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
(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, 2012
Patrick F. Quan
The Income Fund of America
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 fall leaves]
Special feature
Diversity four ways
u See page 6
Annual report for the year ended July 31, 2012
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 more than 40 offered by American Funds, which is one of the nation’s largest mutual fund families. For more than 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, 2012 (the most recent calendar quarter-end): | ||||||||||||
Class A shares | 1 year | 5 years | 10 years | |||||||||
Reflecting 5.75% maximum sales charge | –1.03 | % | 0.30 | % | 6.22 | % |
The total annual fund operating expense ratio is 0.59% for Class A shares as of the prospectus dated October 1, 2012 (unaudited).
Investment results assume all distributions are reinvested and reflect applicable fees and expenses. When applicable, investment results reflect fee waivers, without which results would have been lower. Visit americanfunds.com for more information.
The fund’s 30-day yield for Class A shares as of August 31, 2012, calculated in accordance with the U.S. Securities and Exchange Commission (SEC) formula, was 3.12%. The fund’s distribution rate for Class A shares as of that date was 3.69%. Both reflect the 5.75% maximum sales charge. The SEC yield reflects the rate at which the fund is earning income on its current portfolio of securities while the distribution rate reflects the fund’s past dividends paid to shareholders. Accordingly, the fund’s SEC yield and distribution rate may differ.
Results for other share classes can be found on page 34.
The return of principal for 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. These risks may be heightened in connection with investments in developing countries. Refer to the fund prospectus and the Risk Factors section of this report for more information on these and other risks associated with investing in the fund.
Fellow investors:
For the 12 months ended July 31, 2012, The Income Fund of America (IFA) gained 8.4%. The fund’s return slightly trailed the 9.1% gain turned in by the unmanaged Standard & Poor’s 500 Composite Index, a broad measure of the U.S. stock market. IFA’s return outpaced the 7.3% gain posted by the unmanaged Barclays U.S. Aggregate Index, a gauge of the U.S. bond market, and doubled that of its income-fund peers as measured by the Lipper Income Funds Index, which rose 4.2%.
IFA seeks to deliver solid investment results over full market cycles, and its long-term results compare favorably with the broader stock and bond markets as well as its peer group. As you can see in the table below, it has bested the S&P 500 in all the longer time periods shown and meaningfully surpassed returns for the Barclays and Lipper benchmarks for the available 10-year and lifetime periods ended July 31, 2012.
Uncertainty abounds
The uncertainty that has hung over the global economy translated into considerable market volatility during the fund’s fiscal year. The outset of the period was punctuated by a market decline brought on by global economic slowing, the sovereign debt crisis in Europe and Standard & Poor’s downgrade of the U.S. credit rating. Markets reversed course in early fall and plotted a fairly steady rise into late spring when fear over Europe’s fiscal crisis resurfaced and sparked another sell-off.
[Begin Sidebar]
Results at a glance (with dividends reinvested or interest compounded) | ||||||||||||||||
Average annual total returns for periods ended July 31, 2012 | ||||||||||||||||
1 year | 5 years | 10 years | Lifetime1 | |||||||||||||
The Income Fund of America (Class A shares) | 8.4 | % | 2.5 | % | 7.7 | % | 11.3 | % | ||||||||
Standard & Poor’s 500 Composite Index2 | 9.1 | 1.1 | 6.3 | 10.5 | ||||||||||||
Lipper Income Funds Index | 4.2 | 3.4 | 5.9 | — | 3 | |||||||||||
Barclays U.S. Aggregate Index2 | 7.3 | 6.9 | 5.6 | 8.1 | 4 | |||||||||||
Consumer Price Index (inflation)5 | 1.4 | 1.9 | 2.4 | 4.2 | ||||||||||||
1 Since December 1, 1973, when Capital Research and Management Company became the fund’s investment adviser. | ||||||||||||||||
2 The indexes are unmanaged and, therefore, have no expenses. | ||||||||||||||||
3 The inception date for the index was December 31, 1988. | ||||||||||||||||
4 From December 1, 1973, through December 31, 1975, the Barclays U.S. Government/Credit Index was used because the Barclays U.S. Aggregate Index did not yet exist. | ||||||||||||||||
5 Computed from data supplied by the U.S. Department of Labor, Bureau of Labor Statistics. |
[End Sidebar]
[photo of fall leaves]
[Begin Sidebar]
In this report | |
Special feature | |
6 | Diversity four ways |
How a risk-sensitive approach to income creates significant diversity within IFA’s portfolio. | |
Contents | |
1 | Letter to investors |
4 | The value of a long-term perspective |
12 | About your fund |
13 | The portfolio at a glance |
14 | Summary investment portfolio |
19 | Financial statements |
35 | Board of trustees and other officers |
[End Sidebar]
In keeping with its risk-sensitive orientation, The Income Fund of America held up better than the broader stock market during the period’s two biggest downturns while trailing during the climb.
Market trends influence results
The areas of the market turning in the best results were the higher yielding sectors that typically fare well during uncertain periods. Thanks to IFA’s income orientation and research-intensive approach to building the portfolio, the fund was heavily invested in select companies from a number of these areas. These included health care, consumer staples and telecommunication services.
Conversely, the uncertainty that arose at various points weighed on several areas that generally do better when economic conditions are improving. These included energy, materials and information technology, and IFA’s holdings within those sectors held back returns. However, thanks to solid stock selection, the fund was actually helped by excellent results for its investments among financials, another economically sensitive sector that otherwise struggled.
Solid stock selection at the top
Solid results for some of the fund’s 10 largest holdings were key drivers of results. Among those notching the best returns were Merck (29.4%), specialty real estate investment trust (REIT) HCP (28.5%), Verizon (27.9%) and Bristol-Myers Squibb (24.2%). And underscoring the potential for research to identify companies with the capacity to do well even in environments that might not be especially favorable to them, Home Depot (49.4%) and General Electric (15.9%) both outpaced the broader equity market.
Not all top-10 investments fared as well. The return for Waste Management (9.2%) was in line with the S&P 500 while a challenging energy environment caused Chevron (5.4%) to lag equities and took a toll on Royal Dutch Shell (–5.3%); DuPont (–3.4%) finished in negative territory.
Challenges abroad, with exceptions
To broaden IFA’s pool of potential opportunities, up to 25% of assets can be invested in stocks of companies domiciled outside the United States. As of period-end, IFA was well short of this threshold with 18.5% invested beyond our shores.
Markets abroad, particularly in Europe, were extremely challenging during the 12 months. For IFA, the uncertainty was manifested most acutely in a handful of the fund’s European telecommunications investments whose stock prices were hurt by concerns over the sustainability of their dividends. And though, on balance, non-U.S. investments detracted from results, once again our research led us to a number of companies whose results cut against the grain. These included Australian telecom giant Telstra (28.0%), British American Tobacco (15.1%) and Coca Cola Amatil (17.9%), the brand’s leading bottler in Australia.
[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, bonds and the average income fund and lower volatility than stocks. In addition, 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, 2012
[begin chart]
5 Years | 10 Years | Since 12/31/75 | ||||||||||||||||||||||
Fund | Annual Return | Annual Std Dev | Annual Return | Annual Std Dev | Annual Return | Annual Std Dev | ||||||||||||||||||
Income Fund of America | 2.50 | 13.44 | 7.65 | 10.78 | 11.20 | 9.62 | ||||||||||||||||||
Barclays Capital US Aggregate Bond | 6.91 | 3.54 | 5.65 | 3.62 | 8.28 | 5.57 | ||||||||||||||||||
S&P 500 | 1.13 | 18.98 | 6.33 | 15.54 | 11.04 | 15.32 | ||||||||||||||||||
Lipper Income Funds Index | 3.40 | 9.51 | 5.85 | 7.43 |
[end chart]
Sources: Stocks — S&P 500; Bonds — Barclays 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]
Fixed income helps objectives
Fixed-income securities made up 26.8% of IFA’s portfolio and were drawn from across the credit-quality spectrum. High-yield bonds, which constituted one of the largest shares of the fund’s fixed-income investments and played a key role in delivering income, posted solid results for the 12 months. Also additive for IFA were U.S. Treasury bonds, which turned in the best results within the fixed-income universe as investors sought security amid the period’s uncertainty.
Shifts in the portfolio
IFA allows investment professionals considerable flexibility in their risk-sensitive pursuit of the fund’s income objective. And their adapting to market conditions can cause shifts in the fund’s portfolio. For example, in recent years declining interest rates have caused an erosion in bond yields which has, in many cases, reduced their attractiveness relative to dividend-paying stocks. IFA’s portfolio has gradually come to reflect this shift, with fixed-income securities representing the smallest share of the portfolio in several years.
In addition to benefiting from flexibility, the fund’s portfolio counselors and analysts rely on fundamental research to uncover opportunities within sectors and industries that may be out of favor and, as a result, feature attractive valuations. During the 12 months, two such areas of the market — energy and materials — fit that description and we took the opportunity to add to select holdings in both of those sectors.
Balancing optimism and caution
The challenges that continue to face the global economy are highly complex and won’t be resolved quickly or easily. Yet we are encouraged by some of the steps being taken to deal with the fiscal challenges facing various regions.
We will continue to pursue our income-focused approach while paying careful attention to market risk and keeping a close eye on valuations.
We thank you for your continuing 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, 2012
For current information about the fund, visit americanfunds.com.
[Begin Sidebar]
A lifetime of high current income
The Income Fund of America’s 12-month dividend yield vs. benchmarks
Year ended July 31
[begin line chart]
Year-end | The Income Fund of America | Lipper Income Funds Average | S&P 500 | |||||||||
1/31/1975 | 7.30 | 7.34 | 4.71 | |||||||||
7/31/1975 | 7.24 | 6.98 | 4.18 | |||||||||
1/31/1976 | 6.30 | 6.53 | 3.65 | |||||||||
7/31/1976 | 7.06 | 6.54 | 3.66 | |||||||||
1/31/1977 | 6.94 | 6.30 | 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 | 7.10 | 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 | 7.65 | 3.37 | |||||||||
7/31/1990 | 6.51 | 7.60 | 3.31 | |||||||||
1/31/1991 | 7.45 | 8.53 | 3.52 | |||||||||
7/31/1991 | 7.00 | 7.52 | 3.11 | |||||||||
1/31/1992 | 6.39 | 6.69 | 2.96 | |||||||||
7/31/1992 | 6.08 | 6.16 | 2.89 | |||||||||
1/31/1993 | 5.96 | 5.66 | 2.83 | |||||||||
7/31/1993 | 5.76 | 5.23 | 2.79 | |||||||||
1/31/1994 | 5.54 | 4.99 | 2.64 | |||||||||
7/31/1994 | 6.03 | 5.14 | 2.80 | |||||||||
1/31/1995 | 6.14 | 5.53 | 2.81 | |||||||||
7/31/1995 | 5.55 | 4.78 | 2.41 | |||||||||
1/31/1996 | 5.07 | 4.55 | 2.18 | |||||||||
7/31/1996 | 5.19 | 4.62 | 2.28 | |||||||||
1/31/1997 | 5.09 | 4.26 | 1.89 | |||||||||
7/31/1997 | 4.74 | 4.08 | 1.61 | |||||||||
1/31/1998 | 4.27 | 4.21 | 1.59 | |||||||||
7/31/1998 | 4.32 | 4.12 | 1.43 | |||||||||
1/31/1999 | 4.79 | 3.94 | 1.29 | |||||||||
7/31/1999 | 4.86 | 4.14 | 1.24 | |||||||||
1/31/2000 | 5.40 | 4.57 | 1.19 | |||||||||
7/31/2000 | 5.49 | 4.69 | 1.15 | |||||||||
1/31/2001 | 4.78 | 4.71 | 1.20 | |||||||||
7/31/2001 | 4.80 | 4.58 | 1.30 | |||||||||
1/31/2002 | 5.01 | 4.18 | 1.40 | |||||||||
7/31/2002 | 5.49 | 3.94 | 1.75 | |||||||||
1/31/2003 | 5.45 | 3.67 | 1.88 | |||||||||
7/31/2003 | 4.69 | 3.32 | 1.66 | |||||||||
1/31/2004 | 4.05 | 2.79 | 1.54 | |||||||||
7/31/2004 | 3.98 | 2.77 | 1.69 | |||||||||
1/31/2005 | 3.57 | 2.46 | 1.64 | |||||||||
7/31/2005 | 3.44 | 2.41 | 1.70 | |||||||||
1/31/2006 | 3.75 | 2.70 | 1.75 | �� | ||||||||
7/31/2006 | 3.84 | 2.77 | 1.83 | |||||||||
1/31/2007 | 4.24 | 3.00 | 1.75 | |||||||||
7/31/2007 | 4.43 | 3.09 | 1.81 | |||||||||
1/31/2008 | 4.68 | 3.58 | 2.03 | |||||||||
7/31/2008 | 5.23 | 3.88 | 2.29 | |||||||||
1/31/2009 | 6.72 | 4.52 | 3.39 | |||||||||
7/31/2009 | 5.64 | 3.82 | 2.53 | |||||||||
1/31/2010 | 4.56 | 3.18 | 2.07 | |||||||||
7/31/2010 | 4.26 | 2.91 | 2.00 | |||||||||
1/31/2011 | 4.45 | 2.79 | 1.78 | |||||||||
7/31/2011 | 4.40 | 2.78 | 1.90 | |||||||||
1/31/2012 | 4.09 | 2.63 | 2.03 | |||||||||
7/31/2012 | 3.96 | 2.51 | 2.07 |
[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, 2012)* | ||||||||||||
1 year | 5 years | 10 years | ||||||||||
Class A shares | 2.19 | % | 1.29 | % | 7.02 | % | ||||||
*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. When applicable, investment results reflect fee waivers, without which results would have been lower. Visit americanfunds.com for more information.
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, 2012 | ||||||||
The Income Fund of America | Industry average† | |||||||
Expense ratio | 0.59 | % | 1.07 | % | ||||
Portfolio turnover rate | 41 | % | 44 | % |
*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. |
†Source for industry average: Lipper Income Funds. Industry average expense ratio based on statistics for front-end load funds, excluding funds of funds, for the most recent fiscal year-ends available as of 6/30/12. |
[begin mountain chart]
Year End July 31 | IFA1,7,8 remaining amounts if dividends taken in cash | IFA1,4,8 with dividends reinvested | Barclays 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 | 33,352 | 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 | 51,203 | 87,239 | ||||||||||||
1992 | 28,370 | 113,237 | 58,771 | 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 | 83,416 | 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 | ||||||||||||
2011 | 53,196 | 540,592 | 191,288 | 435,335 | ||||||||||||
2012 | 55,359 | 586,256 | 205,164 | 474,975 |
Year ended July 31 | 1974 | 3 | 1975 | 1976 | 1977 | 1978 | 1979 | 1980 | 1981 | |||||||||||||||||||||||
Value of dividends | ||||||||||||||||||||||||||||||||
Dividends in cash8 | $ | 343 | 734 | 859 | 781 | 843 | 937 | 952 | 1,046 | |||||||||||||||||||||||
Dividends reinvested8 | $ | 346 | 785 | 997 | 970 | 1,117 | 1,333 | 1,463 | 1,743 | |||||||||||||||||||||||
Value of investment | ||||||||||||||||||||||||||||||||
Dividends in cash8 | $ | 8,767 | 10,141 | 12,155 | 12,701 | 12,584 | 12,693 | 12,490 | 12,818 | |||||||||||||||||||||||
Dividends reinvested8 | $ | 9,088 | 11,391 | 14,750 | 16,392 | 17,403 | 18,921 | 20,161 | 22,484 | |||||||||||||||||||||||
IFA total return | (9.1 | )% | 25.3 | 29.5 | 11.1 | 6.2 | 8.7 | 6.6 | 11.5 | |||||||||||||||||||||||
Year ended July 31 | 1982 | 1983 | 1984 | 1985 | 1986 | 1987 | 1988 | 1989 | ||||||||||||||||||||||||
Value of dividends | ||||||||||||||||||||||||||||||||
Dividends in cash8 | 1,202 | 1,280 | 1,344 | 1,438 | 1,550 | 1,636 | 1,542 | 1,710 | ||||||||||||||||||||||||
Dividends reinvested8 | 2,187 | 2,548 | 2,895 | 3,365 | 3,909 | 4,431 | 4,479 | 5,337 | ||||||||||||||||||||||||
Value of investment | ||||||||||||||||||||||||||||||||
Dividends in cash8 | 12,256 | 16,112 | 15,738 | 19,443 | 21,668 | 23,568 | 22,341 | 25,644 | ||||||||||||||||||||||||
Dividends reinvested8 | 23,663 | 33,683 | 35,721 | 47,674 | 57,146 | 66,671 | 67,812 | 83,698 | ||||||||||||||||||||||||
IFA total return | 5.2 | 42.3 | 6.0 | 33.5 | 19.9 | 16.7 | 1.7 | 23.4 | ||||||||||||||||||||||||
Year ended July 31 | 1990 | 1991 | 1992 | 1993 | 1994 | 1995 | 1996 | 1997 | ||||||||||||||||||||||||
Value of dividends | ||||||||||||||||||||||||||||||||
Dividends in cash8 | 1,577 | 1,764 | 1,715 | 1,713 | 1,727 | 1,752 | 1,766 | 1,968 | ||||||||||||||||||||||||
Dividends reinvested8 | 5,269 | 6,311 | 6,579 | 6,995 | 7,471 | 8,046 | 8,581 | 10,074 | ||||||||||||||||||||||||
Value of investment | ||||||||||||||||||||||||||||||||
Dividends in cash8 | 24,351 | 25,390 | 28,370 | 29,917 | 28,788 | 31,571 | 34,007 | 41,731 | ||||||||||||||||||||||||
Dividends reinvested8 | 84,639 | 95,046 | 113,237 | 126,680 | 129,171 | 150,378 | 170,618 | 220,576 | ||||||||||||||||||||||||
IFA total return | 1.1 | 12.3 | 19.1 | 11.9 | 2.0 | 16.4 | 13.5 | 29.3 | ||||||||||||||||||||||||
Year ended July 31 | 1998 | 1999 | 2000 | 2001 | 2002 | 2003 | 2004 | 2005 | ||||||||||||||||||||||||
Value of dividends | ||||||||||||||||||||||||||||||||
Dividends in cash8 | 1,959 | 2,210 | 2,320 | 2,226 | 2,272 | 2,071 | 1,944 | 1,850 | ||||||||||||||||||||||||
Dividends reinvested8 | 10,530 | 12,446 | 13,740 | 13,913 | 14,927 | 14,311 | 14,072 | 13,921 | ||||||||||||||||||||||||
Value of investment | ||||||||||||||||||||||||||||||||
Dividends in cash8 | 44,436 | 45,588 | 42,276 | 46,460 | 41,359 | 44,136 | 49,057 | 54,032 | ||||||||||||||||||||||||
Dividends reinvested8 | 245,542 | 264,664 | 259,165 | 299,416 | 280,397 | 314,550 | 364,136 | 415,525 | ||||||||||||||||||||||||
IFA total return | 11.3 | 7.8 | (2.1 | ) | 15.5 | (6.4 | ) | 12.2 | 15.8 | 14.1 | ||||||||||||||||||||||
Year ended July 31 | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | |||||||||||||||||||||||||
Value of dividends | ||||||||||||||||||||||||||||||||
Dividends in cash8 | 2,180 | 2,728 | 2,784 | 2,483 | 2,069 | 2,343 | 2,191 | |||||||||||||||||||||||||
Dividends reinvested8 | 17,020 | 22,200 | 23,692 | 22,231 | 19,569 | 23,154 | 22,620 | |||||||||||||||||||||||||
Value of investment | ||||||||||||||||||||||||||||||||
Dividends in cash8 | 56,985 | 61,946 | 53,502 | 44,011 | 48,525 | 53,196 | 55,359 | |||||||||||||||||||||||||
Dividends reinvested8 | 456,119 | 518,361 | 469,245 | 409,572 | 471,376 | 540,592 | 586,256 | |||||||||||||||||||||||||
IFA total return | 9.8 | 13.6 | (9.5 | ) | (12.7 | ) | 15.1 | 14.7 | 8.4 |
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 adviser), through July 31, 1974. |
4Includes reinvested dividends of $355,580 and reinvested capital gain distributions of $131,223. |
5The indexes are unmanaged and, therefore, have no expenses. |
6From December 1, 1973, through December 31, 1975, the Barclays U.S. Government/Credit Index was used because the Barclays U.S. Aggregate Index did not yet exist. |
7Includes capital gain distributions of $24,067, but does not reflect income dividends of $65,808 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. |
Diversity four ways
[photo of different colored leaves]
The men and women who manage The Income Fund of America take a risk-sensitive approach to pursuing the fund’s income objective. Central to that mission is a portfolio diversified in multiple ways.
The global economy and markets worldwide are awash in complexity and feature considerable uncertainty. How long will Europe remain in the grip of its financial crisis? Can interest rates go lower? Is the Chinese economy slowing? Will the U.S. economy continue to strengthen and gain stability? Predicting how any one of these scenarios will play out is difficult; getting all of them right borders on the impossible.
Yet for investors confronting this uncertainty, one time-tested investment principle deserves particular attention — diversification. In the next few pages, we’ll take a look at why a broad-based, multi-layered portfolio can help investors navigate market and economic uncertainty. We’ll also examine how The Income Fund of America (IFA) provides investors with four layers of diversification — 1) among asset classes; 2) within asset classes; 3) geographically; and 4) through diversity of opinion and perspective.
More important than ever
“As investment managers, we work hard to develop insights that will serve fund investors. But we are far from omniscient. Political, economic and market events unfold in ways we don’t always anticipate,” explains Hilda Applbaum, vice chairman of The Income Fund of America and one of its portfolio counselors. “So from an investment standpoint, we never want to have all our eggs in one basket even if we think it’s a well-crafted basket. We don’t want a portfolio that can only fare well under specific conditions. Being diversified among asset classes, countries, industries, companies and currencies helps us pursue the fund’s objectives amid a variety of conditions.”
Asset class diversification: Mitigating risk, increasing flexibility
For IFA, diversification is not necessarily a goal unto itself but rather a natural by-product of the risk-sensitive pursuit of the fund’s primary objective — providing investors with current income.
“Providing a high level of current income is our foremost goal. But in our search for that income, we always pay close attention to risk. One important way we do that is by incorporating a variety of asset classes into the portfolio,” explains fund president and fixed-income portfolio counselor David Barclay. “By investing in stocks, bonds, convertible securities and cash, we hope to lower risk and provide solid returns over full market cycles.”
[photo of leaves hanging on branches]
[Begin Sidebar]
Income from far and wide
With the goal of delivering current income, The Income Fund of America invests in a highly diverse mix of securities and seeks opportunity worldwide. How the portfolio is allocated among investment types shifts over time as economic conditions, interest rates, the political climate and dividend trends cause investment professionals to adjust their views on the potential risks and rewards of the various asset classes. For example, in recent years, declining interest rates have caused yields on certain types of bonds to dip below the dividend yields of many stocks. This has led some portfolio counselors to trim bond holdings and increase their investments in stocks, a trend visible in the table to the right.
U.S. Equity | Non-U.S. Equity | Fixed-Income | Cash | |||||||||||||
2003 | 46.4 | % | 17.0 | % | 31.9 | % | 4.7 | % | ||||||||
2004 | 49.8 | 18.7 | 23.9 | 7.6 | ||||||||||||
2005 | 52.4 | 17.2 | 22.8 | 7.6 | ||||||||||||
2006 | 53.0 | 17.5 | 22.7 | 6.8 | ||||||||||||
2007 | 49.2 | 18.0 | 24.3 | 8.5 | ||||||||||||
2008 | 45.1 | 18.1 | 27.7 | 9.1 | ||||||||||||
2009 | 40.8 | 18.9 | 35.9 | 4.4 | ||||||||||||
2010 | 43.5 | 18.9 | 33.1 | 4.5 | ||||||||||||
2011 | 44.3 | 20.5 | 30.5 | 4.7 | ||||||||||||
2012 | 48.7 | 18.5 | 26.8 | 6.0 |
[End Sidebar]
[photo of a tree - mountains in the background]
The risk-reducing properties David speaks of have to do with the tendency of individual asset classes to respond differently to certain political, economic or market conditions. For example, when stocks are faltering due to global uncertainty, high-quality bonds like U.S. Treasuries have tended to do well. A diverse mix of asset classes that move in opposing directions can help temper volatility while also offering some of the upside of the individual asset classes.
The fund’s diversified approach to pursuing its objectives also affords investment professionals flexibility, which is pivotal to risk-sensitive income investing. The current environment offers a case in point.
“Right now, interest rates are very low and, as a result, so are yields for many types of bonds. This has reduced their appeal as income-producing investments,” explains portfolio counselor Dina Perry. “Yet because IFA pursues its income mandate through investments in multiple asset classes, portfolio counselors can increase their focus on investment opportunities they believe offer superior risk/reward profiles. In recent years, one such area has been dividend-paying stocks. Of course, these investments have always been mainstays of the fund’s portfolio, but their relative appeal has increased as interest rates declined.”
Not surprisingly, the low-interest rate environment has led IFA’s portfolio to gradually reflect the reality described by Dina, with stocks comprising a rising percentage of fund assets. Yet it’s important to note that the shifting asset class allocation of the fund’s portfolio is not the result of top-down decision making. Rather it reflects the individual actions of all the portfolio counselors making decisions on a company-by-company or issuer-by-issuer basis.
Diversification within asset classes
Just as results often diverge between asset classes, different types of investments within the same asset class can also behave differently. Consider stocks: In a thriving economy, stock prices of companies in sectors that tend to benefit from economic expansion — such as energy, materials and industrials — often post the best results. Conversely, during economic downturns, sectors regarded as defensive — such as utilities, telecommunications, health care and consumer staples — often hold up better than the broader market.
Similarly, high-yield bonds, which are among the riskier fixed-income investments, tend to post their best results when economic conditions are good and when the ability of the issuers to service their debt is thought to be improving. At the other end of the spectrum are U.S. Treasuries, which are generally regarded as the safest of the safe investments. While they furnish less income than high-yield bonds, they’ve historically held up well during rocky economic stretches when many investors seek stability.
Broad diversification within a given asset class can limit the impact that a downturn in one area of the stock or bond market can have on fund results. IFA’s equity portfolio features meaningful investments in all 10 sectors that make up the S&P 500 — from more economically sensitive tech companies to historically less volatile utilities. And the fund’s fixed-income portfolio houses investments from across the credit-quality spectrum.
“Were risk not a concern, the fund’s stock and bond portfolio might look markedly different. For example, the fund’s stock holdings might be concentrated in a handful of companies with the highest dividend yields while high-yield bonds would make up an even bigger share of IFA’s bond investments,” explains Hong Kong-based portfolio counselor Steve Watson. “But here again, we remain mindful of risk and alert to the fact that diversification plays an important part in tempering it.”
[photo of bushes with fall colored leaves]
[Begin Sidebar]
A deeper look at IFA’s portfolio
Stocks of companies in certain sectors have offered higher yields than the broader market and thus been mainstays of IFA’s portfolio. Yet as you can see, the fund’s stock holdings are drawn from all 10 of the economic sectors that make up equity markets — a manifestation of the fund’s company-by-company approach to portfolio construction.
Percent of | Number of | |||||||
Sector* | equity portfolio | companies | ||||||
Financials | 14.04 | % | 50 | |||||
Industrials | 13.88 | 28 | ||||||
Health care | 12.23 | 10 | ||||||
Consumer staples | 11.29 | 21 | ||||||
Energy | 10.90 | 19 | ||||||
Telecommunication services | 8.94 | 13 | ||||||
Consumer discretionary | 8.76 | 20 | ||||||
Utilities | 7.94 | 14 | ||||||
Materials | 6.78 | 12 | ||||||
Information technology | 5.24 | 15 |
IFA’s bond investments likewise cut a broad swath across the fixed-income universe. Holdings range from riskier high-yield corporate debt which plays a crucial role in helping the fund meet its income objectives, to U.S. Treasury securities which provide important ballast during rocky periods.
Percent of | ||||
Bond type* | fixed-income investments | |||
U.S. corporate bonds | 56.03 | % | ||
Non-U.S. corporate bonds† | 15.66 | |||
Mortgage- & asset-backed securities | 15.59 | |||
U.S. Treasuries/agencies | 11.06 | |||
Agency notes & bonds | 1.01 | |||
Non-U.S. governments/agencies† | 0.48 | |||
Municipal securities | 0.17 | |||
*As of July 31, 2012. | ||||
† Must be denominated in U.S. dollars. |
[End Sidebar]
The benefits of going global
IFA can invest up to 25% of its assets in companies domiciled outside the United States. This significantly expands the number of companies and issuers from which investment professionals can choose as they pursue the fund’s objectives.
But in addition to deepening the pool of potential investments, casting a wide net for income also confers a risk-management benefit to the fund. “Despite the fact that the global economy is more interconnected than ever and many markets move more synchronously than they once did, results for different countries and regions can still vary significantly,” explains David.
Consider the recent fiscal year. On the equity side, the fund’s investments in U.S. companies posted double-digit gains while, as a group, its holdings in non-U.S. firms finished in the red.
“A company’s country of domicile means less than it once did as many firms operate more globally and are diversified with respect to operations and revenues,” explains Hilda. “But the ever-changing global economic environment ensures that, at a given time, conditions in some countries will be favorable while in other countries they’ll be challenging. Though we invest in companies and issuers, and not countries, even investments we judge to be solid can get caught in regional downdrafts. In addition to expanding our set of investment opportunities, having a geographically diverse mix of companies and issuers can blunt the impact of a downturn in a particular country or region.”
[photo of fall colored leaves on a branch]
Diverse thinking
IFA features still another layer of diversification which, though harder to spot than others, has nonetheless been instrumental to the fund’s long-term success. And that is the diversity of investment perspectives captured within its portfolio. The ability to house a variety of individual viewpoints and outlooks within a single fund comes courtesy of the unique investment approach employed by all the American Funds.
Known as the Multiple Portfolio Counselor System,® it divides the fund into portions, each of which is independently managed by one of the fund’s nine portfolio counselors according to his or her investing perspective. Another portion is managed by the fund’s investment analysts. Though all are committed to a research-driven approach to investing, no two share the exact same background or philosophy. And just as some asset classes fare better amid certain market conditions, so too are certain investing styles better suited to particular investment environments.
“The Multiple Portfolio Counselor System makes for a highly diversified portfolio that, over the long-term, has helped investors navigate a variety of market environments in pursuit of their objectives,” says Hilda.
An appealing option in a challenging environment
For investors, the current global economic environment can be unsettling. Yet the reality is that for those with long-term financial needs, owning stocks and bonds has been an effective approach to pursuing them. Thanks in part to its highly diversified portfolio, The Income Fund of America has a long-term track record of delivering solid results while remaining considerably less volatile than the broader market. In the words of Steve Watson: “With so much uncertainty spread so far, investing in a portfolio that distributes risk around and offers lower volatility seems like an appealing proposition.” n
[photo of rocks in a body of water]
About your fund
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.
Resilience during stock declines | The Income Fund of America (IFA) vs. the | |||||||||||
S&P 500 during market 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 | |||||||||
April 29 through October 3, 2011 | –18.6 | –11.6 | 7.0 | |||||||||
*Periods show S&P 500 price declines of 15% or greater (without dividends reinvested) based on 100% recovery after each decline (except for 1976–1978 and 2007–2009 declines, which recovered 78% and 77%, respectively). With respect to the most recent decline, the market has not returned to its high, reached in April 2011, and the decline may not be over. Nonetheless, we have elected to include the period to give investors 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 investors 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 | 1,880,495 | |||
S&P 500 | 482,553 |
[end bar chart]
… have helped to keep principal
intact, letting compounding do
its work.
[begin bar chart]
IFA | S&P 500 | |||||||
Amount withdrawn | 538,548 | 538,548 | ||||||
Ending value | 2,645,319 | 1,227,902 | ||||||
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, 2012. Example assumes an annual withdrawal equaling $5,000 the first year on December 31, 1974, and increased by 5% each year thereafter. Over the period, total withdrawals from each of the fund and the index come to $538,548.
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 38 years, income from the fund has been substantially higher.
