[The American Funds Group(r)]
THE INCOME FUND OF AMERICA
SEMI-ANNUAL REPORT FOR THE SIX MONTHS ENDED JANUARY 31, 2000
[cover illustration: sowing a field of money]
The Income Fund of America(r) seeks current income while secondarily striving
for capital growth through investments in stocks and fixed-income securities.
About our cover: Investing in The Income Fund of America is like planting seeds
in a field. Over time, small investments have grown into meaningful amounts
through the compounding of reinvested dividends. Growing income and capital
appreciation have also played an important role in the fund's long-term
results. But, as with planting seeds, success takes patience.
PLEASE SEE PAGE 5 FOR IMPORTANT INFORMATION ABOUT CLASS A AND B SHARES.
IFA's Yield vs. Benchmarks
[begin mountain chart]
<TABLE>
<CAPTION>
Date The Income Average of Average of S&P 500
Fund of income funds equity-income
America funds
<S> <C> <C> <C> <C>
1/31/1995 6.14 4.69 3.27 2.81
7/31/1995 5.55 4.39 2.93 2.41
1/31/1996 5.07 4.29 2.61 2.18
7/31/1996 5.19 4.49 2.60 2.28
1/31/1997 5.09 3.89 2.22 1.89
7/31/1997 4.74 3.81 1.93 1.61
1/31/1998 4.27 4.02 1.87 1.58
7/31/1998 4.32 3.89 1.74 1.43
1/31/1999 4.79 3.95 1.58 1.29
7/31/1999 4.86 4.14 1.54 1.24
1/31/2000 5.40 4.31 1.68 1.19
</TABLE>
[end mountain chart]
All numbers calculated by Lipper, Inc.
The 12-month dividend rate is calculated by taking the total of the trailing 12
months' dividends and dividing by the month-end net asset value adjusted for
capital gains.
FIGURES SHOWN ARE PAST RESULTS AND ARE NOT PREDICTIVE OF FUTURE RESULTS. SHARE
PRICE AND RETURN WILL VARY, SO YOU 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.
FELLOW SHAREHOLDERS:
Rising interest rates and a stock market that primarily rewarded a small group
of technology stocks posed challenges for The Income Fund of America during the
six months ended January 31. As a result, your fund posted a decline of 5.4%
with dividends and capital gains reinvested.
Our competition didn't fare well either. The average income fund - which has an
objective of providing high income through investing in high-yielding stocks,
bonds and money market instruments - returned 0.7%. The average equity-income
fund lost 6.0%, according to Lipper, Inc., a mutual fund tracking service.
Standard & Poor's 500 Composite Index, a measure of large U.S. stocks, produced
a total return of 5.6%, while the Lehman Brothers Aggregate Bond Index, a broad
measure of the bond market, had a total return of 0.7%.
IFA'S DIVIDEND RATE OUTPACES BENCHMARKS
In terms of the fund's primary objective, IFA continued to deliver
well-above-average income. In the first half of our 2000 fiscal year, IFA paid
two regular dividends of 20 cents a share and a larger-than-usual special
dividend of 7 cents a share at the end of 1999. Also in December, IFA paid a
capital gain distribution of 81 cents a share. If, as most shareholders do, you
reinvested all distributions, you now own 7% more fund shares, on which you are
earning dividends.
Comparatively, our yield stands out both from the broad market and that of most
income funds. As of January 31, IFA's annualized dividend rate of 5.4% was well
above the 4.3% average yield of the income funds tracked by Lipper. This
dividend rate was also more than four times the 1.2% yield of the S&P 500, a
near-record low, and over three times the 1.7% rate of the average
equity-income fund.
THE IMPORTANCE OF A LONG-TERM PERSPECTIVE
Some investors may find it difficult to maintain a long-term perspective in the
face of the dramatic stock price increases some segments of the market are
witnessing. In fact, we cannot recall any greater divergence in valuations over
such a short period of time.
Yield data from the S&P 500 tells the story. In the 12 months ended January 31,
technology stocks that pay few, if any, dividends represented almost one third
of the S&P 500 and rose almost 40% on average. In contrast, stocks yielding at
least 3% - those more appropriate for IFA - represented only 8% of the S&P 500
and suffered an average decline of almost 11%.
If you step back and consider the fund's 26-year lifetime, IFA has produced a
compound annual total return of 13.4%. That is only modestly below the 14.9%
compound annual total return of the S&P 500 over the same period - even though
the S&P 500 is an unmanaged index invested in mostly large U.S. stocks with no
bonds, no income goals and no expenses. IFA's lifetime compound annual total
return far outpaced the 8.9% compound annual total return of the Lehman
Brothers Aggregate Bond Index over the same time period. Over the longer term,
we expect IFA should continue to deliver satisfactory total returns with less
volatility and much greater current income than many investment alternatives.
A LOOK AT THE ECONOMY AND THE MARKET
Economic expansion continued in the U.S. in the recent period, fueled by strong
consumer spending and business investment. Unemployment was low and company
earnings were strong. The strengthening world economy, tight labor market and
rising oil prices led to fears of inflation, however. The Federal Reserve
responded by raising interest rates and signaling further rate increases to
come. Higher rates hurt a number of IFA's investment positions, including
banks, utilities and insurance companies, which traditionally react negatively
to higher interest rates.
As we mentioned before, the U.S. stock market has shown a wide divergence over
the past six months between stocks in the so-called "new economy" (Internet
companies, the media and telecommunications) and stocks in the "old economy"
(banks, utilities, paper and forest products, metals, capital equipment and
food producers). The new economy stocks have tended to rise regardless of
extremely high valuations as long as expectations of future growth remain
intact. For the most part, investors sold the old economy stocks, even though
many have demonstrated growing earnings and have been paying regular dividends.
This divergence has continued in February.
We believe that many new economy stocks are vastly overvalued and that the
shares of out-of-favor companies are trading at valuations which are now
beginning to reflect the possible impact of a slowing economy. That's why we
are selectively adding such stocks to our portfolio.
WHAT HELPED IN EQUITIES
Now let's take a closer look at how the fund's equity investments fared during
the recent period. Investments outside the U.S. helped the fund's results.
Australian bank investments did well because of good earnings and the rise in
the Australian dollar. Significant contributors included Commonwealth Bank of
Australia (+65.7%) and Westpac Banking (+64.0%). Paper and forest product
companies in Scandinavia improved because of continuing consolidation and
rationalization of their capacity. UPM-Kymmene appreciated 13.7%.
Overseas telecommunications companies also provided solid yields, good dividend
growth and strong free cash flow. Contributors were Telecom New Zealand
(+85.3%), KPN, the dominant provider of telecommunications services in the
Netherlands (+92.0%) and Telecom Italia (+27.1%).
Merger deals or announcements benefited U.S. telecommunications holdings such
as U S WEST (+16.0%) and MediaOne Group, whose preferred stock rose 25.8%.
Houston Industries convertible preferred, an unusual issue that is convertible
into shares of Time Warner, rose 10.1%.
WHAT HURT IN EQUITIES
The positive performance of non-U.S. and telecommunications stocks, however,
was overwhelmed by declines in the stocks of banks, utilities and insurance
companies. The fund's largest holding, First Union, fell 27.0%, in part because
it had trouble digesting its acquisitions. Bank of America also declined 27.0%.
Energy companies, the fund's second largest industry concentration, delivered
poor returns even though oil prices have risen from about $10 a barrel in early
1999 to about $30 in January 2000. The energy sector has suffered primarily
because investors perceive that merger and acquisition activities may be
curtailed by the Federal Trade Commission, which has filed a suit seeking to
block the combination of BP Amoco and Atlantic Richfield. Investors also
believe that higher oil prices may be only temporary. This affected Phillips
Petroleum (-20.3%), Atlantic Richfield (-14.5%) and USX-Marathon (-15.4%). Our
analysis indicates that, despite these unfavorable events, earnings prospects
are favorable for our oil holdings.
WHAT HURT IN FIXED-INCOME
As of January 31, the fund had 46.1% of its assets invested in U.S. equity
securities, 11.8% in non-U.S. equity securities, 7.3% in government bonds,
25.0% in other fixed-income securities and 9.8% in cash.
The fixed-income portion of the fund made a modest contribution to total
return, with high-yield corporate bonds accounting for nearly one-half of the
fixed income position. As we mentioned previously, rising interest rates
negatively affected bond markets during the past six months. U.S. Treasury
securities, to which IFA has only a modest exposure, were hardest hit, but the
rout was widespread and took down most other sectors as well. High-yield bonds
struggled with rising defaults in industries such as energy and health care.
However, the fund's investments in telecommunications and cable television
bonds helped results. Mortgage-backed and asset-backed bonds also posted
relatively strong results.
LOOKING FORWARD
While we can't predict what the stock and bond markets will do in the next six
months, we believe that IFA's portfolio is well grounded by thoroughly
researched investments that produce steady income. In the long term, our
cautious investment strategy has provided capital growth while both reducing
price fluctuations in down markets and providing above-average income. We
appreciate your confidence in The Income Fund of America and look forward to
reporting to you again in the autumn.
/s/ Walter P. Stern
Walter P. Stern
Chairman of the Board
/s/ Janet A. McKinley
Janet A. McKinley
President
March 10, 2000
The Income Fund of America
RESULTS AT A GLANCE for periods ended January 31, 2000
<TABLE>
<CAPTION>
Six One Year 10 Years Lifetime/1/ Average
Months Annual
<S> <C> <C> <C> <C> <C>
The Income Fund of America -5.4% -1.4% +204.5% +2,556.6% +13.4%
Standard & Poor's 500 Stock +5.6 +10.3 +441.0 +3,698.3 +14.9
Composite Index
Salomon Smith Barney Long-Term -0.3 -1.8 +234.5 - -
High-Yield Bond Index
Lehman Brothers Aggregate +0.7 -1.8 +111.7 +828.2 +8.9
Bond Index /2/
Average Savings Institution/3/ +2.3 +4.6 +59.4 +425.6 +6.5
Consumer Price Index +1.2 +2.7 +32.4 +267.5 +5.1
(inflation)/4/
</TABLE>
/1/ Since December 1, 1973, when Capital Research and Management Company
became IFA's investment adviser.
/2/ From December 1, 1973 through December 31, 1975, the Lehman Brothers
Government/Corporate Bond Index was used because the Aggregate Bond Index did
not yet exist.
/3/ Based on figures from the U.S. League of Savings Institutions and the
Federal Reserve Board, reflecting all kinds of savings deposits (maximum
allowable interest rates imposed by law until 1983). Savings accounts are
guaranteed; the fund is not.
/4/ Computed from data supplied by the U.S. Department of Labor, Bureau of
Labor Statistics.
The indexes are unmanaged and do not reflect sales charges, commissions or
expenses.
There are two ways to invest in this fund. Class A shares are subject to a
5.75% maximum up-front sales charge that declines for accounts of $25,000 or
more. Class B shares, which are not available for certain employer-sponsored
retirement plans, have no up-front charge. They are, however, subject to
additional expenses of approximately 0.75% a year over the first eight years of
ownership. If redeemed within six years, they may also be subject to a
contingent deferred sales charge (5% maximum) that declines over time.
Fund results in this report were calculated for A shares at net asset value
(without a sales change) unless otherwise indicated. Here are the cumulative
total returns and average annual compound total returns with all distributions
reinvested for periods ended December 31, 1999 (the most recent calendar
quarter), assuming payment of the 5.75% maximum sales charge at the beginning
of the stated periods:
<TABLE>
<CAPTION>
10 Years 5 Years One Year
<S> <C> <C>
+181.68% +88.44% -5.27%
(+10.91% annually) (+13.51% annually)
</TABLE>
The fund's 30-day yield as of February 29, 2000, calculated in accordance with
the Securities and Exchange Commission formula, was 5.71%.
<TABLE>
<S> <C> <C> <C>
The Income Fund of America, Inc.
