannie Mae 2.634%-11.786% 2012-2047 (5) | 1,223,610 | 1,310,017 | 2.06 | |||||||||||
Freddie Mac 2.718%- 11.233% 2018-2040 (5) | 291,975 | 315,524 | .50 | |||||||||||
Other securities | 1,173,687 | 1.84 | ||||||||||||
2,799,228 | 4.40 | |||||||||||||
Industrials - 2.32% | ||||||||||||||
WMX Technologies, Inc. 7.10% 2026 (1) | 10,125 | 11,831 | .02 | |||||||||||
Other securities | 1,460,060 | 2.30 | ||||||||||||
1,471,891 | 2.32 | |||||||||||||
Telecommunication services - 2.22% | ||||||||||||||
Verizon Communications Inc. 3.75%- 6.35% 2011-2037 | 113,085 | 125,160 | ||||||||||||
ALLTEL Corp. 7.00% 2012 | 17,686 | 19,587 | .23 | |||||||||||
Other securities | 1,266,811 | 1.99 | ||||||||||||
1,411,558 | 2.22 | |||||||||||||
Information technology - 1.66% | ||||||||||||||
Other securities | 1,053,962 | 1.66 | ||||||||||||
Health care - 1.59% | ||||||||||||||
Merck & Co., Inc. 4.00% 2015 | 3,000 | 3,290 | .01 | |||||||||||
Other securities | 1,004,824 | 1.58 | ||||||||||||
1,008,114 | 1.59 | |||||||||||||
Utilities - 1.07% | ||||||||||||||
Other securities | 678,130 | 1.07 | ||||||||||||
Energy - 1.06% | ||||||||||||||
Shell International Finance BV 1.875%-4.00% 2013-2019 | 34,000 | 35,919 | .06 | |||||||||||
Chevron Corp. 3.95%-4.95% 2014-2019 | 2,800 | 3,125 | .00 | |||||||||||
Other securities | 633,622 | 1.00 | ||||||||||||
672,666 | 1.06 | |||||||||||||
Consumer staples - 1.02% | ||||||||||||||
Other securities | 651,134 | 1.02 | ||||||||||||
Other - 1.40% | ||||||||||||||
Other securities | 888,011 | 1.40 | ||||||||||||
Miscellaneous - 0.15% | ||||||||||||||
Other bonds & notes in initial period of acquisition | 93,711 | .15 | ||||||||||||
Total bonds & notes (cost: $19,343,315,000) | 20,182,498 | 31.77 | ||||||||||||
Principal | Percent | |||||||||||||
amount | Value | of net | ||||||||||||
Short-term securities - 3.50% | (000 | ) | (000 | ) | assets | |||||||||
Fannie Mae 0.19%-0.51% due 8/25/2010-5/2/2011 | $ | 691,311 | $ | 690,817 | 1.09 | |||||||||
Freddie Mac 0.18%-0.32% due 8/3-12/7/2010 | 515,890 | 515,724 | .81 | |||||||||||
U.S. Treasury Bills 0.11%-0.325% due 8/19-9/23/2010 | 136,100 | 136,085 | .21 | |||||||||||
Other securities | 882,637 | 1.39 | ||||||||||||
Total short-term securities (cost: $2,224,970,000) | 2,225,263 | 3.50 | ||||||||||||
Total investment securities (cost: $62,432,079,000) | 62,905,620 | 99.01 | ||||||||||||
Other assets less liabilities | 624,828 | .99 | ||||||||||||
Net assets | $ | 63,530,448 | 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. Some of these securities (with an aggregate value of $58,770,000, which represented .09% 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. The value of the fund's affiliated-company holdings is either shown in the summary investment portfolio or included in the value of "Other securities" under the respective industry sectors. Further details on such holdings and related transactions during the year ended July 31, 2010, appear below. |
Beginning shares or principal amount | Additions | Reductions | Ending shares or principal amount | Dividend or interest income (000) | Value of affiliates at 7/31/10 (000) | |||||||||||||||||||
Waste Management, Inc. | 26,835,500 | 1,536,000 | 756,500 | 27,615,000 | $ | 32,321 | $ | 937,529 | ||||||||||||||||
WMX Technologies, Inc. 7.10% 2026 | $ | 10,125,000 | - | - | $ | 10,125,000 | 719 | 11,831 | ||||||||||||||||
Waste Management, Inc. 5.00% 2014 | $ | 7,000,000 | - | $ | 7,000,000 | - | 239 | - | ||||||||||||||||
Waste Management, Inc. 7.375% 2019 | $ | 7,200,000 | - | $ | 7,200,000 | - | 90 | - | ||||||||||||||||
Microchip Technology Inc. | 14,128,000 | - | - | 14,128,000 | 19,242 | 430,198 | ||||||||||||||||||
Hospitality Properties Trust | 6,000,000 | 2,015,000 | - | 8,015,000 | 10,820 | 163,907 | ||||||||||||||||||
Hospitality Properties Trust 6.75% 2013 | $ | 28,915,000 | - | $ | 7,650,000 | $ | 21,265,000 | 2,127 | 22,631 | |||||||||||||||
Hospitality Properties Trust 6.70% 2018 | $ | 16,175,000 | - | - | $ | 16,175,000 | 1,088 | 16,866 | ||||||||||||||||
Hospitality Properties Trust 5.625% 2017 | $ | 1,485,000 | $ | 7,000,000 | - | $ | 8,485,000 | 130 | 8,346 | |||||||||||||||
Hospitality Properties Trust 6.30% 2016 | $ | 2,400,000 | - | - | $ | 2,400,000 | 168 | 2,479 | ||||||||||||||||
Hospitality Properties Trust 5.125% 2015 | $ | 2,160,000 | - | - | $ | 2,160,000 | 163 | 2,177 | ||||||||||||||||
Hospitality Properties Trust 7.875% 2014 | - | $ | 13,000,000 | $ | 13,000,000 | - | 287 | - | ||||||||||||||||
Weyerhaeuser Co. | 10,728,000 | - | - | 10,728,000 | 285,579 | 174,008 | ||||||||||||||||||
Weyerhaeuser Co. 6.875% 2033 | $ | 2,500,000 | - | $ | 2,500,000 | - | 39 | - | ||||||||||||||||
Weyerhaeuser Co. 7.375% 2032 | $ | 1,500,000 | - | $ | 1,500,000 | - | 25 | - | ||||||||||||||||
First Niagara Financial Group, Inc. | 9,730,000 | 1,920,000 | - | 11,650,000 | 4,893 | 156,227 | ||||||||||||||||||
First Niagara Financial Group, Inc. 6.75% 2020 | - | $ | 5,500,000 | $ | 5,500,000 | - | 63 | |||||||||||||||||
Arthur J. Gallagher & Co. | 5,000,000 | 1,000,000 | - | 6,000,000 | 7,680 | 152,520 | ||||||||||||||||||
FirstMerit Corp. | - | 5,495,000 | - | 5,495,000 | 2,263 | 108,306 | ||||||||||||||||||
Georgia Gulf Corp. 9.00% 2017 (3) | - | $ | 50,965,000 | - | $ | 50,965,000 | 2,797 | 53,959 | ||||||||||||||||
Georgia Gulf Corp. (4) | - | 2,659,046 | 35,900 | 2,623,146 | - | 40,265 | ||||||||||||||||||
Georgia Gulf Corp. 10.75% 2016 | - | $ | 3,385,000 | - | $ | 3,385,000 | 143 | 3,554 | ||||||||||||||||
Georgia Gulf Corp. 10.00% convertible preferred | 2,545,684 | - | 2,545,684 | - | - | - | ||||||||||||||||||
Georgia Gulf Corp. | 113,556 | 18 | 113,574 | - | - | - | ||||||||||||||||||
Georgia Gulf Corp., Term Loan B, 10.00% 2013 | $ | 6,246,177 | - | $ | 6,246,177 | - | 269 | - | ||||||||||||||||
Georgia Gulf Corp., Term Loan, Revolver, 6.50% 2011 | $ | 4,250,000 | - | $ | 4,250,000 | - | 88 | - | ||||||||||||||||
Macquarie Korea Infrastructure Fund (2) | 21,541,078 | - | - | 21,541,078 | 4,858 | 81,114 | ||||||||||||||||||
Applied Industrial Technologies, Inc. | 2,738,790 | - | - | 2,738,790 | 1,643 | 76,686 | ||||||||||||||||||
Trustmark Corp. | - | 3,257,000 | - | 3,257,000 | 1,483 | 71,654 | ||||||||||||||||||
Prime Infrastructure Group (2) | - | 22,756,141 | - | 22,756,141 | 2,138 | 69,839 | ||||||||||||||||||
Clarent Hospital Corp. Liquidating Trust (2) (4) | 484,684 | - | - | 484,684 | - | 19 | ||||||||||||||||||
Alexandria Real Estate Equities, Inc.(8) | 2,450,000 | - | 2,450,000 | - | 1,678 | - | ||||||||||||||||||
Alexandria Real Estate Equities, Inc. 3.70% convertible notes 2027 (3) (8) | - | $ | 14,920,000 | - | $ | 14,920,000 | 569 | - | ||||||||||||||||
Alexandria Real Estate Equities, Inc. 8.00% convertible notes 2029 (8) | $ | 463,000 | - | $ | 463,000 | - | 32 | - | ||||||||||||||||
BancorpSouth, Inc. (8) | - | 4,255,800 | 350,000 | 3,905,800 | 2,665 | - | ||||||||||||||||||
De La Rue PLC (2) (8) | 6,369,718 | - | 1,552,100 | 4,817,618 | 4,182 | - | ||||||||||||||||||
MeadWestvaco Corp. (8) | 10,600,696 | - | 2,780,696 | 7,820,000 | 7,719 | - | ||||||||||||||||||
$ | 398,200 | $ | 2,584,115 |
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) Valued under fair value procedures adopted by authority of the board of directors. The total value of all such securities, including those in “Miscellaneous” and “Other securities,” was $9,172,493,000, which represented 14.44% of the net assets of the fund. This amount includes $9,076,180,000 related to certain securities trading outside the U.S. whose values were adjusted as a result of significant market movements following the close of local trading. |
(3) Acquired in a transaction exempt from registration under the Securities Act of 1933. May be resold in the U.S. in transactions exempt from registration, normally to qualified institutional buyers. The total value of all such securities, including those in “Other securities,” was $4,672,572,000, which represented 7.35% of the net assets of the fund. |
(4) Security did not produce income during the last 12 months. |
(5) Coupon rate may change periodically. |
(6) Index-linked bond whose principal amount moves with a government retail price index. |
(7) Principal payments may be made periodically. Therefore, the effective maturity date may be earlier than the stated maturity date. |
(8) Unaffiliated issuer at 7/31/2010. |
Key to abbreviation |
ADR = American Depositary Receipts |
See Notes to Financial Statements |
Financial statements
Statement of assets and liabilities | ||||||||
at July 31, 2010 | (dollars in thousands) | |||||||
Assets: | ||||||||
Investment securities, at value: | ||||||||
Unaffiliated issuers (cost: $59,347,983) | $ | 60,321,505 | ||||||
Affiliated issuers (cost: $3,084,096) | 2,584,115 | $ | 62,905,620 | |||||
Cash | 380 | |||||||
Receivables for: | ||||||||
Sales of investments | 255,363 | |||||||
Sales of fund's shares | 57,637 | |||||||
Dividends and interest | 710,531 | 1,023,531 | ||||||
63,929,531 | ||||||||
Liabilities: | ||||||||
Payables for: | ||||||||
Purchases of investments | 257,301 | |||||||
Repurchases of fund's shares | 86,033 | |||||||
Investment advisory services | 18,457 | |||||||
Services provided by affiliates | 33,928 | |||||||
Directors' deferred compensation | 2,938 | |||||||
Other | 426 | 399,083 | ||||||
Net assets at July 31, 2010 | $ | 63,530,448 | ||||||
Net assets consist of: | ||||||||
Capital paid in on shares of capital stock | $ | 71,596,067 | ||||||
Undistributed net investment income | 681,967 | |||||||
Accumulated net realized loss | (9,222,301 | ) | ||||||
Net unrealized appreciation | 474,715 | |||||||
Net assets at July 31, 2010 | $ | 63,530,448 |
(dollars and shares in thousands, except per-share amounts) | ||||||||||||
Total authorized capital stock - 5,500,000 shares, $.001 par value (4,108,932 total shares outstanding) | ||||||||||||
Net assets | Shares outstanding | Net asset value per share | ||||||||||
Class A | $ | 48,436,930 | 3,128,223 | $ | 15.48 | |||||||
Class B | 2,420,763 | 157,535 | 15.37 | |||||||||
Class C | 5,882,122 | 383,645 | 15.33 | |||||||||
Class F-1 | 1,814,776 | 117,398 | 15.46 | |||||||||
Class F-2 | 460,428 | 29,744 | 15.48 | |||||||||
Class 529-A | 752,642 | 48,677 | 15.46 | |||||||||
Class 529-B | 91,568 | 5,944 | 15.41 | |||||||||
Class 529-C | 280,659 | 18,209 | 15.41 | |||||||||
Class 529-E | 35,432 | 2,297 | 15.43 | |||||||||
Class 529-F-1 | 22,064 | 1,427 | 15.46 | |||||||||
Class R-1 | 91,134 | 5,914 | 15.41 | |||||||||
Class R-2 | 518,322 | 33,760 | 15.35 | |||||||||
Class R-3 | 1,056,248 | 68,423 | 15.44 | |||||||||
Class R-4 | 740,441 | 47,883 | 15.46 | |||||||||
Class R-5 | 446,890 | 28,863 | 15.48 | |||||||||
Class R-6 | 480,029 | 30,990 | 15.49 | |||||||||
See Notes to Financial Statements |
Statement of operations | ||||||||
for the year ended July 31, 2010 | (dollars in thousands) | |||||||
Investment income: | ||||||||
Income: | ||||||||
Dividends (net of non-U.S. taxes of $62,584; | ||||||||
also includes $389,177 from affiliates) | $ | 1,955,757 | ||||||
Interest (includes $9,023 from affiliates) | 1,499,475 | $ | 3,455,232 | |||||
Fees and expenses*: | ||||||||
Investment advisory services | 166,066 | |||||||
Distribution services | 222,466 | |||||||
Transfer agent services | 45,050 | |||||||
Administrative services | 19,308 | |||||||
Reports to shareholders | 2,792 | |||||||
Registration statement and prospectus | 8,160 | |||||||
Directors' compensation | 770 | |||||||
Auditing and legal | 190 | |||||||
Custodian | 2,325 | |||||||
Other | 2,131 | 469,258 | ||||||
Net investment income | 2,985,974 | |||||||
Net realized gain and unrealized appreciation | ||||||||
on investments and currency: | ||||||||
Net realized gain (loss) on: | ||||||||
Investments (includes $34,224 net gain from affiliates) | 2,040,760 | |||||||
Currency transactions | (1,774 | ) | 2,038,986 | |||||
Net unrealized appreciation on: | ||||||||
Investments | 3,711,931 | |||||||
Currency translations | 727 | 3,712,658 | ||||||
Net realized gain and unrealized appreciation | ||||||||
on investments and currency | 5,751,644 | |||||||
Net increase in net assets resulting | ||||||||
from operations | $ | 8,737,618 | ||||||
(*) 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 | ||||||||
2010 | 2009 | |||||||
Operations: | ||||||||
Net investment income | $ | 2,985,974 | $ | 3,123,141 | ||||
Net realized gain (loss) on investments and currency transactions | 2,038,986 | (11,247,294 | ) | |||||
Net unrealized appreciation (depreciation) on investments and currency translations | 3,712,658 | (2,332,526 | ) | |||||
Net increase (decrease) in net assets resulting from operations | 8,737,618 | (10,456,679 | ) | |||||
Dividends paid to shareholders from net investment income | (2,671,237 | ) | (2,991,184 | ) | ||||
Net capital share transactions | (2,485,102 | ) | (3,089,104 | ) | ||||
Total increase (decrease) in net assets | 3,581,279 | (16,536,967 | ) | |||||
Net assets: | ||||||||
Beginning of year | 59,949,169 | 76,486,136 | ||||||
End of year (including undistributed | ||||||||
net investment income: $681,967 and $367,574, respectively) | $ | 63,530,448 | $ | 59,949,169 | ||||
See Notes to Financial Statements |
Notes to financial statements
1. | 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.
On November 24, 2009, shareholders approved a proposal to reorganize the fund from a Maryland corporation to a Delaware statutory trust. The reorganization is anticipated to be completed on October 1, 2010; however, the fund reserves the right to delay the implementation. Shareholders also approved amendments to the fund’s Investment Advisory and Service Agreement and amendments to and elimination of certain fundamental investment policies of the fund.
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 |
*Class B and 529-B shares of the fund are not available for purchase.
Holders of all share classes have equal pro rata rights to assets, dividends and liquidation proceeds. Each share class has identical voting rights, except for the exclusive right to vote on matters affecting only its class. Share classes have different fees and expenses ("class-specific fees and expenses"), primarily due to different arrangements for distribution, administrative and shareholder services. Differences in class-specific fees and expenses will result in differences in net investment income and, therefore, the payment of different per-share dividends by each class.
2. | Significant accounting policies |
The financial statements have been prepared to comply with accounting principles generally accepted in the United States of America. These principles require management to make estimates and assumptions that affect reported amounts and disclosures. Actual results could differ from those estimates. The fund follows the significant accounting policies described below, as well as the valuation policies described in the next section on valuation.
Security transactions and related investment income – Security transactions are recorded by the fund as of the date the trades are executed with brokers. Realized gains and losses from security transactions are determined based on the specific identified cost of the securities. In the event a security is purchased with a delayed payment date, the fund will segregate liquid assets sufficient to meet its payment obligations. Dividend income is recognized on the ex-dividend date and interest income is 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 – 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.
Unfunded commitments – The fund may participate in transactions that involve unfunded commitments, which may obligate the fund to purchase new or additional bonds if certain contingencies are met. As of July 31, 2010, the fund’s maximum exposure of unfunded bond commitments was $10,151,000, which would represent 0.02% of the net assets of the fund should such commitments become due.
3. | Valuation |
The fund’s investments are reported at fair value as defined by accounting principles generally accepted in the United States of America. The fund generally determines its net asset value as of approximately 4:00 p.m. New York time each day the New York Stock Exchange is open.
Methods and inputs – The fund uses the following methods and inputs to establish the fair value of its assets and liabilities. Use of particular methods and inputs may vary over time based on availability and relevance as market and economic conditions evolve.
Equity securities are generally valued at the official closing price of, or the last reported sale price on, the exchange or market on which such securities are traded, as of the close of business on the day the securities are being valued or, lacking any sales, at the last available bid price. Prices for each security are taken from the principal exchange or market in which the security trades.
Fixed-income securities, including short-term securities purchased with more than 60 days left to maturity, are generally valued at prices obtained as of approximately 3:00 p.m. New York time from one or more pricing vendors. Vendors value such securities based on one or more of the inputs described in the following table. The table provides examples of inputs that are commonly relevant for valuing particular classes of fixed-income securities in which the fund is authorized to invest. However, these classifications are not exclusive, and any of the inputs may be used to value any other class of fixed-income security.
Fixed-income class | Examples of standard inputs |
All | Benchmark yields, transactions, bids, offers, quotations from dealers and trading systems, new issues, spreads and other relationships observed in the markets among comparable securities; and proprietary pricing models such as yield measures calculated using factors such as cash flows, financial or collateral performance and other reference data (collectively referred to as “standard inputs”) |
Corporate bonds & notes; convertible securities | Standard inputs and underlying equity of the issuer |
Bonds & notes of governments & government agencies | Standard inputs and interest rate volatilities |
Mortgage-backed; asset-backed obligations | Standard inputs and cash flows, prepayment information, default rates, delinquency and loss assumptions, collateral characteristics, credit enhancements and specific deal information |
Municipal securities | Standard inputs and, for certain distressed securities, cash flows or liquidation values using a net present value calculation based on inputs that include, but are not limited to, financial statements and debt contracts |
Where the investment adviser deems it appropriate to do so (such as when vendor prices are unavailable or not deemed to be representative), fixed-income securities will be valued in good faith at the mean quoted bid and asked prices that are reasonably and timely available (or bid prices, if asked prices are not available) or at prices for securities of comparable maturity, quality and type.
Securities with both fixed-income and equity characteristics, or equity securities traded principally among fixed-income dealers, are generally valued in the manner described above for either equity or fixed-income securities, depending on which method is deemed most appropriate by the investment adviser. Short-term securities purchased within 60 days to maturity are valued at amortized cost, which approximates fair value. The value of short-term securities originally purchased with maturities greater than 60 days is determined based on an amortized value to par when they reach 60 days.
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 equity securities trading 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 inputs may be reviewed in order to make a good faith determination of a security’s fair value. These inputs include, but are not limited to, the type and cost of the security; contractual or legal restrictions on resale of the security; relevant financial or business developments of the issuer; actively traded similar or related securities; conversion or exchange rights on the security; related corporate actions; significant events occurring after the close of trading in the security; and changes in overall market conditions. Fair valuations and valuations of investments that are not actively trading involve judgment and may differ materially from valuations that would have been used had greater market activity occurred.
Classifications - The fund classifies its assets and liabilities into three levels based on the inputs used to value the assets or liabilities. Level 1 values are based on quoted prices in active markets for identical securities. Level 2 values are based on significant observable market inputs, such as quoted prices for similar securities and quoted prices in inactive markets. Level 3 values are based on significant unobservable inputs that reflect the fund’s determination of assumptions that market participants might reasonably use in valuing the securities. The valuation levels are not necessarily an indication of the risk or liquidity associated with the underlying inves tment. For example, U.S. government securities are reflected as Level 2 because the inputs used to determine fair value may not always be quoted prices in an active market. The following table presents the fund’s valuation levels as of July 31, 2010 (dollars in thousands):
Investment securities: | Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Common stocks: | |||||||||||||||||
Industrials | $ | 4,297,207 | $ | 964,898 | (1 | ) | $ | 163 | $ | 5,262,268 | |||||||
Consumer staples | 3,715,117 | 791,653 | (1 | ) | - | 4,506,770 | |||||||||||
Financials | 3,063,646 | 1,323,568 | (1 | ) | - | 4,387,214 | |||||||||||
Utilities | 2,482,250 | 1,845,461 | (1 | ) | - | 4,327,711 | |||||||||||
Health care | 3,440,087 | 192,407 | (1 | ) | 19 | 3,632,513 | |||||||||||
Consumer discretionary | 2,801,977 | 737,719 | (1 | ) | 17,063 | 3,556,759 | |||||||||||
Energy | 3,066,636 | 263,886 | (1 | ) | - | 3,330,522 | |||||||||||
Telecommunication services | 1,843,434 | 1,402,013 | (1 | ) | - | 3,245,447 | |||||||||||
Information technology | 1,654,118 | 532,765 | (1 | ) | - | 2,186,883 | |||||||||||
Materials | 1,644,051 | 253,183 | (1 | ) | - | 1,897,234 | |||||||||||
Miscellaneous | 1,475,575 | 781,463 | (1 | ) | - | 2,257,038 | |||||||||||
Preferred stocks | 103,311 | 926,929 | 1,030,240 | ||||||||||||||
Convertible securities | 353,585 | 523,675 | - | 877,260 | |||||||||||||
Bonds & notes: | |||||||||||||||||
Corporate bonds & notes | - | 12,725,071 | 45,234 | 12,770,305 | |||||||||||||
Bonds & notes of governments & government agencies outside the U.S. | - | 3,631,243 | - | 3,631,243 | |||||||||||||
Mortgage-backed obligations | - | 2,778,230 | 20,998 | 2,799,228 | |||||||||||||
Other | - | 888,011 | - | 888,011 | |||||||||||||
Miscellaneous | - | 93,711 | - | 93,711 | |||||||||||||
Short-term securities | - | 2,225,263 | - | 2,225,263 | |||||||||||||
Total | $ | 29,940,994 | $ | 32,881,149 | $ | 83,477 | $ | 62,905,620 | |||||||||
(1) Includes certain securities trading outside the U.S. whose values were adjusted as a result of significant market movements following the close of local trading; therefore, $9,076,180,000 of investment securities were classified as Level 2 instead of Level 1. |
The following table reconciles the valuation of the fund's Level 3 investment securities and related transactions for the year ended July 31, 2010 (dollars in thousands): | ||||||||||||||||||||||||
Beginning value at 8/01/2009 | Net purchases and sales | Net realized loss(2) | Net unrealized appreciation(2) | Net transfers into Level 3(3) | Ending value at 7/31/2010 | |||||||||||||||||||
Investment securities | $ | 109,955 | $ | (88,000 | ) | $ | (19,380 | ) | $ | 57,555 | $ | 23,347 | $ | 83,477 | ||||||||||
Net unrealized appreciation during the period on Level 3 investment securities held at July 31, 2010 (dollars in thousands) (2): | $ | 17,037 | ||||||||||||||||||||||
(2) Net realized loss and unrealized appreciation are included in the related amounts on investments in the statement of operations. | ||||||||||||||||||||||||
(3) Transfers into or out of Level 3 are based on the beginning market value of the quarter in which they occurred. |
4. | Risk factors |
Investing in the fund may involve certain risks including, but not limited to, those described below.
Market risks — 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 issuers whose securities are owned by the fund; conditions affecting the general economy; overall market changes; local, regional or global political, social or economic instability; governmental or governmental agency responses to economic conditions; and currency, interest rate and commodity price fluctuations.
Interest rate risks — The prices 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 prices of debt securities in the fund’s portfolio generally will decline when interest rates rise and increase when interest rates fall. In addition, falling interest rates may cause an issuer to redeem, “call” or refinance a security before its stated maturity, which may result in the fund having to reinvest the proceeds in lower yielding securities.
Credit risks — 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.
High-yield bond and long maturity risks — Lower quality debt securities generally have higher rates of interest and may be subject to greater price fluctuations than higher quality debt securities. In addition, longer maturity debt securities generally have higher rates of interest and may be subject to greater price fluctuations than shorter maturity debt securities. There may be little trading in the secondary market for particular debt securities, which may make them more difficult to value or sell.
Risks of investing outside the U.S. — Investments in securities issued by entities based outside the U.S. may be subject to the risks described above 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 U.S. may also be subject to many of the se risks.
5. | Taxation and distributions |
Federal income taxation – The fund complies with the requirements under Subchapter M of the Internal Revenue Code applicable to mutual funds and intends to distribute substantially all of its net taxable income and net capital gains each year. The fund is not subject to income taxes to the extent such distributions are made. Therefore, no federal income tax provision is required.
As of and during the period ended July 31, 2010, the fund did not have a liability for any unrecognized tax benefits. The fund recognizes interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the statement of operations. During the period, the fund did not incur any interest or penalties.
