N-Q 1 gvt_nq.htm N-Q

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

 

FORM N-Q

Quarterly Schedule of Portfolio Holdings of

Registered Management Investment Company

 

Investment Company Act File Number: 811-04318

 

 

 

The American Funds Income Series

(Exact Name of Registrant as Specified in Charter)

 

333 South Hope Street

Los Angeles, California 90071

(Address of Principal Executive Offices)

 

 

 

 

Registrant's telephone number, including area code: (213) 486-9200

 

Date of fiscal year end: August 31

 

Date of reporting period: May 31, 2017

 

 

 

 

 

Steven I. Koszalka

The American Funds Income Series

333 South Hope Street

Los Angeles, California 90071

(Name and Address of Agent for Service)

 

 

 
 

ITEM 1 – Schedule of Investments

 

U.S. Government Securities Fund®
Investment portfolio
May 31, 2017
unaudited
Bonds, notes & other debt instruments96.83%
U.S. Treasury bonds & notes57.08%
U.S. Treasury47.41% 		Principal?amount
(000) 		Value
(000)
U.S. Treasury 0.875% 2017 $150,000 $149,820
U.S. Treasury 0.75% 2018 100,000 99,398
U.S. Treasury 0.75% 2019 11,000 10,874
U.S. Treasury 1.625% 2019 83,100 83,647
U.S. Treasury 1.25% 2020 90,500 90,187
U.S. Treasury 1.25% 2020 15,600 15,538
U.S. Treasury 1.375% 2020 36,000 35,942
U.S. Treasury 1.375% 2020 27,000 26,979
U.S. Treasury 1.375% 2020 26,548 26,402
U.S. Treasury 1.625% 2020 7,500 7,532
U.S. Treasury 1.75% 2020 70,250 70,686
U.S. Treasury 1.75% 2020 56,150 56,553
U.S. Treasury 2.00% 2020 46,850 47,561
U.S. Treasury 3.625% 2020 25,000 26,480
U.S. Treasury 8.75% 2020 5,255 6,447
U.S. Treasury 1.125% 20211 378,170 369,691
U.S. Treasury 1.125% 2021 20,500 20,020
U.S. Treasury 1.125% 2021 19,926 19,498
U.S. Treasury 1.75% 2021 227,621 228,110
U.S. Treasury 2.00% 2021 145,000 146,783
U.S. Treasury 2.00% 2021 76,550 77,564
U.S. Treasury 2.125% 20211 287,750 292,976
U.S. Treasury 2.125% 2021 56,700 57,772
U.S. Treasury 2.25% 2021 270,705 277,073
U.S. Treasury 3.625% 2021 8,300 8,911
U.S. Treasury 8.00% 2021 3,400 4,317
U.S. Treasury 1.625% 2022 680 673
U.S. Treasury 1.75% 2022 132,600 132,595
U.S. Treasury 1.75% 2022 47,000 46,991
U.S. Treasury 1.75% 2022 25,000 25,015
U.S. Treasury 1.875% 2022 361,000 363,043
U.S. Treasury 1.875% 2022 129,030 129,857
U.S. Treasury 1.875% 2022 89,000 89,587
U.S. Treasury 1.875% 2022 300,000 301,770
U.S. Treasury 2.00% 2022 41,280 41,632
U.S. Treasury 2.125% 2022 119,900 121,633
U.S. Treasury 1.50% 2023 57,820 56,636
U.S. Treasury 1.625% 2023 58,280 57,354
U.S. Treasury 2.125% 2023 289,977 293,080
U.S. Treasury 2.50% 2023 40,720 42,078
U.S. Treasury 2.75% 2023 147,900 155,098
U.S. Treasury 2.125% 2024 60,800 61,294
U.S. Treasury 2.75% 2024 87,700 91,934
U.S. Treasury 6.25% 2030 5,250 7,548
U.S. Treasury 2.875% 2045 78,125 78,118
U.S. Treasury 3.00% 2045 45,875 47,001
U.S. Government Securities Fund — Page 1 of 11
unaudited
Bonds, notes & other debt instruments
U.S. Treasury bonds & notes (continued)
U.S. Treasury (continued) 		Principal?amount
(000) 		Value
(000)
U.S. Treasury 2.50% 2046 $31,880 $29,489
U.S. Treasury 2.875% 2046 2,008 2,007
U.S. Treasury 3.00% 2047 98,165 100,659
U.S. Treasury 3.00% 2047 15,000 15,393
    4,547,246
U.S. Treasury inflation-protected securities9.67%    
U.S. Treasury Inflation-Protected Security 0.130% 20202 42,704 43,092
U.S. Treasury Inflation-Protected Security 0.257% 20252 53,585 53,359
U.S. Treasury Inflation-Protected Security 0.386% 20252 252,592 254,416
U.S. Treasury Inflation-Protected Security 2.375% 20252 108,901 125,806
U.S. Treasury Inflation-Protected Security 0.375% 20272 183,684 183,555