Investment Portfolio, January 31, 2000 (Unaudited)
Shares Market Percent
Principal Value of Net
Equity Securitites Amount (000) Assets
- -------------------------------------------- ------ ------ ------
Utilities: Electric & Gas - 8.75%
Consolidated Edison, Inc. 5,085,000 166,216 .84
Florida Progress Corp. 3,070,000 130,091 .65
DTE Energy Co. 3,400,000 118,150 .59
Southern Co. 4,250,000 108,906 .55
Unicom Corp. 2,550,000 99,769 .50
PECO Energy Co. 2,255,600 93,889 .47
MCN Energy Group Inc. 3,550,000 91,413 .46
Ameren Corp. 2,500,000 81,406 .41
American Electric Power Co., Inc. 2,025,000 67,836 .34
Dominion Resources, Inc. 1,561,392 65,188 .33
Sempra Energy 3,500,000 64,969 .33
Wisconsin Energy Corp. 3,130,000 61,818 .31
Equitable Resources, Inc. (1) 1,697,500 58,564 .29
El Paso Energy Corp. (formerly Sonat Inc.) 800,000 25,800
El Paso Energy Capital Trust I 4.75% convertible preferred 2028 650,000 29,738 .28
Kinder Morgan, Inc. (formerly K N Energy, Inc.) 1,000,000 26,313
K N Energy, Inc. 8.25% PEPS convertible preferred 2001, units 682,600 26,963 .27
Peoples Energy Corp. 1,700,000 53,125 .27
Entergy Corp. 2,000,000 49,875 .25
DQE, Inc. 800,000 37,300 .19
Scottish and Southern Energy PLC 4,250,000 33,058 .17
KeySpan Corp. 1,350,000 31,641 .16
Scottish Power PLC 4,300,000 29,837 .15
New Jersey Resources Corp. 750,000 28,359 .14
National Power PLC 4,580,000 26,625 .13
Central and South West Corp. 1,000,000 20,186 .10
OGE Energy Corp. 950,000 19,297 .10
Eastern Enterprises 300,000 17,156 .09
New England Electric System 318,000 16,814 .08
Puget Sound Energy, Inc. 700,000 15,750 .08
South Jersey Industries, Inc. 500,000 14,500 .07
GPU, Inc. 375,700 10,895 .05
TECO Energy, Inc. 467,200 9,169 .05
WICOR, Inc. 233,600 6,906 .03
Western Resources, Inc. 275,000 4,400 .02
------ ------
1,741,922 8.75
------ ------
Energy Sources & Equipment - 6.77%
Phillips Petroleum Co. 5,268,900 215,366 1.08
Atlantic Richfield Co. 2,350,000 180,950 .91
USX-Marathon Group 6,600,000 169,538 .85
Conoco Inc., Class A 3,520,000 82,060
Conoco Inc., Class B 2,000,000 47,125 .65
Texaco Inc. 2,325,900 122,982 .62
"Shell" Transport and Trading Co., PLC (New York registered) 2,500,000 109,687 .55
Sunoco, Inc. 3,932,000 90,682 .46
Ultramar Diamond Shamrock Corp. 3,925,000 85,859 .43
CONSOL Energy Inc. 4,500,000 54,563 .27
Occidental Petroleum Corp. 2,500,000 49,687 .25
Unocal Capital Trust $3.125 convertible preferred 1,040,000 46,540 .23
Ashland Inc. 1,000,000 32,562 .16
Kerr-McGee Corp. 5.50% DECS convertible notes 2004 865,000 30,923 .16
Diamond Offshore Drilling, Inc. 3.75% convertible debentures 2007 $18,700,000 17,975 .09
Pogo Trust I, Series A, 6.50% convertible preferred 2029 200,000 11,287 .06
------ ------
1,347,786 6.77
------ ------
Banking - 6.49%
First Union Corp. 8,894,400 298,518 1.50
Bank of America Corp. 3,855,800 186,765 .94
BANK ONE CORP. 4,300,000 128,194 .64
Commonwealth Bank of Australia 7,480,973 124,083 .62
Westpac Banking Corp. 18,113,652 122,502 .62
J.P. Morgan & Co. Inc. 860,000 105,619 .53
BancWest Corp. 3,164,100 51,021 .26
Bank of Nova Scotia 2,400,000 48,924 .25
FleetBoston Financial Corp. (formerly BankBoston Corp.) 1,421,280 44,681 .23
Bank of New York Co., Inc. 1,000,000 40,625 .20
KeyCorp 1,800,000 37,800 .19
National City Corp. 1,500,000 32,438 .16
Canadian Imperial Bank of Commerce 1,000,000 26,076 .13
National Australia Bank Ltd., exchangeable capital units $800,000 20,400 .10
NB Capital Corp. 8.35% exchangeable depositary shares 520,000 11,862 .06
Keystone Financial, Inc. 415,000 7,600 .04
Banco Nacional de Mexico, SA 11.00% exchangeable notes 2003 (2) $4,175,000 4,185 .02
------ ------
1,291,293 6.49
------ ------
Forest Products & Paper - 4.26%
Weyerhaeuser Co. 4,412,900 253,190 1.27
UPM-Kymmene Corp. 4,450,000 165,526 .83
International Paper Co. 2,890,168 137,644
International Paper Co., Capital Trust 5.25% convertible preferred 2025 400,000 19,800 .79
Georgia-Pacific Corp., Timber Group 5,450,000 118,197 .60
Stora Enso Oyj, Class R 3,815,511 56,696 .29
Potlatch Corp. 1,350,000 54,338 .27
APP Finance (VI) Mauritius Ltd. 0% convertible preferred 2012 $144,000,000 24,480 .12
Westvaco Corp. 650,000 17,834 .09
------ ------
847,705 4.26
------ ------
Diversified Telecommunication Services - 3.27%
U S WEST, Inc. 3,285,800 218,506 1.10
AT&T Corp. 2,375,000 125,281 .63
SBC Communications Inc. 985,000 42,478
SBC Communications Inc. 7.75% DECS convertible preferred 2001 463,000 42,133 .43
GTE Corp. 575,000 42,155 .21
Koninklijke PTT Nederland NV 341,818 29,114
Koninklijke PTT Nederland NV (ADR) 86,982 7,497 .18
Telecom Italia SpA, nonconvertible savings shares 5,191,500 35,133 .18
Telefonos de Mexico, SA de CV 4.25% convertible debentures 2004 $27,660,000 35,059 .18
Global Crossing Ltd. 7.00% convertible preferred (2) 80,000 21,230 .11
Telecom Corp. of New Zealand Ltd. 3,538,400 14,668 .07
Citizens Utilities Trust 5.00% EPPICS convertible preferred 2036 250,000 14,656 .07
Bell Atlantic Corp. 200,000 12,388 .06
Telstra Corp. Ltd. 1,011,500 4,535 .02
COLT Telecom Group PLC (ADR) (3) 20,000 3,808 .02
Allegiance Telecom, Inc., warrants, expire 2008 (2,3,4) 20,000 2,317 .01
NEXTLINK Communications, Inc. 14.00% preferred 2009 (5) 11,475 585 .00
ICG Holdings, Inc., warrants, expire 2005 (2,3,4) 19,800 313 .00
------ ------
651,856 3.27
------ ------
Chemicals - 2.71%
Dow Chemical Co. 1,628,500 189,720 .95
Imperial Chemical Industries PLC (ADR) 3,900,000 128,944 .65
International Flavors & Fragrances Inc. 1,900,000 67,806 .34
DSM NV 2,100,810 61,209 .31
Hercules Inc. 3,200,000 54,800 .28
Monsanto Co. 6.50% ACES convertible preferred 2001, units 1,108,800 36,590 .18
------ ------
539,069 2.71
------ ------
Real Estate - 2.44%
Equity Residential Properties Trust 2,100,000 87,150
Equity Residential Properties Trust, Series G, 7.25% convertible preferred 600,000 12,075 .50
Boston Properties, Inc. 2,634,600 79,038 .40
Spieker Properties, Inc. 1,600,000 62,200 .31
Weingarten Realty Investors 1,325,000 49,439 .25
AMB Property Corp. 1,225,000 25,036 .13
Amoy Properties Ltd. 35,000,000 22,717 .11
ProLogis Trust, Series D, 7.92% preferred 1,080,000 21,667 .11
CenterPoint Properties Corp. 580,000 20,554 .10
Sun Hung Kai Properties Ltd. 2,000,000 18,572 .09
Hysan Development Co. Ltd. 12,849,635 13,130 .07
Duke-Weeks Realty Corp., Series B, 7.99% preferred cumulative 300,000 12,300 .06
step-up premium rate
Simon DeBartolo Group, Inc., Series C, 7.89% preferred cumulative 300,000 12,188 .06
step-up premium rate
Meditrust Corp., paired stock 3,340,000 12,108 .06
Archstone Communities Trust 564,000 11,315 .06
IAC Capital Trust, Series A, 8.25% TOPRS preferred 300,000 5,888 .03
Glenborough Realty Trust Inc., Series A, 7.75% convertible preferred 400,000 5,850 .03
CarrAmerica Realty Corp., Series B, 8.57% cumulative redeemable preferred 280,000 5,425 .03
New Plan Realty Trust, Series D, 7.80% preferred cumulative 112,500 4,669 .02
step-up premium rate
Kimco Realty Corp. 100,000 3,525 .02
------ ------
484,846 2.44
------ ------
Beverages & Tobacco - 1.92%
Philip Morris Companies Inc. 7,400,000 154,937 .78
Southcorp Ltd. 25,046,175 87,861 .44
R.J. Reynolds Tobacco Holdings, Inc. (formerly RJR Nabisco, Inc.) 4,610,100 79,236 .40
Imperial Tobacco Ltd. 4,000,000 29,143 .15
Gallaher Group PLC 4,800,000 18,474 .09
UST Inc. 500,000 11,469 .06
------ ------
381,120 1.92
------ ------
Merchandising - 1.82%
J.C. Penney Co., Inc. 6,800,000 133,450 .67
Coles Myer Ltd. 14,900,363 71,966 .36
Safeway PLC 21,150,000 68,771 .35
J Sainsbury PLC 8,650,000 47,459 .24
Woolworths Ltd. 9,000,385 27,855 .14
PETsMART, Inc. 6.75% convertible subordinated notes 2004 (2) $17,500,000 12,163 .06
Tultex Corp., warrants, expire 2007 (3,4) 1,522,401 0 .00
------ ------
361,664 1.82
------ ------
Broadcasting & Publishing - 1.66%
Houston Industries Inc. 7.00% ACES convertible preferred 2000 1,730,000 230,523 1.16
UnitedGlobalCom, Inc., Class C, 7.00% convertible preferred (2) 700,000 65,800
UnitedGlobalCom, Inc., Class D, 7.00% convertible preferred 500,000 31,000 .49
NTL Inc., warrants, expire 2008 (2,3,4) 25,650 3,105 .01
TVN Entertainment Corp., warrants, expire 2008 (2,3,4) 10,000 0 .00
------ ------
330,428 1.66
------ ------
Automobiles - 1.26%
Ford Motor Co. 3,600,000 179,100 .90
General Motors Corp. 900,000 72,394 .36
------ ------
251,494 1.26
------ ------
Insurance - 1.25%
American General Corp. 1,670,400 102,625 .51
SAFECO Corp. 2,000,000 49,000 .25
Ohio Casualty Corp. (1) 2,600,000 32,825 .17
Lincoln National Corp. 800,000 29,550 .15
XL Capital Ltd. 600,000 27,075 .13
PMI Group, Inc. 190,890 7,874 .04
------ ------
248,949 1.25
------ ------
Business & Public Services - 1.18%
Cendant Corp. 7.50% PRIDES convertible preferred 1,425,000 43,463 .22
USA Waste Services, Inc. 4.00% 2002 $42,000,000 35,700 .18
United Utilities PLC 3,521,463 33,868 .17
Thames Water PLC 2,650,000 32,115 .16
Alexander & Baldwin, Inc. 1,375,000 27,758 .14
PSINet Inc., Series D, 7.00% convertible preferred 2049 (2) 400,000 18,400 .09
Budget Group, Inc. 6.25% TIDES convertible preferred 2005 600,000 18,300 .09
Interpublic Group of Companies, Inc. 1.87% convertible subordinated $17,000,000 17,043 .09
notes 2006 (2)
Hyder PLC 1,489,173 5,575 .03
Nationwide Health Properties, Inc., Series A, 7.677% preferred cumulative 50,000 3,025 .01
step-up premium rate
Integrated Health Services, Inc. 5.75% convertible debentures 2001 (6) $1,250,000 13 .00
------ ------
235,260 1.18
------ ------
Metals: Steel & Nonferrous - 1.16%
Phelps Dodge Corp. 2,084,841 121,181 .61
Corus Group PLC (formerly British Steel PLC) 25,422,400 50,562 .25