The fund is not subject to examination by U.S. federal tax authorities for tax years before 2006 and by state tax authorities for tax years before 2005.
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 different treatment for items such as currency gains and losses; short-term capital gains and losses; capital losses related to sales of certain securities within 30 days of purchase; 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 r eporting purposes.
During the year ended July 31, 2010, the fund reclassified $89,000 from accumulated net realized loss to undistributed net investment income and $433,000 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, 2010, the tax basis components of distributable earnings, unrealized appreciation (depreciation) and cost of investment securities were as follows:
(dollars in thousands) | ||||||||
Undistributed ordinary income | $ | 704,404 | ||||||
Post-October currency loss deferrals (realized during the period November 1, 2009, through July 31, 2010)* | (3,084 | ) | ||||||
Capital loss carryforwards †: | ||||||||
Expiring 2017 | $ | (1,328,267 | ) | |||||
Expiring 2018 | (7,892,940 | ) | (9,221,207 | ) | ||||
Gross unrealized appreciation on investment securities | 5,102,051 | |||||||
Gross unrealized depreciation on investment securities | (4,650,503 | ) | ||||||
Net unrealized appreciation on investment securities | 451,548 | |||||||
Cost of investment securities | 62,454,072 | |||||||
* These deferrals are considered incurred in the subsequent year. | ||||||||
† The capital loss carryforwards will be used to offset any capital gains realized by the fund in future years through the expiration dates. The fund will not make distributions from capital gains while capital loss carryforwards remain. |
Ordinary income distributions paid to shareholders from net investment income were as follows (dollars in thousands):
Year ended July 31 | ||||||||
Share class | 2010 | 2009 | ||||||
Class A | $ | 2,089,796 | $ | 2,325,379 | ||||
Class B | 97,153 | 136,968 | ||||||
Class C | 211,864 | 256,919 | ||||||
Class F-1 | 79,624 | 100,766 | ||||||
Class F-2 | 19,206 | 7,086 | ||||||
Class 529-A | 29,614 | 28,341 | ||||||
Class 529-B | 3,344 | 3,910 | ||||||
Class 529-C | 9,321 | 9,875 | ||||||
Class 529-E | 1,307 | 1,290 | ||||||
Class 529-F-1 | 933 | 884 | ||||||
Class R-1 | 3,054 | 3,112 | ||||||
Class R-2 | 17,811 | 18,615 | ||||||
Class R-3 | 40,939 | 42,400 | ||||||
Class R-4 | 29,998 | 27,738 | ||||||
Class R-5 | 19,594 | 24,864 | ||||||
Class R-6* | 17,679 | 3,037 | ||||||
Total | $ | 2,671,237 | $ | 2,991,184 | ||||
*Class R-6 was offered beginning May 1, 2009. |
6. | Fees and transactions with related parties |
Capital Research and Management Company ("CRMC"), the fund’s investment adviser, is the parent company of American Funds Distributors,® Inc. ("AFD"), the principal underwriter of the fund’s shares, and American Funds Service Company® ("AFS"), the fund’s transfer agent.
Investment advisory services - The Investment Advisory and Service Agreement with CRMC provides for monthly fees accrued daily. These fees are based on a series of decreasing annual rates beginning with 0.250% 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. For the year ended July 31, 2010, the investment advisory services fee was $166,066,000, which was equivalent to an annualized rate of 0.261% 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 below. In some cases, the board of directors has limited the amounts that may be paid to less than the maximum allowed by the plans. All share classes with a plan may use up to 0.25% of average daily net assets to pay service fees, or to co mpensate 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, 2010, there were no unreimbursed expenses subject to reimbursement for Classes A or 529-A.
Share class | Currently approved limits | Plan limits |
Class A | 0.25% | 0.25% |
Class 529-A | 0.25 | 0.50 |
Classes B and 529-B | 1.00 | 1.00 |
Classes C, 529-C and R-1 | 1.00 | 1.00 |
Class R-2 | 0.75 | 1.00 |
Classes 529-E and R-3 | 0.50 | 0.75 |
Classes F-1, 529-F-1 and R-4 | 0.25 | 0.50 |
Transfer agent services – The fund 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 as described below.
Administrative services – The fund has an administrative services agreement with CRMC for all share classes, except Classes A and B, to provide certain services, including transfer agent and recordkeeping services; coordinating, monitoring, assisting and overseeing third-party service providers; and educating advisers and shareholders about the impact of market-related events, tax laws affecting investments, retirement plan restrictions, exchange limitations and other related matters. Each relevant share class pays CRMC annual fees up to 0.15% (0.10% for Class R-5 and 0.05% for Class R-6) based on its respective average daily net assets. Each relevant share class also pays AFS additional amounts for certain transfer agent servi ces. CRMC and AFS may use these fees to compensate third parties for performing these services.
Each 529 share class is subject to an additional administrative services fee payable to the Commonwealth of Virginia for the maintenance of the 529 college savings plan. The quarterly fee is based on a series of decreasing annual rates beginning with 0.10% on the first $30 billion of the net assets invested in Class 529 shares of the American Funds and decreasing to 0.06% on such assets between $120 billion and $150 billion. The fee for any given calendar quarter is accrued and calculated on the basis of the average net assets of Class 529 shares of the American Funds for the last month of the prior calendar quarter. Although these amounts are included with administrative services fees on the accompanying financial statements, the Commonw ealth of Virginia is not considered a related party.
Expenses under the agreements described on the previous page for the year ended July 31, 2010, were as follows (dollars in thousands):
Administrative services | ||||||||||||||||||||
Share class | Distribution services | Transfer agent services | CRMC administrative services | Transfer agent services | Commonwealth of Virginia administrative services | |||||||||||||||
Class A | $ | 114,251 | $ | 42,618 | Not applicable | Not applicable | Not applicable | |||||||||||||
Class B | 27,293 | 2,432 | Not applicable | Not applicable | Not applicable | |||||||||||||||
Class C | 59,536 | Included in administrative services | $ | 7,443 | $ | 852 | Not applicable | |||||||||||||
Class F-1 | 4,533 | 2,045 | 135 | Not applicable | ||||||||||||||||
Class F-2 | Not applicable | 559 | 21 | Not applicable | ||||||||||||||||
Class 529-A | 1,497 | 536 | 68 | $ | 696 | |||||||||||||||
Class 529-B | 963 | 75 | 23 | 96 | ||||||||||||||||
Class 529-C | 2,658 | 206 | 53 | 267 | ||||||||||||||||
Class 529-E | 164 | 25 | 3 | 33 | ||||||||||||||||
Class 529-F-1 | - | 16 | 2 | 21 | ||||||||||||||||
Class R-1 | 854 | 107 | 25 | Not applicable | ||||||||||||||||
Class R-2 | 3,810 | 759 | 1,465 | Not applicable | ||||||||||||||||
Class R-3 | 5,150 | 1,526 | 574 | Not applicable | ||||||||||||||||
Class R-4 | 1,757 | 1,032 | 41 | Not applicable | ||||||||||||||||
Class R-5 | Not applicable | 401 | 10 | Not applicable | ||||||||||||||||
Class R-6 | Not applicable | 192 | 1 | Not applicable | ||||||||||||||||
Total | $ | 222,466 | $ | 45,050 | $ | 14,922 | $ | 3,273 | $ | 1,113 |
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 $770,000, shown on the accompanying financial statements, includes $419,000 in current fees (either paid in cash or deferred) and a net increase of $351,000 in the val ue of the deferred amounts.
Affiliated officers and directors – Officers and certain directors of the fund are or may be considered to be affiliated with CRMC, AFS and AFD. No affiliated officers or directors received any compensation directly from the fund.
7. | Capital share transactions |
Capital share transactions in the fund were as follows (dollars and shares in thousands):
Share class | Sales(*) | Reinvestments of dividends and distributions | Repurchases(*) | Net (decrease) increase | ||||||||||||||||||||||||||||
Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | |||||||||||||||||||||||||
Year ended July 31, 2010 | ||||||||||||||||||||||||||||||||
Class A | $ | 5,109,735 | 335,067 | $ | 1,909,103 | 124,792 | $ | (8,765,580 | ) | (576,354 | ) | $ | (1,746,742 | ) | (116,495 | ) | ||||||||||||||||
Class B | 69,078 | 4,576 | 89,100 | 5,865 | (851,843 | ) | (56,276 | ) | (693,665 | ) | (45,835 | ) | ||||||||||||||||||||
Class C | 646,265 | 42,774 | 182,915 | 12,069 | (1,151,256 | ) | (76,308 | ) | (322,076 | ) | (21,465 | ) | ||||||||||||||||||||
Class F-1 | 347,380 | 22,812 | 69,299 | 4,536 | (582,284 | ) | (38,413 | ) | (165,605 | ) | (11,065 | ) | ||||||||||||||||||||
Class F-2 | 195,285 | 12,881 | 12,577 | 824 | (134,507 | ) | (8,854 | ) | 73,355 | 4,851 | ||||||||||||||||||||||
Class 529-A | 138,942 | 9,113 | 29,610 | 1,937 | (86,396 | ) | (5,685 | ) | 82,156 | 5,365 | ||||||||||||||||||||||
Class 529-B | 5,063 | 333 | 3,344 | 219 | (17,575 | ) | (1,153 | ) | (9,168 | ) | (601 | ) | ||||||||||||||||||||
Class 529-C | 52,729 | 3,470 | 9,317 | 611 | (46,884 | ) | (3,100 | ) | 15,162 | 981 | ||||||||||||||||||||||
Class 529-E | 7,221 | 475 | 1,307 | 86 | (5,035 | ) | (333 | ) | 3,493 | 228 | ||||||||||||||||||||||
Class 529-F-1 | 5,848 | 384 | 933 | 61 | (5,273 | ) | (348 | ) | 1,508 | 97 | ||||||||||||||||||||||
Class R-1 | 31,826 | 2,092 | 3,031 | 199 | (25,382 | ) | (1,678 | ) | 9,475 | 613 | ||||||||||||||||||||||
Class R-2 | 136,033 | 8,997 | 17,706 | 1,166 | (145,325 | ) | (9,616 | ) | 8,414 | 547 | ||||||||||||||||||||||
Class R-3 | 252,361 | 16,591 | 40,598 | 2,660 | (268,692 | ) | (17,679 | ) | 24,267 | 1,572 | ||||||||||||||||||||||
Class R-4 | 217,458 | 14,322 | 29,785 | 1,948 | (201,984 | ) | (13,233 | ) | 45,259 | 3,037 | ||||||||||||||||||||||
Class R-5 | 103,146 | 6,784 | 19,534 | 1,277 | (110,781 | ) | (7,299 | ) | 11,899 | 762 | ||||||||||||||||||||||
Class R-6 | 167,893 | 10,984 | 17,675 | 1,153 | (8,402 | ) | (544 | ) | 177,166 | 11,593 | ||||||||||||||||||||||
Total net increase | ||||||||||||||||||||||||||||||||
(decrease) | $ | 7,486,263 | 491,655 | $ | 2,435,834 | 159,403 | $ | (12,407,199 | ) | (816,873 | ) | $ | (2,485,102 | ) | (165,815 | ) | ||||||||||||||||
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 | 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† | 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 | ) | ||||||||||||||||
*Includes exchanges between share classes of the fund. | ||||||||||||||||||||||||||||||||
†Class R-6 was offered beginning May 1, 2009. |
8. | Investment transactions |
The fund made purchases and sales of investment securities, excluding short-term securities and U.S. government obligations, if any, of $19,385,071,000 and $22,151,400,000, respectively, during the year ended July 31, 2010.
Financial highlights (1)
Income (loss) from investment operations(2) | Dividends and distributions | |||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | Net investment income | Net gains (losses) on securities (both realized and unrealized) | Total from investment operations | Dividends (from net investment income) | 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 7/31/2010 | $ | 14.04 | $ | .73 | $ | 1.37 | $ | 2.10 | $ | (.66 | ) | $ | - | $ | (.66 | ) | $ | 15.48 | 15.09 | % | $ | 48,437 | .61 | % | .61 | % | 4.82 | % | ||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||
Class B: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2010 | 13.94 | .60 | 1.37 | 1.97 | (.54 | ) | - | (.54 | ) | 15.37 | 14.24 | 2,421 | 1.38 | 1.38 | 4.01 | |||||||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||
Class C: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2010 | 13.91 | .60 | 1.36 | 1.96 | (.54 | ) | - | (.54 | ) | 15.33 | 14.17 | 5,882 | 1.43 | 1.43 | 4.00 | |||||||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||
Class F-1: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2010 | 14.02 | .73 | 1.37 | 2.10 | (.66 | ) | - | (.66 | ) | 15.46 | 15.08 | 1,815 | .65 | .65 | 4.78 | |||||||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||
Class F-2: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2010 | 14.04 | .77 | 1.36 | 2.13 | (.69 | ) | - | (.69 | ) | 15.48 | 15.31 | 460 | .42 | .42 | 5.04 | |||||||||||||||||||||||||||||||||||||
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 7/31/2010 | 14.03 | .73 | 1.35 | 2.08 | (.65 | ) | - | (.65 | ) | 15.46 | 14.95 | 753 | .69 | .69 | 4.77 | |||||||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||
Class 529-B: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2010 | 13.98 | .59 | 1.37 | 1.96 | (.53 | ) | - | (.53 | ) | 15.41 | 14.10 | 92 | 1.49 | 1.49 | 3.92 | |||||||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||
Class 529-C: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2010 | 13.99 | .60 | 1.35 | 1.95 | (.53 | ) | - | (.53 | ) | 15.41 | 14.04 | 281 | 1.48 | 1.48 | 3.97 | |||||||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||
Class 529-E: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2010 | 14.00 | .68 | 1.36 | 2.04 | (.61 | ) | - | (.61 | ) | 15.43 | 14.66 | 35 | .97 | .97 | 4.49 | |||||||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||
Class 529-F-1: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2010 | $ | 14.03 | $ | .76 | $ | 1.35 | $ | 2.11 | $ | (.68 | ) | $ | - | $ | (.68 | ) | $ | 15.46 | 15.19 | % | $ | 22 | .47 | % | .47 | % | 4.99 | % | ||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||
Class R-1: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2010 | 13.99 | .61 | 1.35 | 1.96 | (.54 | ) | - | (.54 | ) | 15.41 | 14.10 | 91 | 1.44 | 1.44 | 4.03 | |||||||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||
Class R-2: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2010 | 13.93 | .60 | 1.35 | 1.95 | (.53 | ) | - | (.53 | ) | 15.35 | 14.10 | 518 | 1.47 | 1.47 | 3.97 | |||||||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||
Class R-3: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2010 | 14.01 | .68 | 1.35 | 2.03 | (.60 | ) | - | (.60 | ) | 15.44 | 14.63 | 1,056 | .99 | .99 | 4.45 | |||||||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||
Class R-4: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2010 | 14.03 | .72 | 1.36 | 2.08 | (.65 | ) | - | (.65 | ) | 15.46 | 14.95 | 740 | .68 | .68 | 4.77 | |||||||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||
Class R-5: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2010 | 14.04 | .77 | 1.37 | 2.14 | (.70 | ) | - | (.70 | ) | 15.48 | 15.36 | 447 | .38 | .38 | 5.07 | |||||||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||
Class R-6: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2010 | 14.05 | .79 | 1.35 | 2.14 | (.70 | ) | - | (.70 | ) | 15.49 | 15.40 | 480 | .33 | .33 | 5.20 | |||||||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||
2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||
Portfolio turnover rate for all classes of shares | 35 | % | 49 | % | 38 | % | 32 | % | 35 | % |
(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, 2010, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods presented. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, o n 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, 2010, by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of The Income Fund of America, Inc. as of July 31, 2010, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America.
Deloitte & Touche LLP
Costa Mesa, California
September 7, 2010
Expense example
0; unaudited
As a shareholder of the fund, you incur two types of costs: (1) transaction costs, such as initial sales charges on purchase payments and contingent deferred sales charges on redemptions (loads), and (2) ongoing costs, including management fees, distribution and service (12b-1) fees, and other expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the fund so you can compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (February 1, 2010, through July 31, 2010).
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 additi on, your ending account value would be lower by the amount of these fees.
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 2/1/2010 | Ending account value 7/31/2010 | Expenses paid during period* | Annualized expense ratio | |||||||||||||
Class A -- actual return | $ | 1,000.00 | $ | 1,044.42 | $ | 3.09 | .61 | % | ||||||||
Class A -- assumed 5% return | 1,000.00 | 1,021.77 | 3.06 | .61 | ||||||||||||
Class B -- actual return | 1,000.00 | 1,040.64 | 6.98 | 1.38 | ||||||||||||
Class B -- assumed 5% return | 1,000.00 | 1,017.95 | 6.90 | 1.38 | ||||||||||||
Class C -- actual return | 1,000.00 | 1,040.00 | 7.18 | 1.42 | ||||||||||||
Class C -- assumed 5% return | 1,000.00 | 1,017.75 | 7.10 | 1.42 | ||||||||||||
Class F-1 -- actual return | 1,000.00 | 1,044.31 | 3.29 | .65 | ||||||||||||
Class F-1 -- assumed 5% return | 1,000.00 | 1,021.57 | 3.26 | .65 | ||||||||||||
Class F-2 -- actual return | 1,000.00 | 1,045.41 | 2.13 | .42 | ||||||||||||
Class F-2 -- assumed 5% return | 1,000.00 | 1,022.71 | 2.11 | .42 | ||||||||||||
Class 529-A -- actual return | 1,000.00 | 1,044.11 | 3.50 | .69 | ||||||||||||
Class 529-A -- assumed 5% return | 1,000.00 | 1,021.37 | 3.46 | .69 | ||||||||||||
Class 529-B -- actual return | 1,000.00 | 1,040.05 | 7.49 | 1.48 | ||||||||||||
Class 529-B -- assumed 5% return | 1,000.00 | 1,017.46 | 7.40 | 1.48 | ||||||||||||
Class 529-C -- actual return | 1,000.00 | 1,039.53 | 7.48 | 1.48 | ||||||||||||
Class 529-C -- assumed 5% return | 1,000.00 | 1,017.46 | 7.40 | 1.48 | ||||||||||||
Class 529-E -- actual return | 1,000.00 | 1,042.77 | 4.91 | .97 | ||||||||||||
Class 529-E -- assumed 5% return | 1,000.00 | 1,019.98 | 4.86 | .97 | ||||||||||||
Class 529-F-1 -- actual return | 1,000.00 | 1,045.24 | 2.38 | .47 | ||||||||||||
Class 529-F-1 -- assumed 5% return | 1,000.00 | 1,022.46 | 2.36 | .47 | ||||||||||||
Class R-1 -- actual return | 1,000.00 | 1,039.87 | 7.23 | 1.43 | ||||||||||||
Class R-1 -- assumed 5% return | 1,000.00 | 1,017.70 | 7.15 | 1.43 | ||||||||||||
Class R-2 -- actual return | 1,000.00 | 1,039.69 | 7.38 | 1.46 | ||||||||||||
Class R-2 -- assumed 5% return | 1,000.00 | 1,017.55 | 7.30 | 1.46 | ||||||||||||
Class R-3 -- actual return | 1,000.00 | 1,042.60 | 4.96 | .98 | ||||||||||||
Class R-3 -- assumed 5% return | 1,000.00 | 1,019.93 | 4.91 | .98 | ||||||||||||
Class R-4 -- actual return | 1,000.00 | 1,043.43 | 3.50 | .69 | ||||||||||||
Class R-4 -- assumed 5% return | 1,000.00 | 1,021.37 | 3.46 | .69 | ||||||||||||
Class R-5 -- actual return | 1,000.00 | 1,045.61 | 1.93 | .38 | ||||||||||||
Class R-5 -- assumed 5% return | 1,000.00 | 1,022.91 | 1.91 | .38 | ||||||||||||
Class R-6 -- actual return | 1,000.00 | 1,045.85 | 1.72 | .34 | ||||||||||||
Class R-6 -- assumed 5% return | 1,000.00 | 1,023.11 | 1.71 | .34 | ||||||||||||
*The “expenses paid during period” are equal to the “annualized expense ratio,” multiplied by the average account value over the period, multiplied by the number of days in the period, and divided by 365 (to reflect the one-half year period). |
Tax information
unaudited
We are required to advise you within 60 days of the fund’s fiscal year-end regarding the federal tax status of certain distributions received by shareholders during such fiscal year. The fund hereby designates the following amounts for the fund’s fiscal year ended July 31, 2010:
Qualified dividend income | $ | 2,186,010,000 | ||
Corporate dividends received deduction | $ | 1,468,845,000 | ||
U.S. government income that may be exempt from state taxation | $ | 89,146,000 |
Individual shareholders should refer to their Form 1099 or other tax information, which will be mailed in January 2011, to determine the calendar year amounts to be included on their 2010 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, 2010 (the most recent calendar quarter-end): | ||||||||||||
10 years1/ | ||||||||||||
1 year | 5 years | Life of class | ||||||||||
Class B shares2 | ||||||||||||
Reflecting applicable contingent deferred sales | ||||||||||||
charge (CDSC), maximum of 5%, payable only | ||||||||||||
if shares are sold within six years of purchase | 10.45 | % | 0.75 | % | 5.08 | % | ||||||
Not reflecting CDSC | 15.45 | 1.06 | 5.08 | |||||||||
Class C shares — first sold 3/15/01 | ||||||||||||
Reflecting CDSC, maximum of 1%, payable only | ||||||||||||
if shares are sold within one year of purchase | 14.37 | 1.01 | 4.01 | |||||||||
Not reflecting CDSC | 15.37 | 1.01 | 4.01 | |||||||||
Class F-1 shares3 — first sold 3/15/01 | ||||||||||||
Not reflecting annual asset-based fee charged | ||||||||||||
by sponsoring firm | 16.30 | 1.79 | 4.81 | |||||||||
Class F-2 shares3 — first sold 8/1/08 | ||||||||||||
Not reflecting annual asset-based fee charged | ||||||||||||
by sponsoring firm | 16.62 | — | –2.27 | |||||||||
Class 529-A shares4 — first sold 2/15/02 | ||||||||||||
Reflecting 5.75% maximum sales charge | 9.57 | 0.55 | 4.11 | |||||||||
Not reflecting maximum sales charge | 16.25 | 1.75 | 4.85 | |||||||||
Class 529-B shares2,4 — first sold 2/19/02 | ||||||||||||
Reflecting applicable CDSC, maximum of 5%, payable | ||||||||||||
only if shares are sold within six years of purchase | 10.39 | 0.63 | 4.12 | |||||||||
Not reflecting CDSC | 15.39 | 0.94 | 4.12 | |||||||||
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 | 14.40 | 0.95 | 4.10 | |||||||||
Not reflecting CDSC | 15.40 | 0.95 | 4.10 | |||||||||
Class 529-E shares3,4 — first sold 2/25/02 | 15.88 | 1.46 | 4.49 | |||||||||
Class 529-F-1 shares3,4 — first sold 9/17/02 | ||||||||||||
Not reflecting annual asset-based fee charged | ||||||||||||
by sponsoring firm | 16.50 | 1.96 | 6.31 |
1Applicable to Class B shares only. All other share classes reflect results for the life of the class. |
2These shares are not available for purchase. |
3These shares are sold without any initial or contingent deferred sales charge. |
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. Applicable fund results shown reflect the waiver, without which they would have been lower. See the Financial Highlights table on pages 29 and 30 for details that include expense ratios for all share classes.
For information regarding the differences among the various share classes, refer to the fund’s prospectus.
Board of directors and other officers
“Independent” directors | ||
Year first | ||
elected a | ||
director of | ||
Name and age | the fund1 | Principal occupation(s) during past five years |
Mary Jane Elmore, 56 | 2008 | Managing Director and General Partner, |
Institutional Venture Partners | ||
Robert A. Fox, 73 | 1972 | Managing General Partner, Fox Investments LP; |
Chairman of the Board | corporate director | |
(Independent and Non-Executive) | ||
Leonade D. Jones, 62 | 1993 | Retired |
William D. Jones, 55 | 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, 73 | 2003 | Business consultant |
John G. McDonald, 73 | 1976 | Stanford Investors Professor, Graduate School of |
Business, Stanford University | ||
James J. Postl, 64 | 2008 | Retired |
Henry E. Riggs, 75 | 1989 | President Emeritus, Keck Graduate Institute of |
Applied Life Sciences; Professor Emeritus, Stanford | ||
University and Harvey Mudd College | ||
Isaac Stein, 63 | 2004 | President, Waverly Associates (private investment |
fund); Chairman Emeritus of the Board of Trustees, | ||
Stanford University | ||
“Independent” directors | ||
Number of | ||
portfolios | ||
in fund | ||
complex2 | ||
overseen by | ||
Name and age | director | Other directorships3 held by director |
Mary Jane Elmore, 56 | 3 | None |
Robert A. Fox, 73 | 9 | None |
Chairman of the Board | ||
(Independent and Non-Executive) | ||
Leonade D. Jones, 62 | 9 | None |
William D. Jones, 55 | 6 | Sempra Energy; SouthWest Water Company |
John M. Lillie, 73 | 3 | None |
John G. McDonald, 73 | 12 | iStar Financial, Inc.; Plum Creek Timber Co.; |
QuinStreet, Inc.; Scholastic Corporation | ||
James J. Postl, 64 | 3 | Cooper Industries; Pulte, Inc. |
Henry E. Riggs, 75 | 5 | None |
Isaac Stein, 63 | 3 | Alexza Pharmaceuticals, Inc.; Maxygen, Inc. |
“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, 49 | 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, 49 | 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 or by visiting the American Funds website at americanfunds.com. The address for all directors and officers of the fund is 333 South Hope Street, Los Angeles, CA 90071, Attention: Secretary.