Year ended July 31
[begin bar chart]
The Income Fund of America | S&P 500 | CDs | ||||||||||
7/31/1975 | $ | 864 | $ | 479 | $ | 924 | ||||||
7/31/1976 | $ | 1,097 | $ | 511 | $ | 652 | ||||||
7/31/1977 | $ | 1,067 | $ | 617 | $ | 598 | ||||||
7/31/1978 | $ | 1,229 | $ | 728 | $ | 814 | ||||||
7/31/1979 | $ | 1,467 | $ | 838 | $ | 1,283 | ||||||
7/31/1980 | $ | 1,610 | $ | 980 | $ | 1,998 | ||||||
7/31/1981 | $ | 1,918 | $ | 1,110 | $ | 2,302 | ||||||
7/31/1982 | $ | 2,407 | $ | 1,241 | $ | 3,003 | ||||||
7/31/1983 | $ | 2,804 | $ | 1,339 | $ | 2,235 | ||||||
7/31/1984 | $ | 3,186 | $ | 1,477 | $ | 2,376 | ||||||
7/31/1985 | $ | 3,702 | $ | 1,637 | $ | 2,617 | ||||||
7/31/1986 | $ | 4,301 | $ | 1,788 | $ | 2,217 | ||||||
7/31/1987 | $ | 4,877 | $ | 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 | $ | 6,340 | $ | 2,969 | $ | 3,382 | ||||||
7/31/1991 | $ | 7,140 | $ | 3,140 | $ | 3,171 | ||||||
7/31/1992 | $ | 7,299 | $ | 3,302 | $ | 2,226 | ||||||
7/31/1993 | $ | 7,837 | $ | 3,469 | $ | 1,548 | ||||||
7/31/1994 | $ | 8,341 | $ | 3,658 | $ | 1,680 | ||||||
7/31/1995 | $ | 8,080 | $ | 3,963 | $ | 2,920 | ||||||
7/31/1996 | $ | 9,462 | $ | 4,388 | $ | 3,049 | ||||||
7/31/1997 | $ | 11,108 | $ | 4,713 | $ | 3,189 | ||||||
7/31/1998 | $ | 11,612 | $ | 4,955 | $ | 3,414 | ||||||
7/31/1999 | $ | 13,724 | $ | 5,236 | $ | 3,313 | ||||||
7/31/2000 | $ | 15,151 | $ | 5,333 | $ | 4,011 | ||||||
7/31/2001 | $ | 15,341 | $ | 5,130 | $ | 4,233 | ||||||
7/31/2002 | $ | 16,460 | $ | 5,265 | $ | 1,806 | ||||||
7/31/2003 | $ | 15,781 | $ | 5,526 | $ | 1,164 | ||||||
7/31/2004 | $ | 17,021 | $ | 6,344 | $ | 837 | ||||||
7/31/2005 | $ | 15,588 | $ | 7,290 | $ | 1,844 | ||||||
7/31/2006 | $ | 19,236 | $ | 8,261 | $ | 3,532 | ||||||
7/31/2007 | $ | 24,953 | $ | 9,483 | $ | 4,586 | ||||||
7/31/2008 | $ | 26,672 | $ | 10,663 | $ | 3,842 | ||||||
7/31/2009 | $ | 21,965 | $ | 9,403 | $ | 2,098 | ||||||
7/31/2010 | $ | 21,582 | $ | 8,491 | $ | 258 | ||||||
7/31/2011 | $ | 25,536 | $ | 9,668 | $ | 284 | ||||||
7/31/2012 | $ | 24,947 | $ | 11,439 | $ | 309 |
[end bar chart]
All results are calculated at net asset value with dividends and capital gains (where applicable) reinvested. Source for CDs is the Federal Reserve. CD income assumes reinvestment of both principal and interest at prevailing rates at the time of purchase. CDs are guaranteed; the fund is not.
The portfolio at a glance
The following summary investment portfolio is designed to streamline the report and help investors better focus on the 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, 2012 | |||
U.S. common stocks | 47.3 | % | ||
Common stocks of issuers outside the U.S. | 18.5 | |||
U.S. Treasury & agency bonds & notes | 3.2 | |||
Convertible securities, preferred stocks & warrants | 1.5 | |||
Other fixed-income securities | 23.5 | |||
Short-term securities & other assets less liabilities | 6.0 |
[end pie chart]
Percent | ||||
of net | ||||
Five largest sectors in common stock holdings | assets | |||
Industrials | 8.9 | % | ||
Health care | 8.0 | |||
Financials | 7.5 | |||
Consumer staples | 7.0 | |||
Energy | 6.8 |
Percent | ||||
of net | ||||
Ten largest common stock holdings | assets | |||
Merck | 2.6 | % | ||
Bristol-Myers Squibb | 2.5 | |||
Verizon | 2.3 | |||
General Electric | 2.3 | |||
Home Depot | 2.0 | |||
Royal Dutch Shell | 1.6 | |||
Chevron | 1.4 | |||
HCP | 1.3 | |||
Waste Management | 1.3 | |||
DuPont | 1.3 |
Percent | ||||
of net | ||||
Country diversification | assets | |||
United States | 71.1 | % | ||
Euro zone* | 5.8 | |||
United Kingdom | 5.7 | |||
Canada | 2.6 | |||
Australia | 2.1 | |||
Switzerland | 1.5 | |||
Other countries | 5.2 | |||
Short-term securities & other assets less liabilities | 6.0 | |||
*Countries using the euro as a common currency; those represented in the fund's portfolio are Belgium, France, Germany, Ireland, Italy, the Netherlands, Portugal and Spain. |
[begin pie chart]
Investment mix by security type | July 31, 2011 | |||
U.S. common stocks | 42.6 | % | ||
Common stocks of issuers outside the U.S. | 20.5 | |||
U.S. Treasury & agency bonds & notes | 3.6 | |||
Convertible securities, preferred stocks & warrants | 1.7 | |||
Other fixed-income securities | 26.9 | |||
Short-term securities & other assets less liabilities | 4.7 |
[end pie chart]
Percent | ||||
of net | ||||
Five largest sectors in common stock holdings | assets | |||
Industrials | 8.3 | % | ||
Financials | 7.0 | |||
Consumer staples | 6.9 | |||
Energy | 6.7 | |||
Health care | 6.4 |
Percent | ||||
of net | ||||
Ten largest common stock holdings | assets | |||
Verizon | 2.4 | % | ||
Bristol-Myers Squibb | 2.1 | |||
Royal Dutch Shell | 1.9 | |||
Merck | 1.9 | |||
Home Depot | 1.7 | |||
Chevron | 1.6 | |||
Philip Morris International | 1.3 | |||
Waste Management | 1.3 | |||
DuPont | 1.3 | |||
General Electric | 1.3 |
Percent | ||||
of net | ||||
Country diversification | assets | |||
United States | 70.0 | % | ||
Euro zone† | 7.5 | |||
United Kingdom | 6.6 | |||
Canada | 2.7 | |||
Australia | 2.0 | |||
Switzerland | .9 | |||
Other countries | 5.6 | |||
Short-term securities & other assets less liabilities | 4.7 | |||
†Countries using the euro as a common currency; those represented in the fund's portfolio were Belgium, France, Germany, Greece, Ireland, Italy, the Netherlands, Portugal and Spain. |
Summary investment portfolio
July 31, 2012
Percent | ||||||||||||
Value | of net | |||||||||||
Common stocks - 65.76% | Shares | (000 | ) | assets | ||||||||
Industrials - 8.85% | ||||||||||||
General Electric Co. | 79,234,500 | $ | 1,644,116 | 2.26 | ||||||||
Waste Management, Inc. (1) | 27,471,706 | 945,027 | 1.30 | |||||||||
Lockheed Martin Corp. | 10,307,400 | 920,142 | 1.26 | |||||||||
Iron Mountain Inc. (1) (2) | 11,117,270 | 358,087 | .49 | |||||||||
Eaton Corp. | 8,046,200 | 352,745 | .48 | |||||||||
Other securities | 2,230,040 | 3.06 | ||||||||||
6,450,157 | 8.85 | |||||||||||
Health care - 8.05% | ||||||||||||
Merck & Co., Inc. | 42,318,040 | 1,869,188 | 2.57 | |||||||||
Bristol-Myers Squibb Co. | 51,825,000 | 1,844,970 | 2.53 | |||||||||
Pfizer Inc | 36,855,000 | 885,994 | 1.22 | |||||||||
Eli Lilly and Co. | 8,100,000 | 356,643 | .49 | |||||||||
Johnson & Johnson | 4,545,000 | 314,605 | .43 | |||||||||
Other securities | 592,603 | .81 | ||||||||||
5,864,003 | 8.05 | |||||||||||
Financials - 7.51% | ||||||||||||
HCP, Inc. | 20,305,800 | 958,637 | 1.32 | |||||||||
Weyerhaeuser Co. (2) | 26,212,881 | 612,071 | .84 | |||||||||
CME Group Inc., Class A | 7,350,000 | 383,008 | .53 | |||||||||
Other securities | 3,515,952 | 4.82 | ||||||||||
5,469,668 | 7.51 | |||||||||||
Consumer staples - 7.00% | ||||||||||||
PepsiCo, Inc. | 8,505,000 | 618,569 | .85 | |||||||||
Altria Group, Inc. | 15,930,000 | 573,002 | .78 | |||||||||
Unilever NV, depository receipts | 9,295,000 | 323,140 | ||||||||||
Unilever NV (New York registered) | 5,551,750 | 192,368 | .71 | |||||||||
Nestlé SA | 8,145,000 | 500,980 | .69 | |||||||||
H.J. Heinz Co. | 7,500,000 | 414,075 | .57 | |||||||||
Philip Morris International Inc. | 4,472,000 | 408,920 | .56 | |||||||||
Kraft Foods Inc., Class A | 8,950,821 | 355,437 | .49 | |||||||||
Procter & Gamble Co. | 5,500,000 | 354,970 | .48 | |||||||||
Other securities | 1,361,221 | 1.87 | ||||||||||
5,102,682 | 7.00 | |||||||||||
�� | ||||||||||||
Energy - 6.79% | ||||||||||||
Royal Dutch Shell PLC, Class B (ADR) | 9,025,000 | 636,804 | ||||||||||
Royal Dutch Shell PLC, Class A (ADR) | 6,000,000 | 409,200 | ||||||||||
Royal Dutch Shell PLC, Class B | 3,797,147 | 133,921 | 1.62 | |||||||||
Chevron Corp. | 9,025,800 | 989,047 | 1.36 | |||||||||
Spectra Energy Corp | 20,150,500 | 618,419 | .85 | |||||||||
Crescent Point Energy Corp. | 14,500,000 | 576,328 | .79 | |||||||||
Kinder Morgan, Inc. | 14,135,000 | 506,174 | .69 | |||||||||
ConocoPhillips | 6,108,000 | 332,519 | .46 | |||||||||
Other securities | 747,751 | 1.02 | ||||||||||
4,950,163 | 6.79 | |||||||||||
Telecommunication services - 5.19% | ||||||||||||
Verizon Communications Inc. | 36,987,500 | 1,669,616 | 2.29 | |||||||||
Telstra Corp. Ltd. | 149,270,000 | 627,471 | .86 | |||||||||
AT&T Inc. | 15,424,621 | 584,902 | .80 | |||||||||
Other securities | 902,154 | 1.24 | ||||||||||
3,784,143 | 5.19 | |||||||||||
Utilities - 5.15% | ||||||||||||
National Grid PLC | 80,801,656 | 839,287 | 1.15 | |||||||||
GDF SUEZ | 22,974,914 | 514,060 | .71 | |||||||||
Power Assets Holdings Ltd. | 59,138,000 | 465,191 | .64 | |||||||||
Duke Energy Corp. | 5,937,057 | 402,414 | .55 | |||||||||
FirstEnergy Corp. | 7,577,983 | 380,567 | .52 | |||||||||
PG&E Corp. | 6,800,000 | 313,888 | .43 | |||||||||
Other securities | 836,465 | 1.15 | ||||||||||
3,751,872 | 5.15 | |||||||||||
Consumer discretionary - 5.03% | ||||||||||||
Home Depot, Inc. | 27,845,000 | 1,452,952 | 1.99 | |||||||||
Time Warner Inc. | 13,815,000 | 540,443 | .74 | |||||||||
McGraw-Hill Companies, Inc. | 10,840,000 | 509,046 | .70 | |||||||||
Time Warner Cable Inc. | 5,400,000 | 458,622 | .63 | |||||||||
Other securities | 705,272 | .97 | ||||||||||
3,666,335 | 5.03 | |||||||||||
Materials - 4.20% | ||||||||||||
E.I. du Pont de Nemours and Co. | 18,841,000 | 936,398 | 1.29 | |||||||||
Dow Chemical Co. | 19,804,900 | 569,985 | .78 | |||||||||
Nucor Corp. | 13,580,000 | 532,336 | .73 | |||||||||
MeadWestvaco Corp. (1) | 11,201,000 | 318,108 | .44 | |||||||||
Other securities | 700,523 | .96 | ||||||||||
3,057,350 | 4.20 | |||||||||||
Information technology - 3.29% | ||||||||||||
Microsoft Corp. | 14,065,000 | 414,496 | .57 | |||||||||
Maxim Integrated Products, Inc. | 14,156,000 | 385,468 | .53 | |||||||||
Paychex, Inc. | 9,403,182 | 307,390 | .42 | |||||||||
Other securities | 1,288,851 | 1.77 | ||||||||||
2,396,205 | 3.29 | |||||||||||
Miscellaneous - 4.70% | ||||||||||||
Other common stocks in initial period of acquisition | 3,427,735 | 4.70 | ||||||||||
Total common stocks (cost: $41,924,970,000) | 47,920,313 | 65.76 | ||||||||||
Percent | ||||||||||||
Value | of net | |||||||||||
Preferred stocks - 0.48% | Shares | (000 | ) | assets | ||||||||
Financials - 0.32% | ||||||||||||
Fannie Mae, Series S, 8.25% noncumulative (2) | 1,511,450 | 2,906 | .00 | |||||||||
Other securities | 232,307 | .32 | ||||||||||
235,213 | .32 | |||||||||||
Miscellaneous - 0.16% | ||||||||||||
Other preferred stocks in initial period of acquisition | 117,012 | .16 | ||||||||||
Total preferred stocks (cost: $364,687,000) | 352,225 | .48 | ||||||||||
Percent | ||||||||||||
Value | of net | |||||||||||
Warrants - 0.00% | Shares | (000 | ) | assets | ||||||||
Energy - 0.00% | ||||||||||||
Other securities | 69 | .00 | ||||||||||
Total warrants (cost: $2,171,000) | 69 | .00 | ||||||||||
Convertible securities - 1.00% | ||||||||||||
Other - 1.00% | ||||||||||||
Other securities | 727,431 | 1.00 | ||||||||||
Total convertible securities (cost: $863,673,000) | 727,431 | 1.00 | ||||||||||
Principal | Percent | |||||||||||
amount | Value | of net | ||||||||||
Bonds & notes - 26.77% | (000 | ) | (000 | ) | assets | |||||||
Financials - 4.42% | ||||||||||||
HCP, Inc. 3.75% 2016 | $ | 20,000 | 21,158 | .03 | ||||||||
Other securities | 3,203,575 | 4.39 | ||||||||||
3,224,733 | 4.42 | |||||||||||
Mortgage-backed obligations (3) - 4.08% | ||||||||||||
Fannie Mae 2.715%-11.355% 2018-2047 (4) | 1,829,667 | 1,983,016 | 2.72 | |||||||||
Freddie Mac 1.883%-10.763% 2019-2041 (4) (5) | 354,390 | 385,128 | .53 | |||||||||
Other securities | 602,225 | .83 | ||||||||||
2,970,369 | 4.08 | |||||||||||
Bonds & notes of U.S. government & government agencies - 3.22% | ||||||||||||
U.S. Treasury 0.625%-8.75% 2012-2042 (6) | 1,845,717 | 2,158,201 | 2.96 | |||||||||
Fannie Mae 0.75%-6.625% 2013-2030 | 65,425 | 81,639 | .11 | |||||||||
Freddie Mac 0.375%-2.375% 2014-2022 | 61,215 | 62,850 | .09 | |||||||||
Other securities | 41,130 | .06 | ||||||||||
2,343,820 | 3.22 | |||||||||||
Consumer discretionary - 3.20% | ||||||||||||
Home Depot, Inc. 5.95% 2041 | 25,000 | 35,171 | .05 | |||||||||
Other securities | 2,298,364 | 3.15 | ||||||||||
2,333,535 | 3.20 | |||||||||||
Industrials - 2.01% | ||||||||||||
General Electric Capital Corp. 2.25%-7.125% 2015-2021 (4) | 226,250 | 243,537 | .33 | |||||||||
Other securities | 1,220,218 | 1.68 | ||||||||||
1,463,755 | 2.01 | |||||||||||
Telecommunication services - 1.99% | ||||||||||||
Verizon Communications Inc. 3.00%-8.75% 2014-2041 | 94,015 | 112,093 | .15 | |||||||||
Other securities | 1,341,529 | 1.84 | ||||||||||
1,453,622 | 1.99 | |||||||||||
Energy - 1.68% | ||||||||||||
Shell International Finance BV 1.875%-6.375% 2013-2038 | 38,750 | 43,503 | .06 | |||||||||
Chevron Corp. 3.95%-4.95% 2014-2019 | 10,500 | 12,738 | .02 | |||||||||
Other securities | 1,170,475 | 1.60 | ||||||||||
1,226,716 | 1.68 | |||||||||||
Health care - 1.60% | ||||||||||||
Pfizer Inc 5.35% 2015 | 20,000 | 22,482 | .03 | |||||||||
Other securities | 1,141,215 | 1.57 | ||||||||||
1,163,697 | 1.60 | |||||||||||
Materials - 0.93% | ||||||||||||
E.I. du Pont de Nemours and Co. 0.888% 2014 (4) | 10,000 | 10,076 | .01 | |||||||||
Other securities | 668,562 | .92 | ||||||||||
678,638 | .93 | |||||||||||
Utilities - 0.70% | ||||||||||||
National Grid PLC 6.30% 2016 | 4,000 | 4,638 | .01 | |||||||||
Other securities | 506,612 | .69 | ||||||||||
511,250 | .70 | |||||||||||
Other - 2.94% | ||||||||||||
Other securities | 2,139,325 | 2.94 | ||||||||||
Total bonds & notes (cost: $18,479,930,000) | 19,509,460 | 26.77 | ||||||||||
Principal | Percent | |||||||||||
amount | Value | of net | ||||||||||
Short-term securities - 6.19% | (000 | ) | (000 | ) | assets | |||||||
Freddie Mac 0.07%-0.205% due 8/1/2012-4/1/2013 | $ | 1,086,450 | $ | 1,086,036 | 1.49 | |||||||
U.S. Treasury Bills 0.106%-0.165% due 8/16/2012-4/4/2013 | 784,200 | 784,020 | 1.08 | |||||||||
Fannie Mae 0.06%-0.19% due 8/1/2012-1/23/2013 | 530,800 | 530,638 | .73 | |||||||||
Federal Home Loan Bank 0.105%-0.21% due 8/24/2012-6/14/2013 | 425,000 | 424,785 | .58 | |||||||||
General Electric Co. 0.14% due 8/13/2012 | 60,000 | 59,997 | .08 | |||||||||
Other securities | 1,624,060 | 2.23 | ||||||||||
Total short-term securities (cost: $4,509,442,000) | 4,509,536 | 6.19 | ||||||||||
Total investment securities (cost: $66,144,873,000) | 73,019,034 | 100.20 | ||||||||||
Other assets less liabilities | (147,679 | ) | (.20 | ) | ||||||||
Net assets | $ | 72,871,355 | 100.00 | % |
As permitted by U.S. Securities and Exchange Commission regulations, "Miscellaneous" securities include holdings in their first year 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 $4,980,324,000, which represented 6.83% of the net assets of the fund) were acquired in transactions exempt from registration under Rule 144A or section 4(2) of the Securities Act of 1933 and may be resold in the U.S. in transactions exempt from registration, normally to qualified institutional buyers. Some of these securities (with an aggregate value of $17,765,000, an aggregate cost of $23,565,000, and which represented .02% of the net assets of the fund) were acquired from 7/17/2009 to 4/30/2010 through private placement transactions exempt from registration under the Securities Act of 1933 which may subject them 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, 2012, appear below. |
Beginning shares or principal amount | Additions | Reductions | Ending shares or principal amount | Dividend or interest income (000) | Value of affiliates at 7/31/2012 (000) | |||||||||||||||||||
Waste Management, Inc. | 28,115,000 | 2,560,000 | 3,203,294 | 27,471,706 | $ | 39,702 | $ | 945,027 | ||||||||||||||||
Iron Mountain Inc.(7) | 4,408,300 | 8,708,970 | 2,000,000 | 11,117,270 | 5,246 | 358,087 | ||||||||||||||||||
Iron Mountain Inc. 8.375% 2021 | $ | 15,000,000 | - | $ | 15,000,000 | - | 779 | - | ||||||||||||||||
MeadWestvaco Corp. | 7,820,000 | 3,381,000 | - | 11,201,000 | 10,187 | 318,108 | ||||||||||||||||||
Hospitality Properties Trust | 8,015,000 | - | - | 8,015,000 | 14,427 | 194,524 | ||||||||||||||||||
Hospitality Properties Trust 6.30% 2016 | $ | 13,577,000 | $ | 9,000,000 | $ | 2,750,000 | $ | 19,827,000 | 1,102 | 21,466 | ||||||||||||||
Hospitality Properties Trust 6.70% 2018 | $ | 16,175,000 | - | $ | 3,550,000 | $ | 12,625,000 | 964 | 14,096 | |||||||||||||||
Hospitality Properties Trust 6.75% 2013 | $ | 12,650,000 | - | - | $ | 12,650,000 | 858 | 12,677 | ||||||||||||||||
Hospitality Properties Trust 5.625% 2017 | $ | 10,169,000 | - | - | $ | 10,169,000 | 633 | 10,887 | ||||||||||||||||
Hospitality Properties Trust 5.125% 2015 | $ | 2,160,000 | $ | 1,000,000 | - | $ | 3,160,000 | 210 | 3,258 | |||||||||||||||
Masco Corp. | 21,789,951 | - | 1,993,200 | 19,796,751 | 6,537 | 238,155 | ||||||||||||||||||
Fletcher Building Ltd. | 28,000,000 | 6,239,000 | - | 34,239,000 | 8,462 | 169,421 | ||||||||||||||||||
R.R. Donnelley & Sons Co. | 12,795,400 | 550,000 | - | 13,345,400 | 13,736 | 161,746 | ||||||||||||||||||
TalkTalk Telecom Group PLC(7) | 45,000,000 | 12,242,000 | - | 57,242,000 | 7,578 | 155,801 | ||||||||||||||||||
Trustmark Corp. | 3,257,000 | - | - | 3,257,000 | 2,996 | 78,754 | ||||||||||||||||||
Douglas Dynamics, Inc. | - | 1,350,000 | - | 1,350,000 | 830 | 18,050 | ||||||||||||||||||
Arthur J. Gallagher & Co. (8) | 6,000,000 | - | 1,000,000 | 5,000,000 | 7,360 | - | ||||||||||||||||||
City Holding Co. (8) | 741,000 | - | - | 741,000 | 1,030 | - | ||||||||||||||||||
Digital Realty Trust, Inc. (8) | 5,790,000 | - | 2,315,000 | 3,475,000 | 14,408 | - | ||||||||||||||||||
FirstMerit Corp. (8) | 5,495,000 | - | 1,664,778 | 3,830,222 | 3,517 | - | ||||||||||||||||||
KLA-Tencor Corp. (8) | 8,190,000 | 680,000 | 4,470,000 | 4,400,000 | 11,459 | - | ||||||||||||||||||
Microchip Technology Inc. (8) | 14,128,000 | - | 12,628,000 | 1,500,000 | - | - | ||||||||||||||||||
Portugal Telecom, SGPS, SA (8) | 46,135,276 | - | 38,607,276 | 7,528,000 | 9,128 | - | ||||||||||||||||||
$ | 161,149 | $ | 2,700,057 |
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) Security did not produce income during the last 12 months. |
(3) Principal payments may be made periodically. Therefore, the effective maturity date may be earlier than the stated maturity date. |
(4) Coupon rate may change periodically. |
(5) Valued under fair value procedures adopted by authority of the board of trustees. The total value of all such securities, including those in "Miscellaneous" and "Other securities," was $92,366,000, which represented .13% of the net assets of the fund. |
(6) Index-linked bond whose principal amount moves with a government price index. |
(7) This security was an unaffiliated issuer in its initial period of acquisition at 7/31/2011; it was not publicly disclosed. |
(8) Unaffiliated issuer at 7/31/2012. |
Key to abbreviation |
ADR = American Depositary Receipts |
See Notes to Financial Statements |
Financial statements
Statement of assets and liabilities | ||||||||
at July 31, 2012 | (dollars in thousands) | |||||||
Assets: | ||||||||
Investment securities, at value: | ||||||||
Unaffiliated issuers (cost: $63,327,144) | $ | 70,318,977 | ||||||
Affiliated issuers (cost: $2,817,729) | 2,700,057 | $ | 73,019,034 | |||||
Cash denominated in currencies other than U.S. dollars | ||||||||
(cost: $3,303) | 3,303 | |||||||
Cash | 15,688 | |||||||
Receivables for: | ||||||||
Sales of investments | 535,169 | |||||||
Sales of fund's shares | 78,567 | |||||||
Dividends and interest | 411,091 | 1,024,827 | ||||||
74,062,852 | ||||||||
Liabilities: | ||||||||
Payables for: | ||||||||
Purchases of investments | 1,041,105 | |||||||
Repurchases of fund's shares | 98,958 | |||||||
Investment advisory services | 13,149 | |||||||
Services provided by related parties | 34,040 | |||||||
Trustees' deferred compensation | 3,940 | |||||||
Other | 305 | 1,191,497 | ||||||
Net assets at July 31, 2012 | $ | 72,871,355 | ||||||
Net assets consist of: | ||||||||
Capital paid in on shares of beneficial interest | $ | 72,033,746 | ||||||
Undistributed net investment income | 408,336 | |||||||
Accumulated net realized loss | (6,444,208 | ) | ||||||
Net unrealized appreciation | 6,873,481 | |||||||
Net assets at July 31, 2012 | $ | 72,871,355 |
(dollars and shares in thousands, except per-share amounts) | ||||||||||||
Shares of beneficial interest issued and outstanding (no stated par value) - | ||||||||||||
unlimited shares authorized (4,132,485 total shares outstanding) | ||||||||||||
Net assets | Shares outstanding | Net asset value per share | ||||||||||
Class A | $ | 56,152,900 | 3,180,277 | $ | 17.66 | |||||||
Class B | 1,160,913 | 66,227 | 17.53 | |||||||||
Class C | 6,095,874 | 348,963 | 17.47 | |||||||||
Class F-1 | 2,562,775 | 145,413 | 17.62 | |||||||||
Class F-2 | 1,019,629 | 57,772 | 17.65 | |||||||||
Class 529-A | 1,102,588 | 62,549 | 17.63 | |||||||||
Class 529-B | 57,920 | 3,296 | 17.57 | |||||||||
Class 529-C | 370,076 | 21,069 | 17.56 | |||||||||
Class 529-E | 51,793 | 2,946 | 17.58 | |||||||||
Class 529-F-1 | 36,327 | 2,061 | 17.63 | |||||||||
Class R-1 | 122,134 | 6,954 | 17.56 | |||||||||
Class R-2 | 567,396 | 32,437 | 17.49 | |||||||||
Class R-3 | 1,203,867 | 68,409 | 17.60 | |||||||||
Class R-4 | 880,074 | 49,915 | 17.63 | |||||||||
Class R-5 | 461,810 | 26,155 | 17.66 | |||||||||
Class R-6 | 1,025,279 | 58,042 | 17.66 | |||||||||
See Notes to Financial Statements |
Statement of operations | ||||||||
for the year ended July 31, 2012 | (dollars in thousands) | |||||||
Investment income: | ||||||||
Income: | ||||||||
Dividends (net of non-U.S. taxes of $64,440; | ||||||||
also includes $156,603 from affiliates) | $ | 1,896,457 | ||||||
Interest (includes $4,546 from affiliates) | 1,195,966 | $ | 3,092,423 | |||||
Fees and expenses*: | ||||||||
Investment advisory services | 164,171 | |||||||
Distribution services | 224,825 | |||||||
Transfer agent services | 63,527 | |||||||
Administrative services | 10,117 | |||||||
Reports to shareholders | 2,614 | |||||||
Registration statement and prospectus | 764 | |||||||
Trustees' compensation | 436 | |||||||
Auditing and legal | 176 | |||||||
Custodian | 2,036 | |||||||
Other | 1,908 | 470,574 | ||||||
Net investment income | 2,621,849 | |||||||
Net realized gain and unrealized appreciation | ||||||||
on investments and currency: | ||||||||
Net realized gain (loss) on: | ||||||||
Investments (net of non-U.S. taxes of $116; also includes $143,714 net loss from affiliates) | 1,012,197 | |||||||
Currency transactions | (10,663 | ) | 1,001,534 | |||||
Net unrealized appreciation (depreciation) on: | ||||||||
Investments | 1,915,161 | |||||||
Currency translations | (1,823 | ) | 1,913,338 | |||||
Net realized gain and unrealized appreciation | ||||||||
on investments and currency | 2,914,872 | |||||||
Net increase in net assets resulting | ||||||||
from operations | $ | 5,536,721 | ||||||
(*) 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 | ||||||||
2012 | 2011 | |||||||
Operations: | ||||||||
Net investment income | $ | 2,621,849 | $ | 2,824,569 | ||||
Net realized gain on investments and currency transactions | 1,001,534 | 1,795,627 | ||||||
Net unrealized appreciation on investments and currency translations | 1,913,338 | 4,485,428 | ||||||
Net increase in net assets resulting from operations | 5,536,721 | 9,105,624 | ||||||
Dividends paid to shareholders from net investment income | (2,766,884 | ) | (2,972,073 | ) | ||||
Net capital share transactions | 1,227,028 | (789,509 | ) | |||||
Total increase in net assets | 3,996,865 | 5,344,042 | ||||||
Net assets: | ||||||||
Beginning of year | 68,874,490 | 63,530,448 | ||||||
End of year (including undistributed | ||||||||
net investment income: $408,336 and $551,902, respectively) | $ | 72,871,355 | $ | 68,874,490 | ||||
See Notes to Financial Statements |
Notes to financial statements
1. | Organization |
The Income Fund of America (the "fund") is registered under the Investment Company Act of 1940 as an open-end, diversified management investment company. The fund seeks current income while secondarily striving for capital growth through investments in stocks and fixed-income securities.
The fund has 16 share classes consisting of five retail share classes (Classes A, B and C, as well as two F share classes, F-1 and F-2), five 529 college savings plan share classes (Classes 529-A, 529-B, 529-C, 529-E and 529-F-1) and six retirement plan share classes (Classes R-1, R-2, R-3, R-4, R-5 and R-6). The 529 college savings plan share classes can be used to save for college education. The retirement plan share classes are generally offered only through eligible employer-sponsored retirement plans. The fund’s share classes are further 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 supplied by one or more pricing vendors 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.
3. | Valuation |
Capital Research and Management Company (“CRMC”), the fund’s investment adviser, values the fund’s investments at fair value as defined by accounting principles generally accepted in the United States of America. The net asset value of each share class of the fund is generally determined as of approximately 4:00 p.m. New York time each day the New York Stock Exchange is open.
Methods and inputs –The fund’s investment adviser uses the following methods and inputs to establish the fair value of the fund’s 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 on 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 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 |
When the fund’s 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 ask prices that are reasonably and timely available (or bid prices, if ask 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 fund’s 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 fund’s investment adviser are fair valued as determined in good faith under fair value guidelines adopted by authority of the fund’s board of trustees as further described below. The investment adviser follows fair valuation guidelines, consistent with U.S. Securities and Exchange Commission rules and guidance, to consider relevant principles and factors when making fair value determinations. The investment adviser considers relevant indications of value that are reasonably and timely available to it in determining the fair value to be assigned to a particular security, such as the type and cost of the security; contractual or legal restrictions on resale of the security; relevant financial or business developments of the issuer; actively traded similar or related securities; conversion or exchange rights on the security; related corporate actions; significant events occurring after the close of trading in the security; and changes in overall market conditions. In addition, the closing prices of equity securities that trade in markets outside U.S. time zones may be adjusted to reflect significant events that occur after the close of local trading but before the net asset value of each share class of the fund is determined. 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.
