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Morningstar Analyst Rating 02-25-15
„
Morningstar Pillars
Process
Performance
People
Parent
Price
Positive
Positive
Positive
Positive
Positive
Morningstar Analyst Rating
Morningstar evaluates mutual funds based on five key pillars, which
its analysts believe lead to funds that are more likely to outperform
over the long term on a risk-adjusted basis.
Analyst Rating Spectrum
Œ „ ´ˇ ¨
Pillar Spectrum
Positive § Negative ¶ Neutral
NAV 22.15 21.58 20.65 18.06 16.76 16.55 15.49 13.09 19.38 20.36 18.11 18.56
Total Return % 2.64 8.39 18.26 11.95 5.58 11.97 24.51 -28.85 3.77 20.29 3.41 12.92
+/-M* MdTgRk 0.48 3.50 3.95 -0.09 4.99 -0.36 2.74 -6.66 -4.86 7.34 -3.63 1.44
+/-Mstr Md Ag Rk -0.16 3.42 -1.92 -2.38 7.51 -2.95 -3.04 1.80 -5.17 4.30 -5.44 -1.15
Income Return % 0.00 3.87 3.70 4.12 4.29 4.91 5.38 4.32 4.54 5.00 3.88 3.87
Capital Return % 2.64 4.52 14.56 7.83 1.29 7.06 19.13 -33.17 -0.77 15.29 -0.47 9.05
Total Rtn % Rank Cat 41 25 36 52 4 48 46 55 78 1 75 7
Income $ 0.00 0.79 0.66 0.68 0.70 0.75 0.69 0.82 0.91 0.89 0.71 0.66
Capital Gains $ 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.85 0.46 0.36 0.13
Expense Ratio % . 0.57 0.58 0.59 0.58 0.61 0.63 0.54 0.54 0.53 0.54 0.57
Income Ratio % . 3.76 3.58 3.92 4.24 4.82 5.50 4.53 4.22 4.35 4.26 4.15
Turnover Rate % . . 47 41 38 35 49 38 32 35 24 27
Net Assets $mil 74,958 72,853 68,001 57,662 52,517 52,075 49,432 43,360 66,390 60,593 48,701 42,536
Performance 02-28-15
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Total
2010
2011
2012
2013
2014
3.01 -6.34 10.58 4.95 11.97
5.01 1.09 -8.31 8.47 5.58
5.34 0.22 4.51 1.47 11.95
6.62 0.64 3.97 5.99 18.26
2.65 4.12 -0.54 1.97 8.39
Trailing Total +/- M* +/- Mstr %Rank Growth of
Return% MdTgRk Md Ag Rk Cat $10,000
3 Mo
6 Mo
1 Yr
3 Yr Avg
5 Yr Avg
10 Yr Avg
15 Yr Avg
1.53 0.26 -0.10 72 10,153
2.91 2.25 2.09 40 10,291
9.30 3.89 2.97 22 10,930
12.22 3.66 1.46 15 14,132
11.96 2.70 0.94 7 17,592
7.11 0.38 -0.16 16 19,875
8.30 2.04 2.05 5 33,069
Tax Analysis Tax-Adj Rtn% %Rank Cat Tax-Cost Rat %Rank Cat
3 Yr (estimated)
5 Yr (estimated)
10 Yr (estimated)
8.43 46 1.45 61
9.13 35 1.37 78
4.77 52 1.60 93
Potential Capital Gain Exposure: 19% of assets
Rating and Risk
Time Load-Adj Morningstar Morningstar Morningstar
Period Return % Rtn vs Cat Risk vs Cat Risk-Adj Rating
1 Yr 3.01
3 Yr 10.02 Avg Avg
5 Yr 10.65 +Avg -Avg
10 Yr 6.47 Avg Avg
Incept 11.23
Other Measures Standard Index Best Fit Index
M* MdTgRk M* MdTgRk
Alpha 3.2 3.2
Beta 1.02 1.02
R-Squared 92 92
Standard Deviation 6.62
Mean 12.22
Sharpe Ratio 1.77
Morningstar’s Take by Alec Lucas 02-25-15
American Funds Income Fund of America stays true to
its name. The fund has consistently met its primary
goal of delivering a high and stable income stream. Its
3.7% yield over the past year through January 2015
beats 95% of moderate-allocation peers. The fund’s
annual dividend yield also places in the
moderate-allocation category’s top decile each year
over the past 15 years through 2014.
Management is aggressive in its pursuit of income,
but it’s also shown a willingness to cut the fund’s
dividend when necessary. In June 2009, it reduced its
quarterly dividend to 16.5 cents per share from 19.5
cents in response to cuts by dividend-paying stocks
combined with the low-rate environment that has
prevailed since the 2007-09 credit crisis.
The fund’s mix between dividend-paying stocks and
bonds is determined by where management finds the
best income opportunities. That’s meant a big shift into
equities over the past few years. From a low of 57% of
assets at year-end 2008, equity exposure has hovered
around 75% since late 2013, including 17%-20% in
foreign stocks, which often offer relatively high yields.
The typical moderate-allocation rival, by contrast, has
during the same time kept around 60% of assets in
equities, with a 12%-14% stake in foreign stocks.
Fixed-income managers have shown restraint
relative to their own history. Although the fund’s 7.5%
stake in bonds rated BB or lower is roughly double the
category mean, it’s down from a 10.5% mid-2008 high.