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 |
position with fund | of the fund1 | or the principal underwriter of the fund |
David C. Barclay, 53 | 1998 | Senior Vice President — Fixed Income, Capital |
President | Research and Management Company | |
Abner D. Goldstine, 80 | 1993 | Senior Vice President — Fixed Income, Capital |
Senior Vice President | Research and Management Company; Director, | |
Capital Research and Management Company | ||
Dina N. Perry, 64 | 1994 | Senior Vice President — Capital World Investors, |
Senior Vice President | Capital Research and Management Company; | |
Director, Capital Research and Management | ||
Company | ||
Paul F. Roye, 56 | 2007 | Senior Vice President — Fund Business Management |
Senior Vice President | Group, Capital Research and Management Company; | |
Director, American Funds Service Company;5 former | ||
Director, Division of Investment Management, United | ||
States Securities and Exchange Commission | ||
Andrew B. Suzman, 43 | 2004 | Senior Vice President — Capital World Investors, |
Senior Vice President | Capital Research Company5 | |
Joanna F. Jonsson, 47 | 2006 | Senior Vice President — Capital World Investors, |
Vice President | Capital Research Company;5 Director, American | |
Funds Distributors, Inc.;5 Director, Capital | ||
International Limited5 | ||
John H. Smet, 54 | 1994 | Senior Vice President — Fixed Income, Capital |
Vice President | Research and Management Company; Director, The | |
Capital Group Companies, Inc.5 | ||
Steven T. Watson, 55 | 2006 | Senior Vice President — Capital World Investors, |
Vice President | Capital Research Company;5 Director, Capital | |
Research Company;5 Director, The Capital Group | ||
Companies, Inc.5 | ||
Patrick F. Quan, 52 | 1986 | Vice President — Fund Business Management |
Secretary | Group, Capital Research and Management Company | |
Jennifer M. Buchheim, 37 | 2005 | Vice President — Fund Business Management |
Treasurer | Group, Capital Research and Management Company | |
Julie E. Lawton, 37 | 2009 | Associate — Capital Research and Management |
Assistant Secretary | Company |
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 10 funds and is available through tax-deferred retirement plans and IRAs; and Endowments, which 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, as amended, 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
(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, 2010, 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, 2010, this report must be accompanied by an American Funds statistical update for the most recently completed calendar quarter.
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 more than 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 26 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 Fund® |
•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-906-0910P
Litho in USA BAG/Q/8061-S26187
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 Leonade D. Jones, 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 s tatements and condition.
ITEM 4 – Principal Accountant Fees and Services
Registrant: | ||||
a) Audit Fees: | ||||
2009 | $141,000 | |||
2010 | $121,000 | |||
b) Audit-Related Fees: | ||||
2009 | $23,000 | |||
2010 | $21,000 | |||
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: | ||||
2009 | $7,000 | |||
2010 | $7,000 | |||
The tax fees consist of professional services relating to the preparation of the Registrant’s tax returns. | ||||
d) All Other Fees: | ||||
2009 | None | |||
2010 | 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: | ||||
2009 | $968,000 | |||
2010 | $996,000 | |||
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: | ||||
2009 | None | |||
2010 | $10,000 | |||
The tax fees consist of consulting services relating to the Registrant’s investments. | ||||
d) All Other Fees: | ||||
2009 | $2,000 | |||
2010 | $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-audi t 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 $1,323,000 for fiscal year 2009 and $1,519,000 for fiscal year 2010. 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
The Income Fund of America®
Investment portfolio
July 31, 2010
Common stocks — 60.74% | Shares | Value (000) | ||||||||
INDUSTRIALS — 8.28% | ||||||||||
Waste Management, Inc.1 | 27,615,000 | $ | 937,529 | |||||||
Emerson Electric Co. | 15,095,000 | 747,806 | ||||||||
Lockheed Martin Corp. | 6,310,000 | 474,197 | ||||||||
Schneider Electric SA2 | 3,430,209 | 395,666 | ||||||||
Honeywell International Inc. | 9,075,000 | 388,955 | ||||||||
Boeing Co. | 5,160,000 | 351,603 | ||||||||
United Technologies Corp. | 4,308,000 | 306,299 | ||||||||
Norfolk Southern Corp. | 3,500,000 | 196,945 | ||||||||
Masco Corp. | 16,989,176 | 174,649 | ||||||||
United Parcel Service, Inc., Class B | 2,650,000 | 172,250 | ||||||||
Hubbell Inc., Class B | 3,272,100 | 154,410 | ||||||||
Keppel Corp. Ltd.2 | 21,100,000 | 144,511 | ||||||||
Finmeccanica SpA2 | 12,400,000 | 136,233 | ||||||||
Eaton Corp. | 1,520,200 | 119,275 | ||||||||
3M Co. | 1,165,000 | 99,654 | ||||||||
AB SKF, Class B2 | 4,290,000 | 82,083 | ||||||||
Macquarie Korea Infrastructure Fund1,2 | 21,541,078 | 81,114 | ||||||||
Applied Industrial Technologies, Inc.1 | 2,738,790 | 76,686 | ||||||||
De La Rue PLC2 | 4,817,618 | 55,453 | ||||||||
R.R. Donnelley & Sons Co. | 3,095,400 | 52,219 | ||||||||
SembCorp Industries Ltd2 | 16,689,500 | 51,812 | ||||||||
Pitney Bowes Inc. | 1,000,000 | 24,410 | ||||||||
Delta Air Lines, Inc.3 | 1,590,154 | 18,891 | ||||||||
Qantas Airways Ltd.2,3 | 8,095,285 | 18,026 | ||||||||
UAL Corp.3 | 60,182 | 1,429 | ||||||||
Atrium Corp.2,3,4 | 1,807 | 163 | ||||||||
5,262,268 | ||||||||||
CONSUMER STAPLES — 7.09% | ||||||||||
Philip Morris International Inc. | 14,715,000 | 751,054 | ||||||||
Kraft Foods Inc., Class A | 21,000,821 | 613,434 | ||||||||
H.J. Heinz Co. | 10,111,700 | 449,768 | ||||||||
Unilever NV, depository receipts2 | 9,045,000 | 266,043 | ||||||||
Unilever NV (New York registered) | 5,051,750 | 148,976 | ||||||||
Coca-Cola Co. | 6,250,000 | 344,438 | ||||||||
Procter & Gamble Co. | 4,540,000 | 277,666 | ||||||||
Tesco PLC2 | 43,521,559 | 267,111 | ||||||||
General Mills, Inc. | 7,740,000 | 264,708 | ||||||||
Hershey Co. | 5,353,915 | 251,634 | ||||||||
Reynolds American Inc. | 3,950,000 | 228,389 | ||||||||
Sysco Corp. | 5,310,000 | 164,451 | ||||||||
British American Tobacco PLC2 | 4,000,000 | 137,890 | ||||||||
Kimberly-Clark Corp. | 2,125,000 | 136,255 | ||||||||
Coca-Cola Amatil Ltd.2 | 11,640,441 | 120,609 | ||||||||
Clorox Co. | 1,300,000 | 84,344 | ||||||||
4,506,770 | ||||||||||
FINANCIALS — 6.91% | ||||||||||
HSBC Holdings PLC (United Kingdom)2 | 23,650,749 | 241,263 | ||||||||
HSBC Holdings PLC (Hong Kong)2 | 14,326,382 | 147,434 | ||||||||
HSBC Holdings PLC (ADR) | 1,460,000 | 74,577 | ||||||||
Bank of Nova Scotia | 7,325,000 | 367,586 | ||||||||
Australia and New Zealand Banking Group Ltd.2 | 16,617,353 | 346,530 | ||||||||
Equity Residential, shares of beneficial interest | 6,842,800 | 313,742 | ||||||||
HCP, Inc. | 8,492,300 | 301,222 | ||||||||
People’s United Financial, Inc. | 13,000,000 | 179,920 | ||||||||
Toronto-Dominion Bank | 2,420,000 | 172,217 | ||||||||
Hospitality Properties Trust1 | 8,015,000 | 163,907 | ||||||||
First Niagara Financial Group, Inc.1 | 11,650,000 | 156,227 | ||||||||
Industrial and Commercial Bank of China Ltd., Class H2 | 202,875,000 | 154,745 | ||||||||
Arthur J. Gallagher & Co.1 | 6,000,000 | 152,520 | ||||||||
Citigroup Inc.3 | 36,376,414 | 149,143 | ||||||||
Bank of America Corp. | 9,504,768 | 133,447 | ||||||||
Banco Santander, SA2 | 9,827,617 | 125,524 | ||||||||
FirstMerit Corp.1 | 5,495,000 | 108,306 | ||||||||
Cullen/Frost Bankers, Inc. | 1,900,000 | 104,899 | ||||||||
U.S. Bancorp | 4,000,000 | 95,600 | ||||||||
Hang Seng Bank Ltd.2 | 6,630,000 | 91,704 | ||||||||
Public Storage | 920,000 | 90,270 | ||||||||
Mercury General Corp. | 2,000,000 | 86,260 | ||||||||
Marsh & McLennan Companies, Inc. | 3,570,000 | 83,966 | ||||||||
Absa Group Ltd.2 | 4,030,000 | 75,025 | ||||||||
Trustmark Corp.1 | 3,257,000 | 71,654 | ||||||||
Crédit Agricole SA2 | 5,000,000 | 68,152 | ||||||||
ProLogis, shares of beneficial interest | 5,600,000 | 60,816 | ||||||||
BancorpSouth, Inc. | 3,905,800 | 57,259 | ||||||||
Boardwalk Real Estate Investment Trust | 1,199,000 | 48,261 | ||||||||
QBE Insurance Group Ltd.2 | 2,961,000 | 44,818 | ||||||||
Itaúsa — Investimentos Itaú SA, preferred nominative | 4,700,921 | 34,960 | ||||||||
Itaú Unibanco Holding SA, preferred nominative (ADR) | 1,272,176 | 28,484 | ||||||||
BB&T Corp. | 975,000 | 24,209 | ||||||||
Renasant Corp.2,5 | 900,000 | 12,309 | ||||||||
Renasant Corp. | 275,000 | 4,194 | ||||||||
AXA SA2 | 875,000 | 16,064 | ||||||||
4,387,214 | ||||||||||
UTILITIES — 6.81% | ||||||||||
GDF SUEZ2 | 19,586,965 | 648,975 | ||||||||
Duke Energy Corp. | 36,316,172 | 621,006 | ||||||||
Progress Energy, Inc. | 7,855,400 | 330,791 | ||||||||
Hongkong Electric Holdings Ltd.2 | 52,138,000 | 315,204 | ||||||||
FirstEnergy Corp. | 8,096,500 | 305,238 | ||||||||
Exelon Corp. | 7,000,000 | 292,810 | ||||||||
National Grid PLC2 | 35,570,000 | 284,384 | ||||||||
Entergy Corp. | 3,541,000 | 274,463 | ||||||||
Snam Rete Gas SpA2 | 50,108,326 | 235,131 | ||||||||
SUEZ Environnement Co.2 | 12,650,000 | 235,074 | ||||||||
DTE Energy Co. | 5,000,000 | 230,800 | ||||||||
Consolidated Edison, Inc. | 3,000,000 | 138,360 | ||||||||
American Electric Power Co., Inc. | 3,000,000 | 107,940 | ||||||||
PG&E Corp. | 2,000,133 | 88,806 | ||||||||
Prime Infrastructure Group1,2 | 22,756,141 | 69,839 | ||||||||
NextEra Energy, Inc. | 1,200,000 | 62,760 | ||||||||
DUET Group2 | 38,369,915 | 56,854 | ||||||||
PPL Corp. | 1,072,778 | 29,276 | ||||||||
4,327,711 | ||||||||||
HEALTH CARE — 5.72% | ||||||||||
Merck & Co., Inc. | 39,858,511 | 1,373,524 | ||||||||
Bristol-Myers Squibb Co. | 35,025,500 | 872,835 | ||||||||
Eli Lilly and Co. | 14,940,000 | 531,864 | ||||||||
Pfizer Inc | 26,050,000 | 390,750 | ||||||||
AstraZeneca PLC (United Kingdom)2 | 3,810,000 | 192,407 | ||||||||
Novartis AG (ADR) | 3,000,000 | 146,220 | ||||||||
Johnson & Johnson | 2,150,000 | 124,894 | ||||||||
Clarent Hospital Corp. Liquidating Trust1,2,3 | 484,684 | 19 | ||||||||
3,632,513 | ||||||||||
CONSUMER DISCRETIONARY — 5.60% | ||||||||||
Home Depot, Inc. | 33,870,000 | 965,634 | ||||||||
McDonald’s Corp. | 11,916,400 | 830,930 | ||||||||
McGraw-Hill Companies, Inc. | 12,590,000 | 386,387 | ||||||||
Time Warner Cable Inc. | 5,245,370 | 299,878 | ||||||||
Esprit Holdings Ltd.2 | 29,997,842 | 188,675 | ||||||||
Vivendi SA2 | 6,000,000 | 143,849 | ||||||||
Truworths International Ltd.2 | 16,095,576 | 128,481 | ||||||||
Tatts Group Ltd.2 | 53,500,000 | 118,743 | ||||||||
CBS Corp., Class B | 7,000,000 | 103,460 | ||||||||
VF Corp. | 1,065,000 | 84,486 | ||||||||
OPAP SA2 | 4,600,000 | 68,142 | ||||||||
H & M Hennes & Mauritz AB, Class B2 | 2,154,000 | 67,852 | ||||||||
Regal Entertainment Group, Class A | 4,827,018 | 64,441 | ||||||||
Leggett & Platt, Inc. | 1,874,000 | 39,054 | ||||||||
Ford Motor Co.3 | 2,169,728 | 27,707 | ||||||||
Kesa Electricals PLC2 | 10,900,000 | 21,450 | ||||||||
Cooper-Standard Holdings Inc.2,3,4 | 586,012 | 17,060 | ||||||||
Adelphia Recovery Trust, Series ACC-12,3 | 19,531,478 | 527 | ||||||||
American Media Operations, Inc.2,3,4 | 281,006 | 3 | ||||||||
3,556,759 | ||||||||||
ENERGY — 5.24% | ||||||||||
Chevron Corp. | 11,625,000 | �� | 885,941 | |||||||
Royal Dutch Shell PLC, Class B (ADR) | 8,100,000 | 432,702 | ||||||||
Royal Dutch Shell PLC, Class A (ADR) | 6,000,000 | 332,520 | ||||||||
Royal Dutch Shell PLC, Class B2 | 3,797,147 | 100,082 | ||||||||
Spectra Energy Corp | 22,411,414 | 465,933 | ||||||||
TOTAL SA (ADR) | 3,640,000 | 184,293 | ||||||||
TOTAL SA2 | 3,255,000 | 163,804 | ||||||||
ConocoPhillips | 6,000,000 | 331,320 | ||||||||
Penn West Energy Trust | 10,775,000 | 208,991 | ||||||||
Diamond Offshore Drilling, Inc. | 2,332,657 | 138,770 | ||||||||
ARC Energy Trust | 4,444,700 | 86,166 | ||||||||
3,330,522 | ||||||||||
TELECOMMUNICATION SERVICES — 5.11% | ||||||||||
Verizon Communications Inc. | 42,960,000 | 1,248,418 | ||||||||
Telefónica, SA2 | 27,042,800 | 613,994 | ||||||||
AT&T Inc. | 19,184,621 | 497,649 | ||||||||
Koninklijke KPN NV2 | 31,219,757 | 434,529 | ||||||||
Telstra Corp. Ltd.2 | 60,000,000 | 175,017 | ||||||||
Bell Aliant Regional Communications Income Fund | 3,595,000 | 90,080 | ||||||||
Vodafone Group PLC2 | 30,000,000 | 70,252 | ||||||||
Telekom Austria AG, non-registered shares2 | 4,500,000 | 57,942 | ||||||||
Telefónica 02 Czech Republic, AS2 | 2,200,000 | 50,279 | ||||||||
Sprint Nextel Corp., Series 13 | 760,501 | 3,476 | ||||||||
American Tower Corp., Class A3 | 42,271 | 1,955 | ||||||||
CenturyLink, Inc. | 52,094 | 1,856 | ||||||||
3,245,447 | ||||||||||
INFORMATION TECHNOLOGY — 3.44% | ||||||||||
Microchip Technology Inc.1 | 14,128,000 | 430,198 | ||||||||
Intel Corp. | 17,205,000 | 354,423 | ||||||||
Automatic Data Processing, Inc. | 7,815,000 | 322,525 | ||||||||
Nintendo Co., Ltd.2 | 1,080,000 | 300,459 | ||||||||
Maxim Integrated Products, Inc. | 14,406,000 | 252,537 | ||||||||
Paychex, Inc. | 9,293,000 | 241,525 | ||||||||
MediaTek Inc.2 | 11,921,433 | 160,621 | ||||||||
HTC Corp.2 | 3,895,500 | 71,685 | ||||||||
Microsoft Corp. | 2,050,000 | 52,910 | ||||||||
2,186,883 | ||||||||||
MATERIALS — 2.99% | ||||||||||
E.I. du Pont de Nemours and Co. | 17,115,000 | 696,067 | ||||||||
Nucor Corp. | 8,200,000 | 320,948 | ||||||||
MeadWestvaco Corp. | 7,820,000 | 187,367 | ||||||||
Weyerhaeuser Co.1 | 10,728,000 | 174,008 | ||||||||
Dow Chemical Co. | 6,100,000 | 166,713 | ||||||||
Fletcher Building Ltd.2 | 25,461,500 | 140,707 | ||||||||
Impala Platinum Holdings Ltd.2 | 2,937,112 | 79,476 | ||||||||
Georgia Gulf Corp.1,3 | 2,623,146 | 40,265 | ||||||||
Grupo México, SAB de CV, Series B | 14,000,000 | 37,221 | ||||||||
Kumba Iron Ore Ltd.2 | 650,908 | 33,000 | ||||||||
Freeport-McMoRan Copper & Gold Inc. | 300,000 | 21,462 | ||||||||
1,897,234 | ||||||||||
MISCELLANEOUS — 3.55% | ||||||||||
Other common stocks in initial period of acquisition | 2,257,038 | |||||||||
Total common stocks (cost: $38,989,855,000) | 38,590,359 | |||||||||
Preferred stocks — 1.62% | ||||||||||
FINANCIALS — 1.50% | ||||||||||
SMFG Preferred Capital USD 3 Ltd. 9.50%5,6 | 155,885,000 | 175,566 | ||||||||
SMFG Preferred Capital USD 2 Ltd. 8.75% noncumulative5 | 1,800,000 | 1,884 | ||||||||
JPMorgan Chase & Co., Series I, 7.90%6 | 126,500,000 | 132,582 | ||||||||
Barclays Bank PLC 7.434%5,6 | 77,913,000 | 76,744 | ||||||||
Barclays Bank PLC 8.55%5,6 | 21,718,000 | 21,935 | ||||||||
Barclays Bank PLC 6.86%5,6 | 6,697,000 | 5,826 | ||||||||
HSBC Capital Funding LP, Series 2, 10.176% noncumulative step-up5,6 | 10,000,000 | 12,575 | ||||||||
Vornado Realty Trust, Series I, 6.625% | 3,380,000 | 79,261 | ||||||||
Mizuho Capital Investment (USD) 2 Ltd. 14.95%5,6 | 55,766,000 | 69,450 | ||||||||
Mizuho Capital Investment (USD) 1 Ltd. 6.686% noncumulative5,6 | 50,000 | 47 | ||||||||
Wells Fargo & Co., Series K, 7.98%6 | 51,373,000 | 53,171 | ||||||||
Wachovia Capital Trust III 5.80%6 | 11,956,000 | 10,238 | ||||||||
Bank of America Corp., Series M, 8.125% noncumulative6 | 30,924,000 | 31,160 | ||||||||
Bank of America Corp., Series K, 8.00% noncumulative6 | 14,500,000 | 14,613 | ||||||||
Société Générale 5.922%5,6 | 45,073,000 | 37,685 | ||||||||
Catlin Insurance Ltd. 7.249%5,6 | 46,240,000 | 37,454 | ||||||||
BNP Paribas 7.195%5,6 | 19,600,000 | 18,718 | ||||||||
BNP Paribas Capital Trust 9.003% noncumulative trust5,6 | 12,000,000 | 12,090 | ||||||||
Public Storage, Inc., Series F, 6.45% | 1,000,000 | 24,050 | ||||||||
Woori Bank 6.208%5,6 | 22,500,000 | 20,931 | ||||||||
Ally Financial Inc., Series G, 7.00%5 | 19,991 | 16,418 | ||||||||
QBE Capital Funding II LP 6.797%5,6 | 18,715,000 | 15,458 | ||||||||
Royal Bank of Scotland Group PLC, Series U, 7.64%6 | 16,800,000 | 10,500 | ||||||||
RBS Capital Trust II 6.425% noncumulative trust3,6 | 2,350,000 | 1,328 | ||||||||
Royal Bank of Scotland Group PLC 5.512% noncumulative trust6 | 2,300,000 | 1,288 | ||||||||
Resona Preferred Global Securities (Cayman) Ltd. 7.191%5,6 | 11,772,000 | 11,189 | ||||||||
PNC Preferred Funding Trust I 6.517%5,6 | 13,900,000 | 10,630 | ||||||||
HBOS Capital Funding LP 6.071%5,6 | 12,400,000 | 9,672 | ||||||||
Shinsei Finance II (Cayman) Ltd. 7.16% noncumulative5,6 | 14,090,000 | 9,379 | ||||||||
AXA SA, Series B, 6.379%5,6 | 11,530,000 | 9,282 | ||||||||
Standard Chartered PLC 6.409%5,6 | 10,000,000 | 9,097 | ||||||||
XL Capital Ltd., Series E, 6.50%6 | 9,025,000 | 6,949 | ||||||||
ILFC E-Capital Trust II 6.25%5,6 | 6,975,000 | 4,778 | ||||||||
Fannie Mae, Series O, 0%3,5,6 | 3,124,329 | 2,031 | ||||||||
Fannie Mae, Series S, 8.25% noncumulative3 | 1,511,450 | 608 | ||||||||
Freddie Mac, Series V, 5.57%3 | 368,022 | 145 | ||||||||
954,732 | ||||||||||
MISCELLANEOUS — 0.12% | ||||||||||
Other preferred stocks in initial period of acquisition | 75,508 | |||||||||
Total preferred stocks (cost: $1,090,314,000) | 1,030,240 | |||||||||
Shares or | ||||||||||
Convertible securities — 1.38% | principal amount | |||||||||
INDUSTRIALS — 0.25% | ||||||||||
UAL Corp. 6.00% convertible notes 2029 | $ | 30,000,000 | 85,350 | |||||||
UAL Corp. 4.50% convertible notes 2021 | $ | 72,600,000 | 73,689 | |||||||
159,039 | ||||||||||
MATERIALS — 0.22% | ||||||||||
Vale SA 6.75% convertible preferred 2012 | 375,000 | 29,902 | ||||||||
Vale SA 6.75% convertible preferred 2012 | 471,000 | 37,737 | ||||||||
Alcoa Inc. 5.25% convertible notes 2014 | $ | 21,500,000 | 40,205 | |||||||
Sino-Forest Corp. 4.25% convertible notes 20165 | $ | 30,000,000 | 29,605 | |||||||
137,449 | ||||||||||
INFORMATION TECHNOLOGY — 0.21% | ||||||||||
Advanced Micro Devices, Inc. 6.00% convertible notes 2015 | $ | 122,560,000 | 122,254 | |||||||
Advanced Micro Devices, Inc. 5.75% convertible notes 2012 | $ | 8,722,000 | 8,809 | |||||||
131,063 | ||||||||||
CONSUMER STAPLES — 0.20% | ||||||||||
Archer Daniels Midland Co. 6.25% convertible preferred 2011, units | 2,570,000 | 98,714 | ||||||||
Bunge Ltd. 5.125% convertible preferred 2010 | 13,300 | 6,770 | ||||||||
Bunge Ltd. 4.875% convertible preferred | 272,700 | 22,770 | ||||||||
128,254 | ||||||||||
ENERGY — 0.12% | ||||||||||
El Paso Corp. 4.99% convertible preferred | 73,150 | 77,758 | ||||||||
FINANCIALS — 0.05% | ||||||||||
Boston Properties, Inc. 2.875% convertible notes 2037 | $ | 17,241,000 | 17,263 | |||||||
