American Funds The Income Fund of America (AMECX) N-CSRS Certified semi-annual shareholder report (management investment company)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

Certified Shareholder Report of

Registered Management Investment Companies

Investment Company Act File Number: 811-01880

The Income Fund of America, Inc.

(Exact Name of Registrant as Specified in Charter)

P.O. Box 7650, One Market, Steuart Tower

San Francisco, California 94120

(Address of Principal Executive Offices)

Registrant's telephone number, including area code: (415) 421-9360

Date of fiscal year end: July 31

Date of reporting period: January 31, 2009

Patrick F. Quan

Capital Research and Management Company

P.O. Box 7650, One Market, Steuart Tower

San Francisco, California 94120

(Name and Address of Agent for Service)

Copies to:

Michael Glazer

Paul, Hastings, Janofsky & Walker LLP

515 South Flower Street, 25th Floor

Los Angeles, California 90071

(Counsel for the Registrant)

ITEM 1 – Reports to Stockholders

[logo - American Funds®]

The right choice for the long term®

The Income Fund of America

[photo of a body of water with trees in the background]

Semi-annual report for the six months ended January 31, 2009

The Income Fund of America® seeks current income while secondarily striving for capital growth through investments in stocks and fixed-income securities.

This fund is one of the 31 American Funds. American Funds is one of the nation’s largest mutual fund families. For nearly 80 years, Capital Research and Management Company,SM the American Funds adviser, has invested with a long-term focus based on thorough research and attention to risk.

Fund results shown in this report, unless otherwise indicated, are for Class A shares at net asset value. If a sales charge (maximum 5.75%) had been deducted, the results would have been lower. Results are for past periods and are not predictive of results for future periods. Current and future results may be lower or higher than those shown. Share prices and returns will vary, so investors may lose money. Investing for short periods makes losses more likely. Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity. For current information and month-end results, visit americanfunds.com.

Here are the average annual total returns on a $1,000 investment with all distributions reinvested for periods ended December 31, 2008 (the most recent calendar quarter-end):
Class A shares	1 year			5 years			10 years
Reflecting 5.75% maximum sales charge		–32.93	%		–0.46	%		3.16	%

The total annual fund operating expense ratio was 0.57% for Class A shares as of the most recent fiscal year-end. This figure does not reflect the fee waiver described below.

Investment results assume all distributions are reinvested and reflect applicable fees and expenses. The fund’s investment adviser waived a portion of its management fees from September 1, 2004, through December 31, 2008. Respective fund results shown reflect the waiver, without which they would have been lower. Please see the Financial Highlights table on pages 28 to 31 for details.

The fund’s 30-day yield for Class A shares as of February 28, 2009, calculated in accordance with the Securities and Exchange Commission formula, was 6.81%. The fund’s distribution rate for Class A shares as of that date was 6.83%. Both reflect the 5.75% maximum sales charge. The SEC yield reflects the rate at which the fund is earning income on its current portfolio of securities while the distribution rate reflects the fund’s past dividends paid to shareholders. Accordingly, the fund’s SEC yield and distribution rate may differ.

Results for other share classes can be found on page 36.

The return of principal for bond funds and for funds with significant underlying bond holdings is not guaranteed. Fund shares are subject to the same interest rate, inflation and credit risks associated with the underlying bond holdings. High-yield bonds are subject to greater fluctuations in value and risk of loss of income and principal than investment-grade bonds. Investing outside the United States may be subject to additional risks, such as currency fluctuations and political instability, which are detailed in the fund’s prospectus.

Fellow shareholders:

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The six months ended January 31, 2009, was among the most challenging periods in the 35-year history of The Income Fund of America (IFA). The deepening global credit crisis, mounting turmoil in the financials sector and bleak economic news from around the world sent markets into near free fall, particularly from late September through November. Only the unprecedented and coordinated efforts of governments and central banks worldwide kept a severe crisis from becoming worse. While the new year saw markets moving sideways, they once again trended sharply downward after the close of the fund’s fiscal period.

This environment proved difficult for investors, including shareholders of The Income Fund of America. For the six months, the fund recorded a 25.7% loss for those who reinvested quarterly dividends totaling 43.2 cents a share.

IFA’s results surpassed the 33.9% loss turned in by the unmanaged Standard & Poor’s 500 Composite Index, but trailed the return of the Lipper Income Funds Index, a measure of IFA’s category peers, which declined 17.9%.

The unmanaged Barclays Capital (formerly Lehman Brothers) U.S. Aggregate Index — a proxy for the broad bond universe — gained 3.2%.

Widespread weakness

Some market downturns are driven by pronounced weakness in certain sectors, but the present turmoil has left investors with few places to hide. This is illustrated by the fact that among the 10 sectors that comprise the S&P 500, the one with the highest return for the six months was health care, which posted a 17.0% decline. The worst sector, financials, dropped 56.3%.

This pervasive decline among stocks was echoed in the bond market. As might be expected, returns for lower quality, higher yielding issues, whose values typically suffer during economic downturns, were down sharply. More surprising was the broad and steep decline among high-quality bonds, which as a group posted their worst returns of the post-World War II era.

The only true safe haven in the stock or the bond world was U.S. Treasury securities. While we have increased our holdings in Treasury securities, they represent only 3.0% of fund assets.

A challenging dividend environment

In this environment, income-focused funds such as IFA are facing some challenges with respect to dividends. For one, there are fewer eligible investments in the financials sector, as many banks and other institutions have cut or reduced dividends in their struggle to remain adequately capitalized and solvent.

Many companies outside the financials area have likewise instituted dividend cuts or eliminations. In some cases, these have been precautionary measures designed to keep cash on hand to help withstand further economic weakness. The realities of the credit markets are also behind some decisions. That’s because as buyers of bonds seek heightened compensation for lending money in a riskier environment, the cost of capital rises and companies look for other ways to fund operations and finance projects. Retaining cash instead of paying dividends is one such option.

Finding yield; managing risk

Our income objective must be balanced by our ongoing commitment to managing risk. Yet when it comes to one risk management strategy — allocating more assets toward perceived safe havens such as cash and shorter term U.S. Treasury securities — these objectives have recently come into conflict. Though cash and Treasuries can buffer the portfolio, these instruments currently have yields well below 1%.

To be sure, the current investment landscape is not without high-yielding investment opportunities. Yet focusing disproportionately on high yields can introduce considerable risk into a portfolio. While some securities offer real opportunity, as in the case of companies that we believe have been unfairly punished and whose dividends and interest payments we regard as sustainable, in other cases securities may have declined due to the perilous state of the issuer. Those in the latter category — stocks with alluring yields but uncertain business prospects — are commonly termed “value traps” and avoiding them is a major focus during markets such as these.

While providing shareholders with income remains paramount in the management of the fund, so does paying close attention to risk. Our sensitivity to risk, coupled with the dividend cuts that have already occurred and the additional ones we expect from companies worldwide, have us currently evaluating our ability to maintain IFA’s quarterly payout at its present level.

A broader base of potential holdings

As we’ve noted in recent reports, the broad-based market downturn has effectively expanded IFA’s investment universe. This is the case with many cyclical companies — those with business prospects and stock prices strongly correlated to the rise and fall of the broader economy. Recently, yields for many have risen as their stock prices have fallen. Beyond cyclicals, eligible investments can now be found within sectors such as technology that once offered little yield opportunity.

There are also many opportunities within the bond universe. In a number of cases, we have concluded that bonds represent a better risk/reward proposition than stocks, and we have transitioned from one asset class to the other. As a result of both this strategy and the diminished value of the fund’s equities, IFA’s fixed-income holdings stand at 33.5% of net assets, a 13-year high.

Looking ahead

The recent market conditions have been challenging. And though a look to the horizon offers no immediate relief, we have confidence in the resilience of the U.S. and global economies. We also know that while there are no certainties, market strength has often followed the kind of difficult environment we are currently experiencing. We believe companies will once again grow and so will their earnings.

Furthermore, it is our hope that many companies will emerge from this crisis with a renewed focus on prudent capital allocation. One possible and, in our view, welcome result could be a renewed emphasis on directing cash to shareholders in the form of dividends rather than earmarking it for share buyback programs.

Whatever direction markets go in the coming months, we will continue to be guided by the long-term perspective so central to our approach. Through good times and bad, it has helped many shareholders reach their key investment goals.

We thank you for your continuing commitment to long-term investing.

Cordially,

/s/ Hilda L. Applbaum

Hilda L. Applbaum

Vice Chairman and

Principal Executive Officer

/s/ David C. Barclay

David C. Barclay

President

March 10, 2009

For current information about the fund, visit americanfunds.com.

The Income Fund of America at a glance

Fund results shown are for past results and are not predictive of results for future periods. Current and future results may be lower or higher than those shown. Share prices and returns will vary, so investors may lose money. For current information and month-end results, visit americanfunds.com. Fund results shown, unless otherwise indicated, are at net asset value. If a sales charge (maximum 5.75%) had been deducted, the results would have been lower.

Results at a glance (with dividends reinvested or interest compounded)
							For periods ended January 31, 2009
	Cumulative total returns						Average annual total returns
	6 months			1 year			5 years			10 years			Lifetime1
The Income Fund of America
(Class A shares)		–25.7	%		–30.6	%		–0.7	%		3.2	%		10.8	%
Standard & Poor’s 500 Composite Index		–33.9			–38.6			–4.2			–2.6			9.8
Lipper Income Funds Index2		–17.9			–20.8			0.0			2.2			—	3
Barclays Capital U.S. Aggregate Index		3.2			2.6			4.3			5.5			8.2	4
Consumer Price Index (inflation)5		–4.0			0.0			2.7			2.5			4.4
1 Since December 1, 1973, when Capital Research and Management Company became the fund’s investment adviser.
2 Source: Lipper. Figures do not reflect the effect of sales charges.
3 The inception date for the index was December 31, 1988.
4 From December 1, 1973, through December 31, 1975, the Barclays Capital (formerly Lehman Brothers) U.S. Government/Credit Index was used because the Barclays Capital U.S. Aggregate Index did not yet exist.
5 Computed from data supplied by the U.S. Department of Labor, Bureau of Labor Statistics.

The market indexes are unmanaged and do not reflect the effect of sales charges, commissions or expenses. Fund returns do not reflect the effect of sales charges.

A history of relatively high current income

For the five years ended January 31, 2009

The Income Fund of America’s 12-month dividend yield vs. benchmarks

[begin line chart]

Year-end	The Income Fund of America		Lipper Income Funds Average		S&P 500
1/31/2004		4.05		2.79		1.54
7/31/2004		3.98		2.73		1.69
1/31/2005		3.57		2.52		1.64
7/31/2005		3.44		2.42		1.70
1/31/2006		3.75		2.71		1.75
7/31/2006		3.84		2.79		1.83
1/31/2007		4.23		3.02		1.75
7/31/2007		4.43		3.15		1.81
1/31/2008		4.68		3.64		2.03
7/31/2008		5.23		3.94		2.29
1/31/2009		6.72		4.65		3.37

[end line chart]

All numbers calculated by Lipper. The 12-month dividend rate is calculated by taking the total of the trailing 12 months’ dividends and dividing the month-end net asset value adjusted for capital gains.

The portfolio at a glance

The following summary investment portfolio is designed to streamline the report and help investors better focus on a fund’s principal holdings. For details on how to obtain a complete schedule of portfolio holdings, please see the inside back cover.

January 31, 2009	Percent of net assets
Investment portfolio
U.S. common stocks		40.5	%
Common stocks of issuers
outside the U.S.		14.6
U.S. Treasury & agency bonds & notes		4.4
Convertible securities & preferred stocks		2.8
Other fixed-income securities		29.1
Short-term securities & other assets
less liabilities		8.6
Five largest sectors in common stock holdings
Telecommunication services		7.7	%
Consumer staples		6.7
Industrials		6.4
Utilities		6.2
Health care		5.1
Ten largest common stock holdings
AT&T		2.6	%
Verizon Communications		2.6
Chevron		1.7
Merck		1.6
Waste Management		1.3
Kraft Foods		1.2
Bristol-Myers Squibb		1.1
GDF Suez		1.1
McDonald’s		1.1
General Electric		1.0
Country diversification
United States		71.8	%
Euro zone*		9.2
United Kingdom		3.0
Australia		1.2
Canada		0.9
Hong Kong		0.9
Other countries		4.4
Short-term securities & other assets
less liabilities		8.6

July 31, 2008	Percent of net assets
Investment portfolio
U.S. common stocks		42.6	%
Common stocks of issuers
outside the U.S.		17.9
U.S. Treasury & agency bonds & notes		2.4
Convertible securities & preferred stocks		3.5
Other fixed-income securities		24.6
Short-term securities & other assets
less liabilities		9.0
Five largest sectors in common stock holdings
Financials		10.1	%
Telecommunication services		8.0
Utilities		7.2
Consumer staples		6.5
Industrials		6.4
Ten largest common stock holdings
AT&T		2.3	%
Verizon Communications		2.0
Chevron		1.9
General Electric		1.8
Merck		1.2
Bank of America		1.2
Citigroup		1.2
McDonald’s		1.1
Kraft Foods		1.0
H.J. Heinz		1.0
Country diversification
United States		68.3	%
Euro zone*		10.5
United Kingdom		3.3
Australia		1.1
Canada		1.1
Hong Kong		1.1
Other countries		5.6
Short-term securities & other assets
less liabilities		9.0

*Countries using the euro as a common currency; those represented in the fund’s portfolio are Austria, Belgium, Finland, France, Germany, Ireland, Italy, the Netherlands and Spain.

Summary investment portfolio, January 31, 2009

unaudited

							Percent
				Value			of net
Common stocks - 55.10%	Shares				(000	)	assets
Telecommunication services - 7.69%
AT&T Inc.		56,084,621		$	1,380,803			2.59	%
Verizon Communications Inc.		45,584,600			1,361,612			2.56
Koninklijke KPN NV (1)		37,739,757			503,989			.95
Other securities					852,096			1.59
					4,098,500			7.69
Consumer staples - 6.70%
Kraft Foods Inc., Class A		22,000,821			617,123			1.16
Philip Morris International Inc.		12,530,000			465,490			.87
Hershey Co. (2)		10,821,000			403,407			.76
H.J. Heinz Co.		9,511,700			347,177			.65
Coca-Cola Co.		7,240,000			309,293			.58
Diageo PLC (1)		18,650,000			254,456			.48
Unilever NV, depository receipts (1)		6,380,000			140,768
Unilever NV (New York registered)		5,051,750			110,987			.47
General Mills, Inc.		3,421,800			202,399			.38
Other securities					715,994			1.35
					3,567,094			6.70
Industrials - 6.39%
Waste Management, Inc.		22,435,500			699,763			1.32
General Electric Co.		45,169,000			547,900			1.03
Emerson Electric Co.		11,885,000			388,640			.73
United Parcel Service, Inc., Class B		7,530,000			319,950			.60
Schneider Electric SA (1)		4,214,488			268,013			.50
Other securities					1,176,855			2.21
					3,401,121			6.39
Utilities - 6.24%
GDF Suez (1)		15,686,565			601,939			1.13
Entergy Corp.		4,942,600			377,417			.71
FirstEnergy Corp.		6,141,500			307,013			.58
RWE AG (1)		3,350,663			260,333			.49
Exelon Corp.		3,800,000			206,036			.39
Duke Energy Corp.		13,431,172			203,482			.38
Other securities					1,366,052			2.56
					3,322,272			6.24
Health care - 5.08%
Merck & Co., Inc.		30,175,000			861,496			1.62
Bristol-Myers Squibb Co.		28,525,500			610,731			1.15
Eli Lilly and Co.		12,890,000			474,610			.89
Pfizer Inc		19,050,000			277,749			.52
Other securities					481,036			.90
					2,705,622			5.08
Financials - 4.83%
JPMorgan Chase & Co.		16,460,000			419,895			.79
U.S. Bancorp		25,777,400			382,537			.72
Wells Fargo & Co.		14,708,000			277,981			.52
Other securities					1,494,662			2.80
					2,575,075			4.83
Energy - 4.37%
Chevron Corp.		13,015,000			917,818			1.72
TOTAL SA (1)		3,855,000			192,804
TOTAL SA (ADR)		3,640,000			181,199			.70
Diamond Offshore Drilling, Inc.		5,015,000			314,741			.59
Spectra Energy Corp		16,311,414			236,679			.44
Other securities					481,832			.92
					2,325,073			4.37
Consumer discretionary - 3.93%
McDonald's Corp.		10,318,300			598,668			1.12
Vivendi SA (1)		14,955,000			386,046			.73
Home Depot, Inc.		16,849,800			362,776			.68
Esprit Holdings Ltd. (1)		49,615,400			264,632			.50
Other securities					479,961			.90
					2,092,083			3.93
Information technology - 3.36%
Intel Corp.		36,920,000			476,268			.89
Microchip Technology Inc. (2)		14,128,000			268,008			.50
Automatic Data Processing, Inc.		6,900,000			250,677			.47
Paychex, Inc.		8,897,000			216,108			.41
Other securities					576,711			1.09
					1,787,772			3.36
Materials - 1.94%
E.I. du Pont de Nemours and Co.		16,600,000			381,136			.72
Weyerhaeuser Co. (2)		10,728,000			293,304			.55
Other securities					361,511			.67
					1,035,951			1.94
Miscellaneous - 4.57%
Other common stocks in initial period of acquisition					2,430,220			4.57
Total common stocks (cost: $39,044,360,000)					29,340,783			55.10
							Percent
				Value			of net
Preferred stocks - 1.18%	Shares				(000	)	assets
Financials - 1.18%
JPMorgan Chase & Co., Series I, 7.90% (3)		54,715,000			41,686			.08
Fannie Mae, Series O, 7.00% (3) (4)		3,183,287			7,560
Fannie Mae, Series S, 8.25% noncumulative		1,511,450			1,757
Fannie Mae, Series R, 7.625%		592,700			624			.02
Freddie Mac, Series Z, 8.375%		1,100,000			1,169
Freddie Mac, Series W, 5.66%		1,912,800			904
Freddie Mac, Series Y, 6.55%		717,000			344			.00
Other securities					573,566			1.08
					627,610			1.18
Miscellaneous - 0.00%
Other preferred stocks in initial period of acquisition					374			.00
Total preferred stocks (cost: $1,327,472,000)					627,984			1.18
							Percent
				Value			of net
Warrants - 0.00%	Shares				(000	)	assets
Other - 0.00%
Other securities					-			.00
Total warrants (cost: $779,000)					-			.00
							Percent
				Value			of net
Convertible securities - 1.60%	Shares				(000	)	assets
Other - 1.42%
Fannie Mae, Series 2004-1, 5.375% convertible preferred		396			1,584			.00
Other securities					751,783			1.42
					753,367			1.42
Miscellaneous - 0.18%
Other convertible securities in initial period of acquisition					96,523			.18
Total convertible securities (cost: $1,460,098,000)					849,890			1.60
	Principal						Percent
	amount			Value			of net
Bonds & notes - 33.51%		(000	)		(000	)	assets
Mortgage-backed obligations (5) - 7.49%
Fannie Mae:
6.00% 2037	$	378,512			390,579
4.00%-11.87% 2010-2047 (1)   (3)		1,245,663			1,288,019			3.15
Freddie Mac 4.50%-11.464% 2009-2038 (3)		403,078			412,780			.78
Other securities					1,898,351			3.56
					3,989,729			7.49
Bonds & notes of U.S. government & government agencies - 4.38%
U.S. Treasury:
4.625% 2011		197,750			216,629
3.625% 2013		199,640			216,617
1.125%-8.875% 2009-2038 (1)  (6)		1,058,428			1,163,312			3.00
Fannie Mae 2.875%-6.25% 2010-2029		363,605			380,427			.71
Freddie Mac 5.00%-6.625% 2009-2018		209,355			199,900			.38
Federal Home Loan Bank 3.625%-5.25% 2009-2014		34,950			37,095			.07
United States Government Agency-Guaranteed (FDIC insured), General Electric Capital Corp., Series G, 1.625%-2.20% 2011-2012		16,150			16,117			.03
Other securities					104,573			.19
					2,334,670			4.38
Financials - 4.15%
JPMorgan Chase & Co. 4.891% 2015 (3)		10,000			9,888
JPMorgan Chase Bank NA 6.00% 2017		14,567			14,216
JPMorgan Chase Capital XXV, Series Y, 6.80% 2037		10,025			7,936
JPMorgan Chase Capital XXII, Series V, 6.45% 2087 (3)		6,690			5,008			.07
Other securities					2,173,610			4.08
					2,210,658			4.15
Consumer discretionary - 3.89%
Other securities					2,070,514			3.89
Telecommunication services - 2.62%
Verizon Communications Inc. 5.25%-8.75% 2012-2037 (4)		184,935			184,427
Verizon Global Funding Corp. 4.90%-7.75% 2015-2030		10,265			10,701
ALLTEL Corp. 7.00% 2012		17,686			18,305			.40
AT&T Inc. 4.85%-6.70% 2013-2039 (1)		71,000			72,856
AT&T Corp. 7.30%-8.00% 2011-2031 (3)		19,789			21,937
SBC Communications Inc. 5.10%-6.25% 2011-2016		54,000			54,341
AT&T Wireless Services, Inc. 8.125% 2012		16,935			18,469			.31
Other securities					1,013,178			1.91
					1,394,214			2.62
Industrials - 2.04%
General Electric Co. 5.25% 2017		11,250			10,664
General Electric Capital Corp., Series A, 3.239% 2026 (3)		25,000			13,437			.05
Waste Management, Inc. 5.00% 2014		7,000			6,014
WMX Technologies, Inc. 7.10% 2026		10,125			8,033			.03
Other securities					1,048,670			1.96
					1,086,818			2.04
Utilities - 1.59%
Other securities					849,422			1.59
Health care - 1.58%
Other securities					840,790			1.58
Energy - 1.36%
Other securities					723,010			1.36
Consumer staples - 1.29%
Kraft Foods Inc. 6.75%-6.875% 2014-2038		16,695			17,625			.03
Other securities					669,261			1.26
					686,886			1.29
Information technology - 1.28%
Other securities					683,213			1.28
Asset-backed obligations - 1.07%
Other securities					569,065			1.07
Other - 0.75%
Other securities					396,954			.75
Miscellaneous - 0.02%
Other bonds & notes in initial period of acquisition					8,456			.02
Total bonds & notes (cost: $22,694,272,000)					17,844,399			33.51
	Principal						Percent
	amount			Value			of net
Short-term securities - 10.52%		(000	)		(000	)	assets
Freddie Mac 0.17%-2.60% due 2/6-9/23/2009		1,384,404			1,381,999			2.60
Federal Home Loan Bank 0.10%-3.10% due 2/18-9/9/2009		944,400			942,845			1.77
U.S. Treasury Bills 0.095%-1.94% due 2/12-7/16/2009		896,600			896,114			1.68
Fannie Mae 0.10%-2.10% due 2/4-7/6/2009		633,600			632,569			1.19
Hewlett-Packard Co. 0.50%-2.20% due 2/2-3/2/2009 (4)		213,700			213,666			.40
Chevron Corp. 0.20%-1.15% due 2/3-4/1/2009		146,800			146,717			.28
Jupiter Securitization Co., LLC 0.30%-1.00% due 2/3-2/11/2009 (4)		75,334			75,302
Park Avenue Receivables Co., LLC 0.30% due 3/11/2009 (4)		51,100			51,082			.24
General Electric Capital Corp., FDIC insured, 0.45% due 6/24/2009		40,200			40,106
General Electric Co. 0.27% due 2/2/2009		36,300			36,299			.14
AT&T Inc. 0.25%-1.15% due 2/9-3/4/2009 (4)		49,700			49,689			.09
Other securities					1,134,076			2.13
Total short-term securities (cost: $5,598,161,000)					5,600,464			10.52
Total investment securities (cost: $70,125,142,000)					54,263,520			101.91
Other assets less liabilities					(1,014,158	)		(1.91	)
Net assets				$	53,249,362			100.00	%

"Miscellaneous" securities include holdings in their initial period of acquisition that have not previously been publicly disclosed.

"Other securities" includes all issues that are not disclosed separately in the summary investment portfolio. One of these securities (with a value of $57,165,000, which represented .11% of the net assets of the fund) may be subject to legal or contractual restrictions on resale.

Investments in affiliates

A company is considered to be an affiliate of the fund under the Investment Company Act of 1940 if the fund's holdings in that company represent 5% or more of the outstanding voting shares of that company. The fund's affiliated holdings listed below are either shown in the preceding summary investment portfolio or included in the value of "Other securities" under their respective industry sectors. Further details on these holdings and related transactions during the six months ended January 31, 2009, appear below.

	Beginning shares or principal amount		Additions		Reductions		Ending shares or principal amount			Dividend or interest income (000	)		Value of affiliates at 1/31/09 (000	)
Hershey Co.		10,821,000		-		-		10,821,000	$	6,439		$	403,407
Weyerhaeuser Co.		10,728,000		-		-		10,728,000		9,119			293,304
Weyerhaeuser Co. 7.375% 2032	$	3,500,000	$	-	$	-	$	3,500,000		130			2,455
Weyerhaeuser Co. 6.875% 2033	$	2,500,000	$	-	$	-	$	2,500,000		87			1,529
Microchip Technology Inc.		14,128,000		-		-		14,128,000		9,565			268,008
MeadWestvaco Corp.		11,500,696		-		-		11,500,696		2,645			133,868
Hospitality Properties Trust		4,500,000		1,500,000		-		6,000,000		9,240			80,520
Hospitality Properties Trust 6.75% 2013	$	18,365,000	$	24,665,000	$	5,795,000	$	37,235,000		1,259			24,404
Hospitality Properties Trust 6.70% 2018	$	16,175,000	$	-	$	-	$	16,175,000		544			9,183
Hospitality Properties Trust 6.85% 2012	$	-	$	6,000,000	$	-	$	6,000,000		140			4,100
Hospitality Properties Trust 5.125% 2015	$	2,160,000	$	3,710,000	$	-	$	5,870,000		95			3,439
Hospitality Properties Trust 6.30% 2016	$	2,368,000	$	2,532,000	$	-	$	4,900,000		98			2,600
Hospitality Properties Trust 5.625% 2017	$	1,485,000	$	-	$	-	$	1,485,000		54			779
Alexandria Real Estate Equities, Inc.		-		1,730,300		-		1,730,300		187			102,676
Macquarie Korea Infrastructure Fund (1)		21,023,070		449,892		-		21,472,962		3,108			78,655
De La Rue PLC (1)		-		7,626,271		2,506,553		5,119,718		32,532			69,183
Goodman Fielder Ltd. (1)		67,000,000		-		-		67,000,000		3,985			64,784
Clarent Hospital Corp. (1) (7)		484,684		-		-		484,684		-			24
Arthur J. Gallagher & Co. (8)		5,403,700		-		5,403,700		-		1,729			-
iStar Financial, Inc. 8.625% 2013 (8)	$	35,675,000	$	2,542,000	$	-	$	38,217,000		1,727			-
iStar Financial, Inc. 5.375% 2010 (8)	$	14,010,000	$	-	$	-	$	14,010,000		534			-
iStar Financial, Inc., Series B, 5.125% 2011 (8)	$	15,000,000	$	1,930,000	$	-	$	16,930,000		622			-
iStar Financial, Inc. 3.027% 2010 (8)	$	3,248,000	$	3,500,000	$	-	$	6,748,000		495			-
iStar Financial, Inc. 6.00% 2010 (8)	$	6,950,000	$	-	$	-	$	6,950,000		337			-
iStar Financial, Inc. 5.50% 2012 (8)	$	3,700,000	$	4,000,000	$	-	$	7,700,000		421			-
iStar Financial, Inc. 5.875% 2016 (8)	$	-	$	7,165,000	$	-	$	7,165,000		297			-
iStar Financial, Inc. (8)		8,574,350		-		6,158,528		2,415,822		-			-
iStar Financial, Inc. 6.50% 2013 (8)	$	5,133,000	$	-	$	-	$	5,133,000		251			-
iStar Financial, Inc. 6.05% 2015 (8)	$	4,152,000	$	460,000	$	-	$	4,612,000		147			-
iStar Financial, Inc., Series B, 3.159% 2009 (8)	$	-	$	2,420,000	$	-	$	2,420,000		264			-
iStar Financial, Inc. 5.65% 2011 (8)	$	3,418,000	$	217,000	$	-	$	3,635,000		235			-
iStar Financial, Inc. 5.15% 2012 (8)	$	-	$	3,400,000	$	-	$	3,400,000		185			-
iStar Financial, Inc., Series F, 7.80% cumulative redeemable (8)		400,000		-		1,600		398,400		390			-
iStar Financial, Inc., Series B, 5.70% 2014 (8)	$	2,918,000	$	-	$	-	$	2,918,000		138			-
iStar Financial, Inc., Series B, 5.95% 2013 (8)	$	808,000	$	-	$	-	$	808,000		40			-
iStar Financial, Inc. 5.80% 2011 (8)	$	-	$	485,000	$	-	$	485,000		30			-
Lite-On Technology Corp. (8)		107,917,127		8,789,585		10,649,914		106,056,798		8,242			-
Polaris Industries Inc.  (8)		1,707,000		-		1,707,000		-		-			-
									$	95,311		$	1,542,918

The following footnotes apply to either the individual securities noted or one or more of the securities aggregated and listed as a single line item.