Processes and structure – The fund’s board of trustees has delegated authority to the fund’s investment adviser to make fair value determinations, subject to board oversight. The investment adviser has established a Joint Fair Valuation Committee (the “Fair Valuation Committee”) to administer, implement and oversee the fair valuation process, and to make fair value decisions. The Fair Valuation Committee regularly reviews its own fair value decisions, as well as decisions made under its standing instructions to the investment adviser’s valuation teams. The Fair Valuation Committee reviews changes in fair value measurements from period to period and may, as deemed appropriate, update the fair valuation guidelines to better reflect the results of back testing and address new or evolving issues. The Fair Valuation Committee reports any changes to the fair valuation guidelines to the board of trustees with supplemental information to support the changes. The fund’s board and audit committee also regularly review reports that describe fair value determinations and methods.
The fund’s investment adviser has also established a Fixed-Income Pricing Review Group to administer and oversee the fixed-income valuation process, including the use of fixed-income pricing vendors. This group regularly reviews pricing vendor information and market data. Pricing decisions, processes and controls over security valuation are also subject to additional internal reviews, including an annual control self-evaluation program facilitated by the investment adviser’s compliance group.
Classifications – The fund’s investment adviser classifies the fund’s 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. Certain securities trading outside the U.S. may transfer between Level 1 and Level 2 due to valuation adjustments resulting from significant market movements following the close of local trading. Level 3 values are based on significant unobservable inputs that reflect the investment adviser’s determination of assumptions that market participants might reasonably use in valuing the securities. The valuation levels are not necessarily an indication of the risk or liquidity associated with the underlying investment. For example, U.S. government securities are reflected as Level 2 because the inputs used to determine fair value may not always be quoted prices in an active market. The following table presents the fund’s valuation levels as of July 31, 2012 (dollars in thousands):
Investment securities | |||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
Assets: | |||||||||||||||||
Common stocks: | |||||||||||||||||
Industrials | $ | 6,450,084 | $ | - | $ | 73 | $ | 6,450,157 | |||||||||
Health care | 5,864,003 | - | - | 5,864,003 | |||||||||||||
Financials | 5,469,668 | - | - | 5,469,668 | |||||||||||||
Consumer staples | 5,102,682 | - | - | 5,102,682 | |||||||||||||
Energy | 4,949,960 | - | 203 | 4,950,163 | |||||||||||||
Telecommunication services | 3,784,143 | - | - | 3,784,143 | |||||||||||||
Utilities | 3,751,872 | - | - | 3,751,872 | |||||||||||||
Consumer discretionary | 3,666,315 | - | 20 | 3,666,335 | |||||||||||||
Materials | 3,057,350 | - | - | 3,057,350 | |||||||||||||
Information technology | 2,396,205 | - | - | 2,396,205 | |||||||||||||
Miscellaneous | 3,404,173 | 23,562 | - | 3,427,735 | |||||||||||||
Preferred stocks | 111,369 | 240,856 | 352,225 | ||||||||||||||
Warrants | - | - | 69 | 69 | |||||||||||||
Convertible securities | 524,694 | 202,737 | - | 727,431 | |||||||||||||
Bonds & notes: | |||||||||||||||||
Corporate bonds & notes | - | 12,024,792 | 31,154 | 12,055,946 | |||||||||||||
Mortgage-backed obligations | - | 2,970,369 | - | 2,970,369 | |||||||||||||
Bonds & notes of U.S. government & government agencies | - | 2,343,820 | - | 2,343,820 | |||||||||||||
Other | - | 2,139,325 | - | 2,139,325 | |||||||||||||
Short-term securities | - | 4,509,536 | - | 4,509,536 | |||||||||||||
Total | $ | 48,532,518 | $ | 24,454,997 | $ | 31,519 | $ | 73,019,034 |
4. | Risk factors |
Investing in the fund may involve certain risks including, but not limited to, those described below.
Market conditions — The prices of, and the income generated by, the common stocks and other securities held by the fund may decline due to market conditions and other factors, including those directly involving the issuers of securities held by the fund.
Investing in income-oriented stocks — Income provided by the fund may be reduced by changes in the dividend policies of, and the capital resources available at, the companies in which the fund invests.
Investing in bonds — Rising interest rates will generally cause the prices of bonds and other debt securities to fall. Longer maturity debt securities may be subject to greater price fluctuations than shorter maturity debt securities. 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.
Bonds and other debt securities are subject to credit risk, which is the possibility that the credit strength of an issuer will weaken and/or an issuer of a debt security will fail to make timely payments of principal or interest and the security will go into default.
Investing in lower rated bonds — Lower rated bonds and other lower rated debt securities generally have higher rates of interest and involve greater risk of default or price declines due to changes in the issuer’s creditworthiness than those of higher quality debt securities. The market prices of these securities may fluctuate more than the prices of higher quality debt securities and may decline significantly in periods of general economic difficulty. These risks may be increased with respect to investments in junk bonds.
Investing outside the U.S. — Securities of issuers domiciled outside the U.S., or with significant operations outside the U.S., may lose value because of political, social, economic or market developments or instability in the countries or regions in which the issuer operates. These securities may also lose value due to changes in foreign currency exchange rates against the U.S. dollar and/or currencies of other countries. Securities markets in certain countries may be more volatile and/or less liquid than those in the U.S. Investments outside the U.S. may also be subject to different settlement and accounting practices and different regulatory, legal and reporting standards, and may be more difficult to value, than those in the U.S. The risks of investing outside the U.S. may be heightened in connection with investments in emerging and developing countries.
Management — The investment adviser to the fund actively manages the fund’s investments. Consequently, the fund is subject to the risk that the methods and analyses employed by the investment adviser in this process may not produce the desired results. This could cause the fund to lose value or its investment results to lag relevant benchmarks or other funds with similar objectives.
5. | Certain investment techniques |
Loan transactions – The fund has entered 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 has participated in transactions that involve unfunded commitments, which may obligate the fund to lend additional sums based upon the terms of the loan agreement. As of July 31, 2012, the fund’s maximum exposure of unfunded loan commitments was $18,685,000, which would represent 0.03% of the net assets of the fund should such commitments become due. Unrealized appreciation of $290,000 is included in net unrealized appreciation on investments in the statement of operations.
6. | 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, 2012, 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 2008 and by state tax authorities for tax years before 2007.
Non-U.S. taxation – Dividend and interest income are recorded net of non-U.S. taxes paid. Gains realized by the fund on the sale of securities in certain countries are subject to non-U.S. taxes. The fund records a liability based on unrealized gains to provide for potential non-U.S. taxes payable upon the sale of these securities.
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; cost of investments sold; paydowns on fixed-income securities; and net capital losses. The fiscal year in which amounts are distributed may differ from the year in which the net investment income and net realized gains are recorded by the fund for financial reporting purposes.
During the year ended July 31, 2012, the fund reclassified $1,551,000 from accumulated net realized loss to undistributed net investment income and $82,000 from undistributed net investment income to capital paid in on shares of beneficial interest to align financial reporting with tax reporting.
Under the Regulated Investment Company Modernization Act of 2010 (the “Act”), net capital losses recognized after July 31, 2011, may be carried forward indefinitely, and their character is retained as short-term and/or long-term losses. Previously, net capital losses were carried forward for eight years and treated as short-term losses. As a transition rule, the Act requires that post-enactment net capital losses be used before pre-enactment net capital losses.
As of July 31, 2012, the tax basis components of distributable earnings, unrealized appreciation (depreciation) and cost of investment securities were as follows:
(dollars in thousands) | ||||
Undistributed ordinary income | $ | 417,285 | ||
Capital loss carryforward expiring 2018* | (6,321,134 | ) | ||
Post-October capital loss deferral† | 115,303 | |||
Gross unrealized appreciation on investment securities | 10,049,776 | |||
Gross unrealized depreciation on investment securities | (3,194,923 | ) | ||
Net unrealized appreciation on investment securities | 6,854,853 | |||
Cost of investment securities | 66,164,181 | |||
*Reflects the utilization of capital loss carryforward of $1,121,275,000. The capital loss carryforward will be used to offset any capital gains realized by the fund in future years through the expiration date. The fund will not make distributions from capital gains while a capital loss carryforward remains. | ||||
†This deferral is considered incurred in the subsequent year. |
Tax-basis distributions paid to shareholders from ordinary income were as follows (dollars in thousands):
Year ended July 31 | ||||||||
Share class | 2012 | 2011 | ||||||
Class A | $ | 2,184,216 | $ | 2,330,998 | ||||
Class B | 46,211 | 80,729 | ||||||
Class C | 200,257 | 230,046 | ||||||
Class F-1 | 89,867 | 85,584 | ||||||
Class F-2 | 36,868 | 30,163 | ||||||
Class 529-A | 40,081 | 38,154 | ||||||
Class 529-B | 2,067 | 3,103 | ||||||
Class 529-C | 11,153 | 11,366 | ||||||
Class 529-E | 1,773 | 1,682 | ||||||
Class 529-F-1 | 1,404 | 1,288 | ||||||
Class R-1 | 3,657 | 3,860 | ||||||
Class R-2 | 18,298 | 20,558 | ||||||
Class R-3 | 42,360 | 46,768 | ||||||
Class R-4 | 33,776 | 35,774 | ||||||
Class R-5 | 18,601 | 22,040 | ||||||
Class R-6 | 36,295 | 29,960 | ||||||
Total | $ | 2,766,884 | $ | 2,972,073 |
7. | Fees and transactions with related parties |
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 fund has an investment advisory and service agreement with CRMC that 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, 2012, the investment advisory services fee was $164,171,000, which was equivalent to an annualized rate of 0.239% 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 plans of distribution for all share classes, except Class F-2, R-5 and R-6 shares. Under the plans, the board of trustees 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 trustees has limited the amounts that may be paid to less than the maximum allowed by the plans. All share classes with a plan may use up to 0.25% of average daily net assets to pay service fees, or to compensate AFD for paying service fees, to firms that have entered into agreements with AFD to provide certain shareholder services. The remaining amounts available to be paid under each plan are paid to dealers to compensate them for their sales activities.
For Class A and 529-A shares, distribution-related expenses include 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, 2012, there were no unreimbursed expenses subject to reimbursement for Class A or 529-A shares.
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 shareholder services agreement with AFS under which the fund compensates AFS for providing transfer agent services to each of the fund’s share classes. These services include recordkeeping, shareholder communications and transaction processing. In addition, the fund reimburses AFS for amounts paid to third parties for performing transfer agent services on behalf of fund shareholders.
During the period August 1, 2011, through December 31, 2011, only Class A and B shares were subject to the shareholder services agreement with AFS. During this period, AFS and other third parties were compensated for providing transfer agent services to Class C, F, 529 and R shares through the fees paid by the fund to CRMC under the fund’s administrative services agreement with CRMC as described in the administrative services section below; CRMC paid for any transfer agent services expenses in excess of 0.10% of the respective average daily net assets of each of such share classes.
Effective January 1, 2012, the shareholder services agreement with AFS was modified to include Class C, F, 529 and R shares and payment for transfer agent services for such classes under the administrative services agreement terminated. Under this structure, transfer agent services expenses for some classes may exceed 0.10% of average daily net assets, resulting in an increase in expenses paid by some share classes.
For the year ended July 31, 2012, the total transfer agent services fee paid under these agreements was $63,527,000, of which $59,397,000 was paid by the fund to AFS and $4,130,000 was paid by the fund to CRMC through its administrative services agreement with the fund. Amounts paid to CRMC by the fund were then paid by CRMC to AFS and other third parties.
Administrative services – The fund has an administrative services agreement with CRMC under which the fund compensates CRMC for providing administrative services to Class A, C, F, 529 and R shares. These services include, but are not limited to, coordinating, monitoring, assisting and overseeing third parties that provide services to fund shareholders.
During the period August 1, 2011, through December 31, 2011, the agreement applied only to Class C, F, 529 and R shares. The agreement also required CRMC to arrange for the provision of transfer agent services for such share classes, which paid CRMC annual fees up to 0.15% (0.10% for Class R-5 and 0.05% for Class R-6) of their respective average daily net assets. During this period, up to 0.05% of these fees were used to compensate CRMC for performing administrative services; all other amounts paid under this agreement were used to compensate AFS and other third parties for transfer agent services.
Effective January 1, 2012, the administrative services agreement with CRMC was modified to include Class A shares. Under the revised agreement, Class A shares pay an annual fee of 0.01% and Class C, F, 529 and R shares pay an annual fee of 0.05% of their respective average daily net assets to CRMC for administrative services. Fees for transfer agent services are no longer included as part of the administrative services fee paid by the fund to CRMC.
For the year ended July 31, 2012, total fees paid to CRMC for performing administrative services were $10,117,000.
529 plan services – Each 529 share class is subject to service fees to compensate 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. The fee is included in other expenses on the accompanying financial statements. The Commonwealth of Virginia is not considered a related party.
Class-specific expenses under the agreements described above/on the previous page for the year ended July 31, 2012, were as follows (dollars in thousands):
Share class | Distribution services | Transfer agent services | Administrative services | 529 plan services | ||||||||||||
Class A | $ | 126,851 | $ | 48,238 | $ | 3,170 | Not applicable | |||||||||
Class B | 13,897 | 1,289 | Not applicable | Not applicable | ||||||||||||
Class C | 59,302 | 5,303 | 2,773 | Not applicable | ||||||||||||
Class F-1 | 5,478 | 1,953 | 1,067 | Not applicable | ||||||||||||
Class F-2 | Not applicable | 882 | 422 | Not applicable | ||||||||||||
Class 529-A | 2,179 | 651 | 478 | $ | 989 | |||||||||||
Class 529-B | 644 | 52 | 31 | 64 | ||||||||||||
Class 529-C | 3,388 | 251 | 164 | 339 | ||||||||||||
Class 529-E | 233 | 18 | 23 | 47 | ||||||||||||
Class 529-F-1 | - | 22 | 16 | 33 | ||||||||||||
Class R-1 | 1,099 | 106 | 57 | Not applicable | ||||||||||||
Class R-2 | 4,061 | 1,932 | 278 | Not applicable | ||||||||||||
Class R-3 | 5,602 | 1,800 | 579 | Not applicable | ||||||||||||
Class R-4 | 2,091 | 815 | 432 | Not applicable | ||||||||||||
Class R-5 | Not applicable | 211 | 215 | Not applicable | ||||||||||||
Class R-6 | Not applicable | 4 | 412 | Not applicable | ||||||||||||
Total class-specific expenses | $ | 224,825 | $ | 63,527 | $ | 10,117 | $ | 1,472 |
Trustees’ deferred compensation –Trustees 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. Trustees’ compensation of $436,000, shown on the accompanying financial statements, includes $399,000 in current fees (either paid in cash or deferred) and a net increase of $37,000 in the value of the deferred amounts.
Affiliated officers and trustees – Officers and certain trustees of the fund are or may be considered to be affiliated with CRMC, AFS and AFD. No affiliated officers or trustees received any compensation directly from the fund.
8. | Capital share transactions |
Capital share transactions in the fund were as follows (dollars and shares in thousands):
Sales(*) | Reinvestments of dividends | Repurchases(*) | Net increase (decrease) | |||||||||||||||||||||||||||||
Share class | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | ||||||||||||||||||||||||
Year ended July 31, 2012 | ||||||||||||||||||||||||||||||||
Class A | $ | 6,409,309 | 380,692 | $ | 2,076,112 | 123,088 | $ | (7,424,453 | ) | (442,493 | ) | $ | 1,060,968 | 61,287 | ||||||||||||||||||
Class B | 53,846 | 3,232 | 44,577 | 2,668 | (732,865 | ) | (44,184 | ) | (634,442 | ) | (38,284 | ) | ||||||||||||||||||||
Class C | 772,114 | 46,260 | 186,801 | 11,185 | (1,246,159 | ) | (75,003 | ) | (287,244 | ) | (17,558 | ) | ||||||||||||||||||||
Class F-1 | 855,471 | 50,731 | 87,301 | 5,178 | (502,848 | ) | (29,980 | ) | 439,924 | 25,929 | ||||||||||||||||||||||
Class F-2 | 357,474 | 21,135 | 30,977 | 1,834 | (155,227 | ) | (9,207 | ) | 233,224 | 13,762 | ||||||||||||||||||||||
Class 529-A | 205,725 | 12,229 | 40,070 | 2,377 | (125,549 | ) | (7,469 | ) | 120,246 | 7,137 | ||||||||||||||||||||||
Class 529-B | 4,732 | 283 | 2,066 | 123 | (27,015 | ) | (1,622 | ) | (20,217 | ) | (1,216 | ) | ||||||||||||||||||||
Class 529-C | 69,306 | 4,131 | 11,149 | 663 | (55,114 | ) | (3,294 | ) | 25,341 | 1,500 | ||||||||||||||||||||||
Class 529-E | 10,662 | 636 | 1,772 | 105 | (6,783 | ) | (404 | ) | 5,651 | 337 | ||||||||||||||||||||||
Class 529-F-1 | 9,503 | 564 | 1,404 | 84 | (7,312 | ) | (431 | ) | 3,595 | 217 | ||||||||||||||||||||||
Class R-1 | 31,835 | 1,893 | 3,647 | 217 | (26,611 | ) | (1,603 | ) | 8,871 | 507 | ||||||||||||||||||||||
Class R-2 | 152,861 | 9,155 | 18,275 | 1,093 | (177,532 | ) | (10,631 | ) | (6,396 | ) | (383 | ) | ||||||||||||||||||||
Class R-3 | 291,667 | 17,334 | 42,296 | 2,514 | (294,208 | ) | (17,542 | ) | 39,755 | 2,306 | ||||||||||||||||||||||
Class R-4 | 260,468 | 15,470 | 33,752 | 2,002 | (256,507 | ) | (15,282 | ) | 37,713 | 2,190 | ||||||||||||||||||||||
Class R-5 | 120,163 | 7,104 | 18,581 | 1,102 | (168,184 | ) | (10,211 | ) | (29,440 | ) | (2,005 | ) | ||||||||||||||||||||
Class R-6 | 248,413 | 14,532 | 36,215 | 2,144 | (55,149 | ) | (3,263 | ) | 229,479 | 13,413 | ||||||||||||||||||||||
Total net increase (decrease) | $ | 9,853,549 | 585,381 | $ | 2,634,995 | 156,377 | $ | (11,261,516 | ) | (672,619 | ) | $ | 1,227,028 | 69,139 | ||||||||||||||||||
Year ended July 31, 2011 | ||||||||||||||||||||||||||||||||
Class A | $ | 6,109,385 | 365,399 | $ | 2,176,992 | 132,135 | $ | (8,467,235 | ) | (506,767 | ) | $ | (180,858 | ) | (9,233 | ) | ||||||||||||||||
Class B | 68,204 | 4,123 | 75,787 | 4,644 | (1,027,318 | ) | (61,791 | ) | (883,327 | ) | (53,024 | ) | ||||||||||||||||||||
Class C | 721,625 | 43,532 | 209,682 | 12,849 | (1,216,808 | ) | (73,505 | ) | (285,501 | ) | (17,124 | ) | ||||||||||||||||||||
Class F-1 | 542,351 | 32,437 | 78,645 | 4,779 | (583,617 | ) | (35,130 | ) | 37,379 | 2,086 | ||||||||||||||||||||||
Class F-2 | 390,748 | 23,557 | 23,003 | 1,394 | (178,431 | ) | (10,685 | ) | 235,320 | 14,266 | ||||||||||||||||||||||
Class 529-A | 184,842 | 11,076 | 38,140 | 2,316 | (110,881 | ) | (6,657 | ) | 112,101 | 6,735 | ||||||||||||||||||||||
Class 529-B | 4,176 | 252 | 3,102 | 190 | (31,146 | ) | (1,874 | ) | (23,868 | ) | (1,432 | ) | ||||||||||||||||||||
Class 529-C | 62,459 | 3,749 | 11,361 | 692 | (51,065 | ) | (3,081 | ) | 22,755 | 1,360 | ||||||||||||||||||||||
Class 529-E | 8,543 | 513 | 1,682 | 102 | (5,027 | ) | (303 | ) | 5,198 | 312 | ||||||||||||||||||||||
Class 529-F-1 | 11,653 | 700 | 1,288 | 78 | (5,993 | ) | (361 | ) | 6,948 | 417 | ||||||||||||||||||||||
Class R-1 | 32,530 | 1,958 | 3,829 | 233 | (27,745 | ) | (1,658 | ) | 8,614 | 533 | ||||||||||||||||||||||
Class R-2 | 143,026 | 8,622 | 20,524 | 1,256 | (179,860 | ) | (10,818 | ) | (16,310 | ) | (940 | ) | ||||||||||||||||||||
Class R-3 | 265,796 | 15,932 | 46,708 | 2,843 | (352,638 | ) | (21,095 | ) | (40,134 | ) | (2,320 | ) | ||||||||||||||||||||
Class R-4 | 218,671 | 13,063 | 35,718 | 2,171 | (258,147 | ) | (15,392 | ) | (3,758 | ) | (158 | ) | ||||||||||||||||||||
Class R-5 | 134,567 | 8,000 | 22,019 | 1,338 | (168,389 | ) | (10,041 | ) | (11,803 | ) | (703 | ) | ||||||||||||||||||||
Class R-6 | 226,926 | 13,561 | 29,959 | 1,813 | (29,150 | ) | (1,735 | ) | 227,735 | 13,639 | ||||||||||||||||||||||
Total net increase (decrease) | $ | 9,125,502 | 546,474 | $ | 2,778,439 | 168,833 | $ | (12,693,450 | ) | (760,893 | ) | $ | (789,509 | ) | (45,586 | ) | ||||||||||||||||
* Includes exchanges between share classes of the fund. |
9. | Investment transactions |
The fund made purchases and sales of investment securities, excluding short-term securities and U.S. government obligations, if any, of $25,358,990,000 and $24,989,177,000, respectively, during the year ended July 31, 2012.
Financial highlights
Income (loss) from investment operations(1) | 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(2) (3) | 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(3) | Ratio of net income to average net assets(3) | ||||||||||||||||||||||||||||||||||||||||
Class A: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2012 | $ | 16.97 | $ | .66 | $ | .73 | $ | 1.39 | $ | (.70 | ) | $ | - | $ | (.70 | ) | $ | 17.66 | 8.45 | % | $ | 56,153 | .59 | % | .59 | % | 3.92 | % | ||||||||||||||||||||||||
Year ended 7/31/2011 | 15.48 | .71 | 1.53 | 2.24 | (.75 | ) | - | (.75 | ) | 16.97 | 14.68 | 52,940 | .58 | .58 | 4.24 | |||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||
Class B: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2012 | 16.85 | .53 | .71 | 1.24 | (.56 | ) | - | (.56 | ) | 17.53 | 7.56 | 1,161 | 1.34 | 1.34 | 3.19 | |||||||||||||||||||||||||||||||||||||
Year ended 7/31/2011 | 15.37 | .58 | 1.52 | 2.10 | (.62 | ) | - | (.62 | ) | 16.85 | 13.82 | 1,760 | 1.34 | 1.34 | 3.48 | |||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||
Class C: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2012 | 16.80 | .52 | .71 | 1.23 | (.56 | ) | - | (.56 | ) | 17.47 | 7.55 | 6,096 | 1.38 | 1.38 | 3.13 | |||||||||||||||||||||||||||||||||||||
Year ended 7/31/2011 | 15.33 | .57 | 1.51 | 2.08 | (.61 | ) | - | (.61 | ) | 16.80 | 13.77 | 6,157 | 1.39 | 1.39 | 3.43 | |||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||
Class F-1: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2012 | 16.94 | .65 | .72 | 1.37 | (.69 | ) | - | (.69 | ) | 17.62 | 8.35 | 2,563 | .64 | .64 | 3.87 | |||||||||||||||||||||||||||||||||||||
Year ended 7/31/2011 | 15.46 | .70 | 1.52 | 2.22 | (.74 | ) | - | (.74 | ) | 16.94 | 14.58 | 2,025 | .64 | .64 | 4.19 | |||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||
Class F-2: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2012 | 16.97 | .69 | .72 | 1.41 | (.73 | ) | - | (.73 | ) | 17.65 | 8.59 | 1,020 | .40 | .40 | 4.09 | |||||||||||||||||||||||||||||||||||||
Year ended 7/31/2011 | 15.48 | .74 | 1.53 | 2.27 | (.78 | ) | - | (.78 | ) | 16.97 | 14.90 | 747 | .40 | .40 | 4.42 | |||||||||||||||||||||||||||||||||||||
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 7/31/2012 | 16.95 | .64 | .72 | 1.36 | (.68 | ) | - | (.68 | ) | 17.63 | 8.30 | 1,102 | .68 | .68 | 3.82 | |||||||||||||||||||||||||||||||||||||
Year ended 7/31/2011 | 15.46 | .69 | 1.53 | 2.22 | (.73 | ) | - | (.73 | ) | 16.95 | 14.62 | 939 | .67 | .67 | 4.15 | |||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||
Class 529-B: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2012 | 16.89 | .51 | .71 | 1.22 | (.54 | ) | - | (.54 | ) | 17.57 | 7.41 | 58 | 1.47 | 1.47 | 3.06 | |||||||||||||||||||||||||||||||||||||
Year ended 7/31/2011 | 15.41 | .56 | 1.52 | 2.08 | (.60 | ) | - | (.60 | ) | 16.89 | 13.66 | 76 | 1.46 | 1.46 | 3.37 | |||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||
Class 529-C: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2012 | 16.89 | .51 | .71 | 1.22 | (.55 | ) | - | (.55 | ) | 17.56 | 7.43 | 370 | 1.47 | 1.47 | 3.04 | |||||||||||||||||||||||||||||||||||||
Year ended 7/31/2011 | 15.41 | .56 | 1.53 | 2.09 | (.61 | ) | - | (.61 | ) | 16.89 | 13.71 | 331 | 1.46 | 1.46 | 3.37 | |||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||
Class 529-E: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2012 | 16.91 | .60 | .71 | 1.31 | (.64 | ) | - | (.64 | ) | 17.58 | 7.99 | 52 | .93 | .93 | 3.57 | |||||||||||||||||||||||||||||||||||||
Year ended 7/31/2011 | 15.43 | .65 | 1.52 | 2.17 | (.69 | ) | - | (.69 | ) | 16.91 | 14.27 | 44 | .94 | .94 | 3.88 | |||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||
Class 529-F-1: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2012 | $ | 16.95 | $ | .68 | $ | .72 | $ | 1.40 | $ | (.72 | ) | $ | - | $ | (.72 | ) | $ | 17.63 | 8.53 | % | $ | 36 | .46 | % | .46 | % | 4.04 | % | ||||||||||||||||||||||||
Year ended 7/31/2011 | 15.46 | .73 | 1.53 | 2.26 | (.77 | ) | - | (.77 | ) | 16.95 | 14.87 | 31 | .45 | .45 | 4.37 | |||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||
Class R-1: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2012 | 16.89 | .52 | .71 | 1.23 | (.56 | ) | - | (.56 | ) | 17.56 | 7.50 | 122 | 1.40 | 1.40 | 3.11 | |||||||||||||||||||||||||||||||||||||
Year ended 7/31/2011 | 15.41 | .57 | 1.52 | 2.09 | (.61 | ) | - | (.61 | ) | 16.89 | 13.76 | 109 | 1.41 | 1.41 | 3.42 | |||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||
Class R-2: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2012 | 16.82 | .52 | .71 | 1.23 | (.56 | ) | - | (.56 | ) | 17.49 | 7.52 | 567 | 1.40 | 1.40 | 3.11 | |||||||||||||||||||||||||||||||||||||
Year ended 7/31/2011 | 15.35 | .57 | 1.51 | 2.08 | (.61 | ) | - | (.61 | ) | 16.82 | 13.75 | 552 | 1.41 | 1.41 | 3.41 | |||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||
Class R-3: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2012 | 16.92 | .60 | .72 | 1.32 | (.64 | ) | - | (.64 | ) | 17.60 | 8.01 | 1,204 | .96 | .96 | 3.55 | |||||||||||||||||||||||||||||||||||||
Year ended 7/31/2011 | 15.44 | .64 | 1.53 | 2.17 | (.69 | ) | - | (.69 | ) | 16.92 | 14.23 | 1,118 | .96 | .96 | 3.86 | |||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||
Class R-4: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2012 | 16.95 | .65 | .72 | 1.37 | (.69 | ) | - | (.69 | ) | 17.63 | 8.33 | 880 | .65 | .65 | 3.86 | |||||||||||||||||||||||||||||||||||||
Year ended 7/31/2011 | 15.46 | .70 | 1.53 | 2.23 | (.74 | ) | - | (.74 | ) | 16.95 | 14.62 | 809 | .66 | .66 | 4.17 | |||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||
Class R-5: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2012 | 16.97 | .70 | .73 | 1.43 | (.74 | ) | - | (.74 | ) | 17.66 | 8.70 | 462 | .35 | .35 | 4.17 | |||||||||||||||||||||||||||||||||||||
Year ended 7/31/2011 | 15.48 | .75 | 1.53 | 2.28 | (.79 | ) | - | (.79 | ) | 16.97 | 14.94 | 478 | .36 | .36 | 4.46 | |||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||
Class R-6: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 7/31/2012 | 16.98 | .71 | .72 | 1.43 | (.75 | ) | - | (.75 | ) | 17.66 | 8.69 | 1,025 | .30 | .30 | 4.21 | |||||||||||||||||||||||||||||||||||||
Year ended 7/31/2011 | 15.49 | .76 | 1.52 | 2.28 | (.79 | ) | - | (.79 | ) | 16.98 | 14.99 | 758 | .31 | .31 | 4.51 | |||||||||||||||||||||||||||||||||||||
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(4) | 12.55 | .19 | 1.48 | 1.67 | (.17 | ) | - | (.17 | ) | 14.05 | 13.42 | 272 | .09 | .09 | 1.45 |
Year ended July 31 | ||||||||||||||||||||
2012 | 2011 | 2010 | 2009 | 2008 | ||||||||||||||||
Portfolio turnover rate for all share classes | 41 | % | 38 | % | 35 | % | 49 | % | 38 | % |
(1)Based on average shares outstanding. | |||||||||||||
(2)Total returns exclude any applicable sales charges, including contingent deferred sales charges. | |||||||||||||
(3)This column reflects the impact, if any, of certain reimbursements/waivers from 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. | |||||||||||||
(4)Based on operations for the period shown and, accordingly, is not representative of a full year. | |||||||||||||
See Notes to Financial Statements |
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Trustees of The Income Fund of America:
We have audited the accompanying statement of assets and liabilities of The Income Fund of America (the “Fund”), including the summary investment portfolio, as of July 31, 2012, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods presented. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of July 31, 2012, 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, such financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of The Income Fund of America as of July 31, 2012, 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, 2012
Expense example
unaudited
As a shareholder of the fund, you incur two types of costs: (1) transaction costs, such as initial sales charges on purchase payments and contingent deferred sales charges on redemptions (loads), and (2) ongoing costs, including management fees, distribution and service (12b-1) fees, and other expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the fund so you can compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire six-month period (February 1, 2012, through July 31, 2012).
Actual expenses:
The first line of each share class in the table on the next page provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses paid during period" to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes:
The second line of each share class in the table on the next page provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio for the share class and an assumed rate of return of 5.00% per year before expenses, which is not the actual return of the share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the fund and other funds. To do so, compare this 5.00% hypothetical example with the 5.00% hypothetical examples that appear in the shareholder reports of the other funds.
Notes:
There are some account fees that are charged to certain types of accounts, such as individual retirement accounts and 529 college savings plan accounts (generally, a $10 fee is charged to set up the account and an additional $10 fee is charged to the account annually), that would increase the amount of expenses paid on your account. In addition, retirement plan participants may be subject to certain fees charged by the plan sponsor, and Class F-1, F-2 and 529-F-1 shareholders may be subject to fees charged by financial intermediaries, typically ranging from 0.75% to 1.50% of assets annually depending on services offered. You can estimate the impact of these fees by adding the amount of the fees to the total estimated expenses you paid on your account during the period as calculated above. In addition, your ending account value would be lower by the amount of these fees.