Alexandria Real Estate Equities, Inc. 3.70% convertible notes 20275 | $ | 14,920,000 | 14,733 | |||||||
31,996 | ||||||||||
CONSUMER DISCRETIONARY — 0.00% | ||||||||||
Ford Motor Co. 4.25% convertible notes 2036 | $ | 700 | 1 | |||||||
MISCELLANEOUS — 0.33% | ||||||||||
Other convertible securities in initial period of acquisition | $ | 211,700 | ||||||||
Total convertible securities (cost: $783,625,000) | 877,260 | |||||||||
Principal amount | ||||||||||
Bonds & notes — 31.77% | (000 | ) | ||||||||
BONDS & NOTES OF U.S. GOVERNMENT & GOVERNMENT AGENCIES — 5.71% | ||||||||||
U.S. Treasury 1.00% 2011 | $ | 13,860 | 13,951 | |||||||
U.S. Treasury 1.125% 2011 | 57,260 | 57,838 | ||||||||
U.S. Treasury 4.50% 2011 | 16,165 | 17,052 | ||||||||
U.S. Treasury 4.625% 2011 | 271,750 | 288,039 | ||||||||
U.S. Treasury 0.625% 2012 | 59,800 | 59,908 | ||||||||
U.S. Treasury 1.875% 20137 | 29,697 | 31,507 | ||||||||
U.S. Treasury 2.75% 2013 | 164,500 | 174,242 | ||||||||
U.S. Treasury 3.375% 2013 | 112,250 | 120,827 | ||||||||
U.S. Treasury 3.50% 2013 | 52,000 | 56,050 | ||||||||
U.S. Treasury 3.625% 2013 | 199,960 | 216,113 | ||||||||
U.S. Treasury 4.25% 2013 | 110,582 | 122,003 | ||||||||
U.S. Treasury 1.875% 2014 | 41,000 | 42,159 | ||||||||
U.S. Treasury 2.375% 2014 | 14,350 | 14,990 | ||||||||
U.S. Treasury 4.25% 2014 | 66,500 | 74,675 | ||||||||
U.S. Treasury 1.875% 20157 | 76,272 | 82,037 | ||||||||
U.S. Treasury 2.50% 2015 | 88,000 | 92,088 | ||||||||
U.S. Treasury 2.625% 2016 | 9,000 | 9,370 | ||||||||
U.S. Treasury 3.125% 2016 | 5,600 | 5,932 | ||||||||
U.S. Treasury 3.25% 2016 | 28,145 | 30,161 | ||||||||
U.S. Treasury 5.125% 2016 | 22,000 | 25,867 | ||||||||
U.S. Treasury 4.50% 2017 | 32,750 | 37,531 | ||||||||
U.S. Treasury 4.75% 2017 | 27,000 | 31,460 | ||||||||
U.S. Treasury 8.875% 2017 | 35,500 | 50,833 | ||||||||
U.S. Treasury 1.625% 20187 | 20,828 | 22,029 | ||||||||
U.S. Treasury 3.50% 2018 | 373,600 | 403,428 | ||||||||
U.S. Treasury 3.75% 2018 | 42,900 | 46,726 | ||||||||
U.S. Treasury 2.75% 2019 | 2,800 | 2,820 | ||||||||
U.S. Treasury 3.125% 2019 | 20,000 | 20,609 | ||||||||
U.S. Treasury 3.375% 2019 | 15,000 | 15,639 | ||||||||
U.S. Treasury 3.625% 2019 | 272,250 | 290,232 | ||||||||
U.S. Treasury 8.125% 2019 | 24,000 | 34,396 | ||||||||
U.S. Treasury 3.625% 2020 | 30,750 | 32,645 | ||||||||
U.S. Treasury 7.875% 2021 | 50,000 | 71,976 | ||||||||
U.S. Treasury 8.125% 2021 | 21,395 | 31,461 | ||||||||
U.S. Treasury 6.25% 2023 | 245,000 | 319,458 | ||||||||
U.S. Treasury 2.375% 20257 | 3,357 | 3,697 | ||||||||
U.S. Treasury 6.00% 2026 | 20,000 | 25,922 | ||||||||
U.S. Treasury 6.50% 2026 | 14,385 | 19,652 | ||||||||
U.S. Treasury 5.25% 2029 | 4,025 | 4,855 | ||||||||
U.S. Treasury 4.50% 2036 | 218,640 | 239,787 | ||||||||
U.S. Treasury 4.375% 2038 | 24,065 | 25,780 | ||||||||
U.S. Treasury 3.50% 2039 | 20,000 | 18,372 | ||||||||
U.S. Treasury 4.25% 2039 | 10,750 | 11,250 | ||||||||
U.S. Treasury 4.50% 2039 | 7,020 | 7,650 | ||||||||
U.S. Treasury 2.125% 20407 | 4,229 | 4,501 | ||||||||
U.S. Treasury 4.625% 2040 | 102,000 | 113,452 | ||||||||
Fannie Mae 6.25% 2029 | 47,000 | 58,915 | ||||||||
Federal Home Loan Bank 0.253% 20116 | 14,200 | 14,209 | ||||||||
Federal Home Loan Bank, Series 467, 5.25% 2014 | 11,125 | 12,755 | ||||||||
CoBank ACB 7.875% 20185 | 10,000 | 11,265 | ||||||||
CoBank ACB 1.137% 20225,6 | 8,315 | 6,577 | ||||||||
United States Government Agency-Guaranteed (FDIC insured), General Electric Capital Corp., Series G, 1.625% 2011 | 4,400 | 4,423 | ||||||||
United States Government Agency-Guaranteed (FDIC insured), General Electric Capital Corp., Series G, 2.20% 2012 | 11,750 | 12,009 | ||||||||
Federal Agricultural Mortgage Corp. 4.875% 20115 | 11,000 | 11,218 | ||||||||
Federal Agricultural Mortgage Corp. 5.50% 20115 | 3,000 | 3,139 | ||||||||
United States Government Agency-Guaranteed (FDIC insured), Regions Bank 3.25% 2011 | 13,375 | 13,877 | ||||||||
United States Government Agency-Guaranteed (FDIC insured), PNC Funding Corp. 2.30% 2012 | 12,500 | 12,891 | ||||||||
United States Government Agency-Guaranteed (FDIC insured), Sovereign Bancorp, Inc. 2.75% 2012 | 12,500 | 12,891 | ||||||||
United States Government Agency-Guaranteed (FDIC insured), Bank of America Corp., Series L, 3.125% 2012 | 12,000 | 12,552 | ||||||||
United States Government Agency-Guaranteed (FDIC insured), Citigroup Inc. 2.875% 2011 | 12,000 | 12,375 | ||||||||
United States Agency for International Development, Republic of Egypt 4.45% 2015 | 10,000 | 11,177 | ||||||||
3,631,243 | ||||||||||
CONSUMER DISCRETIONARY — 4.59% | ||||||||||
Allison Transmission Holdings, Inc., Term Loan B, 3.10% 20146,8,9 | 109,420 | 102,451 | ||||||||
Allison Transmission Holdings, Inc. 11.00% 20155 | 28,760 | 31,061 | ||||||||
Allison Transmission Holdings, Inc. 11.25% 20155,6,10 | 68,547 | 74,031 | ||||||||
Virgin Media Finance PLC 9.125% 2016 | 32,000 | 34,560 | ||||||||
Virgin Media Finance PLC, Series 1, 9.50% 2016 | 91,540 | 103,440 | ||||||||
Virgin Media Inc. 6.50% 20185 | 8,800 | 9,152 | ||||||||
Virgin Media Finance PLC 8.375% 20195 | 41,674 | 45,425 | ||||||||
Charter Communications Operating, LLC and Charter Communications Operating Capital Corp. 8.00% 20125 | 48,548 | 51,461 | ||||||||
Charter Communications Operating, LLC, Term Loan B, 7.25% 20146,8,9 | 6,843 | 6,985 | ||||||||
Charter Communications Operating, LLC and Charter Communications Operating Capital Corp. 10.875% 20145 | 24,550 | 27,619 | ||||||||
Charter Communications Operating, LLC, Term Loan C, 3.79% 20166,8,9 | 27,651 | 26,441 | ||||||||
Charter Communications, Inc. 13.50% 2016 | 28,638 | 34,151 | ||||||||
Charter Communications Operating, LLC and Charter Communications Operating Capital Corp. 7.875% 20185 | 28,250 | 29,733 | ||||||||
Charter Communications Operating, LLC and Charter Communications Operating Capital Corp. 8.125% 20205 | 10,125 | 10,758 | ||||||||
Univision Communications, Inc., First Lien Term Loan B, 2.566% 20146,8,9 | 77,385 | 67,629 | ||||||||
Univision Communications Inc. 12.00% 20145 | 11,250 | 12,403 | ||||||||
Univision Communications Inc. 10.50% 20155,6,10 | 116,061 | 105,470 | ||||||||
Michaels Stores, Inc., Term Loan B1, 2.813% 20136,8,9 | 21,754 | 20,430 | ||||||||
Michaels Stores, Inc. 10.00% 2014 | 101,260 | 106,323 | ||||||||
Michaels Stores, Inc. 0%/13.00% 20165,11 | 8,900 | 8,344 | ||||||||
Michaels Stores, Inc. 0%/13.00% 201611 | 7,170 | 6,722 | ||||||||
Michaels Stores, Inc., Term Loan B2, 5.063% 20166,8,9 | 4,026 | 3,860 | ||||||||
Federated Retail Holdings, Inc. 5.35% 2012 | 4,490 | 4,658 | ||||||||
Macy’s Retail Holdings, Inc. 8.375% 20156 | 19,510 | 21,924 | ||||||||
Federated Retail Holdings, Inc. 5.90% 2016 | 56,600 | 58,298 | ||||||||
Federated Department Stores, Inc. 7.00% 2028 | 2,612 | 2,573 | ||||||||
Federated Department Stores, Inc. 6.90% 2029 | 5,195 | 5,156 | ||||||||
Federated Retail Holdings, Inc. 6.375% 2037 | 14,300 | 13,656 | ||||||||
Toys “R” Us, Inc. 7.625% 2011 | 38,345 | 39,591 | ||||||||
Toys “R” Us-Delaware, Inc., Term Loan B, 4.575% 20126,8,9 | 14,940 | 14,814 | ||||||||
Toys “R” Us, Inc. 8.50% 20175 | 14,125 | 14,937 | ||||||||
Toys “R” Us Property Company I, LLC 10.75% 2017 | 31,775 | 36,025 | ||||||||
Time Warner Cable Inc. 6.20% 2013 | 2,100 | 2,370 | ||||||||
Time Warner Cable Inc. 7.50% 2014 | 10,400 | 12,226 | ||||||||
Time Warner Cable Inc. 3.50% 2015 | 2,000 | 2,081 | ||||||||
Time Warner Cable Inc. 6.75% 2018 | 29,000 | 33,927 | ||||||||
Time Warner Cable Inc. 5.00% 2020 | 19,000 | 19,949 | ||||||||
Time Warner Cable Inc. 6.55% 2037 | 25,000 | 27,741 | ||||||||
Comcast Corp. 5.50% 2011 | 2,590 | 2,661 | ||||||||
Comcast Cable Communications, Inc. 6.75% 2011 | 4,660 | 4,790 | ||||||||
Comcast Corp. 5.85% 2015 | 7,200 | 8,281 | ||||||||
Comcast Corp. 5.90% 2016 | 16,000 | 18,379 | ||||||||
Comcast Corp. 6.30% 2017 | 3,000 | 3,477 | ||||||||
Comcast Corp. 6.45% 2037 | 35,800 | 39,758 | ||||||||
Comcast Corp. 6.95% 2037 | 10,275 | 12,127 | ||||||||
Comcast Corp. 6.40% 2040 | 3,700 | 4,118 | ||||||||
MGM Resorts International 8.50% 2010 | 49,305 | 49,552 | ||||||||
MGM Resorts International 6.75% 2012 | 9,150 | 8,670 | ||||||||
MGM Resorts International 6.75% 2013 | 8,200 | 7,544 | ||||||||
MGM Resorts International 13.00% 2013 | 10,725 | 12,548 | ||||||||
MGM Resorts International 10.375% 2014 | 1,675 | 1,859 | ||||||||
MGM Resorts International 7.50% 2016 | 4,000 | 3,340 | ||||||||
MGM Resorts International 11.125% 2017 | 2,450 | 2,793 | ||||||||
MGM Resorts International 9.00% 20205 | 5,150 | 5,433 | ||||||||
News America Inc. 5.30% 2014 | 26,150 | 29,355 | ||||||||
News America Holdings Inc. 8.00% 2016 | 6,000 | 7,456 | ||||||||
News America Inc. 6.90% 2019 | 23,000 | 27,546 | ||||||||
News America Inc. 6.65% 2037 | 5,500 | 6,143 | ||||||||
News America Inc. 6.90% 2039 | 10,000 | 11,575 | ||||||||
Neiman Marcus Group, Inc. 9.00% 20156,10 | 48,247 | 49,634 | ||||||||
Neiman Marcus Group, Inc. 10.375% 2015 | 20,400 | 21,369 | ||||||||
Sally Holdings LLC and Sally Capital Inc. 9.25% 2014 | 63,875 | 67,707 | ||||||||
Sally Holdings LLC and Sally Capital Inc. 10.50% 2016 | 2,650 | 2,902 | ||||||||
CSC Holdings, Inc., Series B, 6.75% 2012 | 400 | 418 | ||||||||
CSC Holdings, Inc. 8.50% 2014 | 14,975 | 16,248 | ||||||||
CSC Holdings, Inc. 8.50% 2015 | 2,000 | 2,162 | ||||||||
Cablevision Systems Corp. 8.625% 20175 | 10,000 | 10,787 | ||||||||
CSC Holdings, Inc. 8.625% 2019 | 14,375 | 15,812 | ||||||||
Cablevision Systems Corp. 8.00% 2020 | 20,000 | 21,250 | ||||||||
Wynn Las Vegas, LLC and Wynn Las Vegas Capital Corp. 6.625% 2014 | 24,535 | 25,578 | ||||||||
Wynn Las Vegas, LLC and Wynn Las Vegas Capital Corp. 7.75% 20205 | 35,510 | 36,176 | ||||||||
Time Warner Inc. 5.875% 2016 | 19,985 | 22,916 | ||||||||
Time Warner Companies, Inc. 7.25% 2017 | 9,500 | 11,412 | ||||||||
Time Warner Inc. 6.50% 2036 | 17,000 | 18,637 | ||||||||
Time Warner Inc. 6.20% 2040 | 1,000 | 1,069 | ||||||||
Cox Communications, Inc. 7.75% 2010 | 10,000 | 10,162 | ||||||||
Cox Communications, Inc. 5.45% 2014 | 5,000 | 5,616 | ||||||||
Cox Communications, Inc. 5.875% 20165 | 25,000 | 28,615 | ||||||||
Cox Communications, Inc. 8.375% 20395 | 4,000 | 5,376 | ||||||||
Royal Caribbean Cruises Ltd. 8.75% 2011 | 26,625 | 27,424 | ||||||||
Royal Caribbean Cruises Ltd. 11.875% 2015 | 18,175 | 21,537 | ||||||||
J.C. Penney Co., Inc. 9.00% 2012 | 12,006 | 13,342 | ||||||||
J.C. Penney Co., Inc., Series A, 6.875% 2015 | 6,895 | 7,395 | ||||||||
J.C. Penney Co., Inc. 5.75% 2018 | 13,000 | 13,227 | ||||||||
J.C. Penney Co., Inc. 5.65% 2020 | 13,460 | 13,595 | ||||||||
Cinemark USA, Inc., Term Loan, 3.50% 20166,8,9 | 3,658 | 3,590 | ||||||||
Cinemark USA, Inc. 8.625% 2019 | 40,375 | 42,192 | ||||||||
AMC Entertainment Inc. 8.75% 2019 | 42,400 | 44,732 | ||||||||
Limited Brands, Inc. 8.50% 2019 | 17,540 | 19,601 | ||||||||
Limited Brands, Inc. 7.00% 2020 | 21,965 | 22,789 | ||||||||
Regal Cinemas Corp., Series B, 9.375% 2012 | 7,250 | 7,286 | ||||||||
Regal Cinemas Corp. 8.625% 2019 | 31,095 | 32,339 | ||||||||
Boyd Gaming Corp. 7.75% 2012 | 28,400 | 28,684 | ||||||||
Boyd Gaming Corp. 6.75% 2014 | 10,504 | 9,375 | ||||||||
Quebecor Media Inc. 7.75% 2016 | 24,450 | 24,939 | ||||||||
Quebecor Media Inc. 7.75% 2016 | 11,195 | 11,419 | ||||||||
Warner Music Group 7.375% 2014 | 22,665 | 22,438 | ||||||||
Warner Music Group 9.50% 2016 | 12,300 | 13,438 | ||||||||
Clear Channel Worldwide, Series B, 9.25% 20175 | 32,300 | 34,076 | ||||||||
Tenneco Automotive Inc., Series B, 10.25% 2013 | 2,572 | 2,636 | ||||||||
Tenneco Automotive Inc. 8.625% 2014 | 30,025 | 31,076 | ||||||||
Technical Olympic USA, Inc. 9.00% 201012 | 10,675 | 6,672 | ||||||||
Technical Olympic USA, Inc. 9.00% 201012 | 7,815 | 4,884 | ||||||||
Technical Olympic USA, Inc. 9.25% 20115,12 | 33,175 | 20,734 | ||||||||
Dollar General Corp., Term Loan B2, 3.091% 20146,8,9 | 4,268 | 4,119 | ||||||||
Dollar General Corp. 10.625% 2015 | 15,940 | 17,614 | ||||||||
Dollar General Corp. 11.875% 20176,10 | 7,689 | 8,939 | ||||||||
Marriott International, Inc., Series J, 5.625% 2013 | 8,330 | 8,899 | ||||||||
Marriott International, Inc., Series I, 6.375% 2017 | 19,500 | 21,226 | ||||||||
DaimlerChrysler North America Holding Corp., Series E, 5.75% 2011 | 14,150 | 14,798 | ||||||||
DaimlerChrysler North America Holding Corp. 7.30% 2012 | 7,875 | 8,516 | ||||||||
DaimlerChrysler North America Holding Corp. 6.50% 2013 | 5,400 | 6,110 | ||||||||
Target Corp. 6.00% 2018 | 24,500 | 29,030 | ||||||||
LBI Media, Inc. 8.50% 20175 | 32,174 | 28,032 | ||||||||
Mediacom Broadband LLC and Mediacom Broadband Corp. 8.50% 2015 | 10,055 | 10,181 | ||||||||
Mediacom LLC and Mediacom Capital Corp. 9.125% 2019 | 15,000 | 15,300 | ||||||||
Radio One, Inc. 6.375% 2013 | 22,565 | 18,955 | ||||||||
Staples, Inc. 7.75% 2011 | 2,115 | 2,203 | ||||||||
Staples, Inc. 9.75% 2014 | 11,875 | 14,640 | ||||||||
NBC Universal, Inc. 3.65% 20155 | 4,650 | 4,857 | ||||||||
NBC Universal, Inc. 5.15% 20205 | 6,700 | 7,135 | ||||||||
NBC Universal, Inc. 6.40% 20405 | 4,100 | 4,524 | ||||||||
UPC Germany GmbH 8.125% 20175 | 15,800 | 16,234 | ||||||||
KB Home 6.25% 2015 | 16,905 | 15,637 | ||||||||
Kabel Deutschland GmbH 10.625% 2014 | 14,825 | 15,511 | ||||||||
Bon-Ton Department Stores, Inc. 10.25% 2014 | 15,550 | 15,297 | ||||||||
American Axle & Manufacturing Holdings, Inc. 9.25% 20175 | 13,500 | 14,614 | ||||||||
Mohegan Tribal Gaming Authority 8.00% 2012 | 2,100 | 1,806 | ||||||||
Mohegan Tribal Gaming Authority 6.125% 2013 | 4,175 | 3,517 | ||||||||
Mohegan Tribal Gaming Authority 7.125% 2014 | 4,950 | 3,440 | ||||||||
Mohegan Tribal Gaming Authority 6.875% 2015 | 8,775 | 5,791 | ||||||||
Lowe’s Companies, Inc. 4.625% 2020 | 3,258 | 3,543 | ||||||||
Lowe’s Companies, Inc. 5.80% 2040 | 8,700 | 9,690 | ||||||||
UPC Holding BV 9.875% 20185 | 12,500 | 13,125 | ||||||||
Hanesbrands Inc., Series B, 4.121% 20146 | 10,500 | 10,027 | ||||||||
Hanesbrands Inc. 8.00% 2016 | 2,600 | 2,733 | ||||||||
Gray Television Inc. 10.50% 20155 | 12,415 | 12,353 | ||||||||
Vidéotron Ltée 6.875% 2014 | 7,169 | 7,330 | ||||||||
Vidéotron Ltée 6.375% 2015 | 4,905 | 5,003 | ||||||||
Seminole Tribe of Florida 6.535% 20205,8 | 10,000 | 9,021 | ||||||||
Seminole Tribe of Florida 7.804% 20205,8 | 3,295 | 3,038 | ||||||||
Beazer Homes USA, Inc. 8.125% 2016 | 13,050 | 11,778 | ||||||||
TL Acquisitions, Inc., Term Loan B, 3.03% 20146,8,9 | 4,604 | 4,089 | ||||||||
Thomson Learning 10.50% 20155 | 7,780 | 7,566 | ||||||||
Fox Acquisition LLC 13.375% 20165 | 11,690 | 11,588 | ||||||||
Seneca Gaming Corp. 7.25% 2012 | 8,000 | 7,920 | ||||||||
Seneca Gaming Corp., Series B, 7.25% 2012 | 3,275 | 3,242 | ||||||||
Thomson Reuters Corp. 5.95% 2013 | 3,625 | 4,082 | ||||||||
Thomson Reuters Corp. 6.50% 2018 | 5,900 | 7,018 | ||||||||
Lear Corp. 7.875% 2018 | 10,000 | 10,450 | ||||||||
Local T.V. Finance LLC 10.00% 20155,6,10 | 11,879 | 10,335 | ||||||||
Allbritton Communications Co. 8.00% 2018 | 10,000 | 10,025 | ||||||||
Education Management LLC and Education Management Finance Corp. 8.75% 2014 | 9,640 | 9,628 | ||||||||
Marks and Spencer Group PLC 6.25% 20175 | 7,000 | 7,500 | ||||||||
Marks and Spencer Group PLC 7.125% 20375 | 1,000 | 1,072 | ||||||||
Kohl’s Corp. 6.25% 2017 | 6,450 | 7,585 | ||||||||
Kohl’s Corp. 6.875% 2037 | 500 | 603 | ||||||||
Meritage Corp. 7.731% 20175 | 9,500 | 8,087 | ||||||||
Libbey Glass Inc. 10.00% 20155 | 7,500 | 8,025 | ||||||||
Home Depot, Inc. 5.40% 2016 | 1,819 | 2,043 | ||||||||
Home Depot, Inc. 5.875% 2036 | 5,000 | 5,156 | ||||||||
Jarden Corp. 8.00% 2016 | 5,725 | 6,040 | ||||||||
Wendy’s/Arby’s Restaurants, LLC 10.00% 2016 | 5,400 | 5,764 | ||||||||
Nordstrom, Inc. 6.25% 2018 | 5,000 | 5,744 | ||||||||
Standard Pacific Corp. 6.25% 2014 | 2,800 | 2,653 | ||||||||
Standard Pacific Corp. 7.00% 2015 | 3,010 | 2,822 | ||||||||
Vitamin Shoppe Industries Inc. 7.936% 20126 | 4,664 | 4,699 | ||||||||
Grupo Televisa, SAB 6.625% 2040 | 2,250 | 2,435 | ||||||||
Walt Disney Co. 5.625% 2016 | 2,000 | 2,358 | ||||||||
American Media Operations, Inc. 9.00% 20135,10 | 1,055 | 1,075 | ||||||||
Ford Motor Co. 9.50% 2011 | 1,000 | 1,052 | ||||||||
2,914,268 | ||||||||||
FINANCIALS — 4.58% | ||||||||||
CIT Group Inc., Term Loan 2A, 9.50% 20126,8,9 | 51,691 | 53,072 | ||||||||
CIT Group Inc., Term Loan, 13.00% 20126,8,9 | 23,646 | 24,417 | ||||||||
CIT Group Inc., Series A, 7.00% 2013 | 30,850 | 30,696 | ||||||||
CIT Group Inc., Series A, 7.00% 2014 | 23,088 | 22,569 | ||||||||
CIT Group Inc., Series A, 7.00% 2015 | 61,693 | 59,765 | ||||||||
CIT Group Inc., Series A, 7.00% 2016 | 45,740 | 43,796 | ||||||||
Liberty Mutual Group Inc. 6.50% 20355 | 31,325 | 26,789 | ||||||||
Liberty Mutual Group Inc. 7.50% 20365 | 8,475 | 8,143 | ||||||||
Liberty Mutual Group Inc., Series B, 7.00% 20675,6 | 12,690 | 10,559 | ||||||||
Liberty Mutual Group Inc., Series A, 7.80% 20875,6 | 78,650 | 70,785 | ||||||||
Liberty Mutual Group Inc., Series C, 10.75% 20885,6 | 91,185 | 100,759 | ||||||||
International Lease Finance Corp. 5.125% 2010 | 1,100 | 1,100 | ||||||||
International Lease Finance Corp., Series R, 4.95% 2011 | 3,735 | 3,721 | ||||||||
International Lease Finance Corp., Series Q, 5.45% 2011 | 24,720 | 24,658 | ||||||||
International Lease Finance Corp., Series Q, 5.75% 2011 | 21,305 | 21,198 | ||||||||
International Lease Finance Corp. 5.00% 2012 | 4,245 | 4,075 | ||||||||
International Lease Finance Corp., Series R, 5.30% 2012 | 15,020 | 14,643 | ||||||||
International Lease Finance Corp., Series R, 5.35% 2012 | 9,495 | 9,305 | ||||||||
International Lease Finance Corp., Series R, 5.40% 2012 | 15,000 | 14,661 | ||||||||
International Lease Finance Corp., Series R, 6.375% 2013 | 26,000 | 25,350 | ||||||||
International Lease Finance Corp., Series R, 6.625% 2013 | 3,500 | 3,411 | ||||||||
American General Finance Corp., Series I, 5.40% 2015 | 17,250 | 14,404 | ||||||||
International Lease Finance Corp. 8.625% 20155 | 10,000 | 10,200 | ||||||||
American General Finance Corp., Series J, 6.90% 2017 | 12,500 | 10,719 | ||||||||
Simon Property Group, LP 5.30% 2013 | 1,590 | 1,731 | ||||||||
Simon Property Group, LP 6.75% 2014 | 5,310 | 6,044 | ||||||||
Simon Property Group, LP 5.25% 2016 | 79,670 | 88,083 | ||||||||
Simon Property Group, LP 6.10% 2016 | 4,250 | 4,830 | ||||||||
Simon Property Group, LP 5.875% 2017 | 22,265 | 24,634 | ||||||||
Simon Property Group, LP 6.125% 2018 | 18,460 | 20,948 | ||||||||
Simon Property Group, LP 10.35% 2019 | 5,000 | 6,787 | ||||||||
Simon Property Group, LP 5.65% 2020 | 2,000 | 2,203 | ||||||||
Zions Bancorporation 5.65% 2014 | 35,010 | 33,172 | ||||||||