Freeport-McMoRan Copper & Gold Inc., Series A, $1.75 convertible preferred 1,400,000 24,500
Freeport-McMoRan Copper & Gold Inc., Class B 300,000 5,231 .15
Inco Ltd. 5.75% convertible debentures 2004 $17,250,000 15,827 .08
Allegheny Technologies, Inc. (formerly Allegheny Teledyne Inc.) 675,000 14,091 .07
------ ------
231,392 1.16
------ ------
Electronic Components & Instruments - 1.13%
Advanced Micro Devices, Inc. 6.00% convertible subordinated notes 2005 $51,700,000 56,741 .29
Hubbell Inc., Class B 1,700,000 44,094 .22
Micron Technology, Inc. 7.00% convertible subordinated notes 2004 $25,000,000 28,250 .14
Premier Farnell PLC 3,280,000 26,597 .13
Macronix International Co., Ltd. 1.00% convertible subordinated notes 2005 (2) $20,000,000 20,700 .10
Harris Corp. 600,000 17,400 .09
Adaptec, Inc. 4.75% convertible subordinated notes 2004 $15,500,000 17,205 .09
Thermo Instrument Systems Inc. 4.00% convertible subordinated debentures 2005 $10,000,000 7,575 .04
Quantum Corp. 7.00% convertible subordinated notes 2004 $7,000,000 5,320 .03
------ ------
223,882 1.13
------ ------
Leisure & Tourism - 1.12%
Seagram Co. Ltd. 7.50% convertible preferred 2002 1,845,000 102,398 .51
Georgia-Pacific Corp., Georgia-Pacific Group 7.50% PEPS convertible 1,400,000 60,900 .31
preferred 2004, units
Premier Parks Inc. 7.50% PIES convertible preferred 2001 450,000 24,300 .12
Host Marriott Financial Trust 6.75% QUIPS convertible preferred 2026 600,000 20,025 .10
FelCor Lodging Trust Inc. 450,000 8,100 .04
Royal Caribbean Cruises Ltd., Series A, 7.25% convertible preferred 45,000 6,393 .03
AMF Bowling Worldwide, Inc. 0% convertible debentures 2018 (2) $26,391,000 1,122 .01
------ ------
223,238 1.12
------ ------
Food & Household Products - 1.12%
General Mills, Inc. 3,589,300 111,941 .56
H.J. Heinz Co. 1,500,000 55,781 .28
Kellogg Co. 1,200,000 29,100 .15
Nabisco Group Holdings Corp. 3,000,000 25,875 .13
------ ------
222,697 1.12
------ ------
Health & Personal Care - 1.00%
Sepracor Inc. 6.25% convertible subordinated debentures 2005 (2) $7,350,000 20,066
Sepracor Inc. 7.00% convertible subordinated debentures 2005 (2) $21,000,000 25,725 .23
Eli Lilly and Co. 600,000 40,125 .20
Pharmacia & Upjohn, Inc. 813,500 38,235 .19
American Home Products Corp. 800,000 37,650 .19
Athena Neurosciences, Inc. 4.75% convertible notes 2004 $32,500,000 33,353 .17
Glycomed Inc. 7.50% convertible subordinated debentures 2003 $5,000,000 4,125 .02
RainTree Healthcare Corp. (3,4) 279,109 14 .00
------ ------
199,293 1.00
------ ------
Wireless Telecommunication Services - 0.97%
MediaOne Group, Inc. 6.25% PIES convertible preferred 2001 1,214,800 143,650
MediaOne Group, Inc. 7.00% PIES convertible preferred 2002 380,000 19,570 .82
Price Communications Corp. (3) 933,222 20,298 .10
Omnipoint Corp. (2,3) 92,761 9,514 .05
McCaw International, Ltd., warrants, expire 2007 (2,3,4) 31,500 79 .00
Conecel Holdings Ltd., Class B, warrants, expire 2000 (2,3,4) 76,825 8 .00
Comunicacion Celular SA, Class B, warrants, expire 2003 (2,3,4) 31,000 3 .00
------ ------
193,122 .97
------ ------
Financial Services - 0.82%
Household International, Inc. 2,453,280 86,478 .43
Bell Atlantic Financial Services, Inc. 5.75% senior exchangeable note 2003 $7,500,000 7,481
Bell Atlantic Financial Services, Inc. 5.75% convertible debentures 2003 (2) $17,000,000 16,958
Bell Atlantic Financial Services, Inc. 4.25% convertible debentures 2005 (2) $39,000,000 50,115 .38
Wilshire Financial Services Group Inc. (1) 2,150,517 2,285 .01
------ ------
163,317 .82
------ ------
Multi-Industry - 0.74%
Thyssen Krupp AG 2,185,000 55,280 .28
TI Group PLC 7,000,000 40,919 .20
Swire Pacific Capital Ltd. 8.84% cumulative guaranteed 1,125,000 22,500
perpetual capital securities (2)
Swire Pacific Offshore Financing Ltd. 9.33% cumulative 195,000 4,095 .13
guaranteed perpetual capital securities (2)
BFGoodrich Co. 1,000,000 25,000 .13
------ ------
147,794 .74
------ ------
Machinery & Engineering - 0.74%
Metso Oyj (formerly Valmet-Rauma Oyj) (3) 3,559,996 51,862 .26
Pall Corp. 2,344,200 43,221 .22
Ingersoll-Rand Co. 6.75% PRIDES convertible preferred 1,400,000 32,463 .16
Thermo Electron Corp. 4.25% convertible subordinated $23,000,000 19,349 .10
debentures 2003 (2)
------ ------
146,895 .74
------ ------
Industrial Components - 0.73%
Dana Corp. 2,350,000 55,225 .28
Tomkins PLC 13,000,000 38,813 .19
Federal-Mogul Corp. 7.00% convertible preferred 2027 1,150,000 35,362 .18
Tower Auto Capital Trust 6.75% convertible preferred 2018 (2) 450,000 16,369 .08
------ ------
145,769 .73
------ ------
Recreation & Other Consumer Products - 0.63%
EMI Group PLC 8,260,267 101,372 .51
Pennzoil-Quaker State Co. 2,000,000 22,875 .12
V2 Music Holdings, warrants, expire 2008 (2,3,4) 14,750 0 .00
------ ------
124,247 .63
------ ------
Miscellaneous Materials & Commodities - 0.50%
Anglogold Ltd. 675,000 32,619 .16
American National Can Group, Inc. 1,630,200 19,562 .10
De Beers Consolidated Mines Ltd. 720,800 18,775 .10
Crown Cork & Seal Co., Inc. 909,100 18,466 .09
Owens-Illinois, Inc. 4.75% convertible preferred 340,000 9,180 .05
------ ------
98,602 .50
------ ------
Transportation: Rail & Road - 0.33%
Union Pacific Capital Trust 6.25% TIDES convertible preferred 2028 (2) 976,200 39,048
Union Pacific Capital Trust 6.25% TIDES convertible preferred 2028 110,000 4,400 .22
Norfolk Southern Corp. 1,300,000 22,100 .11
------ ------
65,548 .33
------ ------
Other Industries - 0.28%
Newell Financial Trust I 5.25% QUIPS convertible preferred 2027 823,000 32,406 .16
TXI Capital Trust I 5.50% convertible preferred 2028 450,000 16,088 .08
Ingram Micro Inc. 0% convertible debentures 2018 $22,415,000 7,229 .04
Protection One Alarm Monitoring, Inc., warrants, expire 2005 (2,3,4) 57,600 7 .00
------ ------
55,730 .28
------ ------
Miscellaneous - 2.85%
Other equity securities in initial period of acquisition 567,013 2.85
------ ------
------ ------
Total Common Stocks (cost: $10,995,867,000) 11,521,931 57.90
------ ------
Principal Market Percent
Amount Value of Net
Bond & Notes (000) (000) Assets
- -------------------------------------------- ------ ------ ------
Wireless Telecommunication Services - 4.03%
Nextel Communications, Inc.:
0%/9.75% 2007 (7) 76,325 54,000
0%/10.65% 2007 (7) 11,475 8,549
0%/9.95% 2008 (7) 188,900 130,813
12.00% 2008 8,500 9,350
0%/12.125% 2008 (7) 37,450 23,406
9.375% 2009 (2) 5,000 4,800
McCaw International, Ltd. (owned by Nextel Communications, 46,850 33,966
Inc.) 0%/13.00% 2007 (7)
Nextel Partners, Inc. 0%/14.00% 2009 (7) 30,125 19,732 1.43
Omnipoint Corp.:
14.00% 2003 (2,4,5) 62,261 65,250
9.254% 2006 (2,8) 2,383 2,398
11.625% 2006 55,350 58,948
11.50% 2009 (2) 23,750 25,531 .77
Clearnet Communications Inc.:
0%/14.75% 2005 (7) 22,000 21,780
9.203% 2007 (2,8) 25,000 25,000
0%/10.125% 2009 (7) 49,150 28,998 .38
VoiceStream Wireless Corp.: (2)
10.375% 2009 25,250 25,881
0%/11.875% 2009 (7) 45,725 27,664 .27
Crown Castle International Corp.: (7)
0%/10.625% 2007 4,600 3,375
0%/10.375% 2011 39,750 23,452
0%/11.25% 2011 40,500 24,502 .26
SpectraSite Holdings, Inc.: (7)
0%/12.00% 2008 38,250 24,480
0%/11.25% 2009 7,000 4,060 .14
PageMart Wireless, Inc.: (7)
0%/15.00% 2005 16,160 15,352
0%/11.25% 2008 31,000 12,400 .14
Loral Orion Network Systems, Inc. 11.25% 2007 35,175 27,261 .14
Comunicacion Celular SA 0%/14.125% 2005 (2,7) 31,000 18,213 .09
Dobson/Sygnet Communications Co. 12.25% 2008 14,250 15,817 .08
PanAmSat Corp. 6.125% 2005 17,000 15,221 .08
American Cellular Corp. 10.50% 2008 10,750 12,174 .06
Esat Telecom Group PLC 0%/12.50% 2007 (7) 12,875 11,523 .06
Centennial Cellular Corp. 10.75% 2008 9,485 9,841 .05
Sprint Spectrum LP, Sprint Spectrum Finance Corp. 11.00% 2006 6,000 6,586 .03
Teligent, Inc. 11.50% 2007 4,500 4,320 .02
PTC International Finance BV 0%/10.75% 2007 (7) 5,000 3,362 .02
Globe Telecom, Inc. 13.00% 2009 (2) 1,850 2,028 .01
Cellco Finance NV 15.00% 2005 650 704 .00
Conecel Holdings Ltd., Series A, 14.00% 2000 (2,4,6,8) 2,950 295 .00
------ ------
801,032 4.03
------ ------
Broadcasting, Advertising & Publishing - 3.48%
Charter Communications Holdings, LLC.:
8.25% 2007 (8) 59,000 54,575
10.00% 2009 (2) 10,000 10,000
0%/11.75% 2010 (2,7) 3,750 2,175
0%/9.92% 2011 (7) 46,750 27,349 .47
Chancellor Media Corp. of Los Angeles:
9.375% 2004 23,000 24,064
8.125% 2007 30,500 30,347
Series B, 8.75% 2007 4,500 4,522
Series B, 10.50% 2007 18,300 19,672
9.00% 2008 9,000 9,225 .44
Fox/Liberty Networks, LLC, FLN Finance, Inc.:
8.875% 2007 38,100 38,671
0%/9.75% 2007 (7) 45,250 36,200 .38
Time Warner Inc.:
7.75% 2005 9,500 9,496
8.18% 2007 20,000 20,288
9.125% 2013 16,500 17,948
7.25% 2017 8,000 7,505 .28
NTL Inc.:
0%/12.75% 2005 (7) 22,000 22,220
Series B, 10.00% 2007 10,000 10,100
0%/9.75% 2008 (7) 5,000 3,400
Comcast UK Cable Partners Ltd. 0%/11.20% 2007 (7) 19,500 18,622 .27
CBS Corp. 7.15% 2005 39,500 38,373 .19
CSC Holdings, Inc.:
7.25% 2008 8,000 7,499
8.125% 2009 8,000 7,907
9.875% 2013 11,500 11,902 .14
TeleWest PLC:
9.625% 2006 5,000 5,075
0%/11.00% 2007 (7) 20,500 19,065 .12
British Sky Broadcasting Group PLC 8.20% 2009 24,250 23,265 .12
Liberty Media Corp. 7.875% 2009 (2) 23,600 23,179 .12
Hearst-Argyle Television, Inc. 7.00% 2018 21,500 19,388 .10
TCI Communications, Inc.:
8.00% 2005 15,000 15,307
8.75% 2015 3,000 3,293 .09
Radio One, Inc. 7.00%/12.00% 2004 (7) 16,500 17,655 .09
Adelphia Communications Corp. 10.50% 2004 3,000 3,038
Century Communications Corp. 8.75% 2007 13,200 12,144 .08
STC Broadcasting, Inc. 11.00% 2007 14,500 14,355 .07