(1) Valued under fair value procedures adopted by authority of the board of directors. The total value of all such securities, including those in "Miscellaneous" and "Other securities," was $7,529,992,000, which represented 14.14% of the net assets of the fund.

(2) Represents an affiliated company as defined under the Investment Company Act of 1940.

(3) Coupon rate may change periodically.

(4) Purchased in a transaction exempt from registration under the Securities Act of 1933. May be resold in the U.S. in transactions exempt from registration, normally to qualified institutional buyers. The total value of all such securities, including those in "Other securities," was $4,097,441,000, which represented 7.69% of the net assets of the fund.

(5) Principal payments may be made periodically. Therefore, the effective maturity date may be earlier than the stated maturity date.

(6) Index-linked bond whose principal amount moves with a government retail price index.

(7) Security did not produce income during the last 12 months.

(8) Unaffiliated issuer at 1/31/2009.

Key to abbreviation

ADR = American Depositary Receipts

Financial statements

Statement of assets and liabilities			unaudited
at January 31, 2009	(dollars in thousands)
Assets:
Investment securities, at value:
Unaffiliated issuers (cost: $67,570,076)	$	52,720,602
Affiliated issuers (cost: $2,555,066)		1,542,918	$	54,263,520
Cash				4,744
Receivables for:
Sales of investments		302,852
Sales of fund's shares		85,899
Dividends and interest		435,795
Other		1,188		825,734
				55,093,998
Liabilities:
Payables for:
Purchases of investments		1,395,911
Repurchases of fund's shares		79,936
Dividends on fund's shares		324,593
Investment advisory services		11,820
Services provided by affiliates		29,908
Directors' deferred compensation		2,224
Other		244		1,844,636
Net assets at January 31, 2009			$	53,249,362
Net assets consist of:
Capital paid in on shares of capital stock			$	75,058,862
Undistributed net investment income				114,848
Accumulated net realized loss				(6,061,313	)
Net unrealized depreciation				(15,863,035	)
Net assets at January 31, 2009			$	53,249,362

(dollars and shares in thousands, except per-share amounts)
Total authorized capital stock - 5,500,000 shares, $.001 par value (4,361,394 total shares outstanding)
	Net assets		Shares outstanding		Net asset value per share*
Class A	$	40,498,920		3,312,667	$	12.23
Class B		2,719,843		223,948		12.14
Class C		5,125,089		422,718		12.12
Class F-1		1,781,703		145,960		12.21
Class F-2		89,333		7,309		12.22
Class 529-A		501,699		41,085		12.21
Class 529-B		80,446		6,606		12.18
Class 529-C		200,833		16,480		12.19
Class 529-E		23,972		1,967		12.19
Class 529-F-1		14,921		1,222		12.21
Class R-1		63,512		5,212		12.18
Class R-2		382,617		31,516		12.14
Class R-3		792,464		64,977		12.20
Class R-4		510,305		41,787		12.21
Class R-5		463,705		37,940		12.22
(*) Maximum offering price and redemption price per share were equal to the net asset value per share for all share classes, except for Classes A and 529-A, for which the maximum offering prices per share were $12.98 and $12.95, respectively.
See Notes to Financial Statements

Statement of operations				unaudited
for the six months ended January 31, 2009	(dollars in thousands)
Investment income:
Income:
Dividends (net of non-U.S. taxes of $22,473; also includes $87,181 from affiliates)	$	1,002,528
Interest (includes $8,130 from affiliates)		904,526		$	1,907,054
Fees and expenses*:
Investment advisory services		86,833
Distribution services		111,742
Transfer agent services		24,751
Administrative services		9,320
Reports to shareholders		3,287
Registration statement and prospectus		1,250
Postage, stationery and supplies		2,338
Directors' compensation		(244	)
Custodian		1,181
Other		11
Total fees and expenses before waiver		240,469
Less investment advisory services waiver		7,501
Total fees and expenses after waiver					232,968
Net investment income					1,674,086
Net realized loss and unrealized depreciation on investments and currency:
Net realized loss on:
Investments (including $200,291 net loss from affiliates)		(6,026,955	)
Currency transactions		(11,390	)		(6,038,345	)
Net unrealized depreciation on:
Investments		(14,955,437	)
Currency translations		(2,181	)		(14,957,618	)
Net realized loss and unrealized depreciation on investments and currency					(20,995,963	)
Net decrease in net assets resulting from operations				$	(19,321,877	)
(*) Additional information related to class-specific fees and expenses is included in the Notes to Financial Statements.
See Notes to Financial Statements
Statements of changes in net assets
		(dollars in thousands)
	Six months
	ended January 31, 2009*			Year ended July 31, 2008
Operations:
Net investment income	$	1,674,086		$	3,704,181
Net realized (loss) gain on investments and currency transactions		(6,038,345	)		1,080,635
Net unrealized depreciation on investments and currency translations		(14,957,618	)		(13,173,955	)
Net decrease in net assets resulting from operations		(19,321,877	)		(8,389,139	)
Dividends and distributions paid or accrued to shareholders:
Dividends from net investment income		(1,804,571	)		(3,903,711	)
Distributions from net realized gain on investments		-			(3,639,343	)
Total dividends and distributions paid or accrued to shareholders		(1,804,571	)		(7,543,054	)
Net capital share transactions		(2,110,326	)		6,122,868
Total decrease in net assets		(23,236,774	)		(9,809,325	)
Net assets:
Beginning of period		76,486,136			86,295,461
End of period (including undistributed net investment income:
$114,848 and $245,333, respectively)	$	53,249,362		$	76,486,136
*Unaudited.
See Notes to Financial Statements

Notes to financial statements                                                                                                              

       unaudited

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.

The fund has 15 share classes consisting of five retail share classes, five 529 college savings plan share classes and five retirement plan share classes. The 529 college savings plan share classes (529-A, 529-B, 529-C, 529-E and 529-F-1) can be used to save for college education. The five retirement plan share classes (R-1, R-2, R-3, R-4 and R-5) are generally offered only through eligible employer-sponsored retirement plans. The fund’s share classes are described below:

Share class	Initial sales charge	Contingent deferred sales charge upon redemption	Conversion feature
Classes A and 529-A	Up to 5.75%	None (except 1% for certain redemptions within one year of purchase without an initial sales charge)	None
Classes B and 529-B	None	Declines from 5% to 0% for redemptions within six years of purchase	Classes B and 529-B convert to Classes A and 529-A, respectively, after eight years
Class C	None	1% for redemptions within one year of purchase	Class C converts to Class F-1 after 10 years
Class 529-C	None	1% for redemptions within one year of purchase	None
Class 529-E	None	None	None
Classes F-1, F-2 and 529-F-1	None	None	None
Classes R-1, R-2, R-3, R-4 and R-5	None	None	None

Holders of all share classes have equal pro rata rights to assets, dividends and liquidation proceeds.Each share class has identical voting rights, except for the exclusive right to vote on matters affecting only its class. Share classes have different fees and expenses ("class-specific fees and expenses"), primarily due to different arrangements for distribution, administrative and shareholder services. Differences in class-specific fees and expenses will result in differences in net investment income and, therefore, the payment of different per-share dividends by each class.

Significant accounting policies – The financial statements have been prepared to comply with accounting principles generally accepted in the United States of America. These principles require management to make estimates and assumptions that affect reported amounts and disclosures. Actual results could differ from those estimates. The following is a summary of the significant accounting policies followed by the fund:

Security valuation – Equity securities are valued at the official closing price of, or the last reported sale price on, the exchange or market on which such securities are traded, as of the close of business on the day the securities are being valued or, lacking any sales, at the last available bid price. Prices for each security are taken from the principal exchange or market in which the security trades. Fixed-income securities, including short-term securities purchased with more than 60 days left to maturity, are valued at prices obtained from an independent pricing service when such prices are available. However, where the investment adviser deems it appropriate, such securities will be valued at the mean quoted bid and asked prices (or bid prices, if asked prices are not available) or at prices for securities of comparable maturity, quality and type. Securities with both fixed-income and equity characteristics, or equity securities traded principally among fixed-income dealers, are valued in the manner described above for either equity or fixed-income securities, depending on which method is deemed most appropriate by the investment adviser. Short-term securities purchased within 60 days to maturity are valued at amortized cost, which approximates market value. The value of short-term securities originally purchased with maturities greater than 60 days is determined based on an amortized value to par when they reach 60 days or less remaining to maturity.

Securities and other assets for which representative market quotations are not readily available or are considered unreliable by the investment adviser are fair valued as determined in good faith under procedures adopted by authority of the fund's board of directors. Market quotations may be considered unreliable if events occur that materially affect the value of securities (particularly securities outside the U.S.) between the close of trading in those securities and the close of regular trading on the New York Stock Exchange. Various factors may be reviewed in order to make a good faith determination of a security’s fair value. These factors include, but are not limited to, the type and cost of the security; contractual or legal restrictions on resale of the security; relevant financial or business developments of the issuer; actively traded similar or related securities; conversion or exchange rights on the security; related corporate actions; significant events occurring after the close of trading in the security; and changes in overall market conditions.

Security transactions and related investment income – Security transactions are recorded by the fund as of the date the trades are executed with brokers. Realized gains and losses from security transactions are determined based on the specific identified cost of the securities. In the event a security is purchased with a delayed payment date, the fund will segregate liquid assets sufficient to meet its payment obligations. Dividend income is recognized on the ex-dividend date and interest income is recognized on an accrual basis. Market discounts, premiums and original issue discounts on fixed-income securities are amortized daily over the expected life of the security.

Class allocations – Income, fees and expenses (other than class-specific fees and expenses) are allocated daily among the various share classes based on the relative value of their settled shares. Realized and unrealized gains and losses are allocated daily among the various share classes based on their relative net assets. Class-specific fees and expenses, such as distribution, administrative and shareholder services, are charged directly to the respective share class.

Dividends and distributions to shareholders – Dividends paid to shareholders are declared daily from net investment income and are paid to shareholders quarterly. Effective March 21, 2009, the fund will no longer declare daily dividends and will declare and distribute dividends on a periodic basis, usually in March, June, September and December. Distributions paid to shareholders are recorded on the ex-dividend date.

Currency translation – Assets and liabilities, including investment securities, denominated in currencies other than U.S. dollars are translated into U.S. dollars at the exchange rates in effect on the valuation date. Purchases and sales of investment securities and income and expenses are translated into U.S. dollars at the exchange rates on the dates of such transactions. On the accompanying financial statements, the effects of changes in exchange rates on investment securities are included with the net realized gain or loss and net unrealized appreciation or depreciation on investments. The realized gain or loss and unrealized appreciation or depreciation resulting from all other transactions denominated in currencies other than U.S. dollars are disclosed separately.

Loan transactions – The fund may enter into loan transactions in which the fund acquires a loan either through an agent, by assignment from another holder, or as a participation interest in another holder's portion of a loan. The loan is often administered by a financial institution that acts as agent for the holders of the loan, and the fund may be required to receive approval from the agent and/or borrower prior to the sale of the investment. The loan's interest rate and maturity date may change based on the terms of the loan, including potential early payments of principal. Risks may arise due to the delayed settlement date of the loan transaction and the ability of the agent and/or borrower to meet the obligations of the loan.

2. Risk factors

Investing in the fund may involve certain risks including, but not limited to, those described below.

The prices of, and the income generated by, securities held by the fund may decline in response to certain events, including those directly involving the companies whose securities are owned by the fund; conditions affecting the general economy; overall market changes; local, regional or global political, social or economic instability; and currency, interest rate and commodity price fluctuations.

The values of, and the income generated by, most debt securities held by the fund may be affected by changing interest rates and by changes in the effective maturities and credit ratings of these securities. For example, the values of debt securities in the fund’s portfolio generally will decline when interest rates rise and increase when interest rates fall. In addition, falling interest rates may cause an issuer to redeem, “call” or refinance a security before its stated maturity, which may result in the fund having to reinvest the proceeds in lower yielding securities. Debt securities are also subject to credit risk, which is the possibility that the credit strength of an issuer will weaken and/or an issuer of a debt security will fail to make timely payments of principal or interest and the security will go into default. Lower quality or longer maturity debt securities generally have higher rates of interest and may be subject to greater price fluctuations than higher quality or shorter maturity debt securities. The fund’s investment adviser attempts to reduce these risks through diversification of the portfolio and with ongoing credit analysis of each issuer, as well as by monitoring economic and legislative developments, but there can be no assurance that it will be successful at doing so.

Investments in securities issued by entities based outside the United States may be subject to the risks described above to a greater extent and may also be affected by currency controls; different accounting, auditing, financial reporting, and legal standards and practices in some countries; expropriation; changes in tax policy; greater market volatility; differing securities market structures; higher transaction costs; and various administrative difficulties, such as delays in clearing and settling portfolio transactions or in receiving payment of dividends. These risks may be heightened in connection with investments in developing countries.

 3. Taxation and distributions

Federal income taxation – The fund complies with the requirements under Subchapter M of the Internal Revenue Code applicable to mutual funds and intends to distribute substantially all of its net taxable income and net capital gains each year. The fund is not subject to income taxes to the extent such distributions are made. Therefore, no federal income tax provision is required.

As of and during the period ended January 31, 2009, the fund did not have a liability for any unrecognized tax benefits. The fund recognizes interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the statement of operations. During the period, the fund did not incur any interest or penalties.

The fund is not subject to examination by U.S. federal tax authorities for tax years before 2004 and by state tax authorities for tax years before 2003.

Non-U.S. taxation – Dividend and interest income is recorded net of non-U.S. taxes paid.

Distributions – Distributions paid to shareholders are based on net investment income and net realized gains determined on a tax basis, which may differ from net investment income and net realized gains for financial reporting purposes. These differences are due primarily to differing treatment for items such as currency gains and losses; short-term capital gains and losses; capital losses related to sales of certain securities within 30 days of purchase; paydowns on fixed-income securities; and income on certain investments.The fiscal year in which amounts are distributed may differ from the year in which the net investment income and net realized gains are recorded by the fund for financial reporting purposes.

The components of distributable earnings on a tax basis are reported as of the fund’s most recent year-end. As of July 31, 2008, the fund had tax basis undistributed ordinary income of $633,122,000 and currency loss deferrals (realized during the period November 1, 2007, through July 31, 2008) of $6,101,000.

As of January 31, 2009, the tax basis unrealized appreciation (depreciation) and cost of investment securities were as follows:

(dollars in thousands)
Gross unrealized appreciation on investment securities	$	1,611,277
Gross unrealized depreciation on investment securities		(17,500,276	)
Net unrealized depreciation on investment securities		(15,888,999	)
Cost of investment securities		70,152,519

The tax character of distributions paid or accrued to shareholders was as follows (dollars in thousands):

	Six months ended January 31, 2009						Year ended July 31, 2008
Share class	Ordinary  income		Long-term capital gains		Total distributions paid or accrued		Ordinary  income		Long-term capital gains		Total distributions paid or accrued
Class A	$	1,402,893	$	-	$	1,402,893	$	3,047,396	$	2,754,859	$	5,802,255
Class B		85,154		-		85,154		192,964		209,621		402,585
Class C		157,335		-		157,335		345,974		379,554		725,528
Class F-1		62,654		-		62,654		143,928		131,893		275,821
Class F-2 *		1,824		-		1,824		-		-		-
Class 529-A		16,567		-		16,567		32,028		28,944		60,972
Class 529-B		2,337		-		2,337		4,561		5,017		9,578
Class 529-C		5,823		-		5,823		11,330		12,364		23,694
Class 529-E		756		-		756		1,467		1,412		2,879
Class 529-F-1		524		-		524		1,060		924		1,984
Class R-1		1,842		-		1,842		3,369		3,565		6,934
Class R-2		10,925		-		10,925		21,554		23,660		45,214
Class R-3		25,000		-		25,000		47,747		46,144		93,891
Class R-4		15,634		-		15,634		26,228		22,570		48,798
Class R-5		15,303		-		15,303		24,105		18,816		42,921
Total	$	1,804,571	$	-	$	1,804,571	$	3,903,711	$	3,639,343	$	7,543,054
* Class F-2 was offered beginning August 1, 2008.

4. Fees and transactions with related parties

Capital Research and Management Company ("CRMC"), the fund’s investment adviser, is the parent company of American Funds Service Company® ("AFS"), the fund’s transfer agent, and American Funds Distributors,® Inc. ("AFD"), the principal underwriter of the fund’s shares.

Investment advisory services - The Investment Advisory and Service Agreement with CRMC providesfor monthly fees accrued daily. These fees are based on a declining series of annual rates beginning with 0.250% on the first $500 million of daily net assets and decreasing to 0.123% on such assets in excess of $89 billion. The agreement also provides for monthly fees, accrued daily, of 2.25% of the fund’s monthly gross income. CRMC waived a portion of its investment advisory services fee commencing on September 1, 2004, and terminating on December 31, 2008. During the six months ended January 31, 2009, total investment advisory services fees waived by CRMC were $7,501,000. As a result, the fee shown on the accompanying financial statements of $86,833,000, which was equivalent to an annualized rate of 0.275%, was reduced to $79,332,000, or 0.251% of average daily net assets.

Class-specific fees and expenses – Expenses that are specific to individual share classes are accrued directly to the respective share class. The principal class-specific fees and expenses are described below:

Distribution services – The fund has adopted plans of distribution for all share classes, except Classes F-2 and R-5. Under the plans, the board of directors approves certain categories of expenses that are used to finance activities primarily intended to sell fund shares and service existing accounts. The plans provide for payments, based on an annualized percentage of average daily net assets, ranging from 0.25% to 1.00% as noted below. In some cases, the board of directors has limited the amounts that may be paid to less than the maximum allowed by the plans.All share classes except Classes F-2 and R-5 may use up to 0.25% of average daily net assets to pay service fees, or to compensate AFD for paying service fees, to firms that have entered into agreements with AFD to provide certain shareholder services. The remaining amounts available to be paid under each plan are paid to dealers to compensate them for their sales activities.

For Classes A and 529-A, the board of directors has also approved the reimbursement of dealer and wholesaler commissions paid by AFD for certain shares sold without a sales charge. These classes reimburse AFD for amounts billed within the prior 15 months but only to the extent that the overall annual expense limit of 0.25% is not exceeded. As of January 31, 2009, there were no unreimbursed expenses subject to reimbursement for Classes A or 529-A.

Share class	Currently approved limits	Plan limits
Class A	0.25%	0.25%
Class 529-A	0.25	0.50
Classes B and 529-B	1.00	1.00
Classes C, 529-C and R-1	1.00	1.00
Class R-2	0.75	1.00
Classes 529-E and R-3	0.50	0.75
Classes F-1, 529-F-1 and R-4	0.25	0.50

Transfer agent services –The fund hasa transfer agent agreement with AFS for Classes A and B. Under this agreement, these share classes compensate AFS for transfer agent services including shareholder recordkeeping, communications and transaction processing. AFS is also compensated for certain transfer agent services provided to all other share classes from the administrative services fees paid to CRMC described below.

Administrative services – The fund hasan administrative services agreement with CRMC to provide transfer agent and other related shareholder services for all share classes other than Classes A and B. Each relevant share class pays CRMC annual fees up to 0.15% (0.10% for Class R-5) based on its respective average daily net assets. Each relevant share class also pays AFS additional amounts for certain transfer agent services. CRMC and AFS may use these fees to compensate third parties for performing these services. Administrative services fees are presented gross of any payments made by CRMC. Each 529 share class is subject to an additional administrative services fee payable to the Commonwealth of Virginia for the maintenance of the 529 college savings plan.The quarterly fee is based on a declining series of annual rates beginning with 0.10% on the first $30 billion of the net assets invested in Class 529 shares of the American Funds and decreasing to 0.06% on such assets between $120 billion and $150 billion. The fee for any given calendar quarter is accrued and calculated on the basis of the average net assets of Class 529 shares of the American Funds for the last month of the prior calendar quarter.Although these amounts are included with administrative services fees on the accompanying financial statements, the Commonwealth of Virginia is not considered a related party.

Expenses under the agreements described above for the six months ended January 31, 2009, were as follows (dollars in thousands):

Share class	Distribution services	Transfer agent services	Administrative services
			CRMC administrative services	Transfer agent services	Commonwealth of Virginia administrative services
Class A	$54,062	$23,127	Not applicable	Not applicable	Not applicable
Class B	16,734	1,624	Not applicable	Not applicable	Not applicable
Class C	31,089	Included in administrative services	$3,937	$491	Not applicable
Class F-1	2,692		1,017	116	Not applicable
Class F-2 *	Not applicable		33	3	Not applicable
Class 529-A	516		224	35	$284
Class 529-B	466		37	13	47
Class 529-C	1,161		92	27	116
Class 529-E	69		11	2	14
Class 529-F-1	-		7	1	9
Class R-1	364		42	15	Not applicable
Class R-2	1,652		329	815	Not applicable
Class R-3	2,271		671	266	Not applicable
Class R-4	666		398	17	Not applicable
Class R-5	Not applicable		244	7	Not applicable
Total	$111,742	$24,751	$7,042	$1,808	$470

* Class F-2 was offered beginning August 1, 2008.

Directors’ deferred compensation – Since the adoption of the deferred compensation plan in 1993, directors who are unaffiliated with CRMCmay elect to defer the cash payment of part or all of their compensation. These deferred amounts, which remain as liabilities of the fund, are treated as if invested in shares of the fund or other American Funds. These amounts represent general, unsecured liabilities of the fund and vary according to the total returns of the selected funds. Directors’ compensation of $(244,000), shown on the accompanying financial statements, includes $404,000 in current fees (either paid in cash or deferred) and a net decrease of $648,000 in the value of the deferred amounts.

Affiliated officers and directors – Officers and certain directors of the fund are or may be considered to be affiliated with CRMC, AFS and AFD. No affiliated officers or directors received any compensation directly from the fund.

5. Disclosure of fair value measurements

The fund adopted the Statement of Financial Accounting Standards No. 157 (“FAS 157”), Fair Value Measurements, on August 1, 2008. FAS 157 requires the fund to classify its assets and liabilities into three levels based on the method used to value the assets or liabilities. Level 1 values are based on quoted prices in active markets for identical securities. Level 2 values are based on significant observable market inputs, such as quoted prices for similar securities and quoted prices in inactive markets. Level 3 values are based on significant unobservable inputs that reflect the fund’s determination of assumptions that market participants might reasonably use in valuing the securities. The valuation levels are not necessarily an indication of the risk or liquidity associated with the underlying investment. For example, U.S. government securities are generally high quality and liquid; however, they are reflected as Level 2 because the inputs used to determine fair value may not always be quoted prices in an active market. The following table presents the fund’s valuation levels as of January 31, 2009 (dollars in thousands):

Investment securities
Level 1 – Quoted prices	$	23,275,982
Level 2 – Other significant observable inputs		30,660,623	*
Level 3 – Significant unobservable inputs		326,915
Total	$	54,263,520

* Includes certain securities trading outside the U.S. whose values were adjusted as a result of significant market movements following the close of local trading; therefore, $6,626,582,000 of investment securities were classified as Level 2 instead of Level 1.

The following table reconciles the valuation of the fund’s Level 3 investment securities and related transactions during the six months ended January 31, 2009 (dollars in thousands):

	Level 3 investment securities
Beginning value at 8/1/2008	$	13,973
Net purchases		10,810
Net realized gain†		87
Net unrealized appreciation†		718
Net transfers into Level 3		301,327
Ending value at 1/31/2009	$	326,915

Net unrealized appreciation during the period on Level 3 investment securities held at 1/31/2009† $519

† Net realized gain and net unrealized appreciation are included in the related amounts on investments in the statement of operations.

6. Capital share transactions

Capital share transactions in the fund were as follows (dollars and shares in thousands):

Share class	Sales(*)				Reinvestments of dividends and distributions				Repurchases(*)						Net (decrease)  increase
	Amount		Shares		Amount		Shares		Amount			Shares			Amount			Shares
Six months ended January 31, 2009
Class A	$	4,271,121		312,403	$	1,312,061		91,878	$	(7,063,786	)		(509,315	)	$	(1,480,604	)		(105,034	)
Class B		144,689		10,619		78,740		5,562		(529,589	)		(38,163	)		(306,160	)		(21,982	)
Class C		541,786		40,039		142,919		10,113		(1,149,446	)		(83,195	)		(464,741	)		(33,043	)
Class F-1		379,775		27,916		53,659		3,750		(639,640	)		(45,642	)		(206,206	)		(13,976	)
Class F-2†		120,200		8,474		830		63		(15,960	)		(1,228	)		105,070			7,309
Class 529-A		59,348		4,268		16,659		1,173		(47,432	)		(3,374	)		28,575			2,067
Class 529-B		5,570		398		2,349		167		(6,308	)		(449	)		1,611			116
Class 529-C		23,113		1,662		5,841		413		(27,132	)		(1,923	)		1,822			152
Class 529-E		2,587		186		762		54		(2,404	)		(171	)		945			69
Class 529-F-1		2,143		153		529		37		(2,747	)		(198	)		(75	)		(8	)
Class R-1		10,988		787		1,818		129		(10,863	)		(762	)		1,943			154
Class R-2		71,536		5,100		10,860		771		(69,699	)		(4,981	)		12,697			890
Class R-3		137,986		9,835		25,230		1,779		(129,053	)		(9,259	)		34,163			2,355
Class R-4		156,955		11,381		15,423		1,088		(81,394	)		(5,870	)		90,984			6,599
Class R-5		95,816		6,891		14,455		1,019		(40,621	)		(2,929	)		69,650			4,981
Total net increase
(decrease)	$	6,023,613		440,112	$	1,682,135		117,996	$	(9,816,074	)		(707,459	)	$	(2,110,326	)		(149,351	)
Year ended July 31, 2008
Class A	$	8,146,230		423,511	$	5,292,485		276,012	$	(9,068,488	)		(480,352	)	$	4,370,227			219,171
Class B		335,424		17,532		359,218		18,809		(743,435	)		(39,833	)		(48,793	)		(3,492	)
Class C		1,289,999		67,111		638,186		33,450		(1,521,685	)		(81,759	)		406,500			18,802
Class F-1		879,704		45,563		226,732		11,841		(893,923	)		(47,364	)		212,513			10,040
Class 529-A		150,265		7,824		60,016		3,138		(72,570	)		(3,856	)		137,711			7,106
Class 529-B		15,162		792		9,456		495		(9,895	)		(525	)		14,723			762
Class 529-C		67,666		3,539		23,327		1,220		(43,922	)		(2,335	)		47,071			2,424
Class 529-E		7,434		387		2,834		149		(4,142	)		(218	)		6,126			318
Class 529-F-1		7,451		385		1,936		101		(4,146	)		(222	)		5,241			264
Class R-1		43,273		2,254		6,695		351		(23,119	)		(1,220	)		26,849			1,385
Class R-2		202,674		10,639		44,310		2,325		(164,675	)		(8,734	)		82,309			4,230
Class R-3		511,403		26,501		91,683		4,801		(307,548	)		(16,371	)		295,538			14,931
Class R-4		391,084		20,374		47,284		2,481		(180,160	)		(9,619	)		258,208			13,236
Class R-5		378,573		19,654		38,894		2,045		(108,822	)		(5,759	)		308,645			15,940
Total net increase
(decrease)	$	12,426,342		646,066	$	6,843,056		357,218	$	(13,146,530	)		(698,167	)	$	6,122,868			305,117
* Includes exchanges between share classes of the fund.
† Class F-2 was offered beginning August 1, 2008.

7. Investment transactions

The fund made purchases and sales of investment securities, excluding short-term securities and U.S. government obligations, if any, of $13,097,579,000 and $13,255,863,000, respectively, during the six months ended January 31, 2009.