U.S. Treasury Inflation-Protected Security 2.125% 20412 3,061 3,901
U.S. Treasury Inflation-Protected Security 0.75% 20422 185,997 180,393
U.S. Treasury Inflation-Protected Security 1.00% 20462 73,402 74,839
U.S. Treasury Inflation-Protected Security 0.884% 20472 8,080 7,997
    927,358
Total U.S. Treasury bonds & notes   5,474,604
Mortgage-backed obligations37.23%
Federal agency mortgage-backed obligations36.95% 		   
Fannie Mae 3.153% 20173 970 972
Fannie Mae 10.50% 20183 59 61
Fannie Mae 5.50% 20233 607 650
Fannie Mae 6.00% 20243 415 470
Fannie Mae 10.480% 20253 78 81
Fannie Mae 6.00% 20263 22 25
Fannie Mae 6.50% 20273 731 817
Fannie Mae 6.50% 20273 328 365
Fannie Mae 5.00% 20283 334 367
Fannie Mae 2.50% 20313 22,274 22,516
Fannie Mae 8.00% 20313 456 525
Fannie Mae 3.00% 20363 30,630 31,298
Fannie Mae 3.00% 20363 17,370 17,749
Fannie Mae 4.00% 20363 24,500 26,157
Fannie Mae 4.00% 20363 15,773 16,840
Fannie Mae 4.00% 20363 12,265 13,094
Fannie Mae 4.00% 20363 5,090 5,434
Fannie Mae 4.00% 20363 1,441 1,539
Fannie Mae 4.00% 20363 39 41
Fannie Mae 3.00% 20373 10,941 11,180
Fannie Mae 6.50% 20373 229 253
Fannie Mae 6.50% 20373 217 242
Fannie Mae 6.50% 20373 58 64
Fannie Mae 7.00% 20373 290 318
Fannie Mae 7.00% 20373 113 124
Fannie Mae 7.00% 20373 12 13
Fannie Mae 7.50% 20373 50 56
Fannie Mae 6.00% 20383 147 158
Fannie Mae 7.00% 20383 400 437
Fannie Mae 5.00% 20413 1,871 2,091
Fannie Mae 5.00% 20413 1,309 1,463
Fannie Mae 5.00% 20413 955 1,069
U.S. Government Securities Fund — Page 2 of 11
unaudited
Bonds, notes & other debt instruments
Mortgage-backed obligations (continued)
Federal agency mortgage-backed obligations (continued) 		Principal?amount
(000) 		Value
(000)
Fannie Mae 5.00% 20413 $673 $753
Fannie Mae 3.50% 20453 18,003 18,668
Fannie Mae 3.00% 20463 154,994 155,833
Fannie Mae 3.00% 20463 24,739 24,873
Fannie Mae 3.50% 20463 6,961 7,221
Fannie Mae 3.50% 20463 459 476
Fannie Mae 3.50% 20473,4 30,000 30,967
Fannie Mae 3.50% 20473,4 8,000 8,244
Fannie Mae 4.00% 20473 273,392 288,921
Fannie Mae 4.00% 20473,4 108,000 113,834
Fannie Mae 4.00% 20473,4 53,164 55,930
Fannie Mae 4.00% 20473,4 40,000 42,238
Fannie Mae 4.50% 20473,4 78,200 84,162
Fannie Mae 4.50% 20473,4 20,000 21,558
Fannie Mae 3.50% 20563 72,517 74,655
Fannie Mae 4.00% 20563 121,557 129,214
Fannie Mae, Series 2001-4, Class NA, 9.528% 20253,5 21 23
Fannie Mae, Series 2001-25, Class ZA, 6.50% 20313 298 326
Fannie Mae, Series 2001-20, Class E, 9.589% 20313,5 5 6
Fannie Mae, Series 2006-83, Class AO, principal only, 0% 20363 1,074 967
Fannie Mae, Series 2006-56, Class OG, principal only, 0% 20363 668 600
Fannie Mae, Series 2006-65, Class PF, (1-month USD-LIBOR + 0.28%) 1.304% 20363,5 880 876
Fannie Mae, Series 1999-T2, Class A1, 7.50% 20393,5 272 306
Freddie Mac 10.00% 20253 57 58
Freddie Mac 3.00% 20353 16,441 16,897
Freddie Mac Pool #1H1354 2.797% 20363,5 475 501
Freddie Mac 4.00% 20363 245 262
Freddie Mac 5.00% 20413 4,296 4,805
Freddie Mac 3.50% 20453 5,987 6,210
Freddie Mac 3.50% 20463 175,153 181,651
Freddie Mac 3.50% 20463 6,392 6,613
Freddie Mac 4.00% 20473,4 478,079 503,841
Freddie Mac 4.00% 20473 452,870 479,000
Freddie Mac 4.00% 20473,4 135,000 142,549
Freddie Mac 4.00% 20473 110,885 117,178
Freddie Mac 4.50% 20473,4 8,000 8,602
Freddie Mac, Series 2289, Class NA, 10.255% 20203,5 10 10
Freddie Mac, Series 2289, Class NB, 9.00% 20223,5 9 10
Freddie Mac, Series 1567, Class A, (1-month USD-LIBOR + 0.40%) 1.389% 20233,5 9 9
Freddie Mac, Series KS01, Class A2, multifamily 2.522% 20233 3,185 3,240
Freddie Mac, Series 2626, Class NG, 3.50% 20233 10 10