Falcon Holding Group, LP, Falcon Funding Corp. 8.375% 2010 13,000 13,065 .07
Muzak LP:
9.875% 2009 8,500 8,160
0%/13.00% 2010 (7) 3,750 2,212 .05
Rogers Communications Inc. 8.875% 2007 10,000 10,050 .05
Ziff-Davis Inc. 8.50% 2008 8,250 8,621 .04
Young Broadcasting Inc.:
10.125% 2005 3,750 3,750
Series B, 8.75% 2007 5,250 4,830 .04
Sun Media Corp. 9.50% 2007 7,071 6,894 .04
Multicanal Participacoes SA, Series B, 12.625% 2004 6,475 6,718 .03
Telemundo Holdings, Inc., Series A, 0%/11.50% 2008 (7) 8,500 5,355 .03
Antenna TV SA 9.00% 2007 5,250 4,620 .02
TVN Entertainment Corp. 14.50% 2008 (2,8) 10,000 4,025 .02
V2 Music Holdings 0%/14.00% 2008 (2,7) 14,750 3,983 .02
RBS Participacoes SA 11.00% 2007 (2) 4,250 3,602 .02
Gray Communications Systems, Inc. 10.625% 2006 3,500 3,570 .02
American Media Operations, Inc. 10.25% 2009 3,500 3,482 .02
TransWestern Publishing Co. LLC 9.625% 2007 3,500 3,413 .02
Acme Television, LLC, Series B, 0%/10.875% 2004 (7) 2,780 2,530 .01
Continental Cablevision, Inc. 8.50% 2001 2,000 2,025 .01
Lenfest Communications, Inc. 7.625% 2008 2,000 1,919 .01
Grupo Televisa, SA 11.875% 2006 750 797 .00
Globo Comunicacoes e Partcipacoes Ltd. 10.625% 2008 500 411 .00
------ ------
691,856 3.48
------ ------
Banking - 3.02%
SB Treasury Co. LLC, Series A, 9.40% noncumulative preferred (2) 126,000 125,370 .63
SocGen Real Estate Co. LLC, Series A, 7.64%/8.406% (undated) (2,7,8) 71,500 65,730 .33
Fuji JGB Investment LLC, Series A, 9.87% noncumulative preferred (2,8) 56,000 55,440 .28
Tokai Preferred Capital Co. LLC, Series A, 9.98%/11.091% 47,000 47,311 .24
noncumulative preferred (2,7)
MBNA Corp., MBNA:
Capital A, Series A, 8.278% 2026 8,200 7,174
Capital B, Series B, 7.005% 2027 (8) 32,000 26,668 .17
BNP U.S. Funding LLC, Series A, 7.738% noncumulative preferred (2,8) 33,200 30,633 .15
Dime Bancorp, Inc. 6.375% 2001 15,000 14,921
Dime Capital Trust I, Dime Bancorp, Inc., Series A, 9.33% 2027 9,425 9,053 .12
Riggs Capital Trust II:
8.625% 2026 1,500 1,303
8.875% 2027 25,000 22,395 .12
Advanta Corp.:
Series D, 6.60% 2000 4,000 4,000
7.50% 2000 4,000 3,965
Series D, 6.833% 2002 5,000 4,535
6.91% 2002 5,000 4,557
6.925% 2002 5,000 4,557 .11
Deutsche Bank Capital Funding Trust I 7.872% (undated) (2,8) 21,250 19,783 .10
Washington Mutual Capital I, subordinated capital income 10,000 9,568
securities 8.375% 2027
Ahmanson Capital Trust I, capital securities, Series A, 8.36% 2026 (2) 8,000 7,640 .09
Sakura Capital Funding 7.056% (undated) (2,8) 15,000 14,213 .07
Capital One Capital I 7.755% 2027 (2,8) 13,500 11,721 .06
Standard Chartered Bank 6.375% Eurodollar notes (undated) (8) 15,000 10,655 .05
Fleet Capital Trust 7.14% 2028(8) 10,000 9,941 .05
National Westminster Bank PLC 7.375% 2009 10,000 9,647 .05
IBJ Preferred Capital Co. LLC, Series A, 8.79% noncumulative preferred (2,8) 10,000 9,300 .05
Skandinaviska Enskilda Banken AB 7.50% (undated) (2,8) 10,405 9,297 .05
Bank of Nova Scotia 6.063% Eurodollar notes (undated) (8) 10,000 8,181 .04
Canadian Imperial Bank of Commerce 6.063% Eurodollar notes (undated) (8) 10,000 8,104 .04
Sovereign Bancorp, Inc. 10.50% 2006 7,500 7,613 .04
HSBC Americas, Inc. 7.808% 2026 (2) 8,000 7,191 .03
Bank of Scotland 7.00% (undated) (2,8) 7,500 6,879 .03
Komercni Finance BV 9.00%/10.75% 2008 (2,7) 6,000 5,595 .03
Chase Capital II, global floating rate capital securities, Series B, 5,000 4,756 .02
6.705% 2027 (8)
BCI US Funding Trust I 8.01% (undated) (2,8) 5,000 4,565 .02
Midland Bank PLC 6.438% Eurodollar notes (undated) (8) 5,000 4,239 .02
Chevy Chase Bank, FSB 9.25% 2005 4,000 3,840 .02
J.P. Morgan & Co. Inc., Series A, 6.00% 2009 1,650 1,458 .01
------ ------
601,798 3.02
------ ------
Business & Public Services - 1.31%
Allied Waste North America, Inc.:
7.625% 2006 7,000 6,177
10.00% 2009 (2) 64,375 56,006 .31
Columbia/HCA Healthcare Corp.:
6.87% 2003 10,575 9,755
7.15% 2004 6,000 5,520
6.91% 2005 10,750 9,621
8.85% 2007 16,770 16,183
8.70% 2010 9,500 8,740 .25
Safety-Kleen Services, Inc.:
9.25% 2008 26,500 25,175
9.25% 2009 13,500 12,825 .19
Waste Management, Inc.:
6.70% 2001 3,000 2,920
6.625% 2002 4,000 3,786
6.50% 2002 7,000 6,552
6.375% 2003 5,050 4,607
7.00% 2004 4,060 3,722
7.00% 2006 6,500 5,818 .14
Paracelsus Healthcare Corp. 10.00% 2006 30,100 17,909 .09
Integrated Health Services, Inc.: (6)
10.25% 2006 (8) 16,900 1,183
Series A, 9.50% 2007 87,095 6,097
Series A, 9.25% 2008 68,298 4,781 .06
Cendant Corp. 7.75% 2003 12,000 11,871 .06
Concentra Operating Corp., Series A, 13.00% 2009 (2) 11,000 9,625 .05
Tenet Healthcare Corp. 8.00% 2005 9,500 9,049 .05
Ceridian Corp. 7.25% 2004 9,000 8,526 .04
Protection One Alarm Monitoring, Inc. 13.625% 2005 (8) 10,185 5,805 .03
Allegiance Corp. 7.00% 2026 4,000 3,871 .02
Iron Mountain Inc. 8.75% 2009 1,750 1,623 .01
KinderCare Learning Centers, Inc., Series B, 9.50% 2009 1,500 1,425 .01
RainTree Health Corp. 11.00% 2003 (4,6) 2,207 552 .00
Mariner Health Group, Inc. 9.50% 2006 (6) 15,250 152 .00
------ ------
259,876 1.31
------ ------
Diversified Telecommunication Services - 1.19%
Cable & Wireless Communications PLC:
6.625% 2005 26,500 25,691
6.75% 2008 20,000 19,230 .22
NEXTLINK Communications, Inc.:
9.625% 2007 4,000 3,850
9.00% 2008 6,250 5,828
0%/12.125% 2009 (2,7) 14,000 7,840
0%/12.25% 2009 (7) 39,500 23,700 .21
Time Warner Telecom Inc. 9.75% 2008 27,975 28,045 .14
Allegiance Telecom, Inc.:
0%/11.75% 2008 (7) 32,000 22,880
12.875% 2008 3,475 3,927 .13
Qwest Communications International Inc.:
0%/9.47% 2007 (7) 15,000 12,065
10.875% 2007 3,084 3,378
0%/8.29% 2008 (7) 7,500 5,826 .11
Viatel, Inc.:
11.25% 2008 16,550 15,474
0%/12.50% 2008 (7) 4,000 2,400
11.50% 2009 1,000 945 .09
GT Group Telecom Inc. units 0%/13.25% 2010 (2,7) 24,750 13,118 .07
Netia Holdings BV:
0%/11.25% 2007 (7) 10,500 7,009
10.25% 2007 3,625 3,145 .05
IMPSAT Corp. 12.375% 2008 10,000 9,325 .05
US Xchange, LLC 15.00% 2008 13,500 8,505 .04
COLT Telecom Group PLC 0%/12.00% 2006 (7) 7,500 6,600 .03
VersaTel Telecom International NV 11.875% 2009 5,250 5,408 .03
SBA Communications Corp. 0%/12.00% 2008 (7) 5,200 3,562 .02
------ ------
237,751 1.19
------ ------
Financial Services - 0.95%
GS Escrow Corp.:
7.00% 2003 1,550 1,435
7.205% 2003 (8) 15,000 14,315
7.125% 2005 27,000 24,025 .20
Ford Capital BV 10.125% 2000 5,500 5,628
Ford Motor Credit Co. 7.375% 2009 30,750 29,719 .18
Capital One Financial Corp. 7.125% 2008 22,500 20,688 .10
BHP Finance Ltd. 6.75% 2013 20,000 17,655 .09
Newcourt Credit Group Inc., Series A, 7.125% 2003 12,500 12,300 .06
Providian National Bank 6.65% 2004 4,000 3,762
Providian Financial Corp. 9.525% 2027 (2) 10,000 8,514 .06
MBNA Corp., MBNA 6.75% 2008 12,500 11,424 .06
Toyota Motor Credit Corp. 6.00% 2003 10,000 9,595 .05
AB Spintab: (2,8)
6.80% (undated) 5,150 4,970
7.50% (undated) 2,500 2,378 .04
Wharf Capital International, Ltd. 8.875% 2004 7,000 7,032 .04
AT&T Capital Corp. 6.60% 2005 5,000 4,755 .02
General Electric Capital Corp. 8.875% 2009 4,000 4,382 .02
Nebhelp Trust, Student Loan Interest Margin Securities, 4,456 4,197 .02
Series 1998-1, Class A, 6.68% 2016 (2)
Green Tree Financial Corp. 6.50% 2002 2,635 2,474 .01
------ ------
189,248 .95
------ ------
Forest Products & Paper - 0.91%
Container Corp. of America:
10.75% 2002 2,050 2,117
9.75% 2003 50,956 51,466
Series A, 11.25% 2004 19,500 20,085 .37
Scotia Pacific Co. LLC, Timber Collateralized notes:
Series B, Class A-2, 7.11% 2014 15,800 13,596
Series B, Class A-3, 7.71% 2014 16,000 13,280 .13
Pindo Deli Finance Mauritius Ltd.:
10.25% 2002 11,000 8,387
10.75% 2007 24,450 16,687 .13
Packaging Corp. of America, Series B, 9.625% 2009 12,875 12,875 .06
Copamex Industrias, SA de CV, Series B, 11.375% 2004 13,350 12,682 .06
Pacifica Papers Inc. 10.00% 2009 7,875 7,914 .04
Kappa Beheer BV 10.625% 2009 (2) 7,000 7,385 .04
Grupo Industrial Durango, SA de CV 12.00% 2001 6,000 6,015 .03
Advance Agro Capital BV 13.00% 2007 (8) 7,925 5,032 .03
Indah Kiat Finance Mauritius Ltd.:
11.875% 2002 700 611
10.00% 2007 3,050 2,112 .01
Paperboard Industries International Inc. 8.375% 2007 1,250 1,144 .01
------ ------
181,388 .91
------ ------
Energy & Related Companies - 0.82%
Oryx Energy Co.:
8.00% 2003 5,345 5,286
8.375% 2004 12,750 12,934
8.125% 2005 8,500 8,505 .13
Clark Refining & Marketing, Inc. 8.875% 2007 46,750 25,245 .13
PDVSA Finance Ltd.:
9.75% 2010 (2) 5,000 4,723
7.40% 2016 18,465 13,752 .09
Petrozuata Finance, Inc.: (2)
Series A, 7.63% 2009 10,285 8,074
Series B, 8.22% 2017 10,000 7,475 .08
Union Pacific Resources Group, Inc. 7.30% 2009 15,000 14,274 .07
Pioneer Natural Resources Co. 7.20% 2028 15,975 12,155 .06
Pogo Producing Co. 10.375% 2009 10,000 10,200 .05
Cross Timbers Oil Co.:
Series B, 9.25% 2007 1,000 985
8.75% 2009 8,000 7,360 .04
Husky Terra Nova Finance 8.45% 2012 (2) 7,500 7,197 .04
OXYMAR 7.50% 2016 (2) 8,000 5,362 .03
Newfield Exploration Co., Series B, 7.45% 2007 6,000 5,390 .03
HS Resources, Inc. 9.25% 2006 5,150 5,021 .03
Louis Dreyfus Natural Gas Corp. 6.875% 2007 5,000 4,469 .02
USX Corp. 6.65% 2006 4,500 4,222 .02
Petro Stopping Centers, LP 10.50% 2007 750 675 .00
------ ------
163,304 .82
------ ------
Transportation - 0.72%
Jet Equipment Trust: (2,9)
Series 1994-A, Class B1, 10.91% 2006 6,364 6,760
Series 1995-B, 10.91% 2014 4,750 5,103
Series 1995-B, Class A, 7.63% 2015 3,601 3,476
Series 1995-A, Class B, 8.64% 2015 13,454 13,561
Series 1995-B, Class C, 9.71% 2015 5,500 5,614
Series 1995-A, Class C, 10.69% 2015 5,000 5,417 .20
Atlas Air, Inc., Pass-Through Trust, Series 1998-1, Class A, 7.38% 2019 (9) 32,291 28,760 .15
Continental Airlines, Inc.:
9.50% 2001 4,500 4,511
pass-through certificates, Series 1996: (9)