Zions Bancorporation 7.75% 2014 | 8,825 | 9,164 | ||||||||
Zions Bancorporation 5.50% 2015 | 40,017 | 36,101 | ||||||||
Zions Bancorporation 6.00% 2015 | 63,372 | 59,180 | ||||||||
Westfield Group 5.40% 20125 | 4,350 | 4,620 | ||||||||
Westfield Capital Corp. Ltd., WT Finance (Australia) Pty Ltd. and WEA Finance LLC 5.125% 20145 | 18,485 | 19,728 | ||||||||
Westfield Group 7.50% 20145 | 5,555 | 6,426 | ||||||||
Westfield Group 5.75% 20155 | 10,250 | 11,358 | ||||||||
Westfield Group 5.70% 20165 | 34,075 | 37,575 | ||||||||
Westfield Group 7.125% 20185 | 50,165 | 57,655 | ||||||||
Bank of America Corp. 4.25% 2010 | 840 | 845 | ||||||||
Bank of America Corp. 4.375% 2010 | 10,199 | 10,327 | ||||||||
Bank of America Corp. 4.50% 2010 | 1,625 | 1,625 | ||||||||
Bank of America Corp. 0.786% 20166 | 1,500 | 1,342 | ||||||||
Bank of America Corp. 0.817% 20166 | 1,500 | 1,350 | ||||||||
Bank of America Corp. 5.30% 2017 | 45,500 | 46,534 | ||||||||
Bank of America Corp. 5.75% 2017 | 8,100 | 8,573 | ||||||||
Bank of America Corp. 5.625% 2020 | 42,500 | 43,936 | ||||||||
NB Capital Trust II 7.83% 2026 | 5,575 | 5,603 | ||||||||
NB Capital Trust IV 8.25% 2027 | 4,000 | 4,120 | ||||||||
ProLogis 7.625% 2014 | 11,000 | 11,727 | ||||||||
ProLogis 5.625% 2016 | 7,560 | 7,128 | ||||||||
ProLogis 5.75% 2016 | 2,000 | 1,938 | ||||||||
ProLogis 6.625% 2018 | 27,175 | 26,538 | ||||||||
ProLogis 7.375% 2019 | 34,855 | 34,273 | ||||||||
ProLogis 6.875% 2020 | 27,395 | 26,295 | ||||||||
GMAC LLC 6.875% 2011 | 32,623 | 33,439 | ||||||||
GMAC LLC 7.25% 2011 | 3,269 | 3,318 | ||||||||
GMAC LLC 6.875% 2012 | 6,851 | 7,039 | ||||||||
GMAC LLC 7.00% 2012 | 15,839 | 16,354 | ||||||||
GMAC LLC 7.50% 2013 | 17,350 | 18,109 | ||||||||
GMAC LLC 2.738% 20146 | 10,438 | 9,057 | ||||||||
GMAC LLC 8.30% 20155 | 18,750 | 19,781 | ||||||||
Realogy Corp., Letter of Credit, 3.313% 20136,8,9 | 13,144 | 11,562 | ||||||||
Realogy Corp., Term Loan B, 3.347% 20136,8,9 | 44,188 | 38,869 | ||||||||
Realogy Corp., Term Loan DD, 3.347% 20136,8,9 | 15,823 | 13,918 | ||||||||
Realogy Corp., Second Lien Term Loan A, 13.50% 20178,9 | 23,475 | 24,966 | ||||||||
Developers Diversified Realty Corp. 4.625% 2010 | 6,165 | 6,165 | ||||||||
Developers Diversified Realty Corp. 5.375% 2012 | 2,000 | 1,997 | ||||||||
Developers Diversified Realty Corp. 5.50% 2015 | 23,528 | 22,504 | ||||||||
Developers Diversified Realty Corp. 9.625% 2016 | 10,500 | 11,513 | ||||||||
Developers Diversified Realty Corp. 7.50% 2017 | 34,275 | 33,980 | ||||||||
HBOS PLC 6.75% 20185 | 47,050 | 45,304 | ||||||||
Lloyds TSB Bank PLC 5.80% 20205 | 1,500 | 1,530 | ||||||||
LBG Capital No.1 PLC, Series 2, 7.875% 2020 | 20,000 | 18,100 | ||||||||
HBOS PLC 6.00% 20335 | 1,305 | 992 | ||||||||
Kimco Realty Corp. 6.00% 2012 | 3,250 | 3,512 | ||||||||
Kimco Realty Corp., Series C, 4.82% 2014 | 3,000 | 3,157 | ||||||||
Kimco Realty Corp., Series C, 4.904% 2015 | 4,500 | 4,744 | ||||||||
Kimco Realty Corp., Series C, 5.783% 2016 | 15,000 | 16,321 | ||||||||
Kimco Realty Corp. 5.70% 2017 | 23,485 | 24,820 | ||||||||
Kimco Realty Corp. 6.875% 2019 | 10,000 | 11,149 | ||||||||
Citigroup Inc. 4.75% 2015 | 1,700 | 1,751 | ||||||||
Citigroup Inc. 6.875% 2038 | 535 | 576 | ||||||||
Citigroup Capital XXI 8.30% 20776 | 54,695 | 56,609 | ||||||||
Abbey National Treasury Services PLC 3.875% 20145 | 9,750 | 9,827 | ||||||||
Sovereign Bancorp, Inc. 8.75% 2018 | 27,047 | 31,116 | ||||||||
Santander Issuances, SA Unipersonal 6.50% 20195,6 | 12,500 | 12,889 | ||||||||
Hospitality Properties Trust 6.75% 20131 | 21,265 | 22,631 | ||||||||
Hospitality Properties Trust 5.125% 20151 | 2,160 | 2,177 | ||||||||
Hospitality Properties Trust 6.30% 20161 | 2,400 | 2,479 | ||||||||
Hospitality Properties Trust 5.625% 20171 | 8,485 | 8,346 | ||||||||
Hospitality Properties Trust 6.70% 20181 | 16,175 | 16,866 | ||||||||
Metropolitan Life Global Funding I, 5.125% 20135 | 12,750 | 13,898 | ||||||||
MetLife Capital Trust IV 7.875% 20675,6 | 32,930 | 33,095 | ||||||||
MetLife Capital Trust X 9.25% 20685,6 | 1,500 | 1,701 | ||||||||
MetLife Inc. 10.75% 20696 | 2,500 | 3,096 | ||||||||
UnumProvident Finance Co. PLC 6.85% 20155 | 28,500 | 30,819 | ||||||||
Unum Group 7.125% 2016 | 18,740 | 20,647 | ||||||||
Rouse Co. 7.20% 201212 | 28,039 | 32,455 | ||||||||
Rouse Co. 5.375% 201312 | 2,770 | 3,033 | ||||||||
Rouse Co. 6.75% 20135,12 | 13,400 | 15,242 | ||||||||
Standard Chartered PLC 3.85% 20155 | 4,500 | 4,643 | ||||||||
Standard Chartered Bank 6.40% 20175 | 40,000 | 44,643 | ||||||||
Capital One Capital IV 6.745% 20376 | 31,000 | 28,752 | ||||||||
Capital One Capital V 10.25% 2039 | 12,605 | 13,724 | ||||||||
National City Preferred Capital Trust I 12.00% (undated)6 | 37,250 | 41,347 | ||||||||
PRICOA Global Funding I 5.30% 20135 | 2,500 | 2,746 | ||||||||
Prudential Financial, Inc., Series D, 6.10% 2017 | 5,000 | 5,501 | ||||||||
Prudential Holdings, LLC, Series C, 8.695% 20235,8 | 17,250 | 21,412 | ||||||||
Prudential Financial, Inc. 8.875% 20686 | 9,275 | 10,265 | ||||||||
JPMorgan Chase & Co. 3.40% 2015 | 23,985 | 24,655 | ||||||||
JPMorgan Chase & Co. 4.891% 20156 | 2,000 | 1,995 | ||||||||
JPMorgan Chase & Co. 4.40% 2020 | 13,000 | 13,057 | ||||||||
ERP Operating LP 5.50% 2012 | 4,000 | 4,276 | ||||||||
ERP Operating LP 6.625% 2012 | 2,000 | 2,151 | ||||||||
ERP Operating LP 5.20% 2013 | 2,500 | 2,698 | ||||||||
ERP Operating LP 5.25% 2014 | 2,000 | 2,187 | ||||||||
ERP Operating LP 6.584% 2015 | 2,705 | 3,134 | ||||||||
ERP Operating LP 5.75% 2017 | 4,000 | 4,428 | ||||||||
ERP Operating LP 7.125% 2017 | 10,000 | 11,597 | ||||||||
ERP Operating LP 4.75% 2020 | 6,500 | 6,578 | ||||||||
Ford Motor Credit Co. 7.25% 2011 | 7,500 | 7,754 | ||||||||
Ford Motor Credit Co. 7.375% 2011 | 1,800 | 1,832 | ||||||||
Ford Motor Credit Co. 3.277% 20126 | 26,685 | 26,185 | ||||||||
HSBC Bank PLC 3.50% 20155 | 13,000 | 13,476 | ||||||||
HSBC Holdings PLC 6.50% 2037 | 18,000 | 19,567 | ||||||||
HSBK (Europe) BV 7.25% 20175 | 32,570 | 30,801 | ||||||||
Lazard Group LLC 7.125% 2015 | 28,687 | 30,666 | ||||||||
Royal Bank of Scotland Group PLC 5.00% 2013 | 3,000 | 2,951 | ||||||||
Royal Bank of Scotland PLC 4.875% 2015 | 16,750 | 17,332 | ||||||||
Royal Bank of Scotland Group PLC 5.05% 2015 | 5,306 | 5,219 | ||||||||
Royal Bank of Scotland Group PLC 6.99% (undated)5,6 | 7,100 | 4,864 | ||||||||
Nationwide Mutual Insurance Co. 5.81% 20245,6,8 | 8,150 | 7,139 | ||||||||
Nationwide Mutual Insurance Co. 9.375% 20395 | 20,000 | 22,821 | ||||||||
Host Marriott, LP, Series K, 7.125% 2013 | 8,750 | 8,947 | ||||||||
Host Hotels & Resorts, LP, Series S, 6.875% 2014 | 8,750 | 8,947 | ||||||||
Host Marriott, LP, Series O, 6.375% 2015 | 950 | 962 | ||||||||
Host Hotels & Resorts, LP, Series Q, 6.75% 2016 | 7,800 | 7,956 | ||||||||
Host Hotels & Resorts LP 9.00% 2017 | 900 | 992 | ||||||||
Morgan Stanley, Series F, 6.625% 2018 | 17,500 | 19,061 | ||||||||
Morgan Stanley, Series F, 5.625% 2019 | 8,000 | 8,146 | ||||||||
UBS AG 3.875% 2015 | 750 | 771 | ||||||||
UBS AG 5.875% 2017 | 18,500 | 20,308 | ||||||||
UBS AG 4.875% 2020 | 3,500 | 3,536 | ||||||||
SLM Corp., Series A, 5.40% 2011 | 15,000 | 15,011 | ||||||||
SLM Corp., Series A, 0.798% 20146 | 10,000 | 8,222 | ||||||||
UniCredito Italiano SpA 5.584% 20175,6 | 10,000 | 9,544 | ||||||||
UniCredito Italiano SpA 6.00% 20175 | 13,000 | 13,058 | ||||||||
New York Life Global Funding 4.65% 20135 | 19,500 | 21,131 | ||||||||
Genworth Financial, Inc. 6.15% 20666 | 27,500 | 20,075 | ||||||||
Monumental Global Funding 5.50% 20135 | 10,000 | 10,769 | ||||||||
Monumental Global Funding III 0.726% 20145,6 | 8,000 | 7,650 | ||||||||
Monumental Global Funding III 5.25% 20145 | 1,500 | 1,645 | ||||||||
Wells Fargo & Co. 4.375% 2013 | 10,850 | 11,524 | ||||||||
Wells Fargo & Co. 3.625% 2015 | 1,705 | 1,769 | ||||||||
Corestates Capital I 8.00% 20265 | 5,714 | 5,743 | ||||||||
Regions Financial Corp. 7.75% 2014 | 17,500 | 18,747 | ||||||||
Goldman Sachs Group, Inc. 3.70% 2015 | 7,335 | 7,396 | ||||||||
Goldman Sachs Group, Inc. 5.95% 2018 | 1,550 | 1,666 | ||||||||
Goldman Sachs Group, Inc. 6.15% 2018 | 3,500 | 3,781 | ||||||||
Goldman Sachs Group, Inc. 6.125% 2033 | 3,000 | 3,044 | ||||||||
Barclays Bank PLC 2.50% 2013 | 4,625 | 4,674 | ||||||||
Barclays Bank PLC 6.05% 20175 | 3,740 | 3,916 | ||||||||
Barclays Bank PLC 5.125% 2020 | 6,724 | 6,988 | ||||||||
AXA SA 6.463% (undated)5,6 | 18,717 | 14,974 | ||||||||
ZFS Finance (USA) Trust II 6.45% 20655,6 | 12,500 | 11,500 | ||||||||
ZFS Finance (USA) Trust V 6.50% 20675,6 | 3,011 | 2,770 | ||||||||
American Express Co. 6.15% 2017 | 12,610 | 14,178 | ||||||||
Société Générale 5.75% 20165 | 12,135 | 13,162 | ||||||||
Lincoln National Corp. 5.65% 2012 | 12,000 | 12,786 | ||||||||
Korea Development Bank 5.30% 2013 | 11,000 | 11,637 | ||||||||
Boston Properties, Inc. 5.875% 2019 | 10,000 | 10,928 | ||||||||
Principal Life Insurance Co. 5.30% 2013 | 10,000 | 10,841 | ||||||||
Export-Import Bank of Korea 5.125% 2020 | 10,000 | 10,571 | ||||||||
Berkshire Hathaway Inc. 2.125% 2013 | 5,000 | 5,136 | ||||||||
Berkshire Hathaway Inc. 3.20% 2015 | 5,000 | 5,231 | ||||||||
BBVA Bancomer SA 7.25% 20205 | 8,985 | 9,448 | ||||||||
CNA Financial Corp. 5.85% 2014 | 5,625 | 5,940 | ||||||||
CNA Financial Corp. 7.35% 2019 | 3,000 | 3,266 | ||||||||
Banco Mercantil del Norte, SA 6.135% 20165,6 | 2,000 | 2,019 | ||||||||
Banco Mercantil del Norte, SA 6.862% 20215,6 | 6,850 | 6,909 | ||||||||
Paribas, New York Branch 6.95% 2013 | 6,000 | 6,565 | ||||||||
BNP Paribas 3.25% 2015 | 1,000 | 1,021 | ||||||||
BNP Paribas 5.125% 20155 | 440 | 464 | ||||||||
Nationwide Financial Services, Inc. 6.75% 20676 | 8,780 | 7,060 | ||||||||
Brandywine Operating Partnership, LP 5.40% 2014 | 6,000 | 6,186 | ||||||||
Charles Schwab Corp., Series A, 6.375% 2017 | 4,000 | 4,631 | ||||||||
Schwab Capital Trust I 7.50% 20376 | 1,115 | 1,121 | ||||||||
UDR, Inc. 5.00% 2012 | 2,500 | 2,556 | ||||||||
UDR, Inc., Series A, 5.25% 2015 | 3,000 | 3,095 | ||||||||
Nomura Holdings, Inc. 6.70% 2020 | 5,000 | 5,535 | ||||||||
Development Bank of Singapore Ltd. 7.125% 20115 | 5,000 | 5,219 | ||||||||
TuranAlem Finance BV 8.25% 20375,12 | 10,000 | 4,950 | ||||||||
Allstate Life Global Funding Trust, Series 2008-4, 5.375% 2013 | 2,000 | 2,200 | ||||||||
Allstate Corp., Series B, 6.125% 20676 | 2,445 | 2,246 | ||||||||
VEB Finance Ltd. 6.902% 20205 | 3,380 | 3,579 | ||||||||
First Tennessee Bank 5.05% 2015 | 3,400 | 3,310 | ||||||||
Nordea Bank, Series 2, 3.70% 20145 | 3,000 | 3,130 | ||||||||
ACE INA Holdings Inc. 5.875% 2014 | 2,500 | 2,807 | ||||||||
TIAA Global Markets 4.95% 20135 | 2,000 | 2,196 | ||||||||
Ambac Financial Group, Inc. 6.15% 20876,12 | 8,405 | 399 | ||||||||
2,908,582 | ||||||||||
MORTGAGE-BACKED OBLIGATIONS8 — 4.40% | ||||||||||
Fannie Mae 4.89% 2012 | 10,000 | 10,320 | ||||||||
Fannie Mae 4.00% 2015 | 2,561 | 2,680 | ||||||||
Fannie Mae 5.00% 2018 | 8,189 | 8,792 | ||||||||
Fannie Mae 5.50% 2018 | 6,918 | 7,515 | ||||||||
Fannie Mae 5.50% 2020 | 20,083 | 21,805 | ||||||||
Fannie Mae 6.00% 2021 | 731 | 796 | ||||||||
Fannie Mae, Series 2003-48, Class TJ, 4.50% 2022 | 11,554 | 12,090 | ||||||||
Fannie Mae 5.50% 2023 | 17,752 | 19,190 | ||||||||
Fannie Mae 4.00% 2024 | 30,995 | 32,506 | ||||||||
Fannie Mae 4.00% 2024 | 17,741 | 18,606 | ||||||||
Fannie Mae 4.00% 2024 | 9,053 | 9,495 | ||||||||
Fannie Mae 4.50% 2024 | 16,936 | 17,984 | ||||||||
Fannie Mae 4.50% 2024 | 11,259 | 11,955 | ||||||||
Fannie Mae 4.50% 2024 | 6,404 | 6,800 | ||||||||
Fannie Mae 5.50% 2024 | 1,311 | 1,420 | ||||||||
Fannie Mae 3.50% 2025 | 27,000 | 27,661 | ||||||||
Fannie Mae 3.50% 2025 | 16,250 | 16,709 | ||||||||
Fannie Mae 4.00% 2025 | 48,035 | 50,378 | ||||||||
Fannie Mae 4.00% 2025 | 36,291 | 38,026 | ||||||||
Fannie Mae 4.00% 2025 | 3,482 | 3,649 | ||||||||
Fannie Mae 4.00% 2025 | 3,331 | 3,491 | ||||||||
Fannie Mae 4.00% 2025 | 3,250 | 3,405 | ||||||||
Fannie Mae 4.00% 2025 | 1,729 | 1,812 | ||||||||
Fannie Mae 4.50% 2025 | 39,933 | 42,385 | ||||||||
Fannie Mae 4.50% 2025 | 13,965 | 14,822 | ||||||||
Fannie Mae 4.50% 2025 | 5,454 | 5,789 | ||||||||
Fannie Mae 4.50% 2025 | 5,292 | 5,617 | ||||||||
Fannie Mae 4.50% 2025 | 5,081 | 5,393 | ||||||||
Fannie Mae 4.50% 2025 | 2,468 | 2,620 | ||||||||
Fannie Mae 4.50% 2025 | 1,732 | 1,838 | ||||||||
Fannie Mae 4.50% 2025 | 487 | 517 | ||||||||
Fannie Mae, Series 2001-4, Class GA, 9.929% 20256 | 477 | 558 | ||||||||
Fannie Mae, Series 2001-4, Class NA, 11.786% 20256 | 31 | 35 | ||||||||
Fannie Mae 6.00% 2026 | 12,333 | 13,508 | ||||||||
Fannie Mae 7.00% 2026 | 1,453 | 1,612 | ||||||||
Fannie Mae 6.00% 2028 | 16,806 | 18,408 | ||||||||
Fannie Mae 7.00% 2028 | 4,452 | 4,941 | ||||||||
Fannie Mae 7.00% 2028 | 755 | 838 | ||||||||
Fannie Mae, Series 2001-20, Class E, 9.641% 20316 | 387 | 452 | ||||||||
Fannie Mae 5.50% 2033 | 2,823 | 3,055 | ||||||||
Fannie Mae 2.634% 20356 | 2,517 | 2,628 | ||||||||
Fannie Mae 5.00% 2035 | 76,183 | 81,385 | ||||||||
Fannie Mae 5.50% 2035 | 4,888 | 5,283 | ||||||||
Fannie Mae 5.50% 2035 | 2,700 | 2,918 | ||||||||
Fannie Mae 6.50% 2035 | 290 | 321 | ||||||||
Fannie Mae 7.00% 2035 | 3,645 | 4,054 | ||||||||
Fannie Mae 5.50% 2036 | 23,206 | 25,035 | ||||||||
Fannie Mae, Series 2006-43, Class PX, 6.00% 2036 | 6,080 | 6,710 | ||||||||
Fannie Mae, Series 2007-33, Class HE, 5.50% 2037 | 18,473 | 20,055 | ||||||||
Fannie Mae 5.50% 2037 | 12,461 | 13,447 | ||||||||
Fannie Mae 5.609% 20376 | 9,387 | 9,861 | ||||||||
Fannie Mae 6.00% 2037 | 173,824 | 188,864 | ||||||||
Fannie Mae 6.00% 2037 | 44,087 | 47,901 | ||||||||
Fannie Mae 6.00% 2037 | 21,769 | 23,761 | ||||||||
Fannie Mae 6.00% 2037 | 18,444 | 20,040 | ||||||||
Fannie Mae 6.00% 2037 | 14,718 | 15,982 | ||||||||
Fannie Mae 6.00% 2037 | 14,517 | 15,794 | ||||||||
Fannie Mae, Series 2007-24, Class P, 6.00% 2037 | 13,790 | 15,042 | ||||||||
Fannie Mae 6.00% 2037 | 1,088 | 1,171 | ||||||||
Fannie Mae 6.50% 2037 | 8,832 | 9,675 | ||||||||
Fannie Mae 6.50% 2037 | 7,106 | 7,788 | ||||||||
Fannie Mae 6.50% 2037 | 5,873 | 6,449 | ||||||||
Fannie Mae 6.50% 2037 | 5,526 | 6,047 | ||||||||
Fannie Mae 7.00% 2037 | 4,485 | 4,875 | ||||||||
Fannie Mae 7.00% 2037 | 3,003 | 3,264 | ||||||||
Fannie Mae 7.50% 2037 | 4,289 | 4,744 | ||||||||
Fannie Mae 7.50% 2037 | 1,087 | 1,202 | ||||||||
Fannie Mae 7.50% 2037 | 477 | 527 | ||||||||
Fannie Mae 7.50% 2037 | 327 | 362 | ||||||||
Fannie Mae 7.50% 2037 | 175 | 195 | ||||||||
Fannie Mae 8.00% 2037 | 144 | 160 | ||||||||
Fannie Mae 8.00% 2037 | 106 | 118 | ||||||||
Fannie Mae 4.50% 2038 | 11,468 | 12,024 | ||||||||
Fannie Mae 5.50% 2038 | 7,475 | 8,064 | ||||||||
Fannie Mae 6.00% 2038 | 19,482 | 21,150 | ||||||||
Fannie Mae 6.00% 2038 | 18,064 | 19,653 | ||||||||
Fannie Mae 6.00% 2038 | 7,853 | 8,544 | ||||||||
Fannie Mae 6.00% 2038 | 1,998 | 2,173 | ||||||||
Fannie Mae 6.50% 2038 | 8,421 | 9,243 | ||||||||
Fannie Mae 4.50% 2039 | 78,761 | 82,494 | ||||||||
Fannie Mae 5.00% 2039 | 21,300 | 22,726 | ||||||||
Fannie Mae 6.00% 2039 | 7,518 | 8,164 | ||||||||
Fannie Mae 4.50% 2040 | 34,291 | 35,917 | ||||||||
Fannie Mae 4.50% 2040 | 8,873 | 9,294 | ||||||||
Fannie Mae 5.00% 2040 | 24,897 | 26,564 | ||||||||
Fannie Mae 6.00% 2040 | 19,426 | 21,089 | ||||||||
Fannie Mae, Series 2001-50, Class BA, 7.00% 2041 | 1,104 | 1,213 | ||||||||
Fannie Mae, Series 2001-T10, Class A-1, 7.00% 2041 | 775 | 871 | ||||||||
Fannie Mae, Series 2002-W3, Class A-5, 7.50% 2041 | 524 | 601 | ||||||||
Fannie Mae, Series 2002-W1, Class 2A, 7.50% 2042 | 1,203 | 1,390 | ||||||||
Fannie Mae 6.50% 2047 | 2,707 | 2,926 | ||||||||
Fannie Mae 6.50% 2047 | 2,687 | 2,905 | ||||||||
Fannie Mae 6.50% 2047 | 2,468 | 2,669 | ||||||||
Fannie Mae 6.50% 2047 | 2,246 | 2,428 | ||||||||
Fannie Mae 6.50% 2047 | 1,755 | 1,898 | ||||||||
Fannie Mae 6.50% 2047 | 1,434 | 1,550 | ||||||||
Fannie Mae 6.50% 2047 | 1,027 | 1,111 | ||||||||
Fannie Mae 6.50% 2047 | 902 | 975 | ||||||||
Fannie Mae 7.00% 2047 | 2,040 | 2,217 | ||||||||
Fannie Mae 7.00% 2047 | 1,550 | 1,685 | ||||||||
Fannie Mae 7.00% 2047 | 1,456 | 1,583 | ||||||||
Fannie Mae 7.00% 2047 | 1,311 | 1,425 | ||||||||
Fannie Mae 7.00% 2047 | 313 | 340 | ||||||||
Freddie Mac 5.00% 2018 | 4,603 | 4,942 | ||||||||
Freddie Mac 5.50% 2018 | 2,437 | 2,643 | ||||||||
Freddie Mac, Series 2890, Class KT, 4.50% 2019 | 25,425 | 27,902 | ||||||||
Freddie Mac 5.50% 2019 | 6,690 | 7,256 | ||||||||
Freddie Mac, Series 2289, Class NB, 11.233% 20226 | 89 | 102 | ||||||||
Freddie Mac 5.00% 2023 | 17,184 | 18,354 | ||||||||
Freddie Mac 5.00% 2023 | 15,293 | 16,334 | ||||||||
Freddie Mac 5.00% 2023 | 10,807 | 11,543 | ||||||||
Freddie Mac 5.00% 2023 | 5,316 | 5,697 | ||||||||
Freddie Mac 5.00% 2024 | 16,671 | 17,834 | ||||||||
Freddie Mac 6.00% 2026 | 2,557 | 2,799 | ||||||||
Freddie Mac 6.00% 2027 | 4,418 | 4,837 | ||||||||
Freddie Mac 2.718% 20356 | 3,896 | 4,083 | ||||||||
Freddie Mac 5.00% 2035 | 7,678 | 8,198 | ||||||||
Freddie Mac, Series 3061, Class PN, 5.50% 2035 | 4,240 | 4,670 | ||||||||
Freddie Mac 5.00% 2036 | 7,267 | 7,745 | ||||||||
Freddie Mac, Series 3257, Class PA, 5.50% 2036 | 18,734 | 20,499 | ||||||||
Freddie Mac 5.00% 2037 | 2,336 | 2,489 | ||||||||
Freddie Mac, Series 3286, Class JN, 5.50% 2037 | 24,984 | 26,876 | ||||||||
Freddie Mac, Series 3312, Class PA, 5.50% 2037 | 19,061 | 20,540 | ||||||||
Freddie Mac, Series 3318, Class JT, 5.50% 2037 | 14,040 | 15,104 | ||||||||
Freddie Mac, Series 3271, Class OA, 6.00% 2037 | 17,052 | 18,816 | ||||||||
Freddie Mac 6.00% 2037 | 680 | 740 | ||||||||
Freddie Mac 6.50% 2037 | 3,915 | 4,294 | ||||||||
Freddie Mac 6.50% 2038 | 16,592 | 18,214 | ||||||||
Freddie Mac 6.50% 2038 | 6,018 | 6,588 | ||||||||
Freddie Mac 5.00% 2039 | 12,358 | 13,181 | ||||||||
Freddie Mac 5.00% 2039 | 8,338 | 8,894 | ||||||||
Freddie Mac 5.00% 2039 | 5,396 | 5,755 | ||||||||
Freddie Mac 6.00% 2039 | 3,166 | 3,446 | ||||||||
Freddie Mac 6.00% 2040 | 3,553 | 3,865 | ||||||||
Freddie Mac 6.00% 2040 | 1,181 | 1,284 | ||||||||
Government National Mortgage Assn. 10.00% 2021 | 798 | 939 | ||||||||
Government National Mortgage Assn. 10.00% 2025 | 749 | 872 | ||||||||
Government National Mortgage Assn. 5.00% 2039 | 9,517 | 10,262 | ||||||||
Government National Mortgage Assn. 4.00% 2040 | 13,860 | 14,304 | ||||||||
Government National Mortgage Assn. 4.50% 2040 | 98,811 | 104,225 | ||||||||
Government National Mortgage Assn. 4.50% 2040 | 7,744 | 8,169 | ||||||||
Government National Mortgage Assn. 4.50% 2040 | 3,004 | 3,174 | ||||||||
Government National Mortgage Assn. 4.50% 2040 | 2,983 | 3,153 | ||||||||
Government National Mortgage Assn. 5.00% 2040 | 10,468 | 11,270 | ||||||||