Freddie Mac, Series 3156, Class PO, principal only, 0% 20363 1,259 1,105
Freddie Mac, Series 3146, Class PO, principal only, 0% 20363 591 530
Freddie Mac, Series 3213, Class OG, principal only, 0% 20363 514 474
Freddie Mac, Series 3156, Class PF, (1-month USD-LIBOR + 0.25%) 1.239% 20363,5 1,495 1,490
Freddie Mac Pool #760014 2.982% 20453,5 6,964 7,176
Government National Mortgage Assn. 10.00% 20193 35 37
Government National Mortgage Assn. 10.00% 20213 30 32
Government National Mortgage Assn. 6.50% 20293 447 510
Government National Mortgage Assn. 6.50% 20323 734 834
Government National Mortgage Assn. 6.50% 20373 281 322
Government National Mortgage Assn. 5.50% 20383 364 408
Government National Mortgage Assn. 5.50% 20383 58 62
Government National Mortgage Assn. 6.00% 20383 475 548
U.S. Government Securities Fund — Page 3 of 11
unaudited
Bonds, notes & other debt instruments
Mortgage-backed obligations (continued)
Federal agency mortgage-backed obligations (continued) 		Principal?amount
(000) 		Value
(000)
Government National Mortgage Assn. 6.50% 20383 $273 $306
Government National Mortgage Assn. 6.50% 20383 257 274
Government National Mortgage Assn. 6.50% 20383 189 216
Government National Mortgage Assn. 6.50% 20383 136 155
Government National Mortgage Assn. 4.00% 20393 507 538
Government National Mortgage Assn. 4.00% 20393 64 68
Government National Mortgage Assn. 5.00% 20393 1,228 1,353
Government National Mortgage Assn. 6.00% 20393 2,679 3,060
Government National Mortgage Assn. 6.50% 20393 735 835
Government National Mortgage Assn. 4.50% 20403 1,101 1,192
Government National Mortgage Assn. 5.00% 20403 154 169
Government National Mortgage Assn. 5.00% 20403 124 136
Government National Mortgage Assn. 5.50% 20403 4,330 4,883
Government National Mortgage Assn. 3.50% 20413 854 881
Government National Mortgage Assn. 4.00% 20413 337 347
Government National Mortgage Assn. 4.50% 20413 13,324 14,307
Government National Mortgage Assn. 5.00% 20413 7,450 8,051
Government National Mortgage Assn. 5.00% 20413 138 144
Government National Mortgage Assn. 5.50% 20413 517 552
Government National Mortgage Assn. 5.50% 20413 404 431
Government National Mortgage Assn. 5.50% 20413 76 81
Government National Mortgage Assn. 6.00% 20413 83 92
Government National Mortgage Assn. 6.50% 20413 1,559 1,728
Government National Mortgage Assn. 3.50% 20423 546 570
Government National Mortgage Assn. 4.00% 20423 3,438 3,609
Government National Mortgage Assn. 4.00% 20423 2,093 2,198
Government National Mortgage Assn. 3.50% 20433 4,471 4,667
Government National Mortgage Assn. 4.50% 20433 615 659
Government National Mortgage Assn. 4.50% 20443 22 23
Government National Mortgage Assn. 4.50% 20453 61,587 65,958
Government National Mortgage Assn. 4.50% 20453 11,929 12,776
Government National Mortgage Assn. 4.50% 20453 9,745 10,437
Government National Mortgage Assn. 4.50% 20453 643 689
Government National Mortgage Assn. 4.50% 20453 445 476
Government National Mortgage Assn. 4.50% 20453 135 144
Government National Mortgage Assn. 4.00% 20463 10,337 10,786
Government National Mortgage Assn. 4.00% 20473,6 258,200 273,631
Government National Mortgage Assn. 4.00% 20473 77,148 81,745
Government National Mortgage Assn. 4.00% 20473,4 61,500 64,979
Government National Mortgage Assn. 4.00% 20473 34,843 36,919
Government National Mortgage Assn. 4.50% 20473 48,330 51,887
Government National Mortgage Assn. 4.50% 20473 47,699 51,122
Government National Mortgage Assn. 4.50% 20473 18,406 19,736
Government National Mortgage Assn. 6.21% 20583 68 69