Class A, 6.94% 2015 7,985 7,504
Class C, 9.50% 2015 11,534 11,740 .12
Airplanes Pass Through Trust, pass-through certificates, Series 1, 21,678 19,806 .10
Class C, 8.15% 2019 (9)
United Air Lines, Inc.:
9.00% 2003 8,000 8,142
pass-through certificate, Series 1996-A2, 7.87% 2019 (9) 5,000 4,548 .06
Teekay Shipping Corp. 8.32% 2008 10,820 9,738 .05
Delta Air Lines, Inc., pass-through certificates, 5,000 5,189 .03
Series 1992-A2, 9.20% 2014 (9)
MC-Cuernavaca Trust 9.25% 2001 (2) 2,739 2,492 .01
------ ------
142,361 .72
------ ------
Leisure & Tourism - 0.60%
Horseshoe Gaming, LLC, Series B, 9.375% 2007 1,000 965
Horseshoe Gaming Holding Corp., Series B, 8.625% 2009 21,500 19,995 .10
Mirage Resorts, Inc.:
6.625% 2005 3,000 2,721
6.75% 2007 5,750 5,044
6.75% 2008 9,500 8,240 .08
International Game Technology 7.875% 2004 16,000 15,160 .08
Premier Parks Inc. 9.75% 2007 13,875 13,637 .07
Florida Panthers Holdings, Inc. 9.875% 2009 10,000 9,300 .05
Joseph E. Seagram & Sons, Inc. 6.625% 2005 9,000 8,433 .04
Boyd Gaming Corp. 9.25% 2003 7,000 6,965 .03
Royal Caribbean Cruises Ltd. 7.00% 2007 7,000 6,514 .03
Friendly Ice Cream Corp. 10.50% 2007 6,515 5,342 .03
CapStar Hotel Co. 8.75% 2007 4,900 4,343 .02
AMF Bowling Worldwide, Inc.:
10.875% 2006 6,250 2,844
0%/12.25% 2006 (7) 1,437 503 .02
Carmike Cinemas, Inc., Series B, 9.375% 2009 4,000 3,170 .02
Harrah's Operating Co., Inc. 7.875% 2005 3,000 2,835 .01
Six Flags Entertainment Corp. 8.875% 2006 2,000 1,935 .01
KSL Recreation Group, Inc. 10.25% 2007 1,250 1,219 .01
Loews Cineplex Entertainment Corp. 8.875% 2008 1,000 815 .00
------ ------
119,980 .60
------ ------
General Retailing & Merchandising - 0.58%
J.C. Penney Co., Inc.:
6.50% 2002 8,500 8,142
7.625% 2007 3,000 2,277
7.95% 2017 28,200 24,941 .18
Fred Meyer, Inc.:
7.375% 2005 21,000 20,353
7.45% 2008 4,000 3,831 .12
WestPoint Stevens Inc. 7.875% 2005 18,000 16,020 .08
Boyds Collection, Ltd., Series B, 9.00% 2008 14,621 13,744 .07
Salton/Maxim Housewares, Inc. 10.75% 2005 12,950 13,209 .07
Sears, Roebuck and Co. 9.375% 2011 12,310 12,937 .06
------ ------
115,454 .58
------ ------
Industrial Components - 0.56%
Federal-Mogul Corp.:
7.50% 2004 6,860 6,398
7.375% 2006 46,500 41,801
7.75% 2006 10,000 9,108
7.50% 2009 33,500 29,107 .44
TRW Inc. 7.125% 2009 15,000 14,033 .07
Cooper Tire & Rubber Co. 7.25% 2002 8,000 7,839 .04
Westinghouse Air Brake Co. 9.375% 2005 2,000 1,990 .01
BREED Technologies, Inc. 9.25% 2008 (6) 29,500 295 .00
------ ------
110,571 .56
------ ------
Electronic Components - 0.42%
Fairchild Semiconductor Corp. 10.375% 2007 24,750 24,997 .13
Hyundai Semiconductor America, Inc.: (2)
8.25% 2004 5,650 5,072
8.625% 2007 20,000 17,323 .11
Zilog, Inc. 9.50% 2005 19,850 18,163 .09
Advanced Micro Devices, Inc. 11.00% 2003 10,000 10,100 .05
Flextronics International Ltd. 8.75% 2007 9,000 8,550 .04
------ ------
84,205 .42
------ ------
Multi-Industry - 0.41%
Reliance Industries Ltd.:
8.25% 2027 (2) 10,000 9,112
10.50% 2046 (2) 5,750 5,571
Series B, 10.25% 2097 5,000 4,588 .10
Hutchison Whampoa Finance (CI) Ltd., Series D, 6.988% 2037 (2) 16,000 14,863 .07
Graham Packaging Co.:
8.75% 2008 8,475 7,892
0%/10.75% 2009 (7) 8,000 5,400 .07
Tyco International Group SA 6.875% 2002 (2) 12,000 11,763 .06
American Standard Inc. 8.25% 2009 (2) 10,250 9,789 .05
Tekni-Plex, Inc. 9.25% 2008 8,000 7,800 .04
Innova, S de RL 12.875% 2007 5,000 4,506 .02
------ ------
81,284 .41
------ ------
Utilities: Electric & Gas - 0.40%
Israel Electric Corp. Ltd.: (2)
7.75% 2009 6,000 5,707
8.25% 2009 8,000 7,852
7.70% 2018 22,500 20,086
8.10% 2096 14,405 11,912 .23
Edison Mission Energy 7.73% 2009 (2) 10,000 9,776 .05
Tennessee Gas Pipeline Co. 7.625% 2037 10,000 9,404 .05
Williams Holdings of Delaware, Inc. 6.50% 2008 10,000 9,131 .04
Transener SA 9.25% 2008 (2) 7,500 6,591 .03
------ ------
80,459 .40
------ ------
Real Estate - 0.40%
Security Capital Group Inc. 7.15% 2007 17,500 15,543 .08
FelCor Suites LP:
7.375% 2004 10,000 8,853
7.625% 2007 5,000 4,320 .07
ProLogis Trust 7.05% 2006 12,000 11,172 .06
CarrAmerica Realty Corp. 6.625% 2000 10,000 9,904 .05
Spieker Properties, Inc.:
7.125% 2006 3,645 3,403
7.50% 2027 5,000 4,378 .04
EOP Operating LP 6.763% 2007 6,550 6,022 .03
ERP Operating LP:
7.95% 2002 3,750 3,736
6.63% 2005 1,400 1,306 .02
Irvine Co. 7.46% 2006 (4) 5,000 4,531 .02
Omega Healthcare Investors, Inc. 6.95% 2002 5,000 4,523 .02
Beverly Finance Corp. 8.36% 2004 (2) 2,500 2,502 .01
------ ------
80,193 .40
------ ------
Insurance - 0.35%
Conseco, Inc. 9.00% 2006 14,925 15,003
Conseco Financing Trust II, capital trust pass-through 5,000 4,400
securities (TRUPS), 8.70% 2026 (9)
Conseco Finance Home Loan Trust, Series 1999-G, Class B-2, 10.96% 2029 13,688 13,403 .17
Royal & Sun Alliance Insurance Group PLC 8.95% 2029 (2) 22,750 23,860 .12
ReliaStar Financial Corp. 8.00% 2006 8,000 7,989 .04
Jefferson-Pilot Corp. 8.14% 2046 (2) 5,000 4,635 .02
------ ------
69,290 .35
------ ------
Metals: Steel & Nonferous - 0.29%
Doe Run Resources Corp., Series B, 11.25% 2005 31,000 28,520 .14
Freeport-McMoRan Copper & Gold Inc.:
7.50% 2006 9,500 7,009
7.20% 2026 16,000 11,943 .10
Kaiser Aluminum & Chemical Corp. 12.75% 2003 8,000 7,880 .04
Inco Ltd. 9.60% 2022 2,625 2,527 .01
------ ------
57,879 .29
------ ------
Miscellaneous Materials & Commodities - 0.24%
Owens-Illinois, Inc.:
7.85% 2004 6,000 5,802
7.15% 2005 11,000 10,219
8.10% 2007 5,750 5,498 .11
Printpack, Inc. 10.625% 2006 20,270 19,510 .10
Equistar Chemicals, LP 8.50% 2004 7,500 7,388 .03
------ ------
48,417 .24
------ ------
Food Retailing: Food Products & Beverages - 0.21%
Home Products International, Inc. 9.625% 2008 10,500 9,502 .05
Canandaigua Wine Co., Inc.:
8.75% 2003 5,000 4,875
Series C, 8.75% 2003 3,250 3,209
8.625% 2006 1,000 983 .05
New World Pasta Co. 9.25% 2009 9,000 8,010 .04
Gruma, SA de CV 7.625% 2007 7,750 6,607 .03
Nabisco, Inc. 6.375% 2035 (8) 5,000 4,623 .02
Delta Beverage Group, Inc. 9.75% 2003 3,435 3,401 .02
DGS International Finance Co. BV 10.00% 2007 (2) 1,075 379 .00
------ ------
41,589 .21
------ ------
Other Industries - 0.12%
Hughes Electronics Corp. 7.45% 2000 (2,8) 20,000 19,870 .10
Huntsman Corp. 9.38% 2007 (2,8) 5,000 4,725 .02
------ ------
24,595 .12
------ ------
Collateralized Mortgage-/Asset-Backed Obligations (9)
(excluding those issued by federal agencies) - 3.97%
Green Tree Financial Corp., pass-through certificates:
Series 1994-A, Class NIM, 6.90% 2004 728 725
Series 1995-A, Class NIM, 7.25% 2005 2,057 1,934
Series 1993-2, Class B, 8.00% 2018 14,000 12,596
Series 1995-4, Class B2, 7.70% 2025 1,900 1,526
Series 1995-3, Class B-2, 8.10% 2025 16,121 13,557
Series 1995-1, Class B2, 9.20% 2025 5,500 5,094
Series 1995-2, Class B-2, 8.80% 2026 11,457 10,242
Series 1995-9, Class A-5, 6.80% 2027 4,000 3,969
Series 1996-2, Class B2, 7.90% 2027 3,500 2,826
Series 1996-10, Class A-6, 7.30% 2028 3,000 2,856
Series 1996-10, Class B-2, 7.74% 2028 4,928 3,981
Series 1997-1, Class B-2, 7.76% 2028 7,396 6,166
Series 1998-3, Class B2, 8.07% 2028 5,000 3,975
Series 1998-4, Class B2, 8.11% 2028 6,650 5,332 .38
G3 Mortgage Reinsurance Ltd., Series 1: (2,8)
Class A, 6.814% 2008 19,000 18,288
Class B, 7.114% 2008 16,000 15,310
Class C, 8.664% 2008 10,600 9,788
Class D, 12.314% 2008 11,000 10,121 .27
PP&L Transition Bond Co. LLC, Series 1999-1, Class A-8, 7.05% 2009 45,100 44,182 .22
Collateralized Mortgage Obligation Trust, Series 63, Class Z, 9.00% 2020 36,933 37,567 .19
CS First Boston, Inc.:
Finance Co. Ltd., Series 1995-A, 5.977% 2005 (2,8) 11,375 9,712
Series 1998-FL1, Class E, 7.326% 2013 (2,8) 12,300 12,192
Mortgage Securities Corp., Series 1998-C1, Class A-1A, 6.26% 2040 13,192 12,524 .17
Merrill Lynch Mortgage Investors, Inc.:
Seller manufactured housing contracts, Series 1995-C2, Class A-1, 11,834 11,678
7.079% 2021 (8)
Series 1995-C3, Class A-3, 7.070% 2025 (8) 10,000 9,688
Series 1998-C3, Class A1, 5.65% 2030 4,668 4,351
Mortgage pass-through certificates: (8)
Series 1996-C2, Class A-1, 6.69% 2028 2,195 2,152
Series 1998-C3, Class E, 7.177% 2030 7,980 6,464 .17
First USA Credit Card Master Trust:
Series 1999-1, Class C, 6.42% 2006 (2) 7,500 7,060
Class A, floating rate asset-backed certificates: (2,8)
Series 1998-7 6.381% 2004 13,000 12,921
Series 1998-8, 6.681% 2008 5,652 5,625
Series 1997-4, 6.781% 2010 6,500 6,340 .16
Gramercy Place Insurance Ltd., Series 1998-A, Class C-2, 8.95% 2002 (2) 29,613 29,246 .15
GMAC Commercial Mortgage Securities, Inc.:
Series 1997-C2, Class E, 7.624% 2011 20,750 17,388
Series 1999-C1: (8)
Class D, 7.074% 2033 7,000 6,263
Class E, 7.074% 2033 4,015 3,366 .14
SMA Finance Co., Inc., Series 1998-C1, Class A1, 6.27% 2005 (2) 26,244 25,297 .13
MBNA Master Credit Card Trust: (2)
Series 1999-D, Class B, 6.95% 2008 4,700 4,424
Series 1998-E, Class C, 6.60% 2010 22,500 19,921 .12
DLJ Mortgage Acceptance Corp.:
Series 1997-CF1, Class A1A, 7.40% 2006 (2) 6,090 6,030
Series 1996-CF2, Class A1A, 6.86% 2021 (2) 4,175 4,104
Series 1998-CF2, Class A1B, 6.24% 2031 15,000 13,563 .12
GS Mortgage Securities Corp. II, mortgage pass-through certificates, 20,000 17,786 .09
Series 1998-C1, Class D, 7.45% 2030 (8)
First Union-Lehman Brothers Bank of America Commerical Mortgage Trust, 18,249 17,382 .09
commercial mortgage pass-through certificates, Series 1998-C2, 6.28% 2035
Deutsche Mortgage & Asset Receiving Corp., Series 1998-C1, Class A-1, 17,317 16,461 .08
6.22% 2031
L.A. Arena Funding, LLC, Series 1, Class A, 7.656% 2026 (2) 18,250 16,305 .08
Commercial Mortgage Acceptance Corp.:
Series 1998-C1, Class A-1, 6.23% 2007 5,130 4,876
