American Funds The Income Fund of America NCSRS 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, 2010

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

Bingham McCutchen LLP

355 South Grand Avenue, Suite 4400

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 hummingbird sitting on a flower covered branch]

Semi-annual report for the six months ended January 31, 2010

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 30 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, so they may lose value. For current information and month-end results, visit americanfunds.com.

Here are the average annual total returns on a $1,000 investment with all distributions reinvested for periods ended December 31, 2009 (the most recent calendar quarter-end):

Class A shares	1 year			5 years			10 years

Reflecting 5.75% maximum sales charge		17.34	%		1.51	%		5.39	%

The total annual fund operating expense ratio was 0.64% for Class A shares as of July 31, 2009.

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. Fund results shown reflect the waiver, without which they would have been lower. See the Financial Highlights table on pages 32 to 37 for details.

Results for other share classes can be found on page 44.

Equity investments are subject to market fluctuations. 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. Investing outside the United States may be subject to additional risks, such as currency fluctuations, periods of illiquidity and price volatility. These risks may be heightened in connection with investments in developing countries. See the prospectus and the Risk Factors section of this report for more information on these and other risks associated with investing in the fund.

Fellow shareholders:

[photo of a hummingbird sitting on a flower covered branch]

For the six months ended January 31, 2010, The Income Fund of America (IFA) gained 10.2%. This figure assumes reinvestment of quarterly dividends totaling 33 cents a share.

The fund’s gain topped the 9.9% rise turned in by the unmanaged Standard & Poor’s 500 Composite Index, a broad gauge of U.S. stocks.

Fund results also surpassed those of the bond market, as measured by the unmanaged Barclays Capital U.S. Aggregate Index, which rose 3.9%.

In addition, The Income Fund of America outpaced the 7.7% increase turned in by its peer group benchmark, the Lipper Income Funds Index.

Markets on the rise

The six months ended January 31, 2010, saw a continuation of the improving market conditions that began in the spring of 2009. Attractive valuations continued to draw investors, and a combination of monetary and fiscal policy measures, low interest rates and slightly improving economic indicators helped sustain the upswing.

As is often the case, areas of the market that had suffered most during the downturn led the rally. Many companies whose stock prices had reflected deep investor concerns over their survivability saw their values increase as stabilizing conditions diminished those fears. Conversely, those companies whose survival was less in doubt and that hadn’t fallen quite as far generally saw more muted increases. Many such stable companies are within the dividend-paying sectors such as utilities, telecommunications and health care in which IFA has historically made sizable investments. Though this market dynamic amounted to a headwind for the fund, results clearly indicate that we were able to find other opportunities.

In many respects, fixed-income markets mirrored the pattern in the equity world. Lower quality securities that generally exhibit significant sensitivity to economic conditions and investor sentiment had trended sharply downward amid the difficult economic conditions that marked 2008 and early 2009. However, as credit markets thawed and the prospects for further deterioration of the global economy lessened, this area of the market rebounded sharply. And as with stocks, higher quality issues that had held up better during the downturn didn’t appreciate as greatly.

Opportunities borne of the downturn

The fund’s solid results were in large part due to opportunities borne of the broad market decline. As you may recall, in the most recent annual report we chronicled how the breadth of the downturn had expanded the number and variety of companies that offered relatively high dividend yields due to share price declines. (When a company’s share price falls but its dividend payout remains steady, the stock’s yield increases.) Many of these companies were in sectors like industrials, materials and energy that are generally not among IFA’s fishing ponds.

Presented with these somewhat unusual opportunities, we were well-positioned to act as our extensive global research resources had provided us with a solid understanding of many of the companies in question. Amidst the volatile conditions, we made investments in select firms that we judged to be among the stronger players in these troubled sectors. We believed these companies could withstand the market difficulties, provide income and deliver capital appreciation to shareholders. In fact, this largely came to pass and many of the investments helped bolster fund results.