Financial highlights(1)

			(Loss) income from investment operations(2)				Dividends and distributions
		Net asset value, beginning of period	Net investment income		Net (losses) gains on securities (both realized and unrealized)	Total from investment operations	Dividends (from net investment income)	Distributions (from capital gains)	Total dividends and distributions	Net asset value, end of period	Total return (3) (4)	Net assets, end of period (in millions)	Ratio of expenses to average net assets before reimbursements /waivers		Ratio of expenses to average net assets after reimbursements /waivers (4)		Ratio of net income to average net assets (4)
Class A:
Six months ended 1/31/2009	(5)	$16.98	$.39	$	(4.72)	$(4.33)	$(.42)	$                           -	$(.42)	$12.23	(25.70)%	$40,499	.62%	(6)	.60%	(6)	5.43%	(6)
Year ended 7/31/2008		20.54	.87		(2.67)	(1.80)	(.91)	(.85)	(1.76)	16.98	(9.46)	58,029	.57		.54		4.53
Year ended 7/31/2007		19.33	.87		1.73	2.60	(.93)	(.46)	(1.39)	20.54	13.66	65,713	.56		.54		4.22
Year ended 7/31/2006		18.70	.81		.94	1.75	(.76)	(.36)	(1.12)	19.33	9.77	53,188	.56		.53		4.35
Year ended 7/31/2005		17.10	.77		1.61	2.38	(.65)	(.13)	(.78)	18.70	14.12	47,196	.55		.54		4.26
Year ended 7/31/2004		15.44	.70		1.70	2.40	(.74)	-	(.74)	17.10	15.76	36,075	.57		.57		4.15
Class B:
Six months ended 1/31/2009	(5)	16.87	.33		(4.69)	(4.36)	(.37)	-	(.37)	12.14	(26.05)	2,720	1.40	(6)	1.37	(6)	4.66	(6)
Year ended 7/31/2008		20.43	.72		(2.66)	(1.94)	(.77)	(.85)	(1.62)	16.87	(10.16)	4,149	1.33		1.31		3.76
Year ended 7/31/2007		19.22	.70		1.74	2.44	(.77)	(.46)	(1.23)	20.43	12.83	5,094	1.32		1.30		3.46
Year ended 7/31/2006		18.61	.66		.93	1.59	(.62)	(.36)	(.98)	19.22	8.87	4,442	1.33		1.31		3.58
Year ended 7/31/2005		17.01	.63		1.61	2.24	(.51)	(.13)	(.64)	18.61	13.32	4,135	1.34		1.32		3.48
Year ended 7/31/2004		15.36	.56		1.69	2.25	(.60)	-	(.60)	17.01	14.84	3,231	1.35		1.35		3.37
Class C:
Six months ended 1/31/2009	(5)	16.84	.33		(4.69)	(4.36)	(.36)	-	(.36)	12.12	(26.05)	5,125	1.44	(6)	1.42	(6)	4.61	(6)
Year ended 7/31/2008		20.39	.71		(2.65)	(1.94)	(.76)	(.85)	(1.61)	16.84	(10.22)	7,676	1.38		1.35		3.72
Year ended 7/31/2007		19.19	.69		1.73	2.42	(.76)	(.46)	(1.22)	20.39	12.80	8,911	1.37		1.35		3.41
Year ended 7/31/2006		18.58	.65		.93	1.58	(.61)	(.36)	(.97)	19.19	8.83	6,675	1.38		1.36		3.52
Year ended 7/31/2005		16.99	.61		1.60	2.21	(.49)	(.13)	(.62)	18.58	13.17	5,756	1.43		1.41		3.38
Year ended 7/31/2004		15.34	.55		1.69	2.24	(.59)	-	(.59)	16.99	14.75	3,833	1.44		1.44		3.26
Class F-1:
Six months ended 1/31/2009	(5)	16.95	.39		(4.71)	(4.32)	(.42)	-	(.42)	12.21	(25.70)	1,782	.65	(6)	.62	(6)	5.40	(6)
Year ended 7/31/2008		20.52	.86		(2.68)	(1.82)	(.90)	(.85)	(1.75)	16.95	(9.56)	2,712	.61		.58		4.48
Year ended 7/31/2007		19.30	.86		1.74	2.60	(.92)	(.46)	(1.38)	20.52	13.69	3,075	.60		.57		4.18
Year ended 7/31/2006		18.68	.80		.93	1.73	(.75)	(.36)	(1.11)	19.30	9.68	1,957	.60		.57		4.30
Year ended 7/31/2005		17.08	.75		1.61	2.36	(.63)	(.13)	(.76)	18.68	14.01	1,603	.67		.65		4.14
Year ended 7/31/2004		15.42	.67		1.71	2.38	(.72)	-	(.72)	17.08	15.65	1,000	.69		.69		4.02
Class F-2:
Period from 8/1/2008 to 1/31/2009	(5)	16.91	.37		(4.63)	(4.26)	(.43)	-	(.43)	12.22	(25.39)	89	.22		.21		2.81
Class 529-A:
Six months ended 1/31/2009	(5)	16.96	.39		(4.72)	(4.33)	(.42)	-	(.42)	12.21	(25.75)	502	.67	(6)	.65	(6)	5.39	(6)
Year ended 7/31/2008		20.52	.85		(2.66)	(1.81)	(.90)	(.85)	(1.75)	16.96	(9.55)	662	.65		.63		4.46
Year ended 7/31/2007		19.31	.85		1.73	2.58	(.91)	(.46)	(1.37)	20.52	13.57	655	.65		.63		4.14
Year ended 7/31/2006		18.68	.80		.94	1.74	(.75)	(.36)	(1.11)	19.31	9.70	452	.63		.61		4.27
Year ended 7/31/2005		17.08	.75		1.61	2.36	(.63)	(.13)	(.76)	18.68	13.98	328	.70		.68		4.13
Year ended 7/31/2004		15.42	.68		1.70	2.38	(.72)	-	(.72)	17.08	15.61	195	.67		.67		4.06
Class 529-B:
Six months ended 1/31/2009	(5)	16.92	.33		(4.71)	(4.38)	(.36)	-	(.36)	12.18	(26.07)	80	1.51	(6)	1.48	(6)	4.55	(6)
Year ended 7/31/2008		20.47	.69		(2.65)	(1.96)	(.74)	(.85)	(1.59)	16.92	(10.25)	110	1.46		1.43		3.65
Year ended 7/31/2007		19.26	.68		1.73	2.41	(.74)	(.46)	(1.20)	20.47	12.71	117	1.45		1.43		3.34
Year ended 7/31/2006		18.65	.64		.92	1.56	(.59)	(.36)	(.95)	19.26	8.71	92	1.47		1.44		3.44
Year ended 7/31/2005		17.05	.59		1.61	2.20	(.47)	(.13)	(.60)	18.65	13.05	74	1.55		1.53		3.28
Year ended 7/31/2004		15.36	.53		1.70	2.23	(.54)	-	(.54)	17.05	14.67	51	1.57		1.57		3.16
Class 529-C:
Six months ended 1/31/2009	(5)	16.93	.33		(4.71)	(4.38)	(.36)	-	(.36)	12.19	(26.05)	201	1.50	(6)	1.47	(6)	4.56	(6)
Year ended 7/31/2008		20.49	.70		(2.67)	(1.97)	(.74)	(.85)	(1.59)	16.93	(10.29)	276	1.45		1.43		3.66
Year ended 7/31/2007		19.27	.69		1.74	2.43	(.75)	(.46)	(1.21)	20.49	12.77	285	1.45		1.42		3.35
Year ended 7/31/2006		18.65	.64		.93	1.57	(.59)	(.36)	(.95)	19.27	8.77	201	1.46		1.43		3.45
Year ended 7/31/2005		17.06	.59		1.60	2.19	(.47)	(.13)	(.60)	18.65	13.00	153	1.54		1.52		3.29
Year ended 7/31/2004		15.39	.53		1.71	2.24	(.57)	-	(.57)	17.06	14.69	95	1.56		1.56		3.17
Class 529-E:
Six months ended 1/31/2009	(5)	16.93	.36		(4.71)	(4.35)	(.39)	-	(.39)	12.19	(25.86)	24	.99	(6)	.97	(6)	5.07	(6)
Year ended 7/31/2008		20.49	.79		(2.66)	(1.87)	(.84)	(.85)	(1.69)	16.93	(9.83)	32	.94		.92		4.17
Year ended 7/31/2007		19.28	.79		1.73	2.52	(.85)	(.46)	(1.31)	20.49	13.27	32	.94		.91		3.86
Year ended 7/31/2006		18.66	.74		.93	1.67	(.69)	(.36)	(1.05)	19.28	9.32	23	.94		.92		3.96
Year ended 7/31/2005		17.06	.69		1.61	2.30	(.57)	(.13)	(.70)	18.66	13.63	17	1.02		1.01		3.80
Year ended 7/31/2004		15.40	.62		1.70	2.32	(.66)	-	(.66)	17.06	15.24	10	1.04		1.04		3.69
Class 529-F-1:
Six months ended 1/31/2009	(5)	$16.96	$.40	$	(4.72)	$(4.32)	$(.43)	$                           -	$(.43)	$12.21	(25.68)%	$15	.49%	(6)	.47%	(6)	5.56%	(6)
Year ended 7/31/2008		20.52	.89		(2.66)	(1.77)	(.94)	(.85)	(1.79)	16.96	(9.35)	21	.44		.42		4.67
Year ended 7/31/2007		19.30	.90		1.73	2.63	(.95)	(.46)	(1.41)	20.52	13.87	20	.44		.41		4.37
Year ended 7/31/2006		18.68	.83		.93	1.76	(.78)	(.36)	(1.14)	19.30	9.85	10	.44		.42		4.46
Year ended 7/31/2005		17.08	.75		1.60	2.35	(.62)	(.13)	(.75)	18.68	13.96	5	.70		.68		4.14
Year ended 7/31/2004		15.42	.67		1.69	2.36	(.70)	-	(.70)	17.08	15.53	3	.79		.79		3.95
Class R-1:
Six months ended 1/31/2009	(5)	16.92	.33		(4.71)	(4.38)	(.36)	-	(.36)	12.18	(26.05)	63	1.45	(6)	1.43	(6)	4.61	(6)
Year ended 7/31/2008		20.48	.71		(2.67)	(1.96)	(.75)	(.85)	(1.60)	16.92	(10.25)	86	1.39		1.37		3.73
Year ended 7/31/2007		19.27	.70		1.72	2.42	(.75)	(.46)	(1.21)	20.48	12.75	75	1.41		1.39		3.41
Year ended 7/31/2006		18.65	.64		.94	1.58	(.60)	(.36)	(.96)	19.27	8.79	37	1.45		1.41		3.46
Year ended 7/31/2005		17.05	.61		1.61	2.22	(.49)	(.13)	(.62)	18.65	13.15	19	1.50		1.45		3.36
Year ended 7/31/2004		15.39	.55		1.70	2.25	(.59)	-	(.59)	17.05	14.75	8	1.55		1.48		3.27
Class R-2:
Six months ended 1/31/2009	(5)	16.86	.32		(4.69)	(4.37)	(.35)	-	(.35)	12.14	(26.11)	383	1.56	(6)	1.54	(6)	4.49	(6)
Year ended 7/31/2008		20.42	.70		(2.66)	(1.96)	(.75)	(.85)	(1.60)	16.86	(10.26)	516	1.44		1.42		3.66
Year ended 7/31/2007		19.22	.69		1.72	2.41	(.75)	(.46)	(1.21)	20.42	12.73	539	1.44		1.39		3.38
Year ended 7/31/2006		18.60	.64		.94	1.58	(.60)	(.36)	(.96)	19.22	8.83	379	1.52		1.40		3.48
Year ended 7/31/2005		17.01	.61		1.60	2.21	(.49)	(.13)	(.62)	18.60	13.16	271	1.58		1.42		3.39
Year ended 7/31/2004		15.36	.55		1.69	2.24	(.59)	-	(.59)	17.01	14.75	139	1.75		1.44		3.30
Class R-3:
Six months ended 1/31/2009	(5)	16.94	.36		(4.71)	(4.35)	(.39)	-	(.39)	12.20	(25.85)	792	1.00	(6)	.98	(6)	5.06	(6)
Year ended 7/31/2008		20.50	.79		(2.66)	(1.87)	(.84)	(.85)	(1.69)	16.94	(9.83)	1,061	.95		.93		4.16
Year ended 7/31/2007		19.29	.79		1.73	2.52	(.85)	(.46)	(1.31)	20.50	13.26	978	.94		.92		3.86
Year ended 7/31/2006		18.67	.73		.93	1.66	(.68)	(.36)	(1.04)	19.29	9.29	579	.96		.94		3.94
Year ended 7/31/2005		17.07	.70		1.60	2.30	(.57)	(.13)	(.70)	18.67	13.68	394	.97		.96		3.85
Year ended 7/31/2004		15.41	.62		1.70	2.32	(.66)	-	(.66)	17.07	15.25	176	1.02		1.02		3.70
Class R-4:
Six months ended 1/31/2009	(5)	16.96	.38		(4.71)	(4.33)	(.42)	-	(.42)	12.21	(25.76)	510	.70	(6)	.67	(6)	5.35	(6)
Year ended 7/31/2008		20.53	.85		(2.68)	(1.83)	(.89)	(.85)	(1.74)	16.96	(9.56)	597	.66		.63		4.49
Year ended 7/31/2007		19.31	.85		1.74	2.59	(.91)	(.46)	(1.37)	20.53	13.57	451	.65		.63		4.15
Year ended 7/31/2006		18.69	.79		.93	1.72	(.74)	(.36)	(1.10)	19.31	9.60	255	.66		.64		4.22
Year ended 7/31/2005		17.09	.76		1.60	2.36	(.63)	(.13)	(.76)	18.69	14.00	120	.67		.65		4.17
Year ended 7/31/2004		15.43	.68		1.70	2.38	(.72)	-	(.72)	17.09	15.64	30	.69		.69		4.05
Class R-5:
Six months ended 1/31/2009	(5)	16.97	.40		(4.71)	(4.31)	(.44)	-	(.44)	12.22	(25.67)	464	.40	(6)	.37	(6)	5.66	(6)
Year ended 7/31/2008		20.54	.91		(2.68)	(1.77)	(.95)	(.85)	(1.80)	16.97	(9.26)	559	.36		.33		4.80
Year ended 7/31/2007		19.32	.91		1.74	2.65	(.97)	(.46)	(1.43)	20.54	13.94	350	.36		.33		4.42
Year ended 7/31/2006		18.70	.85		.93	1.78	(.80)	(.36)	(1.16)	19.32	9.92	168	.36		.34		4.56
Year ended 7/31/2005		17.10	.80		1.61	2.41	(.68)	(.13)	(.81)	18.70	14.33	81	.37		.35		4.45
Year ended 7/31/2004		15.44	.73		1.71	2.44	(.78)	-	(.78)	17.10	16.01	57	.37		.37		4.35

				Year ended July 31
	Six months ended January 31, 2009(5)			2008			2007			2006			2005			2004
Portfolio turnover rate for all classes of shares		24	%		38	%		32	%		35	%		24	%		27	%

(1) Based on operations for the periods shown (unless otherwise noted) and, accordingly, may not be representative of a full year.

(2) Based on average shares outstanding.

(3) Total returns exclude any applicable sales charges, including contingent deferred sales charges.

(4) This column reflects the impact, if any, of certain reimbursements/waivers from CRMC. During the periods shown, CRMC reduced fees for investment advisory services. In addition, during some of the periods shown, CRMC paid a portion of the fund's transfer agent fees for certain retirement plan share classes.

(5) Unaudited.

(6) Annualized.

See Notes to Financial Statements

Expense example

unaudited

As a shareholder of the fund, you incur two types of costs: (1) transaction costs, such as initial sales charges on purchase payments and contingent deferred sales charges on redemptions (loads), and (2) ongoing costs, including management fees, distribution and service (12b-1) fees, and other expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the fund so you can compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (August 1, 2008, through January 31, 2009).

Actual expenses:

The first line of each share class in the table on the next page provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses paid during period" to estimate the expenses you paid on your account during this period.

Hypothetical example for comparison purposes:

The second line of each share class in the table on the next page provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio for the share class and an assumed rate of return of 5.00% per year before expenses, which is not the actual return of the share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the fund and other funds. To do so, compare this 5.00% hypothetical example with the 5.00% hypothetical examples that appear in the shareholder reports of the other funds.

Notes:

There are some account fees that are charged to certain types of accounts, such as individual retirement accounts and 529 college savings plan accounts (generally, a $10 fee is charged to set up the account and an additional $10 fee is charged to the account annually), that would increase the amount of expenses paid on your account. In addition, retirement plan participants may be subject to certain fees charged by the plan sponsor, and Class F-1, F-2 and 529-F-1shareholders may be subject to fees charged by financial intermediaries, typically ranging from 0.75% to 1.50% of assets annually depending on services offered. You can estimate the impact of these fees by adding the amount of the fees to the total estimated expenses you paid on your account during the period as calculated above. In addition, your ending account value would be lower by the amount of these fees.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads). Therefore, the second line of each share class in the table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

	Beginning account value 8/1/2008		Ending account value 1/31/2009		Expenses paid during period*		Annualized expense ratio
Class A -- actual return	$	1,000.00	$	743.02	$	2.64		.60	%
Class A -- assumed 5% return		1,000.00		1,022.18		3.06		.60
Class B -- actual return		1,000.00		739.54		6.01		1.37
Class B -- assumed 5% return		1,000.00		1,018.30		6.97		1.37
Class C -- actual return		1,000.00		739.50		6.23		1.42
Class C -- assumed 5% return		1,000.00		1,018.05		7.22		1.42
Class F-1 -- actual return		1,000.00		743.05		2.72		.62
Class F-1 -- assumed 5% return		1,000.00		1,022.08		3.16		.62
Class F-2 -- actual return †		1,000.00		746.13		1.79		.41
Class F-2 -- assumed 5% return †		1,000.00		1,023.14		2.09		.41
Class 529-A -- actual return		1,000.00		742.52		2.85		.65
Class 529-A -- assumed 5% return		1,000.00		1,021.93		3.31		.65
Class 529-B -- actual return		1,000.00		739.29		6.49		1.48
Class 529-B -- assumed 5% return		1,000.00		1,017.74		7.53		1.48
Class 529-C -- actual return		1,000.00		739.47		6.45		1.47
Class 529-C -- assumed 5% return		1,000.00		1,017.80		7.48		1.47
Class 529-E -- actual return		1,000.00		741.43		4.26		.97
Class 529-E -- assumed 5% return		1,000.00		1,020.32		4.94		.97
Class 529-F-1 -- actual return		1,000.00		743.20		2.07		.47
Class 529-F-1 -- assumed 5% return		1,000.00		1,022.84		2.40		.47
Class R-1 -- actual return		1,000.00		739.50		6.27		1.43
Class R-1 -- assumed 5% return		1,000.00		1,018.00		7.27		1.43
Class R-2 -- actual return		1,000.00		738.88		6.75		1.54
Class R-2 -- assumed 5% return		1,000.00		1,017.44		7.83		1.54
Class R-3 -- actual return		1,000.00		741.54		4.30		.98
Class R-3 -- assumed 5% return		1,000.00		1,020.27		4.99		.98
Class R-4 -- actual return		1,000.00		742.42		2.94		.67
Class R-4 -- assumed 5% return		1,000.00		1,021.83		3.41		.67
Class R-5 -- actual return		1,000.00		743.30		1.63		.37
Class R-5 -- assumed 5% return		1,000.00		1,023.34		1.89		.37

*The “expenses paid during period” are equal to the “annualized expense ratio,” multiplied by the average account value over the period, multiplied by the number of days in the period, and divided by 365 (to reflect the one-half year period).

† The period for the “annualized expense ratio” and “actual return” line is based on the number of days from August 1, 2008 (the initial sale of the share class), through January 31, 2009, and accordingly, is not representative of a full period. The “assumed 5% return” line is based on 184 days.

Approval of Investment Advisory and Service Agreement

The fund’s board has approved the fund’s Investment Advisory and Service Agreement (the “agreement”) with Capital Research and Management Company (“CRMC”) for an additional one-year term through December 31, 2009. The board approved the agreement following the recommendation of the fund’s Contracts Committee (the “committee”), which is composed of all of the fund’s independent board members. The board and the committee determined that the fund’s advisory fee structure was fair and reasonable in relation to the services provided and that approving the agreement was in the best interests of the fund and its shareholders.

In reaching this decision, the board and the committee took into account information furnished to them throughout the year, as well as information prepared specifically in connection with their review of the agreement and were advised by their independent counsel. They considered the factors discussed below, among others, but did not identify any single issue or particular piece of information that, in isolation, was the controlling factor.

1. Nature, extent and quality of services

The board and the committee considered the depth and quality of CRMC’s investment management process, including its global research capabilities; the experience, capability and integrity of its senior management and other personnel; the low turnover rates of its key personnel; the overall financial strength and stability of its organization; and the ongoing evolution of CRMC’s organizational structure designed to maintain and strengthen these qualities. The board and the committee also considered the nature, extent and quality of administrative, compliance and shareholder services provided by CRMC to the fund under the agreement and other agreements as well as the benefits to fund shareholders from investing in a fund that is part of a large family of funds. The board and the committee concluded that the nature, extent and quality of the services provided by CRMC have benefited and should continue to benefit the fund and its shareholders.

2. Investment results

The board and the committee considered the investment results of the fund in light of its objectives of providing current income and, secondarily, growth of capital. They compared the fund’s total returns with those of other relevant funds (including the other funds that are the basis of the Lipper index for the category in which the fund is included) and market data such as relevant market indices. This report, including the letter to shareholders and related disclosures, contains certain information about the fund’s investment results. The board and the committee concluded that although the fund’s net asset value per share had declined during the one-year period ended December 31, 2008, its long-term results have been satisfactory and that CRMC’s record in managing the fund indicated that its continued management should benefit the fund and its shareholders.

3. Advisory fees and total expenses

The board and the committee compared the advisory fees and total expense levels of the fund to those of other relevant funds. They observed that the fund’s advisory fees and expenses remain significantly below those of most other relevant funds. The board and the committee also noted the breakpoint discounts in the fund’s advisory fee structure that reduce the level of fees charged by CRMC to the fund as fund assets increase as well as the 10% advisory fee waiver that was then in effect. In addition, they reviewed information regarding the advisory fees paid by institutional clients of an affiliate of CRMC with investment mandates similar to those of the fund. They noted that, although the fees paid by those clients generally were lower than those paid by the fund, the differences appropriately reflected the significant investment, operational and regulatory differences between advising mutual funds and institutional clients. The board and the committee concluded that the fund’s cost structure was fair and reasonable in relation to the services provided, and that the shareholders receive reasonable value in return for the advisory fees and other amounts paid to CRMC by the fund.

4. Ancillary benefits

The board and the committee considered a variety of other benefits received by CRMC and its affiliates as a result of CRMC’s relationship with the fund and the other American Funds, including fees for administrative services provided to certain share classes; fees paid to CRMC’s affiliated transfer agent; sales charges and distribution fees received and retained by the fund’s principal underwriter, an affiliate of CRMC; and possible ancillary benefits to CRMC’s institutional management affiliates. The board and the committee reviewed CRMC’s portfolio trading practices, noting that while CRMC receives the benefit of research provided by broker-dealers executing portfolio transactions on behalf of the fund, it does not obtain third-party research or other services in return for allocating brokerage to such broker-dealers. The board and the committee took these ancillary benefits into account in evaluating the reasonableness of the advisory fees and other amounts paid to CRMC by the fund.

5. Adviser financial information

The board and the committee reviewed information regarding CRMC’s costs of providing services to the American Funds, including personnel, systems and resources of investment, compliance, trading, accounting and other administrative operations. They considered CRMC’s costs and willingness to invest in technology, infrastructure and staff to maintain and expand services and capabilities, respond to industry and regulatory developments and attract and retain qualified personnel. They noted information previously received regarding the compensation structure for CRMC’s investment professionals. The board and the committee also compared CRMC’s profitability to the reported results of several large, publicly held investment management companies. The board and the committee noted the competitiveness and cyclicality of both the mutual fund industry and the capital markets, and the importance in that environment of CRMC’s long-term profitability for maintaining its independence, company culture and management continuity. They further considered the breakpoint discounts in the fund’s advisory fee structure and the impact of CRMC’s 10% advisory fee waiver that was then in effect, reflecting benefits that may accrue from growth in assets. The board and the committee concluded that the fund’s advisory fee structure reflected a reasonable sharing of benefits between CRMC and the fund’s shareholders.

Other share class results

unaudited

Classes B, C, F and 529

Fund results shown are for past periods and are not predictive of results for future periods. Current and future results may be lower or higher than those shown. Share prices and returns will vary, so investors may lose money. For current information and month-end results, visit americanfunds.com.

Average annual total returns for periods ended December 31, 2008
(the most recent calendar quarter-end):	1 year			5 years			Life of class
Class B shares — first sold 3/15/00
Reflecting applicable contingent deferred sales
charge (CDSC), maximum of 5%, payable only
if shares are sold within six years of purchase		–32.81	%		–0.35	%		3.98	%
Not reflecting CDSC		–29.43			–0.04			3.98
Class C shares — first sold 3/15/01
Reflecting CDSC, maximum of 1%, payable only
if shares are sold within one year of purchase		–30.14			–0.11			2.52
Not reflecting CDSC		–29.46			–0.11			2.52
Class F-1 shares1 — first sold 3/15/01
Not reflecting annual asset-based fee
charged by sponsoring firm		–28.87			0.67			3.31
Class F-2 shares1 — first sold 8/1/08
Not reflecting annual asset-based fee
charged by sponsoring firm		—			—			–20.65	2
Class 529-A shares3 — first sold 2/15/02
Reflecting 5.75% maximum sales charge		–33.01			–0.56			2.27
Not reflecting maximum sales charge		–28.93			0.62			3.15
Class 529-B shares3 — first sold 2/19/02
Reflecting applicable CDSC, maximum of 5%,
payable only if shares are sold within six years
of purchase		–32.92			–0.52			2.42
Not reflecting CDSC		–29.55			–0.21			2.42
Class 529-C shares3 — first sold 2/19/02
Reflecting CDSC, maximum of 1%, payable only
if shares are sold within one year of purchase		–30.21			–0.19			2.43
Not reflecting CDSC		–29.53			–0.19			2.43
Class 529-E shares1,3 — first sold 2/25/02		–29.11			0.33			2.80
Class 529-F-1 shares1,3 — first sold 9/17/02
Not reflecting annual asset-based fee charged
by sponsoring firm		–28.78			0.75			4.73

1These shares are sold without any initial or contingent deferred sales charge.

2Results are cumulative total returns; they are not annualized.

3Results shown do not reflect the $10 initial account setup fee and an annual $10 account maintenance fee.

Investment results assume all distributions are reinvested and reflect applicable fees and expenses. The fund’s investment adviser waived a portion of its management fees from September 1, 2004, through December 31, 2008. Respective fund results shown reflect the waiver, without which they would have been lower. Please see the Financial Highlights table on pages 28 to 31 for details that include expense ratios for all share classes.

For information regarding the differences among the various share classes, please refer to the fund’s prospectus.

Office of the fund

One Market

Steuart Tower, Suite 1800

Mailing address: P.O. Box 7650

San Francisco, CA 94120-7650

Investment adviser

Capital Research and Management Company

333 South Hope Street

Los Angeles, CA 90071-1406

6455 Irvine Center Drive

Irvine, CA 92618

Transfer agent for shareholder accounts

American Funds Service Company

(Please write to the address near you.)

P.O. Box 6007

Indianapolis, IN 46206-6007

P.O. Box 2280

Norfolk, VA 23501-2280

Custodian of assets

JPMorgan Chase Bank

270 Park Avenue

New York, NY 10017-2070

Counsel

Paul, Hastings, Janofsky & Walker LLP

515 South Flower Street

Los Angeles, CA 90071-2228

Independent registered public

accounting firm

Deloitte & Touche LLP

695 Town Center Drive

Suite 1200

Costa Mesa, CA 92626-7188

Principal underwriter

American Funds Distributors, Inc.

333 South Hope Street

Los Angeles, CA 90071-1406

Investors should carefully consider the investment objectives, risks, charges and expenses of the American Funds. This and other important information is contained in the fund’s prospectus, which can be obtained from your financial professional and should be read carefully before investing. You may also call American Funds Service Company (AFS) at 800/421-0180 or visit the American Funds website at americanfunds.com.

“American Funds Proxy Voting Guidelines” — which describes how we vote proxies relating to portfolio securities — is available free of charge on the U.S. Securities and Exchange Commission (SEC) website at sec.gov, on the American Funds website or upon request by calling AFS. The fund files its proxy voting record with the SEC for the 12 months ended June 30 by August 31. The report also is available on the SEC and American Funds websites.

A complete January 31, 2009, portfolio of The Income Fund of America’s investments is available free of charge by calling AFS or visiting the SEC website (where it is part of Form N-CSR).

The Income Fund of America files a complete list of its portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. This filing is available free of charge on the SEC website. You may also review or, for a fee, copy this filing at the SEC’s Public Reference Room in Washington, D.C. (800/SEC-0330). Additionally, the list of portfolio holdings also is available by calling AFS.

This report is for the information of shareholders of The Income Fund of America, but it also may be used as sales literature when preceded or accompanied by the current prospectus, which gives details about charges, expenses, investment objectives and operating policies of the fund. If used as sales material after March 31, 2009, this report must be accompanied by an American Funds statistical update for the most recently completed calendar quarter.

[logo - American Funds®]

The right choice for the long term®

What makes American Funds different?

For nearly 80 years, we have followed a consistent philosophy to benefit our investors. Our 31 carefully conceived, broadly diversified funds, in addition to the target date retirement series, offer opportunities that have attracted over 50 million shareholder accounts.

Our unique combination of strengths includes these five factors:

n A long-term, value-oriented approach

We seek to buy securities at reasonable prices relative to their prospects and hold them for the long term.

n An extensive global research effort

Our investment professionals travel the world to find the best investment opportunities and gain a comprehensive understanding of companies and markets.

n The multiple portfolio counselor system

Our unique approach to portfolio management, developed 50 years ago, blends teamwork with individual accountability and has provided American Funds with a sustainable method of achieving fund objectives.

n Experienced investment professionals

American Funds portfolio counselors have an average of 25 years of investment experience, providing a depth of knowledge and broad perspective that few organizations have.

n A commitment to low management fees

The American Funds provide exceptional value for shareholders, with management fees that are among the lowest in the mutual fund industry.