Series 1998-C2, Class A-1, 5.80% 2030 12,116 11,390 .08
Morgan Stanley Capital I, Inc.:
Series 1995-GAL1, Class A-2, 7.50% 2005 (2) 7,500 7,467
Series 1998-WF2, Class A-1, 6.34% 2030 (8) 8,993 8,594 .08
Metris Master Trust: (2,8)
Series 1998-1A, Class C, 7.311% 2005 5,000 4,921
Series 1997-2, Class C, 6.858% 2006 10,000 9,809 .07
Residential Reinsurance Ltd. 9.77% 2000 (2,8) 14,000 14,118 .07
Chase Commercial Mortgage Securities Corp., Series 1998-1, Class A1, 13,734 13,193 .07
6.34% 2030
Ford Credit Auto Owner Trust:
Series 1998-B, Class C, 6.40% 2002 10,000 9,737
Series 1999-B, Class C, 6.65% 2003 3,000 2,898 .06
First Consumer Master Trust, Series 1999-A, Class A, 5.80% 2005 (2) 12,500 11,858 .06
Structured Asset Securities Corp., pass-through certificates: (8)
Series 1998-RF2, Class A, 8.547% 2022 (2) 2,186 2,221
Series 1998-RF1, Class A, 8.673% 2027 (2) 1,730 1,765
Series 1999-BC1, Class M2, 7.781% 2029 7,500 7,526 .06
FIRSTPLUS Home Loan Owner Trust, Series 1997-1, Class A-6, 6.95% 2015 10,000 9,898 .05
Bayview Financial Revolving Mortgage Loan, Series 1999-1, Class M2, 10,000 9,860 .05
7.781% 2029 (2,8)
Team Fleet Financing Corp.:
Series 1999-2A, Class D, 7.631% 2002 (2,8) 3,000 2,996
Series 1999-3A, Class D, 7.60% 2003 (2) 7,000 6,839 .05
Green Tree Recreational, Equipment & Consumer Trust, Series 1999-A, Class A-6, 10,000 9,746 .05
6.84% 2029
Freddie Mac Loan Receivables Trust, Series 1998-A, Class A3, 6.69% 2020 (2) 10,100 9,141 .05
Capital One Secured Note Trust, Series 1999-2, 7.063% 2005 (2,8) 6,250 6,201
Capital One Master Trust, Series 1999-1, Class C, 6.60% 2007 (2) 2,500 2,360 .04
Fleet Credit Card Master Trust II, Series 1999-A, Class C, floating 8,000 8,001 .04
rate asset-backed interests, 7.413% 2004 (2,8)
First Nationwide, Series 1999-2, Class 1PA1, 6.50% 2029 8,488 7,862 .04
H.S. Receivables Corp., Series 1999-1, Class A, 8.13% 2004 (2) 7,500 7,394 .04
PNC Mortgage Securities Corp., Series 1998-10, Class 1-B1, 6.50% 2028 (2) 6,904 6,156 .03
GE Capital Mortgage Services, Inc., Series 1994-9, Class A9, 6.50% 2024 7,089 6,147 .03
Bear Stearns Commercial Mortgage Securities Inc., Series 1999-C1, 88,905 5,731 .03
Class X, interest only, 1.29% 2031 (8)
First Union Commercial Mortgage Trust, Series 1999-C1, Class E, 7.169% 2035 (8) 7,000 5,597 .03
Chase Manhattan Credit Card Master Trust, Series 1997-5, Class A, 5,585 5,412 .03
6.194% 2005
Resolution Trust Corp:
Series 1993-C1, Class D, 9.45% 2024 3,742 3,727
Series 1993-C2, Class D, 8.50% 2025 1,311 1,305 .03
ComEd Transitional Funding Trust, transitional funding trust notes, 5,500 5,018 .03
Series 1998, Class A-6, 5.63% 2009
EQCC Home Equity Loan Trust, asset-backed certificates, 5,000 4,920 .02
Series 1999-3, Class A-3F, 7.067% 2025
CDC Securitization Corp., Series 1999-FL1, Class E, 8.481% 2002 (2,8) 5,000 4,908 .02
Nationslink Funding Corp., Series 1999-1, Class D, 6.637% 2031 5,000 4,526 .02
Metropolitan Asset Funding, Inc., Series 1998-A, Class B1, 7.728% 2014 (2,8) 4,669 4,407 .02
Government Lease Trust, Series 1999-C1A, Class B3, 4.00% 2011 (2) 6,687 4,387 .02
Mosaic Re II Ltd., Class B, 13.312% 2001 (2,8) 4,000 4,012 .02
UCFC Acceptance Corp., Series 1996-D1, Class A-4, 6.776% 2016 3,649 3,640 .02
Residential Funding Mortgage Securities I, Inc., Series 1998-S17, Class M-1, 3,944 3,590 .02
6.75% 2028
NPF XII, Inc., Series 1999-3, Class B, 6.825% 2003 (2,8) 3,000 3,000 .02
Grupo Financiero Banamex Accival, SA de CV 0% 2002 3,321 2,990 .01
Financial Asset Securitization, Inc., Series 1997-NAM1, Class B1, 7.75% 2027 2,527 2,444 .01
Rental Car Finance Corp., Series 1999-1A, Class D, 7.10% 2007 (2) 2,500 2,305 .01
Money Store Trust, asset-backed certificates, Series 1997-D, 6.345% 2021 (2) 2,083 2,069 .01
Chase Manhattan Bank, NA, Series 1993-I, Class 2A5, 7.25% 2024 2,058 2,042 .01
Chevy Chase Master Credit Card Trust II, Series 1996-C, Class A, 2,000 1,992 .01
5.933% 2007 (8)
------ ------
789,274 3.97
------ ------
Federal Agency Obligations: Mortgage Pass-Throughs (9) - 2.21%
Government National Mortgage Assn.:
6.00% 2028-2029 93,239 83,274
6.50% 2028 12,215 11,287
7.00% 2022-2029 52,443 49,904
7.50% 2017-2029 102,015 99,581
8.00% 2017-2023 13,590 13,595
8.50% 2017-2029 12,969 13,271
9.00% 2008-2020 3,829 4,008
9.50% 2009-2021 (2) 6,733 7,125
10.00% 2016-2025 49,013 52,250
10.50% 2019 52 56 1.68
Fannie Mae:
6.00% 2013 8,148 7,626
6.50% 2013 4,271 4,081
7.00% 2012 6,447 6,291
7.50% 2023-2029 13,665 13,355
8.00% 2024 2,680 2,687
8.50% 2025 2,727 2,773
9.00% 2008-2023 4,305 4,467
9.50% 2022 3,782 3,983
10.00% 2005-2025 10,810 11,516
12.50% 2019 797 900
13.00% 2015 2,046 2,317
15.00% 2028 758 884 .31
Freddie Mac:
5.00% 2014 22,791 20,241
6.00% 2014 11,918 11,131
8.50% 2008-2020 7,179 7,331
9.00% 2007 3,071 3,146
11.00% 2018 2,617 2,853
11.50% 2000 2 2 .22
------ ------
439,935 2.21
------ ------
Federal Agency Obligations: Collateralized Mortgage Obligations (9) - 0.11%
Fannie Mae:
Series 1996-4, Class ZA, 6.50% 2022 6,829 6,097
Series 1994-4, Class ZA, 6.50% 2024 5,784 4,940
Series 1997-28, Class C, 7.00% 2027 5,000 4,720 .08
Freddie Mac:
Series 178, Class Z, 9.25% 2021 1,557 1,593
Series 1673, Class SA, 5.222% 2024 (8,10) 6,000 3,688 .03
------ ------
21,038 .11
------ ------
Other Federal Agency Obligations - 0.93%
Freddie Mac:
5.125% 2008 42,000 36,074
6.25% 2004 60,000 57,750 .47
Fannie Mae:
5.25% 2009 75,000 64,805
Medium-Term Note 6.75% 2028 30,000 25,669 .46
------ ------
184,298 .93
------ ------
Governments & Governmental Authorities (excluding U.S.) - 1.25%
Brazil (Federal Republic of):
Debt Conversion Bonds, Series L, 7.00% 2012 (8) 3,750 2,625
Debt Conversion Bonds, Bearer, Series L, 7.00% 2012 (8) 5,000 3,500
Bearer 8.00% 2014 (5) 110,584 77,271 .42
Argentina (Republic of):
Eurobonds, Series L, 6.813% 2005 (8) 1,980 1,780
9.75% 2027 10,000 8,600
11.00% 2006 31,635 30,370
11.375% 2017 13,400 12,764
11.75% 2009 2,230 2,158 .28
United Mexican States Government Eurobonds:
Series C, 0% 2003 (4) 2,307
Global:
11.375% 2016 9,000 9,707
11.50% 2026 19,000 21,470
Units, Series C, 6.836% 2019 (8) 1,500 1,393 .16
Panama (Republic of):
Interest Reduction Bonds 4.25% 2014 (8) 250 193
Past Due Interest Eurobonds 7.063% 2016 (8) 547 434
8.875% 2027 21,500 17,684
9.375% 2029 5,000 4,613 .12
Turkey (Republic of) 12.375% 2009 11,750 12,499 .06
Philippines (Republic of):
8.875% 2008 12,250 11,668
9.875% 2019 750 714 .06
Ontario (Province of) 5.50% 2008 10,000 8,705 .04
Poland (Republic of), Past Due Interest Bond, Bearer, 6.00% 2014 (8) 9,000 7,945 .04
Mendoza (Province of) 10.00% 2007 (2) 9,500 6,911 .04
Venezuela (Republic of):
Eurobonds 7.00% 2007 (8) 5,524 4,336
9.25% 2027 1,150 733 .03
------ ------
248,073 1.25
------ ------
U.S. Treasury Obligations - 2.84%
8.75% August 2000 22,500 22,827 .12
5.875% November 2001 12,590 12,423 .06
7.75% February 2001 13,000 13,177 .07
6.25% August 2002 50,000 49,492 .25
7.25% May 2004 83,630 85,185 .43
11.625% November 2004 43,500 51,942 .26
7.50% February 2005 4,860 5,008 .03
6.50% May 2005 10,000 9,888 .05
7.00% July 2006 18,293 18,507 .09
6.125% August 2007 1,465 1,411 .01
3.724% January 2008 (8,11) 65,000 64,559 .32
10.00% May 2010 35,500 40,354 .20
0% February 2015 STRIP 147,000 54,090 .27
7.50% November 2016 17,000 18,302 .09
8.875% August 2017 95,525 116,331 .58
5.25% February 2029 3,000 2,499 .01
------ ------
565,995 2.84
------ ------
------ ------
Total Bonds & Notes (cost: $6,913,709,000) 6,431,143 32.32
------ ------
Principal Market Percent
Amount Value of Net
Short Term Securities (000) (000) Assets
- -------------------------------------------- ------ ------ ------
Corporate Short-Term Notes - 6.77%
AT&T Corp. 5.72%-5.80% due 2/25-4/10/2000 95,200 94,612 .48
BellSouth Capital Funding Corp. 5.62%-5.75% due 2/10-3/24/2000 (2) 86,200 85,637 .43
Preferred Receivables Funding Corp. 5.75%-5.95% due 2/22-3/03/2000 (2) 85,500 85,105 .43
E.I. du Pont de Nemours and Co. 5.30%-5.80% due 2/02-4/19/2000 84,000 83,486 .42
Motiva Enterprises LLC 5.67%-5.71% due 3/08-3/23/2000 73,500 72,951 .37
Bell Atlantic Financial Services, Inc. 5.63%-5.68% due 2/24-3/03/2000 68,400 68,101 .34
GE Financial Assurance Holdings Inc. 5.69%-5.82% due 2/28-4/05/2000 (2) 68,239 67,765 .34
Household Finance Corp. 5.67%-5.89% due 2/14-3/13/2000 67,500 67,210 .34
Eastman Kodak Co. 5.70%-5.85% due 2/22-4/20/2000 63,000 62,511 .31
American Express Credit Corp. 5.60%-5.70% due 2/08-2/18/2000 62,700 62,570 .31
Coca-Cola Co. 5.74% due 4/03/2000 61,000 60,379 .30
Motorola Credit Corp. 5.78%-5.92% due 2/17-4/06/2000 60,000 59,590 .30
National Rural Utilities Cooperative Finance Corp. 5.85%-5.88% 60,000 59,578 .30
due 3/06-3/20/2000
Pfizer Inc 5.60%-5.80% due 2/02-3/28/2000 (2) 53,700 53,434 .27
Ciesco LP 5.70% due 3/09-3/14/2000 52,500 52,164 .26
General Electric Capital Corp. 5.74% due 2/16/2000 50,000 49,867 .25
SBC Communications Inc. 5.78%-5.80% due 2/15-3/06/2000 (2) 48,000 47,836 .24
Associates First Capital Corp. 5.55%-5.72% due 2/07-3/27/2000 45,500 45,249 .23
Park Avenue Receivables Corp. 5.74%-5.85% 2/18-3/03/2000 (2) 40,000 39,837 .20
H.J. Heinz Co. 5.50%-5.62% due 2/02-2/24/2000 39,500 39,377 .20
Merck & Co., Inc. 5.34% due 2/02/2000 25,000 24,992 .13
International Lease Finance Corp. 5.90% due 2/07/2000 25,000 24,972 .13
Lucent Technologies Inc. 5.82% due 3/15/2000 25,000 24,824 .12
Archer Daniels Midland Co. 5.36% due 2/10/2000 15,000 14,976 .07
CIT Group, Inc. 5.87% due 2/01/2000 700 700 .00
------ ------
1,347,723 6.77
------ ------
Federal Agency Short-Term Obligations - 1.22%
Fannie Mae 5.40%-5.75% due 2/9-5/3/2000 125,200 123,556 .62