Government National Mortgage Assn. 6.216% 20583 1,035 1,098
Government National Mortgage Assn., Series 2003-46, 5.00% 20333 1,388 1,478
Government National Mortgage Assn., Series 2003, 6.172% 20583 185 188
Government National Mortgage Assn., Series 2010-H13, Class JA, 5.46% 20593 1,651 1,657
Government National Mortgage Assn., Series 2010-H23, Class PT, 5.421% 20603,5 28,154 29,315
Government National Mortgage Assn., Series 2011-H02, Class BI, interest only, 0.432% 20613,5 41,075 454
Government National Mortgage Assn., Series 2012-H23, Class FI, interest only, 0.776% 20623,5 24,810 360
National Credit Union Administration, Series 2010-R2, Class 1A, (1-month USD-LIBOR + 0.37%)
1.362% 20173,5 		333 333
U.S. Government Securities Fund — Page 4 of 11
unaudited
Bonds, notes & other debt instruments
Mortgage-backed obligations (continued)
Federal agency mortgage-backed obligations (continued) 		Principal?amount
(000) 		Value
(000)
National Credit Union Administration, Series 2011-R3, Class 1A, (1-month USD-LIBOR + 0.40%)
1.394% 20203,5 		$785 $785
National Credit Union Administration, Series 2011-R1, Class 1A, (1-month USD-LIBOR + 0.45%)
1.442% 20203,5 		512 513
Seasoned Credit Risk Transfer, Series 2017-1, Class HA, 2.00% 20563 40,689 40,853
Vendee Mortgage Trust, Series 2011-2, Class V, 3.75% 20283 11,519 11,711
Vendee Mortgage Trust, Series 2008-1, Class GD, 5.25% 20323 10,107 10,745
Vendee Mortgage Trust, Series 2011-2, Class DA, 3.75% 20333 7,132 7,278
Vendee Mortgage Trust, Series 2010-1, Class DA, 4.25% 20353 2,820 2,901
    3,544,642
Other mortgage-backed securities0.28%    
Fannie Mae, Series 2014-M6, Class FA, multifamily (1-month USD-LIBOR + 0.29%) 1.266% 20173,5 134 134
Fannie Mae, Series 2012-M2, Class A2, multifamily 2.717% 20223 4,325 4,454
Fannie Mae, Series 2012-M3, Class 1A2, multifamily 3.044% 20223 3,500 3,614
Fannie Mae, Series 2014-M1, Class A2, multifamily 3.241% 20233,5 3,600 3,777
Fannie Mae, Series 2014-M3, Class A2, multifamily 3.471% 20243,5 6,525 6,943
Freddie Mac, Series KGRP, Class A, multifamily (1-month USD-LIBOR + 0.38%) 1.371% 20203,5 2,131 2,133
Freddie Mac, Series K013, Class A1, multifamily 2.902% 20203 1,134 1,156
Freddie Mac, Series K010, Class A1, multifamily 3.32% 20203 1,231 1,240
Freddie Mac, Series K031, Class A1, multifamily 2.778% 20223 1,957 2,005
Freddie Mac, Series K029, Class A2, multifamily 3.32% 20233 1,200 1,271
    26,727
Total mortgage-backed obligations   3,571,369
Federal agency bonds & notes2.52%    
Export-Import Bank of the United States-Guaranteed, Ethiopian Leasing 2012 LLC 2.646% 20263 1,545 1,567
Export-Import Bank of the United States-Guaranteed, VCK Lease SA 2.591% 20263 1,596 1,615
Fannie Mae 1.25% 2021 31,600 31,028
Fannie Mae 7.125% 2030 3,000 4,412
Federal Home Loan Bank 3.375% 2023 14,160 15,246
Federal Home Loan Bank 5.50% 2036 700 948
Private Export Funding Corp. 1.45% 2019 5,250 5,239
Private Export Funding Corp. 2.25% 2020 10,000 10,173
Private Export Funding Corp. 3.55% 2024 11,150 12,067
Small Business Administration, Series 2001-20K, 5.34% 20213 171 179
Small Business Administration, Series 2001-20J, 5.76% 20213 58 61
Small Business Administration, Series 2001-20F, 6.44% 20213 265 280
Small Business Administration, Series 2003-20B, 4.84% 20233 847 893
Tennessee Valley Authority 1.875% 2022 18,350 18,332
Tennessee Valley Authority 4.65% 2035 3,930 4,653
Tennessee Valley Authority 5.88% 2036 2,750 3,783
Tennessee Valley Authority, Series A, 3.875% 2021 8,500 9,165
Tennessee Valley Authority, Series 2008, Class A, 4.875% 2048 3,300 4,134
TVA Southaven 3.846% 20333 2,581 2,637