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 2/1/2012 | Ending account value 7/31/2012 | Expenses paid during period* | Annualized expense ratio | |||||||||||||
Class A -- actual return | $ | 1,000.00 | $ | 1,053.81 | $ | 3.01 | .59 | % | ||||||||
Class A -- assumed 5% return | 1,000.00 | 1,021.93 | 2.97 | .59 | ||||||||||||
Class B -- actual return | 1,000.00 | 1,049.40 | 6.83 | 1.34 | ||||||||||||
Class B -- assumed 5% return | 1,000.00 | 1,018.20 | 6.72 | 1.34 | ||||||||||||
Class C -- actual return | 1,000.00 | 1,049.65 | 7.08 | 1.39 | ||||||||||||
Class C -- assumed 5% return | 1,000.00 | 1,017.95 | 6.97 | 1.39 | ||||||||||||
Class F-1 -- actual return | 1,000.00 | 1,053.13 | 3.27 | .64 | ||||||||||||
Class F-1 -- assumed 5% return | 1,000.00 | 1,021.68 | 3.22 | .64 | ||||||||||||
Class F-2 -- actual return | 1,000.00 | 1,054.25 | 2.04 | .40 | ||||||||||||
Class F-2 -- assumed 5% return | 1,000.00 | 1,022.87 | 2.01 | .40 | ||||||||||||
Class 529-A -- actual return | 1,000.00 | 1,053.45 | 3.47 | .68 | ||||||||||||
Class 529-A -- assumed 5% return | 1,000.00 | 1,021.48 | 3.42 | .68 | ||||||||||||
Class 529-B -- actual return | 1,000.00 | 1,048.65 | 7.49 | 1.47 | ||||||||||||
Class 529-B -- assumed 5% return | 1,000.00 | 1,017.55 | 7.37 | 1.47 | ||||||||||||
Class 529-C -- actual return | 1,000.00 | 1,048.38 | 7.49 | 1.47 | ||||||||||||
Class 529-C -- assumed 5% return | 1,000.00 | 1,017.55 | 7.37 | 1.47 | ||||||||||||
Class 529-E -- actual return | 1,000.00 | 1,051.69 | 4.80 | .94 | ||||||||||||
Class 529-E -- assumed 5% return | 1,000.00 | 1,020.19 | 4.72 | .94 | ||||||||||||
Class 529-F-1 -- actual return | 1,000.00 | 1,054.56 | 2.40 | .47 | ||||||||||||
Class 529-F-1 -- assumed 5% return | 1,000.00 | 1,022.53 | 2.36 | .47 | ||||||||||||
Class R-1 -- actual return | 1,000.00 | 1,049.39 | 7.08 | 1.39 | ||||||||||||
Class R-1 -- assumed 5% return | 1,000.00 | 1,017.95 | 6.97 | 1.39 | ||||||||||||
Class R-2 -- actual return | 1,000.00 | 1,048.96 | 7.08 | 1.39 | ||||||||||||
Class R-2 -- assumed 5% return | 1,000.00 | 1,017.95 | 6.97 | 1.39 | ||||||||||||
Class R-3 -- actual return | 1,000.00 | 1,051.48 | 4.90 | .96 | ||||||||||||
Class R-3 -- assumed 5% return | 1,000.00 | 1,020.09 | 4.82 | .96 | ||||||||||||
Class R-4 -- actual return | 1,000.00 | 1,052.99 | 3.27 | .64 | ||||||||||||
Class R-4 -- assumed 5% return | 1,000.00 | 1,021.68 | 3.22 | .64 | ||||||||||||
Class R-5 -- actual return | 1,000.00 | 1,055.06 | 1.79 | .35 | ||||||||||||
Class R-5 -- assumed 5% return | 1,000.00 | 1,023.12 | 1.76 | .35 | ||||||||||||
Class R-6 -- actual return | 1,000.00 | 1,054.71 | 1.53 | .30 | ||||||||||||
Class R-6 -- assumed 5% return | 1,000.00 | 1,023.37 | 1.51 | .30 | ||||||||||||
*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 366 (to reflect the one-half year period). |
Tax information
unaudited
We are required to advise you of the federal tax status of certain distributions received by shareholders during the fiscal year. The fund hereby designates the following amounts for the fund’s fiscal year ended July 31, 2012:
Qualified dividend income | $ | 2,072,192,000 | ||
Corporate dividends received deduction | $ | 1,311,711,000 | ||
U.S. government income that may be exempt from state taxation | $ | 42,156,000 |
Individual shareholders should refer to their Form 1099 or other tax information, which will be mailed in January 2013, to determine the calendar year amounts to be included on their 2012 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, 2012 (the most recent calendar quarter-end): | ||||||||||||
10 years/ | ||||||||||||
1 year | 5 years | Life of class1 | ||||||||||
Class B shares2 | ||||||||||||
Reflecting applicable contingent deferred sales charge | ||||||||||||
(CDSC), maximum of 5%, payable only if shares | ||||||||||||
are sold within six years of purchase | –0.89 | % | 0.39 | % | 6.20 | % | ||||||
Not reflecting CDSC | 4.11 | 0.71 | 6.20 | |||||||||
Class C shares | ||||||||||||
Reflecting CDSC, maximum of 1%, payable only | ||||||||||||
if shares are sold within one year of purchase | 3.09 | 0.67 | 5.97 | |||||||||
Not reflecting CDSC | 4.09 | 0.67 | 5.97 | |||||||||
Class F-1 shares3 | ||||||||||||
Not reflecting annual asset-based fee charged | ||||||||||||
by sponsoring firm | 4.84 | 1.45 | 6.78 | |||||||||
Class F-2 shares3 — first sold 8/1/08 | ||||||||||||
Not reflecting annual asset-based fee charged | ||||||||||||
by sponsoring firm | 5.14 | — | 5.70 | |||||||||
Class 529-A shares4 | ||||||||||||
Reflecting 5.75% maximum sales charge | –1.18 | 0.21 | 6.12 | |||||||||
Not reflecting maximum sales charge | 4.84 | 1.41 | 6.76 | |||||||||
Class 529-B shares2,4 | ||||||||||||
Reflecting applicable CDSC, maximum of 5%, payable | ||||||||||||
only if shares are sold within six years of purchase | –0.96 | 0.28 | 6.05 | |||||||||
Not reflecting CDSC | 4.04 | 0.60 | 6.05 | |||||||||
Class 529-C shares4 | ||||||||||||
Reflecting CDSC, maximum of 1%, payable only | ||||||||||||
if shares are sold within one year of purchase | 3.05 | 0.61 | 5.89 | |||||||||
Not reflecting CDSC | 4.05 | 0.61 | 5.89 | |||||||||
Class 529-E shares3,4 | 4.60 | 1.13 | 6.43 | |||||||||
Class 529-F-1 shares3,4 — first sold 9/17/02 | ||||||||||||
Not reflecting annual asset-based fee charged | ||||||||||||
by sponsoring firm | 5.07 | 1.64 | 7.82 |
1Applicable to Class F-2 and 529-F-1 shares only. All other share classes reflect 10-year results. |
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. When applicable, investment results reflect fee waivers, without which results would have been lower. Visit americanfunds.com for more information.
For information regarding the differences among the various share classes, refer to the fund prospectus.
Board of trustees and other officers
“Independent” trustees1 | ||
Year first | ||
elected a | ||
trustee of | ||
Name and age | the fund2 | Principal occupation(s) during past five years |
Vanessa C. L. Chang, 60 | 2011 | Director, EL & EL Investments (real estate) |
Mary Jane Elmore, 58 | 2008 | Managing Director and General Partner, Institutional Venture Partners; independent private angel investor |
Robert A. Fox, 75 | 1972 | Managing General Partner, Fox Investments LP; |
Chairman of the Board | corporate director | |
(Independent and Non-Executive) | ||
Linda Griego, 64 | 2012 | President and CEO, Griego Enterprises, Inc. |
(business management company); President, Zapgo | ||
Entertainment LLC (television production company | ||
focused on programming for the Latino market) | ||
Leonade D. Jones, 64 | 1993 | Retired; former Treasurer, The Washington Post |
Company | ||
William D. Jones, 57 | 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, 75 | 2003 | Business consultant |
John G. McDonald, 75 | 1976 | Stanford Investors Professor, Graduate School of |
Business, Stanford University | ||
James J. Postl, 66 | 2008 | Retired; former President and CEO, Pennzoil-Quaker |
State Company (automotive products and services) | ||
Margaret Spellings, 54 | 2012 | President and CEO, Margaret Spellings & Company |
(public policy and strategic consulting); President, | ||
U.S. Forum for Policy Innovation and Senior Advisor | ||
to the President and CEO, U.S. Chamber of | ||
Commerce; former United States Secretary of | ||
Education, United States Department of Education | ||
Isaac Stein, 65 | 2004 | President, Waverly Associates (private investment |
fund); Chairman Emeritus of the Board of Trustees, | ||
Stanford University | ||
“Independent” trustees1 | ||
Number of | ||
portfolios | ||
in fund | ||
complex3 | ||
overseen by | ||
Name and age | trustee | Other directorships4 held by trustee |
Vanessa C. L. Chang, 60 | 6 | Edison International; Transocean Ltd. |
Mary Jane Elmore, 58 | 3 | None |
Robert A. Fox, 75 | 9 | None |
Chairman of the Board | ||
(Independent and Non-Executive) | ||
Linda Griego, 64 | 3 | AECOM Technology Corporation; CBS Corporation |
Leonade D. Jones, 64 | 9 | None |
William D. Jones, 57 | 7 | Sempra Energy |
John M. Lillie, 75 | 3 | None |
John G. McDonald, 75 | 13 | iStar Financial, Inc.; Plum Creek Timber Co.; |
QuinStreet, Inc.; Scholastic Corporation | ||
James J. Postl, 66 | 3 | Cooper Industries; Pulte, Inc. |
Margaret Spellings, 54 | 61 | None |
Isaac Stein, 65 | 3 | Alexza Pharmaceuticals, Inc.; Maxygen, Inc. |
“Interested” trustee5,7 | ||
Year first | ||
elected a | ||
trustee 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 fund2 | principal underwriter of the fund |
Hilda L. Applbaum, 51 | 1998 | Senior Vice President — Capital World Investors, |
Vice Chairman of the Board | Capital Research and Management Company | |
“Interested” trustee5,7 | ||
Number of | ||
portfolios in | ||
fund complex3 | ||
Name, age and | overseen | |
position with fund | by trustee | Other directorships4 held by trustee |
Hilda L. Applbaum, 51 | 1 | None |
Vice Chairman of the Board |
The fund’s statement of additional information includes further details about fund trustees and is available without charge upon request by calling American Funds Service Company at 800/421-4225 or by visiting the American Funds website at americanfunds.com. The address for all trustees and officers of the fund is 333 South Hope Street, Los Angeles, CA 90071, Attention: Secretary.
See page 36 for footnotes.
Other officers7 | ||
Year first | ||
elected | Principal occupation(s) during past five years | |
Name, age and | an officer | and positions held with affiliated entities or the |
position with fund | of the fund2 | principal underwriter of the fund |
David C. Barclay, 55 | 1998 | Senior Vice President — Fixed Income, Capital |
President | Research and Management Company; Director, | |
Capital Research and Management Company | ||
Dina N. Perry, 66 | 1994 | Senior Vice President — Capital World Investors, |
Senior Vice President | Capital Research and Management Company; | |
Director, Capital Research and Management | ||
Company | ||
Paul F. Roye, 58 | 2007 | Senior Vice President — Fund Business Management |
Senior Vice President | Group, Capital Research and Management Company; | |
Director, American Funds Service Company;6 former | ||
Director, Division of Investment Management, United | ||
States Securities and Exchange Commission | ||
Andrew B. Suzman, 45 | 2004 | Senior Vice President — Capital World Investors, |
Senior Vice President | Capital Research Company;6 Director, American | |
Funds Distributors, Inc.;6 Director, Capital Strategy | ||
Research, Inc.6 | ||
Joanna F. Jonsson, 49 | 2006 | Senior Vice President — Capital World Investors, |
Vice President | Capital Research Company;6 Director, Capital | |
International Limited6 | ||
Donald H. Rolfe, 40 | 2012 | Chief Compliance Officer, Capital Research |
Vice President | Company;6 Chief Compliance Officer, Capital | |
Research and Management Company; Vice President | ||
and Senior Counsel — Fund Business Management | ||
Group, Capital Research and Management Company | ||
John H. Smet, 56 | 1994 | Senior Vice President — Fixed Income, Capital |
Vice President | Research and Management Company; Director, | |
The Capital Group Companies, Inc.6 | ||
Steven T. Watson, 57 | 2006 | Senior Vice President — Capital World Investors, |
Vice President | Capital Research Company;6 Director, Capital | |
Research Company6 | ||
Patrick F. Quan, 54 | 1986 | Vice President — Fund Business Management |
Secretary | Group, Capital Research and Management Company | |
Jeffrey P. Regal, 41 | 2011 | Vice President — Fund Business Management |
Treasurer | Group, Capital Research and Management Company | |
Julie E. Lawton, 39 | 2009 | Assistant Vice President — Fund Business |
Assistant Secretary | Management Group, Capital Research and | |
Management Company | ||
Ari M. Vinocor, 37 | 2012 | Vice President — Fund Business Management |
Assistant Treasurer | Group, Capital Research and Management Company | |
Dori Laskin, 61 | 2011 | Vice President — Fund Business Management |
Assistant Treasurer | Group, Capital Research and Management Company |
1The term “independent” trustee refers to a trustee who is not an “interested person” of the fund within the meaning of the Investment Company Act of 1940. |
2Trustees and officers of the fund serve until their resignation, removal or retirement. |
3Capital Research and Management Company manages the American Funds. Capital Research and Management Company also manages American Funds Insurance Series,® which is composed of 19 funds and serves as the underlying investment vehicle for certain variable insurance contracts; American Funds Target Date Retirement Series,® which is composed of 10 funds and is available through tax-deferred retirement plans and IRAs; American Funds Portfolio Series,SM which is composed of eight funds; and American Funds College Target Date Series,SM which is composed of seven funds. |
4This includes all directorships (other than those in the American Funds or other funds managed by Capital Research and Management Company) that are held by each trustee as a trustee or director of a public company or a registered investment company. |
5“Interested persons” within the meaning of the Investment Company Act of 1940, 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). |
6Company affiliated with Capital Research and Management Company. |
7All 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 2000
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 investment objectives, risks, charges and expenses. This and other important information is contained in the fund prospectus and summary prospectus, which can be obtained from your financial professional and should be read carefully before investing. You may also call American Funds Service Company (AFS) at 800/421-4225 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, 2012, 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 prospectus or summary prospectus, which gives details about charges, expenses, investment objectives and operating policies of the fund. If used as sales material after September 30, 2012, this report must be accompanied by an American Funds statistical update for the most recently completed calendar quarter.
The American Funds difference
Since 1931, American Funds has helped investors pursue long-term investment success. Our consistent approach — in combination with a proven system — has resulted in a superior long-term track record.
Consistent approach
We base our decisions on a long-term perspective because we believe it is the best way to achieve superior long-term investment results. Our portfolio counselors average 25 years of investment experience, including 21 years at our company, reflecting a career commitment to our long-term approach.1
Proven system
Our system combines individual accountability with teamwork. Each fund is divided into portions that are managed by investment professionals with varied backgrounds, ages and investment styles. An extensive global research effort is the backbone of our system.
Superior long-term track record
Our equity funds have beaten their Lipper peer indexes in 91% of 10-year periods and 96% of 20-year periods. Our fixed-income funds have beaten their Lipper indexes in 60% of 10-year periods and 67% of 20-year periods.2 Our fund management fees have been among the lowest in the industry.3
1As of 12/31/11. |
2Based on Class A share results for periods through 12/31/11. Periods covered are the shorter of the fund’s lifetime or since the comparable Lipper index inception date. |
3Based on management fees for the 20-year period ended 12/31/11 versus comparable Lipper categories, excluding funds of funds. |
American Funds span a range of investment objectives
•Growth funds |
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 |
American Mutual Fund® |
Capital World Growth and Income Fund® |
Fundamental InvestorsSM |
International Growth and Income FundSM |
The Investment Company of America® |
Washington Mutual Investors FundSM |
•Equity-income funds |
Capital Income Builder® |
The Income Fund of America® |
•Balanced funds |
American Balanced Fund® |
American Funds Global Balanced FundSM |
•Bond funds |
American Funds Mortgage Fund® |
American High-Income Trust® |
The Bond Fund of America® |
Capital World Bond Fund® |
Intermediate Bond Fund of America® |
Short-Term Bond Fund of America®
U.S. Government Securities Fund® |
•Tax-exempt bond funds |
American Funds Short-Term Tax-Exempt Bond Fund® |
American High-Income Municipal Bond Fund® |
Limited Term Tax-Exempt Bond Fund of America® |
The Tax-Exempt Bond Fund of America® |
State-specific tax-exempt funds |
American Funds Tax-Exempt Fund of New York® |
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 Portfolio SeriesSM |
American Funds Global Growth PortfolioSM
American Funds Growth PortfolioSM |
American Funds Growth and Income PortfolioSM |
American Funds Balanced PortfolioSM |
American Funds Income PortfolioSM |
American Funds Tax-Advantaged Income PortfolioSM |
American Funds Preservation PortfolioSM |
American Funds Tax-Exempt Preservation PortfolioSM |
•American Funds Target Date Retirement Series® |
•American Funds College Target Date SeriesSM |
The Capital Group Companies
American Funds Capital Research and Management Capital International Capital Guardian Capital Bank and Trust
Lit No. MFGEAR-906-0912P
Litho in USA BAG/Q/8061-S33522
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 2000, San Francisco, California 94105.
ITEM 3 – Audit Committee Financial Expert
The Registrant’s board has determined that John M. Lillie, a member of the Registrant’s audit committee, is an “audit committee financial expert” and "independent," as such terms are defined in this Item. This designation will not increase the designee’s duties, obligations or liability as compared to his or her duties, obligations and liability as a member of the audit committee and of the board, nor will it reduce the responsibility of the other audit committee members. There may be other individuals who, through education or experience, would qualify as "audit committee financial experts" if the board had designated them as such. Most importantly, the board believes each member of the audit committee contributes significantly to the effective oversight of the Registrant’s financial statements and condition.
ITEM 4 – Principal Accountant Fees and Services
Registrant: | ||||
a) Audit Fees: | ||||
2011 | $122,000 | |||
2012 | $120,000 | |||
b) Audit-Related Fees: | ||||
2011 | $21,000 | |||
2012 | $22,000 | |||
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 Standards for Attestation Engagements Number 16 issued by the American Institute of Certified Public Accountants. | ||||
c) Tax Fees: | ||||
2011 | $8,000 | |||
2012 | $7,000 | |||
The tax fees consist of professional services relating to the preparation of the Registrant’s tax returns including returns relating to the Registrant’s investments in non-U.S. jurisdictions. | ||||
d) All Other Fees: | ||||
2011 | None | |||
2012 | 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: | ||||
2011 | $1,184,000 | |||
2012 | $763,000 | |||
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 Standards for Attestation Engagements Number 16 issued by the American Institute of Certified Public Accountants. | ||||
c) Tax Fees: | ||||
2011 | $17,000 | |||
2012 | $59,000 | |||
The tax fees consist of consulting services relating to the Registrant’s investments. | ||||
d) All Other Fees: | ||||
2011 | $2,000 | |||
2012 | $2,000 | |||
The other fees consist of subscription services related to an accounting research tool. |
All audit and permissible non-audit services that the Registrant’s audit committee considers compatible with maintaining the independent registered public accounting firm’s independence are required to be pre-approved by the committee. The pre-approval requirement will extend to all non-audit services provided to the Registrant, the investment adviser, and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the Registrant, if the engagement relates directly to the operations and financial reporting of the Registrant. The committee will not delegate its responsibility to pre-approve these services to the investment adviser. The committee may delegate to one or more committee members the authority to review and pre-approve audit and permissible non-audit services. Actions taken under any such delegation will be reported to the full committee at its next meeting. The pre-approval requirement is waived with respect to non-audit services if certain conditions are met. The pre-approval requirement was not waived for any of the non-audit services listed above provided to the Registrant, adviser and affiliates.
Aggregate non-audit fees paid to the Registrant’s auditors, including fees for all services billed to the Registrant, adviser and affiliates that provide ongoing services to the Registrant, were $1,767,000 for fiscal year 2011 and $1,431,000 for fiscal year 2012. 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, 2012
Common stocks — 65.76% | Shares | Value (000) | ||||||
INDUSTRIALS — 8.85% | ||||||||
General Electric Co. | 79,234,500 | $ | 1,644,116 | |||||
Waste Management, Inc.1 | 27,471,706 | 945,027 | ||||||
Lockheed Martin Corp. | 10,307,400 | 920,142 | ||||||
Iron Mountain Inc.1 | 11,117,270 | 358,087 | ||||||
Eaton Corp. | 8,046,200 | 352,745 | ||||||
Schneider Electric SA | 5,343,606 | 302,637 | ||||||
Hubbell Inc., Class B | 3,430,000 | 282,220 | ||||||
Masco Corp.1 | 19,796,751 | 238,155 | ||||||
Emerson Electric Co. | 4,300,000 | 205,411 | ||||||
R.R. Donnelley & Sons Co.1 | 13,345,400 | 161,746 | ||||||
Keppel Corp. Ltd. | 16,300,000 | 146,443 | ||||||
Ryanair Holdings PLC (ADR)2 | 4,615,000 | 135,958 | ||||||
Norfolk Southern Corp. | 1,800,000 | 133,290 | ||||||
Boeing Co. | 1,700,000 | 125,647 | ||||||
CCR SA, ordinary nominative | 14,607,300 | 121,894 | ||||||
Honeywell International Inc. | 1,575,000 | 91,429 | ||||||
United Technologies Corp. | 1,200,000 | 89,328 | ||||||
AB SKF, Class B | 4,290,000 | 88,883 | ||||||
Atlas Copco AB, Class B | 2,825,000 | 56,702 | ||||||
Geberit AG | 158,758 | 31,221 | ||||||
Douglas Dynamics, Inc.1 | 1,350,000 | 18,050 | ||||||
Nortek, Inc.2 | 18,686 | 953 | ||||||
Atrium Corp.2,3,4 | 1,807 | 73 | ||||||
6,450,157 | ||||||||
HEALTH CARE — 8.05% | ||||||||
Merck & Co., Inc. | 42,318,040 | 1,869,188 | ||||||
Bristol-Myers Squibb Co. | 51,825,000 | 1,844,970 | ||||||
Pfizer Inc | 36,855,000 | 885,994 | ||||||
Eli Lilly and Co. | 8,100,000 | 356,643 | ||||||
Johnson & Johnson | 4,545,000 | 314,605 | ||||||
Roche Holding AG | 1,400,000 | 248,510 | ||||||
AstraZeneca PLC (United Kingdom) | 4,000,000 | 187,295 | ||||||
Sonic Healthcare Ltd. | 9,590,000 | 127,488 | ||||||
Novartis AG (ADR) | 500,000 | 29,310 | ||||||
5,864,003 | ||||||||
FINANCIALS — 7.51% | ||||||||
HCP, Inc. | 20,305,800 | 958,637 | ||||||
Weyerhaeuser Co.2 | 26,212,881 | 612,071 | ||||||
CME Group Inc., Class A | 7,350,000 | 383,008 | ||||||
Prologis, Inc. | 8,447,500 | 273,108 | ||||||
Digital Realty Trust, Inc. | 3,475,000 | 271,293 | ||||||
Hospitality Properties Trust1 | 8,015,000 | 194,524 | ||||||
Sanlam Ltd. | 44,802,500 | 192,516 | ||||||
HSBC Holdings PLC (United Kingdom) | 18,638,722 | 156,020 | ||||||
HSBC Holdings PLC (Hong Kong) | 3,126,382 | 26,467 | ||||||
Public Storage | 1,200,000 | 178,740 | ||||||
Arthur J. Gallagher & Co. | 5,000,000 | 177,400 | ||||||