IFA also benefited from its holdings within the financial sector, which was at the forefront of both the market’s decline and its ascent. Our investments in this sector have become more concentrated in two different areas. First, smaller U.S. regional banks which, unlike many of their larger domestic counterparts, still offer attractive yields and, in our view, stand to benefit from the reshaped financial landscape. Second, several larger banks based outside the United States (IFA is able to invest up to 25% of assets in equities from issuers outside the U.S.) which we believe continue to be appealing from a dividend standpoint.

High-yield bonds also strongly contributed to fund results, as the category posted equity-like returns for the six months.

Income challenges

As the fund’s name makes clear, income is our primary objective and the current landscape presents a mix of challenges as we pursue that goal. For one, the low interest rate environment means that yields on cash and short-term securities (which currently stand at 4.2% of net assets) provide the fund with little income. Furthermore, interest rates on many high-quality bonds, a traditional source of yield for the fund, are actually below our income target. Indeed, in some cases, the yield on a company’s bond is actually lower than the dividend yield on its stock. Higher yields can be found among lower quality bonds and IFA does have sizable investments in these types of securities. Yet because capital preservation is important to us and these types of bonds come with certain risks, we are always circumspect when adding to our holdings in this area.

We are accounting for all these factors as we endeavor to strike the right balance between generating income, offering the potential for capital appreciation and paying close attention to risk. In the current environment, we have been finding better opportunities among equities and have been directing assets accordingly. This approach is partly responsible for the slight decrease in the fund’s bond holdings. They now constitute 32.3% of IFA’s portfolio, down from 34.6% when we last reported to you.

Staying true

Many of the companies we invested in during the downturn have seen their share prices recover strongly. As a result, yields for many have declined, making those investments less appealing to an income-focused fund. Reducing or selling positions that have strongly contributed to fund results can be difficult. However, the dividend discipline that has served the fund over its lifetime ultimately compels us to focus on investments that are aligned with our income objective. Moreover, history tells us that the ebb and flow of markets and industries will continue to provide new opportunities for those with the resources to uncover them.

And though in recent months investors may have turned their attention away from stocks of dividend-paying companies, we continue to believe in the enduring appeal of real and reliable return in the form of regular quarterly dividends. Accordingly, this will remain our focus and we believe that, in time, this area of the market will recapture the attention of investors.

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, 2010

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

The fund’s 30-day yield for Class A shares as of February 28, 2010, calculated in accordance with the Securities and Exchange Commission formula, was 3.97%. The fund’s distribution rate for Class A shares as of that date was 4.24%. 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.

The Income Fund of America at a glance

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. 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, 2010

	Cumulative total returns						Average annual total returns
	6 months			1 year			5 years			10 years			Lifetime1

The Income Fund of America
(Class A shares)		10.2	%		29.4	%		2.6	%		6.1	%		11.3	%

Standard & Poor’s 500
Composite Index		9.9			33.1			0.2			–0.8			10.3

Lipper Income Funds Index2		7.7			23.8			3.2			4.1			—	3

Barclays Capital U.S.
Aggregate Index		3.9			8.5			5.2			6.5			8.2	4

Consumer Price Index (inflation)5		0.6			2.6			2.6			2.5			4.4

1Since December 1, 1973, when Capital Research and Management Company became the fund’s investment adviser.

2Source: Lipper. Figures do not reflect the effect of sales charges.

3The inception date for the index was December 31, 1988.

4From December 1, 1973, through December 31, 1975, the Barclays Capital U.S. Government/Credit Index was used because the Barclays Capital U.S. Aggregate Index did not yet exist.

5Computed 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, 2010

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

1/31/2005		3.57		2.51		1.64
7/31/2005		3.44		2.41		1.70
1/31/2006		3.75		2.70		1.75
7/31/2006		3.84		2.79		1.83
1/31/2007		4.24		3.03		1.75
7/31/2007		4.43		3.13		1.81
1/31/2008		4.68		3.62		2.03
7/31/2008		5.23		3.91		2.29
1/31/2009		6.72		4.54		3.39
7/31/2009		5.64		3.84		2.53
1/31/2010		4.56		3.14		2.07

[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. See the inside back cover for details on how to obtain a complete schedule of portfolio holdings.