American Funds span a range of investment objectives

n  Growth funds

AMCAP Fund®

EuroPacific Growth Fund®

The Growth Fund of America®

The New Economy Fund®

New Perspective Fund®

New World Fund®

Smallcap World Fund®

n  Growth-and-income funds

American Mutual Fund®

Capital World Growth and Income FundSM

Fundamental InvestorsSM

International Growth and Income FundSM

The Investment Company of America®

Washington Mutual Investors FundSM

n  Equity-income funds

Capital Income Builder®

>The Income Fund of America®

n   Balanced fund

American Balanced Fund®

n   Bond funds

American High-Income TrustSM

The Bond Fund of AmericaSM

Capital World Bond Fund®

Intermediate Bond Fund of America®

Short-Term Bond Fund of AmericaSM

U.S. Government Securities FundSM

n  Tax-exempt bond funds

American High-Income Municipal Bond Fund®

Limited Term Tax-Exempt Bond Fund of AmericaSM

The Tax-Exempt Bond Fund of America®

State-specific tax-exempt funds

The Tax-Exempt Fund of California®

The Tax-Exempt Fund of Maryland®

The Tax-Exempt Fund of Virginia®

n  Money market funds

The Cash Management Trust of America®

The Tax-Exempt Money Fund of AmericaSM

The U.S. Treasury Money Fund of AmericaSM

n  American Funds Target Date Retirement Series®

The Capital Group Companies

American Funds Capital Research and Management Capital International Capital Guardian Capital Bank and Trust

Lit No. MFGESR-906-0309P

Litho in USA BAG/LPT/8088-S16773

Printed on paper containing 10% post-consumer waste

Printed with inks containing soy and/or vegetable oil

ITEM 2 – Code of Ethics

Not applicable for filing of semi-annual reports to shareholders.

ITEM 3 – Audit Committee Financial Expert

Not applicable for filing of semi-annual reports to shareholders.

ITEM 4 – Principal Accountant Fees and Services

Not applicable for filing of semi-annual reports to shareholders.

ITEM 5 – Audit Committee of Listed Registrants

Not applicable to this Registrant, insofar as the Registrant is not a listed issuer as defined in Rule 10A-3 under the Securities Exchange Act of 1934.

ITEM 6 – Schedule of Investments

[logo – American Funds®]