United States Agency for International Development, Jordan (Kingdom of) 1.945% 2019 31,500 31,776
United States Agency for International Development, Jordan (Kingdom of) 2.503% 2020 8,200 8,420
United States Agency for International Development, Jordan (Kingdom of) 2.578% 2022 6,000 6,154
United States Agency for International Development, Jordan (Kingdom of) 3.00% 2025 2,500 2,589
United States Agency for International Development, State of Iraq, 2.149% 2022 13,330 13,457
United States Agency for International Development, State of Israel, Class 1-A, 5.50% 2023 5,000 5,956
United States Agency for International Development, Tunisia (Kingdom of) 1.416% 2021 7,000 6,882
United States Agency for International Development, Ukraine, 1.844% 2019 2,890 2,915
U.S. Government Securities Fund — Page 5 of 11
unaudited
Bonds, notes & other debt instruments
Federal agency bonds & notes (continued) 		Principal?amount
(000) 		Value
(000)
United States Agency for International Development, Ukraine, 1.847% 2020 $20,000 $20,149
United States Agency for International Development, Ukraine, 1.471% 2021 11,770 11,601
United States Government-Guaranteed Certificates of Participation, Overseas Private Investment Corp,
3.49% 20293 		1,635 1,717
United States Government-Guaranteed Certificates of Participation, Overseas Private Investment Corp,
3.82% 20323 		1,828 1,939
United States Government-Guaranteed Certificates of Participation, Overseas Private Investment Corp,
3.938% 20323 		1,441 1,565
    241,532
Total bonds, notes & other debt instruments (cost: $9,218,753,000)   9,287,505
Short-term securities26.37%    
Federal Farm Credit Banks 1.04% due 12/15/2017 11,000 10,934
Federal Home Loan Bank 1.00%–1.07% due 10/20/2017–11/22/2017 271,648 270,347
Freddie Mac 0.99%–1.03% due 10/24/2017–11/28/2017 908,050 903,633
U.S. Treasury Bills 0.88%–1.06% due 9/28/2017–11/24/2017 1,350,000 1,343,741
Total short-term securities (cost: $2,529,119,000)   2,528,655
Total investment securities 123.20% (cost: $11,747,872,000)   11,816,160
Other assets less liabilities (23.20)%   (2,224,876)
Net assets 100.00%   $9,591,284
U.S. Government Securities Fund — Page 6 of 11
unaudited
Futures contracts
Contracts Type Number of
contracts 		Expiration Notional
amount
(000) 		Value at
5/31/2017
(000) 		Unrealized
appreciation
(depreciation)
at 5/31/2017
(000)
10 Year U.S. Treasury Note Futures Long 3,779 September 2017 $377,900 $477,276 $1,773
30 Year Ultra U.S. Treasury Bond Futures Long 808 September 2017 80,800 133,421 1,079
20 Year U.S. Treasury Bond Futures Long 415 September 2017 41,500 63,832 547
10 Year Ultra U.S. Treasury Note Futures Long 15 September 2017 1,500 2,036 8
5 Year U.S. Treasury Note Futures Long 37,203 October 2017 3,720,300 4,401,580 7,160
2 Year U.S. Treasury Note Futures Long 4,075 October 2017 815,000 882,174 88
90 Day Euro Dollar Futures Short 2,300 September 2018 (575,000) (565,599) (1,385)
90 Day Euro Dollar Futures Short 3,100 December 2018 (775,000) (761,631) (2,175)
            $7,095
Swap contracts
Interest rate swaps
Receive Pay Expiration
date 		Notional
(000) 		Value at
5/31/2017
(000) 		Upfront
payments/
receipts
(000) 		Unrealized
appreciation
(depreciation)
at 5/31/2017
(000)
U.S. EFFR 1.19125% 11/1/2017 $9,555,000 $— $— $—
U.S. EFFR 1.201% 11/1/2017 4,920,000 — — —
U.S. EFFR 1.19875% 11/1/2017 4,920,000 — — —
1.6715% 3-month USD-LIBOR 3/17/2019 857,000 2,845 — 2,845
1.654% 3-month USD-LIBOR 3/20/2019 853,000 2,559 — 2,559
1.329% U.S. EFFR 3/27/2019 58,000 6 — 6
1.34875% U.S. EFFR 4/5/2019 362,500 149 — 149
1.32625% U.S. EFFR 4/5/2019 207,900 — — —