January 31, 2010 (unaudited)

	Percent
	of net
Investment portfolio	assets

U.S. common stocks		40.8	%
Common stocks of issuers outside the U.S.		19.0
Convertible securities & preferred stocks		3.4
U. S. Treasury & agency bonds & notes		5.4
Other fixed-income securities		26.9
Short-term securities & other assets less liabilities		4.5


	Percent
	of net
Five largest sectors in common stock holdings	assets

Industrials		7.9	%
Consumer staples		7.4
Utilities		6.6
Health care		6.1
Telecommunication services		5.9


	Percent
	of net
Ten largest common stock holdings	assets

Merck		2.4	%
Verizon Communications		2.1
Bristol-Myers Squibb		1.3
Waste Management		1.3
Emerson Electric		1.3
GDF Suez		1.3
Royal Dutch Shell		1.3
Chevron		1.3
Telefónica		1.2
Koninklijke KPN		1.2


	Percent
	of net
Country diversification	assets

United States		70.2	%
Euro zone*		10.3
United Kingdom		5.3
Australia		2.1
Canada		1.6
Japan		1.0
Other countries		5.0
Short-term securities & other assets less liabilities		4.5

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

July 31, 2009
	Percent
	of net
Investment portfolio	assets

U.S. common stocks		38.7	%
Common stocks of issuers outside the U.S.		18.5
Convertible securities & preferred stocks		3.8
U. S. Treasury & agency bonds & notes		5.5
Other fixed-income securities		29.1
Short-term securities & other assets less liabilities		4.4


	Percent
	of net
Five largest sectors in common stock holdings	assets

Consumer Staples		7.2	%
Industrials		7.2
Telecommunication Services		7.1
Utilities		6.6
Health Care		5.3


	Percent
	of net
Ten largest common stock holdings	assets

Verizon Communications		2.3	%
AT&T		2.0
Merck		1.7
GDF Suez		1.4
Royal Dutch Shell		1.3
Waste Management		1.3
Kraft Foods		1.3
Bristol-Myers Squibb		1.2
Chevron		1.2
Philip Morris International		1.2


	Percent
	of net
Country diversification	assets

United States		70.9	%
Euro zone*		10.7
United Kingdom		5.1
Australia		2.2
Canada		1.3
Japan		0.8
Other countries		4.6
Short-term securities & other assets less liabilities		4.4

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

Summary investment portfolio, January 31, 2010

unaudited

							Percent
				Value			of net
Common stocks - 59.79%	Shares				(000	)	assets

Industrials - 7.92%
Waste Management, Inc. (1)		26,079,000		$	835,832			1.32	%
Emerson Electric Co.		19,855,000			824,777			1.30
Schneider Electric SA (2)		4,611,288			474,445			.75
Boeing Co.		6,450,000			390,870			.62
Honeywell International Inc.		8,675,000			335,202			.53
United Technologies Corp.		4,848,000			327,143			.52
Other securities					1,824,066			2.88
					5,012,335			7.92

Consumer staples - 7.36%
Kraft Foods Inc., Class A		26,700,821			738,545			1.17
Philip Morris International Inc.		14,715,000			669,680			1.06
Coca-Cola Co.		9,225,000			500,456			.79
H.J. Heinz Co.		10,111,700			441,173			.70
Unilever NV, depository receipts (2)		8,880,000			272,890
Unilever NV (New York registered)		5,051,750			154,482			.68
Tesco PLC (2)		41,465,000			280,907			.44
General Mills, Inc.		3,870,000			275,970			.44
Other securities					1,323,044			2.08
					4,657,147			7.36

Utilities - 6.56%
GDF Suez (2)		21,574,270			818,908			1.29
Duke Energy Corp.		36,066,172			596,174			.94
FirstEnergy Corp.		8,096,500			353,169			.56
Entergy Corp.		4,541,000			346,524			.55
Exelon Corp.		6,770,000			308,847			.49
SUEZ Environnement Co. (2)		12,280,000			279,292			.44
Other securities					1,447,421			2.29
					4,150,335			6.56

Health care - 6.07%
Merck & Co., Inc.		39,858,511			1,521,798			2.41
Bristol-Myers Squibb Co.		35,025,500			853,221			1.35
Eli Lilly and Co.		14,940,000			525,888			.83
Pfizer Inc		26,050,000			486,093			.77
Other securities					453,548			.71
					3,840,548			6.07