Government National Mortgage Assn. 5.00% 2040 | 5,487 | 5,907 | ||||||||
Government National Mortgage Assn. 5.00% 2040 | 1,872 | 2,019 | ||||||||
Government National Mortgage Assn. 5.00% 2040 | 1,234 | 1,331 | ||||||||
CS First Boston Mortgage Securities Corp., Series 2001-CKN5, Class A-4, 5.435% 2034 | 2,979 | 3,046 | ||||||||
CS First Boston Mortgage Securities Corp., Series 2004-5, Class IV-A-1, 6.00% 2034 | 2,381 | 2,358 | ||||||||
CS First Boston Mortgage Securities Corp., Series 2001-CP4, Class A-4, 6.18% 2035 | 6,208 | 6,369 | ||||||||
CS First Boston Mortgage Securities Corp., Series 2005-5, Class IV-A-1, 6.25% 2035 | 4,216 | 3,707 | ||||||||
CS First Boston Mortgage Securities Corp., Series 2001-CK1, Class A-3, 6.38% 2035 | 3,413 | 3,438 | ||||||||
CS First Boston Mortgage Securities Corp., Series 2005-C3, Class A-AB, 4.614% 2037 | 9,802 | 10,259 | ||||||||
CS First Boston Mortgage Securities Corp., Series 2007-3, Class 4-A-1, 5.00% 2037 | 10,758 | 9,717 | ||||||||
CS First Boston Mortgage Securities Corp., Series 2007-1, Class 1-A-2A, 5.802% 20376 | 9,724 | 5,093 | ||||||||
CS First Boston Mortgage Securities Corp., Series 2007-1, Class 1-A-6A, 5.863% 20376 | 6,795 | 3,941 | ||||||||
CS First Boston Mortgage Securities Corp., Series 2002-CKN2, Class A-3, 6.133% 2037 | 6,910 | 7,315 | ||||||||
CS First Boston Mortgage Securities Corp., Series 2005-C5, Class A-2, 5.10% 20386 | 7,470 | 7,486 | ||||||||
CS First Boston Mortgage Securities Corp., Series 2007-C4, Class A-4, 5.83% 20396 | 18,880 | 18,476 | ||||||||
CS First Boston Mortgage Securities Corp., Series 2005-C6, Class A-2FX, 5.207% 20406 | 1,689 | 1,694 | ||||||||
CS First Boston Mortgage Securities Corp., Series 2005-C6, Class A-3, 5.23% 20406 | 10,900 | 11,546 | ||||||||
American Tower Trust I, Series 2007-1A, Class A-FX, 5.42% 20375 | 7,250 | 7,783 | ||||||||
American Tower Trust I, Series 2007-1A, Class B, 5.537% 20375 | 20,000 | 21,010 | ||||||||
American Tower Trust I, Series 2007-1A, Class D, 5.957% 20375 | 29,375 | 30,857 | ||||||||
American Tower Trust I, Series 2007-1A, Class E, 6.249% 20375 | 15,500 | 16,282 | ||||||||
American Tower Trust I, Series 2007-1A, Class F, 6.639% 20375 | 5,550 | 5,830 | ||||||||
Countrywide Alternative Loan Trust, Series 2005-49CB, Class A-1, 5.50% 2035 | 44,215 | 42,350 | ||||||||
Countrywide Alternative Loan Trust, Series 2005-54CB, Class 2-A-5, 5.50% 2035 | 11,354 | 6,865 | ||||||||
Countrywide Alternative Loan Trust, Series 2004-36CB, Class 1-A-1, 6.00% 2035 | 3,327 | 3,301 | ||||||||
Countrywide Alternative Loan Trust, Series 2007-HY4, Class 3-A-1, 5.633% 20476 | 9,285 | 6,467 | ||||||||
Countrywide Alternative Loan Trust, Series 2007-HY4, Class 4-A-1, 5.712% 20476 | 14,412 | 9,869 | ||||||||
WaMu Mortgage Pass-Through Certificates Trust, Series 2006-AR12, Class 1-A2, 5.74% 20366 | 10,000 | 7,636 | ||||||||
WaMu Mortgage Pass-Through Certificates Trust, Series 2007-HY6, Class 2-A3, 5.705% 20376 | 39,599 | 33,544 | ||||||||
WaMu Mortgage Pass-Through Certificates Trust, Series 2007-HY7, Class 2-A1, 5.725% 20376 | 14,321 | 9,980 | ||||||||
WaMu Mortgage Pass-Through Certificates Trust, Series 2007-HY7, Class 4-A2, 5.784% 20376 | 13,539 | 10,699 | ||||||||
Structured Adjustable Rate Mortgage Loan Trust, Series 2005-20, Class 3-A1, 5.25% 20356 | 20,196 | 20,248 | ||||||||
Structured Adjustable Rate Mortgage Loan Trust, Series 2006-8, Class 3-AF, 0.709% 20366 | 5,334 | 3,569 | ||||||||
Structured Adjustable Rate Mortgage Loan Trust, Series 2006-9, Class 2-A2, 5.729% 20366 | 6,261 | 4,393 | ||||||||
Structured Adjustable Rate Mortgage Loan Trust, Series 2006-4, Class 6-A, 5.77% 20366 | 21,774 | 16,668 | ||||||||
Structured Adjustable Rate Mortgage Loan Trust, Series 2006-12, Class 2-A1, 5.711% 20376 | 8,778 | 6,401 | ||||||||
Structured Adjustable Rate Mortgage Loan Trust, Series 2007-9, Class 2-A1, 5.673% 20476 | 5,429 | 3,467 | ||||||||
CHL Mortgage Pass-Through Trust, Series 2005-HYB8, Class 4-A-1, 5.369% 20356 | 5,373 | 4,145 | ||||||||
CHL Mortgage Pass-Through Trust, Series 2007-HY5, Class 3-A-1, 6.023% 20376 | 16,141 | 13,161 | ||||||||
CHL Mortgage Pass-Through Trust, Series 2007-HY5, Class 1-A-1, 5.803% 20476 | 31,375 | 23,711 | ||||||||
CHL Mortgage Pass-Through Trust, Series 2007-HY4, Class 1-A-1, 5.913% 20476 | 17,120 | 12,842 | ||||||||
Wachovia Bank Commercial Mortgage Trust, Series 2005-C16, Class A-PB, 4.692% 2041 | 13,272 | 13,943 | ||||||||
Wachovia Bank Commercial Mortgage Trust, Series 2005-C22, Class A-4, 5.27% 20446 | 22,000 | 23,858 | ||||||||
Wachovia Bank Commercial Mortgage Trust, Series 2006-C23, Class A-PB, 5.446% 2045 | 12,500 | 13,328 | ||||||||
GE Commercial Mortgage Corp., Series 2004-C1, Class A-2, 3.915% 2038 | 1,988 | 1,993 | ||||||||
GE Commercial Mortgage Corp., Series 2006-C1, Class A-4, 5.335% 20446 | 13,000 | 14,042 | ||||||||
GE Commercial Mortgage Corp., Series 2005-C4, Class A-3A, 5.336% 20456 | 17,000 | 17,889 | ||||||||
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2002-CIBC5, Class A-1, 4.372% 2037 | 1,262 | 1,289 | ||||||||
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2005-CIBC12, Class A-2, 4.739% 2037 | 1,404 | 1,403 | ||||||||
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2005-CIBC11, Class A-2, 5.016% 2037 | 1,248 | 1,247 | ||||||||
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2003-ML1, Class A-1, 3.972% 2039 | 619 | 636 | ||||||||
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2004-C3, Class A-2, 4.223% 2042 | 8,092 | 8,151 | ||||||||
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2005-LDP4, Class A-2, 4.79% 2042 | 218 | 218 | ||||||||
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2006-LDP7, Class A-4, 5.874% 20456 | 14,700 | 15,940 | ||||||||
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2005-LDP1, Class A-2, 4.625% 2046 | 4,190 | 4,279 | ||||||||
Banc of America Commercial Mortgage Inc., Series 2001-1, Class A-2, 6.503% 2036 | 7,783 | 7,921 | ||||||||
Banc of America Commercial Mortgage Inc., Series 2005-5, Class A-4, 5.115% 20456 | 3,000 | 3,170 | ||||||||
Banc of America Commercial Mortgage Inc., Series 2005-5, Class A-3B, 5.214% 20456 | 17,730 | 17,694 | ||||||||
IndyMac INDX Mortgage Loan Trust, Series 2006-AR5, Class 2-A-1, 5.398% 20366 | 13,421 | 10,506 | ||||||||
IndyMac INDX Mortgage Loan Trust, Series 2006-AR25, Class 3-A-1, 5.613% 20366 | 29,398 | 17,825 | ||||||||
ML-CFC Commercial Mortgage Trust, Series 2006-4, Class A-3, 5.172% (undated)6 | 27,410 | 27,784 | ||||||||
Greenwich Capital Commercial Funding Corp., Series 2005-GG5, Class A-2, 5.117% 2037 | 9,294 | 9,410 | ||||||||
Greenwich Capital Commercial Funding Corp., Series 2005-GG5, Class A-4-1, 5.243% 20376 | 10,000 | 10,496 | ||||||||
Greenwich Capital Commercial Funding Corp., Series 2006-GG7, Class A-4, 5.888% 20386 | 7,000 | 7,567 | ||||||||
Bank of America 5.50% 20125 | 22,500 | 23,920 | ||||||||
Banc of America Mortgage Securities, Inc., Series 2004-7, Class 7-A1, 5.00% 2019 | 17,935 | 17,545 | ||||||||
Banc of America Mortgage Securities, Inc., Series 2005-E, Class 4-A1, 5.379% 20356 | 6,294 | 5,955 | ||||||||
J.P. Morgan Chase Commercial Mortgage Securities Trust, Series 2006-LDP6, Class A-4, 5.475% 20436 | 20,250 | 21,319 | ||||||||
L.A. Arena Funding, LLC, Series 1, Class A, 7.656% 20262,5 | 20,118 | 20,998 | ||||||||
Citigroup Mortgage Loan Trust, Inc., Series 2005-8, Class I-A4A, 5.424% 20356 | 3,147 | 2,557 | ||||||||
Citigroup Mortgage Loan Trust, Inc., Series 2006-AR5, Class 2-A7A, 6.157% 20366 | 22,312 | 15,034 | ||||||||
Citigroup Mortgage Loan Trust, Inc., Series 2007-AR5, Class 1-A2A, 5.474% 20376 | 4,491 | 3,095 | ||||||||
Citicorp Mortgage Securities, Inc. 5.50% 2035 | 21,392 | 20,466 | ||||||||
Morgan Stanley Capital I Trust, Series 2005-HQ7, Class A-2, 5.206% 20426 | 17,875 | 18,735 | ||||||||
Nationwide Building Society, Series 2007-2, 5.50% 20125 | 17,500 | 18,659 | ||||||||
Lehman Mortgage Trust, Series 2006-6, Class 3-A-9, 5.50% 2036 | 24,282 | 15,783 | ||||||||
Citigroup-Deutsche Bank Commercial Mortgage Trust, Series 2005-CD1, Class A-4, 5.223% 20446 | 5,500 | 5,986 | ||||||||
Citigroup-Deutsche Bank Commercial Mortgage Trust, Series 2006-CD3, Class A-5, 5.617% 2048 | 8,000 | 8,328 | ||||||||
Wells Fargo Mortgage-backed Securities Trust, Series 2006-AR15, Class A-1, 5.469% 20366 | 9,441 | 7,981 | ||||||||
Wells Fargo Mortgage-backed Securities Trust, Series 2006-AR4, Class 2-A-4, 5.692% 20366 | 6,200 | 5,470 | ||||||||
LB-UBS Commercial Mortgage Trust, Series 2005-C7, Class A-4, 5.197% 20306 | 11,422 | 12,429 | ||||||||
GSR Mortgage Loan Trust, Series 2004-2F, Class VIIA-1, 4.50% 2019 | 9,045 | 8,834 | ||||||||
GSR Mortgage Loan Trust, Series 2004-15F, Class 5A-1, 5.50% 2020 | 2,546 | 2,525 | ||||||||
GMAC Commercial Mortgage Securities, Inc., Series 2001-C1, Class A-2, 6.465% 2034 | 11,077 | 11,252 | ||||||||
Bear Stearns ARM Trust, Series 2005-6, Class I-A-1, 2.978% 20356 | 10,546 | 7,609 | ||||||||
Bear Stearns ARM Trust, Series 2006-2, Class 2-A-1, 5.65% 20366 | 4,219 | 3,074 | ||||||||
Morgan Stanley Mortgage Loan Trust, Series 2005-3AR, Class 3-A, 2.552% 20356 | 14,164 | 10,027 | ||||||||
Morgan Stanley Mortgage Loan Trust, Series 2006-3AR, Class 3-A-1, 5.772% 20366 | 773 | 487 | ||||||||
Crown Castle Towers LLC, Series 2010-1, Class C, 4.523% 20355 | 10,000 | 10,495 | ||||||||
Bank of Montreal 2.85% 20155 | 10,000 | 10,334 | ||||||||
American General Mortgage Loan Trust, Series 2006-1, Class A-5, 5.75% 20355,6 | 8,630 | 8,827 | ||||||||
American General Mortgage Loan Trust, Series 2010-1A, Class A-1, 5.15% 20585,6 | 371 | 372 | ||||||||
American Home Mortgage Assets Trust, Series 2007-3, Class II-2A-1, 6.25% 20376 | 13,901 | 8,003 | ||||||||
Wells Fargo Alternative Loan Trust, Series 2007-PA4, Class III-A-1, 5.906% 20376 | 12,400 | 7,974 | ||||||||
Commercial Mortgage Trust, Series 2003-LNB1, Class A-2, 4.084% 2038 | 6,925 | 7,199 | ||||||||
GS Mortgage Securities Corp. II, Series 2001-ROCK, Class D, 6.878% 20185 | 6,000 | 6,212 | ||||||||
Bear Stearns ALT-A Trust, Series 2006-2, Class II-4-A-1, 5.68% 20366 | 8,572 | 5,188 | ||||||||
Residential Accredit Loans, Inc., Series 2005-QR1, Class A, 6.00% 2034 | 5,227 | 5,078 | ||||||||
BCAP LLC Trust, Series 2006-AA2, Class A-1, 0.499% 20376 | 8,334 | 4,546 | ||||||||
J.P. Morgan Mortgage Trust, Series 2006-A3, Class 3-A-3, 5.724% 20366 | 2,000 | 1,629 | ||||||||
J.P. Morgan Mortgage Trust, Series 2006-A7, Class 2-A-4, 5.754% 20376 | 3,875 | 2,871 | ||||||||
Banc of America Funding Trust, Series 2006-7, Class T-2-A-1, 5.878% 2036 | 4,638 | 3,006 | ||||||||
Washington Mutual Mortgage, WMALT Series 2007-2, Class 3-A-1, 5.50% 2022 | 3,184 | 2,835 | ||||||||
GE Capital Commercial Mortgage Corp., Series 2002-3, Class A-1, 4.229% 2037 | 2,225 | 2,253 | ||||||||
Morgan Stanley Dean Witter Capital I Trust, Series 2000-LIFE2, Class A-2, 7.20% 2033 | 1,936 | 1,935 | ||||||||
FDIC Structured Sale Guaranteed Notes, Series 2010-L1A, Class A-1, 0% 20115 | 750 | 743 | ||||||||
FDIC Structured Sale Guaranteed Notes, Series 2010-L2A, Class A, 3.00% 20195 | 1,091 | 1,111 | ||||||||
Harborview Mortgage Loan Trust, Series 2006-6, Class 1A, 3.135% 20366 | 2,498 | 1,596 | ||||||||
Bear Stearns Commercial Mortgage Securities Inc., Series 1999-C1, Class X, interest only, 0.652% 20315,6 | 17,671 | 390 | ||||||||
Bear Stearns Commercial Mortgage Securities Inc., Series 2002-PBW1, Class A-1, 3.97% 2035 | 695 | 705 | ||||||||
Structured Asset Securities Corp., Series 1998-RF2, Class A, 8.165% 20275,6 | 186 | 186 | ||||||||
Structured Asset Securities Corp., Series 1998-RF1, Class A, 8.351% 20275,6 | 160 | 164 | ||||||||
Financial Asset Securitization, Inc., Series 1997-NAM1, Class B-1, 7.75% 2027 | 221 | 230 | ||||||||
2,799,228 | ||||||||||
INDUSTRIALS — 2.32% | ||||||||||
Nielsen Finance LLC, Term Loan A, 2.345% 20136,8,9 | 8,484 | 8,066 | ||||||||
Nielsen Finance LLC and Nielsen Finance Co. 10.00% 2014 | 48,750 | 51,066 | ||||||||
Nielsen Finance LLC and Nielsen Finance Co. 11.625% 2014 | 39,775 | 44,846 | ||||||||
Nielsen Finance LLC and Nielsen Finance Co. 0%/12.50% 201611 | 74,720 | 73,226 | ||||||||
Nielsen Finance LLC and Nielsen Finance Co. 11.50% 2016 | 24,510 | 27,635 | ||||||||
Nielsen Finance LLC, Term Loan 1L, 8.50% 20172,8,9 | 12,000 | 12,540 | ||||||||
Continental Airlines, Inc. 8.75% 2011 | 27,750 | 28,617 | ||||||||
Continental Airlines, Inc., Series 2000-2, Class A-2, 7.487% 20128 | 11,700 | 11,780 | ||||||||
Continental Airlines, Inc., Series 1997-1, Class A, 7.461% 20168 | 7,916 | 7,993 | ||||||||
Continental Airlines, Inc., Series 2001-1, Class B, 7.373% 20178 | 5,598 | 5,402 | ||||||||
Continental Airlines, Inc., Series 1998-1, Class B, 6.748% 20188 | 896 | 851 | ||||||||
Continental Airlines, Inc., Series 1997-4B, Class B, 6.90% 20188 | 373 | 360 | ||||||||
Continental Airlines, Inc., Series 1998-1, Class A, 6.648% 20198 | 15,110 | 15,460 | ||||||||
Continental Airlines, Inc., Series 1997-4, Class A, 6.90% 20198 | 4,561 | 4,689 | ||||||||
Continental Airlines, Inc., Series 2000-2, Class B, 8.307% 20198 | 881 | 864 | ||||||||
Continental Airlines, Inc., Series 1999-1, Class A, 6.545% 20208 | 18,944 | 19,300 | ||||||||
Continental Airlines, Inc., Series 1999-1, Class B, 6.795% 20208 | 651 | 615 | ||||||||
Continental Airlines, Inc., Series 2003-ERJ3, Class A, 7.875% 20208 | 9,950 | 9,253 | ||||||||
Continental Airlines, Inc., Series 1999-2, Class A-1, 7.256% 20218 | 664 | 690 | ||||||||
Continental Airlines, Inc., Series 1999-2, Class B, 7.566% 20218 | 3,249 | 3,167 | ||||||||
Continental Airlines, Inc., Series 2001-1, Class A-1, 6.703% 20228 | 14,609 | 14,792 | ||||||||
Continental Airlines, Inc., Series 2007-1, Class B, 6.903% 20228 | 11,281 | 10,971 | ||||||||
Continental Airlines, Inc., Series 2000-2, Class A-1, 7.707% 20228 | 3,437 | 3,547 | ||||||||
Continental Airlines, Inc., Series 2000-1, Class A-1, 8.048% 20228 | 5,370 | 5,675 | ||||||||
Continental Airlines, Inc., Series 2000-1, Class B, 8.388% 20228 | 4,596 | 4,527 | ||||||||
Delta Air Lines, Inc., Series 2000-1, Class A-2, 7.57% 20128 | 8,050 | 8,142 | ||||||||
Northwest Airlines, Inc., Term Loan B, 4.04% 20136,8,9 | 4,553 | 4,097 | ||||||||
Delta Air Lines, Inc., Series 2002-1, Class G-2, MBIA insured, 6.417% 20148 | 58,790 | 59,672 | ||||||||
Northwest Airlines, Inc., Term Loan A, 2.29% 20186,8,9 | 53,365 | 45,227 | ||||||||
Delta Air Lines, Inc., Series 2002-1, Class G-1, MBIA insured, 6.718% 20248 | 25,084 | 24,144 | ||||||||
US Investigations Services, Inc., Term Loan B, 3.539% 20156,8,9 | 18,476 | 16,398 | ||||||||
US Investigations Services, Inc., Term Loan B, 7.75% 20156,8,9 | 22,230 | 22,202 | ||||||||
US Investigations Services, Inc. 10.50% 20155 | 49,850 | 49,102 | ||||||||
US Investigations Services, Inc. 11.75% 20165 | 21,761 | 20,999 | ||||||||
Hawker Beechcraft Acquisition Co., LLC, Letter of Credit, 2.433% 20146,8,9 | 4,793 | 3,895 | ||||||||
Hawker Beechcraft Acquisition Co., LLC, Term Loan B, 2.533% 20146,8,9 | 81,675 | 66,378 | ||||||||
Hawker Beechcraft Acquisition Co., LLC, Term Loan B, 10.50% 20146,8,9 | 17,461 | 17,428 | ||||||||
Hawker Beechcraft Acquisition Co., LLC 8.50% 2015 | 3,570 | 2,892 | ||||||||
Hawker Beechcraft Acquisition Co., LLC 8.875% 20156,10 | 14,057 | 10,754 | ||||||||
Hawker Beechcraft Acquisition Co., LLC 9.75% 2017 | 1,305 | 816 | ||||||||
American Airlines, Inc., Series 2001-1, Class A-2, 6.817% 20128 | 17,745 | 18,056 | ||||||||
American Airlines, Inc., Series 2001-2, Class A-1, 6.978% 20128 | 745 | 750 | ||||||||
American Airlines, Inc., Series 2001-2, Class B, 8.608% 2012 | 4,595 | 4,624 | ||||||||
AMR Corp. 9.00% 2012 | 11,000 | 10,533 | ||||||||
American Airlines, Inc., Series 2001-2, Class A-2, 7.858% 20138 | 17,138 | 17,759 | ||||||||
AMR Corp. 9.00% 2016 | 2,000 | 1,830 | ||||||||
American Airlines, Inc., Series 2001-1, Class B, 7.377% 20198 | 12,868 | 11,131 | ||||||||
AMR Corp. 10.00% 2021 | 3,000 | 2,475 | ||||||||
American Airlines, Inc., Series 2001-1, Class A-1, 6.977% 20228 | 5,722 | 4,835 | ||||||||
Ashtead Group PLC 8.625% 20155 | 14,675 | 14,932 | ||||||||
Ashtead Capital, Inc. 9.00% 20165 | 46,185 | 46,878 | ||||||||
Iron Mountain Inc. 8.00% 2020 | 12,000 | 12,660 | ||||||||
Iron Mountain Inc. 8.375% 2021 | 45,000 | 48,038 | ||||||||
ARAMARK Corp., Letter of Credit, 2.223% 20146,8,9 | 273 | 256 | ||||||||
ARAMARK Corp., Term Loan B, 2.408% 20146,8,9 | 3,773 | 3,543 | ||||||||
ARAMARK Corp. 3.844% 20156 | 8,050 | 7,446 | ||||||||
ARAMARK Corp. 8.50% 2015 | 26,725 | 27,760 | ||||||||
ARAMARK Corp., Letter of Credit, 3.448% 20166,8,9 | 492 | 476 | ||||||||
ARAMARK Corp., Term Loan B, 3.783% 20166,8,9 | 7,483 | 7,244 | ||||||||
CEVA Group PLC, Bridge Loan, 9.091% 20152,6,8,9 | 32,191 | 27,523 | ||||||||
CEVA Group PLC 11.625% 20165 | 2,450 | 2,628 | ||||||||
CEVA Group PLC 11.50% 20185 | 14,675 | 15,409 | ||||||||
Nortek, Inc. 11.00% 2013 | 37,335 | 40,041 | ||||||||
United Air Lines, Inc., Term Loan B, 2.375% 20146,8,9 | 26,590 | 23,997 | ||||||||
United Air Lines, Inc., Series 1996-A2, 7.87% 20192,8,12 | 2,421 | — | ||||||||
United Air Lines, Inc., Series 2007-1, Class B, 7.336% 20215,8 | 4,944 | 4,425 | ||||||||
United Air Lines, Inc., Series 2007-1, Class A, 6.636% 20248 | 11,387 | 10,818 | ||||||||
RailAmerica, Inc. 9.25% 2017 | 34,003 | 36,978 | ||||||||
AMH Holdings, Inc. 11.25% 2014 | 32,660 | 33,640 | ||||||||
AMH Holdings, Inc. 9.875% 2016 | 825 | 898 | ||||||||
Union Pacific Corp. 5.125% 2014 | 15,325 | 16,902 | ||||||||
Union Pacific Corp. 5.75% 2017 | 2,065 | 2,357 | ||||||||
Union Pacific Corp. 5.70% 2018 | 8,000 | 9,109 | ||||||||
TransDigm Inc. 7.75% 2014 | 15,110 | 15,639 | ||||||||
TransDigm Inc. 7.75% 2014 | 11,950 | 12,368 | ||||||||
Koninklijke Philips Electronics NV 5.75% 2018 | 23,250 | 26,462 | ||||||||
Kansas City Southern Railway Co. 13.00% 2013 | 5,599 | 6,740 | ||||||||
Kansas City Southern Railway Co. 8.00% 2015 | 1,500 | 1,607 | ||||||||
Kansas City Southern de México, SA de CV 8.00% 20185 | 10,000 | 10,650 | ||||||||
Burlington Northern Santa Fe Corp. 7.00% 2014 | 13,885 | 16,247 | ||||||||
BNSF Funding Trust I 6.613% 20556 | 2,630 | 2,518 | ||||||||
BAE Systems 2001 Asset Trust, Series 2001, Class B, 7.156% 20115,8 | 12,538 | 13,040 | ||||||||
BAE Systems 2001 Asset Trust, Series 2001, Class G, MBIA insured, 6.664% 20135,8 | 2,166 | 2,380 | ||||||||
Esterline Technologies Corp. 6.625% 2017 | 12,500 | 12,625 | ||||||||
Esterline Technologies Corp. 7.00% 20205 | 2,240 | 2,290 | ||||||||
Volvo Treasury AB 5.95% 20155 | 13,875 | 14,860 | ||||||||
Honeywell International Inc. 3.875% 2014 | 13,605 | 14,743 | ||||||||