Freddie Mac 5.21%-5.66% due 2/3-3/23/2000 77,260 76,779 .38
Federal Home Loan Banks 5.58%-5.73% due 4/7-5/19/2000 43,600 43,039 .22
------ ------
243,374 1.22
------ ------
------ ------
Total Short-Term Securities (cost: $1,591,214,000) 1,591,097 7.99
------ ------
Total Investment Securities (cost: $19,500,790,000) 19,544,171 98.21
Excess of cash and receivables over payables 356,101 1.79
------ ------
NET ASSETS 19,900,272 100.00
------ ------
1. The fund owns 5.14%, 7.59% and 10.73% of the
outstanding voting securities of Equitable
Resources, Ohio Casualty and Wilshire Financial
Services, respectively, and thus, is considered
an affiliate as defined in the Investment
Company Act of 1940.
2. Purchased in a private placement transaction;
resale to the public may require registration
or sale only to qualified institutional buyers.
3. Non-income-producing security.
4. Valued under procedures established by the
Board of Directors.
5. Payment in kind; the issuer has the option of
paying additional securities in lieu of cash.
6. Company not making interest payments;
bankruptcy proceedings pending.
7. Step Bond; coupon rate will increase at a later date.
8. Coupon rate may change periodically.
9. Pass-through securities backed by a pool of mortgages
or other loans on which principal payments are
periodically made. Therefore, the effective maturities
are shorter than the stated maturities.
10.Inverse floater, which is a floating rate note whose
interest rate moves in the opposite direction of
prevailing interest rates.
11.Index-linked bond whose principal amount moves with a
government retail price index.
ADR = American Depositary Receipts
See Notes to Financial Statements
</TABLE>
<TABLE>
<S> <C> <C>
The Income Fund of America
Financial Statements (unaudited)
- ----------------------------------------- ----- -----
Statement of Assets and Liabilities (dollars in
at January 31, 2000 thousands)
- ----------------------------------------- ----- -----
Assets:
Investment securities at market
(cost: $19,500,790) $19,544,171
Cash 10,339
Receivables for-
Sales of investments $ 426,781
Sales of fund's shares 16,480
Dividends and accrued interest 138,161 581,422
----- -----
20,135,932
Liabilities:
Payables for-
Purchases of investments 177,654
Repurchases of fund's shares 44,653
Management services 4,593
Accrued expenses 8,760 235,660
----- -----
Net Assets at January 31, 2000-
Equivalent to $15.30 per share on
1,300,378,224 shares of $0.001 par value
capital stock outstanding (authorized
capital stock--3,000,000,000 shares) $19,900,272
========
- ----------------------------------------- ----- -----
Statement of Operations (dollars in
for the six months ended January 31, 2000 (unaudited) thousands)
- ----------------------------------------- ----- -----
Investment Income:
Income:
Dividends $ 262,566
Interest 369,907 $ 632,473
-----
Expenses:
Management services fee 31,351
Distribution expenses 25,191
Transfer agent fee 6,358
Reports to shareholders 422
Registration statement and
prospectus 700
Postage, stationery and supplies 2,339
Directors' fees 87
Auditing and legal fees 64
Custodian fee 587
Taxes other than federal income tax 1
Other expenses 105 67,205
----- -----
Net investment income 565,268
---------
Realized Gain and Unrealized
Appreciation on Investments:
Net realized gain 471,500
Net change in unrealized appreciation on
investments (2,234,087)
-----
Net realized gain and change in unrealized
appreciation on investments (1,762,587)
-----
Net Change in Net Assets Resulting
From Operations ($1,197,319)
========
- ----------------------------------------- ----- -----
(dollars in
Statement of Changes in Net Assets (unaudited) thousands)
- ----------------------------------------- ----- -----
Six Months
Ended Year Ended
January 31, July 31,
2000 1999
----- -----
Operations:
Net investment income $ 565,268 $ 1,120,421
Net realized gain on investments 471,500 1,485,110
Net change in unrealized appreciation
on investments (2,234,087) (912,310)
----- -----
Net change in net assets
resulting from operations (1,197,319) 1,693,221
----- -----
Dividends and Distributions
Paid to Shareholders:
Dividends from net investment income (604,964) (1,109,089)
Distributions from net realized
gain on investments (1,033,505) (1,454,557)
----- -----
Total dividends and distributions (1,638,469) (2,563,646)
----- -----
Capital Share Transactions:
Proceeds from shares sold:
56,213,861 and 172,804,800
shares, respectively 930,602 3,038,713
Proceeds from shares issued in
reinvestment of net investment
income dividends and distributions of
net realized gain on investments:
94,486,594 and 134,016,601
shares, respectively 1,482,246 2,310,634
Cost of shares repurchased:
164,785,959 and 203,714,499
shares, respectively (2,688,618) (3,580,068)
----- -----
Net change in net assets
resulting from capital share
transactions (275,770) 1,769,279
----- -----
Total change in Net Assets (3,111,558) 898,854
Net Assets:
Beginning of period 23,011,830 22,112,976
----- -----
End of period (including undistributed
net investment income: $171,332
and $211,028, respectively) $19,900,272 $23,011,830
======== ========
See Notes to Financial Statements
</TABLE>
Notes to Financial Statements (unaudited)
Six Months ended January 31, 2000
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION - The Income Fund of America, Inc. (the "fund") is registered
under the Investment Company Act of 1940 as an open-end, diversified management
investment company. The fund seeks current income while secondarily striving
for capital growth through investments in stocks and fixed-income securities.
Effective December 23, 1999, the fund's par value changed from $1 to $0.001.
SIGNIFICANT ACCOUNTING POLICIES - The financial statements have been prepared
in conformity with generally accepted accounting principles which require
management to make estimates and assumptions that affect the reported amounts
and disclosures in the financial statements. Actual results could differ from
those estimates. The following is a summary of the significant accounting
policies consistently followed by the fund in the preparation of its financial
statements:
SECURITY VALUATION - Equity securities, including depositary receipts, are
valued at 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. In
cases where equity securities are traded on more than one exchange, the
securities are valued on the exchange or market determined by the investment
adviser to be the broadest and most representative market, which may be either
a securities exchange or the over-the-counter market. Fixed-income securities
are valued at prices obtained from a pricing service, when such prices are
available; however, in circumstances where the investment adviser deems it
appropriate to do so, such securities will be valued at the mean quoted bid and
asked prices or at prices for securities of comparable maturity, quality and
type. The ability of the issuers of the debt securities held by the fund to
meet their obligations may be affected by economic developments in a specific
industry, state or region. Short-term securities maturing within 60 days are
valued at amortized cost, which approximates market value. Securities and
assets for which representative market quotations are not readily available are
valued at fair value as determined in good faith by a committee appointed by
the Board of Directors.
NON-U.S. CURRENCY TRANSLATION - Assets and liabilities initially expressed in
terms of non-U.S. currencies are translated into U.S. dollars at the prevailing
market rates at the end of the reporting period. Purchases and sales of
securities and income and expenses are translated into U.S. dollars at the
prevailing market rates on the dates of such transactions. The effects of
changes in non-U.S. currency exchange rates on investment securities and other
assets and liabilities are included with the net realized and unrealized gain
or loss on investment securities.
SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME - Security transactions are
accounted for as of the trade date. Realized gains and losses from securities
transactions are determined based on specific identified cost. In the event
securities are purchased on a delayed delivery or "when-issued" basis, the fund
will instruct the custodian to segregate liquid assets sufficient to meet its
payment obligations in these transactions. 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 securities
purchased are amortized daily over the expected life of the security.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS - Dividends and distributions paid
to shareholders are recorded on the ex-dividend date.
2. NON-U.S. INVESTMENTS
INVESTMENT RISK - Investments in securities of non-U.S. issuers in certain
countries involve special investment risks. These risks may include, but are
not limited to, investment and repatriation restrictions, revaluation of
currencies, adverse political, social, and economic developments, government
involvement in the private sector, limited and less reliable investor
information, lack of liquidity, certain local tax law considerations, and
limited regulation of the securities markets.
TAXATION - Dividend and interest income is recorded net of non-U.S. taxes paid.
For the six months ended January 31, 2000, such non-U.S. taxes were $5,174,000.
CURRENCY GAINS AND LOSSES - Net realized currency gains on dividends, interest,
and other receivables and payables, on a book basis, were $358,000 for the six
months ended January 31, 2000.