M&T Bank Corp. | 2,065,000 | 177,260 | ||||||
Toronto-Dominion Bank | 2,150,000 | 169,196 | ||||||
Bank of Nova Scotia | 2,800,000 | 146,163 | ||||||
United Overseas Bank Ltd. | 8,922,339 | 143,400 | ||||||
Prudential PLC | 11,775,000 | 140,861 | ||||||
British Land Co. PLC | 16,450,475 | 137,858 | ||||||
New York Community Bancorp, Inc. | 9,160,000 | 118,897 | ||||||
IG Group Holdings PLC | 14,650,000 | 103,062 | ||||||
Industrial and Commercial Bank of China Ltd., Class H | 176,959,000 | 101,547 | ||||||
Cullen/Frost Bankers, Inc. | 1,700,000 | 94,027 | ||||||
Sumitomo Mitsui Financial Group, Inc. | 2,500,000 | 79,616 | ||||||
Trustmark Corp.1 | 3,257,000 | 78,754 | ||||||
Boardwalk Real Estate Investment Trust | 1,199,000 | 76,518 | ||||||
Mercury General Corp. | 2,000,000 | 72,440 | ||||||
QBE Insurance Group Ltd. | 4,521,328 | 66,710 | ||||||
Capitol Federal Financial, Inc. | 5,294,700 | 62,054 | ||||||
FirstMerit Corp. | 3,830,222 | 62,050 | ||||||
People’s United Financial, Inc. | 5,350,000 | 61,311 | ||||||
Northwest Bancshares, Inc. | 4,850,000 | 56,502 | ||||||
Allianz SE | 350,000 | 34,921 | ||||||
City Holding Co. | 741,000 | 24,490 | ||||||
Itaúsa — Investimentos Itaú SA, preferred nominative | 5,219,716 | 24,478 | ||||||
AXA SA | 875,000 | 10,712 | ||||||
American Tower Corp. | 42,271 | 3,057 | ||||||
5,469,668 | ||||||||
CONSUMER STAPLES — 7.00% | ||||||||
PepsiCo, Inc. | 8,505,000 | 618,569 | ||||||
Altria Group, Inc. | 15,930,000 | 573,002 | ||||||
Unilever NV, depository receipts | 9,295,000 | 323,140 | ||||||
Unilever NV (New York registered) | 5,551,750 | 192,368 | ||||||
Nestlé SA | 8,145,000 | 500,980 | ||||||
H.J. Heinz Co. | 7,500,000 | 414,075 | ||||||
Philip Morris International Inc. | 4,472,000 | 408,920 | ||||||
Kraft Foods Inc., Class A | 8,950,821 | 355,437 | ||||||
Procter & Gamble Co. | 5,500,000 | 354,970 | ||||||
Sysco Corp. | 10,128,500 | 297,677 | ||||||
General Mills, Inc. | 5,925,000 | 229,297 | ||||||
Coca-Cola Co. | 2,500,000 | 202,000 | ||||||
Coca-Cola Amatil Ltd. | 11,640,441 | 170,405 | ||||||
British American Tobacco PLC | 2,940,000 | 156,607 | ||||||
Hershey Co. | 2,000,000 | 143,480 | ||||||
Tesco PLC | 16,725,000 | 83,413 | ||||||
Kimberly-Clark Corp. | 766,000 | 66,573 | ||||||
Kimberly-Clark de México, SAB de CV, Class A | 5,629,800 | 11,769 | ||||||
5,102,682 | ||||||||
ENERGY — 6.79% | ||||||||
Royal Dutch Shell PLC, Class B (ADR) | 9,025,000 | 636,804 | ||||||
Royal Dutch Shell PLC, Class A (ADR) | 6,000,000 | 409,200 | ||||||
Royal Dutch Shell PLC, Class B | 3,797,147 | 133,921 | ||||||
Chevron Corp. | 9,025,800 | 989,047 | ||||||
Spectra Energy Corp | 20,150,500 | 618,419 | ||||||
Crescent Point Energy Corp. | 14,500,000 | 576,328 | ||||||
Kinder Morgan, Inc. | 14,135,000 | 506,174 | ||||||
ConocoPhillips | 6,108,000 | 332,519 | ||||||
Husky Energy Inc. | 9,760,000 | 242,431 | ||||||
TOTAL SA (ADR) | 5,110,000 | 234,804 | ||||||
Penn West Petroleum Ltd. | 10,775,000 | 146,983 | ||||||
Diamond Offshore Drilling, Inc. | 1,885,200 | 123,330 | ||||||
General Maritime Corp.2,3,4 | 5,506 | 203 | ||||||
4,950,163 | ||||||||
TELECOMMUNICATION SERVICES — 5.19% | ||||||||
Verizon Communications Inc. | 36,987,500 | 1,669,616 | ||||||
Telstra Corp. Ltd. | 149,270,000 | 627,471 | ||||||
AT&T Inc. | 15,424,621 | 584,902 | ||||||
CenturyLink, Inc. | 5,711,120 | 237,240 | ||||||
France Télécom SA | 17,340,000 | 232,340 | ||||||
TalkTalk Telecom Group PLC1 | 57,242,000 | 155,801 | ||||||
Koninklijke KPN NV | 13,619,107 | 111,785 | ||||||
Vodafone Group PLC | 30,000,000 | 85,887 | ||||||
Bell Aliant Inc. | 1,895,000 | 47,146 | ||||||
Portugal Telecom, SGPS, SA | 7,528,000 | 31,955 | ||||||
3,784,143 | ||||||||
UTILITIES — 5.15% | ||||||||
National Grid PLC | 80,801,656 | 839,287 | ||||||
GDF SUEZ | 22,974,914 | 514,060 | ||||||
Power Assets Holdings Ltd. | 59,138,000 | 465,191 | ||||||
Duke Energy Corp. | 5,937,057 | 402,414 | ||||||
FirstEnergy Corp. | 7,577,983 | 380,567 | ||||||
PG&E Corp. | 6,800,000 | 313,888 | ||||||
DTE Energy Co. | 5,000,000 | 306,850 | ||||||
Exelon Corp. | 5,500,000 | 215,160 | ||||||
Snam SpA | 27,201,945 | 109,444 | ||||||
ONEOK, Inc. | 2,420,000 | 107,714 | ||||||
DUET Group | 44,511,723 | 97,297 | ||||||
Prime AET&D Holdings No 1 Pty Ltd.2,4 | 22,756,141 | — | ||||||
3,751,872 | ||||||||
CONSUMER DISCRETIONARY — 5.03% | ||||||||
Home Depot, Inc. | 27,845,000 | 1,452,952 | ||||||
Time Warner Inc. | 13,815,000 | 540,443 | ||||||
McGraw-Hill Companies, Inc. | 10,840,000 | 509,046 | ||||||
Time Warner Cable Inc. | 5,400,000 | 458,622 | ||||||
SES SA, Class A (FDR) | 6,940,000 | 167,108 | ||||||
Marks and Spencer Group PLC | 30,000,000 | 156,957 | ||||||
McDonald’s Corp. | 1,500,000 | 134,040 | ||||||
H & M Hennes & Mauritz AB, Class B | 3,054,000 | 113,032 | ||||||
VF Corp. | 710,000 | 106,003 | ||||||
Cooper-Standard Holdings Inc.2 | 586,012 | 20,510 | ||||||
Esprit Holdings Ltd. | 6,251,399 | 7,602 | ||||||
Adelphia Recovery Trust, Series ACC-12,4 | 19,531,478 | 20 | ||||||
3,666,335 | ||||||||
MATERIALS — 4.20% | ||||||||
E.I. du Pont de Nemours and Co. | 18,841,000 | 936,398 | ||||||
Dow Chemical Co. | 19,804,900 | 569,985 | ||||||
Nucor Corp. | 13,580,000 | 532,336 | ||||||
MeadWestvaco Corp.1 | 11,201,000 | 318,108 | ||||||
Cliffs Natural Resources Inc. | 5,573,000 | 227,880 | ||||||
Fletcher Building Ltd.1 | 34,239,000 | 169,421 | ||||||
Israel Chemicals Ltd. | 10,000,000 | 118,356 | ||||||
BASF SE | 1,500,000 | 109,776 | ||||||
Impala Platinum Holdings Ltd. | 4,287,112 | 67,346 | ||||||
Georgia Gulf Corp. | 236,235 | 7,744 | ||||||
3,057,350 | ||||||||
INFORMATION TECHNOLOGY — 3.29% | ||||||||
Microsoft Corp. | 14,065,000 | 414,496 | ||||||
Maxim Integrated Products, Inc. | 14,156,000 | 385,468 | ||||||
Paychex, Inc. | 9,403,182 | 307,390 | ||||||
Analog Devices, Inc. | 6,250,000 | 244,250 | ||||||
Intel Corp. | 9,355,000 | 240,423 | ||||||
KLA-Tencor Corp. | 4,400,000 | 224,004 | ||||||
Taiwan Semiconductor Manufacturing Co. Ltd. | 80,653,000 | 217,818 | ||||||
Automatic Data Processing, Inc. | 1,800,000 | 101,790 | ||||||
HTC Corp. | 7,405,275 | 72,096 | ||||||
Nintendo Co., Ltd. | 630,000 | 70,560 | ||||||
Canon, Inc. | 2,000,000 | 67,840 | ||||||
Microchip Technology Inc.2 | 1,500,000 | 50,070 | ||||||
2,396,205 | ||||||||
MISCELLANEOUS — 4.70% | ||||||||
Other common stocks in initial period of acquisition | 3,427,735 | |||||||
Total common stocks (cost: $41,924,970,000) | 47,920,313 | |||||||
Preferred stocks — 0.48% | ||||||||
FINANCIALS — 0.32% | ||||||||
Vornado Realty Trust, Series I, 6.625% | 3,380,000 | 85,649 | ||||||
Citigroup Inc. 7.875% preferred | 2,381,610 | 65,345 | ||||||
HSBC Holdings PLC, Series 2, 8.00% | 1,825,000 | 50,644 | ||||||
Public Storage, Inc., Series F, 6.45% depositary shares | 1,000,000 | 25,720 | ||||||
Zions Bancorporation, Series C, 9.50% noncumulative depositary shares | 186,400 | 4,949 | ||||||
Fannie Mae, Series S, 8.25% noncumulative2 | 1,511,450 | 2,906 | ||||||
235,213 | ||||||||
MISCELLANEOUS — 0.16% | ||||||||
Other preferred stocks in initial period of acquisition | 117,012 | |||||||
Total preferred stocks (cost: $364,687,000) | 352,225 | |||||||
Warrants — 0.00% | ||||||||
ENERGY — 0.00% | ||||||||
General Maritime Corp., warrants, expire 20172,3,4 | 8,514 | 69 | ||||||
Total warrants (cost: $2,171,000) | 69 | |||||||
Shares or | ||||||||
Convertible securities — 1.00% | principal amount | |||||||
CONSUMER DISCRETIONARY — 0.43% | ||||||||
General Motors Co., Series B, 4.75% convertible preferred 2013 | 8,830,000 | 295,540 | ||||||
MGM Resorts International 4.25% convertible notes 2015 | $ | 17,037,000 | 16,909 | |||||
312,449 | ||||||||
UTILITIES — 0.15% | ||||||||
PPL Corp. 9.50% convertible preferred 2013, units | 2,007,787 | 109,123 | ||||||
ENERGY — 0.13% | ||||||||
Apache Corp., Series D, 6.00% convertible preferred 2013 | 1,930,000 | 93,740 | ||||||
INDUSTRIALS — 0.11% | ||||||||
United Continental Holdings, Inc. 4.50% convertible notes 2021 | $ | 72,600,000 | 65,282 | |||||
AMR Corp. 6.25% convertible notes 20145 | $ | 26,400,000 | 17,259 | |||||
82,541 | ||||||||
MATERIALS — 0.08% | ||||||||
Alcoa Inc. 5.25% convertible notes 2014 | $ | 41,500,000 | 60,902 | |||||
TELECOMMUNICATION SERVICES — 0.06% | ||||||||
Leap Wireless International, Inc. 4.50% convertible notes 2014 | $ | 25,000,000 | 23,625 | |||||
Clearwire Corp. 8.25% convertible notes 20406 | $ | 28,000,000 | 18,760 | |||||
42,385 | ||||||||
CONSUMER STAPLES — 0.04% | ||||||||
Bunge Ltd. 4.875% convertible preferred | 272,700 | 26,291 | ||||||
Total convertible securities (cost: $863,673,000) | 727,431 | |||||||
Principal amount | ||||||||
Bonds & notes — 26.77% | (000 | ) | ||||||
FINANCIALS — 4.42% | ||||||||
Realogy Corp., Letter of Credit, 4.491% 20167,8,9 | $ | 8,298 | 7,891 | |||||
Realogy Corp., Term Loan B, 4.499% 20167,8,9 | 95,391 | 90,717 | ||||||
Realogy Corp., Second Lien Term Loan A, 13.50% 20178,9 | 51,550 | 52,323 | ||||||
Realogy Corp. 7.875% 20196 | 79,249 | 80,438 | ||||||
Realogy Corp. 9.00% 20206 | 12,540 | 13,198 | ||||||
Wells Fargo & Co. 5.25% 2012 | 12,880 | 13,029 | ||||||
Wells Fargo & Co. 3.676% 2016 | 10,000 | 10,879 | ||||||
Wells Fargo & Co. 4.60% 2021 | 45,000 | 51,897 | ||||||
Wells Fargo & Co., Series I, 3.50% 2022 | 14,000 | 14,977 | ||||||
Wells Fargo & Co., Series K, junior subordinated 7.98% (undated)7 | 86,566 | 97,387 | ||||||
Westfield Group 5.40% 20126 | 4,350 | 4,383 | ||||||
Westfield Capital Corp. Ltd., WT Finance (Australia) Pty Ltd. and WEA Finance LLC 5.125% 20146 | 18,485 | 19,621 | ||||||
Westfield Group 7.50% 20146 | 5,555 | 6,063 | ||||||
Westfield Group 5.75% 20156 | 10,250 | 11,243 | ||||||
Westfield Group 5.70% 20166 | 44,075 | 49,123 | ||||||
Westfield Group 7.125% 20186 | 39,925 | 47,647 | ||||||
Westfield Group 6.75% 20196 | 20,000 | 23,905 | ||||||
WEA Finance LLC 4.625% 20216 | 20,000 | 21,684 | ||||||
CIT Group Inc., Series C, 4.75% 20156 | 99,815 | 104,193 | ||||||
CIT Group Inc., Series C, 7.00% 20166 | 3,000 | 3,019 | ||||||
CIT Group Inc. 4.25% 2017 | 14,000 | 14,000 | ||||||
CIT Group Inc. 5.00% 2017 | 38,600 | 40,361 | ||||||
CIT Group Inc., Series C, 7.00% 20176 | 1,152 | 1,159 | ||||||
CIT Group Inc., Series C, 5.50% 20196 | 13,650 | 14,435 | ||||||
Prologis, Inc. 7.625% 2014 | 11,000 | 12,170 | ||||||
Prologis, Inc. 6.25% 2017 | 8,900 | 10,173 | ||||||
Prologis, Inc. 6.625% 2018 | 57,365 | 67,607 | ||||||
Prologis, Inc. 6.625% 2019 | 3,611 | 4,347 | ||||||
Prologis, Inc. 7.375% 2019 | 22,690 | 28,350 | ||||||
Prologis, Inc. 6.875% 2020 | 34,045 | 42,050 | ||||||
SMFG Preferred Capital USD 3 Ltd., junior subordinated 9.50% (undated)6,7 | 116,330 | 147,332 | ||||||
Simon Property Group, LP 6.75% 2014 | 5,310 | 5,762 | ||||||
Simon Property Group, LP 5.25% 2016 | 73,435 | 83,621 | ||||||
Simon Property Group, LP 6.10% 2016 | 4,250 | 4,848 | ||||||
Simon Property Group, LP 5.875% 2017 | 22,265 | 26,068 | ||||||
Simon Property Group, LP 6.125% 2018 | 10,790 | 12,984 | ||||||
Simon Property Group, LP 10.35% 2019 | 5,000 | 7,177 | ||||||
Goldman Sachs Group, Inc. 3.625% 2016 | 22,600 | 23,154 | ||||||
Murray Street Investment Trust I 4.647% 2017 | 20,045 | 20,631 | ||||||
Goldman Sachs Group, Inc. 5.25% 2021 | 40,000 | 42,224 | ||||||
Goldman Sachs Group, Inc. 5.75% 2022 | 46,500 | 50,939 | ||||||
Bank of America Corp., Series L, 3.625% 2016 | 13,660 | 14,047 | ||||||
Bank of America Corp. 3.75% 2016 | 9,975 | 10,343 | ||||||
Bank of America Corp. 5.75% 2017 | 8,100 | 8,955 | ||||||
Bank of America Corp. 5.625% 2020 | 14,195 | 15,826 | ||||||
Bank of America Corp. 5.00% 2021 | 5,480 | 5,924 | ||||||
Bank of America Corp. 5.875% 2021 | 655 | 745 | ||||||
Bank of America Corp. 5.70% 2022 | 24,755 | 28,360 | ||||||
Bank of America Corp., Series M, junior subordinated 8.125% noncumulative (undated)7 | 30,924 | 33,410 | ||||||
JPMorgan Chase & Co. 3.45% 2016 | 10,000 | 10,585 | ||||||
JPMorgan Chase & Co., Series I, junior subordinated 7.90% (undated)7 | 76,875 | 85,133 | ||||||
International Lease Finance Corp. 5.00% 2012 | 1,250 | 1,258 | ||||||
International Lease Finance Corp. 4.875% 2015 | 77,310 | 78,774 | ||||||
PNC Preferred Funding Trust I, junior subordinated 2.118% (undated)6,7 | 23,800 | 18,623 | ||||||
PNC Financial Services Group, Inc., Series O, junior subordinated 6.75% (undated)7 | 10,250 | 11,149 | ||||||
PNC Preferred Funding Trust III, junior subordinated 8.70% (undated)6,7 | 40,700 | 41,645 | ||||||
National City Preferred Capital Trust I 12.00% (undated)7 | 5,640 | 5,851 | ||||||
Zions Bancorporation 5.50% 2015 | 40,017 | 40,922 | ||||||
Zions Bancorporation 6.00% 2015 | 32,732 | 34,073 | ||||||
Developers Diversified Realty Corp. 5.50% 2015 | 15,776 | 16,886 | ||||||
Developers Diversified Realty Corp. 9.625% 2016 | 3,170 | 3,856 | ||||||
Developers Diversified Realty Corp. 7.50% 2017 | 32,887 | 37,892 | ||||||
Developers Diversified Realty Corp. 4.75% 2018 | 5,000 | 5,329 | ||||||
Developers Diversified Realty Corp. 7.875% 2020 | 6,505 | 8,052 | ||||||
Kimco Realty Corp. 6.00% 2012 | 3,250 | 3,294 | ||||||
Kimco Realty Corp., Series C, 4.82% 2014 | 3,000 | 3,176 | ||||||
Kimco Realty Corp., Series C, 4.904% 2015 | 4,500 | 4,757 | ||||||
Kimco Realty Corp., Series C, 5.783% 2016 | 15,000 | 16,574 | ||||||
Kimco Realty Corp. 5.70% 2017 | 23,485 | 26,899 | ||||||
Kimco Realty Corp. 4.30% 2018 | 3,000 | 3,187 | ||||||
Kimco Realty Corp. 6.875% 2019 | 10,844 | 13,297 | ||||||
Mizuho Capital Investment (USD) 2 Ltd, junior subordinated 14.95% (undated)6,7 | 55,766 | 68,254 | ||||||
HBOS PLC 6.75% 20186 | 17,300 | 16,762 | ||||||
LBG Capital No.1 PLC, Series 2, 7.875% 20206 | 48,335 | 45,818 | ||||||
HBOS PLC 6.00% 20336 | 2,200 | 1,717 | ||||||
HBOS Capital Funding LP 6.071% (undated)6,7 | 5,000 | 3,437 | ||||||
Standard Chartered PLC 3.85% 20156 | 10,345 | 10,921 | ||||||
Standard Chartered PLC 3.20% 20166 | 13,123 | 13,659 | ||||||
Standard Chartered Bank 6.40% 20176 | 35,000 | 39,435 | ||||||
Hospitality Properties Trust 6.75% 20131 | 12,650 | 12,677 | ||||||
Hospitality Properties Trust 5.125% 20151 | 3,160 | 3,258 | ||||||
Hospitality Properties Trust 6.30% 20161 | 19,827 | 21,466 | ||||||
Hospitality Properties Trust 5.625% 20171 | 10,169 | 10,887 | ||||||
Hospitality Properties Trust 6.70% 20181 | 12,625 | 14,096 | ||||||
Royal Bank of Scotland PLC 3.40% 2013 | 7,950 | 8,084 | ||||||
Royal Bank of Scotland PLC 3.95% 2015 | 10,000 | 10,277 | ||||||
Royal Bank of Scotland PLC 4.875% 2015 | 9,000 | 9,476 | ||||||
Royal Bank of Scotland Group PLC 4.375% 2016 | 1,250 | 1,306 | ||||||
Royal Bank of Scotland Group PLC 4.70% 2018 | 14,000 | 12,296 | ||||||
RBS Capital Trust II 6.425% noncumulative trust (undated)7 | 12,605 | 9,643 | ||||||
Royal Bank of Scotland Group PLC, junior subordinated 6.99% (undated)5,6,7 | 11,135 | 9,186 | ||||||
Synovus Financial Corp. 5.125% 2017 | 31,353 | 30,020 | ||||||
Synovus Financial Corp. 7.875% 2019 | 18,816 | 20,462 | ||||||
Citigroup Inc. 4.587% 2015 | 10,885 | 11,590 | ||||||
Citigroup Inc. 3.953% 2016 | 27,115 | 28,287 | ||||||
Citigroup Inc. 8.50% 2019 | 5,800 | 7,380 | ||||||
Citigroup Inc. 4.50% 2022 | 500 | 528 | ||||||
American Tower Corp. 4.625% 2015 | 9,280 | 9,855 | ||||||
American Tower Corp. 7.00% 2017 | 12,431 | 14,549 | ||||||
American Tower Corp. 7.25% 2019 | 15,025 | 17,850 | ||||||
MetLife Global Funding I 5.125% 20136 | 12,000 | 12,372 | ||||||
MetLife Global Funding I 2.50% 20156 | 10,000 | 10,334 | ||||||
MetLife Capital Trust IV, junior subordinated 7.875% 20676,7 | 14,430 | 16,522 | ||||||
MetLife Capital Trust X, junior subordinated 9.25% 20686,7 | 500 | 625 | ||||||
UnumProvident Finance Co. PLC 6.85% 20156 | 28,500 | 31,938 | ||||||
Unum Group 7.125% 2016 | 6,740 | 7,857 | ||||||
iStar Financial Inc. 9.00% 20176 | 34,760 | 35,151 | ||||||
American International Group, Inc. 3.00% 2015 | 14,000 | 14,261 | ||||||
American International Group, Inc. 4.875% 2016 | 4,000 | 4,321 | ||||||
American International Group, Inc. 3.80% 2017 | 11,500 | 11,968 | ||||||
American International Group, Inc. 4.875% 2022 | 3,000 | 3,204 | ||||||
Société Générale, junior subordinated 5.922% (undated)6,7 | 45,073 | 33,379 | ||||||
Springleaf Finance Corp., Term Loan B, 5.50% 20177,8,9 | 34,345 | 32,935 | ||||||
HSBK (Europe) BV 7.25% 20176 | 30,570 | 30,876 | ||||||
ERP Operating LP 5.50% 2012 | 4,000 | 4,031 | ||||||
ERP Operating LP 5.20% 2013 | 2,500 | 2,568 | ||||||
ERP Operating LP 5.25% 2014 | 2,000 | 2,167 | ||||||
ERP Operating LP 6.584% 2015 | 2,705 | 3,052 | ||||||
ERP Operating LP 5.75% 2017 | 4,000 | 4,722 | ||||||
ERP Operating LP 7.125% 2017 | 10,000 | 11,963 | ||||||
Lazard Group LLC 7.125% 2015 | 25,187 | 27,646 | ||||||
NASDAQ OMX Group, Inc. 5.25% 2018 | 25,020 | 27,026 | ||||||
Morgan Stanley, Series F, 2.875% 2014 | 10,000 | 9,983 | ||||||
Morgan Stanley 3.80% 2016 | 5,125 | 5,081 | ||||||
Morgan Stanley, Series F, 5.625% 2019 | 8,154 | 8,260 | ||||||
HCP, Inc. 3.75% 2016 | 20,000 | 21,158 | ||||||
Regions Financial Corp. 7.75% 2014 | 1,863 | 2,054 | ||||||
Regions Financial Corp. 5.20% 2015 | 3,115 | 3,216 | ||||||
Regions Financial Corp. 5.75% 2015 | 14,761 | 15,776 | ||||||
Liberty Mutual Group Inc., Series A, 7.80% 20876,7 | 19,415 | 20,337 | ||||||
New York Life Global Funding 4.65% 20136 | 19,000 | 19,619 | ||||||
Toyota Motor Credit Corp. 1.375% 2013 | 10,000 | 10,107 | ||||||
Toyota Motor Credit Corp. 0.875% 2015 | 8,500 | 8,545 | ||||||
Monumental Global Funding 5.50% 20136 | 10,000 | 10,281 | ||||||
Monumental Global Funding III 0.655% 20146,7 | 8,000 | 7,885 | ||||||
BNP Paribas 3.60% 2016 | 10,000 | 10,315 | ||||||
BNP Paribas 5.00% 2021 | 7,000 | 7,513 | ||||||
Berkshire Hathaway Inc. 2.20% 2016 | 11,500 | 12,041 | ||||||
Berkshire Hathaway Inc. 1.60% 2017 | 2,000 | 2,045 | ||||||
Berkshire Hathaway Inc. 4.40% 2042 | 3,000 | 3,263 | ||||||
Prudential Financial, Inc. 4.50% 2021 | 3,000 | 3,286 | ||||||
Prudential Holdings, LLC, Series C, 8.695% 20236,8 | 10,250 | 12,718 | ||||||
BBVA Bancomer SA 4.50% 20166 | 8,125 | 8,450 | ||||||
BBVA Bancomer SA 6.50% 20216 | 7,200 | 7,452 | ||||||
Host Marriott, LP, Series O, 6.375% 2015 | 950 | 967 | ||||||
Host Hotels & Resorts, LP, Series Q, 6.75% 2016 | 7,800 | 8,053 | ||||||
Host Hotels & Resorts LP 9.00% 2017 | 5,000 | 5,537 | ||||||
Host Hotels & Resorts LP 6.00% 2020 | 1,000 | 1,111 | ||||||
American Express Co. 6.15% 2017 | 12,610 | 15,286 | ||||||
AXA SA, Series B, junior subordinated 6.379% (undated)6,7 | 11,530 | 9,483 | ||||||
AXA SA, junior subordinated 6.463% (undated)6,7 | 6,000 | 5,257 | ||||||
Barclays Bank PLC 2.50% 2013 | 4,625 | 4,657 | ||||||
Barclays Bank PLC 5.125% 2020 | 5,500 | 6,001 | ||||||
Barclays Bank PLC 5.14% 2020 | 3,075 | 3,052 | ||||||
Boston Properties, Inc. 3.70% 2018 | 12,000 | �� | 12,819 | |||||
UBS AG 2.25% 2014 | 10,000 | 10,112 | ||||||
UBS AG 4.875% 2020 | 1,694 | 1,880 | ||||||
QBE Capital Funding II LP 6.797% (undated)6,7 | 12,215 | 10,754 | ||||||
Bank of New York Mellon Corp., Series G, 2.50% 2016 | 10,000 | 10,505 | ||||||
ANZ National (International) Ltd. 3.125% 20156 | 10,000 | 10,360 | ||||||
Principal Life Insurance Co. 5.30% 2013 | 10,000 | 10,349 | ||||||
US Bancorp., Series T, 1.65% 2017 | 10,000 | 10,221 | ||||||
Lincoln National Corp. 5.65% 2012 | 10,000 | 10,035 | ||||||
Bank of Nova Scotia 2.55% 2017 | 9,000 | 9,502 | ||||||
Toronto-Dominion Bank 2.375% 2016 | 9,000 | 9,442 | ||||||
Westpac Banking Corp. 3.00% 2015 | 9,000 | 9,437 | ||||||
Brandywine Operating Partnership, LP 5.40% 2014 | 6,000 | 6,297 | ||||||
Brandywine Operating Partnership, LP 4.95% 2018 | 2,426 | 2,578 | ||||||
Ford Motor Credit Co. 2.50% 2016 | 7,000 | 6,978 | ||||||
Ford Motor Credit Co. 8.00% 2016 | 1,500 | 1,777 | ||||||
Santander Issuances, SA Unipersonal 6.50% 20196,7 | 9,400 | 8,131 | ||||||
CNA Financial Corp. 5.85% 2014 | 5,625 | 6,041 | ||||||
CNA Financial Corp. 6.50% 2016 | 1,750 | 1,991 | ||||||
ACE INA Holdings Inc. 2.60% 2015 | 7,445 | 7,800 | ||||||
Nationwide Mutual Insurance Co. 5.81% 20246,7 | 8,150 | 7,465 | ||||||
Goodman Funding Pty Ltd. 6.00% 20226 | 6,185 | 6,436 | ||||||
Development Bank of Kazakhstan 5.50% 2015 | 3,000 | 3,171 | ||||||
Development Bank of Kazakhstan 5.50% 20156 | 2,055 | 2,172 | ||||||
VEB Finance Ltd. 6.80% 20256 | 3,000 | 3,441 | ||||||
UDR, Inc., Series A, 5.25% 2015 | 3,000 | 3,222 | ||||||
Allstate Corp., Series B, junior subordinated 6.125% 20677 | 2,445 | 2,491 | ||||||
Intesa Sanpaolo SpA 6.50% 20216 | 2,750 | 2,482 | ||||||
Nordea Bank, Series 2, 3.70% 20146 | 2,000 | 2,094 | ||||||
ACE Cash Express, Inc. 11.00% 20196 | 2,275 | 2,036 | ||||||
3,224,733 | ||||||||
MORTGAGE-BACKED OBLIGATIONS8 — 4.08% | ||||||||
Fannie Mae 5.50% 2018 | 107 | 116 | ||||||
Fannie Mae 6.00% 2021 | 415 | 455 | ||||||
Fannie Mae, Series 2012-M5, Class A2, multifamily 2.715% 2022 | 7,000 | 7,306 | ||||||
Fannie Mae, Series 2003-48, Class TJ, 4.50% 2022 | 2,494 | 2,542 | ||||||
Fannie Mae 4.50% 2024 | 5,507 | 5,932 | ||||||
Fannie Mae 5.50% 2024 | 594 | 651 | ||||||
Fannie Mae 3.50% 2025 | 15,617 | 16,618 | ||||||
Fannie Mae 3.50% 2025 | 11,542 | 12,281 | ||||||
Fannie Mae 3.50% 2025 | 9,300 | 9,896 | ||||||
Fannie Mae 3.50% 2025 | 9,298 | 9,894 | ||||||
Fannie Mae 3.50% 2025 | 8,921 | 9,493 | ||||||
Fannie Mae 3.50% 2025 | 5,624 | 5,984 | ||||||
Fannie Mae 3.50% 2025 | 1,344 | 1,430 | ||||||
Fannie Mae 3.50% 2025 | 556 | 592 | ||||||
Fannie Mae 3.50% 2025 | 443 | 472 | ||||||
Fannie Mae 4.50% 2025 | 5,896 | 6,352 | ||||||
Fannie Mae 4.50% 2025 | 3,578 | 3,871 | ||||||
Fannie Mae 4.50% 2025 | 3,250 | 3,501 | ||||||
Fannie Mae 4.50% 2025 | 3,249 | 3,500 | ||||||
Fannie Mae, Series 2001-4, Class GA, 9.704% 20257 | 279 | 325 | ||||||
Fannie Mae, Series 2001-4, Class NA, 11.355% 20257 | 13 | 14 | ||||||
Fannie Mae 3.50% 2026 | 9,775 | 10,402 | ||||||
Fannie Mae 6.00% 2026 | 7,682 | 8,681 | ||||||
Fannie Mae 7.00% 2026 | 975 | 1,132 | ||||||
Fannie Mae 3.00% 2027 | 71,400 | 75,171 | ||||||
Fannie Mae 3.00% 2027 | 67,122 | 70,782 | ||||||
Fannie Mae 3.00% 2027 | 33,063 | 35,075 | ||||||
Fannie Mae 3.50% 2027 | 7,000 | 7,443 | ||||||
Fannie Mae 6.00% 2028 | 9,422 | 10,379 | ||||||
Fannie Mae 7.00% 2028 | 3,102 | 3,616 | ||||||
Fannie Mae 7.00% 2028 | 473 | 550 | ||||||
Fannie Mae, Series 2001-20, Class E, 9.596% 20317 | 262 | 301 | ||||||
Fannie Mae 5.50% 2033 | 1,473 | 1,632 | ||||||
Fannie Mae 4.50% 2034 | 43,575 | 47,377 | ||||||
Fannie Mae 5.00% 2035 | 38,906 | 42,462 | ||||||
Fannie Mae 5.50% 2035 | 1,484 | 1,638 | ||||||
Fannie Mae 5.00% 2036 | 34,317 | 37,491 | ||||||
Fannie Mae 5.50% 2036 | 11,975 | 13,167 | ||||||
Fannie Mae, Series 2006-43, Class PX, 6.00% 2036 | 3,977 | 4,439 | ||||||
Fannie Mae 3.459% 20377 | 4,432 | 4,641 | ||||||
Fannie Mae, Series 2007-33, Class HE, 5.50% 2037 | 13,242 | 14,673 | ||||||
Fannie Mae 6.00% 2037 | 82,944 | 91,526 | ||||||
Fannie Mae 6.00% 2037 | 21,719 | 23,966 | ||||||
Fannie Mae 6.00% 2037 | 12,655 | 14,043 | ||||||
Fannie Mae, Series 2007-24, Class P, 6.00% 2037 | 9,500 | 10,695 | ||||||
Fannie Mae 6.00% 2037 | 8,825 | 9,727 | ||||||
Fannie Mae 6.00% 2037 | 8,745 | 9,650 | ||||||
Fannie Mae 6.00% 2037 | 624 | 683 | ||||||
Fannie Mae 6.00% 2037 | 569 | 629 | ||||||
Fannie Mae 6.50% 2037 | 4,464 | 5,025 | ||||||
Fannie Mae 6.50% 2037 | 3,421 | 3,851 | ||||||
Fannie Mae 6.50% 2037 | 3,201 | 3,650 | ||||||
Fannie Mae 6.50% 2037 | 3,134 | 3,518 | ||||||
Fannie Mae 6.50% 2037 | 1,163 | 1,326 | ||||||