United Technologies Corp. 5.70% 2040 | 12,000 | 13,467 | ||||||||
General Electric Co. 5.25% 2017 | 11,250 | 12,420 | ||||||||
WMX Technologies, Inc. 7.10% 20261 | 10,125 | 11,831 | ||||||||
USG Corp. 9.50% 20186 | 10,500 | 10,369 | ||||||||
Norfolk Southern Corp. 5.75% 2016 | 6,710 | 7,661 | ||||||||
Norfolk Southern Corp. 5.75% 2018 | 2,000 | 2,281 | ||||||||
CSX Corp. 5.75% 2013 | 4,960 | 5,433 | ||||||||
CSX Corp. 6.25% 2015 | 3,460 | 4,023 | ||||||||
Atlas Copco AB 5.60% 20175 | 7,405 | 8,043 | ||||||||
Allied Waste North America, Inc. 6.875% 2017 | 7,250 | 8,013 | ||||||||
H&E Equipment Services, Inc. 8.375% 2016 | 7,800 | 7,537 | ||||||||
Esco Corp. 4.412% 20135,6 | 3,725 | 3,432 | ||||||||
Esco Corp. 8.625% 20135 | 4,000 | 3,990 | ||||||||
Sequa Corp., Term Loan B, 3.79% 20146,8,9 | 7,348 | 6,899 | ||||||||
RBS Global, Inc. and Rexnord LLC 8.50% 20185 | 6,000 | 6,090 | ||||||||
Lockheed Martin Corp. 4.121% 2013 | 5,000 | 5,368 | ||||||||
ERAC USA Finance Co. 5.25% 20205 | 5,000 | 5,135 | ||||||||
Ply Gem Industries, Inc. 11.75% 2013 | 3,210 | 3,427 | ||||||||
Oshkosh Corp. 8.25% 2017 | 1,250 | 1,313 | ||||||||
Oshkosh Corp. 8.50% 2020 | 1,900 | 2,000 | ||||||||
John Deere Capital Corp. 5.40% 2011 | 2,000 | 2,108 | ||||||||
John Deere Capital Corp., Series D, 5.50% 2017 | 1,000 | 1,140 | ||||||||
Caterpillar Financial Services Corp., Series F, 5.50% 2016 | 2,000 | 2,293 | ||||||||
RSC Equipment Rental, Inc. and RSC Holdings III, LLC 9.50% 2014 | 1,375 | 1,420 | ||||||||
1,471,891 | ||||||||||
TELECOMMUNICATION SERVICES — 2.22% | ||||||||||
Sprint Capital Corp. 7.625% 2011 | 3,100 | 3,185 | ||||||||
Sprint Capital Corp. 8.375% 2012 | 10,775 | 11,475 | ||||||||
Nextel Communications, Inc., Series E, 6.875% 2013 | 76,000 | 76,000 | ||||||||
Nextel Communications, Inc., Series F, 5.95% 2014 | 39,210 | 37,936 | ||||||||
Nextel Communications, Inc., Series D, 7.375% 2015 | 182,295 | 181,384 | ||||||||
Cricket Communications, Inc. 9.375% 2014 | 98,695 | 102,519 | ||||||||
Cricket Communications, Inc. 10.00% 2015 | 2,500 | 2,687 | ||||||||
Cricket Communications, Inc. 7.75% 2016 | 45,610 | 47,434 | ||||||||
Verizon Communications Inc. 3.75% 2011 | 19,750 | 20,239 | ||||||||
ALLTEL Corp. 7.00% 2012 | 17,686 | 19,587 | ||||||||
Verizon Communications Inc. 5.55% 2014 | 37,250 | 42,130 | ||||||||
Verizon Communications Inc. 4.90% 2015 | 3,560 | 3,973 | ||||||||
Verizon Communications Inc. 5.50% 2017 | 18,000 | 20,381 | ||||||||
Verizon Communications Inc. 6.35% 2019 | 4,525 | 5,361 | ||||||||
Verizon Communications Inc. 5.85% 2035 | 5,000 | 5,291 | ||||||||
Verizon Communications Inc. 6.25% 2037 | 25,000 | 27,785 | ||||||||
MetroPCS Wireless, Inc. 9.25% 2014 | 53,180 | 55,839 | ||||||||
MetroPCS Wireless, Inc. 9.25% 2014 | 47,735 | 50,122 | ||||||||
SBC Communications Inc. 6.25% 2011 | 5,500 | 5,688 | ||||||||
AT&T Wireless Services, Inc. 8.125% 2012 | 16,935 | 18,988 | ||||||||
AT&T Inc. 4.95% 2013 | 34,375 | 37,544 | ||||||||
SBC Communications Inc. 5.10% 2014 | 3,500 | 3,925 | ||||||||
SBC Communications Inc. 5.625% 2016 | 10,000 | 11,534 | ||||||||
AT&T Inc. 5.80% 2019 | 8,750 | 10,068 | ||||||||
AT&T Inc. 8.00% 20316 | 5,000 | 6,517 | ||||||||
AT&T Inc. 6.55% 2039 | 5,000 | 5,766 | ||||||||
Wind Acquisition SA 11.75% 20175 | 80,475 | 85,907 | ||||||||
Clearwire Communications LLC/Finance 12.00% 20155 | 41,875 | 43,969 | ||||||||
Clearwire Communications LLC/Finance 12.00% 20155 | 30,305 | 31,820 | ||||||||
Crown Castle International Corp. 9.00% 2015 | 33,850 | 37,150 | ||||||||
Crown Castle International Corp. 7.75% 20175 | 15,150 | 16,627 | ||||||||
Crown Castle International Corp. 7.125% 2019 | 19,000 | 19,808 | ||||||||
New Communications Holdings 7.875% 20155 | 18,475 | 19,630 | ||||||||
New Communications Holdings 8.25% 20175 | 38,175 | 40,943 | ||||||||
New Communications Holdings 8.50% 20205 | 6,950 | 7,454 | ||||||||
New Communications Holdings 8.75% 20225 | 4,400 | 4,741 | ||||||||
Windstream Corp. 8.125% 2013 | 6,000 | 6,420 | ||||||||
Valor Telecommunications Enterprises, LLC and Valor Telecommunications Enterprises Finance Corp. 7.75% 2015 | 7,125 | 7,405 | ||||||||
Windstream Corp. 8.625% 2016 | 54,100 | 56,670 | ||||||||
American Tower Corp. 4.625% 2015 | 12,019 | 12,741 | ||||||||
American Tower Corp. 7.00% 2017 | 12,431 | 14,280 | ||||||||
American Tower Corp. 7.25% 2019 | 24,050 | 28,199 | ||||||||
Telecom Italia Capital SA, Series B, 5.25% 2013 | 4,000 | 4,221 | ||||||||
Telecom Italia Capital SA 5.25% 2015 | 22,000 | 23,194 | ||||||||
Telecom Italia Capital SA 6.999% 2018 | 10,500 | 11,808 | ||||||||
Intelsat, Ltd. 8.875% 2015 | 8,000 | 8,340 | ||||||||
Intelsat, Ltd. 9.25% 2016 | 10,000 | 10,725 | ||||||||
Intelsat Jackson Holding Co. 8.50% 20195 | 3,500 | 3,719 | ||||||||
tw telecom inc. 8.00% 20185 | 20,000 | 20,925 | ||||||||
SBA Telecommunications, Inc. 8.00% 2016 | 16,675 | 18,009 | ||||||||
Deutsche Telekom International Finance BV 5.875% 2013 | 5,625 | 6,204 | ||||||||
Deutsche Telekom International Finance BV 4.875% 2014 | 10,000 | 10,894 | ||||||||
Telefónica Emisiones, SAU 3.729% 2015 | 3,050 | 3,131 | ||||||||
Telefónica Emisiones, SAU 5.134% 2020 | 7,950 | 8,367 | ||||||||
Qwest Communications International Inc. 8.00% 20155 | 5,000 | 5,350 | ||||||||
Qwest Capital Funding, Inc. 7.625% 2021 | 3,900 | 3,851 | ||||||||
América Móvil, SAB de CV 6.125% 20405 | 7,575 | 8,221 | ||||||||
Sorenson Communications 10.50% 20155 | 15,525 | 7,918 | ||||||||
Trilogy International Partners LLC, Term Loan B, 4.033% 20122,6,8,9 | 5,250 | 5,171 | ||||||||
Level 3 Financing, Inc. 9.25% 2014 | 4,000 | 3,730 | ||||||||
Hawaiian Telcom Communications, Inc. 8.765% 20136,12 | 15,920 | 318 | ||||||||
Hawaiian Telcom Communications, Inc. 9.75% 201312 | 16,945 | 339 | ||||||||
Hawaiian Telcom Communications, Inc., Series B, 12.50% 201512 | 7,075 | 1 | ||||||||
1,411,558 | ||||||||||
INFORMATION TECHNOLOGY — 1.66% | ||||||||||
NXP BV and NXP Funding LLC 3.276% 20136 | 93,769 | 88,963 | ||||||||
NXP BV and NXP Funding LLC 10.00% 20134 | 37,639 | 41,544 | ||||||||
NXP BV and NXP Funding LLC 7.875% 2014 | 3,850 | 3,898 | ||||||||
NXP BV and NXP Funding LLC 9.50% 2015 | 102,735 | 100,937 | ||||||||
NXP BV and NXP Funding LLC 9.75% 20185 | 49,520 | 52,367 | ||||||||
Freescale Semiconductor, Inc. 4.412% 20146 | 16,350 | 14,797 | ||||||||
Freescale Semiconductor, Inc. 8.875% 2014 | 46,005 | 44,625 | ||||||||
Freescale Semiconductor, Inc. 9.125% 20146,10 | 49,424 | 46,953 | ||||||||
Freescale Semiconductor, Inc., Term Loan, 4.596% 20166,8,9 | 37,197 | 34,297 | ||||||||
Freescale Semiconductor, Inc. 10.125% 2016 | 55,538 | 50,540 | ||||||||
Freescale Semiconductor, Inc. 10.125% 20185 | 30,700 | 32,849 | ||||||||
First Data Corp., Term Loan B2, 3.079% 20146,8,9 | 67,651 | 58,868 | ||||||||
First Data Corp. 9.875% 2015 | 63,000 | 50,558 | ||||||||
First Data Corp. 10.55% 201510 | 57,450 | 44,380 | ||||||||
Sanmina-SCI Corp. 6.75% 2013 | 23,100 | 23,244 | ||||||||
Sanmina-SCI Corp. 3.287% 20145,6 | 23,750 | 22,563 | ||||||||
Sanmina-SCI Corp. 8.125% 2016 | 71,830 | 73,446 | ||||||||
SunGard Data Systems Inc. 9.125% 2013 | 44,235 | 45,451 | ||||||||
Jabil Circuit, Inc. 8.25% 2018 | 36,225 | 39,666 | ||||||||
Cisco Systems, Inc. 2.90% 2014 | 10,000 | 10,517 | ||||||||
Cisco Systems, Inc. 4.95% 2019 | 20,000 | 22,271 | ||||||||
KLA-Tencor Corp. 6.90% 2018 | 29,000 | 32,504 | ||||||||
Advanced Micro Devices, Inc. 8.125% 2017 | 20,250 | 21,364 | ||||||||
Advanced Micro Devices, Inc. 7.75% 20205 | 6,250 | 6,344 | ||||||||
Ceridian Corp. 11.25% 2015 | 28,425 | 27,075 | ||||||||
Hewlett-Packard Co. 5.50% 2018 | 9,500 | 11,075 | ||||||||
Electronic Data Systems Corp. 7.45% 2029 | 6,555 | 8,614 | ||||||||
National Semiconductor Corp. 6.15% 2012 | 15,000 | 16,053 | ||||||||
Serena Software, Inc. 10.375% 2016 | 13,430 | �� | 13,229 | |||||||
Oracle Corp. 3.75% 2014 | 10,000 | 10,790 | ||||||||
Fidelity National Information Services, Inc. 7.625% 20175 | 4,000 | 4,180 | ||||||||
1,053,962 | ||||||||||
HEALTH CARE — 1.59% | ||||||||||
Elan Finance PLC and Elan Finance Corp. 4.436% 20116 | 19,200 | 19,008 | ||||||||
Elan Finance PLC and Elan Finance Corp. 4.663% 20136 | 14,285 | 13,856 | ||||||||
Elan Finance PLC and Elan Finance Corp. 8.875% 2013 | 39,090 | 39,774 | ||||||||
Elan Finance PLC and Elan Finance Corp. 8.75% 20165 | 54,200 | 54,335 | ||||||||
Tenet Healthcare Corp. 7.375% 2013 | 32,447 | 33,502 | ||||||||
Tenet Healthcare Corp. 9.25% 2015 | 10,160 | 10,795 | ||||||||
Tenet Healthcare Corp. 8.875% 20195 | 66,195 | 73,145 | ||||||||
HealthSouth Corp. 10.75% 2016 | 84,200 | 91,989 | ||||||||
Boston Scientific Corp. 4.50% 2015 | 4,500 | 4,550 | ||||||||
Boston Scientific Corp. 6.25% 2015 | 5,880 | 6,192 | ||||||||
Boston Scientific Corp. 6.40% 2016 | 21,735 | 23,187 | ||||||||
Boston Scientific Corp. 6.00% 2020 | 16,330 | 16,943 | ||||||||
Boston Scientific Corp. 7.375% 2040 | 34,146 | 36,697 | ||||||||
VWR Funding, Inc., Series B, 10.25% 20156,10 | 80,371 | 83,384 | ||||||||
PTS Acquisition Corp. 9.50% 20156,10 | 63,111 | 63,269 | ||||||||
Roche Holdings Inc. 4.50% 20125 | 18,000 | 18,995 | ||||||||
Roche Holdings Inc. 5.00% 20145 | 4,000 | 4,443 | ||||||||
Roche Holdings Inc. 6.00% 20195 | 21,000 | 24,825 | ||||||||
Roche Holdings Inc. 7.00% 20395 | 2,500 | 3,301 | ||||||||
Pfizer Inc. 4.45% 2012 | 13,000 | 13,748 | ||||||||
Pfizer Inc. 5.35% 2015 | 25,000 | 28,608 | ||||||||
Pfizer Inc. 6.20% 2019 | 5,000 | 6,044 | ||||||||
HCA Inc., Term Loan B1, 2.783% 20136,8,9 | 11,231 | 10,841 | ||||||||
HCA Inc. 9.125% 2014 | 5,090 | 5,370 | ||||||||
HCA Inc. 9.25% 2016 | 5,480 | 5,932 | ||||||||
HCA Inc. 9.625% 20166,10 | 3,000 | 3,248 | ||||||||
HCA Inc., Term Loan B2, 3.783% 20176,8,9 | 6,292 | 6,136 | ||||||||
HCA Inc. 8.50% 2019 | 11,820 | 13,120 | ||||||||
Novartis Capital Corp. 4.125% 2014 | 17,250 | 18,813 | ||||||||
Novartis Capital Corp. 2.90% 2015 | 17,000 | 17,684 | ||||||||
Novartis Securities Investment Ltd. 5.125% 2019 | 4,000 | 4,528 | ||||||||
Coventry Health Care, Inc. 5.875% 2012 | 4,800 | 4,945 | ||||||||
Coventry Health Care, Inc. 6.30% 2014 | 26,020 | 27,410 | ||||||||
Abbott Laboratories 2.70% 2015 | 10,000 | 10,420 | ||||||||
Abbott Laboratories 5.125% 2019 | 19,000 | 21,462 | ||||||||
GlaxoSmithKline Capital Inc. 4.85% 2013 | 13,500 | 14,807 | ||||||||
GlaxoSmithKline Capital Inc. 5.65% 2018 | 4,000 | 4,635 | ||||||||
Merge Healthcare Inc. 11.75% 20155 | 18,410 | 18,594 | ||||||||
Quintiles Transnational 9.50% 20145,6,10 | 16,760 | 17,179 | ||||||||
Surgical Care Affiliates, Inc. 8.875% 20155,6,10 | 6,591 | 6,657 | ||||||||
Surgical Care Affiliates, Inc. 10.00% 20175 | 9,500 | 9,571 | ||||||||
Symbion Inc. 11.75% 20156,10 | 17,695 | 15,704 | ||||||||
UnitedHealth Group Inc. 6.00% 2017 | 12,430 | 14,191 | ||||||||
Patheon Inc. 8.625% 20175 | 11,835 | 11,879 | ||||||||
Cardinal Health, Inc. 5.80% 2016 | 10,000 | 11,359 | ||||||||
WellPoint, Inc. 6.00% 2014 | 10,000 | 11,338 | ||||||||
Express Scripts Inc. 7.25% 2019 | 8,985 | 11,006 | ||||||||
Biogen Idec Inc. 6.00% 2013 | 6,000 | 6,573 | ||||||||
Biogen Idec Inc. 6.875% 2018 | 3,650 | 4,228 | ||||||||
Team Finance LLC and Health Finance Corp. 11.25% 2013 | 8,605 | 9,057 | ||||||||
Viant Holdings Inc. 10.125% 20175 | 5,653 | 6,784 | ||||||||
Accellent Inc. 8.375% 20175 | 5,900 | 6,003 | ||||||||
Merck & Co., Inc. 4.00% 2015 | 3,000 | 3,290 | ||||||||
Bausch & Lomb Inc. 9.875% 2015 | 2,250 | 2,385 | ||||||||
Johnson & Johnson 5.85% 2038 | 2,000 | 2,375 | ||||||||
1,008,114 | ||||||||||
UTILITIES — 1.07% | ||||||||||
Edison Mission Energy 7.50% 2013 | 35,525 | 30,196 | ||||||||
Edison Mission Energy 7.75% 2016 | 35,300 | 25,328 | ||||||||
Midwest Generation, LLC, Series B, 8.56% 20168 | 15,970 | 15,730 | ||||||||
Edison Mission Energy 7.00% 2017 | 19,525 | 13,375 | ||||||||
Edison Mission Energy 7.20% 2019 | 39,450 | 26,826 | ||||||||
Homer City Funding LLC 8.734% 20268 | 12,275 | 11,231 | ||||||||
Edison Mission Energy 7.625% 2027 | 20,850 | 13,240 | ||||||||
Texas Competitive Electric Holdings Co. LLC, Term Loan B1, 3.845% 20146,8,9 | 3,491 | 2,722 | ||||||||
Texas Competitive Electric Holdings Co. LLC, Term Loan B2, 4.066% 20146,8,9 | 49,849 | 38,875 | ||||||||
Texas Competitive Electric Holdings Co. LLC, Series A, 10.25% 2015 | 101,129 | 68,262 | ||||||||
Texas Competitive Electric Holdings Co. LLC, Series B, 10.25% 2015 | 21,680 | 14,634 | ||||||||
Texas Competitive Electric Holdings Co. LLC 11.25% 20166,10 | 16,055 | 10,195 | ||||||||
NRG Energy, Inc. 7.25% 2014 | 7,825 | 8,040 | ||||||||
NRG Energy, Inc. 7.375% 2016 | 48,975 | 50,077 | ||||||||
NRG Energy, Inc. 7.375% 2017 | 1,400 | 1,421 | ||||||||
Consumers Energy Co., First Mortgage Bonds, 6.70% 2019 | 26,800 | 32,389 | ||||||||
CMS Energy Corp. 6.25% 2020 | 20,000 | 20,019 | ||||||||
AES Corp. 9.375% 2010 | 4,802 | 4,844 | ||||||||
AES Corp. 8.75% 20135 | 14,329 | 14,616 | ||||||||
AES Corp. 7.75% 2015 | 10,000 | 10,550 | ||||||||
AES Corp. 8.00% 2017 | 4,000 | 4,265 | ||||||||
AES Corp. 8.00% 2020 | 5,000 | 5,319 | ||||||||
MidAmerican Energy Co. 5.95% 2017 | 10,625 | 12,409 | ||||||||
MidAmerican Energy Holdings Co. 5.75% 2018 | 15,320 | 17,472 | ||||||||
MidAmerican Energy Holdings Co. 5.95% 2037 | 3,375 | 3,711 | ||||||||
Sierra Pacific Power Co., General and Refunding Mortgage Notes, Series H, 6.25% 2012 | 7,500 | 8,038 | ||||||||
Sierra Pacific Resources 8.625% 2014 | 2,725 | 2,820 | ||||||||
Nevada Power Co., General and Refunding Mortgage Notes, Series L, 5.875% 2015 | 1,675 | 1,895 | ||||||||
Nevada Power Co., General and Refunding Mortgage Notes, Series M, 5.95% 2016 | 13,700 | 15,718 | ||||||||
Sierra Pacific Resources 6.75% 2017 | 3,000 | 3,064 | ||||||||
Electricité de France SA 5.50% 20145 | 15,000 | 16,690 | ||||||||
Electricité de France SA 6.95% 20395 | 8,000 | 10,251 | ||||||||
Israel Electric Corp. Ltd. 9.375% 20205 | 16,215 | 20,360 | ||||||||
Israel Electric Corp. Ltd. 8.10% 20965 | 4,905 | 5,366 | ||||||||
Intergen Power 9.00% 20175 | 16,000 | 16,760 | ||||||||
Alabama Power Co., Series R, 4.70% 2010 | 1,250 | 1,267 | ||||||||
Alabama Power Co., Series 2008-B, 5.80% 2013 | 4,500 | 5,109 | ||||||||
Alabama Power Co. 6.00% 2039 | 9,000 | 10,312 | ||||||||
National Rural Utilities Cooperative Finance Corp. 5.50% 2013 | 13,850 | 15,463 | ||||||||
E.ON International Finance BV 5.80% 20185 | 13,000 | 15,028 | ||||||||
Virginia Electric and Power Co., Series 2003-A, 4.75% 2013 | 6,000 | 6,514 | ||||||||
Virginia Electric and Power Co., Series B, 5.95% 2017 | 4,500 | 5,225 | ||||||||
PG&E Corp. 5.75% 2014 | 9,000 | 10,059 | ||||||||
PSEG Power LLC 7.75% 2011 | 7,500 | 7,839 | ||||||||
Public Service Electric and Gas Co., Series E, 5.30% 2018 | 1,000 | 1,105 | ||||||||
Veolia Environnement 5.25% 2013 | 8,000 | 8,761 | ||||||||
Carolina Power & Light Co. d/b/a Progress Energy Carolinas, Inc. 5.25% 2015 | 6,000 | 6,897 | ||||||||
Teco Finance, Inc. 5.15% 2020 | 5,000 | 5,347 | ||||||||
Xcel Energy Inc. 4.70% 2020 | 5,000 | 5,330 | ||||||||
Jersey Central Power & Light Co. 4.80% 2018 | 5,000 | 5,138 | ||||||||
AES Panamá, SA 6.35% 20165 | 4,500 | 4,713 | ||||||||
Abu Dhabi National Energy Co. PJSC (TAQA) 6.165% 20175 | 4,000 | 4,228 | ||||||||
Appalachian Power Co., Series M, 5.55% 2011 | 3,000 | 3,087 | ||||||||
678,130 | ||||||||||
ENERGY — 1.06% | ||||||||||
Ras Laffan Liquefied Natural Gas III 5.50% 20145 | 2,400 | 2,625 | ||||||||
Ras Laffan Liquefied Natural Gas Co. Ltd. 8.294% 20145,8 | 9,991 | 11,190 | ||||||||
Ras Laffan Liquefied Natural Gas Co. Ltd. 8.294% 20148 | 2,240 | 2,509 | ||||||||
Ras Laffan Liquefied Natural Gas II 5.298% 20205,8 | 34,850 | 37,310 | ||||||||
Ras Laffan Liquefied Natural Gas III 5.838% 20275,8 | 45,650 | 47,674 | ||||||||
TransCanada PipeLines Ltd. 6.50% 2018 | 375 | 441 | ||||||||
TransCanada PipeLines Ltd. 7.125% 2019 | 14,105 | 17,545 | ||||||||
TransCanada PipeLines Ltd. 6.20% 2037 | 400 | 436 | ||||||||
TransCanada PipeLines Ltd. 7.625% 2039 | 14,000 | 18,126 | ||||||||
TransCanada PipeLines Ltd. 6.10% 2040 | 1,250 | 1,388 | ||||||||
TransCanada PipeLines Ltd. 6.35% 20676 | 61,150 | 55,721 | ||||||||
Petroplus Finance Ltd. 6.75% 20145 | 7,390 | 6,688 | ||||||||
Petroplus Finance Ltd. 7.00% 20175 | 24,650 | 21,199 | ||||||||
Petroplus Finance Ltd. 9.375% 20195 | 30,220 | 27,349 | ||||||||
Enbridge Energy Partners, LP, Series B, 6.50% 2018 | 5,225 | 6,071 | ||||||||
Enbridge Energy Partners, LP 9.875% 2019 | 12,000 | 16,156 | ||||||||
Enbridge Energy Partners, LP 5.20% 2020 | 2,000 | 2,105 | ||||||||
Enbridge Energy Partners, LP, Series B, 7.50% 2038 | 6,000 | 7,187 | ||||||||
Enbridge Energy Partners, LP 8.05% 20776 | 10,500 | 10,357 | ||||||||
Transcontinental Gas Pipe Line Corp., Series B, 7.00% 2011 | 10,000 | 10,557 | ||||||||
Williams Partners L.P. and Williams Partners Finance Corp. 3.80% 2015 | 8,630 | 8,931 | ||||||||
Williams Partners L.P. and Williams Partners Finance Corp. 7.25% 2017 | 7,200 | 8,476 | ||||||||
Williams Partners L.P. and Williams Partners Finance Corp. 5.25% 2020 | 5,460 | 5,842 | ||||||||
Williams Partners L.P. and Williams Partners Finance Corp. 6.30% 2040 | 2,250 | 2,414 | ||||||||
Shell International Finance BV 1.875% 2013 | 10,000 | 10,178 | ||||||||
Shell International Finance BV 4.00% 2014 | 22,750 | 24,425 | ||||||||
Shell International Finance BV 4.30% 2019 | 1,250 | 1,316 | ||||||||
Kinder Morgan Energy Partners LP 5.85% 2012 | 2,400 | 2,573 | ||||||||
Kinder Morgan Energy Partners LP 5.125% 2014 | 10,325 | 11,297 | ||||||||
Kinder Morgan Energy Partners LP 6.00% 2017 | 2,950 | 3,302 | ||||||||
Kinder Morgan Energy Partners LP 9.00% 2019 | 8,250 | 10,720 | ||||||||
Kinder Morgan Energy Partners LP 5.30% 2020 | 2,750 | 2,954 | ||||||||
Kinder Morgan Energy Partners LP 6.85% 2020 | 2,400 | 2,849 | ||||||||
Williams Companies, Inc. 6.375% 20105 | 4,700 | 4,729 | ||||||||
Williams Companies, Inc. 7.875% 2021 | 11,035 | 13,410 | ||||||||
Williams Companies, Inc. 8.75% 2032 | 11,711 | 14,663 | ||||||||
Petrobras International 5.75% 2020 | 23,225 | 24,808 | ||||||||
Petrobras International 6.875% 2040 | 2,700 | 2,948 | ||||||||
Enbridge Inc. 5.60% 2017 | 20,067 | 22,983 | ||||||||
Arch Coal Inc. 8.75% 20165 | 20,000 | 21,550 | ||||||||
Rockies Express Pipeline LLC 6.25% 20135 | 4,020 | 4,294 | ||||||||
Rockies Express Pipeline LLC 6.85% 20185 | 12,500 | 13,464 | ||||||||
Devon Energy Corp. 5.625% 2014 | 3,000 | 3,360 | ||||||||
Devon Energy Corp. 6.30% 2019 | 5,635 | 6,629 | ||||||||
Devon Financing Corp. ULC 7.875% 2031 | 5,000 | 6,622 | ||||||||
StatoilHydro ASA 3.875% 2014 | 10,000 | 10,697 | ||||||||