Telecommunication services - 5.87%
Verizon Communications Inc.		45,865,000			1,349,348			2.13
Telefónica, SA (2)		32,542,800			782,524			1.24
Koninklijke KPN NV (2)		46,239,757			767,660			1.21
AT&T Inc.		22,934,621			581,622			.92
Other securities					234,103			.37
					3,715,257			5.87


Financials - 5.60%
HSBC Holdings PLC (United Kingdom) (2)		19,481,373			209,123
HSBC Holdings PLC (Hong Kong) (2)		14,326,382			152,723
HSBC Holdings PLC (ADR)		1,460,000			78,125			.70
Australia and New Zealand Banking Group Ltd. (2)		22,650,000			434,538			.69
Other securities					2,668,254			4.21
					3,542,763			5.60


Energy - 5.36%
Royal Dutch Shell PLC, Class B (ADR)		8,100,000			432,378
Royal Dutch Shell PLC, Class A (ADR)		5,000,000			276,950
Royal Dutch Shell PLC, Class B (2)		3,797,147			101,552			1.28
Chevron Corp.		11,125,000			802,335			1.27
Spectra Energy Corp		20,311,414			431,617			.68
TOTAL SA (ADR)		3,640,000			209,628
TOTAL SA (2)		3,255,000			189,266			.63
Diamond Offshore Drilling, Inc.		3,030,000			277,336			.44
ConocoPhillips		5,500,000			264,000			.41
Other securities					410,020			.65
					3,395,082			5.36

Consumer discretionary - 3.67%
McDonald's Corp.		11,916,400			743,941			1.18
Home Depot, Inc.		23,900,000			669,439			1.06
Other securities					906,520			1.43
					2,319,900			3.67

Information technology - 3.56%
Microchip Technology Inc. (1)		14,128,000			364,644			.58
Automatic Data Processing, Inc.		8,396,123			342,478			.54
Microsoft Corp.		12,095,000			340,837			.54
Nintendo Co., Ltd. (2)		1,044,000			291,632			.46
Paychex, Inc.		9,293,000			269,404			.43
Other securities					641,918			1.01
					2,250,913			3.56

Materials - 3.21%
Weyerhaeuser Co. (1)		10,728,000			428,047			.68
E.I. du Pont de Nemours and Co.		12,035,000			392,461			.62
BHP Billiton PLC (ADR)		3,460,000			202,687
BHP Billiton PLC (2)		4,633,618			136,309			.54
Other securities					870,020			1.37
					2,029,524			3.21

Miscellaneous - 4.61%
Other common stocks in initial period of acquisition					2,915,375			4.61


Total common stocks (cost: $37,683,021,000)					37,829,179			59.79



							Percent
				Value			of net
Preferred stocks - 1.57%	Shares				(000	)	assets

Financials - 1.56%
Fannie Mae, Series O, 7.065% (3) (4) (5)		3,124,329			3,937
Fannie Mae, Series S, 8.25% noncumulative (4)		1,511,450			1,727			.01
Freddie Mac, Series V, 5.57% (4)		368,022			306			.00
Other securities					982,980			1.55
					988,950			1.56

Miscellaneous - 0.01%
Other preferred stocks in initial period of acquisition					5,628			.01


Total preferred stocks (cost: $1,088,048,000)					994,578			1.57



							Percent
				Value			of net
Warrants - 0.00%					(000	)	assets

Other - 0.00%
Other securities					-			.00

Total warrants (cost: $779,000)					-			.00



							Percent
				Value			of net
Convertible securities - 1.85%					(000	)	assets


Other - 1.54%
Other securities					976,759			1.54

Miscellaneous - 0.31%
Other convertible securities in initial period of acquisition					194,522			.31


Total convertible securities (cost: $1,094,808,000)					1,171,281			1.85



	Principal						Percent
	amount			Value			of net
Bonds & notes - 32.25%		(000	)		(000	)	assets