Fannie Mae 7.00% 2037 | 1,817 | 2,041 | ||||||
Fannie Mae 7.00% 2037 | 1,503 | 1,688 | ||||||
Fannie Mae 7.50% 2037 | 1,493 | 1,706 | ||||||
Fannie Mae 7.50% 2037 | 487 | 556 | ||||||
Fannie Mae 7.50% 2037 | 220 | 251 | ||||||
Fannie Mae 7.50% 2037 | 174 | 201 | ||||||
Fannie Mae 7.50% 2037 | 165 | 188 | ||||||
Fannie Mae 8.00% 2037 | 106 | 121 | ||||||
Fannie Mae 5.50% 2038 | 3,359 | 3,686 | ||||||
Fannie Mae 6.00% 2038 | 34,018 | 37,611 | ||||||
Fannie Mae 6.00% 2038 | 11,871 | 13,099 | ||||||
Fannie Mae 6.00% 2038 | 11,279 | 12,424 | ||||||
Fannie Mae 6.00% 2038 | 4,668 | 5,161 | ||||||
Fannie Mae 6.00% 2038 | 3,841 | 4,288 | ||||||
Fannie Mae 4.50% 2039 | 54,298 | 60,215 | ||||||
Fannie Mae 6.00% 2039 | 5,945 | 6,573 | ||||||
Fannie Mae 6.00% 2039 | 4,740 | 5,230 | ||||||
Fannie Mae 6.00% 2039 | 3,674 | 4,050 | ||||||
Fannie Mae 6.50% 2039 | 2,802 | 3,195 | ||||||
Fannie Mae 3.50% 2040 | 16,080 | 17,086 | ||||||
Fannie Mae 3.50% 2040 | 13,437 | 14,408 | ||||||
Fannie Mae 3.50% 2040 | 10,242 | 10,883 | ||||||
Fannie Mae 3.50% 2040 | 6,926 | 7,359 | ||||||
Fannie Mae 4.00% 2040 | 23,488 | 25,227 | ||||||
Fannie Mae 4.00% 2040 | 19,919 | 21,394 | ||||||
Fannie Mae 4.00% 2040 | 17,568 | 18,825 | ||||||
Fannie Mae 4.00% 2040 | 17,480 | 18,775 | ||||||
Fannie Mae 4.00% 2040 | 15,568 | 16,722 | ||||||
Fannie Mae 4.00% 2040 | 4,788 | 5,143 | ||||||
Fannie Mae 4.17% 20407 | 2,168 | 2,310 | ||||||
Fannie Mae 4.50% 2040 | 44,476 | 48,280 | ||||||
Fannie Mae 4.50% 2040 | 22,853 | 24,736 | ||||||
Fannie Mae 4.50% 2040 | 5,526 | 5,981 | ||||||
Fannie Mae 4.50% 2040 | 4,147 | 4,502 | ||||||
Fannie Mae 4.50% 2040 | 2,182 | 2,369 | ||||||
Fannie Mae 4.50% 2040 | 157 | 176 | ||||||
Fannie Mae 4.50% 2040 | 153 | 171 | ||||||
Fannie Mae 4.50% 2040 | 49 | 54 | ||||||
Fannie Mae 5.00% 2040 | 18,240 | 19,973 | ||||||
Fannie Mae 6.00% 2040 | 9,364 | 10,307 | ||||||
Fannie Mae 3.50% 2041 | 15,334 | 16,442 | ||||||
Fannie Mae 3.50% 2041 | 14,996 | 15,934 | ||||||
Fannie Mae 3.50% 2041 | 7,263 | 7,718 | ||||||
Fannie Mae 3.758% 20417 | 3,175 | 3,371 | ||||||
Fannie Mae 4.00% 2041 | 40,706 | 43,721 | ||||||
Fannie Mae 4.00% 2041 | 14,126 | 15,173 | ||||||
Fannie Mae 4.50% 2041 | 100,566 | 109,357 | ||||||
Fannie Mae 4.50% 2041 | 59,241 | 64,420 | ||||||
Fannie Mae 4.50% 2041 | 11,697 | 12,720 | ||||||
Fannie Mae 4.50% 2041 | 6,952 | 7,560 | ||||||
Fannie Mae 4.50% 2041 | 2,837 | 3,085 | ||||||
Fannie Mae 4.50% 2041 | 463 | 517 | ||||||
Fannie Mae 4.50% 2041 | 96 | 107 | ||||||
Fannie Mae 5.00% 2041 | 11,103 | 12,442 | ||||||
Fannie Mae 5.00% 2041 | 3,663 | 4,119 | ||||||
Fannie Mae 5.00% 2041 | 1,101 | 1,234 | ||||||
Fannie Mae 5.00% 2041 | 903 | 1,016 | ||||||
Fannie Mae 5.00% 2041 | 852 | 958 | ||||||
Fannie Mae 5.00% 2041 | 704 | 791 | ||||||
Fannie Mae 5.00% 2041 | 688 | 774 | ||||||
Fannie Mae 5.00% 2041 | 652 | 731 | ||||||
Fannie Mae 5.00% 2041 | 647 | 727 | ||||||
Fannie Mae 5.50% 2041 | 53,451 | 58,667 | ||||||
Fannie Mae 5.50% 2041 | 19,128 | 20,994 | ||||||
Fannie Mae, Series 2001-50, Class BA, 7.00% 2041 | 713 | 816 | ||||||
Fannie Mae, Series 2001-T10, Class A-1, 7.00% 2041 | 562 | 659 | ||||||
Fannie Mae, Series 2002-W3, Class A-5, 7.50% 2041 | 387 | 465 | ||||||
Fannie Mae 3.50% 2042 | 81,562 | 86,379 | ||||||
Fannie Mae 3.50% 2042 | 67,415 | 72,630 | ||||||
Fannie Mae 3.50% 2042 | 43,793 | 46,535 | ||||||
Fannie Mae 3.50% 2042 | 31,008 | 32,950 | ||||||
Fannie Mae 3.50% 2042 | 15,800 | 16,773 | ||||||
Fannie Mae 3.50% 2042 | 11,710 | 12,590 | ||||||
Fannie Mae 3.50% 2042 | 7,765 | 8,340 | ||||||
Fannie Mae 3.50% 2042 | 4,993 | 5,305 | ||||||
Fannie Mae 3.50% 2042 | 1,852 | 1,975 | ||||||
Fannie Mae 4.00% 2042 | 9,000 | 9,635 | ||||||
Fannie Mae 4.50% 2042 | 37,938 | 41,050 | ||||||
Fannie Mae 5.50% 2042 | 9,750 | 10,698 | ||||||
Fannie Mae 6.00% 2042 | 102,520 | 113,092 | ||||||
Fannie Mae, Series 2002-W1, Class 2A, 7.055% 20427 | 981 | 1,162 | ||||||
Fannie Mae 6.50% 2047 | 1,909 | 2,118 | ||||||
Fannie Mae 6.50% 2047 | 1,336 | 1,482 | ||||||
Fannie Mae 6.50% 2047 | 1,081 | 1,199 | ||||||
Fannie Mae 6.50% 2047 | 900 | 998 | ||||||
Fannie Mae 6.50% 2047 | 652 | 724 | ||||||
Fannie Mae 6.50% 2047 | 522 | 579 | ||||||
Fannie Mae 6.50% 2047 | 128 | 142 | ||||||
Fannie Mae 7.00% 2047 | 1,220 | 1,363 | ||||||
Fannie Mae 7.00% 2047 | 1,211 | 1,353 | ||||||
Fannie Mae 7.00% 2047 | 805 | 900 | ||||||
Fannie Mae 7.00% 2047 | 730 | 815 | ||||||
Fannie Mae 7.00% 2047 | 161 | 180 | ||||||
Freddie Mac, Series K710, Class A2, multifamily 1.883% 2019 | 6,906 | 7,041 | ||||||
Freddie Mac, Series K709, Class A2, multifamily 2.086% 2019 | 5,880 | 6,104 | ||||||
Freddie Mac, Series 2890, Class KT, 4.50% 2019 | 25,425 | 28,302 | ||||||
Freddie Mac, Series K019, Class A2, multifamily 2.272% 20224 | 8,000 | 8,093 | ||||||
Freddie Mac, Series 2289, Class NB, 10.763% 20227 | 41 | 45 | ||||||
Freddie Mac 5.00% 2023 | 7,434 | 8,003 | ||||||
Freddie Mac 5.00% 2023 | 7,119 | 7,658 | ||||||
Freddie Mac 5.00% 2023 | 6,322 | 6,800 | ||||||
Freddie Mac 5.00% 2023 | 2,343 | 2,534 | ||||||
Freddie Mac 6.00% 2026 | 1,298 | 1,425 | ||||||
Freddie Mac 6.00% 2027 | 2,307 | 2,533 | ||||||
Freddie Mac 2.726% 20357 | 2,699 | 2,883 | ||||||
Freddie Mac 4.50% 2035 | 48,594 | 52,410 | ||||||
Freddie Mac, Series 3061, Class PN, 5.50% 2035 | 2,648 | 2,945 | ||||||
Freddie Mac, Series 3257, Class PA, 5.50% 2036 | 13,506 | 14,966 | ||||||
Freddie Mac, Series 3286, Class JN, 5.50% 2037 | 14,934 | 16,360 | ||||||
Freddie Mac, Series 3312, Class PA, 5.50% 2037 | 13,364 | 14,640 | ||||||
Freddie Mac, Series 3318, Class JT, 5.50% 2037 | 8,255 | 9,039 | ||||||
Freddie Mac 5.50% 2037 | 3,654 | 3,994 | ||||||
Freddie Mac, Series 3271, Class OA, 6.00% 2037 | 11,708 | 13,306 | ||||||
Freddie Mac 5.50% 2038 | 8,183 | 8,937 | ||||||
Freddie Mac 6.50% 2038 | 8,417 | 9,603 | ||||||
Freddie Mac 6.50% 2038 | 3,219 | 3,615 | ||||||
Freddie Mac 5.00% 2039 | 6,786 | 7,445 | ||||||
Freddie Mac 5.00% 2039 | 6,519 | 7,230 | ||||||
Freddie Mac 5.00% 2039 | 3,197 | 3,465 | ||||||
Freddie Mac 5.50% 2039 | 4,423 | 4,835 | ||||||
Freddie Mac 5.50% 2039 | 3,945 | 4,309 | ||||||
Freddie Mac 4.50% 2040 | 88,170 | 95,011 | ||||||
Freddie Mac 4.00% 2041 | 18,933 | 20,298 | ||||||
Freddie Mac 4.00% 2041 | 4,538 | 4,993 | ||||||
Freddie Mac 5.00% 2041 | 3,102 | 3,479 | ||||||
Freddie Mac 5.00% 2041 | 625 | 701 | ||||||
Freddie Mac 5.00% 2041 | 603 | 676 | ||||||
Freddie Mac 5.00% 2041 | 570 | 639 | ||||||
Freddie Mac 5.00% 2041 | 416 | 467 | ||||||
Freddie Mac 5.00% 2041 | 307 | 344 | ||||||
Government National Mortgage Assn. 10.00% 2021 | 509 | 566 | ||||||
Government National Mortgage Assn. 10.00% 2025 | 489 | 543 | ||||||
Government National Mortgage Assn. 4.00% 2040 | 90,310 | 99,496 | ||||||
Government National Mortgage Assn. 4.50% 2040 | 4,657 | 5,079 | ||||||
Government National Mortgage Assn. 5.00% 2040 | 5,125 | 5,606 | ||||||
Government National Mortgage Assn. 5.00% 2040 | 1,777 | 1,945 | ||||||
Government National Mortgage Assn. 3.50% 2042 | 12,000 | 13,028 | ||||||
Government National Mortgage Assn. 3.50% 2042 | 5,000 | 5,430 | ||||||
American Tower Trust I, Series 2007-1A, Class A-FX, 5.42% 20376 | 7,250 | 7,596 | ||||||
American Tower Trust I, Series 2007-1A, Class B, 5.537% 20376 | 20,000 | 21,178 | ||||||
American Tower Trust I, Series 2007-1A, Class D, 5.957% 20376 | 29,375 | 30,336 | ||||||
American Tower Trust I, Series 2007-1A, Class E, 6.249% 20376 | 15,000 | 15,876 | ||||||
American Tower Trust I, Series 2007-1A, Class F, 6.639% 20376 | 550 | 561 | ||||||
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2003-ML1, Class A-1, 3.972% 2039 | — | — | ||||||
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2006-LDP7, Class A-4, 5.871% 20457 | 14,700 | 16,859 | ||||||
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2011-C4, Class A-2, 3.341% 20466 | 7,500 | 8,029 | ||||||
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2011-C3A, Class A-2, 3.673% 20466 | 24,000 | 25,884 | ||||||
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2005-LDP1, Class A-2, 4.625% 2046 | 2,030 | 2,050 | ||||||
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2007-CB19, Class A-4, 5.734% 20497 | 15,450 | 17,958 | ||||||
CS First Boston Mortgage Securities Corp., Series 2004-5, Class IV-A-1, 6.00% 2034 | 1,994 | 2,059 | ||||||
CS First Boston Mortgage Securities Corp., Series 2005-C3, Class A-AB, 4.614% 2037 | 5,531 | 5,733 | ||||||
CS First Boston Mortgage Securities Corp., Series 2002-CKN2, Class A-3, 6.133% 2037 | 96 | 96 | ||||||
CS First Boston Mortgage Securities Corp., Series 2007-C4, Class A-4, 5.772% 20397 | 18,880 | 20,823 | ||||||
CS First Boston Mortgage Securities Corp., Series 2005-C6, Class A-3, 5.23% 20407 | 5,003 | 5,144 | ||||||
Wachovia Bank Commercial Mortgage Trust, Series 2005-C16, Class A-PB, 4.692% 2041 | 7,060 | 7,281 | ||||||
Wachovia Bank Commercial Mortgage Trust, Series 2005-C22, Class A-4, 5.266% 20447 | 22,000 | 24,740 | ||||||
Wachovia Bank Commercial Mortgage Trust, Series 2006-C23, Class A-PB, 5.446% 2045 | 1,694 | 1,706 | ||||||
Greenwich Capital Commercial Funding Corp., Series 2005-GG5, Class A-2, 5.117% 2037 | 3,072 | 3,082 | ||||||
Greenwich Capital Commercial Funding Corp., Series 2005-GG5, Class A-4-1, 5.243% 20377 | 10,000 | 10,360 | ||||||
Greenwich Capital Commercial Funding Corp., Series 2006-GG7, Class A-4, 5.874% 20387 | 7,000 | 8,061 | ||||||
Greenwich Capital Commercial Funding Corp., Series 2007-GG9, Class A-4, 5.444% 2039 | 10,000 | 11,361 | ||||||
GE Commercial Mortgage Corp., Series 2006-C1, Class A-4, 5.303% 20447 | 13,000 | 14,621 | ||||||
GE Commercial Mortgage Corp., Series 2005-C4, Class A-3A, 5.308% 20457 | 17,000 | 17,248 | ||||||
ML-CFC Commercial Mortgage Trust, Series 2006-4, Class A-3, 5.172% (undated)7 | 27,410 | 30,761 | ||||||
Banc of America Commercial Mortgage Inc., Series 2005-5, Class A-4, 5.115% 20457 | 3,000 | 3,347 | ||||||
Banc of America Commercial Mortgage Inc., Series 2005-5, Class A-3B, 5.231% 20457 | 16,893 | 17,404 | ||||||
Banc of America Commercial Mortgage Inc., Series 2007-3, Class A-4, 5.661% (undated)7 | 5,000 | 5,717 | ||||||
J.P. Morgan Chase Commercial Mortgage Securities Trust, Series 2006-LDP6, Class A-4, 5.475% 20437 | 20,250 | 22,886 | ||||||
Citigroup-Deutsche Bank Commercial Mortgage Trust, Series 2005-CD1, Class A-4, 5.219% 20447 | 5,500 | 6,163 | ||||||
Citigroup-Deutsche Bank Commercial Mortgage Trust, Series 2006-CD3, Class A-5, 5.617% 2048 | 13,250 | 15,258 | ||||||
LB-UBS Commercial Mortgage Trust, Series 2005-C7, Class A-4, 5.197% 20307 | 11,422 | 12,735 | ||||||
Countrywide Alternative Loan Trust, Series 2005-54CB, Class 2-A-5, 5.50% 2035 | 10,447 | 7,594 | ||||||
Countrywide Alternative Loan Trust, Series 2007-HY4, Class 3-A-1, 5.231% 20477 | 6,823 | 4,527 | ||||||
Bank of Montreal 2.85% 20156 | 10,000 | 10,630 | ||||||
Crown Castle Towers LLC, Series 2010-1, Class C, 4.523% 20356 | 10,000 | 10,534 | ||||||
L.A. Arena Funding, LLC, Series 1, Class A, 7.656% 20266 | 8,521 | 9,458 | ||||||
DBUBS Mortgage Trust, Series 2011-LC1A, Class A1, 3.742% 20466 | 7,568 | 8,137 | ||||||
IndyMac INDX Mortgage Loan Trust, Series 2006-AR5, Class 2-A-1, 5.00% 20367 | 10,544 | 7,897 | ||||||
Structured Adjustable Rate Mortgage Loan Trust, Series 2006-4, Class 6-A, 5.414% 20367 | 8,397 | 6,632 | ||||||
Residential Accredit Loans, Inc., Series 2005-QR1, Class A, 6.00% 2034 | 4,163 | 4,216 | ||||||
GSR Mortgage Loan Trust, Series 2004-2F, Class VIIA-1, 4.50% 2019 | 3,800 | 3,876 | ||||||
FDIC Structured Sale Guaranteed Notes, Series 2010-L2A, Class A, 3.00% 20196 | 1,524 | 1,562 | ||||||
Morgan Stanley Capital I Trust, Series 2005-HQ7, Class A-2, 5.211% 20427 | 1,510 | 1,510 | ||||||
National Credit Union Administration, Series 2011-M1, Class A2, 1.40% 2015 | 709 | 723 | ||||||
Financial Asset Securitization, Inc., Series 1997-NAM1, Class B-1, 7.75% 2027 | 172 | 176 | ||||||
Bear Stearns Commercial Mortgage Securities Inc., Series 1999-C1, Class X, interest only, 0.605% 20316,7 | 14,422 | 147 | ||||||
2,970,369 | ||||||||
BONDS & NOTES OF U.S. GOVERNMENT & GOVERNMENT AGENCIES — 3.22% | ||||||||
U.S. Treasury 0.625% 2012 | 17,150 | 17,184 | ||||||
U.S. Treasury 0.75% 2013 | 1,500 | 1,509 | ||||||
U.S. Treasury 1.125% 2013 | 142,125 | 143,296 | ||||||
U.S. Treasury 1.375% 2013 | 245,375 | 247,694 | ||||||
U.S. Treasury 1.50% 2013 | 40,000 | 40,731 | ||||||
U.S. Treasury 1.875% 201310 | 31,283 | 32,148 | ||||||
U.S. Treasury 2.75% 2013 | 109,500 | 112,969 | ||||||
U.S. Treasury 3.50% 2013 | 92,125 | 94,666 | ||||||
U.S. Treasury 1.875% 2014 | 17,555 | 18,060 | ||||||
U.S. Treasury 1.875% 201510 | 44,899 | 49,289 | ||||||
U.S. Treasury 1.50% 2016 | 7,625 | 7,945 | ||||||
U.S. Treasury 2.00% 2016 | 20,375 | 21,543 | ||||||
U.S. Treasury 4.50% 2016 | 10,925 | 12,513 | ||||||
U.S. Treasury 7.50% 2016 | 20,000 | 25,938 | ||||||
U.S. Treasury 1.00% 2017 | 7,250 | 7,400 | ||||||
U.S. Treasury 3.50% 2018 | 22,650 | 26,093 | ||||||
U.S. Treasury 1.125% 2019 | 67,500 | 68,315 | ||||||
U.S. Treasury 8.75% 2020 | 26,900 | 42,784 | ||||||
U.S. Treasury 2.125% 2021 | 124,250 | 132,535 | ||||||
U.S. Treasury 8.00% 2021 | 9,025 | 14,320 | ||||||
U.S. Treasury 2.00% 2022 | 189,875 | 199,488 | ||||||
U.S. Treasury 6.25% 2023 | 135,000 | 199,051 | ||||||
U.S. Treasury 6.75% 2026 | 4,575 | 7,310 | ||||||
U.S. Treasury 4.50% 2036 | 98,935 | 137,289 | ||||||
U.S. Treasury 4.375% 2039 | 14,000 | 19,342 | ||||||
U.S. Treasury 4.625% 2040 | 143,870 | 206,318 | ||||||
U.S. Treasury 3.125% 2041 | 3,575 | 4,001 | ||||||
U.S. Treasury 3.75% 2041 | 74,350 | 93,193 | ||||||
U.S. Treasury 4.75% 2041 | 107,125 | 156,971 | ||||||
U.S. Treasury 3.00% 2042 | 1,400 | 1,528 | ||||||
U.S. Treasury 3.125% 2042 | 15,000 | 16,778 | ||||||
Fannie Mae 0.75% 2013 | 17,825 | 17,922 | ||||||
Fannie Mae 1.125% 2017 | 14,350 | 14,599 | ||||||
Fannie Mae 6.25% 2029 | 32,000 | 47,172 | ||||||
Fannie Mae 6.625% 2030 | 1,250 | 1,946 | ||||||
Freddie Mac 0.375% 2014 | 6,850 | 6,864 | ||||||
Freddie Mac 1.75% 2015 | 29,500 | 30,715 | ||||||
Freddie Mac 1.00% 2017 | 18,000 | 18,193 | ||||||
Freddie Mac 1.00% 2017 | 3,215 | 3,251 | ||||||
Freddie Mac 2.375% 2022 | 3,650 | 3,827 | ||||||
CoBank ACB 7.875% 20186 | 10,000 | 12,346 | ||||||
CoBank ACB 1.068% 20226,7 | 8,315 | 6,660 | ||||||
United States Agency for International Development, Republic of Egypt 4.45% 2015 | 10,000 | 11,128 | ||||||
Federal Farm Credit Banks, Consolidated Systemwide Designated Bonds, 1.625% 2014 | 6,975 | 7,183 | ||||||
Federal Home Loan Bank 4.125% 2020 | 1,600 | 1,909 | ||||||
Tennessee Valley Authority, Series A, 3.875% 2021 | 850 | 1,000 | ||||||
Tennessee Valley Authority, Series 2008, Class A, 4.875% 2048 | 700 | 904 | ||||||
2,343,820 | ||||||||
CONSUMER DISCRETIONARY — 3.20% | ||||||||
Virgin Media Finance PLC, Series 1, 9.50% 2016 | 86,065 | 96,716 | ||||||
Virgin Media Secured Finance PLC 6.50% 2018 | 8,800 | 9,724 | ||||||
Virgin Media Finance PLC 8.375% 20196 | 41,674 | 47,352 | ||||||
Virgin Media Secured Finance PLC 5.25% 2021 | 8,225 | 9,399 | ||||||
Virgin Media Finance PLC 5.25% 2022 | 25,000 | 26,000 | ||||||
MGM Resorts International 6.75% 2012 | 17,385 | 17,515 | ||||||
MGM Resorts International 6.75% 2013 | 19,860 | 20,456 | ||||||
MGM Resorts International 13.00% 2013 | 10,725 | 12,253 | ||||||
MGM Resorts International 5.875% 2014 | 51,925 | 53,483 | ||||||
MGM Resorts International 6.625% 2015 | 22,500 | 23,372 | ||||||
MGM Resorts International 7.50% 2016 | 4,000 | 4,155 | ||||||
MGM Resorts International 11.125% 2017 | 500 | 561 | ||||||
MGM Resorts International 9.00% 2020 | 5,150 | 5,762 | ||||||
MGM Resorts International 7.75% 2022 | 19,000 | 19,143 | ||||||
Boyd Gaming Corp. 6.75% 2014 | 17,059 | 17,123 | ||||||
Boyd Gaming Corp. 7.125% 2016 | 13,925 | 13,507 | ||||||
Boyd Gaming Corp. 9.125% 2018 | 88,575 | 91,675 | ||||||
Boyd Gaming Corp. 9.00% 20206 | 5,000 | 4,975 | ||||||
Univision Communications Inc., Term Loan B, 4.496% 20177,8,9 | 108,999 | 104,656 | ||||||
Univision Communications Inc. 8.50% 20216 | 3,030 | 3,075 | ||||||
Allison Transmission Holdings, Inc., Term Loan B, 2.75% 20147,8,9 | 103,047 | 102,849 | ||||||
Time Warner Inc. 5.875% 2016 | 8,000 | 9,474 | ||||||
Time Warner Companies, Inc. 7.25% 2017 | 1,500 | 1,898 | ||||||
Time Warner Inc. 4.75% 2021 | 19,000 | 21,986 | ||||||
Time Warner Inc. 3.40% 2022 | 2,750 | 2,911 | ||||||
Time Warner Cable Inc. 4.00% 2022 | 40,100 | 44,242 | ||||||
Time Warner Inc. 6.25% 2041 | 8,000 | 10,121 | ||||||
Charter Communications, Inc. 13.50% 2016 | 24,238 | 26,904 | ||||||
Charter Communications Operating, LLC and Charter Communications Operating Capital Corp. 7.25% 2017 | 38,100 | 42,053 | ||||||
Charter Communications Operating, LLC and Charter Communications Operating Capital Corp. 7.875% 2018 | 8,425 | 9,236 | ||||||
CCO Holdings LLC and CCO Holdings Capital Corp. 7.00% 2019 | 10,000 | 11,025 | ||||||
Comcast Corp. 5.90% 2016 | 10,000 | 11,625 | ||||||
Comcast Corp. 6.30% 2017 | 3,000 | 3,692 | ||||||
Comcast Corp. 3.125% 2022 | 10,655 | 11,189 | ||||||
Comcast Corp. 5.65% 2035 | 7,000 | 8,391 | ||||||
Comcast Corp. 6.45% 2037 | 25,000 | 32,751 | ||||||
Comcast Corp. 6.95% 2037 | 10,275 | 14,189 | ||||||
Comcast Corp. 4.65% 2042 | 6,315 | 6,970 | ||||||
EchoStar DBS Corp 7.75% 2015 | 7,350 | 8,260 | ||||||
DISH DBS Corp. 4.625% 20176 | 45,105 | 46,007 | ||||||
DISH DBS Corp 7.875% 2019 | 1,425 | 1,664 | ||||||
DISH DBS Corp 6.75% 2021 | 17,400 | 19,118 | ||||||
DISH DBS Corp. 5.875% 20226 | 12,490 | 12,927 | ||||||
Toys “R” Us-Delaware, Inc., Term Loan B, 6.00% 20167,8,9 | 6,214 | 5,911 | ||||||
Toys “R” Us-Delaware, Inc. 7.375% 20166 | 3,755 | 3,778 | ||||||
Toys “R” Us Property Co. II, LLC 8.50% 2017 | 14,125 | 15,326 | ||||||
Toys “R” Us Property Co. I, LLC 10.75% 2017 | 31,775 | 35,270 | ||||||
Toys “R” Us-Delaware, Inc., Term Loan B2, 5.25% 20187,8,9 | 26,606 | 24,844 | ||||||
Time Warner Cable Inc. 6.20% 2013 | 1,600 | 1,678 | ||||||
Time Warner Cable Inc. 7.50% 2014 | 10,400 | 11,523 | ||||||
Time Warner Cable Inc. 6.75% 2018 | 22,500 | 28,336 | ||||||
Time Warner Cable Inc. 5.00% 2020 | 19,000 | 22,043 | ||||||
Time Warner Cable Inc. 4.125% 2021 | 16,000 | 17,687 | ||||||
Time Warner Cable Inc. 5.50% 2041 | 1,485 | 1,744 | ||||||
Limited Brands, Inc. 5.25% 2014 | 1,585 | 1,678 | ||||||
Limited Brands, Inc. 8.50% 2019 | 16,105 | 19,185 | ||||||
Limited Brands, Inc. 7.00% 2020 | 19,965 | 22,286 | ||||||
Limited Brands, Inc. 6.625% 2021 | 29,565 | 33,002 | ||||||
Michaels Stores, Inc., Term Loan B3, 5.00% 20167,8,9 | 20,139 | 20,284 | ||||||
Michaels Stores, Inc., Term Loan B2, 5.00% 20167,8,9 | 3,727 | 3,754 | ||||||
Michaels Stores, Inc. 13.00% 2016 | 4,020 | 4,301 | ||||||
Michaels Stores, Inc. 7.75% 2018 | 25,500 | 27,444 | ||||||
CityCenter Holdings, LLC and CityCenter Finance Corp. 7.625% 2016 | 44,200 | 46,797 | ||||||
CityCenter Holdings, LLC and CityCenter Finance Corp. 7.625% 20166 | 5,000 | 5,294 | ||||||
CSC Holdings, Inc. 8.50% 2014 | 14,975 | 16,547 | ||||||
CSC Holdings, Inc. 8.625% 2019 | 6,175 | 7,302 | ||||||
Cablevision Systems Corp. 8.00% 2020 | 20,000 | 22,250 | ||||||
Neiman Marcus Group, Inc. 10.375% 2015 | 9,875 | 10,245 | ||||||
Neiman Marcus Group, Inc., Term Loan B, 4.75% 20187,8,9 | 31,320 | 31,132 | ||||||
Revel Entertainment, Term Loan B, 9.00% 20177,8,9 | 48,950 | 39,813 | ||||||
Home Depot, Inc. 5.95% 2041 | 25,000 | 35,171 | ||||||
Mediacom Broadband LLC and Mediacom Broadband Corp. 8.50% 2015 | 10,055 | 10,394 | ||||||
Mediacom LLC and Mediacom Capital Corp. 9.125% 2019 | 15,000 | 16,650 | ||||||
Mediacom LLC and Mediacom Capital Corp. 7.25% 2022 | 7,775 | 8,125 | ||||||
Cox Communications, Inc. 5.45% 2014 | 5,000 | 5,529 | ||||||
Cox Communications, Inc. 5.875% 20166 | 25,000 | 29,227 | ||||||
DaimlerChrysler North America Holding Corp. 6.50% 2013 | 5,400 | 5,795 | ||||||
Daimler Finance NA LLC 1.30% 20156 | 8,500 | 8,516 | ||||||
Daimler Finance NA LLC 2.625% 20166 | 2,000 | 2,084 | ||||||
Daimler AG 2.40% 20176 | 14,000 | 14,397 | ||||||
DaimlerChrysler North America Holding Corp. 8.50% 2031 | 2,000 | 3,189 | ||||||
Videotron Ltd. 6.375% 2015 | 4,905 | 5,028 | ||||||
Quebecor Media Inc. 7.75% 2016 | 13,000 | 13,406 | ||||||
Videotron Ltd. 5.00% 2022 | 13,600 | 14,280 | ||||||
Marriott International, Inc., Series J, 5.625% 2013 | 8,330 | 8,537 | ||||||
Marriott International, Inc., Series I, 6.375% 2017 | 19,500 | 23,073 | ||||||
Tousa, Inc. 9.00% 20104,5 | 10,675 | 6,437 | ||||||
Tousa, Inc. 9.00% 20104,5 | 7,815 | 4,712 | ||||||
Tousa, Inc. 9.25% 20114,5,6,7 | 33,175 | 20,005 | ||||||
Target Corp. 6.00% 2018 | 24,500 | 30,370 | ||||||
News America Inc. 5.30% 2014 | 20,000 | 21,999 | ||||||
News America Holdings Inc. 8.00% 2016 | 1,000 | 1,247 | ||||||
News America Inc. 4.50% 2021 | 5,000 | 5,747 | ||||||
News America Inc. 6.65% 2037 | 1,000 | 1,299 | ||||||
Cinemark USA, Inc., Term Loan, 3.50% 20167,8,9 | 3,585 | 3,592 | ||||||
Cinemark USA, Inc. 8.625% 2019 | 23,075 | 25,844 | ||||||
J.C. Penney Co., Inc. 5.75% 2018 | 13,808 | 12,134 | ||||||
J.C. Penney Co., Inc. 5.65% 2020 | 20,230 | 17,069 | ||||||
Volkswagen International Finance NV 1.071% 20146,7 | 10,000 | 10,012 | ||||||
Volkswagen International Finance NV 2.875% 20166 | 4,000 | 4,187 | ||||||
Volkswagen International Finance NV 2.375% 20176 | 14,500 | 14,996 | ||||||
PETCO Animal Supplies, Inc. 9.25% 20186 | 25,750 | 28,357 | ||||||
Burlington Coat Factory Warehouse Corp., Term Loan B1, 5.50% 20177,8,9 | 24,079 | 24,073 | ||||||
Burlington Coat Factory Warehouse Corp. 10.00% 2019 | 3,700 | 3,945 | ||||||
Royal Caribbean Cruises Ltd. 11.875% 2015 | 22,175 | 27,164 | ||||||
DIRECTV Holdings LLC and DIRECTV Financing Co., Inc. 3.50% 2016 | 24,463 | 26,112 | ||||||
Clear Channel Worldwide Holdings, Inc., Series B, 9.25% 2017 | 23,300 | 25,281 | ||||||
Macy’s Retail Holdings, Inc. 7.875% 20157 | 12,930 | 15,273 | ||||||
Federated Department Stores, Inc. 6.90% 2029 | 7,925 | 9,778 | ||||||
Walt Disney Co. 0.875% 2014 | 19,000 | 19,212 | ||||||
Walt Disney Co. 5.625% 2016 | 2,000 | 2,372 | ||||||
NBCUniversal Media, LLC 2.10% 2014 | 3,000 | 3,060 | ||||||
NBCUniversal Media, LLC 2.875% 2016 | 10,000 | 10,563 | ||||||
NBCUniversal Media, LLC 4.375% 2021 | 4,750 | 5,384 | ||||||
UPC Germany GmbH 8.125% 20176 | 5,000 | 5,450 | ||||||
UPC Germany GmbH 7.50% 20196 | 12,500 | 13,310 | ||||||
Burger King Corp 0%/11.00% 20196,11 | 23,475 | 18,633 | ||||||
Needle Merger Sub Corp. 8.125% 20196 | 16,220 | 16,362 | ||||||
Mohegan Tribal Gaming Authority 10.50% 20166 | 6,275 | 5,553 | ||||||
Mohegan Tribal Gaming Authority 11.00% 20186,7,12 | 13,725 | 9,196 | ||||||
Marina District Finance Co., Inc. 9.50% 2015 | 14,500 | 14,156 | ||||||
Sally Holdings LLC and Sally Capital Inc. 6.875% 2019 | 11,950 | 13,399 | ||||||
Seminole Tribe of Florida 6.535% 20206,8 | 10,000 | 10,380 | ||||||
Seminole Tribe of Florida 7.804% 20206,8 | 2,885 | 2,886 | ||||||
Tenneco Inc. 6.875% 2020 | 11,300 | 12,246 | ||||||
Education Management LLC and Education Management Finance Corp. 8.75% 2014 | 10,965 | 10,060 | ||||||
Academy, Ltd., Term Loan B, 6.00% 20187,8,9 | 9,950 | 10,025 | ||||||
Staples, Inc. 9.75% 2014 | 8,000 | 8,915 | ||||||
Warner Music Group 9.50% 2016 | 925 | 1,021 | ||||||
Warner Music Group 9.50% 2016 | 850 | 938 | ||||||
Warner Music Group 11.50% 2018 | 5,700 | 6,341 | ||||||
Seneca Gaming Corp. 8.25% 20186 | 7,925 | 8,252 | ||||||
Thomson Reuters Corp. 5.95% 2013 | 3,625 | 3,807 | ||||||