The Income Fund of America®

Investment portfolio

January 31, 2009

 unaudited

Common stocks — 55.10%	Shares			Value (000)
TELECOMMUNICATION SERVICES — 7.69%
AT&T Inc.		56,084,621		$	1,380,803
Verizon Communications Inc.		45,584,600			1,361,612
Koninklijke KPN NV1		37,739,757			503,989
Telecom Italia SpA, nonvoting1		134,928,000			130,414
Telecom Italia SpA1		72,765,000			89,407
Vodafone Group PLC1		64,650,000			120,012
Qwest Communications International Inc.		35,000,000			112,700
Telstra Corp. Ltd.1		45,368,954			108,580
Telekomunikacja Polska SA1		17,645,900			99,852
Singapore Telecommunications Ltd.1		40,000,000			69,543
StarHub Ltd1		45,306,250			60,976
Bell Aliant Regional Communications Income Fund		2,825,700			56,122
Sprint Nextel Corp., Series 12		760,501			1,848
Embarq Corp.		38,025			1,358
American Tower Corp., Class A2		42,271			1,283
XO Holdings, Inc.2		9,158			1
					4,098,500
CONSUMER STAPLES — 6.70%
Kraft Foods Inc., Class A		22,000,821			617,123
Philip Morris International Inc.		12,530,000			465,490
Hershey Co.3		10,821,000			403,407
H.J. Heinz Co.		9,511,700			347,177
Coca-Cola Co.		7,240,000			309,293
Diageo PLC1		18,650,000			254,456
Unilever NV, depository receipts1		6,380,000			140,768
Unilever NV (New York registered)		5,051,750			110,987
General Mills, Inc.		3,421,800			202,399
Clorox Co.		3,050,000			152,957
Kimberly-Clark Corp.		2,950,000			151,837
Altria Group, Inc.		7,031,200			116,296
Reynolds American Inc.		3,000,000			114,540
Goodman Fielder Ltd.1,3		67,000,000			64,784
SABMiller PLC1		3,876,000			63,179
Coca-Cola Amatil Ltd.1		5,092,118			29,480
ConAgra Foods, Inc.		1,340,400			22,921
					3,567,094
INDUSTRIALS — 6.39%
Waste Management, Inc.		22,435,500			699,763
General Electric Co.		45,169,000			547,900
Emerson Electric Co.		11,885,000			388,640
United Parcel Service, Inc., Class B		7,530,000			319,950
Schneider Electric SA1		4,214,488			268,013
Finmeccanica SpA1		11,307,669			177,141
Deutsche Post AG1		14,021,400			175,887
Cooper Industries, Ltd., Class A		5,000,000			134,550
Masco Corp.		16,253,200			127,100
Hubbell Inc., Class B		3,272,100			101,435
Avery Dennison Corp.		3,248,182			78,703
Macquarie Korea Infrastructure Fund1,3		21,472,962			78,655
Atlas Copco AB, Class A1		11,000,000			74,076
De La Rue PLC1,3		5,119,718			69,183
Watsco, Inc.		1,707,900			56,446
R.R. Donnelley & Sons Co.		2,845,400			27,771
Corporate Executive Board Co.		1,364,500			27,563
SembCorp Industries Ltd1		16,689,500			24,807
Sandvik AB1		2,400,000			12,318
Delta Air Lines, Inc.2		1,544,006			10,654
UAL Corp.2		59,995			566
					3,401,121
UTILITIES — 6.24%
GDF Suez1		15,686,565			601,939
Entergy Corp.		4,942,600			377,417
FirstEnergy Corp.		6,141,500			307,013
RWE AG1		3,350,663			260,333
Exelon Corp.		3,800,000			206,036
Duke Energy Corp.		13,431,172			203,482
E.ON AG1		5,900,000			189,793
Southern Co.		5,405,000			180,797
DTE Energy Co.		5,000,000			172,500
Hongkong Electric Holdings Ltd.1		26,754,000			157,031
Consolidated Edison, Inc.		2,750,000			112,062
PPL Corp.		3,300,000			101,178
Enel SpA1		16,433,000			92,098
Ameren Corp.		2,500,000			83,125
Progress Energy, Inc.		2,045,400			79,198
American Electric Power Co., Inc.		2,500,000			78,375
NiSource Inc.		4,859,596			47,041
Spark Infrastructure1		50,400,000			42,880
DUET Group1		22,425,266			29,974
					3,322,272
HEALTH CARE — 5.08%
Merck & Co., Inc.		30,175,000			861,496
Bristol-Myers Squibb Co.		28,525,500			610,731
Eli Lilly and Co.		12,890,000			474,610
Pfizer Inc		19,050,000			277,749
Wyeth		4,257,500			182,945
Abbott Laboratories		3,000,000			166,320
Johnson & Johnson		2,150,000			124,034
Schering-Plough Corp.		439,243			7,713
Clarent Hospital Corp.1,2,3		484,684			24
					2,705,622
FINANCIALS — 4.83%
JPMorgan Chase & Co.		16,460,000			419,895
U.S. Bancorp		25,777,400			382,537
Wells Fargo & Co.		14,708,000			277,981
Unibail-Rodamco, non-registered shares1		1,475,000			198,592
Equity Residential, shares of beneficial interest		6,842,800			163,748
PNC Financial Services Group, Inc.		3,832,000			124,617
Kimco Realty Corp.		8,127,866			116,879
Alexandria Real Estate Equities, Inc.3		1,730,300			102,676
People’s United Financial, Inc.		6,100,000			99,796
Crédit Agricole SA1		8,000,000			97,337
Hospitality Properties Trust3		6,000,000			80,520
HCP, Inc.		2,442,300			57,003
Bank of America Corp.		8,000,000			52,640
Singapore Exchange Ltd.1		14,500,000			49,147
Simon Property Group, Inc.		1,000,000			42,980
SunTrust Banks, Inc.		3,500,000			42,910
QBE Insurance Group Ltd.1		2,707,792			40,792
Itaúsa — Investimentos Itaú SA, preferred nominative		11,058,500			34,937
CapitalSource Inc.		8,828,441			32,136
Citigroup Inc.		8,500,000			30,175
Unibanco-União de Bancos Brasileiros SA, units (GDR)		484,000			27,239
Boardwalk REIT		1,199,000			26,141
HSBC Holdings PLC (Hong Kong)1		2,981,600			23,096
ING Groep NV, depository receipts1		2,816,200			22,488
AXA SA1		875,000			13,630
DnB NOR ASA1		3,750,000			12,646
iStar Financial, Inc.		2,415,822			2,537
					2,575,075
ENERGY — 4.37%
Chevron Corp.		13,015,000			917,818
TOTAL SA1		3,855,000			192,804
TOTAL SA (ADR)		3,640,000			181,199
Diamond Offshore Drilling, Inc.		5,015,000			314,741
Royal Dutch Shell PLC, Class A (ADR)		4,000,000			196,920
Royal Dutch Shell PLC, Class B1		2,797,147			66,751
Spectra Energy Corp		16,311,414			236,679
Occidental Petroleum Corp.		2,000,000			109,100
Penn West Energy Trust		8,775,000			99,774
ARC Energy Trust		690,500			9,287
					2,325,073
CONSUMER DISCRETIONARY — 3.93%
McDonald’s Corp.		10,318,300			598,668
Vivendi SA1		14,955,000			386,046
Home Depot, Inc.		16,849,800			362,776
Esprit Holdings Ltd.1		49,615,400			264,632
VF Corp.		2,130,000			119,323
H & M Hennes & Mauritz AB, Class B1		2,277,000			87,917
Tatts Group Ltd.1		46,500,000			84,249
Limited Brands, Inc.		6,169,000			48,859
Regal Entertainment Group, Class A		4,827,018			48,463
CBS Corp., Class B		7,000,000			40,040
Leggett & Platt, Inc.		1,874,000			23,406
Kesa Electricals PLC1		10,900,000			15,917
Time Warner Cable Inc., Class A2		404,298			7,532
Ford Motor Co.2		2,169,728			4,057
Adelphia Recovery Trust, Series ACC-12		19,531,478			195
American Media Operations, Inc.1,2,4		281,003			3
					2,092,083
INFORMATION TECHNOLOGY — 3.36%
Intel Corp.		36,920,000			476,268
Microchip Technology Inc.3		14,128,000			268,008
Automatic Data Processing, Inc.		6,900,000			250,677
Paychex, Inc.		8,897,000			216,108
Microsoft Corp.		11,045,000			188,870
Taiwan Semiconductor Manufacturing Co. Ltd. (ADR)		16,527,729			124,619
Taiwan Semiconductor Manufacturing Co. Ltd.1		31,999,668			38,543
Maxim Integrated Products, Inc.		12,045,000			159,355
Lite-On Technology Corp.1		106,056,798			64,223
ZiLOG, Inc.2		455,000			1,101
					1,787,772
MATERIALS — 1.94%
E.I. du Pont de Nemours and Co.		16,600,000			381,136
Weyerhaeuser Co.3		10,728,000			293,304
MeadWestvaco Corp.3		11,500,696			133,868
Vulcan Materials Co.		1,500,000			74,190
International Paper Co.		5,500,000			50,160
Fletcher Building Ltd.1		15,584,014			44,101
PPG Industries, Inc.		745,000			27,997
Alcoa Inc.		3,036,400			23,653
Freeport-McMoRan Copper & Gold Inc.		300,000			7,542
					1,035,951
MISCELLANEOUS — 4.57%
Other common stocks in initial period of acquisition					2,430,220
Total common stocks (cost: $39,044,360,000)					29,340,783
Preferred stocks — 1.18%
FINANCIALS — 1.18%
SMFG Preferred Capital USD 3 Ltd. 9.50%4,5		173,190,000			165,647
SMFG Preferred Capital USD 1 Ltd. 6.078%4,5		26,170,000			17,616
SMFG Preferred Capital USD 2 Ltd. 8.75% noncumulative4		8,800,000			8,001
Vornado Realty Trust, Series I, 6.625%		3,380,000			52,559
Bank of America Corp., Series K, 8.00% noncumulative5		84,500,000			44,812
BAC Capital Trust XIII 2.396%5		14,880,000			3,473
JPMorgan Chase & Co., Series I, 7.90%5		54,715,000			41,686
HSBC Capital Funding LP, Series 1, 9.547% noncumulative step-up4,5		25,000,000			19,252
HSBC Capital Funding LP, Series 2, 10.176% noncumulative step-up4,5		10,000,000			8,676
Public Storage, Inc., Series F, 6.45%		1,000,000			18,590
Public Storage, Inc., Series V, 7.50% cumulative depositary shares		400,000			9,120
Santander Finance Preferred S.A., Unipersonal, 6.50%		1,417,200			23,331
Woori Bank 6.208%4,5		45,000,000			19,779
Barclays Bank PLC 7.434%4,5		39,905,000			18,765
Chuo Mitsui Trust and Banking Co., Ltd. 5.506%4,5		31,710,000			18,102
BNP Paribas 7.195%4,5		24,500,000			13,485
BNP Paribas Capital Trust 9.003% noncumulative trust4,5		8,000,000			4,483
PNC Preferred Funding Trust I 6.517%4,5		35,400,000			17,052
Citigroup Inc., Series E, 8.40%5		39,450,000			14,458
ILFC E-Capital Trust I 5.90%4,5		25,300,000			7,971
ILFC E-Capital Trust II 6.25%4,5		18,790,000			6,167
Standard Chartered PLC 6.409%4,5		25,500,000			8,805
Standard Chartered PLC 7.014% noncumulative redeemable preference shares4,5		11,000,000			4,308
QBE Capital Funding II LP 6.797%4,5		18,715,000			10,291
Fannie Mae, Series O, 7.00%4,5		3,183,287			7,560
Fannie Mae, Series S, 8.25% noncumulative		1,511,450			1,757
Fannie Mae, Series R, 7.625%		592,700			624
AXA SA, Series B, 6.379%4,5		21,250,000			9,203
General Motors Corp. 9.00%4		28,785			7,185
Société Générale 5.922%4,5		15,935,000			7,113
Shinsei Finance II (Cayman) Ltd. 7.16% noncumulative4,5		45,950,000			6,103
DBS Capital Funding Corp., Series A, 7.657% noncumulative guaranteed preference shares4,5		6,500,000			5,721
XL Capital Ltd., Series C, 6.102%1,4		1,039,200			3,704
XL Capital Ltd., Series E, 6.50%5		12,750,000			1,818
Mizuho Capital Investment (USD) 1 Ltd. 6.686% noncumulative4,5		7,322,000			4,725
Banco Bilbao Vizcaya Argentaria, SA, 5.919%5		14,025,000			4,527
Lloyds TSB Group PLC 6.267%4,5		12,400,000			3,081
Royal Bank of Scotland Group PLC, Series U, 7.64%5		18,200,000			2,822
Freddie Mac, Series Z, 8.375%		1,100,000			1,169
Freddie Mac, Series W, 5.66%		1,912,800			904
Freddie Mac, Series Y, 6.55%		717,000			344
Shinhan Bank 5.663% 20355		2,075,000			1,134
Shinhan Bank 6.819% 20365		400,000			214
iStar Financial, Inc., Series F, 7.80% cumulative redeemable		398,400			1,195
BOI Capital Funding (No. 2) LP 5.571%4,5		2,500,000			249
IndyMac Bancorp, Inc., Series A, 8.50% noncumulative4		2,948,000			29
Lehman Brothers Holdings E-Capital Trust I 3.59%5,6		3,085,000			—
					627,610
MISCELLANEOUS — 0.00%
Other preferred stocks in initial period of acquisition					374
Total preferred stocks (cost: $1,327,472,000)					627,984
Warrants — 0.00%
TELECOMMUNICATION SERVICES — 0.00%
XO Holdings, Inc., Series A, warrants, expire 20101,2		18,316			—
XO Holdings, Inc., Series B, warrants, expire 20101,2		13,738			—
XO Holdings, Inc., Series C, warrants, expire 20101,2		13,738			—
GT Group Telecom Inc., warrants, expire 20101,2,4		15,000			—
					—
INDUSTRIALS — 0.00%
Atrium Corp., warrants, expire 20181,2,4		3,456			—
Total warrants (cost: $779,000)					—
Convertible securities — 1.60%	Shares or principal  amount				Value (000	)
HEALTH CARE — 0.54%
Schering-Plough Corp., 6.00% convertible preferred 2010		990,100		$	172,287
Mylan Inc. 6.50% convertible preferred 20101		140,000			103,425
Incyte Corp. 3.50% convertible notes 20114	$	15,000,000			7,575
					283,287
MATERIALS — 0.24%
Cia. Vale do Rio Doce, Class A, 5.50% convertible preferred 2010		1,000,000			31,460
Cia. Vale do Rio Doce, Series 1, 5.50% convertible preferred 2010		2,590,000			80,679
Freeport-McMoRan Copper & Gold Inc. 6.75% convertible preferred 2010		290,000			13,514
					125,653
CONSUMER STAPLES — 0.22%
Archer Daniels Midland Co., 6.25% convertible preferred 2011, units		2,700,000			97,362
Bunge Ltd. 5.125% convertible preferred 2010		13,300			5,453
Bunge Ltd. 4.875% convertible preferred		247,700			15,235
					118,050
FINANCIALS — 0.14%
Citigroup Inc., Series J, 7.00% noncumulative convertible preferred depositary shares1,7		3,570,000			57,165
Metropolitan Life Insurance Co., Class B, 6.375% convertible preferred 2009, units	2,000,000		units		16,540
Fannie Mae, Series 2004-1, 5.375% convertible preferred		396			1,584
					75,289
ENERGY — 0.10%
El Paso Corp. 4.99% convertible preferred4		75,000			54,066
INFORMATION TECHNOLOGY — 0.09%
Advanced Micro Devices, Inc. 6.00% convertible notes 2015	$	92,245,000			27,904
Advanced Micro Devices, Inc. 5.75% convertible notes 2012	$	63,525,000			20,090
					47,994
INDUSTRIALS — 0.07%
UAL Corp. 4.50% convertible notes 2021	$	72,600,000			38,144
CONSUMER DISCRETIONARY — 0.02%
Ford Motor Co. 4.25% convertible notes 2036	$	46,316,700			10,884
MISCELLANEOUS — 0.18%
Other convertible securities in initial period of acquisition					96,523
Total convertible securities (cost: $1,460,098,000)					849,890
	Principal amount
Bonds & notes — 33.51%		(000	)
MORTGAGE-BACKED OBLIGATIONS8 — 7.49%
Fannie Mae, Series 2000-T5, Class B, 7.30% 2010	$	36,750			38,962
Fannie Mae 9.00% 2010		6			6
Fannie Mae 4.89% 2012		10,000			10,124
Fannie Mae 4.00% 2015		4,356			4,397
Fannie Mae 7.00% 2016		141			148
Fannie Mae 5.00% 2018		12,371			12,751
Fannie Mae 5.50% 2018		10,388			10,770
Fannie Mae 10.00% 2018		196			219
Fannie Mae 5.50% 2020		28,460			29,471
Fannie Mae 6.00% 2021		1,201			1,252
Fannie Mae, Series 2003-48, Class TJ, 4.50% 2022		20,288			20,482
Fannie Mae 9.50% 2022		201			221
Fannie Mae 5.50% 2023		14,850			15,331
Fannie Mae 5.50% 2023		10,534			10,875
Fannie Mae 5.50% 2023		9,874			10,203
Fannie Mae 7.50% 2023		7			7
Fannie Mae 5.00% 2024		20,000			20,459
Fannie Mae 10.00% 20251		135			137
Fannie Mae, Series 2001-4, Class GA, 10.148% 20255		722			817
Fannie Mae, Series 2001-4, Class NA, 11.87% 20255		56			62
Fannie Mae 6.00% 2026		17,261			17,854
Fannie Mae 6.50% 2026		5,320			5,548
Fannie Mae 6.50% 2026		824			859
Fannie Mae 7.00% 2026		2,254			2,373
Fannie Mae 6.50% 2027		1,385			1,444
Fannie Mae 6.50% 2027		1,269			1,323
Fannie Mae 6.50% 2027		1,124			1,172
Fannie Mae 6.50% 2027		1,040			1,084
Fannie Mae 6.00% 2028		26,220			27,055
Fannie Mae 7.00% 2028		6,786			7,143
Fannie Mae 7.00% 2028		1,160			1,221
Fannie Mae 7.50% 2031		282			299
Fannie Mae, Series 2001-20, Class E, 9.625% 20315		582			652
Fannie Mae 5.50% 2033		4,063			4,177
Fannie Mae 4.566% 20355		4,633			4,729
Fannie Mae 5.50% 2035		14,834			15,220
Fannie Mae 5.50% 2035		6,729			6,904
Fannie Mae 6.50% 2035		421			441
Fannie Mae 7.00% 2035		6,984			7,353
Fannie Mae 6.00% 2036		20,000			20,638
Fannie Mae, Series 2006-43, Class PX, 6.00% 2036		7,610			7,821
Fannie Mae 6.50% 2036		14,628			15,171
Fannie Mae 5.50% 2037		94,025			96,320
Fannie Mae, Series 2007-33, Class HE, 5.50% 2037		22,811			23,267
Fannie Mae 5.50% 2037		17,932			18,381
Fannie Mae 5.621% 20375		15,119			15,544
Fannie Mae 6.00% 2037		378,512			390,579
Fannie Mae 6.00% 2037		75,316			77,717
Fannie Mae 6.00% 2037		49,500			51,078
Fannie Mae 6.00% 2037		32,248			33,276
Fannie Mae 6.00% 2037		27,271			28,174
Fannie Mae 6.00% 2037		20,000			20,638
Fannie Mae 6.00% 20371		19,691			20,104
Fannie Mae, Series 2007-24, Class P, 6.00% 2037		17,312			17,840
Fannie Mae 6.00% 2037		15,705			16,225
Fannie Mae 6.00% 2037		10,172			10,500
Fannie Mae 6.00% 2037		10,000			10,319
Fannie Mae 6.00% 2037		2,217			2,272
Fannie Mae 6.50% 2037		53,295			55,275
Fannie Mae 6.50% 2037		17,010			17,753
Fannie Mae 6.50% 2037		16,596			17,305
Fannie Mae 6.50% 2037		13,120			13,681
Fannie Mae 6.50% 2037		12,911			13,391
Fannie Mae 6.50% 20371		12,441			12,834
Fannie Mae 6.50% 2037		6,977			7,236
Fannie Mae 6.50% 2037		6,204			6,475
Fannie Mae 6.50% 2037		3,962			4,135
Fannie Mae 6.78% 20375		1,489			1,540
Fannie Mae 7.00% 2037		33,922			35,453
Fannie Mae 7.00% 2037		30,431			32,032
Fannie Mae 7.00% 2037		13,458			14,166
Fannie Mae 7.00% 2037		12,812			13,390
Fannie Mae 7.00% 2037		10,198			10,658
Fannie Mae 7.00% 2037		9,899			10,346
Fannie Mae 7.00% 2037		8,352			8,792
Fannie Mae 7.00% 2037		7,841			8,195
Fannie Mae 7.00% 20371		4,357			4,532
Fannie Mae 7.00% 20371		3,566			3,709
Fannie Mae 7.00% 2037		1,868			1,952
Fannie Mae 7.00% 2037		1,192			1,255
Fannie Mae 7.50% 2037		21,655			22,641
Fannie Mae 7.50% 2037		3,822			3,996
Fannie Mae 7.50% 2037		3,186			3,331
Fannie Mae 7.50% 2037		1,601			1,673
Fannie Mae 7.50% 20371		1,243			1,292
Fannie Mae 7.50% 20371		747			776
Fannie Mae 8.00% 2037		1,211			1,266
Fannie Mae 8.00% 2037		1,174			1,228
Fannie Mae 4.50% 2038		14,116			14,214
Fannie Mae 5.00% 2039		29,000			29,471
Fannie Mae 6.00% 2035		79,985			82,447
Fannie Mae, Series 2001-50, Class BA, 7.00% 2041		1,335			1,380
Fannie Mae, Series 2001-T10, Class A-1, 7.00% 2041		907			960
Fannie Mae, Series 2002-W3, Class A-5, 7.50% 2041		653			692
Fannie Mae, Series 2002-W1, Class 2A, 7.50% 2042		1,447			1,536
Fannie Mae 6.50% 2047		6,081			6,295
Fannie Mae 6.50% 2047		5,519			5,714
Fannie Mae 6.50% 2047		5,180			5,363
Fannie Mae 6.50% 2047		4,164			4,311
Fannie Mae 6.50% 2047		3,557			3,683
Fannie Mae 6.50% 2047		2,407			2,492
Fannie Mae 6.50% 2047		1,412			1,462
Fannie Mae 6.50% 2047		1,037			1,074
Fannie Mae 7.00% 2047		5,808			6,055
Fannie Mae 7.00% 2047		3,495			3,644
Fannie Mae 7.00% 2047		3,490			3,639
Fannie Mae 7.00% 2047		2,689			2,804
Fannie Mae 7.00% 2047		1,577			1,645
Freddie Mac 8.50% 2009		5			5
Freddie Mac 8.50% 2010		16			16
Freddie Mac 5.00% 2018		7,569			7,800
Freddie Mac 5.50% 2018		3,744			3,882
Freddie Mac 11.00% 2018		139			156
Freddie Mac, Series 2890, Class KT, 4.50% 2019		25,425			24,819
Freddie Mac 5.50% 2019		10,107			10,477
Freddie Mac, Series 178, Class Z, 9.25% 2021		70			74
Freddie Mac, Series 2289, Class NB, 11.464% 20225		137			155
Freddie Mac 5.00% 2023		29,424			30,145
Freddie Mac 5.00% 2023		27,316			27,985
Freddie Mac 5.00% 2023		22,709			23,265
Freddie Mac 5.00% 2023		14,877			15,241
Freddie Mac 5.00% 2023		8,065			8,267
Freddie Mac 5.00% 2023		4,597			4,710
Freddie Mac 6.00% 2026		4,448			4,601
Freddie Mac 6.00% 2027		7,658			7,902
Freddie Mac 4.634% 20355		6,419			6,565
Freddie Mac 5.00% 2035		11,407			11,599
Freddie Mac, Series 3061, Class PN, 5.50% 2035		5,310			5,504
Freddie Mac 5.00% 2036		10,320			10,481
Freddie Mac, Series 3257, Class PA, 5.50% 2036		22,236			22,836
Freddie Mac 7.00% 2036		1,689			1,755
Freddie Mac 5.00% 2037		3,292			3,343
Freddie Mac 5.437% 20375		10,854			11,114
Freddie Mac, Series 3286, Class JN, 5.50% 2037		30,033			30,641
Freddie Mac, Series 3312, Class PA, 5.50% 2037		22,901			23,334
Freddie Mac, Series 3318, Class JT, 5.50% 2037		16,783			17,122
Freddie Mac, Series 3271, Class OA, 6.00% 2037		21,470			22,686
Freddie Mac 6.50% 2037		7,247			7,560
Freddie Mac 5.00% 2038		31,976			32,474
Freddie Mac 5.938% 20385		4,041			4,130
Freddie Mac 6.50% 2038		30,794			32,136
Countrywide Alternative Loan Trust, Series 2006-J3, Class 2-A-1, 4.75% 20201		6,194			4,831
Countrywide Alternative Loan Trust, Series 2005-49CB, Class A-1, 5.50% 2035		78,075			63,084
Countrywide Alternative Loan Trust, Series 2005-40CB, Class A-1, 5.50% 2035		13,340			9,705
Countrywide Alternative Loan Trust, Series 2005-46CB, Class A-8, 5.50% 2035		6,132			4,717
Countrywide Alternative Loan Trust, Series 2005-54CB, Class 2-A-5, 5.50% 2035		11,354			3,432
Countrywide Alternative Loan Trust, Series 2005-50CB, Class 3-A-1, 6.00% 2035		11,972			6,069
Countrywide Alternative Loan Trust, Series 2004-36CB, Class 1-A-1, 6.00% 2035		3,863			3,215
Countrywide Alternative Loan Trust, Series 2006-18CB, Class A-7, 0.739% 20365		12,661			6,656
Countrywide Alternative Loan Trust, Series 2006-14CB, Class A-2, 0.789% 20365		6,444			3,941
Countrywide Alternative Loan Trust, Series 2006-6CB, Class 1-A-4, 5.50% 2036		10,000			5,789
Countrywide Alternative Loan Trust, Series 2006-6CB, Class 1-A-1, 5.50% 2036		7,028			5,681
Countrywide Alternative Loan Trust, Series 2007-J1, Class 3-A-4, 5.755% 20365		20,000			9,938
Countrywide Alternative Loan Trust, Series 2007-14T2, Class A-4, 0.739% 20375		27,196			10,067
Countrywide Alternative Loan Trust, Series 2007-5CB, Class 1-A-19, 0.839% 20371,5		32,475			17,861
Countrywide Alternative Loan Trust, Series 2007-2CB, Class 1-A-9, 5.75% 2037		15,304			8,912
Countrywide Alternative Loan Trust, Series 2007-7T2, Class A-27, 6.00% 2037		36,739			20,291
Countrywide Alternative Loan Trust, Series 2007-HY4, Class 3-A-1, 5.85% 20475		29,832			15,048
Countrywide Alternative Loan Trust, Series 2007-HY4, Class 4-A-1, 5.924% 20475		16,348			8,312
Government National Mortgage Assn. 9.50% 2009		27			27
Government National Mortgage Assn. 9.00% 2016		32			35
Government National Mortgage Assn. 8.50% 2017		7			8
Government National Mortgage Assn. 8.50% 2017		3			3
Government National Mortgage Assn. 8.50% 2021		160			174
Government National Mortgage Assn. 8.50% 2021		26			29
Government National Mortgage Assn. 8.50% 2021		5			6
Government National Mortgage Assn. 9.50% 2021		96			107
Government National Mortgage Assn. 10.00% 2021		1,025			1,162
Government National Mortgage Assn. 10.00% 2025		971			1,095
Government National Mortgage Assn. 6.00% 2038		84,271			86,818
Government National Mortgage Assn. 6.50% 2038		53,899			56,004
Government National Mortgage Assn. 6.50% 2038		3,953			4,108
WaMu Mortgage Pass-Through Certificates Trust, Series 2003-S8, Class A-2, 5.00% 2018		52,474			48,577
WaMu Mortgage Pass-Through Certificates Trust, Series 2003-S10, Class A-2, 5.00% 2018		31,861			29,495
WaMu Mortgage Pass-Through Certificates Trust, Series 2003-AR1, Class A-6, 5.451% 20335		175			117
WaMu Mortgage Pass-Through Certificates Trust, Series 2007-HY3, Class 4-A1, 5.339% 20375		3,952			2,754
WaMu Mortgage Pass-Through Certificates Trust, Series 2007-HY5, Class 3-A1, 5.816% 20375		33,799			23,939
WaMu Mortgage Pass-Through Certificates Trust, Series 2007-HY7, Class 2-A1, 5.849% 20375		17,091			9,467
WaMu Mortgage Pass-Through Certificates Trust, Series 2007-HY7, Class 4-A2, 5.868% 20375		16,329			9,001
Residential Accredit Loans, Inc., Series 2003-QS16, Class A-1, 5.00% 2018		10,681			8,761
Residential Accredit Loans, Inc., Series 2005-QR1, Class A, 6.00% 2034		6,609			4,804
Residential Accredit Loans, Inc., Series 2005-QS9, Class A-6, 5.50% 2035		100			46
Residential Accredit Loans, Inc., Series 2005-QA12, Class CB-I, 5.868% 20355		9,781			5,241
Residential Accredit Loans, Inc., Series 2007-QS5, Class A-5, 0.689% 20375		43,125			18,166
Residential Accredit Loans, Inc., Series 2007-QS8, Class A-1, 0.79% 20375		5,884			2,545
Residential Accredit Loans, Inc., Series 2007-QS9, Class A-33, 6.50% 2037		52,113			27,272
Residential Accredit Loans, Inc., Series 2007-QS7, Class II-A-1, 6.75% 2037		13,558			8,564
Residential Accredit Loans, Inc., Series 2007-QS11, Class A-1, 7.00% 2037		7,094			3,885
CS First Boston Mortgage Securities Corp., Series 2005-7, Class III-A-1, 5.00% 2020		5,240			4,062
CS First Boston Mortgage Securities Corp., Series 2001-CKN5, Class A-4, 5.435% 2034		3,677			3,405
CS First Boston Mortgage Securities Corp., Series 2004-5, Class IV-A-1, 6.00% 2034		2,899			2,020
CS First Boston Mortgage Securities Corp., Series 2001-CP4, Class A-4, 6.18% 2035		7,375			7,274
CS First Boston Mortgage Securities Corp., Series 2005-5, Class IV-A-1, 6.25% 2035		4,851			3,137
CS First Boston Mortgage Securities Corp., Series 2001-CK1, Class A-3, 6.38% 2035		8,901			8,618
CS First Boston Mortgage Securities Corp., Series 2006-2R, Class A-PO, principal only, 0% 20364		18,205			12,477
CS First Boston Mortgage Securities Corp., Series 2005-C3, Class A-AB, 4.614% 2037		10,000			8,453
CS First Boston Mortgage Securities Corp., Series 2002-CKN2, Class A-3, 6.133% 2037		6,910			6,763
CS First Boston Mortgage Securities Corp., Series 2005-C5, Class A-2, 5.10% 20385		8,000			7,201
CS First Boston Mortgage Securities Corp., Series 2005-C6, Class A-2FX, 5.207% 20405		3,050			2,760
CS First Boston Mortgage Securities Corp., Series 2005-C6, Class A-3, 5.23% 20405		10,900			9,103
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2002-CIBC5, Class A-1, 4.372% 2037		3,681			3,596
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2005-CIBC12, Class A-2, 4.739% 2037		1,741			1,642
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2005-CIBC11, Class A-2, 5.016% 2037		14,040			13,316
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2003-ML1, Class A-1, 3.972% 2039		799			748
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2004-C3, Class A-2, 4.223% 2042		11,687			10,965
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2005-LDP4, Class A-2, 4.79% 2042		2,886			2,718
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2006-CIBC14, Class A-4, 5.481% 20445		3,840			2,593
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2006-LDP7, Class A-4, 5.875% 20455		27,700			19,411
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2005-LDP1, Class A-2, 4.625% 2046		20,000			19,282
American Tower Trust I, Series 2007-1A, Class A-FX, 5.42% 20374		7,250			5,872
American Tower Trust I, Series 2007-1A, Class B, 5.537% 20371,4		20,000			16,000
American Tower Trust I, Series 2007-1A, Class D, 5.957% 20371,4		37,375			27,844
American Tower Trust I, Series 2007-1A, Class E, 6.249% 20371,4		20,500			12,589
American Tower Trust I, Series 2007-1A, Class F, 6.639% 20371,4		5,550			3,168
Wells Fargo Alternative Loan Trust, Series 2007-PA1, Class A-1, 0.709% 20375		10,750			4,685
Wells Fargo Alternative Loan Trust, Series 2007-PA3, Class II-A-4, 6.00% 2037		14,000			6,523
Wells Fargo Alternative Loan Trust, Series 2007-PA4, Class III-A-1, 6.076% 20375		15,286			7,400
Wells Fargo Alternative Loan Trust, Series 2007-PA3, Class III-A-1, 6.25% 2037		32,242			17,523
Wells Fargo Alternative Loan Trust, Series 2007-PA3, Class IV-A-1, 6.50% 2037		42,715			18,913
Wells Fargo Alternative Loan Trust, Series 2007-PA3, Class V-A-1, 7.00% 2037		21,494			9,704
Crown Castle Towers LLC, Series 2005-1, Class A-FX, 4.643% 20354		10,000			9,000
Crown Castle Towers LLC, Series 2005-1, Class D, 5.612% 20351,4		37,750			33,031
Crown Castle Towers LLC, Series 2006-1, Class E, 6.065% 20361,4		9,000			7,335
Crown Castle Towers LLC, Series 2006-1, Class F, 6.650% 20361,4		16,575			13,343
Crown Castle Towers LLC, Series 2006-1, Class G, 6.795% 20361,4		1,250			994
Wells Fargo Mortgage-backed Securities Trust, Series 2003-13, Class A-1, 4.50% 2018		13,761			12,622
Wells Fargo Mortgage-backed Securities Trust, Series 2006-1, Class A-3, 5.00% 20211		7,422			6,829
Wells Fargo Mortgage-backed Securities Trust, Series 2006-AR15, Class A-1, 5.656% 20365		12,994			9,232
Wells Fargo Mortgage-backed Securities Trust, Series 2007-11, Class A-96, 6.00% 2037		50,269			33,523
CHL Mortgage Pass-Through Trust, Series 2003-56, Class 6-A-1, 5.315% 20335		703			576
CHL Mortgage Pass-Through Trust, Series 2004-22, Class A-2, 4.619% 20345		3,364			2,255
CHL Mortgage Pass-Through Trust, Series 2005-HYB8, Class 4-A-1, 5.562% 20355		6,005			3,566
CHL Mortgage Pass-Through Trust, Series 2007-HY5, Class 3-A-1, 6.201% 20375		18,841			13,066
CHL Mortgage Pass-Through Trust, Series 2007-8, Class 1-A-1, 6.00% 2038		8,778			6,712
CHL Mortgage Pass-Through Trust, Series 2007-HY5, Class 1-A-1, 5.93% 20475		39,033			22,088
CHL Mortgage Pass-Through Trust, Series 2007-HY4, Class 1-A-1, 6.083% 20475		21,867			12,614
SBA CMBS Trust, Series 2005-1, Class A, 5.369% 20351,4		10,000			9,150
SBA CMBS Trust, Series 2005-1, Class B, 5.565% 20351,4		7,000			6,300
SBA CMBS Trust, Series 2006-1A, Class A, 5.314% 20361,4		12,000			10,680
SBA CMBS Trust, Series 2006-1A, Class D, 5.852% 20361,4		5,000			4,100
SBA CMBS Trust, Series 2006-1A, Class F, 6.709% 20361,4		18,000			14,220
SBA CMBS Trust, Series 2006-1A, Class G, 6.904% 20361,4		17,000			13,090
SBA CMBS Trust, Series 2006-1A, Class H, 7.389% 20361,4		1,670			1,269
Tower Ventures, LLC, Series 2006-1, Class A1-FX, 5.361% 20361,4		12,000			11,160
Tower Ventures, LLC, Series 2006-1, Class A-2, 5.45% 20361,4		11,100			10,101
Tower Ventures, LLC, Series 2006-1, Class C, 5.707% 20361,4		8,000			7,240
Tower Ventures, LLC, Series 2006-1, Class D, 6.052% 20361,4		29,000			25,955
Wachovia Bank Commercial Mortgage Trust, Series 2005-C16, Class A-PB, 4.692% 2041		15,000			12,947
Wachovia Bank Commercial Mortgage Trust, Series 2005-C17, Class A-2, 4.782% 2042		9,720			9,338
Wachovia Bank Commercial Mortgage Trust, Series 2005-C17, Class A-4, 5.083% 20425		5,000			3,914
Wachovia Bank Commercial Mortgage Trust, Series 2005-C22, Class A-4, 5.265% 20445		22,000			17,937
Wachovia Bank Commercial Mortgage Trust, Series 2006-C23, Class A-PB, 5.446% 2045		12,500			10,224
Lehman Mortgage Trust, Series 2005-2, Class 5-A1, 1.289% 20355		16,660			6,818
Lehman Mortgage Trust, Series 2005-2, Class 3-A3, 5.50% 2035		7,079			6,378
Lehman Mortgage Trust, Series 2006-3, Class 3-A1, 0.739% 20365		56,799			27,265
Lehman Mortgage Trust, Series 2006-8, Class 2-A1, 0.81% 20365		2,552			1,053
Lehman Mortgage Trust, Series 2007-6, Class 2-A1, 6.826% 20375		24,425			12,253
IndyMac INDX Mortgage Loan Trust, Series 2006-AR5, Class 2-A-1, 5.76% 20365		28,238			15,768
IndyMac INDX Mortgage Loan Trust, Series 2006-AR25, Class 3-A-1, 6.207% 20365		40,604			19,591
Structured Adjustable Rate Mortgage Loan Trust, Series 2006-8, Class 3-AF, 0.769% 20365		6,582			3,640
Structured Adjustable Rate Mortgage Loan Trust, Series 2006-4, Class 5-A-1, 5.893% 20365		11,168			5,968
Structured Adjustable Rate Mortgage Loan Trust, Series 2006-4, Class 6-A, 5.921% 20365		27,082			15,011
Structured Adjustable Rate Mortgage Loan Trust, Series 2006-12, Class 2-A1, 5.928% 20375		10,503			5,563
Structured Adjustable Rate Mortgage Loan Trust, Series 2007-9, Class 2-A1, 5.975% 20475		6,550			3,609
Citigroup Mortgage Loan Trust, Inc., Series 2003-UST1, Class A-3, 5.00% 2018		5,395			4,995
Citigroup Mortgage Loan Trust, Inc., Series 2005-8, Class I-A4A, 5.573% 20355		18,343			11,541
Citigroup Mortgage Loan Trust, Inc., Series 2006-AR5, Class 2-A7A, 6.217% 20365		24,255			13,953
Citigroup Mortgage Loan Trust, Inc., Series 2007-AR5, Class 1-A2A, 5.608% 20375		5,526			3,282
IndyMac IMSC Mortgage Loan Trust, Series 2007-F3, Class 2-A-1, 6.50% 2037		19,584			10,634
IndyMac IMSC Mortgage Loan Trust, Series 2007-F3, Class 3-A-1, 7.00% 2037		38,428			21,209
Banc of America Commercial Mortgage Inc., Series 2001-1, Class A-2, 6.503% 2036		10,506			10,469
Banc of America Commercial Mortgage Inc., Series 2005-5, Class A-4, 5.115% 20451,5		3,000			2,499
Banc of America Commercial Mortgage Inc., Series 2005-5, Class A-3B, 5.227% 20455		17,730			14,374
Banc of America Mortgage Securities, Inc., Series 2004-7, Class 7-A-1, 5.00% 2019		27,261			24,691
Banc of America Mortgage Securities, Inc., Series 2003-G, Class 2-A-1, 4.84% 20335		1,693			1,419
GE Commercial Mortgage Corp., Series 2004-C1, Class A-2, 3.915% 2038		2,640			2,414
GE Commercial Mortgage Corp., Series 2006-C1, Class A-4, 5.338% 20445		13,000			8,707
GE Commercial Mortgage Corp., Series 2005-C4, Class A-3A, 5.334% 20455		17,000			14,719
Bank of America 5.50% 20124		22,500			22,258
CitiMortgage Alternative Loan Trust, Series 2005-A1, Class IIA-1, 5.00% 2020		13,697			10,610
CitiMortgage Alternative Loan Trust, Series 2007-A3, Class IA-1, 6.00% 20371		20,000			11,400
Bear Stearns ARM Trust, Series 2003-9, Class III-A-2, 4.955% 20345		1,792			1,291
Bear Stearns ARM Trust, Series 2005-10, Class A-3, 4.65% 20355		20,000			10,995
Bear Stearns ARM Trust, Series 2005-6, Class I-A-1, 4.871% 20355		13,334			7,968
L.A. Arena Funding, LLC, Series 1, Class A, 7.656% 20264		21,353			18,429
Greenwich Capital Commercial Funding Corp., Series 2005-GG5, Class A-2, 5.117% 2037		9,890			8,937
Greenwich Capital Commercial Funding Corp., Series 2005-GG5, Class A-4-1, 5.243% 20375		10,000			9,196
Structured Products Asset Return Certificates Trust, Series 2001-CF1, Class A, 6.36% 20331		18,153			17,812
ML-CFC Commercial Mortgage Trust, Series 2006-4, Class A-3, 5.172% 20495		27,410			17,738
GSR Mortgage Loan Trust, Series 2004-2F, Class VIIA-1, 4.50% 2019		14,714			13,202
GSR Mortgage Loan Trust, Series 2004-15F, Class 5A-1, 5.50% 2020		3,695			3,371
American Home Mortgage Assets Trust, Series 2007-3, Class II-2A-1, 6.25% 20375		29,942			16,551
Nationwide Building Society, Series 2007-2, 5.50% 20124		17,500			16,187
Morgan Stanley Mortgage Loan Trust, Series 2005-10, Class 5-A-1, 6.00% 2035		10,846			6,962
Morgan Stanley Mortgage Loan Trust, Series 2006-11, Class 4-A-1, 0.81% 20365		5,552			2,346
Morgan Stanley Mortgage Loan Trust, Series 2006-3AR, Class 3-A-1, 5.967% 20365		911			489
Morgan Stanley Mortgage Loan Trust, Series 2007-11AR, Class 2-A-1, 6.612% 20375		12,891			6,249
Morgan Stanley Capital I Trust, Series 2005-HQ7, Class A-2, 5.208% 20425		17,875			15,567
J.P. Morgan Chase Commercial Mortgage Securities Trust, Series 2006-LDP6, Class A-4, 5.475% 20435		20,250			14,453
Citigroup-Deutsche Bank Commercial Mortgage Trust, Series 2006-CD3, Class A-5, 5.617% 2048		20,000			13,485
Thornburg Mortgage Securities Trust, Series 2006-5, Class A-1, 0.509% 20465		16,673			13,481
Bear Stearns Asset-backed Securities I Trust, Series 2005-AC3, Class II-A-1, 5.25% 2020		7,177			6,130
Bear Stearns Asset-backed Securities I Trust, Series 2005-AC8, Class A-4, 5.50% 2035		5,000			4,123
Bear Stearns Asset-backed Securities I Trust, Series 2006-AC2, Class II-1A-1, 6.00% 2036		2,642			1,624
Bear Stearns Commercial Mortgage Securities Inc., Series 1999-C1, Class X, interest only, 1.221% 20314,5		24,105			380
Bear Stearns Commercial Mortgage Securities Inc., Series 2002-PBW1, Class A-1, 3.97% 2035		3,797			3,723
Bear Stearns Commercial Mortgage Securities Inc., Series 2001-TOP2, Class A-2, 6.48% 2035		7,665			7,616
GMAC Commercial Mortgage Securities, Inc., Series 2001-C1, Class A-2, 6.465% 2034		11,737			11,308
Host Marriott Pool Trust, Series 1999-HMTA, Class D, 7.97% 20154		10,990			11,202
Morgan Stanley Dean Witter Capital I Trust, Series 2000-LIFE2, Class A-2, 7.20% 2033		10,510			10,230
Banc of America Funding Trust, Series 2007-7, Class 2-A-1, 6.00% 2037		15,990			9,864
Residential Asset Securitization Trust, Series 2006-A9CB, Class A-11, 0.819% 20365		22,482			9,138
First Horizon Alternative Mortgage Securities Trust, Series 2005-FA11, Class I-A-5, 5.75% 2036		1,095			738
First Horizon Alternative Mortgage Securities Trust, Series 2006-FA3, Class A-6, 6.00% 2036		9,856			8,149
Structured Asset Securities Corp., Series 1998-RF2, Class A, 8.467% 20274,5		230			229
Structured Asset Securities Corp., Series 1998-RF1, Class A, 8.601% 20274,5		190			190
Structured Asset Securities Corp., Series 2005-3, Class 1-A-5, 5.00% 2035		12,539			8,132
Merrill Lynch Mortgage Investors, Inc., Series 1999-C1, Class A-2, 7.56% 2031		8,256			8,276
American General Mortgage Loan Trust, Series 2006-1, Class A-5, 5.75% 20354,5		10,000			7,969
J.P. Morgan Mortgage Trust, Series 2006-A3, Class 3-A-3, 5.731% 20365		2,000			1,040
J.P. Morgan Mortgage Trust, Series 2006-A7, Class 2-A-4, 5.801% 20375		13,875			6,435
GS Mortgage Securities Corp. II, Series 2001-ROCK, Class D, 6.878% 20184		6,000			6,224
Four Times Square Trust, Series 2000-4TS, Class C, 7.86% 20154		6,000			6,220
Commercial Mortgage Trust, Series 2003-LNB1, Class A-2, 4.084% 2038		6,925			6,164
BCAP LLC Trust, Series 2006-AA2, Class A-1, 0.559% 20375		14,145			5,842
GE Capital Commercial Mortgage Corp., Series 2001-1, Class A-1, 6.079% 2033		689			679