Bonds & notes of U.S. government & government agencies - 5.37%
U.S. Treasury:
4.625% 2011	$	339,750		$	364,592
3.50% 2018		373,600			378,330
6.25% 2023		235,190			287,539
1.00%-8.875% 2011-2029 (2) (6)		1,928,531			2,036,170			4.85
Fannie Mae 4.625%-6.25% '2012-2029		171,000			188,839			.30
Other securities					141,301			.22
					3,396,771			5.37

Mortgage-backed obligations (7) - 4.89%
Fannie Mae 4.00%-11.821% 2010-2047 (5)		1,500,873			1,595,234			2.52
Freddie Mac 4.50%-11.277% 2018-2039 (5)		313,779			333,510			.53
Other securities					1,163,259			1.84
					3,092,003			4.89

Financials - 4.76%
Other securities
					3,014,188			4.76

Consumer discretionary - 4.24%
Home Depot, Inc. 5.40%-5.875% 2016-2036		6,819			6,810			.01
Other securities					2,675,993			4.23
					2,682,803			4.24

Telecommunication services - 2.44%
Verizon Communications Inc. 3.75%-8.75% 2011-2037		158,525			170,912
ALLTEL Corp. 7.00% 2012		17,686			19,773
Verizon Global Funding Corp. 4.90% 2015		3,560			3,862			.31
AT&T Inc. 4.95%-6.70 2013-2039		63,125			68,886
SBC Communications Inc.5.10%-6.25% 2011-2016		19,000			20,637
AT&T Wireless Services, Inc. 8.125% 2012		16,935			19,294
AT&T Corp. 8.00% 2031 (5)		5,000			6,197			.18
Koninklijke KPN NV 8.375% 2030		4,660			5,874			.01
Other securities					1,225,088			1.94
					1,540,523			2.44

Industrials - 2.32%
WMX Technologies, Inc. 7.10% 2026 (1)		10,125			11,289
Waste Management, Inc. 5.00% 2014 (1)		7,000			7,486			.03
Other securities					1,451,791			2.29
					1,470,566			2.32

Information technology - 1.81%
Other securities					1,147,233			1.81

Health care - 1.46%
Merck & Co., Inc. 5.00% 2019		8,500			8,919			.01
Other securities					914,541			1.45
					923,460			1.46

Energy - 1.24%
Shell International Finance B.V. 4.00% 2014		20,000			21,160			.03
Chevron Corp. 3.95%-4.95% 2014-2019		1,800			1,892			.00
Other securities					760,771			1.21
					783,823			1.24

Utilities - 1.19%
Other securities					755,228			1.19

Other - 2.48%
Kraft Foods Inc. 6.75% 2014		10,820			12,185			.02
Other securities					1,552,816			2.46
					1,565,001			2.48


Miscellaneous - 0.05%
Other bonds & notes in initial period of acquisition					28,954			.05


Total bonds & notes (cost: $19,962,482,000)					20,400,553			32.25



	Principal						Percent
	amount			Value			of net
Short-term securities - 4.20%		(000	)		(000	)	assets


Freddie Mac 0.06%-0.33% due 2/16-9/15/2010	$	966,400		$	965,897			1.53
Fannie Mae 0.085%-0.36% due 3/3-10/4/2010		488,736			488,222			.77
U.S. Treasury Bills 0.22%-0.335% due 5/6-9/23/2010		223,500			223,340			.35
Other securities					981,777			1.55
Total short-term securities (cost: $2,658,514,000)					2,659,236			4.20


Total investment securities (cost: $62,487,652,000)					63,054,827			99.66
Other assets less liabilities					215,836			.34

Net assets				$	63,270,663			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 $38,956,000, which represented .06% 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. The value of the fund's affiliated-company holdings is either shown in the summary investment portfolio or included in the value of "Other securities" under the respective industry sectors. Further details on such holdings and related transactions during the six months ended January 31, 2010, appear below.