3-month USD-LIBOR 1.5165% 4/19/2019 300,000 (117) — (117)
1.515% 3-month USD-LIBOR 6/4/2019 120,000 4 — 4
1.732% 3-month USD-LIBOR 6/27/2019 115,000 490 — 490
1.773% 3-month USD-LIBOR 8/11/2019 108,000 546 — 546
1.9225% 3-month USD-LIBOR 9/25/2019 132,000 1,096 — 1,096
1.785% 3-month USD-LIBOR 1/2/2020 90,000 440 — 440
1.655% 3-month USD-LIBOR 2/11/2020 160,000 210 — 210
3-month USD-LIBOR 1.217% 9/22/2021 250,000 5,790 — 5,790
3-month USD-LIBOR 1.225% 9/22/2021 250,000 5,707 — 5,707
3-month USD-LIBOR 1.196% 9/27/2021 90,000 2,173 — 2,173
3-month USD-LIBOR 1.9665% 2/2/2022 146,000 (1,064) — (1,064)
3-month USD-LIBOR 2.01215% 2/2/2022 350,000 (3,269) — (3,269)
3-month USD-LIBOR 1.977% 2/7/2022 178,000 (1,376) — (1,376)
3-month USD-LIBOR 2.2175% 3/17/2022 316,000 (5,893) — (5,893)
3-month USD-LIBOR 1.869% 4/19/2022 215,000 (497) — (497)
2.8% 3-month USD-LIBOR 9/2/2022 560,000 6,641 — 6,641
2.75% 3-month USD-LIBOR 9/2/2022 560,000 6,121 — 6,121
3-month USD-LIBOR 1.495% 11/10/2023 115,000 3,142 — 3,142
3-month USD-LIBOR 2.74125% 11/22/2023 79,000 (3,863) — (3,863)
3-month USD-LIBOR 2.7343% 11/22/2023 100,000 (4,847) — (4,847)
3-month USD-LIBOR 2.0955% 2/10/2024 43,300 (368) — (368)
3-month USD-LIBOR 2.0815% 2/10/2024 86,700 (661) — (661)
3-month USD-LIBOR 2.3875% 3/17/2024 290,300 (7,829) — (7,829)
3-month USD-LIBOR 2.683% 8/4/2024 63,000 (2,935) — (2,935)
U.S. Government Securities Fund — Page 7 of 11
unaudited
Receive Pay Expiration
date 		Notional
(000) 		Value at
5/31/2017
(000) 		Upfront
payments/
receipts
(000) 		Unrealized
appreciation
(depreciation)
at 5/31/2017
(000)
3-month USD-LIBOR 2.469% 6/9/2025 $23,000 $(727) $— $(727)
3-month USD-LIBOR 1.7545% 2/5/2026 45,000 1,196 — 1,196
3-month USD-LIBOR 2.24% 12/5/2026 179,000 (1,752) — (1,752)
3-month USD-LIBOR 2.27% 12/5/2026 146,000 (1,813) — (1,813)
2.579% 3-month USD-LIBOR 3/14/2027 159,000 6,252 — 6,252
2.4695% 3-month USD-LIBOR 3/21/2027 81,800 2,408 — 2,408
2.333% 3-month USD-LIBOR 3/29/2027 130,000 2,228 — 2,228
2.3335% 3-month USD-LIBOR 3/29/2027 100,000 1,719 — 1,719
3-month USD-LIBOR 2.3215% 4/12/2027 32,400 (518) — (518)
3-month USD-LIBOR 2.2095% 4/19/2027 31,600 (184) — (184)
3-month USD-LIBOR 2.1385% 6/2/2027 117,000 — — —
3-month USD-LIBOR 2.97125% 9/2/2030 124,000 (5,006) — (5,006)
3-month USD-LIBOR 3.005% 9/2/2030 124,000 (5,363) — (5,363)
3-month USD-LIBOR 3.34% 6/27/2044 80,000 (15,163) — (15,163)
3-month USD-LIBOR 3.206% 7/31/2044 27,000 (4,387) — (4,387)
3-month USD-LIBOR 3.238% 8/8/2044 28,000 (4,728) — (4,728)
3-month USD-LIBOR 2.7045% 1/2/2045 38,500 (2,249) — (2,249)
3-month USD-LIBOR 2.525% 10/20/2045 32,000 (669) — (669)
3-month USD-LIBOR 2.516% 10/20/2045 48,000 (912) — (912)
3-month USD-LIBOR 2.5315% 10/26/2045 20,000 (447) — (447)
3-month USD-LIBOR 2.58245% 11/5/2045 13,000 (432) — (432)
3-month USD-LIBOR 2.57067% 11/9/2045 55,000 (1,688) — (1,688)
3-month USD-LIBOR 2.6485% 11/16/2045 54,375 (2,580) — (2,580)
3-month USD-LIBOR 2.52822% 11/23/2045 17,800 (385) — (385)
3-month USD-LIBOR 2.59125% 12/16/2045 22,500 (791) — (791)
3-month USD-LIBOR 2.4095% 1/14/2046 25,000 100 — 100
3-month USD-LIBOR 1.991% 6/13/2046 30,000 2,858 — 2,858
U.S. EFFR 1.46% 7/25/2046 116,000 16,618 — 16,618
3-month USD-LIBOR 1.768% 8/17/2046 57,000 8,236 — 8,236
2.66515% 3-month USD-LIBOR 2/2/2047 30,000 1,566 — 1,566
2.6275% 3-month USD-LIBOR 2/2/2047 33,000 1,448 — 1,448
3-month USD-LIBOR 2.6575% 2/17/2047 47,000 (2,377) — (2,377)
3-month USD-LIBOR 2.601% 4/6/2047 20,600 (787) — (787)
3-month USD-LIBOR 2.609% 4/6/2047 20,400 (816) — (816)
          $— $(3,945)
    