GE Capital Commercial Mortgage Corp., Series 2002-3, Class A-1, 4.229% 2037		5,260			4,985
Deutsche Alt-A Securities, Inc., Mortgage Loan Trust, Series 2005-5, Class II-A-1, 0.589% 20355		8,660			5,266
Bear Stearns ALT-A Trust, Series 2006-2, Class II-4-A-1, 5.887% 20365		10,456			5,206
GMAC Mortgage Loan Trust, Series 2006-AR1, Class 2-A-1, 5.63% 20365		7,400			5,001
Chase Commercial Mortgage Securities Corp., Series 2000-1, Class A-2, 7.757% 2032		4,844			4,755
American Home Mortgage Investment Trust, Series 2004-1, Class III-A, 3.28% 2044		4,149			3,166
TBW Mortgage-Backed Trust, Series 2006-1, Class 2-A-1, 6.50% 2036		6,194			3,055
GSAA Home Equity Trust, Series 2007-10, Class A-1A, 6.00% 2037		4,868			2,541
Harborview Mortgage Loan Trust, Series 2006-6, Class 1A, 5.456% 20365		3,325			1,757
Financial Asset Securitization, Inc., Series 1997-NAM1, Class B-1, 7.75% 2027		268			259
					3,989,729
BONDS & NOTES OF U.S. GOVERNMENT & GOVERNMENT AGENCIES — 4.38%
U.S. Treasury 3.875% 2009		5,000			5,051
U.S. Treasury 1.50% 2010		37,000			37,437
U.S. Treasury 1.125% 2011		60,680			60,386
U.S. Treasury 4.50% 2011		16,165			17,608
U.S. Treasury 4.625% 2011		197,750			216,629
U.S. Treasury 4.875% 2011		53,820			58,544
U.S. Treasury 2.00% 20121,9		67,428			69,862
U.S. Treasury 4.25% 2012		112,490			123,629
U.S. Treasury 2.00% 20131,9		20,127			20,047
U.S. Treasury 3.625% 2013		199,640			216,617
U.S. Treasury 4.25% 2013		159,582			178,507
U.S. Treasury 4.25% 2014		91,000			102,677
U.S. Treasury 2.00% 20151,9		74,357			73,329
U.S. Treasury 8.875% 2017		7,500			10,650
U.S. Treasury 2.00% 20181,9		20,305			19,796
U.S. Treasury 3.50% 2018		74,310			78,327
U.S. Treasury 3.75% 2018		41,500			44,697
U.S. Treasury 8.125% 2019		24,000			33,743
U.S. Treasury 6.25% 2023		7,190			9,105
U.S. Treasury 6.00% 2026		20,000			25,553
U.S. Treasury 6.50% 2026		14,385			19,373
U.S. Treasury 5.50% 2028		19,375			23,589
U.S. Treasury 2.00% 20321,9		18,579			22,543
U.S. Treasury 4.50% 2036		101,140			114,691
U.S. Treasury 4.375% 2038		12,495			14,168
Fannie Mae 2.875% 2010		65,000			66,624
Fannie Mae 6.25% 2011		5,400			5,657
Fannie Mae 5.25% 2012		74,000			76,176
Fannie Mae 2.875% 2013		89,205			90,727
Fannie Mae 4.625% 2013		80,000			80,072
Fannie Mae 6.25% 2029		50,000			61,171
Freddie Mac 6.625% 2009		39,355			40,770
Freddie Mac 5.00% 2018		170,000			159,130
Federal Home Loan Bank 5.00% 2009		15,000			15,395
Federal Home Loan Bank 3.625% 2013		8,825			9,208
Federal Home Loan Bank 5.25% 2014		11,125			12,492
United States Government Agency-Guaranteed (FDIC insured), General Electric Capital Corp., Series G, 1.625% 2011		4,400			4,406
United States Government Agency-Guaranteed (FDIC insured), General Electric Capital Corp., Series G, 2.20% 2012		11,750			11,711
CoBank ACB 7.875% 20184		10,000			9,661
CoBank ACB 2.596% 20224,5		8,315			5,834
Federal Agricultural Mortgage Corp. 4.875% 20114		11,000			11,671
Federal Agricultural Mortgage Corp. 5.50% 20114		3,000			3,176
United States Government Agency-Guaranteed (FDIC insured), Regions Bank 3.25% 2011		13,375			13,748
United States Government Agency-Guaranteed (FDIC insured), Sovereign Bancorp, Inc. 2.75% 2012		12,500			12,698
United States Government Agency-Guaranteed (FDIC insured), PNC Funding Corp. 2.30% 2012		12,500			12,490
United States Government Agency-Guaranteed (FDIC insured), Bank of America Corp., Series L, 3.125% 2012		12,000			12,337
United States Government Agency-Guaranteed (FDIC insured), Citigroup Inc. 2.875% 2011		12,000			12,275
United States Agency for International Development, Republic of Egypt 4.45% 2015		10,000			10,683
					2,334,670
FINANCIALS — 4.15%
Simon Property Group, LP 4.875% 2010		5,000			4,788
Simon Property Group, LP 5.375% 2011		32,700			29,106
Simon Property Group, LP 6.35% 2012		5,000			4,253
Simon Property Group, LP 5.30% 2013		6,000			4,961
Simon Property Group, LP 5.75% 2015		2,500			1,909
Simon Property Group, LP 5.25% 2016		80,040			60,301
Simon Property Group, LP 6.10% 2016		4,250			3,349
Simon Property Group, LP 5.875% 2017		35,825			27,690
Simon Property Group, LP 6.125% 2018		47,375			36,581
Countrywide Home Loans, Inc., Series M, 4.125% 2009		8,000			7,951
Countrywide Financial Corp., Series A, 4.50% 2010		2,695			2,628
Countrywide Financial Corp., Series B, 5.80% 2012		49,356			48,554
Bank of America Corp. 5.30% 2017		55,990			49,228
Merrill Lynch & Co., Inc. 6.875% 2018		10,000			9,643
MBNA Global Capital Funding, Series B, 3.993% 20275		35,000			15,671
Westfield Group 5.40% 20124		22,690			18,825
Westfield Capital Corp. Ltd., WT Finance (Australia) Pty Ltd. and WEA Finance LLC 5.125% 20144		28,560			21,589
Westfield Group 5.70% 20164		60,690			45,088
Westfield Group 7.125% 20184		57,870			46,342
General Motors Acceptance Corp. 6.875% 20114		58,489			46,073
General Motors Acceptance Corp. 7.25% 20114		30,552			24,680
General Motors Acceptance Corp. 6.875% 20124		6,851			4,903
General Motors Acceptance Corp. 7.00% 20124		21,516			15,709
General Motors Acceptance Corp. 7.50% 20134		6,484			3,829
General Motors Acceptance Corp. 4.403% 20144,5		10,438			5,911
General Motors Acceptance Corp. 8.00% 20184		6,366			2,517
Liberty Mutual Group Inc. 6.50% 20354		21,275			13,010
Liberty Mutual Group Inc. 7.50% 20364		5,655			3,734
Liberty Mutual Group Inc., Series A, 7.80% 20874		11,070			5,479
Liberty Mutual Group Inc., Series C, 10.75% 20884,5		109,430			65,750
Independence Community Bank Corp. 4.90% 2010		5,000			4,846
Sovereign Bancorp, Inc. 4.903% 20135		9,135			6,979
Sovereign Bancorp, Inc. 5.125% 2013		20,395			18,400
Independence Community Bank 3.75% 20145		11,255			9,174
Sovereign Bancorp, Inc. 8.75% 2018		37,125			33,065
CIT Group Inc. 2.303% 20095		1,259			1,225
CIT Group Inc. 4.125% 2009		780			734
CIT Group Inc. 6.875% 2009		15,820			15,240
CIT Group Inc. 4.25% 2010		9,294			8,549
CIT Group Inc. 4.75% 2010		4,733			4,080
CIT Group Inc. 1.464% 20115		2,500			1,889
CIT Group Inc. 5.60% 2011		100			84
CIT Group Inc. 7.625% 2012		17,560			14,714
CIT Group Inc. 7.75% 2012		865			684
CIT Group Inc. 5.40% 2013		6,167			4,700
CIT Group Inc. 5.00% 2014		10,525			7,120
CIT Group Inc. 5.125% 2014		235			153
CIT Group Inc. 5.65% 2017		511			334
CIT Group Inc. 12.00% 20184		6,784			4,964
CIT Group Inc. 5.80% 2036		3,898			2,456
CIT Group Inc. 6.10% 20675		13,890			4,485
iStar Financial, Inc., Series B, 2.336% 20095		2,420			1,576
iStar Financial, Inc. 2.536% 20105		6,748			3,720
iStar Financial, Inc. 5.375% 2010		14,010			7,707
iStar Financial, Inc. 6.00% 2010		6,950			3,476
iStar Financial, Inc., Series B, 5.125% 2011		16,930			7,113
iStar Financial, Inc. 5.65% 2011		3,635			1,491
iStar Financial, Inc. 5.80% 2011		485			204
iStar Financial, Inc. 5.15% 2012		3,400			1,395
iStar Financial, Inc. 5.50% 2012		7,700			3,159
iStar Financial, Inc., Series B, 5.95% 2013		808			315
iStar Financial, Inc. 6.50% 2013		5,133			1,849
iStar Financial, Inc. 8.625% 2013		38,217			15,297
iStar Financial, Inc., Series B, 5.70% 2014		2,918			1,081
iStar Financial, Inc. 6.05% 2015		4,612			1,708
iStar Financial, Inc. 5.875% 2016		7,165			2,654
Citigroup Inc. 6.50% 2013		17,500			16,737
Citigroup Inc. 6.125% 2017		8,000			7,248
Citigroup Capital XXI 8.30% 20771,5		49,150			26,541
HSBK (Europe) BV 7.75% 2013		10,275			7,347
HSBK (Europe) BV 7.75% 20134		2,165			1,548
HSBK (Europe) BV 7.25% 20174		65,640			37,087
HSBK (Europe) BV 7.25% 2017		3,125			1,766
Zions Bancorporation 5.65% 2014		19,000			14,462
Zions Bancorporation 5.50% 2015		44,140			31,102
Hospitality Properties Trust 6.85% 20123		6,000			4,100
Hospitality Properties Trust 6.75% 20133		37,235			24,404
Hospitality Properties Trust 5.125% 20153		5,870			3,439
Hospitality Properties Trust 6.30% 20163		4,900			2,600
Hospitality Properties Trust 5.625% 20173		1,485			779
Hospitality Properties Trust 6.70% 20183		16,175			9,183
Realogy Corp., Letter of Credit, 5.05% 20135,8,10		7,350			4,415
Realogy Corp., Term Loan B, 5.706% 20135,8,10		22,596			13,573
Realogy Corp. 10.50% 2014		95,945			22,067
Realogy Corp. 11.75% 201411		19,058			2,573
Realogy Corp. 12.375% 2015		11,125			1,335
UniCredito Italiano SpA 5.584% 20174,5		32,750			21,300
UniCredito Italiano SpA 6.00% 20174		24,400			19,316
HVB Funding Trust I 8.741% 20314		5,670			1,292
HSBC Finance Corp. 4.625% 2010		14,000			13,771
HSBC Holdings PLC 6.50% 2037		28,000			25,619
Midland Bank 2.061% Eurodollar note (undated)5		5,000			2,175
HBOS PLC 6.75% 20184		34,425			30,461
HBOS PLC 6.00% 20334		300			189
HBOS PLC 5.375% (undated)4,5		24,110			8,389
Lloyds Banking Group PLC 6.657% preference shares (undated)4,5		5,950			1,125
SLM Corp., Series A, 5.40% 2011		15,000			12,622
SLM Corp., Series A, 1.459% 20145		10,000			6,411
SLM Corp., Series A, 5.00% 2015		12,000			8,582
SLM Corp., Series A, 8.45% 2018		12,500			10,650
JPMorgan Chase & Co. 4.891% 20155		10,000			9,888
JPMorgan Chase Bank NA 6.00% 2017		14,567			14,216
JPMorgan Chase Capital XXV, Series Y, 6.80% 2037		10,025			7,936
JPMorgan Chase Capital XXII, Series V, 6.45% 20875		6,690			5,008
International Lease Finance Corp. 5.00% 2012		5,000			3,672
International Lease Finance Corp., Series R, 5.40% 2012		10,000			7,480
International Lease Finance Corp., Series R, 6.625% 2013		3,500			2,596
American General Finance Corp., Series I, 5.40% 2015		17,250			7,597
American General Finance Corp., Series J, 6.50% 2017		8,000			3,517
American General Finance Corp., Series J, 6.90% 2017		12,500			5,612
American International Group, Inc. 8.175% 20584,5		16,000			5,946
UnumProvident Corp. 5.859% 2009		11,500			11,074
UnumProvident Finance Co. PLC 6.85% 20154		28,500			25,343
Goldman Sachs Group, Inc. 5.95% 2018		2,125			1,919
Goldman Sachs Group, Inc. 6.15% 2018		4,220			3,860
Goldman Sachs Group, Inc. 7.50% 20191		25,875			25,616
Goldman Sachs Group, Inc. 6.75% 2037		3,850			2,934
Standard Chartered Bank 6.40% 20174		40,820			33,656
Santander Issuances, SA Unipersonal 1.885% 20164,5		15,200			11,423
Santander Issuances, SA Unipersonal 5.805% 20164,5		15,700			12,538
Abbey National PLC 7.95% 2029		4,642			3,866
Santander Perpetual, SA Unipersonal 6.671% (undated)4,5		10,000			5,663
Metropolitan Life Global Funding I, 5.125% 20134		10,000			9,580
MetLife Capital Trust IV 7.875% 20674,5		21,500			14,333
MetLife Capital Trust X 9.25% 20684,5		13,200			9,504
Kimco Realty Corp. 6.00% 2012		3,250			2,590
Kimco Realty Corp., Series C, 5.783% 2016		20,000			14,816
Kimco Realty Corp. 5.70% 2017		21,985			15,634
TuranAlem Finance BV 8.00% 2014		6,005			2,372
TuranAlem Finance BV 8.50% 2015		22,485			8,882
TuranAlem Finance BV 8.50% 20154		10,000			3,950
TuranAlem Finance BV 8.25% 20374		35,000			15,225
TuranAlem Finance BV, Series 8, 8.25% 2037		5,385			2,342
Korea Development Bank 5.30% 2013		29,500			26,374
Korea Development Bank 8.00% 2014		4,000			3,939
Lazard Group LLC 7.125% 2015		32,782			24,789
Lazard Group LLC 6.85% 2017		6,322			4,362
Fifth Third Capital Trust IV 6.50% 20675		59,500			27,162
Rouse Co. 3.625% 2009		32,561			11,885
Rouse Co. 7.20% 2012		28,039			9,673
Rouse Co. 5.375% 2013		2,770			969
Rouse Co. 6.75% 20134		13,400			4,623
E*TRADE Financial Corp. 8.00% 2011		26,350			12,253
E*TRADE Financial Corp. 7.375% 2013		8,100			3,442
E*TRADE Financial Corp. 7.875% 2015		24,700			10,003
Capital One Financial Corp. 6.25% 2013		20,000			18,853
Capital One Capital III 7.686% 20365		10,000			5,300
Capmark Financial Group Inc. 3.038% 20105		4,800			2,724
Capmark Financial Group Inc. 5.875% 2012		40,888			15,532
Capmark Financial Group Inc. 6.30% 2017		15,797			5,230
Prudential Holdings, LLC, Series C, 8.695% 20234,8		22,250			19,372
Prudential Financial, Inc. 8.875% 20685		5,000			3,370
Hartford Financial Services Group, Inc. 6.30% 2018		9,250			7,586
Glen Meadow Pass-Through Trust 6.505% 20674,5		38,500			15,141
Charles Schwab Corp., Series A, 6.375% 2017		15,035			13,744
Schwab Capital Trust I 7.50% 20375		13,000			7,799
Host Marriott, LP, Series M, 7.00% 2012		16,800			15,036
Host Marriott, LP, Series K, 7.125% 2013		7,000			6,090
Development Bank of Singapore Ltd. 7.875% 20104		10,000			10,407
Development Bank of Singapore Ltd. 7.125% 20114		5,000			5,297
DBS Bank Ltd. 1.704% 20214,5		7,250			5,347
PNC Funding Corp., Series II, 6.113% (undated)4,5		3,800			1,830
National City Preferred Capital Trust I 12.00% (undated)5		20,000			18,200
Lincoln National Corp. 5.65% 2012		12,000			11,250
Lincoln National Corp. 7.00% 20665		15,025			6,950
ZFS Finance (USA) Trust I 6.15% 20654,5		6,000			3,415
ZFS Finance (USA) Trust II 6.45% 20654,5		12,500			5,459
ZFS Finance (USA) Trust V 6.50% 20674,5		20,360			9,173
Kazkommerts International BV 8.50% 20134		2,500			1,462
Kazkommerts International BV 7.875% 20144		10,000			5,450
Kazkommerts International BV 8.00% 2015		14,500			6,742
Kazkommerts International BV, Series 4, 7.50% 2016		7,500			3,254
Resona Bank, Ltd. 5.85% (undated)4,5		31,500			16,873
New York Life Global Funding 4.65% 20134		17,000			16,786
American Express Co. 6.15% 2017		12,610			11,878
American Express Co. 8.15% 2038		4,500			4,767
ProLogis 5.625% 2015		2,605			1,393
ProLogis 6.625% 2018		27,915			14,667
ERP Operating LP 5.50% 2012		4,000			3,674
ERP Operating LP 6.584% 2015		2,705			2,273
ERP Operating LP 5.75% 2017		1,660			1,348
ERP Operating LP 7.125% 2017		10,000			8,348
Monumental Global Funding 5.50% 20134		10,000			9,106
Monumental Global Funding III 1.294% 20144,5		8,000			5,320
Lehman Brothers Holdings Inc., Series I, 3.018% 20125,6		2,195			302
Lehman Brothers Holdings Inc., Series G, 4.80% 20146		9,895			1,435
Lehman Brothers Holdings Inc., Series I, 6.20% 20146		2,785			404
Lehman Brothers Holdings Inc., Series H, 5.50% 20166		215			31
Lehman Brothers Holdings Inc., Series I, 6.875% 20186		73,733			10,691
Northern Rock PLC 5.60% (undated)4,5		16,380			3,849
Northern Rock PLC 6.594% (undated)4,5		33,985			7,986
CNA Financial Corp. 5.85% 2014		5,625			3,965
CNA Financial Corp. 7.25% 2023		11,625			7,804
Wells Fargo & Co. 4.375% 2013		10,850			10,571
Royal Bank of Scotland Group PLC 6.375% 2011		200			187
RBS Capital Trust II 6.425% noncumulative trust (undated)5		1,905			507
Royal Bank of Scotland Group PLC 6.99% (undated)4,5		27,540			7,298
Royal Bank of Scotland Group PLC 7.648% (undated)5		6,381			1,851
Principal Life Insurance Co. 5.30% 2013		10,000			9,590
Catlin Insurance Ltd. 7.249% (undated)4,5		40,090			9,555
Developers Diversified Realty Corp. 4.625% 2010		8,695			6,341
Developers Diversified Realty Corp. 5.375% 2012		2,000			947
Developers Diversified Realty Corp. 5.50% 2015		5,000			2,178
Protective Life Insurance Co., Series 2005-C, 4.85% 2010		10,000			9,355
Allstate Corp., Series B, 6.125% 20675		4,020			2,669
Allstate Corp., Series A, 6.50% 20675		9,775			6,326
United Overseas Bank Ltd. 5.375% 20194,5		10,000			8,976
ORIX Corp. 5.48% 2011		12,000			8,860
Nationwide Mutual Insurance 5.81% 20244,5		10,000			4,258
Nationwide Mutual Insurance Co. 7.875% 20334		5,000			2,759
Chubb Corp. 6.375% 20675		10,250			6,929
AXA SA 6.463% (undated)4,5		15,000			6,588
Société Générale 5.75% 20164		7,400			6,460
Banco Mercantil del Norte, SA 6.135% 20164,5		2,000			1,298
Banco Mercantil del Norte, SA 6.862% 20214,5		6,850			3,915
Skandinaviska Enskilda Banken AB 7.50% (undated)4,5		10,405			5,110
Bank of Nova Scotia 3.25% 20855		10,000			5,097
Silicon Valley Bank 5.70% 2012		5,000			4,847
Assurant, Inc. 5.625% 2014		5,740			4,816
Canadian Imperial Bank of Commerce 3.25% Eurodollar note 20851,5		10,000			4,742
Huntington National Bank 5.50% 2016		510			398
Huntington National Bank 6.60% 2018		5,750			3,919
Huntington National Bank 5.375% 2019		384			242
Nationwide Financial Services, Inc. 6.75% 20675		9,780			4,281
SunTrust Banks, Inc. 7.25% 2018		4,000			4,143
KeyBank NA 5.50% 2012		4,000			3,779
Credit Agricole SA 6.637% (undated)4,5		9,233			3,555
Brandywine Operating Partnership, LP 5.75% 2012		4,190			3,060
Genworth Financial, Inc. 6.15% 20665		17,665			2,989
First Tennessee Bank 5.05% 2015		3,400			2,340
United Dominion Realty Trust, Inc. 5.00% 2012		2,500			1,918
LaBranche & Co Inc. 11.00% 2012		1,750			1,553
Plum Creek Timberlands, LP 5.875% 2015		1,500			1,194
Ambac Financial Group, Inc. 6.15% 20875		8,405			755
Barclays Bank PLC 5.926% (undated)4,5		1,000			430
BNP Paribas 5.125% 20154		245			215
Downey Financial Corp. 6.50% 20146		18,340			2
					2,210,658
CONSUMER DISCRETIONARY — 3.89%
CCH II, LLC and CCH II Capital Corp. 10.25% 2010		39,050			23,625
Charter Communications Operating, LLC and Charter Communications Operating Capital Corp. 8.00% 20124		48,548			41,509
CCO Holdings, LLC and CCO Holdings Capital Corp. 8.75% 2013		23,350			17,162
Charter Communications Operating, LLC, Term Loan B, 3.18% 20145,8,10		49,822			38,468
Charter Communications Operating, LLC and Charter Communications Operating Capital Corp. 8.375% 20144		15,000			12,525
Charter Communications Operating, LLC, Term Loan B, 8.50% 20145,8,10		26,798			23,448
Charter Communications Operating, LLC and Charter Communications Operating Capital Corp. 10.875% 20144		24,550			21,358
CCH I, LLC and CCH I Capital Corp. 11.00% 2015		1,725			310
Ford Motor Credit Co. 7.375% 2009		1,200			1,076
Ford Motor Credit Co. 9.75% 20105		81,750			67,496
Ford Motor Credit Co. 7.25% 2011		4,450			3,170
Ford Motor Credit Co. 7.375% 2011		1,800			1,345
Ford Motor Co. 9.50% 2011		1,000			378
Ford Motor Credit Co. 9.875% 2011		7,500			5,579
Ford Motor Credit Co. 4.01% 20125		102,355			63,588
Ford Motor Credit Co. 7.80% 2012		3,500			2,391
Ford Motor Co., Term Loan B, 5.00% 20135,8,10		51,650			19,003
Ford Motor Credit Co. 8.00% 2016		9,925			5,950
Ford Motor Co. 6.50% 2018		5,742			1,120
Ford Motor Co. 8.875% 2022		1,320			264
Ford Motor Co. 7.45% 2031		1,725			388
Allison Transmission Holdings, Inc., Term Loan B, 3.18% 20145,8,10		114,040			74,665
Allison Transmission Holdings, Inc. 11.00% 20154		27,300			15,288
Allison Transmission Holdings, Inc. 11.25% 20154,5,11		76,450			34,785
MGM MIRAGE 6.00% 2009		32,175			30,968
Mandalay Resort Group 6.50% 2009		7,122			6,908
MGM MIRAGE 8.50% 2010		46,405			37,588
MGM MIRAGE 6.75% 2012		9,150			5,444
MGM MIRAGE 6.75% 2013		8,200			4,797
MGM MIRAGE 13.00% 20134		14,425			13,199
MGM MIRAGE 7.50% 2016		4,000			2,180
Time Warner Inc. 2.405% 20095		14,700			14,365
Time Warner Inc. 5.50% 2011		1,000			977
AOL Time Warner Inc. 6.75% 2011		3,000			3,025
AOL Time Warner Inc. 6.875% 2012		11,950			12,013
Time Warner Companies, Inc. 9.125% 2013		5,000			5,329
Time Warner Inc. 5.875% 2016		18,900			17,889
Time Warner Companies, Inc. 7.25% 2017		9,500			9,162
AOL Time Warner Inc. 7.625% 2031		10,750			10,383
Time Warner Inc. 6.50% 2036		19,000			16,947
Univision Communications, Inc., Second Lien Term Loan B, 2.909% 20091,5,8,10		5,415			4,982
Univision Communications Inc. 7.85% 2011		22,490			15,293
Univision Communications, Inc., First Lien Term Loan B, 2.659% 20145,8,10		66,344			35,383
Univision Communications Inc. 9.75% 20154,11		104,155			17,706
News America Inc. 5.30% 2014		20,800			20,204
News America Holdings Inc. 8.00% 2016		6,000			6,186
News America Inc. 7.25% 2018		1,405			1,371
News America Holdings Inc. 8.25% 2018		7,000			6,877
News America Inc. 6.40% 2035		750			695
News America Inc. 6.65% 20371		21,000			20,296
News America Inc. 6.75% 2038		15,000			15,254
Cox Communications, Inc. 7.875% 2009		12,500			12,459
Cox Communications, Inc. 4.625% 2010		8,250			8,186
Cox Communications, Inc. 7.75% 2010		10,000			10,041
Cox Communications, Inc. 5.45% 2014		13,500			12,468
Cox Communications, Inc. 5.875% 20164		25,000			22,395
Sally Holdings LLC and Sally Capital Inc. 9.25% 2014		63,375			58,622
Sally Holdings LLC and Sally Capital Inc. 10.50% 2016		2,650			2,199
Michaels Stores, Inc., Term Loan B, 2.688% 20135,8,10		31,120			19,061
Michaels Stores, Inc. 10.00% 2014		87,100			39,631
Michaels Stores, Inc. 0%/13.00% 201612		8,155			856
Comcast Cable Communications, Inc. 6.75% 2011		3,300			3,383
Comcast Cable Communications, Inc. 7.125% 2013		8,100			8,401
Comcast Corp. 5.85% 2015		13,200			12,925
Comcast Corp. 5.90% 2016		8,475			8,273
Comcast Corp. 6.45% 2037		13,500			12,987
Comcast Corp. 6.95% 2037		10,275			10,529
Time Warner Cable Inc. 6.75% 2018		32,000			31,304
Time Warner Cable Inc. 6.55% 2037		25,000			23,906
NTL Cable PLC 8.75% 2014		30,564			26,132
NTL Cable PLC 9.125% 2016		32,000			27,040
Macy’s Retail Holdings, Inc. 7.875% 2015		15,000			11,515
Federated Retail Holdings, Inc. 5.90% 2016		52,335			32,694
Federated Retail Holdings, Inc. 6.375% 2037		14,300			8,240
J.C. Penney Co., Inc. 8.00% 2010		35,705			35,617
J.C. Penney Co., Inc. 9.00% 2012		10,506			9,769
KB Home 5.875% 2015		25,985			17,930
KB Home 6.25% 2015		21,905			15,991
Dollar General Corp., Term Loan B2, 3.159% 20145,8,10		5,000			4,023
Dollar General Corp. 10.625% 2015		19,125			19,125
Dollar General Corp. 11.875% 20175,11		11,200			10,360
K. Hovnanian Enterprises, Inc. 8.875% 2012		10,515			3,943
K. Hovnanian Enterprises, Inc. 7.75% 2013		14,265			3,566
K. Hovnanian Enterprises, Inc. 6.375% 2014		7,891			2,367
K. Hovnanian Enterprises, Inc. 6.50% 2014		4,446			1,378
K. Hovnanian Enterprises, Inc. 6.25% 2015		28,080			8,284
K. Hovnanian Enterprises, Inc. 6.25% 2016		16,170			4,770
K. Hovnanian Enterprises, Inc. 7.50% 2016		13,755			4,161
K. Hovnanian Enterprises, Inc. 8.625% 2017		11,930			3,340
Target Corp. 6.00% 2018		24,500			24,306
Target Corp. 6.50% 2037		2,255			2,089
Target Corp. 7.00% 2038		5,600			5,363
Mohegan Tribal Gaming Authority 6.375% 2009		19,780			19,236
Mohegan Tribal Gaming Authority 8.00% 2012		2,100			1,281
Mohegan Tribal Gaming Authority 6.125% 2013		4,175			2,756
Mohegan Tribal Gaming Authority 7.125% 2014		4,950			2,772
Mohegan Tribal Gaming Authority 6.875% 2015		8,775			4,739
Boyd Gaming Corp. 7.75% 2012		28,400			25,276
Boyd Gaming Corp. 6.75% 2014		8,004			5,363
Quebecor Media Inc. 7.75% 2016		27,200			21,488
Quebecor Media Inc. 7.75% 2016		11,195			8,844
TL Acquisitions, Inc., Term Loan B, 2.91% 20145,8,10		15,191			11,574
Thomson Learning 10.50% 20154		33,050			16,690
Staples, Inc. 7.375% 2012		9,000			8,934
Staples, Inc. 9.75% 2014		15,625			16,635
Marriott International, Inc., Series J, 5.625% 2013		9,030			7,749
Marriott International, Inc., Series I, 6.375% 2017		19,500			16,217
Wynn Las Vegas, LLC and Wynn Las Vegas Capital Corp. 6.625% 2014		32,535			23,873
Walt Disney Co. 6.375% 2012		15,000			16,168
Walt Disney Co. 5.625% 2016		3,000			3,155
Walt Disney Co. 5.875% 2017		4,000			4,273
General Motors Corp. 7.20% 2011		67,225			13,949
General Motors Corp. 7.125% 2013		24,700			4,014
General Motors Corp. 8.80% 2021		24,970			3,246
General Motors Corp. 9.40% 2021		5,225			862
Standard Pacific Corp. 5.125% 2009		13,750			13,338
Standard Pacific Corp. 6.875% 2011		3,385			2,454
Standard Pacific Corp. 6.25% 2014		7,050			3,842
Standard Pacific Corp. 7.00% 2015		3,830			2,049
Royal Caribbean Cruises Ltd. 8.75% 2011		26,850			21,614
CSC Holdings, Inc., Series B, 8.125% 2009		14,025			14,130
CSC Holdings, Inc., Series B, 6.75% 2012		400			387
CSC Holdings, Inc. 8.50% 20144		7,000			6,913
DaimlerChrysler North America Holding Corp., Series E, 5.75% 2011		250			238
DaimlerChrysler North America Holding Corp. 5.875% 2011		5,000			4,797
DaimlerChrysler North America Holding Corp. 7.75% 2011		15,000			14,918
Toys “R” Us, Inc. 7.625% 2011		28,615			12,054
Toys “R” Us-Delaware, Inc., Term Loan B, 4.584% 20125,8,10		14,940			7,700
Kabel Deutschland GmbH 10.625% 2014		19,675			19,085
Seminole Tribe of Florida 6.535% 20204,8		10,000			7,675
Seminole Tribe of Florida 7.804% 20204,8		9,980			9,185
Thomson Reuters Corp. 5.95% 2013		3,625			3,564
Thomson Reuters Corp. 6.50% 2018		14,260			13,243
Warner Music Group 7.375% 2014		25,000			16,000
Princeton University 4.95% 2019		15,000			15,088
Tenneco Automotive Inc., Series B, 10.25% 2013		5,144			3,421
Tenneco Automotive Inc. 8.625% 2014		27,750			8,603
Tenneco Inc. 8.125% 2015		6,950			2,433
AMC Entertainment Inc., Series B, 8.625% 2012		14,650			13,405
Viacom Inc. 5.75% 2011		2,500			2,392
Viacom Inc. 6.25% 2016		12,750			10,900
Meritage Corp. 7.00% 2014		4,960			3,249
Meritage Homes Corp. 6.25% 2015		5,350			3,317
Meritage Corp. 7.731% 20171,4		12,500			6,137
President & Fellows of Harvard University 5.00% 20144		12,000			12,220
Vidéotron Ltée 6.875% 2014		7,169			6,846
Vidéotron Ltée 6.375% 2015		4,905			4,341
McGraw-Hill Companies, Inc. 5.375% 2012		5,170			4,617
McGraw-Hill Companies, Inc. 5.90% 2017		6,000			4,930
Centex Corp. 5.25% 2015		7,315			5,413
Centex Corp. 6.50% 2016		4,935			3,849
CanWest Media Inc., Series B, 8.00% 2012		38,823			9,123
CanWest MediaWorks Inc. 9.25% 20151,4		375			49
Beazer Homes USA, Inc. 8.375% 2012		11,298			4,971
Beazer Homes USA, Inc. 8.125% 2016		13,050			4,176
Seneca Gaming Corp. 7.25% 2012		8,000			6,440
Seneca Gaming Corp., Series B, 7.25% 2012		3,275			2,636
Education Management LLC and Education Management Finance Corp. 8.75% 2014		8,100			6,946
Education Management LLC and Education Management Finance Corp. 10.25% 2016		2,520			2,104
Hanesbrands Inc., Series B, 5.698% 20145		12,300			9,041
Clear Channel Communications, Inc. 7.65% 2010		15,000			8,325
American Media Operation 9.00% 20131,4,11		945			567
American Media Operation 14.00% 20131,4		14,805			7,402
Delphi Automotive Systems Corp. 6.50% 20096		54,466			1,634
Delphi Corp. 6.50% 20136		72,580			2,177
Delphi Automotive Systems Corp. 6.55% 20066		17,105			513
Delphi Automotive Systems Corp. 7.125% 20296		104,355			3,131
Delphi Trust I 8.25% 20336		30,031			3
DIRECTV Holdings LLC and DIRECTV Financing Co., Inc. 8.375% 2013		7,187			7,259
LBI Media, Inc. 8.50% 20174		19,605			6,960
Regal Cinemas Corp., Series B, 9.375% 20121		7,250			6,916
Pinnacle Entertainment, Inc. 7.50% 2015		9,100			6,643
Cooper-Standard Automotive Inc. 7.00% 2012		19,150			6,032
ERAC USA Finance Co. 7.00% 20374		10,000			5,919
Radio One, Inc. 6.375% 2013		22,565			5,754
Neiman Marcus Group, Inc. 9.75% 20155,11		11,300			5,085
Gaylord Entertainment Co. 8.00% 2013		4,354			3,363
Gaylord Entertainment Co. 6.75% 2014		2,000			1,480
Dex Media West LLC, Dex Media West Finance Co., Series B, 8.50% 2010		5,000			3,225
Dex Media, Inc., Series B, 9.00% 2013		9,000			1,170
Technical Olympic USA, Inc. 9.00% 20106		10,675			854
Technical Olympic USA, Inc. 9.00% 20106		7,815			625
Technical Olympic USA, Inc. 9.25% 20114,6		33,175			2,654
Claire’s Stores, Inc., Term Loan B, 3.159% 20145,8,10		9,106			3,335
Cinemark USA, Inc., Term Loan B, 2.09% 20135,8,10		3,715			3,324
Liberty Media Corp. 8.25% 2030		6,025			2,974
Goodyear Tire & Rubber Co. 6.318% 20095		3,000			2,910
William Lyon Homes, Inc. 7.625% 2012		9,000			2,295
Sealy Mattress Co. 8.25% 2014		5,275			2,242
Bon-Ton Department Stores, Inc. 10.25% 2014		12,850			1,992
Fox Acquisition LLC 13.375% 20164		4,175			1,973
Visteon Corp. 7.00% 2014		18,000			1,350
Wyndham Worldwide Corp. 6.00% 2016		1,590			789
Local T.V. Finance LLC 9.25% 20154,11		4,775			603
Young Broadcasting Inc. 10.00% 2011		21,855			164
Young Broadcasting Inc. 8.75% 20146		535			4
					2,070,514
TELECOMMUNICATION SERVICES — 2.62%
Qwest Capital Funding, Inc. 7.90% 2010		32,510			31,697
Qwest Capital Funding, Inc. 7.25% 2011		137,770			128,126
Qwest Communications International Inc. 7.25% 2011		30,025			28,524
Qwest Corp. 8.875% 2012		12,400			12,400
Qwest Capital Funding, Inc. 7.625% 2021		7,225			5,346
U S WEST Capital Funding, Inc. 6.875% 2028		21,175			14,081
Qwest Capital Funding, Inc. 7.75% 2031		31,220			21,698
Verizon Communications Inc. 5.25% 20124		17,000			16,944
ALLTEL Corp. 7.00% 2012		17,686			18,305
Verizon Communications Inc. 5.55% 20144		64,635			64,219
Verizon Global Funding Corp. 4.90% 2015		3,560			3,401
Verizon Communications Inc. 5.50% 2017		27,000			26,530
Verizon Communications Inc. 6.10% 2018		11,300			11,482
Verizon Communications Inc. 8.75% 2018		15,000			17,501
Verizon Global Funding Corp. 7.75% 2030		6,705			7,300
Verizon Communications Inc. 6.25% 2037		50,000			47,751
SBC Communications Inc. 6.25% 2011		5,500			5,756
AT&T Corp. 7.30% 20115		14,789			15,987
AT&T Wireless Services, Inc. 8.125% 2012		16,935			18,469
AT&T Inc. 4.95% 2013		28,750			29,330
AT&T Inc. 6.70% 2013		15,000			16,212
AT&T Inc. 4.85% 2014		2,000			2,012
SBC Communications Inc. 5.10% 2014		38,500			38,522
SBC Communications Inc. 5.625% 2016		10,000			10,063
AT&T Inc. 5.80% 2019		20,250			20,297
AT&T Corp. 8.00% 20315		5,000			5,950
AT&T Inc. 6.55% 20391		5,000			5,005
Sprint Capital Corp. 6.375% 2009		3,280			3,256
Nextel Communications, Inc., Series E, 6.875% 2013		101,615			49,308
Nextel Communications, Inc., Series F, 5.95% 2014		48,855			22,983
Nextel Communications, Inc., Series D, 7.375% 2015		136,815			64,332
Sprint Nextel Corp. 6.00% 2016		3,850			2,583
Sprint Capital Corp. 6.90% 2019		1,420			953
Sprint Capital Corp. 8.75% 2032		17,150			10,609
American Tower Corp. 7.125% 2012		59,325			59,918
American Tower Corp. 7.50% 2012		43,300			43,841
American Tower Corp. 7.00% 20174		11,200			10,808
Centennial Communications Corp. 7.185% 20135		47,300			46,827
Centennial Communications Corp. 10.00% 2013		5,275			5,592
Centennial Communications Corp. and Centennial Cellular Operating Co. LLC 10.125% 2013		17,500			18,156
Centennial Communications Corp., Centennial Cellular Operating Co. LLC and
Centennial Puerto Rico Operations Corp. 8.125% 20145		39,275			40,453
Telecom Italia Capital SA 4.00% 2010		1,470			1,429
Telecom Italia Capital SA 4.875% 2010		1,630			1,561
Telecom Italia Capital SA, Series B, 5.25% 2013		2,700			2,431
Telecom Italia Capital SA 5.25% 2015		14,000			11,931
Telecom Italia Capital SA 6.999% 2018		24,400			22,632
Telecom Italia Capital SA 7.20% 2036		18,400			16,128
Telecom Italia Capital SA 7.721% 2038		30,100			28,179
Windstream Corp. 8.125% 2013		6,000			5,940
Valor Telecommunications Enterprises, LLC and Valor Telecommunications Enterprises Finance Corp. 7.75% 2015		7,125			6,739
Windstream Corp. 8.625% 2016		58,100			57,519
Cricket Communications, Inc. 9.375% 2014		54,450			49,822
MetroPCS Wireless, Inc., Term Loan B, 5.50% 20135,8,10		13,732			11,985
MetroPCS Wireless, Inc. 9.25% 2014		17,300			16,111
MetroPCS Wireless, Inc. 9.25% 20144		7,050			6,504
Vodafone Group PLC 5.625% 2017		11,975			11,676
Vodafone Group PLC 6.15% 2037		16,560			16,121
Cincinnati Bell Inc. 7.25% 2013		23,475			22,536
Rogers Wireless Inc. 7.25% 2012		3,140			3,253
Rogers Wireless Inc. 7.50% 2015		16,750			17,060
Koninklijke KPN NV 8.00% 2010		10,000			10,353
Koninklijke KPN NV 8.375% 2030		4,660			5,065
Singapore Telecommunications Ltd. 6.375% 2011		4,825			5,147
Singapore Telecommunications Ltd. 7.375% 20314		3,800			4,108
France Télécom 7.75% 20115		8,500			8,991
PCCW-HKT Capital No. 3 Ltd. 5.25% 20154		12,000			8,639
British Telecommunications PLC 5.15% 2013		8,750			8,076
Deutsche Telekom International Finance BV 5.875% 2013		5,625			5,814
NTELOS Inc., Term Loan B, 2.66% 20115,8,10		5,776			5,232
Embarq Corp. 6.738% 2013		5,000			4,754
Nordic Telephone Co. Holding ApS 8.875% 20164		4,000			3,260
Level 3 Financing, Inc. 9.25% 2014		4,000			2,920
Citizens Communications Co. 7.875% 2027		3,725			2,780
Hawaiian Telcom Communications, Inc. 8.765% 20135,6		15,920			1,114
Hawaiian Telcom Communications, Inc. 9.75% 20136		16,945			1,229
Hawaiian Telcom Communications, Inc., Series B, 12.50% 20156		7,075			71
Crown Castle International Corp. 9.00% 2015		2,400			2,346
Trilogy International Partners LLC, Term Loan B, 4.959% 20125,8,10		5,250			2,231
					1,394,214
INDUSTRIALS — 2.04%
Nielsen Finance LLC, Term Loan B, 4.388% 20135,8,10		9,629			7,771
Nielsen Finance LLC and Nielsen Finance Co. 10.00% 2014		65,200			58,028
Nielsen Finance LLC and Nielsen Finance Co. 11.625% 20144		23,825			22,217
Nielsen Finance LLC and Nielsen Finance Co. 0%/12.50% 201612		65,225			26,742
Continental Airlines, Inc. 8.75% 2011		27,750			19,564
Continental Airlines, Inc., Series 2000-2, Class A-2, 7.487% 20128		11,700			10,764
Continental Airlines, Inc., Series 1997-1, Class A, 7.461% 20168		9,870			6,909
Continental Airlines, Inc., Series 2001-1, Class B, 7.373% 20178		5,403			3,836
Continental Airlines, Inc., Series 1998-1, Class B, 6.748% 20188		1,313			932
Continental Airlines, Inc., Series 1998-1, Class A, 6.648% 20198		17,293			13,834
Continental Airlines, Inc., Series 1997-4, Class A, 6.90% 20198		4,851			3,930
Continental Airlines, Inc., Series 2000-2, Class B, 8.307% 20198		847			593
Continental Airlines, Inc., Series 1999-1, Class A, 6.545% 20208		15,943			13,552
Continental Airlines, Inc., Series 1999-1, Class B, 6.795% 20208		822			625
Continental Airlines, Inc., Series 2003-ERJ3, Class A, 7.875% 20208		11,559			6,820
Continental Airlines, Inc., Series 1999-2, Class A-1, 7.256% 20218		674			553
Continental Airlines, Inc., Series 1999-2, Class B, 7.566% 20218		5,204			4,111
Continental Airlines, Inc., Series 2001-1, Class A-1, 6.703% 20228		13,342			10,140
Continental Airlines, Inc., Series 2007-1, Class B, 6.903% 20228		11,380			7,333
Continental Airlines, Inc., Series 2000-2, Class A-1, 7.707% 20228		2,642			2,008
Continental Airlines, Inc., Series 2000-1, Class A-1, 8.048% 20228		6,677			5,208
Continental Airlines, Inc., Series 2000-1, Class B, 8.388% 20228		5,754			3,682
Delta Air Lines, Inc., Series 2000-1, Class A-2, 7.57% 20128		8,050			7,446
Northwest Airlines, Inc., Term Loan B, 4.96% 20131,5,8,10		5,936			5,372
Delta Air Lines, Inc., Series 2002-1, Class G-2, MBIA insured, 6.417% 20148		46,035			35,746
Delta Air Lines, Inc., Series 1992-A2, 9.20% 20146,8		3,174			2,817
Northwest Airlines, Inc., Term Loan A, 3.21% 20185,8,10		58,481			47,272
Delta Air Lines, Inc., Series 2002-1, Class G-1, MBIA insured, 6.718% 20248		18,109			12,224
United Air Lines, Inc., Series 2001-1, Class A-2, 6.201% 20108		2,723			2,597
United Air Lines, Inc., Series 2000-2, Class B, 7.811% 20116,8		5,302			5,832
United Air Lines, Inc., Series 2000-2, Class A-2, 7.186% 20128		25,471			24,325
United Air Lines, Inc., Term Loan B, 2.438% 20145,8,10		57,011			30,481
United Air Lines, Inc., Series 2001-1, Class A-1, 6.071% 20148		2,019			1,942
United Air Lines, Inc., Series 2001-1, Class A-3, 6.602% 20158		1,072			1,031
United Air Lines, Inc., Series 1996-A2, 7.87% 20196,8		2,453			33
United Air Lines, Inc., Series 2007-1, Class B, 7.336% 20214,8		5,138			2,877
United Air Lines, Inc., Series 2007-1, Class A, 6.636% 20248		9,130			6,431
US Investigations Services, Inc., Term Loan B, 4.275% 20155,8,10		18,762			14,634
US Investigations Services, Inc. 10.50% 20154		41,545			32,613
US Investigations Services, Inc. 11.75% 20164		15,775			10,806
American Airlines, Inc., Series 2003-1, Class G, AMBAC insured, 3.857% 20128		1,354			1,240
American Airlines, Inc., Series 2001-1, Class A-2, 6.817% 20128		17,745			13,309
American Airlines, Inc., Series 2001-2, Class A-1, 6.978% 20128		1,726			1,599
American Airlines, Inc., Series 2001-2, Class B, 8.608% 20128		4,595			3,320
AMR Corp. 9.00% 2012		11,000			6,490