3. FEDERAL INCOME TAXATION
The fund complies with the requirements of the Internal Revenue Code applicable
to regulated investment companies and intends to distribute all of its net
taxable income and net capital gains for the fiscal year. As a regulated
investment company, the fund is not subject to income taxes if such
distributions are made. Required distributions are determined on a tax basis
and may differ from net investment income and net realized gains for financial
reporting purposes. In addition, 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.
As of January 31, 2000, net unrealized appreciation on investments for federal
income tax purposes aggregated $41,341,000 of which $1,961,644,000 related to
appreciated securities and $1,920,303,000 related to depreciated securities.
During the six months ended January 31, 2000, the fund realized, on a tax
basis, a net capital gain of $472,144,000 on securities transactions. Net
gains related to non-U.S. currency of $358,000 and losses on other transactions
of $1,002,000 were treated as ordinary income or deferred for federal income
tax purposes. The cost of portfolio securities for federal income tax purposes
was $19,502,830,000 at January 31, 2000.
4. FEES AND TRANSACTIONS WITH RELATED PARTIES
INVESTMENT ADVISORY FEE - The fee of $31,351,000 for management services was
incurred pursuant to an agreement with Capital Research and Management Company
(CRMC), with which certain officers and Directors of the fund are affiliated.
The Investment Advisory and Service Agreement in effect through December 31,
1999, provided for monthly fees, accrued daily, based on an annual rate of
0.25% of the first $500 million of average net assets; 0.23% of such assets in
excess of $500 million but not exceeding $1 billion; 0.21% of such assets in
excess of $1 billion but not exceeding $1.5 billion; 0.19% of such assets in
excess of $1.5 billion but not exceeding $2.5 billion; 0.17% of such assets in
excess of $2.5 billion but not exceeding $4 billion; 0.16% of such assets in
excess of $4 billion but not exceeding $6.5 billion; 0.15% of such assets in
excess of $6.5 billion but not exceeding $10.5 billion; 0.145% of such assets
in excess of $10.5 billion but not exceeding $17 billion; 0.14% of such assets
in excess of $17 billion but not exceeding $27.5 billion; and 0.135% of such
assets in excess of $27.5 billion; plus 2.25% of monthly gross investment
income. The Board of Directors approved an amended agreement effective January
1, 2000, reducing the fees to 0.25% of the first $500 million of average net
assets; 0.23% of such assets in excess of $500 million but not exceeding $1
billion; 0.21% of such assets in excess of $1 billion but not exceeding $1.5
billion; 0.19% of such assets in excess of $1.5 billion but not exceeding $2.5
billion; 0.17% of such assets in excess of $2.5 billion but not exceeding $4
billion; 0.16% of such assets in excess of $4 billion but not exceeding $6.5
billion; 0.15% of such assets in excess of $6.5 billion but not exceeding $10.5
billion; 0.144% of such assets in excess of $10.5 billion but not exceeding $13
billion; 0.141% of such assets in excess of $13 billion but not exceeding $17
billion; 0.138% of such assets in excess of $17 billion but not exceeding $21
billion; 0.135% of such assets in excess of $21 billion but not exceeding $27
billion; 0.133% of such assets in excess of $27 billion but not exceeding $34
billion; 0.131% of such assets in excess of $34 billion but not exceeding $44
billion; and 0.129% of such assets in excess of $44 billion; plus 2.25% of
monthly gross investment income.
DISTRIBUTION EXPENSES - Pursuant to a Plan of Distribution, the fund may expend
up to 0.25% of its average net assets annually for any activities primarily
intended to result in sales of fund shares, provided the categories of expenses
for which reimbursement is made are approved by the fund's Board of Directors.
Fund expenses under the Plan include payments to dealers to compensate them for
their selling and servicing efforts. During the six months ended January 31,
2000, distribution expenses under the Plan were $25,191,000. As of January 31,
2000, accrued and unpaid distribution expenses were $7,784,000.
American Funds Distributors, Inc. (AFD), the principal underwriter of the
fund's shares, received $3,594,000 (after allowances to dealers) as its portion
of the sales charges paid by purchasers of the fund's shares. Such sales
charges are not an expense of the fund and, hence, are not reflected in the
accompanying statement of operations.
TRANSFER AGENT FEE - American Funds Service Company (AFS), the transfer agent
for the fund, was paid a fee of $6,358,000.
DEFERRED DIRECTORS' FEES - Directors who are unaffiliated with CRMC may elect
to defer part or all of the fees earned for services as members of the Board.
Amounts deferred are not funded and are general unsecured liabilities of the
fund. As of January 31, 2000, aggregate deferred amounts and earnings thereon
since the deferred compensation plan's adoption (1993), net of any payments to
Directors, were $815,000.
CRMC is owned by The Capital Group Companies, Inc. AFS and AFD are both wholly
owned subsidiaries of CRMC. Certain Directors and officers of the fund are or
may be considered to be affiliated with CRMC, AFS and AFD. No such persons
received any remuneration directly from the fund.
5. INVESTMENT TRANSACTIONS AND OTHER DISCLOSURES
The fund made purchases and sales of investment securities, excluding
short-term securities, of $3,385,801,000 and $4,261,189,000, respectively,
during the six months ended January 31, 2000.
As of January 31, 2000, accumulated undistributed net realized gain on
investments was $366,809,000 and additional paid-in capital was
$19,317,100,000.
Pursuant to the custodian agreement, the fund receives credits against its
custodian fee for imputed interest on certain balances with the custodian bank.
The custodian fee of $587,000 includes $142,000 that was paid by these credits
rather than in cash.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
The Income Fund of America
Per-Share Data and Ratios
Six Months
Ended Year ended July 31
January 31, ------- ------- ------- ------- -------
2000 (1) 1999 1998 1997 1996 1995
------- ------- ------- ------- ------- -------
Net Asset Value, Beginning of Period $17.51 $18.25 $18.59 $15.89 $14.92 $13.59
------- ------- ------- ------- ------- -------
Income from Investment Operations:
Net investment income .44 .88 .85 .86 .87 .85
Net gains or losses on securities
(both realized and unrealized) (1.37) .45 1.11 3.55 1.11 1.29
------- ------- ------- ------- ------- -------
Total from investment operations (.93) 1.33 1.96 4.41 1.98 2.14
------- ------- ------- ------- ------- -------
Less Distributions:
Dividends (from net investment
income) (.47) (.88) (.82) (.90) (.83) (.75)
Distributions (from capital gains)
(.81) (1.19) (1.48) (.81) (.18) (.06)
------- ------- ------- ------- ------- -------
Total distributions (1.28) (2.07) (2.30) (1.71) (1.01) (.81)
------- ------- ------- ------- ------- -------
Net Asset Value, End of Period $15.30 $17.51 $18.25 $18.59 $15.89 $14.92
======= ======= ======= ======= ======= =======
Total Return (2) -5.42% (3) 7.79% 11.32% 29.28% 13.46% 16.42%
Ratios/Supplemental Data:
Net assets, end of period
(in millions) $19,900 $23,012 $22,113 $18,814 $14,459 $12,290
Ratio of expenses to average
net assets .31% (3) .59% .59% .61% .62% .65%
Ratio of net income to average
net assets 2.61% (3) 4.99% 4.75% 5.09% 5.56% 6.12%
Portfolio turnover rate 17.32% (3) 44.35% 34.68% 40.92% 37.77% 26.26%
(1) Unaudited
(2) Excludes maximum sales charge
of 5.75%.
(3) Based on operations for the
period shown and, accordingly,
not representative of a full year.
</TABLE>
IFA RESULTS OF SHAREHOLDERS MEETING
(Held December 1, 1999) (Unaudited)
Shares Outstanding on September 15, 1999 (record date) 1,302,921,461
Shares Voting on December 1, 1999 973,113,821 (74.7%)
PROPOSAL 1: ELECTION OF DIRECTORS
<TABLE>
<CAPTION>
Director Votes Percent of Votes Percent of
For Shares Withheld Shares
Voting For Withheld
<S> <C> <C> <C> <C>
Robert A. Fox 955,564,157 98% 17,549,664 2%
Roberta L. Hazard 954,924,864 98 18,188,956 2
Leonade D. Jones 955,372,360 98 17,741,461 2
John G. McDonald 955,457,604 98 17,656,217 2
Janet A. McKinley 955,742,725 98 17,371,096 2
James K. Peterson 955,367,301 98 17,746,520 2
James W. Ratzlaff 955,443,593 98 17,670,228 2
Henry E. Riggs 955,759,447 98 17,354,374 2
Walter P. Stern 955,299,948 98 17,813,873 2
Patricia K. Woolf 955,291,088 98 17,822,733 2
</TABLE>
PROPOSAL 2: Amendment to Articles of Incorporation authorizing the board to
create new classes and series of capital stock
PROPOSAL 3: Amendment to Articles of Incorporation reducing par value per share
of capital stock
PROPOSAL 4: Eliminate or revise certain of the fund's investment restrictions
4A. Borrowing
4B. Investments in Real Estate/Mineral Leases
4C. Lending Activities
4D. Unseasoned Issuers
4E. Purchasing Securities of Other Investment Companies
PROPOSAL 5: Ratification of Auditors
<TABLE>
<CAPTION>
Shares Percent Votes Percent Shares Percent
Voting For of Against of Abstaining of
Votes Votes Shares
For Against Abstaining
<S> <C> <C> <C> <C> <C> <C>
Proposal 2: 697,210,407 72% 28,882,495 3% 36,695,341 4%
(Broker non-votes =
210,325,578)
Proposal 3: 872,683,098 90% 51,083,260 5% 49,347,463 5%
Proposal 4A: 666,724,857 69% 46,892,823 5% 49,170,563 5%
(Broker non-votes =
210,325,578)
Proposal 4B: 671,237,969 69% 43,627,904 4% 47,922,369 5%
(Broker non-votes =
210,325,578)
Proposal 4C: 664,675,272 68% 47,955,595 5% 50,157,376 5%
(Broker non-votes =
210,325,578)
Proposal 4D: 660,229,534 68% 49,487,346 5% 53,071,363 5%
(Broker non-votes =
210,325,578)
Proposal 4E: 676,130,737 69% 35,936,045 4% 50,721,461 5%
(Broker non-votes =
210,325,578)
Proposal 5: 931,227,813 96% 8,648,707 1% 33,237,301 3%
</TABLE>
[The American Funds Group (r)]
THE INCOME FUND OF AMERICA(R) IS ONE OF THE 29 MUTUAL FUNDS IN THE AMERICAN
FUNDS GROUP,(R) THE NATION'S THIRD-LARGEST MUTUAL FUND FAMILY. FOR NEARLY SEVEN
DECADES, CAPITAL RESEARCH AND MANAGEMENT COMPANY, THE AMERICAN FUNDS ADVISER,
HAS INVESTED WITH A LONG-TERM FOCUS BASED ON THOROUGH RESEARCH AND ATTENTION TO
RISK.
OFFICE OF THE FUND
One Market
Steuart Tower, Suite 1800
Mailing Address: P.O. Box 7650
San Francisco, California 94120-7650
INVESTMENT ADVISER
Capital Research and
Management Company
333 South Hope Street
Los Angeles, California 90071-1443
135 South State College Boulevard
Brea, California 92821-5823
TRANSFER AGENT FOR
SHAREHOLDER ACCOUNTS
American Funds Service Company
(Please write to the address nearest you.)
P.O. Box 2205
Brea, California 92822-2205
P.O. Box 659522
San Antonio, Texas 78265-9522
P.O. Box 6007
Indianapolis, Indiana 46206-6007
P.O. Box 2280
Norfolk, Virginia 23501-2280
CUSTODIAN OF ASSETS
The Chase Manhattan Bank
One Chase Manhattan Plaza
New York, New York 10081-0001
COUNSEL
Paul, Hastings, Janofsky & Walker LLP
555 South Flower Street
Los Angeles, California 90071-2371
PRINCIPAL UNDERWRITER
American Funds Distributors, Inc.
333 South Hope Street
Los Angeles, California 90071-1462
For information about your account, any of the fund's services, or for a
prospectus for any of The American Funds, please contact your financial
adviser. You may also call American Funds Service Company, toll-free, at
800/421-0180, or visit www.americanfunds.com on the World Wide Web. Please read
the prospectus carefully before you invest or send money.
This report is for the information of shareholders of The Income Fund of
America, but it may also be used as sales literature when preceded or
accompanied by the current prospectus, which gives details about charges,
expenses, investment objectives and operating policies of the fund. If used as
sales material after March 31, 2000, this report must be accompanied by an
American Funds Group Statistical Update for the most recently completed
calendar quarter.
Printed on recycled paper
Litho in USA BDC/CG/4558
Lit. No. IFA-013-0300