Thomson Reuters Corp. 6.50% 2018 | 3,000 | 3,713 | ||||||
Tower Automotive Holdings 10.625% 20176 | 6,797 | 7,162 | ||||||
CBS Corp. 1.95% 2017 | 7,000 | 7,143 | ||||||
Marks and Spencer Group PLC 6.25% 20176 | 4,902 | 5,427 | ||||||
Marks and Spencer Group PLC 7.125% 20376 | 1,000 | 1,113 | ||||||
Jarden Corp. 8.00% 2016 | 5,725 | 6,212 | ||||||
NCL Corp. Ltd. 9.50% 2018 | 5,575 | 6,133 | ||||||
Local T.V. Finance LLC 9.25% 20156,7,12 | 5,730 | 5,873 | ||||||
Dynacast International LLC 9.25% 2019 | 5,325 | 5,525 | ||||||
WPP Finance 2010 4.75% 2021 | 5,000 | 5,504 | ||||||
Omnicom Group Inc. 3.625% 2022 | 4,500 | 4,802 | ||||||
Choice Hotels International Inc. 5.75% 2022 | 500 | 535 | ||||||
2,333,535 | ||||||||
INDUSTRIALS — 2.01% | ||||||||
General Electric Capital Corp., Series A, 2.25% 2015 | 12,000 | 12,358 | ||||||
General Electric Capital Corp. 2.95% 2016 | 4,650 | 4,895 | ||||||
General Electric Capital Corp., Series A, 6.00% 2019 | 9,000 | 10,872 | ||||||
General Electric Capital Corp. 4.65% 2021 | 14,000 | 16,050 | ||||||
General Electric Capital Corp., Series B, junior subordinated 6.25% (undated)7 | 56,000 | 57,518 | ||||||
General Electric Capital Corp., Series A, junior subordinated 7.125% (undated)7 | 130,600 | 141,844 | ||||||
Hawker Beechcraft Acquisition Co., LLC, Debtor in Possession Delayed Draw, 9.75% 20127,8,9 | 25,280 | 25,961 | ||||||
Hawker Beechcraft Acquisition Co., LLC, Letter of Credit, 2.361% 20147,8,9 | 4,442 | 3,208 | ||||||
Hawker Beechcraft Acquisition Co., LLC, Term Loan B, 4.25% 20147,8,9 | 141,942 | 102,502 | ||||||
Hawker Beechcraft Acquisition Co., LLC, Term Loan B, 10.75% 20147,8,9 | 24,818 | 18,045 | ||||||
Hawker Beechcraft Acquisition Co., LLC 8.50% 20155 | 3,570 | 750 | ||||||
Hawker Beechcraft Acquisition Co., LLC 8.875% 20155,12 | 14,057 | 2,952 | ||||||
Hawker Beechcraft Acquisition Co., LLC 9.75% 20175 | 4,450 | 44 | ||||||
CEVA Group PLC 11.625% 20166 | 3,725 | 3,921 | ||||||
CEVA Group PLC 8.375% 20176 | 7,950 | 7,811 | ||||||
CEVA Group PLC 11.50% 20186 | 28,080 | 26,430 | ||||||
CEVA Group PLC 12.75% 20206 | 77,775 | 71,747 | ||||||
Ply Gem Industries, Inc. 13.125% 2014 | 14,862 | 15,382 | ||||||
Ply Gem Industries, Inc. 8.25% 2018 | 86,175 | 89,837 | ||||||
US Investigations Services, Inc., Term Loan B, 2.997% 20157,8,9 | 13,204 | 12,552 | ||||||
US Investigations Services, Inc., Term Loan D, 7.75% 20157,8,9 | 18,652 | 18,636 | ||||||
US Investigations Services, Inc. 10.50% 20156 | 49,850 | 44,366 | ||||||
US Investigations Services, Inc. 11.75% 20166 | 19,814 | 16,941 | ||||||
United Air Lines, Inc., Term Loan B, 2.25% 20147,8,9 | 16,283 | 15,998 | ||||||
Continental Airlines, Inc., Series 1997-1, Class A, 7.461% 20168 | 1,445 | 1,489 | ||||||
Continental Airlines, Inc., Series 2001-1, Class B, 7.373% 20178 | 2,194 | 2,246 | ||||||
Continental Airlines, Inc., Series 1998-1, Class B, 6.748% 20188 | 586 | 588 | ||||||
Continental Airlines, Inc., Series 1997-4B, Class B, 6.90% 20188 | 198 | 200 | ||||||
Continental Airlines, Inc., Series 1998-1, Class A, 6.648% 20198 | 6,838 | 7,229 | ||||||
Continental Airlines, Inc., Series 1997-4, Class A, 6.90% 20198 | 2,475 | 2,690 | ||||||
United Air Lines, Inc., Series 1996-A2, 7.87% 20194,5,8 | 2,421 | 0 | ||||||
Continental Airlines, Inc., Series 2000-2, Class B, 8.307% 20198 | 361 | 370 | ||||||
Continental Airlines, Inc., Series 1999-1, Class A, 6.545% 20208 | 13,491 | 14,646 | ||||||
Continental Airlines, Inc., Series 1999-1, Class B, 6.795% 20208 | 382 | 385 | ||||||
Continental Airlines, Inc., Series 1999-2, Class A-1, 7.256% 20218 | 525 | 573 | ||||||
United Air Lines, Inc., Series 2007-1, Class B, 7.336% 20216,8 | 4,530 | 4,428 | ||||||
Continental Airlines, Inc., Series 1999-2, Class B, 7.566% 20218 | 1,465 | 1,498 | ||||||
Continental Airlines, Inc., Series 2001-1, Class A-1, 6.703% 20228 | 3,610 | 3,917 | ||||||
Continental Airlines, Inc., Series 2007-1, Class B, 6.903% 20228 | 10,856 | 11,290 | ||||||
Continental Airlines, Inc., Series 2000-2, Class A-1, 7.707% 20228 | 2,852 | 3,155 | ||||||
Continental Airlines, Inc., Series 2000-1, Class A-1, 8.048% 20228 | 5,203 | 5,834 | ||||||
Continental Airlines, Inc., Series 2000-1, Class B, 8.388% 20228 | 461 | 472 | ||||||
United Air Lines, Inc., Series 2007-1, Class A, 6.636% 20248 | 7,434 | 7,838 | ||||||
Associated Materials, LLC and AMH New Finance, Inc. 9.125% 2017 | 75,245 | 72,800 | ||||||
BE Aerospace, Inc. 5.25% 2022 | 49,405 | 51,999 | ||||||
Northwest Airlines, Inc., Term Loan B, 3.97% 20137,8,9 | 2,709 | 2,709 | ||||||
Northwest Airlines, Inc., Term Loan A, 2.22% 20187,8,9 | 45,630 | 42,664 | ||||||
Delta Air Lines, Inc., Series 2002-1, Class G-1, MBIA insured, 6.718% 20248 | 5,428 | 5,876 | ||||||
JELD-WEN Escrow Corp. 12.25% 20176 | 43,750 | 49,437 | ||||||
Nielsen Finance LLC and Nielsen Finance Co. 11.625% 2014 | 25,868 | 29,619 | ||||||
Nielsen Finance LLC and Nielsen Finance Co. 11.50% 2016 | 3,901 | 4,408 | ||||||
Nielsen Finance LLC, Term Loan 1L, 8.50% 20178,9 | 12,000 | 12,960 | ||||||
Nielsen Finance LLC and Nielsen Finance Co. 7.75% 2018 | 1,000 | 1,130 | ||||||
Nortek Inc. 10.00% 2018 | 22,255 | 24,147 | ||||||
Nortek Inc. 8.50% 2021 | 21,625 | 22,382 | ||||||
Esterline Technologies Corp. 6.625% 2017 | 13,025 | 13,562 | ||||||
Esterline Technologies Corp. 7.00% 2020 | 16,590 | 18,415 | ||||||
Euramax International, Inc. 9.50% 2016 | 31,755 | 28,738 | ||||||
Union Pacific Corp. 5.125% 2014 | 15,325 | 16,336 | ||||||
Union Pacific Corp. 5.75% 2017 | 2,065 | 2,472 | ||||||
Union Pacific Corp. 5.70% 2018 | 8,000 | 9,717 | ||||||
Ashtead Capital, Inc. 9.00% 20166 | 27,020 | 27,932 | ||||||
United Technologies Corp. 1.20% 2015 | 1,115 | 1,134 | ||||||
United Technologies Corp. 1.80% 2017 | 6,905 | 7,183 | ||||||
United Technologies Corp. 3.10% 2022 | 11,400 | 12,301 | ||||||
United Technologies Corp. 5.70% 2040 | 2,000 | 2,686 | ||||||
United Technologies Corp. 4.50% 2042 | 1,765 | 2,061 | ||||||
ARAMARK Corp. 8.50% 2015 | 20,500 | 21,013 | ||||||
ARAMARK Corp. 8.625% 20166,7,12 | 2,000 | 2,050 | ||||||
Burlington Northern Santa Fe LLC 7.00% 2014 | 13,885 | 15,206 | ||||||
Burlington Northern Santa Fe LLC 4.10% 2021 | 7,000 | 7,823 | ||||||
TransDigm Inc. 7.75% 2018 | 17,395 | 19,482 | ||||||
Navios Maritime Acquisition Corporation and Navios Acquisition Finance (US) Inc. 8.625% 2017 | 14,115 | 13,303 | ||||||
Navios Maritime Holdings Inc. and Navios Maritime Finance II (US) Inc. 8.125% 2019 | 6,100 | 5,307 | ||||||
Honeywell International Inc. 3.875% 2014 | 13,605 | 14,324 | ||||||
Florida East Coast Railway Corp. 8.125% 2017 | 12,075 | 12,769 | ||||||
Kansas City Southern de México, SA de CV 8.00% 2018 | 10,000 | 11,275 | ||||||
AMR Corp. 10.00% 20215 | 3,000 | 1,875 | ||||||
American Airlines, Inc., Series 2011-2, Class A, 8.625% 20238 | 8,734 | 9,226 | ||||||
Norfolk Southern Corp. 5.75% 2016 | 6,710 | 7,755 | ||||||
Norfolk Southern Corp. 5.75% 2018 | 2,000 | 2,403 | ||||||
Volvo Treasury AB 5.95% 20156 | 8,835 | 9,707 | ||||||
CSX Corp. 5.75% 2013 | 4,960 | 5,113 | ||||||
CSX Corp. 6.25% 2015 | 3,460 | 3,955 | ||||||
Odebrecht Finance Ltd 7.00% 2020 | 2,250 | 2,509 | ||||||
Odebrecht Finance Ltd 5.125% 20226 | 6,000 | 6,150 | ||||||
Odebrecht Finance Ltd 6.00% 20236 | 250 | 272 | ||||||
Atlas Copco AB 5.60% 20176 | 7,405 | 8,610 | ||||||
ERAC USA Finance Co. 5.25% 20206 | 5,000 | 5,673 | ||||||
Sequa Corp., Term Loan B, 3.72% 20147,8,9 | 5,521 | 5,476 | ||||||
RBS Global, Inc. and Rexnord LLC 8.50% 2018 | 4,900 | 5,427 | ||||||
Canadian National Railway Co. 1.45% 2016 | 5,010 | 5,070 | ||||||
H&E Equipment Services, Inc. 8.375% 2016 | 4,800 | 4,962 | ||||||
Danaher Corp. 2.30% 2016 | 2,000 | 2,109 | ||||||
ABB Finance (USA) Inc. 1.625% 2017 | 1,000 | 1,019 | ||||||
ABB Finance (USA) Inc. 2.875% 2022 | 1,000 | 1,045 | ||||||
John Deere Capital Corp., Series D, 5.75% 2018 | 575 | 711 | ||||||
1,463,755 | ||||||||
TELECOMMUNICATION SERVICES — 1.99% | ||||||||
Nextel Communications, Inc., Series E, 6.875% 2013 | 21,102 | 21,287 | ||||||
Nextel Communications, Inc., Series F, 5.95% 2014 | 59,360 | 59,805 | ||||||
Nextel Communications, Inc., Series D, 7.375% 2015 | 177,295 | 179,511 | ||||||
Sprint Nextel Corp. 8.375% 2017 | 21,975 | 24,118 | ||||||
Sprint Nextel Corp. 9.125% 20176 | 42,196 | 47,154 | ||||||
Sprint Nextel Corp. 9.00% 20186 | 5,000 | 5,850 | ||||||
Sprint Nextel Corp. 11.50% 20216 | 20,975 | 25,249 | ||||||
Clearwire Communications and Clearwire Finance, Inc., Series B, 12.00% 20156 | 79,320 | 75,354 | ||||||
Clearwire Communications and Clearwire Finance, Inc., Series A, 12.00% 20156 | 72,825 | 69,184 | ||||||
Clearwire Communications and Clearwire Finance, Inc. 14.75% 20166 | 6,125 | 6,186 | ||||||
Clearwire Communications and Clearwire Finance, Inc. 12.00% 20176 | 38,045 | 32,528 | ||||||
Wind Acquisition SA 11.75% 20176 | 102,805 | 85,842 | ||||||
Wind Acquisition SA 7.25% 20186 | 49,055 | 43,904 | ||||||
Verizon Communications Inc. 5.55% 2014 | 37,250 | 39,848 | ||||||
Verizon Communications Inc. 3.00% 2016 | 17,000 | 18,279 | ||||||
Verizon Communications Inc. 8.75% 2018 | 4,765 | 6,639 | ||||||
Verizon Communications Inc. 4.75% 2041 | 2,075 | 2,458 | ||||||
Verizon Communications Inc. 6.00% 2041 | 32,925 | 44,869 | ||||||
Frontier Communications Corp. 7.875% 2015 | 18,475 | 20,507 | ||||||
Frontier Communications Corp. 8.25% 2017 | 36,875 | 40,563 | ||||||
Frontier Communications Corp. 8.125% 2018 | 2,467 | 2,701 | ||||||
Frontier Communications Corp. 8.50% 2020 | 15,475 | 16,829 | ||||||
Frontier Communications Corp. 9.25% 2021 | 20,625 | 22,791 | ||||||
Frontier Communications Corp. 8.75% 2022 | 6,425 | 6,907 | ||||||
Vodafone Group PLC, Term Loan B, 6.875% 20158,9,12 | 69,082 | 72,536 | ||||||
Vodafone Group PLC, Term Loan B, 6.25% 20164,8,9,12 | 19,623 | 20,212 | ||||||
Cricket Communications, Inc. 10.00% 2015 | 26,010 | 27,311 | ||||||
Cricket Communications, Inc. 7.75% 2016 | 50,790 | 54,091 | ||||||
Cricket Communications, Inc. 7.75% 2020 | 7,775 | 7,464 | ||||||
Crown Castle International Corp. 9.00% 2015 | 33,850 | 37,108 | ||||||
Crown Castle International Corp. 7.75% 20176 | 9,950 | 10,833 | ||||||
Crown Castle International Corp. 7.125% 2019 | 19,000 | 20,948 | ||||||
LightSquared, Term Loan B, 12.00% 20145,8,9,12 | 96,867 | 66,734 | ||||||
Telecom Italia Capital SA, Series B, 5.25% 2013 | 4,000 | 4,090 | ||||||
Telecom Italia Capital SA 5.25% 2015 | 15,035 | 15,035 | ||||||
Telecom Italia Capital SA 6.999% 2018 | 24,140 | 24,562 | ||||||
Telecom Italia Capital SA 7.175% 2019 | 2,000 | 2,040 | ||||||
SBC Communications Inc. 5.10% 2014 | 3,500 | 3,831 | ||||||
AT&T Inc. 0.875% 2015 | 5,410 | 5,457 | ||||||
AT&T Inc. 2.40% 2016 | 9,000 | 9,491 | ||||||
SBC Communications Inc. 5.625% 2016 | 10,000 | 11,743 | ||||||
AT&T Inc. 1.70% 2017 | 2,500 | 2,572 | ||||||
AT&T Inc. 5.35% 2040 | 7,500 | 9,229 | ||||||
France Télécom 2.75% 2016 | 9,000 | 9,314 | ||||||
France Télécom 4.125% 2021 | 15,000 | 16,398 | ||||||
Deutsche Telekom International Finance BV 4.875% 2014 | 10,000 | 10,631 | ||||||
Deutsche Telekom International Finance BV 9.25% 2032 | 8,420 | 13,179 | ||||||
Deutsche Telekom International Finance BV 4.875% 20426 | 350 | 373 | ||||||
tw telecom holdings inc. 8.00% 2018 | 20,000 | 22,450 | ||||||
Telefónica Emisiones, SAU 3.729% 2015 | 3,050 | 2,870 | ||||||
Telefónica Emisiones, SAU 3.992% 2016 | 10,000 | 9,364 | ||||||
Telefónica Emisiones, SAU 5.134% 2020 | 7,950 | 7,102 | ||||||
Trilogy International Partners, LLC, 10.25% 20166 | 22,150 | 17,831 | ||||||
SBA Telecommunications, Inc. 8.00% 2016 | 10,824 | 11,571 | ||||||
SBA Communications Corp. 5.75% 20206 | 3,375 | 3,565 | ||||||
Level 3 Communications, Inc. 8.125% 2019 | 7,000 | 7,403 | ||||||
Level 3 Communications, Inc. 11.875% 2019 | 4,625 | 5,180 | ||||||
Syniverse Holdings, Inc. 9.125% 2019 | 7,800 | 8,560 | ||||||
Qwest Capital Funding, Inc. 7.625% 2021 | 3,900 | 4,181 | ||||||
1,453,622 | ||||||||
ENERGY — 1.68% | ||||||||
Transocean Inc. 5.05% 2016 | 22,500 | 24,941 | ||||||
Transocean Inc. 6.375% 2021 | 66,400 | 80,109 | ||||||
Transocean Inc. 7.35% 2041 | 1,340 | 1,802 | ||||||
TransCanada PipeLines Ltd. 7.625% 2039 | 10,750 | 16,931 | ||||||
TransCanada PipeLines Ltd., junior subordinated 6.35% 20677 | 61,150 | 63,915 | ||||||
Kinder Morgan Energy Partners, LP 5.125% 2014 | 10,325 | 11,212 | ||||||
Kinder Morgan Energy Partners, LP 3.50% 2016 | 33,950 | 36,287 | ||||||
Kinder Morgan Energy Partners, LP 6.00% 2017 | 2,950 | 3,432 | ||||||
Kinder Morgan Energy Partners, LP 9.00% 2019 | 1,660 | 2,176 | ||||||
Kinder Morgan Energy Partners, LP 3.95% 2022 | 4,500 | 4,763 | ||||||
Kinder Morgan Energy Partners, LP 4.15% 2022 | 12,145 | 13,079 | ||||||
Kinder Morgan Energy Partners, LP 6.95% 2038 | 750 | 947 | ||||||
Kinder Morgan Energy Partners, LP 6.375% 2041 | 2,500 | 3,091 | ||||||
Petrobras International Finance Co. 2.875% 2015 | 2,570 | 2,634 | ||||||
Petrobras International 5.75% 2020 | 6,535 | 7,422 | ||||||
Petrobras International 5.375% 2021 | 51,515 | 57,942 | ||||||
Petrobras International Finance Co. 6.75% 2041 | 580 | 733 | ||||||
Laredo Petroleum, Inc. 9.50% 2019 | 57,550 | 65,319 | ||||||
Anadarko Petroleum Corp. 5.95% 2016 | 10,500 | 12,164 | ||||||
Anadarko Petroleum Corp. 6.375% 2017 | 3,500 | 4,204 | ||||||
Anadarko Petroleum Corp. 8.70% 2019 | 31,625 | 42,321 | ||||||
Anadarko Petroleum Corp. 6.20% 2040 | 500 | 624 | ||||||
Total Capital SA 3.00% 2015 | 11,500 | 12,336 | ||||||
Total Capital SA 3.125% 2015 | 1,200 | 1,289 | ||||||
Total Capital International 1.55% 2017 | 20,000 | 20,365 | ||||||
Total Capital SA 4.45% 2020 | 1,000 | 1,163 | ||||||
Total Capital International 2.875% 2022 | 17,040 | 18,175 | ||||||
Ras Laffan Liquefied Natural Gas III 5.50% 20146 | 2,400 | 2,595 | ||||||
Ras Laffan Liquefied Natural Gas III 6.75% 2019 | 4,000 | 4,940 | ||||||
Ras Laffan Liquefied Natural Gas III 6.75% 20196 | 1,000 | 1,235 | ||||||
Ras Laffan Liquefied Natural Gas II 5.298% 20206,8 | 26,181 | 29,388 | ||||||
Ras Laffan Liquefied Natural Gas III 5.838% 20276,8 | 10,325 | 11,770 | ||||||
Peabody Energy Corp. 6.00% 20186 | 22,840 | 22,954 | ||||||
Peabody Energy Corp. 6.25% 20216 | 23,575 | 23,398 | ||||||
StatoilHydro ASA 3.875% 2014 | 10,000 | 10,553 | ||||||
StatoilHydro ASA 1.80% 2016 | 15,000 | 15,507 | ||||||
Statoil ASA 3.125% 2017 | 10,000 | 10,982 | ||||||
StatoilHydro ASA 5.25% 2019 | 2,000 | 2,418 | ||||||
Statoil ASA 3.15% 2022 | 4,000 | 4,330 | ||||||
StatoilHydro ASA 4.25% 2041 | 1,350 | 1,546 | ||||||
Shell International Finance BV 1.875% 2013 | 10,000 | 10,102 | ||||||
Shell International Finance BV 4.00% 2014 | 20,000 | 21,163 | ||||||
Shell International Finance BV 4.30% 2019 | 3,000 | 3,551 | ||||||
Shell International Finance BV 6.375% 2038 | 5,750 | 8,687 | ||||||
Arch Coal, Inc. 7.00% 2019 | 29,200 | 25,696 | ||||||
Arch Coal, Inc. 7.25% 2020 | 2,125 | 1,870 | ||||||
Arch Coal, Inc. 7.25% 2021 | 17,725 | 15,509 | ||||||
Alpha Natural Resources, Inc. 6.00% 2019 | 17,450 | 15,269 | ||||||
Alpha Natural Resources, Inc. 6.25% 2021 | 17,475 | 15,203 | ||||||
Enbridge Energy Partners, LP, Series B, 6.50% 2018 | 5,225 | 6,358 | ||||||
Enbridge Energy Partners, LP 9.875% 2019 | 10,500 | 14,439 | ||||||
Enbridge Energy Partners, LP, Series B, 7.50% 2038 | 6,000 | 8,082 | ||||||
Enterprise Products Operating LLC 5.65% 2013 | 10,000 | 10,294 | ||||||
Enterprise Products Operating LLC 5.20% 2020 | 11,250 | 13,251 | ||||||
Enterprise Products Operating LLC 4.05% 2022 | 4,250 | 4,662 | ||||||
QGOG Atlantic/Alaskan Rigs Ltd. 5.25% 20186,8 | 26,495 | 27,688 | ||||||
BG Energy Capital PLC 2.50% 20156 | 7,000 | 7,294 | ||||||
BG Energy Capital PLC 2.875% 20166 | 11,505 | 12,198 | ||||||
BG Energy Capital PLC 4.00% 20216 | 6,550 | 7,239 | ||||||
Woodside Finance Ltd. 4.60% 20216 | 21,655 | 23,694 | ||||||
Enbridge Inc. 5.60% 2017 | 20,067 | 23,058 | ||||||
Reliance Holdings Ltd. 4.50% 2020 | 11,250 | 11,210 | ||||||
Reliance Holdings Ltd. 4.50% 20206 | 1,260 | 1,256 | ||||||
Reliance Holdings Ltd. 5.40% 20226 | 8,350 | 8,748 | ||||||
Reliance Holdings Ltd. 6.25% 20406 | 1,250 | 1,311 | ||||||
Devon Energy Corp. 1.875% 2017 | 6,990 | 7,123 | ||||||
Devon Energy Corp. 3.25% 2022 | 14,500 | 15,277 | ||||||
Williams Partners L.P. 4.125% 2020 | 6,500 | 7,087 | ||||||
Williams Partners L.P. and Williams Partners Finance Corp. 5.25% 2020 | 1,960 | 2,265 | ||||||
Williams Partners L.P. 4.00% 2021 | 11,820 | 12,671 | ||||||
Southwestern Energy Co. 4.10% 20226 | 21,010 | 22,023 | ||||||
Petroplus Finance Ltd. 6.75% 20145,6 | 39,340 | 5,704 | ||||||
Petroplus Finance Ltd. 7.00% 20175,6 | 60,011 | 8,702 | ||||||
Petroplus Finance Ltd. 9.375% 20195,6 | 50,518 | 7,325 | ||||||
Spectra Energy Partners, LP 2.95% 2016 | 3,750 | 3,830 | ||||||
Spectra Energy Partners 4.60% 2021 | 15,730 | 16,926 | ||||||
El Paso Pipeline Partners Operating Co., LLC 5.00% 2021 | 15,745 | 17,271 | ||||||
Cenovus Energy Inc. 4.50% 2014 | 12,000 | 12,866 | ||||||
Cenovus Energy Inc. 6.75% 2039 | 2,500 | 3,389 | ||||||
CONSOL Energy Inc. 8.00% 2017 | 4,650 | 4,952 | ||||||
CONSOL Energy Inc. 8.25% 2020 | 10,225 | 10,941 | ||||||
Energy Transfer Partners, LP 7.50% 2020 | 12,250 | 14,057 | ||||||
Chevron Corp. 3.95% 2014 | 500 | 528 | ||||||
Chevron Corp. 4.95% 2019 | 10,000 | 12,210 | ||||||
Canadian Natural Resources Ltd. 5.70% 2017 | 7,350 | 8,719 | ||||||
Canadian Natural Resources Ltd. 3.45% 2021 | 3,700 | 3,967 | ||||||
Gazprom OJSC, Series 9, 6.51% 2022 | 2,000 | 2,331 | ||||||
Gazprom OJSC 6.51% 20226 | 500 | 583 | ||||||
Gazprom OJSC 7.288% 20376 | 4,650 | 5,859 | ||||||
Gazprom OJSC 7.288% 2037 | 2,500 | 3,150 | ||||||
NGPL PipeCo LLC 7.119% 20176 | 3,100 | 3,201 | ||||||
NGPL PipeCo LLC 9.625% 20196 | 7,200 | 7,848 | ||||||
Petróleos Mexicanos 5.50% 20446 | 9,800 | 10,951 | ||||||
PTT Exploration & Production Ltd 5.692% 20216 | 500 | 554 | ||||||
PTT Exploration & Production Ltd 6.35% 20426 | 8,825 | 9,887 | ||||||
Phillips 66 5.875% 20426 | 8,760 | 10,105 | ||||||
Williams Companies, Inc. 8.75% 2032 | 4,824 | 6,684 | ||||||
Western Gas Partners LP 4.00% 2022 | 5,500 | 5,597 | ||||||
Husky Energy Inc. 5.90% 2014 | 3,500 | 3,815 | ||||||
Regency Energy Partners LP and Regency Energy Finance Corp. 6.50% 2021 | 2,800 | 2,996 | ||||||
XTO Energy Inc. 5.50% 2018 | 1,750 | 2,180 | ||||||
Odebrecht Drilling Norbe VIII/IX Ltd 6.35% 20216,8 | 1,804 | 1,967 | ||||||
Energy Transfer Partners, L.P. 6.50% 2042 | 955 | 1,094 | ||||||
Transportadora de Gas Internacional 5.70% 20226 | 850 | 892 | ||||||
Dolphin Energy Ltd. 5.50% 20216 | 325 | 365 | ||||||
1,226,716 | ||||||||
HEALTH CARE — 1.60% | ||||||||
Amgen Inc. 2.50% 2016 | 21,375 | 22,398 | ||||||
Amgen Inc. 2.125% 2017 | 8,500 | 8,762 | ||||||
Amgen Inc. 3.875% 2021 | 20,400 | 22,354 | ||||||
Amgen Inc. 3.625% 2022 | 5,885 | 6,293 | ||||||
Amgen Inc. 5.15% 2041 | 3,500 | 3,899 | ||||||
Amgen Inc. 5.375% 2043 | 46,060 | 52,861 | ||||||
VWR Funding, Inc., Series B, 10.25% 201512 | 79,476 | 82,059 | ||||||
PTS Acquisition Corp. 9.50% 201512 | 73,175 | 75,279 | ||||||
Express Scripts Inc. 2.75% 20146 | 1,000 | 1,031 | ||||||
Express Scripts Inc. 6.25% 2014 | 4,000 | 4,379 | ||||||
Medco Health Solutions, Inc. 2.75% 2015 | 6,305 | 6,537 | ||||||
Express Scripts Inc. 3.125% 2016 | 24,864 | 26,348 | ||||||
Express Scripts Inc. 7.25% 2019 | 8,985 | 11,434 | ||||||
Express Scripts Inc. 4.75% 20216 | 1,000 | 1,145 | ||||||
Express Scripts Inc. 3.90% 20226 | 8,500 | 9,166 | ||||||
Express Scripts Inc. 6.125% 20416 | 2,750 | 3,660 | ||||||
Quintiles, Term Loan B, 5.00% 20187,8,9 | 60,721 | 60,834 | ||||||
Tenet Healthcare Corp. 7.375% 2013 | 32,447 | 33,420 | ||||||
Tenet Healthcare Corp. 9.25% 2015 | 22,805 | 25,599 | ||||||
inVentiv Health Inc. 10.00% 20186 | 46,175 | 38,325 | ||||||
inVentiv Health Inc. 10.00% 20186 | 20,490 | 17,007 | ||||||
Boston Scientific Corp. 6.40% 2016 | 21,735 | 25,335 | ||||||
Boston Scientific Corp. 6.00% 2020 | 23,580 | 28,497 | ||||||
Kinetic Concepts, Inc. 10.50% 20186 | 30,160 | 32,045 | ||||||
Kinetic Concepts, Inc. 12.50% 20196 | 20,100 | 18,693 | ||||||
Novartis Capital Corp. 4.125% 2014 | 17,250 | 18,213 | ||||||
Novartis Capital Corp. 2.90% 2015 | 14,000 | 14,918 | ||||||
Novartis Securities Investment Ltd. 5.125% 2019 | 10,500 | 12,741 | ||||||
GlaxoSmithKline Capital Inc. 4.85% 2013 | 13,500 | 13,970 | ||||||
GlaxoSmithKline Capital PLC 1.50% 2017 | 16,160 | 16,508 | ||||||
GlaxoSmithKline Capital PLC 2.85% 2022 | 14,000 | 14,731 | ||||||
Elan Finance PLC and Elan Finance Corp. 8.75% 2016 | 25,865 | 28,257 | ||||||
Elan Finance PLC and Elan Finance Corp. 8.75% 2016 | 8,965 | 9,817 | ||||||
Gilead Sciences, Inc. 3.05% 2016 | 10,265 | 10,998 | ||||||
Gilead Sciences, Inc. 4.40% 2021 | 15,010 | 17,103 | ||||||
Gilead Sciences, Inc. 5.65% 2041 | 5,215 | 6,617 | ||||||
Roche Holdings Inc. 6.00% 20196 | 21,250 | 26,996 | ||||||
Roche Holdings Inc. 7.00% 20396 | 4,000 | 6,243 | ||||||
Symbion Inc. 8.00% 2016 | 32,230 | 32,391 | ||||||
Alkermes, Inc., Term Loan B, 6.75% 20177,8,9 | 19,410 | 19,629 | ||||||
Alkermes, Inc., Term Loan B, 9.50% 20187,8,9 | 9,535 | 9,761 | ||||||
Patheon Inc. 8.625% 20176 | 26,276 | 25,882 | ||||||
Grifols Inc. 8.25% 2018 | 21,643 | 23,807 | ||||||
Pfizer Inc 5.35% 2015 | 20,000 | 22,482 | ||||||
Merge Healthcare Inc 11.75% 2015 | 21,065 | 22,329 | ||||||
HCA Inc. 6.375% 2015 | 7,400 | 7,997 | ||||||
HCA Inc., Term Loan B2, 3.711% 20177,8,9 | 6,292 | 6,208 | ||||||
HCA Inc. 7.50% 2022 | 4,350 | 4,905 | ||||||
Centene Corp. 5.75% 2017 | 17,140 | 18,061 | ||||||
UnitedHealth Group Inc. 6.00% 2017 | 12,430 | 15,232 | ||||||
UnitedHealth Group Inc. 4.625% 2041 | 2,000 | 2,269 | ||||||
Multiplan Inc. 9.875% 20186 | 15,100 | 16,667 | ||||||
Surgical Care Affiliates, Inc. 8.875% 20156,7,12 | 6,591 | 6,723 | ||||||
Surgical Care Affiliates, Inc. 10.00% 20176 | 9,500 | 9,714 | ||||||
Cardinal Health, Inc. 4.00% 2015 | 3,000 | 3,244 | ||||||
Cardinal Health, Inc. 5.80% 2016 | 10,000 | 11,639 | ||||||
Cardinal Health, Inc. 1.90% 2017 | 740 | 753 | ||||||
Bausch & Lomb Inc. 9.875% 2015 | 14,175 | 14,866 | ||||||
McKesson Corp. 3.25% 2016 | 7,525 | 8,123 | ||||||
McKesson Corp. 4.75% 2021 | 3,475 | 4,090 | ||||||
Rotech Healthcare Inc. 10.50% 2018 | 19,385 | 10,856 | ||||||
WellPoint, Inc. 6.00% 2014 | 10,000 | 10,749 | ||||||
Sanofi 0.661% 20137 | 10,000 | 10,025 | ||||||
Endo Pharmaceuticals Holdings Inc. 7.00% 2019 | 2,450 | 2,719 | ||||||
Endo Pharmaceuticals Holdings Inc. 7.00% 2020 | 6,350 | 7,056 | ||||||
Coventry Health Care, Inc. 6.30% 2014 | 8,370 | 9,111 | ||||||
Biogen Idec Inc. 6.00% 2013 | 6,000 | 6,180 | ||||||
DENTSPLY International Inc. 2.75% 2016 | 5,620 | 5,757 | ||||||
1,163,697 | ||||||||
INFORMATION TECHNOLOGY — 1.47% | ||||||||
First Data Corp. 9.875% 2015 | 4,958 | 5,032 | ||||||
First Data Corp. 9.875% 2015 | 1,451 | 1,480 | ||||||
First Data Corp. 10.55% 201512 | 13,581 | 13,989 | ||||||
First Data Corp. 11.25% 2016 | 230,150 | 220,369 | ||||||
First Data Corp., Term Loan D, 5.247% 20177,8,9 | 71,536 | 69,427 | ||||||
First Data Corp. 7.375% 20196 | 21,575 | 22,627 | ||||||
First Data Corp. 8.875% 20206 | 7,300 | 8,030 | ||||||
First Data Corp. 8.25% 20216 | 32,230 | 32,311 | ||||||
First Data Corp. 12.625% 2021 | 46,558 | 47,256 | ||||||
First Data Corp. 8.75% 20226,7,12 | 88,116 | 88,887 | ||||||
SRA International, Inc., Term Loan B, 6.50% 20187,8,9 | 67,305 | 64,823 | ||||||