StatoilHydro ASA 5.125% 20145 | 3,000 | 3,339 | ||||||||
StatoilHydro ASA 5.25% 2019 | 2,000 | 2,233 | ||||||||
Total Capital SA 3.00% 2015 | 12,250 | 12,649 | ||||||||
Total Capital SA 3.125% 2015 | 2,000 | 2,082 | ||||||||
Total Capital SA 4.45% 2020 | 1,000 | 1,061 | ||||||||
Enterprise Products Operating LLC 5.65% 2013 | 10,000 | 10,917 | ||||||||
Enterprise Products Operating LLC 7.00% 20676 | 4,830 | 4,361 | ||||||||
Energy Transfer Partners, LP 9.00% 2019 | 6,535 | 8,020 | ||||||||
Energy Transfer Partners, LP 9.70% 2019 | 4,660 | 5,874 | ||||||||
Gazprom OJSC 6.51% 20225 | 4,700 | 4,753 | ||||||||
Gazprom OJSC, Series 9, 6.51% 2022 | 3,800 | 3,843 | ||||||||
Gazprom OJSC 7.288% 20375 | 4,650 | 4,824 | ||||||||
Husky Energy Inc. 5.90% 2014 | 3,500 | 3,934 | ||||||||
Husky Energy Inc. 7.25% 2019 | 1,655 | 2,032 | ||||||||
Husky Energy Inc. 6.80% 2037 | 4,425 | 5,159 | ||||||||
Tengizchevroil Finance Co. S.àr.l., Series A, 6.124% 20145,8 | 8,040 | 8,389 | ||||||||
Tengizchevroil Finance Co. S.àr.l., Series A, 6.124% 20148 | 1,293 | 1,349 | ||||||||
General Maritime Corp. 12.00% 2017 | 8,500 | 8,989 | ||||||||
Canadian Natural Resources Ltd. 5.70% 2017 | 7,350 | 8,413 | ||||||||
XTO Energy Inc. 5.30% 2015 | 2,500 | 2,880 | ||||||||
XTO Energy Inc. 5.50% 2018 | 2,500 | 2,901 | ||||||||
Pemex Project Funding Master Trust 5.75% 2018 | 4,500 | 4,792 | ||||||||
Qatar Petroleum 5.579% 20115,8 | 4,446 | 4,555 | ||||||||
Chevron Corp. 3.95% 2014 | 500 | 541 | ||||||||
Chevron Corp. 4.95% 2019 | 2,300 | 2,584 | ||||||||
Apache Corp. 6.90% 2018 | 1,800 | 2,210 | ||||||||
BP Capital Markets PLC 3.875% 2015 | 2,000 | 1,914 | ||||||||
672,666 | ||||||||||
CONSUMER STAPLES — 1.02% | ||||||||||
Altria Group, Inc. 9.70% 2018 | 18,000 | 23,619 | ||||||||
Altria Group, Inc. 9.25% 2019 | 54,890 | 70,738 | ||||||||
Altria Group, Inc. 9.95% 2038 | 23,500 | 32,911 | ||||||||
Anheuser-Busch InBev NV 2.50% 20135 | 5,000 | 5,086 | ||||||||
Anheuser-Busch InBev NV 3.625% 20155 | 23,500 | 24,447 | ||||||||
Anheuser-Busch InBev NV 4.125% 2015 | 14,950 | 15,885 | ||||||||
Anheuser-Busch InBev NV 7.75% 20195 | 25,000 | 31,185 | ||||||||
Anheuser-Busch InBev NV 5.00% 20205 | 2,500 | 2,690 | ||||||||
Anheuser-Busch InBev NV 5.375% 2020 | 4,950 | 5,479 | ||||||||
SUPERVALU INC., Term Loan B, 1.566% 20126,8,9 | 493 | 478 | ||||||||
SUPERVALU INC. 7.50% 2012 | 3,323 | 3,464 | ||||||||
Albertson’s, Inc. 7.25% 2013 | 14,122 | 14,510 | ||||||||
SUPERVALU INC. 7.50% 2014 | 1,000 | 1,015 | ||||||||
SUPERVALU INC., Term Loan B2, 3.066% 20156,8,9 | 874 | 846 | ||||||||
SUPERVALU INC. 8.00% 2016 | 18,700 | 18,934 | ||||||||
Albertson’s, Inc. 7.45% 2029 | 2,000 | 1,670 | ||||||||
Albertson’s, Inc. 8.00% 2031 | 2,650 | 2,305 | ||||||||
Stater Bros. Holdings Inc. 8.125% 2012 | 20,025 | 20,175 | ||||||||
Stater Bros. Holdings Inc. 7.75% 2015 | 19,250 | 19,635 | ||||||||
CVS Caremark Corp. 4.75% 2020 | 3,810 | 3,975 | ||||||||
CVS Caremark Corp. 5.789% 20265,8 | 4,424 | 4,551 | ||||||||
CVS Caremark Corp. 6.943% 20308 | 11,881 | 13,083 | ||||||||
CVS Caremark Corp. 7.507% 20325,8 | 14,884 | 17,197 | ||||||||
PepsiCo, Inc. 3.10% 2015 | 15,000 | 15,813 | ||||||||
PepsiCo, Inc. 7.90% 2018 | 15,000 | 19,646 | ||||||||
Wal-Mart Stores, Inc. 2.25% 2015 | 5,000 | 5,087 | ||||||||
Wal-Mart Stores, Inc. 2.875% 2015 | 15,000 | 15,685 | ||||||||
Wal-Mart Stores, Inc. 3.625% 2020 | 6,810 | 6,857 | ||||||||
Wal-Mart Stores, Inc. 4.875% 2040 | 3,000 | 2,977 | ||||||||
Rite Aid Corp., Term Loan T4, 9.50% 20156,8,9 | 9,965 | 10,197 | ||||||||
Rite Aid Corp. 9.75% 2016 | 10,000 | 10,812 | ||||||||
Rite Aid Corp. 10.25% 2019 | 6,050 | 6,224 | ||||||||
Rite Aid Corp. 6.875% 2028 | 2,300 | 1,248 | ||||||||
Wesfarmers Ltd. 6.998% 20135 | 25,000 | 27,523 | ||||||||
Constellation Brands, Inc. 8.375% 2014 | 3,675 | 3,987 | ||||||||
Constellation Brands, Inc. 7.25% 2017 | 21,000 | 21,945 | ||||||||
Kroger Co. 3.90% 2015 | 11,130 | 11,923 | ||||||||
Kroger Co. 6.40% 2017 | 8,250 | 9,741 | ||||||||
Kraft Foods Inc. 2.625% 2013 | 8,930 | 9,184 | ||||||||
Kraft Foods Inc. 4.125% 2016 | 5,000 | 5,354 | ||||||||
Kraft Foods Inc. 5.375% 2020 | 5,000 | 5,480 | ||||||||
Tyson Foods, Inc. 10.50% 2014 | 6,050 | 7,260 | ||||||||
Tyson Foods, Inc. 7.85% 20166 | 11,500 | 12,751 | ||||||||
Unilever Capital Corp. 3.65% 2014 | 17,500 | 18,669 | ||||||||
Procter & Gamble Co. 3.50% 2015 | 17,250 | 18,595 | ||||||||
Delhaize Group 6.50% 2017 | 6,301 | 7,388 | ||||||||
Delhaize America, Inc. 9.00% 2031 | 5,000 | 6,760 | ||||||||
Kimberly-Clark Corp. 7.50% 2018 | 9,000 | 11,643 | ||||||||
British American Tobacco International Finance PLC 9.50% 20185 | 8,705 | 11,619 | ||||||||
Tesco PLC 5.50% 20175 | 9,000 | 10,067 | ||||||||
Smithfield Foods, Inc., Series B, 7.75% 2013 | 2,800 | 2,821 | ||||||||
Smithfield Foods, Inc. 10.00% 20145 | 5,050 | 5,669 | ||||||||
Safeway Inc. 6.35% 2017 | 4,000 | 4,706 | ||||||||
TreeHouse Foods, Inc. 7.75% 2018 | 3,100 | 3,282 | ||||||||
Elizabeth Arden, Inc. 7.75% 2014 | 3,150 | 3,174 | ||||||||
Spectrum Brands Inc. 9.50% 20185 | 3,000 | 3,169 | ||||||||
651,134 | ||||||||||
MATERIALS — 0.76% | ||||||||||
Dow Chemical Co. 7.60% 2014 | 40,450 | 47,263 | ||||||||
Dow Chemical Co. 8.55% 2019 | 20,300 | 25,393 | ||||||||
Dow Chemical Co. 9.40% 2039 | 1,160 | 1,634 | ||||||||
Georgia Gulf Corp. 10.75% 20161 | 3,385 | 3,554 | ||||||||
Georgia Gulf Corp. 9.00% 20171,5 | 50,965 | 53,959 | ||||||||
International Paper Co. 7.40% 2014 | 12,500 | 14,523 | ||||||||
International Paper Co. 7.95% 2018 | 22,545 | 27,254 | ||||||||
International Paper Co. 9.375% 2019 | 1,505 | 1,960 | ||||||||
International Paper Co. 7.30% 2039 | 7,000 | 8,049 | ||||||||
Owens-Brockway Glass Container Inc. 6.75% 2014 | 585 | 598 | ||||||||
Owens-Brockway Glass Container Inc. 7.375% 2016 | 30,255 | 32,600 | ||||||||
Reynolds Group 7.75% 20165 | 8,180 | 8,589 | ||||||||
Reynolds Group 8.50% 20185 | 23,510 | 24,274 | ||||||||
Nalco Finance Holdings LLC and Nalco Finance Holdings Inc. 9.00% 2014 | 7,200 | 7,425 | ||||||||
Nalco Co., Term Loan B, 5.75% 20166,8,9 | 5,485 | 5,515 | ||||||||
Nalco Co. 8.25% 2017 | 17,485 | 18,884 | ||||||||
Teck Resources Ltd. 10.75% 2019 | 24,000 | 30,016 | ||||||||
Ball Corp. 7.125% 2016 | 12,700 | 13,716 | ||||||||
Ball Corp. 7.375% 2019 | 2,125 | 2,306 | ||||||||
Ball Corp. 6.75% 2020 | 12,960 | 13,673 | ||||||||
LBI Escrow Corp 8.00% 20175 | 18,355 | 19,341 | ||||||||
Rio Tinto Finance (USA) Ltd. 5.875% 2013 | 10,000 | 11,122 | ||||||||
Rio Tinto Finance (USA) Ltd. 8.95% 2014 | 6,500 | 8,006 | ||||||||
ArcelorMittal 6.125% 2018 | 17,500 | 19,018 | ||||||||
BHP Billiton Finance (USA) Ltd. 5.50% 2014 | 11,730 | 13,285 | ||||||||
Georgia-Pacific Corp. 8.125% 2011 | 5,875 | 6,081 | ||||||||
Georgia-Pacific LLC 8.25% 20165 | 6,500 | 7,085 | ||||||||
Graphic Packaging International, Inc. 9.50% 2017 | 11,150 | 11,986 | ||||||||
Freeport-McMoRan Copper & Gold Inc. 8.25% 2015 | 4,380 | 4,757 | ||||||||
Freeport-McMoRan Copper & Gold Inc. 8.375% 2017 | 5,350 | 5,986 | ||||||||
FMG Finance Pty Ltd. 10.625% 20165 | 6,000 | 6,870 | ||||||||
MacDermid 9.50% 20175 | 6,120 | 6,304 | ||||||||
Smurfit Capital Funding PLC 7.50% 2025 | 4,725 | 4,371 | ||||||||
Rockwood Specialties Group, Inc. 7.50% 2014 | 3,240 | 3,313 | ||||||||
Arbermarle Corp. 5.10% 2015 | 2,570 | 2,804 | ||||||||
Rock-Tenn Co. 9.25% 2016 | 2,280 | 2,488 | ||||||||
Plastipak Holdings, Inc. 8.50% 20155 | 2,275 | 2,343 | ||||||||
Solutia Inc. 8.75% 2017 | 1,680 | 1,839 | ||||||||
Airgas, Inc. 7.125% 20185 | 1,250 | 1,392 | ||||||||
Praxair, Inc. 4.375% 2014 | 1,000 | 1,092 | ||||||||
CRH America Inc. 6.95% 2012 | 315 | 340 | ||||||||
CRH America, Inc. 8.125% 2018 | 500 | 599 | ||||||||
CEMEX SA 9.25% 20205 | 979 | 883 | ||||||||
Newpage Corp. 11.375% 2014 | 875 | 815 | ||||||||
483,305 | ||||||||||
ASSET-BACKED OBLIGATIONS8 — 0.36% | ||||||||||
AmeriCredit Automobile Receivables Trust, Series 2007-C-M, Class A-4-A, MBIA insured, 5.55% 2014 | 12,000 | 12,613 | ||||||||
AmeriCredit Automobile Receivables Trust, Series 2007-D-F, Class A-4-A, FSA insured, 5.56% 2014 | 7,000 | 7,311 | ||||||||
AmeriCredit Automobile Receivables Trust, Series 2008-A-F, Class A-4, FSA insured, 6.96% 2014 | 15,000 | 16,098 | ||||||||
Honda Auto Receivables Owner Trust, Series 2007-2, Class A-4, 5.57% 2013 | 21,136 | 21,604 | ||||||||
Honda Auto Receivables Owner Trust, Series 2010-2, Class A-4, 1.92% 2013 | 3,335 | 3,394 | ||||||||
CPS Auto Receivables Trust, Series 2006-A, Class 1-A-4, FSA insured, 5.33% 20125 | 2,348 | 2,358 | ||||||||
CPS Auto Receivables Trust, Series 2006-B, Class A-4, MBIA insured, 5.81% 20125 | 1,192 | 1,210 | ||||||||
CPS Auto Receivables Trust, Series 2006-C, Class A-4, XLCA insured, 5.14% 20135 | 5,115 | 5,211 | ||||||||
CPS Auto Receivables Trust, Series 2007-B, Class A-4, FSA insured, 5.60% 20145 | 8,931 | 9,277 | ||||||||
UPFC Auto Receivables Trust, Series 2007-B, Class A-3, AMBAC insured, 6.15% 2014 | 12,729 | 13,185 | ||||||||
Chase Issuance Trust, Series 2008-4, Class A, 4.65% 2015 | 10,000 | 10,904 | ||||||||
PG&E Energy Recovery Funding LLC, Series 2005-1, Class A-3, 4.14% 2012 | 1,109 | 1,115 | ||||||||
PG&E Energy Recovery Funding LLC, Series 2005-2, Class A-3, 5.12% 2014 | 8,040 | 8,724 | ||||||||
AEP Texas Central Transitioning Funding II LLC, Secured Transition Bonds, Series A, Class A-3, 5.09% 2017 | 8,265 | 9,311 | ||||||||
First Horizon ABS Trust, Series 2006-HE2, Class A, FSA insured, 0.459% 20266 | 4,262 | 2,977 | ||||||||
First Horizon ABS Trust, Series 2007-HE1, Class A, FSA insured, 0.477% 20296 | 8,517 | 6,316 | ||||||||
Aesop Funding II LLC, Series 2010-2A, Class A, 3.63% 20145 | 5,000 | 5,111 | ||||||||
Aesop Funding II LLC, Series 2010-3A, Class B, 6.74% 20165 | 3,000 | 3,149 | ||||||||
Long Beach Acceptance Auto Receivables Trust, Series 2006-B, Class A-4, FSA insured, 5.18% 2013 | 7,821 | 7,929 | ||||||||
J.P. Morgan Mortgage Acquisition Corp., Series 2005-FRE1, Class A-F-4, 4.864% 20356 | 9,032 | 7,929 | ||||||||
Home Equity Asset Trust, Series 2004-7, Class M-1, 0.949% 20356 | 10,000 | 7,771 | ||||||||
CWHEQ Revolving Home Equity Loan Trust, Series 2006-I, Class 2-A, FSA insured, 0.481% 20376 | 4,366 | 3,176 | ||||||||
CWHEQ Revolving Home Equity Loan Trust, Series 2007-C, Class A, FGIC insured, 0.491% 20376 | 10,389 | 2,472 | ||||||||
Nissan Auto Lease Trust, Series 2008-A, Class A-3a, 5.14% 2011 | 5,520 | 5,528 | ||||||||
Citibank Credit Card Issuance Trust, Series 2008, Class C6, 6.30% 2014 | 2,000 | 2,143 | ||||||||
Citibank Credit Card Issuance Trust, Series 2008, Class A5, 4.85% 2015 | 3,000 | 3,289 | ||||||||
Countryplace Manufactured Housing Contract, Series 2005-1, Class A-3, AMBAC insured, 4.80% 20355 | 5,025 | 4,380 | ||||||||
Countryplace Manufactured Housing Contract, Series 2005-1, Class A-4, AMBAC insured, 5.20% 20355,6 | 1,145 | 863 | ||||||||
MBNA Credit Card Master Note Trust, Series 2001-C, Class C, 7.10% 20135 | 5,000 | 5,163 | ||||||||
MBNA Master Credit Card Trust II, Series 2000-H, Class B, 0.941% 20136 | 5,000 | 5,000 | ||||||||
Hertz Vehicle Financing LLC, Rental Car Asset-backed Notes, Series 2005-2, Class A-6, AMBAC insured, 5.08% 20115 | 4,250 | 4,281 | ||||||||
RAMP Trust, Series 2003-RZ4, Class A-7, 4.79% 20336 | 4,510 | 4,172 | ||||||||
Conseco Finance Home Loan Trust, Series 1999-G, Class B-2, 10.96% 2029 | 13,702 | 3,496 | ||||||||
Residential Asset Securities Corp. Trust, Series 2001-KS3, Class A-I-6, 5.96% 2031 | 3,476 | 3,286 | ||||||||
Residential Asset Securities Corp. Trust, Series 2003-KS6, Class A-2, 0.929% 20336 | 92 | 70 | ||||||||
CWHEQ Home Equity Loan Trust, Series 2006-S2, Class A-5, FGIC insured, 5.753% 2027 | 7,346 | 3,255 | ||||||||
Ameriquest Mortgage Securities Inc., Series 2003-12, Class M-1, 1.079% 20346 | 4,581 | 3,240 | ||||||||
Vanderbilt Mortgage and Finance, Inc., Series 1999-B, Class I-A-6, 6.925% 2024 | 2,827 | 2,838 | ||||||||
Prestige Auto Receivables Trust, Series 2006-1A, Class A-2, FSA insured, 5.25% 20135 | 2,217 | 2,300 | ||||||||
Home Equity Mortgage Trust, Series 2006-6, Class 2A-1, 0.429% 20376 | 15,477 | 862 | ||||||||
Home Equity Mortgage Trust, Series 2006-5, Class A-1, 5.50% 20376 | 5,050 | 710 | ||||||||
Advanta Business Card Master Trust, Series 2005-A2, Class A-2, 0.468% 20136 | 901 | 895 | ||||||||
SACO I Trust, Series 2006-12, Class I-A, 0.469% 20366 | 7,733 | 859 | ||||||||
CarMax Auto Owner Trust, Series 2007-2, Class A-3, 5.23% 2011 | 551 | 553 | ||||||||
226,328 | ||||||||||
BONDS & NOTES OF GOVERNMENTS & GOVERNMENT AGENCIES OUTSIDE THE U.S. — 0.28% | ||||||||||
United Mexican States Government Global 5.875% 2014 | 20,000 | 22,170 | ||||||||
United Mexican States Government Global, Series A, 6.75% 2034 | 3,990 | 4,768 | ||||||||
Croatian Government 6.75% 20195 | 14,000 | 15,115 | ||||||||
Croatian Government 6.75% 2019 | 5,500 | 5,938 | ||||||||
Croatian Government 6.625% 20205 | 2,000 | 2,150 | ||||||||
Hungarian Government 6.25% 2020 | 21,310 | 21,726 | ||||||||
Polish Government 6.375% 2019 | 18,985 | 21,643 | ||||||||
Russian Federation 7.50% 20308 | 17,728 | 20,687 | ||||||||
France Government Agency-Guaranteed, Société Finance 2.875% 20145 | 10,000 | 10,386 | ||||||||
Province of Ontario, Series 1, 1.875% 2012 | 10,000 | 10,180 | ||||||||
South Africa (Republic of) 6.875% 2019 | 2,050 | 2,427 | ||||||||
South Africa (Republic of) 5.50% 2020 | 5,000 | 5,375 | ||||||||
Brazil (Federal Republic of) Global 6.00% 2017 | 4,200 | 4,777 | ||||||||
Brazil (Federal Republic of) Global 7.125% 2037 | 2,000 | 2,490 | ||||||||
Greek Government 4.625% 2013 | 7,500 | 6,340 | ||||||||
State of Qatar 9.75% 2030 | 4,000 | 6,000 | ||||||||
Israeli Government 5.125% 2019 | 5,500 | 5,964 | ||||||||
Peru (Republic of) 7.125% 2019 | 3,780 | 4,626 | ||||||||
Aries Vermögensverwaltungs GmbH, Series C, 9.60% 2014 | 2,500 | 3,206 | ||||||||
175,968 | ||||||||||
MUNICIPALS — 0.00% | ||||||||||
State of South Dakota, Educational Enhancement Funding Corp., Tobacco Settlement Asset-backed Bonds, | ||||||||||
Series 2002-A, Class A, 6.72% 2025 | 2,692 | 2,410 | ||||||||
MISCELLANEOUS — 0.15% | ||||||||||
Other bonds & notes in initial period of acquisition | 93,711 | |||||||||
Total bonds & notes (cost: $19,343,315,000) | 20,182,498 | |||||||||
Short-term securities — 3.50% | ||||||||||
Fannie Mae 0.19%–0.51% due 8/25/2010–5/2/2011 | 691,311 | 690,817 | ||||||||
Freddie Mac 0.18%–0.32% due 8/3–12/7/2010 | 515,890 | 515,724 | ||||||||
Straight-A Funding LLC 0.29%–0.40% due 8/10–10/6/20105 | 180,853 | 180,793 | ||||||||
Procter & Gamble Co. 0.20%–0.25% due 9/7–10/21/20105 | 173,000 | 172,924 | ||||||||
U.S. Treasury Bills 0.11%–0.325% due 8/19–9/23/2010 | 136,100 | 136,085 | ||||||||
PepsiCo Inc. 0.20% due 9/9–9/13/20105 | 116,700 | 116,673 | ||||||||
Federal Farm Credit Banks 0.23%–0.35% due 8/12–9/30/2010 | 100,000 | 99,978 | ||||||||
Google, Inc. 0.23% due 10/26/20105 | 82,000 | 81,920 | ||||||||
Federal Home Loan Bank 0.18%–0.35% due 10/4–10/6/2010 | 73,300 | 73,276 | ||||||||
Coca-Cola Co. 0.21% due 9/8/20105 | 60,000 | 59,982 | ||||||||
General Electric Co. 0.18% due 8/2/2010 | 57,100 | 57,099 | ||||||||
NetJets Inc. 0.21% due 9/3/20105 | 40,000 | 39,992 | ||||||||
Total short-term securities (cost: $2,224,970,000) | 2,225,263 | |||||||||
Total investment securities (cost: $62,432,079,000) | 62,905,620 | |||||||||
Other assets less liabilities | 624,828 | |||||||||
Net assets | 63,530,448 |
“Miscellaneous” securities include holdings in their initial period of acquisition that have not previously been publicly disclosed.
1Represents an affiliated company as defined under the Investment Company Act of 1940. |
2Valued under fair value procedures adopted by authority of the board of directors. The total value of all such securities, including those in “Miscellaneous” was $9,172,493,000, which represented 14.44% of the net assets of the fund. This amount includes $9,076,180,000 related to certain securities trading outside the U.S. whose values were adjusted as a result of significant market movements following the close of local trading. |
3Security did not produce income during the last 12 months. |
4Acquired in a transaction exempt from registration under the Securities Act of 1933. May be subject to legal or contractual restrictions on resale. Further details on these holdings appear below. |
Acquisition | Cost | Value | Percent of net | ||||||||||
date | (000 | ) | (000 | ) | assets | ||||||||
NXP BV and NXP Funding LLC 10.00% 2013 | 7/17/2009 | $ | 31,016 | $ | 41,544 | .06 | % | ||||||
Cooper-Standard Holdings Inc. | 5/27/2010 | 17,000 | 17,060 | .03 | |||||||||
Atrium Corp. | 4/30/2010 | 163 | 163 | .00 | |||||||||
American Media Operations, Inc. | 1/30/2009 | 3 | 3 | .00 | |||||||||
Total restricted securities | $ | 48,182 | $ | 58,770 | .09 | % |
5Acquired 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 $4,672,572,000, which represented 7.35% of the net assets of the fund. |
6Coupon rate may change periodically. |
7Index-linked bond whose principal amount moves with a government retail price index. |
8Principal payments may be made periodically. Therefore, the effective maturity date may be earlier than the stated maturity date. |
9Loan participations and assignments; may be subject to legal or contractual restrictions on resale. The total value of all such loans was $861,327,000, which represented 1.36% of the net assets of the fund. |
10Payment in kind; the issuer has the option of paying additional securities in lieu of cash. |
11Step bond; coupon rate will increase at a later date. |
12Scheduled interest and/or principal payment was not received. |
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 they may lose value.
Investors should carefully consider the investment objectives, risks, charges and expenses of the American Funds. This and other important information is contained in the fund’s 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.
MFGEFP-906-0910O-S25525
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, 2010, and for the year then ended and have issued our report thereon dated September 7, 2010, 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, 2010, 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 statement s 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 7, 2010
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 share holder 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, 2010 |
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, 2010 |
By /s/ Jennifer M. Buchheim |
Jennifer M. Buchheim, Treasurer and Principal Financial Officer |
Date: September 30, 2010 |