They have also kept interest-rate risk steady. A
5.3-year average duration, which is slightly above the
4.4-year category average, falls within historical
norms as well.
Hefty equity and junk-bond exposures could lead to
above-average losses in a downturn, but thus far it’s
resulted in strong performance. Over the past five
years through January 2015, the fund’s posted a
top-decile 11.5% annualized gain. That’s in keeping
with its long-term record.
The fund courts more risk than its typical peer, but
it rewards investors well for that risk, earning it a
Morningstar Analyst Rating of Silver.
Address: The Income Fund of America, Inc.
San Francisco, CA 94105-1409
800-421-4225
Web Address:
Inception: 11-30-73
Advisor: Capital Research and Management Company
Subadvisor: None
NTF Plans: Federated Tr NTF
Minimum Purchase: $250 Add: $50 IRA: $250
Min Auto Inv Plan: $250 Add: $50
Sales Fees: 5.75%L,
Management Fee: 0.25% mx./0.12% mn., 0.01%A
Actual Fees: Mgt:0.23% Dist:0.24%
Expense Projections: 3Yr:$747 5Yr:$875 10Yr:$1248
Income Distribution: Quarterly
Data through February 28, 2015
American Funds Income Fund of Amer A Ticker Status Yield Total Assets Mstar Category
AMECX Open 3.6% $99,548 mil Moderate Allocation
58% 55% 59% 62% 63% 65% 71% 71%
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 02-15
Historical Profile
Return
Risk
Rating
Average
Average
Neutral
Investment Style
Equity
Stock %
Manager Change
Partial Manager Change
Growth of $10,000
Investment Values of
Fund
Investment Values of
M* MdTgRk
Performance Quartile
(within Category)
History
10.0
12.5
15.0
18.0
20.5
Portfolio Analysis 12-31-14
Total Stocks:150 P/E YTD % Net
Share change since 09-30-14 Sectors Ratio Return % Assets
Merck & Co Inc Hlth care 13.9 2.73 3.11
Microsoft Corp Technology 18.8 -6.16 3.06
General Electric Co Industrl 19.1 3.24 2.09
Bristol-Myers Squibb Comp Hlth care 49.3 4.90 2.05
Pfizer Inc Hlth care 22.1 11.85 1.92
E I du Pont de Nemours & Basic Mat 19.0 6.22 1.78
Verizon Communications In Comm Svs 19.3 7.10 1.65
Cisco Systems Inc Technology 18.9 6.88 1.58
Procter & Gamble Co Cnsmr Def 24.1 -5.80 1.51
Date of Amount Value % Net
Total Fixed-Income:1293 Maturity $000 $000 Assets
FNMA 01-01-45 194,362 202,526 0.22
FNMA 02-01-45 180,054 195,094 0.21
US Treasury Note 1.625% 12-31-19 186,500 186,295 0.20
US Treasury TIP 02-15-44 157,092 179,386 0.20
US Treasury Bond 3.375% 05-15-44 155,240 174,851 0.19
US Treasury Bond 3.125% 08-15-44 131,950 142,001 0.16
Smfg Pfd Cap Usd 3 144A F 07-29-49 116,330 141,632 0.15
General Elec Cap FRN 12-29-49 112,300 131,110 0.14
US Treasury Note 1.5% 05-31-19 129,155 128,862 0.14
Equity Style Fixed-Income Style
Style: Value
Size: Large-Cap
Duration: Moderate
Quality: Low
Avg Eff Duration 5.3 Yrs
Avg Eff Maturity .
Avg Credit Quality BB
Avg Wtd Coupon 5.33%
figure provided by fund as of 12-31-14 1
1
Value Measures Rel Category
Price/Earnings
Price/Book
Price/Sales
Price/Cash Flow
Dividend Yield %
17.29
2.19
1.80
7.51
3.50
1.20
1.15
1.48
1.10
1.47
Growth Measures % Rel Category
Long-Term Erngs
Book Value
Sales
Cash Flow
Historical Erngs
8.23
4.44
0.24
2.80
0.65
0.77
3.83
0.07
2.09
0.02
Market Cap %
Giant 55.5
Large 33.0
Mid 9.8
Small 1.4
Micro 0.3
Avg $mil: 58,168
Composition - Net
(% of Stock)
Cash 5.7
Stocks 70.6
Bonds 18.3
Other 5.5
Foreign 23.9
Sector
Weightings
% of
Stocks
Rel M*
MdTgRk High
3 Year
Low
Cyclical 28.30 0.71
BasicMat 8.80 1.65 9 6
CnsmrCyc 6.15 0.52 9 5
FinanSvs 10.05 0.55 10 5
Real Est 3.30 0.72 6 3
Sensitive 39.95 1.09
CommSrvs 7.18 1.89 10 5
Energy 8.10 1.08 12 8
Industrl 12.05 1.03 16 12
Technlgy 12.62 0.93 13 3
Defensive31.75 1.34
CnsmrDef11.47 1.37 12 9
Hlthcare 14.71 1.38 17 12
Utilities 5.57 1.22 8 6
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© 2015Morningstar, Inc.All rights reserved.The informationherein is not represented orwarranted tobeaccurate, correct, completeor
timely. Pastperformance is no guarantee of future results.Access updated reportsat Toorder reprints, call312-696-6100. mfb.morningstar.com. Mutual Funds ß® EQ
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