1 A portion of this security was pledged as collateral. The total value of pledged collateral was $182,784,000, which represented 1.91% of the net assets of the fund.
2 Index-linked bond whose principal amount moves with a government price index.
3 Principal payments may be made periodically. Therefore, the effective maturity date may be earlier than the stated maturity date.
4 Purchased on a TBA basis.
5 Coupon rate may change periodically.
6 Valued under fair value procedures adopted by authority of the board of trustees. The total value of the security was $273,631,000, which represented 2.85% of the net assets of the fund.
Valuation disclosures
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. Security transactions are recorded by the fund as of the date the trades are executed with brokers.
U.S. Government Securities Fund — Page 8 of 11
unaudited
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.
Fixed-income securities, including short-term securities, 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”)
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
When the fund’s investment adviser deems it appropriate to do so (such as when vendor prices are unavailable or deemed to be not 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.
Exchange-traded futures are generally valued at the official settlement price of, or the last reported sale price on, the exchange or market on which such instruments are traded, as of the close of business on the day the futures are being valued or, lacking any sales, at the last available bid price. Prices for each future are taken from the exchange or market on which the security trades. The average month-end notional amount of futures contracts while held was $7,244,376,000. Interest rate swaps are generally valued by pricing vendors based on market inputs that include the index and term of index, reset frequency, payer/receiver, currency and pay frequency. The average month-end notional amount of interest rate swaps while held was $12,017,217,000.
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 valuation guidelines adopted by authority of the fund’s board of trustees as further described. 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.
U.S. Government Securities Fund — Page 9 of 11
unaudited
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 tables present the fund’s valuation levels as of May 31, 2017 (dollars in thousands):
  Investment securities
  Level 1 Level 2 Level 3 Total
Assets:        
Bonds, notes & other debt instruments:        
U.S. Treasury bonds & notes $— $5,474,604 $— $5,474,604
Mortgage-backed obligations — 3,571,369 — 3,571,369
Federal agency bonds & notes — 241,532 — 241,532
Short-term securities — 2,528,655 — 2,528,655
Total $— $11,816,160 $— $11,816,160
    