SRA International, Inc. 11.00% 2019 | 58,195 | 59,068 | ||||||
Freescale Semiconductor, Inc., Term Loan, 4.495% 20167,8,9 | 13,647 | 12,870 | ||||||
Freescale Semiconductor, Inc. 10.125% 2016 | 4,500 | 4,736 | ||||||
Freescale Semiconductor, Inc. 9.25% 20186 | 18,000 | 19,350 | ||||||
Freescale Semiconductor, Inc. 10.125% 20186 | 24,756 | 27,108 | ||||||
Freescale Semiconductor, Inc., Term Loan B, 6.00% 20197,8,9 | 27,830 | 27,158 | ||||||
International Business Machines Corp. 1.95% 2016 | 14,750 | 15,402 | ||||||
International Business Machines Corp. 2.00% 2016 | 35,000 | 36,492 | ||||||
International Business Machines Corp. 5.60% 2039 | 96 | 133 | ||||||
International Business Machines Corp. 4.00% 2042 | 1,910 | 2,147 | ||||||
Blackboard Inc., Term Loan B, 7.50% 20187,8,9 | 54,775 | 53,804 | ||||||
SunGard Data Systems Inc. 7.375% 2018 | 28,000 | 29,890 | ||||||
SunGard Data Systems Inc. 7.625% 2020 | 18,165 | 19,596 | ||||||
Cisco Systems, Inc. 0.718% 20147 | 10,000 | 10,053 | ||||||
Cisco Systems, Inc. 2.90% 2014 | 10,000 | 10,570 | ||||||
Cisco Systems, Inc. 4.95% 2019 | 20,000 | 24,043 | ||||||
Jabil Circuit, Inc. 8.25% 2018 | 20,925 | 25,215 | ||||||
Jabil Circuit, Inc. 5.625% 2020 | 11,150 | 11,903 | ||||||
Jabil Circuit, Inc. 4.70% 2022 | 2,050 | 2,050 | ||||||
NXP BV and NXP Funding LLC 10.00% 20133 | 16,241 | 17,420 | ||||||
NXP BV and NXP Funding LLC 9.75% 20186 | 7,000 | 8,050 | ||||||
Advanced Micro Devices, Inc. 8.125% 2017 | 10,100 | 10,681 | ||||||
Advanced Micro Devices, Inc. 7.75% 2020 | 6,250 | 6,578 | ||||||
Ceridian Corp. 11.25% 2015 | 15,000 | 14,775 | ||||||
Serena Software, Inc. 10.375% 2016 | 13,430 | 13,900 | ||||||
Hughes Satellite Systems Corp. 6.50% 2019 | 9,550 | 10,314 | ||||||
Hughes Satellite Systems Corp. 7.625% 2021 | 1,175 | 1,304 | ||||||
Xerox Corp. 6.40% 2016 | 768 | 876 | ||||||
Xerox Corp. 2.95% 2017 | 7,940 | 8,037 | ||||||
Xerox Corp. 6.75% 2017 | 360 | 421 | ||||||
Lawson Software, Inc. 9.375% 20196 | 6,000 | 6,450 | ||||||
Samsung Electronics America, Inc., 1.75% 20176 | 3,500 | 3,536 | ||||||
1,068,161 | ||||||||
CONSUMER STAPLES — 1.18% | ||||||||
Altria Group, Inc. 9.70% 2018 | 18,000 | 25,713 | ||||||
Altria Group, Inc. 9.25% 2019 | 54,890 | 77,616 | ||||||
Altria Group, Inc. 4.75% 2021 | 3,000 | 3,527 | ||||||
Altria Group, Inc. 9.95% 2038 | 23,500 | 39,745 | ||||||
Anheuser-Busch InBev NV 0.815% 20147 | 15,150 | 15,234 | ||||||
Anheuser-Busch InBev NV 0.80% 2015 | 2,500 | 2,511 | ||||||
Anheuser-Busch InBev NV 3.625% 2015 | 21,000 | 22,555 | ||||||
Anheuser-Busch InBev NV 4.125% 2015 | 10,000 | 10,827 | ||||||
Anheuser-Busch InBev NV 1.375% 2017 | 11,500 | 11,632 | ||||||
Anheuser-Busch InBev NV 7.75% 2019 | 25,000 | 33,656 | ||||||
Anheuser-Busch InBev NV 5.375% 2020 | 2,000 | 2,457 | ||||||
Anheuser-Busch InBev NV 2.50% 2022 | 3,000 | 3,069 | ||||||
Anheuser-Busch InBev NV 3.75% 2042 | 2,500 | 2,645 | ||||||
Albertson’s, Inc. 7.25% 2013 | 10,730 | 10,609 | ||||||
SUPERVALU Inc. 7.50% 2014 | 42,615 | 40,804 | ||||||
SUPERVALU Inc. 8.00% 2016 | 22,305 | 19,322 | ||||||
Albertson’s, Inc. 8.00% 2031 | 4,510 | 2,599 | ||||||
Kraft Foods Inc. 1.625% 20156 | 2,000 | 2,035 | ||||||
Kraft Foods Inc. 2.25% 20176 | 4,105 | 4,241 | ||||||
Kraft Foods Inc. 6.125% 2018 | 2,500 | 3,067 | ||||||
Kraft Foods Inc. 5.375% 20206 | 6,021 | 7,288 | ||||||
Kraft Foods Inc. 5.375% 2020 | 5,479 | 6,619 | ||||||
Kraft Foods Inc. 3.50% 20226 | 3,000 | 3,190 | ||||||
Kraft Foods Inc. 6.50% 20406 | 3,000 | 4,024 | ||||||
Kraft Foods Inc. 5.00% 20426 | 32,000 | 36,336 | ||||||
Rite Aid Corp. 9.75% 2016 | 10,000 | 11,075 | ||||||
Rite Aid Corp. 10.375% 2016 | 11,488 | 12,177 | ||||||
Rite Aid Corp. 10.25% 2019 | 19,590 | 22,186 | ||||||
Rite Aid Corp. 8.00% 2020 | 11,450 | 12,953 | ||||||
SABMiller Holdings Inc. 1.85% 20156 | 2,000 | 2,048 | ||||||
SABMiller Holdings Inc. 2.45% 20176 | 14,865 | 15,506 | ||||||
SABMiller Holdings Inc. 3.75% 20226 | 23,000 | 25,302 | ||||||
SABMiller Holdings Inc. 4.95% 20426 | 11,000 | 13,299 | ||||||
PepsiCo, Inc. 3.10% 2015 | 10,000 | 10,576 | ||||||
PepsiCo, Inc. 2.50% 2016 | 5,000 | 5,283 | ||||||
PepsiCo, Inc. 7.90% 2018 | 15,000 | 20,311 | ||||||
Pernod Ricard SA 2.95% 20176 | 23,000 | 23,761 | ||||||
Pernod Ricard SA 4.45% 20226 | 7,000 | 7,619 | ||||||
Pernod Ricard SA 5.50% 20426 | 3,000 | 3,418 | ||||||
Coca-Cola Co. 1.50% 2015 | 14,090 | 14,485 | ||||||
Coca-Cola Co. 1.80% 2016 | 12,000 | 12,491 | ||||||
Coca-Cola Co. 3.15% 2020 | 4,000 | 4,381 | ||||||
Constellation Brands, Inc. 8.375% 2014 | 3,675 | 4,201 | ||||||
Constellation Brands, Inc. 7.25% 2017 | 16,425 | 19,032 | ||||||
Constellation Brands, Inc. 6.00% 2022 | 2,825 | 3,132 | ||||||
Wesfarmers Ltd. 6.998% 20136 | 25,000 | 25,900 | ||||||
Stater Bros. Holdings Inc. 7.75% 2015 | 14,250 | 14,588 | ||||||
Stater Bros. Holdings Inc. 7.375% 2018 | 8,575 | 9,282 | ||||||
British American Tobacco International Finance PLC 2.125% 20176 | 10,500 | 10,695 | ||||||
British American Tobacco International Finance PLC 9.50% 20186 | 8,705 | 11,969 | ||||||
Wal-Mart Stores, Inc. 2.875% 2015 | 10,000 | 10,637 | ||||||
Wal-Mart Stores, Inc. 2.80% 2016 | 10,000 | 10,772 | ||||||
Procter & Gamble Co. 3.50% 2015 | 17,250 | 18,535 | ||||||
Unilever Capital Corp. 3.65% 2014 | 17,500 | 18,376 | ||||||
General Mills, Inc. 0.816% 20147 | 15,000 | 15,046 | ||||||
Diageo Capital PLC 5.50% 2016 | 11,161 | 13,154 | ||||||
Tyson Foods, Inc. 6.85% 20167 | 11,500 | 13,052 | ||||||
Kimberly-Clark Corp. 7.50% 2018 | 9,000 | 12,165 | ||||||
Kroger Co. 6.40% 2017 | 8,250 | 9,907 | ||||||
Delhaize Group 5.70% 2040 | 10,691 | 8,946 | ||||||
Smithfield Foods, Inc., Series B, 7.75% 2013 | 1,495 | 1,585 | ||||||
Smithfield Foods, Inc. 10.00% 2014 | 2,696 | 3,188 | ||||||
Smithfield Foods, Inc. 6.625% 2022 | 3,400 | 3,536 | ||||||
Philip Morris International Inc. 1.625% 2017 | 2,000 | 2,050 | ||||||
Philip Morris International Inc. 4.375% 2041 | 3,000 | 3,384 | ||||||
Del Monte Corp. 7.625% 2019 | 4,125 | 4,115 | ||||||
TreeHouse Foods, Inc. 7.75% 2018 | 3,100 | 3,356 | ||||||
Safeway Inc. 3.95% 2020 | 3,020 | 2,879 | ||||||
861,674 | ||||||||
MATERIALS — 0.93% | ||||||||
ArcelorMittal 5.375% 2013 | 4,750 | 4,884 | ||||||
ArcelorMittal 3.75% 20157 | 17,500 | 17,751 | ||||||
ArcelorMittal 4.50% 20177 | 11,430 | 11,329 | ||||||
ArcelorMittal 5.50% 20217 | 23,815 | 23,069 | ||||||
ArcelorMittal 6.25% 20227 | 35,410 | 35,583 | ||||||
ArcelorMittal 6.75% 20417 | 23,250 | 21,777 | ||||||
Reynolds Group Inc. 7.75% 2016 | 17,902 | 18,887 | ||||||
Reynolds Group Inc. 8.50% 2018 | 19,595 | 19,840 | ||||||
Reynolds Group Inc. 7.125% 2019 | 8,000 | 8,540 | ||||||
Reynolds Group Inc. 7.875% 2019 | 13,960 | 15,461 | ||||||
Reynolds Group Inc. 9.875% 2019 | 20,235 | 21,550 | ||||||
Reynolds Group Inc. 9.875% 20196 | 17,730 | 18,816 | ||||||
Georgia Gulf Corp. 9.00% 20176 | 53,480 | 60,566 | ||||||
International Paper Co. 7.40% 2014 | 12,500 | 13,824 | ||||||
International Paper Co. 7.95% 2018 | 15,545 | 19,978 | ||||||
International Paper Co. 7.30% 2039 | 5,615 | 7,424 | ||||||
Inmet Mining Corp. 8.75% 20206 | 33,140 | 32,809 | ||||||
Cliffs Natural Resources Inc. 4.875% 2021 | 28,275 | 28,360 | ||||||
Cliffs Natural Resources Inc. 6.25% 2040 | 2,480 | 2,520 | ||||||
Ball Corp. 7.125% 2016 | 12,700 | 13,859 | ||||||
Ball Corp. 5.75% 2021 | 8,615 | 9,390 | ||||||
Ball Corp. 5.00% 2022 | 940 | 995 | ||||||
Teck Resources Ltd. 3.15% 2017 | 2,500 | 2,596 | ||||||
Teck Resources Ltd. 10.75% 2019 | 8,500 | 10,298 | ||||||
Teck Resources Ltd. 4.75% 2022 | 7,745 | 8,420 | ||||||
Teck Resources Ltd. 6.25% 2041 | 1,750 | 1,947 | ||||||
Xstrata Canada Financial Corp. 2.85% 20146 | 5,000 | 5,137 | ||||||
Xstrata Canada Financial Corp. 3.60% 20176 | 5,000 | 5,220 | ||||||
Xstrata Canada Financial Corp. 4.95% 20216 | 11,500 | 12,293 | ||||||
Dow Chemical Co. 7.60% 2014 | 14,450 | 16,081 | ||||||
Dow Chemical Co. 5.25% 2041 | 4,000 | 4,691 | ||||||
Newpage Corp. 11.375% 20145 | 29,615 | 20,138 | ||||||
Consolidated Minerals Ltd. 8.875% 20166 | 24,255 | 18,919 | ||||||
BHP Billiton Finance (USA) Ltd. 5.50% 2014 | 11,730 | 12,714 | ||||||
BHP Billiton Finance (USA) Ltd. 1.00% 2015 | 3,000 | 3,025 | ||||||
BHP Billiton Finance (USA) Ltd. 1.625% 2017 | 3,000 | 3,064 | ||||||
Rio Tinto Finance (USA) Ltd. 8.95% 2014 | 2,500 | 2,845 | ||||||
Rio Tinto Finance (USA) Ltd. 2.25% 2016 | 9,000 | 9,415 | ||||||
Rio Tinto Finance (USA) Ltd. 9.00% 2019 | 3,000 | 4,187 | ||||||
Graphic Packaging International, Inc. 9.50% 2017 | 13,150 | 14,580 | ||||||
Graphic Packaging International, Inc. 7.875% 2018 | 1,500 | 1,673 | ||||||
Newcrest Finance Pty Ltd. 4.45% 20216 | 11,895 | 12,352 | ||||||
Newcrest Finance Pty Ltd. 5.75% 20416 | 2,000 | 2,115 | ||||||
Ardagh Packaging Finance 7.375% 20176 | 9,070 | 9,773 | ||||||
Ardagh Packaging Finance 11.125% 20186,7,12 | 4,273 | 3,835 | ||||||
Ardagh Packaging Finance 9.125% 20206 | 585 | 616 | ||||||
FMG Resources 6.375% 20166 | 3,000 | 3,030 | ||||||
FMG Resources 6.00% 20176 | 8,400 | 8,421 | ||||||
MacDermid 9.50% 20176 | 10,850 | 11,365 | ||||||
E.I. du Pont de Nemours and Co. 0.888% 20147 | 10,000 | 10,076 | ||||||
Ecolab Inc. 3.00% 2016 | 7,455 | 7,958 | ||||||
Ecolab Inc. 4.35% 2021 | 1,000 | 1,137 | ||||||
Ecolab Inc. 5.50% 2041 | 750 | 945 | ||||||
JMC Steel Group Inc. 8.25% 20186 | 9,250 | 9,319 | ||||||
OMNOVA Solutions Inc. 7.875% 2018 | 8,500 | 8,681 | ||||||
Smurfit Capital Funding PLC 7.50% 2025 | 7,125 | 7,232 | ||||||
Anglo American Capital PLC 2.15% 20136 | 5,000 | 5,043 | ||||||
Packaging Dynamics Corp. 8.75% 20166 | 2,865 | 3,044 | ||||||
Arbermarle Corp. 5.10% 2015 | 2,570 | 2,800 | ||||||
Taminco Global Chemical Corp. 9.75% 20206 | 2,440 | 2,574 | ||||||
Airgas, Inc. 7.125% 2018 | 1,250 | 1,328 | ||||||
Praxair, Inc. 4.375% 2014 | 1,000 | 1,063 | ||||||
CEMEX SA 9.25% 20206 | 979 | 871 | ||||||
CRH America, Inc. 8.125% 2018 | 500 | 605 | ||||||
678,638 | ||||||||
UTILITIES — 0.70% | ||||||||
Consumers Energy Co., First Mortgage Bonds, 6.125% 2019 | 7,548 | 9,495 | ||||||
Consumers Energy Co., First Mortgage Bonds, 6.70% 2019 | 29,193 | 38,363 | ||||||
Consumers Energy Co. 5.65% 2020 | 4,731 | 5,919 | ||||||
CMS Energy Corp. 6.25% 2020 | 20,345 | 23,139 | ||||||
Consumers Energy Co. 2.85% 2022 | 3,370 | 3,531 | ||||||
CMS Energy Corp. 5.05% 2022 | 8,817 | 9,453 | ||||||
TXU, Term Loan, 4.746% 20177,8,9 | 79,442 | 50,753 | ||||||
Texas Competitive Electric Holdings Co. LLC, 11.50% 20206 | 39,780 | 29,636 | ||||||
Nevada Power Co., General and Refunding Mortgage Notes, Series L, 5.875% 2015 | 690 | 770 | ||||||
Nevada Power Co., General and Refunding Mortgage Notes, Series M, 5.95% 2016 | 13,700 | 15,882 | ||||||
Nevada Power Co., General and Refunding Mortgage Notes, Series O, 6.50% 2018 | 460 | 571 | ||||||
Nevada Power Co., General and Refunding Mortgage Notes, Series V, 7.125% 2019 | 4,043 | 5,248 | ||||||
NV Energy, Inc 6.25% 2020 | 17,500 | 20,371 | ||||||
AES Corp. 7.75% 2015 | 10,000 | 11,450 | ||||||
AES Corp. 8.00% 2017 | 4,000 | 4,670 | ||||||
AES Corp. 8.00% 2020 | 7,000 | 8,260 | ||||||
AES Corp. 7.375% 20216 | 10,125 | 11,631 | ||||||
MidAmerican Energy Co. 5.95% 2017 | 10,625 | 12,751 | ||||||
PacifiCorp., First Mortgage Bonds, 5.65% 2018 | 5,500 | 6,719 | ||||||
MidAmerican Energy Holdings Co. 5.75% 2018 | 10,000 | 12,047 | ||||||
MidAmerican Energy Holdings Co. 5.95% 2037 | 3,375 | 4,449 | ||||||
Electricité de France SA 5.50% 20146 | 19,000 | 20,154 | ||||||
Electricité de France SA 6.95% 20396 | 8,000 | 10,377 | ||||||
National Rural Utilities Cooperative Finance Corp. 5.50% 2013 | 13,850 | 14,492 | ||||||
National Rural Utilities Cooperative Finance Corp. 1.00% 2015 | 8,250 | 8,318 | ||||||
E.ON International Finance BV 5.80% 20186 | 17,000 | 20,268 | ||||||
NRG Energy, Inc. 7.375% 2017 | 14,400 | 14,976 | ||||||
NRG Energy, Inc. 8.25% 2020 | 3,850 | 4,168 | ||||||
CenterPoint Energy Resources Corp. 4.50% 2021 | 16,130 | 17,859 | ||||||
Intergen Power 9.00% 20176 | 18,000 | 17,595 | ||||||
Abu Dhabi National Energy Co. PJSC (TAQA) 6.165% 2017 | 10,000 | 11,650 | ||||||
Abu Dhabi National Energy Co. PJSC (TAQA) 6.165% 20176 | 4,000 | 4,660 | ||||||
Virginia Electric and Power Co., Series 2003-A, 4.75% 2013 | 6,000 | 6,149 | ||||||
Virginia Electric and Power Co., Series B, 5.95% 2017 | 4,500 | 5,579 | ||||||
Midwest Generation, LLC, Series B, 8.56% 20164,8 | 9,761 | 8,980 | ||||||
Entergy Corp. 4.70% 2017 | 8,000 | 8,591 | ||||||
Eskom Holdings Ltd. 5.75% 20216 | 6,820 | 7,596 | ||||||
Carolina Power & Light Co. d/b/a Progress Energy Carolinas, Inc. 5.25% 2015 | 6,000 | 6,839 | ||||||
Public Service Co. of Colorado 5.80% 2018 | 122 | 150 | ||||||
Xcel Energy Inc. 4.70% 2020 | 5,000 | 5,889 | ||||||
Teco Finance, Inc. 5.15% 2020 | 5,172 | 5,985 | ||||||
AES Panamá, SA 6.35% 20166 | 4,500 | 4,943 | ||||||
Israel Electric Corp. Ltd. 8.10% 20966 | 4,905 | 4,798 | ||||||
National Grid PLC 6.30% 2016 | 4,000 | 4,638 | ||||||
CEZ, a s 4.25% 20226 | 2,820 | 2,969 | ||||||
Veolia Environnement 6.00% 2018 | 2,500 | 2,832 | ||||||
Enel Finance International SA 6.00% 20396 | 3,000 | 2,494 | ||||||
Colbun SA 6.00% 20206 | 2,000 | 2,188 | ||||||
Iberdrola Finance Ireland 5.00% 20196 | 1,060 | 1,005 | ||||||
511,250 | ||||||||
BONDS & NOTES OF GOVERNMENTS & GOVERNMENT AGENCIES OUTSIDE THE U.S. — 0.14% | ||||||||
Polish Government 5.25% 2014 | 1,500 | 1,588 | ||||||
Polish Government 6.375% 2019 | 15,985 | 19,601 | ||||||
Polish Government 5.00% 2022 | 3,000 | 3,450 | ||||||
Hungarian Government 6.25% 2020 | 12,935 | 13,291 | ||||||
Israeli Government 5.125% 2019 | 3,000 | 3,459 | ||||||
Israeli Government 4.00% 2022 | 8,500 | 9,060 | ||||||
Russian Federation 3.25% 20176 | 2,800 | 2,906 | ||||||
Russian Federation 3.25% 2017 | 2,000 | 2,076 | ||||||
Russian Federation 7.50% 20308 | 4,645 | 5,777 | ||||||
France Government Agency-Guaranteed, Société Finance 2.875% 20146 | 10,000 | 10,416 | ||||||
Province of Ontario, Series 1, 1.875% 2012 | 10,000 | 10,046 | ||||||
South Africa (Republic of) 5.50% 2020 | 3,500 | 4,182 | ||||||
South Africa (Republic of) 6.25% 2041 | 2,500 | 3,425 | ||||||
Croatian Government 6.25% 20176 | 485 | 504 | ||||||
Croatian Government 6.75% 2019 | 4,800 | 5,064 | ||||||
Latvia (Republic of) 5.25% 20176 | 5,240 | 5,515 | ||||||
Romanian Government 6.75% 20226 | 3,000 | 3,184 | ||||||
KfW 1.00% 2015 | 1,825 | 1,846 | ||||||
105,390 | ||||||||
ASSET-BACKED OBLIGATIONS8 — 0.10% | ||||||||
Chase Issuance Trust, Series 2008-4, Class A, 4.65% 2015 | 10,000 | 10,261 | ||||||
AEP Texas Central Transitioning Funding II LLC, Secured Transition Bonds, Series A, Class A-3, 5.09% 2017 | 8,265 | 8,933 | ||||||
Home Equity Asset Trust, Series 2004-7, Class M-1, 1.176% 20357 | 10,000 | 7,567 | ||||||
AmeriCredit Automobile Receivables Trust, Series 2008-A-F, Class A-4, FSA insured, 6.96% 2014 | 6,966 | 7,064 | ||||||
First Horizon ABS Trust, Series 2006-HE2, Class A, FSA insured, 0.376% 20267 | 2,664 | 2,007 | ||||||
First Horizon ABS Trust, Series 2007-HE1, Class A, FSA insured, 0.376% 20297 | 5,800 | 4,403 | ||||||
CWHEQ Revolving Home Equity Loan Trust, Series 2006-I, Class 2-A, FSA insured, 0.389% 20377 | 2,799 | 2,168 | ||||||
CWHEQ Revolving Home Equity Loan Trust, Series 2007-B, Class A, FSA insured, 0.399% 20377 | 4,923 | 3,644 | ||||||
PG&E Energy Recovery Funding LLC, Series 2005-2, Class A-3, 5.12% 2014 | 4,930 | 4,965 | ||||||
Countryplace Manufactured Housing Contract, Series 2005-1, Class A-3, AMBAC insured, 4.80% 20356 | 3,486 | 3,489 | ||||||
Countryplace Manufactured Housing Contract, Series 2005-1, Class A-4, AMBAC insured, 5.20% 20356,7 | 1,145 | 1,050 | ||||||
Citibank Credit Card Issuance Trust, Series 2008, Class A5, 4.85% 2015 | 3,000 | 3,096 | ||||||
Conseco Finance Home Loan Trust, Series 1999-G, Class B-2, 10.96% 2029 | 13,630 | 2,758 | ||||||
RAMP Trust, Series 2003-RZ4, Class A-7, 4.79% 20337 | 2,281 | 2,309 | ||||||
Ameriquest Mortgage Securities Inc., Series 2003-12, Class M-1, 1.371% 20347 | 2,721 | 2,150 | ||||||
IndyMac Home Equity Mortgage Loan Asset-backed Trust, Series 2007-H1, Class A-1, FSA insured, 0.406% 20377 | 2,804 | 2,050 | ||||||
CPS Auto Receivables Trust, Series 2007-B, Class A-4, FSA insured, 5.60% 20146 | 1,568 | 1,584 | ||||||
Home Equity Mortgage Trust, Series 2006-6, Class 2A-1, 0.346% 20377 | 14,648 | 1,118 | ||||||
Residential Asset Securities Corp. Trust, Series 2003-KS6, Class A-2, 0.846% 20337 | 92 | 81 | ||||||
70,697 | ||||||||
MUNICIPALS — 0.05% | ||||||||
State of California, Various Purpose General Obligation Bonds (Federally Taxable), 6.20% 2019 | 24,675 | 29,518 | ||||||
State of New Jersey, Economic Development Authority, Energy Facility Revenue Bonds (ACR Energy Partners, LLC Project), | ||||||||
Series 2011-B, 12.00% 20306 | 1,875 | 2,032 | ||||||
State of South Dakota, Educational Enhancement Funding Corp., Tobacco Settlement Asset-backed Bonds, | ||||||||
Series 2002-A, Class A, 6.72% 2025 | 1,838 | 1,853 | ||||||
33,403 | ||||||||
Total bonds & notes (cost: $18,479,930,000) | 19,509,460 | |||||||
Short-term securities — 6.19% | ||||||||
Freddie Mac 0.07%–0.205% due 8/1/2012–4/1/2013 | 1,086,450 | 1,086,036 | ||||||
U.S. Treasury Bills 0.106%–0.165% due 8/16/2012–4/4/2013 | 784,200 | 784,020 | ||||||
Fannie Mae 0.06%–0.19% due 8/1/2012–1/23/2013 | 530,800 | 530,638 | ||||||
Federal Home Loan Bank 0.105%–0.21% due 8/24/2012–6/14/2013 | 425,000 | 424,785 | ||||||
Coca-Cola Co. 0.15%–0.22% due 8/9–11/13/20126 | 168,000 | 167,941 | ||||||
Procter & Gamble Co. 0.11%–0.14% due 8/8–9/25/20126 | 158,900 | 158,888 | ||||||
Federal Farm Credit Banks 0.18%–0.22% due 9/12/2012–7/3/2013 | 155,500 | 155,334 | ||||||
Straight-A Funding LLC 0.17%–0.18% due 9/20–10/23/20126 | 145,905 | 145,847 | ||||||
Variable Funding Capital Company LLC 0.16%–0.18% due 8/1–9/24/20126 | 145,000 | 144,977 | ||||||
Wal-Mart Stores, Inc. 0.10%–0.15% due 8/6–8/27/20126 | 125,000 | 124,993 | ||||||
United Technologies Corp. 0.15%–0.18% due 8/27–9/26/20126 | 110,400 | 110,366 | ||||||
Private Export Funding Corp. 0.16%–0.17% due 8/31–9/11/20126 | 85,000 | 84,980 | ||||||
Abbott Laboratories 0.14%–0.15% due 8/28–8/29/20126 | 76,500 | 76,492 | ||||||
National Rural Utilities Cooperative Finance Corp. 0.12%–0.13% due 8/15–8/16/2012 | 76,100 | 76,096 | ||||||
Regents of the University of California 0.15% due 8/13–9/17/2012 | 67,200 | 67,191 | ||||||
NetJets Inc. 0.11%–0.12% due 8/9–8/24/20126 | 61,500 | 61,497 | ||||||
General Electric Co. 0.14% due 8/13/2012 | 60,000 | 59,997 | ||||||
Paccar Financial Corp. 0.13% due 8/21–8/22/2012 | 52,000 | 51,996 | ||||||
Chariot Funding, LLC 0.17% due 8/29/20126 | 50,000 | 49,993 | ||||||
eBay Inc. 0.17% due 9/19/20126 | 50,000 | 49,986 | ||||||
John Deere Credit Ltd. 0.13% due 8/17/20126 | 40,000 | 39,998 | ||||||
Texas Instruments Inc. 0.11% due 8/28/20126 | 37,500 | 37,497 | ||||||
Medtronic Inc. 0.15% due 10/25/20126 | 20,000 | 19,988 | ||||||
Total short-term securities (cost: $4,509,442,000) | 4,509,536 | |||||||
Total investment securities (cost: $66,144,873,000) | 73,019,034 | |||||||
Other assets less liabilities | (147,679 | ) | ||||||
Net assets | $ | 72,871,355 |
As permitted by U.S. Securities and Exchange Commission regulations, “Miscellaneous” securities include holdings in their first year of acquisition that have not previously been publicly disclosed.
1Represents an affiliated company as defined under the Investment Company Act of 1940. |
2Security did not produce income during the last 12 months. |
3Acquired through a private placement 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. |
Percent | |||||||||||||
Acquisition | Cost | Value | of net | ||||||||||
date(s) | (000 | ) | (000 | ) | assets | ||||||||
NXP BV and NXP Funding LLC 10.00% 2013 | 7/17/2009 | $ | 15,154 | $ | 17,420 | .02 | % | ||||||
General Maritime Corp. | 11/6/2009–4/14/2010 | 6,077 | 203 | .00 | |||||||||
General Maritime Corp., warrants, expire 2017 | 11/6/2009–4/14/2010 | 2,171 | 69 | .00 | |||||||||
Atrium Corp. | 4/30/2010 | 163 | 73 | .00 | |||||||||
Total restricted securities | $ | 23,565 | $ | 17,765 | .02 | % |
4Valued under fair value procedures adopted by authority of the board of trustees. The total value of all such securities, including those in “Miscellaneous,” was $92,366,000, which represented .13% of the net assets of the fund. |
5Scheduled interest and/or principal payment was not received. |
6Acquired in a transaction exempt from registration under Rule 144A or section 4(2) of 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 $4,980,324,000, which represented 6.83% of the net assets of the fund. |
7Coupon rate may change periodically. |
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 $1,350,259,000, which represented 1.85% of the net assets of the fund. |
10Index-linked bond whose principal amount moves with a government price index. |
11Step bond; coupon rate will increase at a later date. |
12Payment in kind; the issuer has the option of paying additional securities in lieu of cash. |
Key to abbreviations
ADR = American Depositary Receipts
FDR = Fiduciary 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 investment objectives, risks, charges and expenses. This and other important information is contained in the fund prospectus and summary prospectus, which can be obtained from your financial professional and should be read carefully before investing. You may also call American Funds Service Company (AFS) at 800/421-4225 or visit the American Funds website at americanfunds.com.
MFGEFP-906-0912O-S32882
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON INVESTMENT PORTFOLIO
To the Shareholders and Board of Trustees of
The Income Fund of America:
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 (the “Fund”) as of July 31, 2012, and for the year then ended and have issued our report thereon dated September 7, 2012, 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, 2012, appearing in Item 6 of this Form N-CSR. This Schedule is the responsibility of the Fund’s management. Our responsibility is to express an opinion based on our audit. In our opinion, the Schedule referred to above, when considered in relation to the basic financial statements taken as a whole of the Fund referred to above, presents fairly, in all material respects, the information set forth therein.
DELOITTE & TOUCHE LLP
Costa Mesa, California
September 7, 2012
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 trustees since the Registrant last submitted a proxy statement to its shareholders. The procedures are as follows. The Registrant has a nominating and governance 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 trustees. While the committee normally is able to identify from its own resources an ample number of qualified candidates, it will consider shareholder suggestions of persons to be considered as nominees to fill future vacancies on the board. Such suggestions must be sent in writing to the nominating and governance 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 and governance 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 | |
By /s/ Hilda L. Applbaum | |
Hilda L. Applbaum, Vice Chairman and Principal Executive Officer | |
Date: September 28, 2012 |
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 28, 2012 |
By /s/ Jeffrey P. Regal |
Jeffrey P. Regal, Treasurer and Principal Financial Officer |
Date: September 28, 2012 |