American Airlines, Inc., Series 2001-2, Class A-2, 7.858% 20138		17,138			14,760
AMR Corp. 9.00% 2016		2,000			1,100
American Airlines, Inc., Series 2001-1, Class B, 7.377% 20198		14,398			6,911
AMR Corp. 10.00% 20211		3,000			1,650
American Airlines, Inc., Series 2001-1, Class A-1, 6.977% 20228		7,283			4,151
Ashtead Group PLC 8.625% 20154		15,700			9,656
Ashtead Capital, Inc. 9.00% 20164		55,185			33,387
Allied Waste North America, Inc., Series B, 6.50% 2010		12,000			12,005
Allied Waste North America, Inc., Series B, 5.75% 2011		8,800			8,628
Allied Waste North America, Inc., Series B, 6.125% 2014		2,500			2,403
Allied Waste North America, Inc., Series B, 7.375% 2014		4,500			4,437
Allied Waste North America, Inc. 7.25% 2015		8,500			8,255
Allied Waste North America, Inc. 6.875% 2017		7,250			7,043
ARAMARK Corp., Term Loan B, 3.334% 20145,8,10		12,047			10,607
ARAMARK Corp., Letter of Credit, 4.494% 20145,8,10		765			674
ARAMARK Corp. 6.693% 20155		8,050			6,561
ARAMARK Corp. 8.50% 2015		24,575			24,022
Koninklijke Philips Electronics NV 5.75% 2018		23,250			22,343
Koninklijke Philips Electronics NV 6.875% 2038		10,700			10,274
Hutchison Whampoa International Ltd. 7.00% 20114		5,000			5,265
Hutchison Whampoa International Ltd. 6.50% 20134		25,000			25,385
BAE SYSTEMS 2001 Asset Trust, Series 2001, Class B, 7.156% 20111,4,8		22,607			19,668
BAE SYSTEMS 2001 Asset Trust, Series 2001, Class G, MBIA insured, 6.664% 20134,8		9,223			8,721
Burlington Northern Santa Fe Corp. 7.00% 2014		23,600			25,037
BNSF Funding Trust I 6.613% 20555		2,910			2,020
General Electric Co. 5.25% 2017	��	11,250			10,664
General Electric Capital Corp., Series A, 3.239% 20265		25,000			13,437
Norfolk Southern Corp. 5.75% 20164		11,760			11,593
Norfolk Southern Corp. 5.75% 2018		12,000			11,584
Hawker Beechcraft Acquisition Co., LLC, Term Loan B, 2.409% 20145,8,10		27,169			14,923
Hawker Beechcraft Acquisition Co., LLC, Letter of Credit, 3.459% 20145,8,10		1,598			878
Hawker Beechcraft Acquisition Co., LLC 8.50% 2015		5,300			1,723
Hawker Beechcraft Acquisition Co., LLC 8.875% 201511		11,530			2,940
Hawker Beechcraft Acquisition Co., LLC 9.75% 2017		4,105			759
Caterpillar Financial Services Corp., Series F, 4.85% 2012		8,335			8,385
Caterpillar Financial Services Corp., Series F, 6.20% 2013		2,500			2,625
Caterpillar Financial Services Corp., Series F, 5.50% 2016		5,000			4,779
Caterpillar Financial Services Corp., Series F, 5.85% 2017		2,000			1,940
Caterpillar Financial Services Corp., Series F, 7.05% 2018		1,530			1,593
CSX Corp. 5.75% 2013		4,960			4,778
CSX Corp. 6.25% 2015		3,460			3,324
CSX Corp. 6.15% 2037		11,800			9,023
American Standard Inc. 7.625% 2010		16,501			16,709
United Technologies Corp. 6.125% 2019		15,000			16,293
Waste Management, Inc. 5.00% 2014		7,000			6,014
WMX Technologies, Inc. 7.10% 2026		10,125			8,033
USG Corp. 6.30% 2016		10,000			6,200
USG Corp. 9.25% 20185		10,500			6,877
Sequa Corp., Term Loan B, 3.69% 20145,8,10		19,280			12,399
Atlas Copco AB 5.60% 20174		11,405			10,266
Navios Maritime Holdings Inc. 9.50% 2014		16,695			9,878
Union Pacific Corp. 5.75% 2017		2,065			1,980
Union Pacific Corp. 5.70% 2018		8,000			7,679
CEVA Group PLC 10.00% 20144		8,825			6,575
CEVA Group PLC, Bridge Loan, 6.18% 20151,5,8,10		6,691			2,476
Kansas City Southern Railway Co. 13.00% 2013		8,625			9,013
John Deere Capital Corp. 4.875% 2009		4,000			4,016
John Deere Capital Corp. 5.40% 2011		2,000			2,045
John Deere Capital Corp. 5.10% 2013		500			506
John Deere Capital Corp., Series D, 5.50% 2017		2,500			2,431
B/E Aerospace 8.50% 2018		9,525			8,977
DynCorp International and DIV Capital Corp., Series B, 9.50% 20131		5,230			4,864
DynCorp International and DIV Capital Corp. 9.50% 20134		4,445			3,917
NTK Holdings Inc. 0%/10.75% 20148,12		13,500			1,620
THL Buildco, Inc. 8.50% 2014		27,325			5,738
RBS Global, Inc. and Rexnord LLC 9.50% 2014		7,800			6,747
RBS Global, Inc. and Rexnord LLC 8.875% 2016		575			405
Esterline Technologies Corp. 6.625% 2017		7,500			6,862
TransDigm Inc. 7.75% 2014		6,865			6,213
Esco Corp. 5.871% 20134,5		3,725			2,440
Esco Corp. 8.625% 20131,4		4,000			3,010
Lockheed Martin Corp. 4.121% 2013		5,000			5,103
RSC Holdings III, LLC, Second Lien Term Loan B, 4.93% 20135,8,10		8,105			4,971
H&E Equipment Services, Inc. 8.375% 2016		6,800			4,080
Atrium Companies, Inc., Term Loan B, 11.75% 20125,8,10,11		12,741			3,504
Atrium Companies, Inc. 15.00% 20124,11		6,891			517
Accuride Corp. 8.50% 2015		12,100			3,509
RSC Equipment Rental, Inc. and RSC Holdings III, LLC 9.50% 2014		5,300			3,379
Tyco International Ltd. 7.00% 2019		600			533
Tyco International Ltd. 6.875% 2021		1,000			843
Alion Science and Technology Corp. 10.25% 2015		1,740			696
					1,086,818
UTILITIES — 1.59%
Edison Mission Energy 7.50% 2013		32,525			31,387
Edison Mission Energy 7.75% 2016		35,300			34,065
Midwest Generation, LLC, Series B, 8.56% 20168		11,625			11,334
Edison Mission Energy 7.00% 2017		19,525			18,256
Edison Mission Energy 7.20% 2019		39,450			35,998
Homer City Funding LLC 8.734% 20268		12,513			11,762
Edison Mission Energy 7.625% 2027		20,850			17,045
Southern California Edison Co., First and Refunding Mortgage Bonds, Series 2006-E, 5.55% 2037		6,500			6,362
Texas Competitive Electric Holdings Co. LLC, Term Loan B2, 3.906% 20145,8,10		19,280			13,461
Texas Competitive Electric Holdings Co. LLC, Series A, 10.25% 2015		111,144			82,802
Texas Competitive Electric Holdings Co. LLC, Series B, 10.25% 2015		41,665			31,040
Texas Competitive Electric Holdings Co. LLC 11.25% 201611		15,900			9,142
AES Corp. 9.50% 2009		39,554			39,950
AES Corp. 9.375% 2010		4,802			4,838
AES Corp. 8.75% 20134		34,656			34,916
AES Corp. 7.75% 2015		10,000			9,425
AES Red Oak, LLC, Series A, 8.54% 20198		35,217			33,324
AES Red Oak, LLC, Series B, 9.20% 20298		7,000			6,405
NRG Energy, Inc. 7.25% 2014		24,525			23,483
NRG Energy, Inc. 7.375% 2016		76,625			73,177
Israel Electric Corp. Ltd. 7.95% 20114		5,000			5,359
Israel Electric Corp. Ltd. 7.70% 20184		18,500			17,598
Israel Electric Corp. Ltd. 7.25% 20194		1,800			1,720
Israel Electric Corp. Ltd. 9.375% 20201,4		20,215			21,504
Israel Electric Corp. Ltd. 8.10% 20964		4,905			3,912
MidAmerican Energy Co. 4.65% 2014		3,200			3,178
MidAmerican Energy Co. 5.95% 2017		7,000			7,060
MidAmerican Energy Holdings Co. 5.75% 2018		20,000			19,901
PacifiCorp. 5.50% 2019		5,000			5,147
MidAmerican Energy Holdings Co. 6.125% 2036		10,150			9,540
MidAmerican Energy Holdings Co. 6.50% 2037		3,000			2,960
Nevada Power Co., General and Refunding Mortgage Bonds, Series A, 8.25% 2011		6,000			6,398
Sierra Pacific Power Co., General and Refunding Mortgage Notes, Series H, 6.25% 2012		7,500			7,523
Nevada Power Co., General and Refunding Mortgage Notes, Series I, 6.50% 2012		4,250			4,294
Sierra Pacific Resources 8.625% 2014		2,725			2,537
Nevada Power Co., General and Refunding Mortgage Notes, Series L, 5.875% 2015		5,675			5,412
Nevada Power Co., General and Refunding Mortgage Notes, Series M, 5.95% 2016		13,700			13,013
Sierra Pacific Resources 6.75% 2017		3,000			2,222
National Rural Utilities Cooperative Finance Corp. 5.50% 2013		19,000			19,343
National Rural Utilities Cooperative Finance Corp., Collateral Trust Bonds, 10.375% 2018		6,000			7,260
Electricité de France SA 5.50% 20144		15,000			15,603
Electricité de France SA 6.95% 20394		8,000			8,275
Cilcorp Inc. 8.70% 2009		9,000			9,517
Union Electric Co. 5.40% 2016		8,000			7,031
Cilcorp Inc. 9.375% 2029		3,000			3,705
Abu Dhabi National Energy Co. PJSC (TAQA) 5.875% 20164		11,000			9,530
Abu Dhabi National Energy Co. PJSC (TAQA) 6.165% 20174		4,000			3,422
Abu Dhabi National Energy Co. PJSC (TAQA) 6.50% 20364		7,750			5,523
PSEG Power LLC 7.75% 2011		7,500			7,745
PSEG Power LLC 5.00% 2014		10,000			8,938
Public Service Electric and Gas Co., Series E, 5.30% 2018		1,000			970
E.ON International Finance BV 5.80% 20184		18,085			17,495
Virginia Electric and Power Co., Series 2003-A, 4.75% 2013		6,000			5,981
Virginia Electric and Power Co., Series B, 5.95% 2017		4,500			4,616
Veolia Environnement 5.25% 2013		8,000			7,474
Alabama Power Co., Series R, 4.70% 2010		1,250			1,288
Alabama Power Co., Series 2008-B, 5.80% 2013		4,500			4,852
Alabama Power Co., Series Q, 5.50% 2017		1,000			1,016
AES Panamá, SA 6.35% 20164		8,000			6,258
Carolina Power & Light Co. d/b/a Progress Energy Carolinas, Inc. 5.25% 2015		6,000			6,167
Duke Energy Corp., First and Refunding Mortgage Bonds, 5.30% 2015		5,000			5,064
Pacific Gas and Electric Co., First Mortgage Bonds, 6.05% 2034		4,000			4,103
Enersis SA 7.375% 2014		3,500			3,581
Appalachian Power Co., Series M, 5.55% 2011		3,000			2,980
Intergen Power 9.00% 20174		3,000			2,805
FPL Energy National Wind Portfolio, LLC 6.125% 20194,8		1,663			1,430
					849,422
HEALTH CARE — 1.58%
Tenet Healthcare Corp. 6.375% 2011		3,345			2,994
Tenet Healthcare Corp. 7.375% 2013		18,620			15,175
Tenet Healthcare Corp. 9.875% 2014		118,870			96,285
Tenet Healthcare Corp. 9.25% 2015		16,700			13,276
HealthSouth Corp. 8.323% 20145		40,525			33,838
HealthSouth Corp. 10.75% 2016		85,200			84,561
Boston Scientific Corp. 5.45% 2014		10,700			9,683
Boston Scientific Corp. 6.40% 2016		42,363			39,080
Boston Scientific Corp. 5.125% 2017		21,677			17,884
Boston Scientific Corp. 7.00% 2035		59,710			48,067
HCA Inc., Term Loan B, 3.709% 20135,8,10		84,715			70,468
HCA Inc. 9.125% 2014		2,090			2,012
HCA Inc. 9.25% 2016		3,650			3,495
HCA Inc. 10.375% 201611		3,400			2,865
VWR Funding, Inc. 10.25% 20155,11		70,410			52,455
Warner Chilcott Corp. 8.75% 2015		41,924			39,409
GlaxoSmithKline Capital Inc. 4.85% 2013		13,500			14,171
GlaxoSmithKline Capital Inc. 5.65% 2018		7,705			8,271
GlaxoSmithKline Capital Inc. 6.375% 2038		8,100			9,054
Cardinal Health, Inc. 4.00% 2015		25,000			20,649
Cardinal Health, Inc. 5.80% 2016		10,000			9,104
Elan Finance PLC and Elan Finance Corp. 6.149% 20115		1,500			1,118
Elan Finance PLC and Elan Finance Corp. 7.75% 2011		4,750			3,776
Elan Finance PLC and Elan Finance Corp. 6.328% 20135		14,285			9,214
Elan Finance PLC and Elan Finance Corp. 8.875% 2013		21,035			15,250
Mylan Inc., Term Loan B, 4.75% 20145,8,10		31,466			28,800
PTS Acquisition Corp. 9.50% 201511		56,135			21,612
Team Finance LLC and Health Finance Corp. 11.25% 2013		26,600			21,546
Abbott Laboratories 5.60% 2017		17,480			18,715
Coventry Health Care, Inc. 6.30% 2014		26,750			18,210
Health Management Associates Inc., Term Loan B, 3.209% 20145,8,10		23,379			16,807
UnitedHealth Group Inc. 4.875% 2013		1,590			1,509
UnitedHealth Group 6.00% 2017		12,430			11,311
UnitedHealth Group Inc. 5.80% 2036		3,410			2,691
Schering-Plough Corp. 6.00% 2017		13,843			14,294
Hospira, Inc. 1.948% 20105		10,000			9,104
Hospira, Inc. 5.55% 2012		5,295			5,105
Surgical Care Affiliates, Inc. 9.625% 20154,11		5,250			3,439
Surgical Care Affiliates, Inc. 10.00% 20174		9,500			5,463
Humana Inc. 6.45% 2016		10,000			8,498
AstraZeneca PLC 5.40% 2012		7,000			7,446
Biogen Idec Inc. 6.00% 2013		6,000			5,971
Amgen Inc. 6.40% 2039		5,000			5,201
Symbion Inc. 11.75% 201511		10,518			4,312
AMR HoldCo, Inc. and EmCare HoldCo, Inc. 10.00% 2015		3,420			3,454
Viant Holdings Inc. 10.125% 20174		8,335			2,959
Bausch & Lomb Inc. 9.875% 20154		2,250			1,991
CHS/Community Health Systems, Inc. 8.875% 2015		205			198
					840,790
ENERGY — 1.36%
Williams Companies, Inc. and Credit Linked Certificate Trust 6.75% 20094		8,000			7,960
Williams Companies, Inc. 3.435% 20104,5		8,000			7,445
Williams Companies, Inc. 6.375% 20104		4,700			4,584
Transcontinental Gas Pipe Line Corp., Series B, 7.00% 2011		10,000			9,801
Williams Companies, Inc. 7.125% 2011		38,750			37,997
Williams Companies, Inc. 8.125% 2012		14,810			14,736
Williams Companies, Inc. 7.875% 2021		14,900			14,182
Williams Companies, Inc. 8.75% 2032		10,530			9,657
Ras Laffan Liquefied Natural Gas Co. Ltd. 3.437% 20094,8		10,703			10,515
Ras Laffan Liquefied Natural Gas Co. Ltd. 3.437% 20098		206			202
Ras Laffan Liquefied Natural Gas Co. Ltd. 8.294% 20144,8		13,329			12,398
Ras Laffan Liquefied Natural Gas Co. Ltd. 8.294% 20148		4,325			4,023
Ras Laffan Liquefied Natural Gas II 5.298% 20204,8		49,350			36,185
Ras Laffan Liquefied Natural Gas III 5.838% 20274,8		55,650			36,842
TransCanada PipeLines Ltd. 6.50% 2018		24,970			25,378
TransCanada PipeLines Ltd. 7.125% 2019		17,910			19,018
TransCanada PipeLines Ltd. 6.20% 2037		800			666
TransCanada PipeLines Ltd. 7.25% 2038		175			175
TransCanada PipeLines Ltd. 7.625% 2039		6,000			6,263
TransCanada PipeLines Ltd. 6.35% 20675		80,730			46,005
Southern Natural Gas Co. 5.90% 20174		11,740			10,302
El Paso Natural Gas Co. 5.95% 2017		7,500			6,619
Tennessee Gas Pipeline Co. 7.00% 2028		71,500			60,775
Gaz Capital SA 8.146% 20184		3,250			2,486
Gaz Capital SA 6.51% 20224		42,310			25,915
Gaz Capital SA, Series 9, 6.51% 2022		9,500			5,819
Gaz Capital SA 7.288% 20374		24,925			15,578
Enterprise Products Operating LP 4.95% 2010		2,400			2,366
Enterprise Products Operating LP 7.50% 2011		2,400			2,450
Enterprise Products Operating LLC 5.65% 2013		10,000			9,559
Enterprise Products Operating LP, Series B, 5.00% 2015		4,565			3,966
Enterprise Products Operating LP 8.375% 20665		14,975			9,445
Enterprise Products Operating LP 7.034% 20685		35,720			20,031
Enbridge Energy Partners, LP, Series B, 6.50% 2018		5,225			4,606
Enbridge Energy Partners, LP 9.875% 2019		2,000			2,110
Enbridge Energy Partners, LP, Series B, 7.50% 2038		11,015			9,344
Enbridge Energy Partners, LP 8.05% 20775		20,045			11,230
Premcor Refining Group Inc. 6.125% 2011		14,500			14,615
Premcor Refining Group Inc. 6.75% 2011		11,150			11,328
Tengizchevroil Finance Co. S.àr.l., Series A, 6.124% 20144,8		24,432			19,546
Tengizchevroil Finance Co. S.àr.l., Series A, 6.124% 20148		7,715			6,172
Drummond Co., Inc. 7.375% 20164		36,430			20,583
Kinder Morgan Energy Partners LP 5.85% 2012		2,400			2,381
Kinder Morgan Energy Partners LP 5.125% 2014		10,325			9,707
Kinder Morgan Energy Partners LP 6.00% 2017		5,200			4,890
Kinder Morgan Energy Partners LP 9.00% 2019		1,660			1,805
ConocoPhillips 5.75% 20191		17,250			17,245
Enbridge Inc. 5.60% 2017		20,400			16,634
Sunoco, Inc. 4.875% 2014		7,810			6,684
Sunoco, Inc. 5.75% 2017		9,250			8,023
Qatar Petroleum 5.579% 20114,8		11,112			10,608
Rockies Express Pipeline LLC 6.85% 20184		10,000			10,198
Pemex Project Funding Master Trust 7.875% 2009		1,297			1,297
Pemex Project Funding Master Trust 5.75% 2018		4,500			3,848
Pemex Project Funding Master Trust 6.625% 2035		5,000			3,993
XTO Energy Inc. 6.25% 2017		7,750			7,433
Williams Partners L.P. and Williams Partners Finance Corp. 7.25% 2017		7,200			6,417
Canadian Natural Resources Ltd. 5.70% 2017		7,350			6,364
Petrobas International Finance Co. 6.125% 2016		6,000			5,970
Petroplus Finance Ltd. 6.75% 20144		3,750			2,813
Petroplus Finance Ltd. 7.00% 20174		3,750			2,737
PETRONAS Capital Ltd. 7.00% 20124		4,000			4,246
TEPPCO Partners LP 7.00% 20675		8,055			4,166
Husky Energy Inc. 6.80% 2037		4,425			3,375
Delek & Avner-Yam Tethys Ltd. 5.326% 20134,8		2,585			2,346
TNK-BP Finance SA 7.50% 20164		1,500			953
					723,010
CONSUMER STAPLES — 1.29%
Altria Group, Inc. 8.50% 2013		20,000			22,013
Altria Group, Inc. 9.70% 2018		50,000			54,803
Altria Group, Inc. 9.95% 2038		23,500			25,214
PepsiCo, Inc. 7.90% 2018		65,000			80,754
H.J. Heinz Co. 15.59% 20114,5		64,700			72,251
Diageo Capital PLC 7.375% 2014		47,510			52,157
Diageo Capital PLC 5.50% 2016		7,490			7,348
Wesfarmers Ltd. 6.998% 20134		50,000			50,862
Anheuser-Busch InBev NV 7.20% 20144		15,000			15,257
Anheuser-Busch InBev NV 7.75% 20194		25,000			25,404
SUPERVALU INC., Term Loan B, 1.656% 20125,8,10		14,057			12,561
SUPERVALU INC. 7.50% 2012		3,323			3,223
Albertson’s, Inc. 7.25% 2013		14,122			13,275
SUPERVALU INC. 7.50% 2014		1,000			960
Albertson’s, Inc. 8.00% 2031		12,650			9,804
Stater Bros. Holdings Inc. 8.125% 2012		22,625			22,512
Stater Bros. Holdings Inc. 7.75% 2015		17,750			16,330
Kroger Co. 7.50% 2014		15,000			16,740
Kroger Co. 6.40% 2017		17,950			18,226
Kroger Co. 6.80% 2018		830			866
Kroger Co. 6.15% 2020		2,595			2,588
CVS Caremark Corp. 2.503% 20105		5,000			4,770
CVS Corp. 5.789% 20261,4,8		4,329			3,173
CVS Corp. 6.036% 20284,8		13,323			10,193
CVS Caremark Corp. 6.943% 20304,8		5,882			4,503
British American Tobacco International Finance PLC 9.50% 20184		18,520			20,351
Dole Food Co., Inc. 8.625% 2009		4,225			4,003
Dole Food Co., Inc. 7.25% 2010		7,875			6,694
Dole Food Co., Inc. 8.875% 2011		10,735			8,105
Kraft Foods Inc. 6.75% 2014		10,820			11,735
Kraft Foods Inc. 6.875% 2038		5,875			5,890
Kimberly-Clark Corp. 7.50% 2018		13,500			15,888
Safeway Inc. 6.25% 2014		7,000			7,397
Safeway Inc. 6.35% 2017		8,000			8,096
Tyson Foods, Inc. 7.85% 20165		17,000			14,056
Vitamin Shoppe Industries Inc. 9.649% 20125		11,650			7,806
Duane Reade Inc. 9.75% 2011		14,120			7,695
Constellation Brands, Inc. 8.375% 2014		3,675			3,675
Constellation Brands, Inc. 7.25% 2017		3,000			2,895
Delhaize Group 6.50% 2017		3,850			3,785
Rite Aid Corp. 8.625% 2015		5,000			1,425
Rite Aid Corp. 7.70% 2027		8,000			1,480
Rite Aid Corp. 6.875% 2028		2,300			425
Pilgrim’s Pride Corp. 7.625% 20156		8,050			3,180
Elizabeth Arden, Inc. 7.75% 2014		3,150			2,284
Yankee Candle Co., Inc., Series B, 8.50% 2015		4,545			2,204
Smithfield Foods, Inc., Series B, 7.75% 2013		2,800			2,030
					686,886
INFORMATION TECHNOLOGY — 1.28%
Electronic Data Systems Corp., Series B, 6.00% 20135		112,925			120,051
Hewlett-Packard Co. 6.125% 2014		35,000			38,399
Hewlett-Packard Co. 5.50% 2018		9,500			9,867
Electronic Data Systems Corp. 7.45% 2029		6,555			7,158
NXP BV and NXP Funding LLC 3.844% 20135		134,160			32,702
NXP BV and NXP Funding LLC 7.875% 2014		134,740			38,401
NXP BV and NXP Funding LLC 9.50% 2015		201,265			18,617
Jabil Circuit, Inc. 5.875% 2010		49,890			46,398
Jabil Circuit, Inc. 8.25% 2018		40,725			31,358
Freescale Semiconductor, Inc., Term Loan B, 3.931% 20135,8,10		9,963			5,235
Freescale Semiconductor, Inc. 5.871% 20145		7,900			1,501
Freescale Semiconductor, Inc. 8.875% 2014		56,782			12,776
Freescale Semiconductor, Inc. 9.875% 20145,11		183,610			25,246
Freescale Semiconductor, Inc. 10.125% 2016		92,007			16,561
Sanmina-SCI Corp. 4.746% 20104,5		1,732			1,567
Sanmina-SCI Corp. 6.75% 2013		25,085			12,417
Sanmina-SCI Corp. 4.746% 20144,5		15,500			9,068
Sanmina-SCI Corp. 8.125% 2016		66,845			29,078
First Data Corp., Term Loan B2, 3.139% 20145,8,10		59,410			37,837
First Data Corp. 9.875% 20154		15,000			8,475
KLA-Tencor Corp. 6.90% 2018		50,500			38,457
SunGard Data Systems Inc. 9.125% 2013		43,285			36,359
Western Union Co. 5.40% 2011		5,000			4,942
Western Union Co. 5.93% 2016		24,000			23,016
Celestica Inc. 7.625% 2013		23,320			20,172
Ceridian Corp. 11.25% 2015		28,425			15,421
National Semiconductor Corp. 6.15% 2012		18,750			14,988
Hughes Communications, Inc. 9.50% 2014		15,750			13,151
Serena Software, Inc. 10.375% 2016		13,430			7,857
Sensata Technologies BV, Term Loan B, 2.934% 20135,8,10		3,773			1,986
Sensata Technologies BV 8.00% 20145		9,125			4,152
					683,213
ASSET-BACKED OBLIGATIONS8 — 1.07%
Honda Auto Receivables Owner Trust, Series 2006-3, Class A-4, 5.11% 2012		17,500			17,481
Honda Auto Receivables Owner Trust, Series 2007-2, Class A-4, 5.57% 2013		24,500			24,811
Washington Mutual Master Note Trust, Series 2006-A3A, Class A-3, 0.363% 20131,4,5		8,890			8,404
Washington Mutual Master Note Trust, Series 2007-C1, Class C-1, 0.733% 20144,5		7,550			3,858
Washington Mutual Master Note Trust, Series 2007-A4A, Class A-4, 5.20% 20144		17,475			14,641
Washington Mutual Master Note Trust, Series 2006-A2A, Class A, 0.383% 20154,5		17,000			11,956
Washington Mutual Master Note Trust, Series 2006-C2A, Class C-2, 0.833% 20154,5		2,300			1,144
Drive Auto Receivables Trust, Series 2005-3, Class A-4, FSA insured, 5.09% 20134		17,331			15,828
Drive Auto Receivables Trust, Series 2006-2, Class A-3, MBIA insured, 5.33% 20144		20,000			16,906
AmeriCredit Automobile Receivables Trust, Series 2007-C-M, Class A-4-A, MBIA insured, 5.55% 2014		12,000			8,314
AmeriCredit Automobile Receivables Trust, Series 2007-D-F, Class A-4-A, FSA insured, 5.56% 2014		7,000			4,704
AmeriCredit Automobile Receivables Trust, Series 2008-A-F, Class A-4, FSA insured, 6.96% 2014		15,000			10,165
CSAB Mortgage-backed Trust, Series 2006-3, Class A-2, 0.549% 20365		18,294			5,883
CSAB Mortgage-backed Trust, Series 2006-4, Class A-2-B, 0.549% 20365		8,651			2,814
CSAB Mortgage-backed Trust, Series 2006-2, Class A-2, 0.559% 20365		22,064			9,586
CSAB Mortgage-backed Trust, Series 2006-2, Class A-6-A, 5.72% 20365		6,923			3,774
CPS Auto Receivables Trust, Series 2006-A, Class 1-A-4, FSA insured, 5.33% 20124		6,441			4,441
CPS Auto Receivables Trust, Series 2006-B, Class A-4, MBIA insured, 5.81% 20124		3,000			2,400
CPS Auto Receivables Trust, Series 2006-C, Class A-4, XLCA insured, 5.14% 20134		10,000			6,517
CPS Auto Receivables Trust, Series 2007-B, Class A-4, FSA insured, 5.60% 20144		10,000			8,036
UPFC Auto Receivables Trust, Series 2005-B, Class A-3, XLCA insured, 4.98% 2011		2,521			2,427
UPFC Auto Receivables Trust, Series 2007-B, Class A-3, AMBAC insured, 6.15% 2014		23,250			18,723
PG&E Energy Recovery Funding LLC, Series 2005-1, Class A-3, 4.14% 2012		10,000			10,117
PG&E Energy Recovery Funding LLC, Series 2005-2, Class A-3, 5.12% 2014		8,040			8,276
Conseco Finance Home Loan Trust, Series 1999-G, Class B-2, 10.96% 2029		14,349			5,068
Green Tree Financial Corp., Series 2008-MH1, Class A-3, 8.97% 20384		14,079			11,375
ARG Funding Corp., Series 2005-2, Class A-4, AMBAC insured, 4.84% 20114		20,000			14,984
Advanta Business Card Master Trust, Series 2005-A2, Class A-2, 0.489% 20135		18,000			13,683
Nissan Auto Lease Trust, Series 2008-A, Class A-3a, 5.14% 2011		14,000			13,070
Long Beach Acceptance Auto Receivables Trust, Series 2006-B, Class A-3, FSA insured, 5.17% 2011		2,265			2,262
Long Beach Acceptance Auto Receivables Trust, Series 2006-B, Class A-4, FSA insured, 5.18% 2013		11,500			9,936
American Express Issuance Trust, Series 2005-1, Class C, 0.663% 20115		17,500			11,985
Citigroup Mortgage Loan Trust, Inc., Series 2006-WF2, Class A-2D, 6.164% 20365		22,289			8,828
Citigroup Mortgage Loan Trust, Inc., Series 2006-WF2, Class A-2E, 6.351% 20365		7,000			3,067
J.P. Morgan Alternative Loan Trust, Series 2006-S1, Class 3-A-5, 5.73% 20365		19,462			11,805
CWHEQ Revolving Home Equity Loan Trust, Series 2006-I, Class 2-A, FSA insured, 0.473% 20375		7,504			4,995
CWHEQ Revolving Home Equity Loan Trust, Series 2007-C, Class A, FGIC insured, 0.483% 20375		30,004			6,570
J.P. Morgan Mortgage Acquisition Corp., Series 2005-FRE1, Class A-F-4, 5.488% 20355		11,432			11,357
BMW Vehicle Owner Trust, Series 2006-A, Class A-4, 5.07% 2011		11,044			11,054
Susquehanna Auto Lease Trust, Series 2007-1, Class A-3, 5.25% 20104		10,624			10,562
Triad Automobile Receivables Trust, Series 2006-C, Class A-3, AMBAC insured, 5.26% 2011		4,628			4,581
Triad Automobile Receivables Trust, Series 2005-A, Class A-4, AMBAC insured, 4.22% 2012		6,419			5,866
Chase Issuance Trust, Series 2008-4, Class A, 4.65% 2015		10,000			9,723
Option One Mortgage Loan Trust, Series 2006-3, Class II-A-2, 0.489% 20375		10,000			8,318
First Horizon ABS Trust, Series 2006-HE2, Class A, FSA insured, 0.519% 20265		4,928			2,939
First Horizon ABS Trust, Series 2007-HE1, Class A, FSA insured, 0.519% 20295		9,446			5,188
Prestige Auto Receivables Trust, Series 2005-1A, Class A-2, FSA insured, 4.37% 20124		3,187			2,971
Prestige Auto Receivables Trust, Series 2006-1A, Class A-2, FSA insured, 5.25% 20134		5,618			5,154
AEP Texas Central Transitioning Funding II LLC, Secured Transition Bonds, Series A, Class A-3, 5.09% 2015		8,265			7,895
Securitized Asset-backed Receivables LLC Trust, Series 2006-HE2, Class A-2C, 0.539% 20365		17,043			5,256
Securitized Asset-backed Receivables LLC Trust, Series 2006-NC3, Class A-2B, 0.539% 20365		7,950			2,431
Santander Drive Auto Receivables Trust, Series 2007-1, Class A-3, FGIC insured, 5.05% 2011		7,327			7,181
Home Equity Mortgage Trust, Series 2006-2, Class 1A-1, 5.367% 20365		2,726			856
Home Equity Mortgage Trust, Series 2006-4, Class A-1, 5.671% 20365		5,610			1,025
Home Equity Mortgage Trust, Series 2006-6, Class 2A-1, 0.489% 20375		24,071			2,004
Home Equity Mortgage Trust, Series 2006-5, Class A-1, 5.50% 20375		14,438			3,226
MBNA Credit Card Master Note Trust, Series 2003-1, Class C, 2.033% 20125		3,600			2,680
MBNA Credit Card Master Note Trust, Series 2001-C, Class C, 7.10% 20134		5,000			3,691
SACO I Trust, Series 2006-7, Class A, 0.519% 20365		23,238			3,856
SACO I Trust, Series 2006-12, Class I-A, 0.529% 20365		12,633			2,172
Residential Funding Mortgage Securities II, Inc., Series 2006-HSA2, Class A-I-5, FGIC insured, 5.63% 20365		10,000			2,455
Residential Funding Mortgage Securities II, Inc., Series 2007-HSA2, Class A-1F, MBIA insured, 8.47% 20375		3,498			3,390
CarMax Auto Owner Trust, Series 2007-2, Class A-3, 5.23% 2011		5,956			5,718
Vanderbilt Mortgage and Finance, Inc., Series 1999-B, Class I-A-6, 6.925% 2024		5,803			5,658
Home Equity Asset Trust, Series 2004-7, Class M-1, 1.009% 20355		10,000			5,581
Structured Asset Investment Loan Trust, Series 2006-BNC2, Class A-5, 0.549% 20365		10,000			5,575
Hertz Vehicle Financing LLC, Rental Car Asset-backed Notes, Series 2005-2, Class A-6, AMBAC insured, 5.08% 20114		6,375			5,405
Capital One Multi-asset Execution Trust, Series 2005-1, Class C, 0.733% 20135		4,000			2,993
Capital One Multi-asset Execution Trust, Series 2006-1, Class C, 0.623% 20145		2,000			853
Capital One Multi-asset Execution Trust, Series 2003-3, Class C, 2.583% 20165		4,600			1,330
RAMP Trust, Series 2003-RZ4, Class A-7, 4.79% 20335		5,725			4,931
GMAC Mortgage Loan Trust, Series 2007-HE2, Class A-2, FGIC insured, 6.054% 20375		5,000			2,404
GMAC Mortgage Loan Trust, Series 2007-HE2, Class A-3, FGIC insured, 6.193% 20375		10,000			2,425
Ameriquest Mortgage Securities Trust, Series 2006-M3, Class A-2C, 0.549% 20365		12,000			4,823
Ameriquest Mortgage Securities Inc., Series 2003-12, Class M-1, 1.139% 20345		6,757			4,627
Drivetime Auto Owner Trust, Series 2006-A, Class A-3, XLCA insured, 5.501% 20114,5		4,784			4,464
Residential Asset Securities Corp. Trust, Series 2001-KS3, Class A-I-6, 5.96% 2031		4,581			3,738
Residential Asset Securities Corp. Trust, Series 2003-KS6, Class A-2, 0.989% 20335		124			109
Residential Asset Securities Corp. Trust, Series 2006-KS3, Class M-2, 0.729% 20365		10,000			489
Citibank Credit Card Issuance Trust, Series 2008, Class C6, 6.30% 2014		2,000			1,150
Citibank Credit Card Issuance Trust, Series 2008, Class A5, 4.85% 2015		3,000			2,899
MBNA Master Credit Card Trust II, Series 2000-H, Class B, 0.933% 20135		5,000			3,934
New Century Home Equity Loan Trust, Series 2006-2, Class A-2-b, 0.549% 20365		9,000			3,803
First Franklin Mortgage Loan Trust, Series 2006-FFA, Class A-3, 0.509% 20265		14,896			3,365
Metropolitan Asset Funding, Inc., Series 1998-A, Class B-1, 7.728% 20141,4		4,040			2,990
Discover Card Execution Note Trust, Series 2008-3, Class A, 5.10% 2013		3,000			2,924
CWHEQ Home Equity Loan Trust, Series 2006-S2, Class A-5, FGIC insured, 5.753% 2027		10,000			2,713
CWABS Asset-backed Certificates Trust, Series 2006-14, Class 2-A-2, 0.539% 20375		7,125			2,523
MASTR Asset-backed Securities Trust, Series 2007-HE1, Class A-2, 0.539% 20375		6,600			2,420
CWABS, Inc., Series 2005-11, Class AF-2, 4.657% 20365		2,445			2,406
BA Credit Card Trust, Series 2007-2, Class C-2, 0.603% 20125		3,315			2,257
BNC Mortgage Loan Trust, Series 2007-3, Class A3, 0.519% 20375		5,819			2,109
Bear Stearns Asset-backed Securities I Trust, Series 2005-CL1, Class A-1, 0.889% 20341,5		4,393			1,977
GSAA Home Equity Trust, Series 2006-7, Class AF-5A, 6.205% 20465		2,800			1,664
NovaStar Mortgage Funding Trust, Series 2004-4, Class B-1, 2.089% 20355		7,500			1,295
Discover Card Master Trust I, Series 2007-2, Class B, 0.583% 20165		3,269			1,248
Long Beach Mortgage Loan Trust, Series 2006-A, Class A-1, 0.479% 20365		16,062			860
Nebhelp Trust, Student Loan Interest Margin Securities, Series 1, Class A, MBIA insured, 6.68% 20161,4		410			410
Merrill Lynch Mortgage Investors Trust, Series 2007-SL1, Class A-1, 0.689% 20371,5		3,671			330
					569,065
MATERIALS — 0.58%
ArcelorMittal 5.375% 2013		16,165			13,580
ArcelorMittal 6.125% 2018		50,775			39,792
International Paper Co. 7.40% 2014		12,500			10,523
International Paper Co. 7.95% 2018		39,535			32,062
International Paper Co. 8.70% 2038		5,000			3,487
Georgia-Pacific Corp. 8.125% 2011		9,825			9,530
Georgia-Pacific Corp. 9.50% 2011		5,000			4,900
Georgia-Pacific Corp., First Lien Term Loan B, 3.689% 20125,8,10		5,625			4,876
Nalco Co. 7.75% 2011		12,010			11,650
Nalco Co. 8.875% 2013		1,000			940
Nalco Finance Holdings LLC and Nalco Finance Holdings Inc. 0%/9.00% 201412		7,200			5,778
Freeport-McMoRan Copper & Gold Inc. 6.875% 2014		3,100			2,870
Freeport-McMoRan Copper & Gold Inc. 8.25% 2015		16,880			14,386
Owens-Illinois, Inc. 7.50% 2010		750			761
Owens-Brockway Glass Container Inc. 8.25% 2013		16,000			16,160
Graphic Packaging International, Inc. 8.50% 2011		17,975			15,908
Domtar Corp. 5.375% 2013		2,350			1,721
Domtar Corp. 7.125% 2015		17,145			12,602
Stora Enso Oyj 6.404% 20164		8,625			5,551
Stora Enso Oyj 7.25% 20364		13,000			6,611
Allegheny Technologies, Inc. 8.375% 2011		10,500			10,016
Boise Cascade, LLC and Boise Cascade Finance Corp. 7.125% 2014		16,155			8,481
Georgia Gulf Corp. 7.125% 2013		850			140
Georgia Gulf Corp. 9.50% 2014		52,970			8,210
AMH Holdings, Inc. 0%/11.25% 201412		12,905			5,872
Airgas, Inc. 6.25% 2014		1,400			1,302
Airgas, Inc. 7.125% 20184		3,500			3,255
Abitibi-Consolidated Inc. 8.55% 2010		10,193			1,733
Abitibi-Consolidated Co. of Canada 15.50% 20104		2,320			661
Abitibi-Consolidated Co. of Canada 5.496% 20115		5,225			784
Abitibi-Consolidated Inc. 7.75% 2011		6,865			1,030
Abitibi-Consolidated Co. of Canada 6.00% 2013		1,955			283
Weyerhaeuser Co. 7.375% 20323		3,500			2,455
Weyerhaeuser Co. 6.875% 20333		2,500			1,529
FMG Finance Pty Ltd. 10.625% 20164		6,000			3,930
C5 Capital (SPV) Ltd. 6.196% (undated)4,5		1,500			631
C8 Capital (SPV) Ltd. 6.64% (undated)4,5		6,350			2,670
C10 Capital (SPV) Ltd. 6.722% (undated)4,5		1,300			546
JSG Funding PLC 7.75% 2015		6,500			3,803
Rohm and Haas Co. 5.60% 2013		4,020			3,742
UPM-Kymmene Corp. 5.625% 20144		5,500			3,735
Metals USA Holdings Corp. 8.209% 20125,11		8,315			2,245
Metals USA, Inc. 11.125% 2015		2,150			1,451
Jefferson Smurfit Corp. (U.S.) 8.25% 20126		2,675			308
Stone Container Corp. 8.375% 2012		9,953			1,095
Jefferson Smurfit Corp. (U.S.) 7.50% 20136		8,880			1,110
Smurfit-Stone Container Enterprises, Inc. 8.00% 20176		7,560			832
E.I. du Pont de Nemours and Co. 5.00% 2013		3,025			3,117
Algoma Steel Inc. 9.875% 20154		7,500			2,925
Rockwood Specialties Group, Inc. 7.50% 2014		3,240			2,673
Momentive Performance Materials Inc. 9.75% 2014		6,000			2,670
AEP Industries Inc. 7.875% 2013		4,055			2,352
Arbermarle Corp. 5.10% 2015		2,570			2,221
Building Materials Corp. of America 7.75% 2014		2,725			1,812
Plastipak Holdings, Inc. 8.50% 20154		2,275			1,672
Corporación Nacional del Cobre de Chile 6.375% 20124		1,500			1,536
NewPage Corp., Series A, 12.00% 2013		3,170			777
Neenah Paper, Inc. 7.375% 2014		277			154
					307,446
BONDS & NOTES OF GOVERNMENTS & GOVERNMENT AGENCIES OUTSIDE THE U.S. — 0.16%
United Mexican States Government Global 6.375% 2013		14,765			15,503
United Mexican States Government Global 11.375% 2016		9,118			12,127
United Mexican States Government Global 5.625% 2017		3,640			3,556
United Mexican States Government Global 6.75% 2034		7,740			7,334
United Mexican States Government Global 6.05% 2040		2,000			1,715
Russian Federation 8.25% 20108		1,000			1,028
Russian Federation 7.50% 20308		20,845			19,359
State of Qatar 9.75% 2030		4,000			4,940
El Salvador (Republic of) 7.75% 2023		3,000			2,850
El Salvador (Republic of) 7.75% 20234		1,250			1,187
El Salvador (Republic of) 7.65% 20354		750			574
Banque Centrale de Tunisie 7.375% 2012		3,500			3,570
Brazil (Federal Republic of) Global 8.00% 20188		3,200			3,450
Aries Vermögensverwaltungs GmbH, Series C, 9.60% 2014		2,500			3,131
Bulgaria (Republic of) 8.25% 2015		3,000			3,097
Corporación Andina de Fomento 5.75% 2017		2,000			1,621
					85,042
MUNICIPALS — 0.01%
State of South Dakota, Educational Enhancement Funding Corp., Tobacco Settlement Asset-backed Bonds,
Series 2002-A, Class A, 6.72% 2025		3,594			2,664
State of Louisiana, Tobacco Settlement Financing Corp., Tobacco Settlement Asset-backed Bonds,
Series 2001-A, Class A, 6.36% 2025		2,110			1,802
					4,466
MISCELLANEOUS — 0.02%
Other bonds & notes in initial period of acquisition					8,456
Total bonds & notes (cost: $22,694,272,000)					17,844,399
Short-term securities — 10.52%
Freddie Mac 0.17%–2.60% due 2/6–9/23/2009		1,384,404			1,381,999
Federal Home Loan Bank 0.10%–3.10% due 2/18–9/9/2009		944,400			942,845
U.S. Treasury Bills 0.095%–1.94% due 2/12–7/16/2009		896,600			896,114
Fannie Mae 0.10%–2.10% due 2/4–7/6/2009		633,600			632,569
Hewlett-Packard Co. 0.50%–2.20% due 2/2–3/2/20094		213,700			213,666
Enterprise Funding Co. LLC 0.45%–1.40% due 2/2–4/14/20094		83,827			83,754
Ranger Funding Co. LLC 0.40% due 4/6–4/21/20094		75,000			74,926
Chevron Corp. 0.20%–1.15% due 2/3–4/1/2009		146,800			146,717
Walt Disney Co. 0.70%–1.30% due 2/5–2/27/2009		139,500			139,478
Jupiter Securitization Co., LLC 0.30%–1.00% due 2/3–2/11/20094		75,334			75,302
Park Avenue Receivables Co., LLC 0.30% due 3/11/20094		51,100			51,082
Ciesco LLC 0.40%–0.75% due 3/23–4/7/20094		109,500			109,341
International Bank for Reconstruction and Development 0.18%–1.10% due 2/4–3/16/2009		92,300			92,280
Private Export Funding Corp. 1.15% due 2/10/2009		54,000			53,977
Private Export Funding Corp. 0.90% due 4/30/20094		34,400			34,328
Medtronic Inc. 1.20%–1.45% due 2/13–3/5/20094		86,300			86,229
General Electric Capital Corp., FDIC insured, 0.45% due 6/24/2009		40,200			40,106
General Electric Co. 0.27% due 2/2/2009		36,300			36,299
Procter & Gamble International Funding S.C.A. 0.45%–1.15% due 2/18–4/29/20094		66,650			66,612
Harvard University 0.90%–1.02% due 2/11–2/17/2009		55,000			54,991
HSBC Finance Corp. 1.10% due 2/17/2009		50,000			49,969
Pfizer Inc 1.40% due 4/6/20094		50,000			49,959
Caterpillar Inc. 0.30% due 4/3/20094		50,000			49,954
AT&T Inc. 0.25%–1.15% due 2/9–3/4/20094		49,700			49,689
Wal-Mart Stores Inc. 0.25%–0.55% due 6/16–9/21/20094		48,700			48,487
Yale University 1.10%–1.97% due 2/2–2/17/2009		47,500			47,481
Federal Farm Credit Banks 0.70% due 12/22/2009		44,600			44,321
Eaton Corp. 1.75% due 2/6/20094		25,000			24,991
Estée Lauder Companies Inc. 1.10% due 2/11/20094		23,010			22,998
Total short-term securities (cost: $5,598,161,000)					5,600,464
Total investment securities (cost: $70,125,142,000)					54,263,520
Other assets less liabilities					(1,014,158	)
Net assets				$	53,249,362