  Other investments*
  Level 1 Level 2 Level 3 Total
Assets:        
Unrealized appreciation on futures contracts $10,655 $— $— $10,655
Unrealized appreciation on interest rate swaps — 82,548 — 82,548
Liabilities:        
Unrealized depreciation on futures contracts (3,560) — — (3,560)
Unrealized depreciation on interest rate swaps — (86,493) — (86,493)
Total $7,095 $(3,945) $— $3,150
* Futures contracts and interest rate swaps are not included in the investment portfolio.
Federal income tax information (dollars in thousands)
Gross unrealized appreciation on investment securities $92,338
Gross unrealized depreciation on investment securities (28,992)
Net unrealized appreciation on investment securities 63,346
Cost of investment securities 11,752,814
    
Key to abbreviations and symbol
EFFR = Effective Federal Funds Rate
LIBOR = London Interbank Offered Rate
TBA = To-be-announced
USD/$ = U.S. dollars
U.S. Government Securities Fund — Page 10 of 11
unaudited
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.
MFGEFPX-022-0717O-S60634 U.S. Government Securities Fund — Page 11 of 11

 

 

ITEM 2 – Controls and Procedures

 

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.

 

There were no changes in the Registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) that occurred during the Registrant’s last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting.

 

 

ITEM 3 – Exhibits

 

The certifications required by Rule 30a-2 of the Investment Company Act of 1940 and Section 302 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 AMERICAN FUNDS INCOME SERIES
   
  By /s/ Fergus N. MacDonald
 

Fergus N. MacDonald, President and

Principal Executive Officer

   
  Date: July 28, 2017

 

 

 

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/ Fergus N. MacDonald

Fergus N. MacDonald, President and

Principal Executive Officer

 
Date: July 28, 2017

 

 

 

By /s/ Brian C. Janssen

Brian C. Janssen, Treasurer and

Principal Financial Officer

 
Date: July 28, 2017