“Miscellaneous” securities include holdings in their initial period of acquisition that have not previously been publicly disclosed.

1 Valued under fair value procedures adopted by authority of the board of directors. The total value of all such securities, including those in “Miscellaneous,” was $7,529,992,000, which represented 14.14% of the net assets of the fund.

2 Security did not produce income during the last 12 months.

3 Represents an affiliated company as defined under the Investment Company Act of 1940.

4 Purchased in a transaction exempt from registration under the Securities Act of 1933. May be resold in the U.S. in transactions exempt from registration, normally to qualified institutional buyers. The total value of all such securities was $4,097,441,000, which represented 7.69% of the net assets of the fund.

5 Coupon rate may change periodically.

6 Scheduled interest and/or principal payment was not received.

7 Purchased in a transaction exempt from registration under the Securities Act of 1933. This security (acquired 1/15/2008 at a cost of $178,500,000) may be subject to legal or contractual restrictions on resale.

8 Principal payments may be made periodically. Therefore, the effective maturity date may be earlier than the stated maturity date.

9 Index-linked bond whose principal amount moves with a government retail price index.

10 Loan participations and assignments; may be subject to legal or contractual restrictions on resale. The total value of all such loans was $630,395,000, which represented 1.18% of the net assets of the fund.

11 Payment in kind; the issuer has the option of paying additional securities in lieu of cash.

12 Step bond; coupon rate will increase at a later date.

Key to abbreviations

ADR = American Depositary Receipts

GDR = Global Depositary Receipts

Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so you may lose money.

Investors should carefully consider the investment objectives, risks, charges and expenses of the American Funds. This and other important information is contained in each fund’s prospectus, which can be obtained from your financial professional and should be read carefully before investing.

MFGEFP-906-0309O-S15830

ITEM 7 – Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies

Not applicable to this Registrant, insofar as the Registrant is not a closed-end management investment company.

ITEM 8 – Portfolio Managers of Closed-End Management Investment Companies

Not applicable to this Registrant, insofar as the Registrant is not a closed-end management investment company.

ITEM 9 – Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers

Not applicable to this Registrant, insofar as the Registrant is not a closed-end management investment company.

ITEM 10 – Submission of Matters to a Vote of Security Holders

There have been no material changes to the procedures by which shareholders may recommend nominees to the Registrant’s board of directors since the Registrant last submitted a proxy statement to its shareholders.  The procedures are as follows.  The Registrant has a nominating committee comprised solely of persons who are not considered ‘‘interested persons’’ of the Registrant within the meaning of the Investment Company Act of 1940, as amended. The committee periodically reviews such issues as the board’s composition, responsibilities, committees, compensation and other relevant issues, and recommends any appropriate changes to the full board of directors. While the committee normally is able to identify from its own resources an ample number of qualified candidates, it will consider shareholder suggestions of persons to be considered as nominees to fill future vacancies on the board. Such suggestions must be sent in writing to the nominating committee of the Registrant, c/o the Registrant’s Secretary, and must be accompanied by complete biographical and occupational data on the prospective nominee, along with a written consent of the prospective nominee for consideration of his or her name by the nominating committee.

ITEM 11 – Controls and Procedures

(a)	The Registrant’s Principal Executive Officer and Principal Financial Officer have concluded, based on their evaluation of the Registrant’s disclosure controls and procedures (as such term is defined in Rule 30a-3 under the Investment Company Act of 1940), that such controls and procedures are adequate and reasonably designed to achieve the purposes described in paragraph (c) of such rule.
(b)	There were no changes in the Registrant’s internal controls over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) that occurred during the Registrant’s second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting.

ITEM 12 – Exhibits

(a)(1)	Not applicable for filing of semi-annual reports to shareholders.
(a)(2)	The certifications required by Rule 30a-2 of the Investment Company Act of 1940 and Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 are attached as exhibits hereto.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

THE INCOME FUND OF AMERICA, INC.

By /s/ Hilda L. Applbaum

Hilda L. Applbaum, Vice Chairman and

Principal Executive Officer

Date: April 9, 2009

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

By /s/ Hilda L. Applbaum

Hilda L. Applbaum, Vice Chairman and

Principal Executive Officer

Date: April 9, 2009

By /s/ Jennifer M. Buchheim

Jennifer M. Buchheim, Treasurer and

Principal Financial Officer

Date: April 9, 2009