	Beginning shares or principal amount		Additions		Reductions		Ending shares or principal amount		Dividend or interest income (000)		Value of affiliates at 1/31/10 (000)
Waste Management, Inc.		26,835,500		-		756,500		26,079,000	$	15,565	$	835,832
WMX Technologies, Inc. 7.10% 2026	$	10,125,000		-		-	$	10,125,000		359		11,289
Waste Management, Inc. 5.00% 2014	$	7,000,000		-		-	$	7,000,000		176		7,486
Waste Management, Inc. 7.375% 2019	$	7,200,000		-	$	7,200,000		-		90		-
Weyerhaeuser Co.		10,728,000		-		-		10,728,000		1,073		428,047
Weyerhaeuser Co. 7.375% 2032	$	1,500,000		-	$	1,500,000		-		25		-
Weyerhaeuser Co. 6.875% 2033	$	2,500,000		-	$	2,500,000		-		39		-
Microchip Technology Inc.		14,128,000		-		-		14,128,000		9,593		364,644
Hospitality Properties Trust		6,000,000		2,015,000		-		8,015,000		3,607		177,292
Hospitality Properties Trust 6.75% 2013	$	28,915,000		-	$	7,650,000	$	21,265,000		1,287		22,321
Hospitality Properties Trust 6.70% 2018	$	16,175,000		-		-	$	16,175,000		544		15,871
Hospitality Properties Trust 6.30% 2016	$	2,400,000		-		-	$	2,400,000		84		2,372
Hospitality Properties Trust 5.125% 2015	$	2,160,000		-		-	$	2,160,000		81		2,078
Hospitality Properties Trust 5.625% 2017	$	1,485,000		-		-	$	1,485,000		55		1,384
Hospitality Properties Trust 7.875% 2014		-	$	13,000,000	$	13,000,000		-		287		-
First Niagara Financial Group, Inc.		9,730,000		1,920,000		-		11,650,000		1,631		159,953
Arthur J. Gallagher & Co.		5,000,000		1,000,000		-		6,000,000		3,840		135,300
De La Rue PLC (2)		6,369,718		-		-		6,369,718		1,462		98,554
BancorpSouth, Inc.		-		4,255,800		-		4,255,800		792		97,373
Georgia Gulf Corp. 10.00% convertible preferred		2,545,684		-		2,545,684		-		-		-
Georgia Gulf Corp. 9.00% 2017 (3)		-	$	50,965,000		-	$	50,965,000		483		52,621
Georgia Gulf Corp. (4)		-		2,659,046		35,900		2,623,146		-		40,265
Georgia Gulf Corp., Term Loan, Revolver, 6.50% 2011	$	4,250,000		-	$	4,250,000		-		58		-
Georgia Gulf Corp., Term Loan B, 10.00% 2013	$	6,246,177		-	$	6,246,177		-		269		-
Georgia Gulf Corp.		113,556		18		113,574		-		-		-
Macquarie Korea Infrastructure Fund (2)		21,541,078		-		-		21,541,078		2,464		88,825
FirstMerit Corp.		-		4,325,000		-		4,325,000		692		88,619
Prime Infrastructure Group (2) (4)		-		22,756,141		-		22,756,141		-		74,923
Applied Industrial Technologies, Inc.		2,738,790		-		-		2,738,790		822		59,706
Clarent Hospital Corp. Liquidating Trust (2) (4)		484,684		-		-		484,684		-		24
Alexandria Real Estate Equities, Inc. 8.00% convertible notes 2029 (3) (8)	$	463,000		-		-	$	463,000		19		-
Alexandria Real Estate Equities, Inc.(8)		2,450,000		-		1,728,735		721,265		1,715		-
MeadWestvaco Corp. (8)		10,600,696		-		2,780,696		7,820,000		2,323		-
									$	49,435	$	2,764,779

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

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

(2) 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 $9,588,870,000, which represented 15.16% of the net assets of the fund. This amount includes $9,301,232,000 related to certain securities trading outside the U.S. whose values were adjusted as a result of significant market movements following the close of local trading.

(3) 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 $4,673,629,000, which represented 7.39% of the net assets of the fund.

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

(5) Coupon rate may change periodically.

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

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

(8) Unaffiliated issuer at 1/31/2010.

Key to abbreviation

ADR = American Depositary Receipts

See Notes to Financial Statements

Financial statements

Statement of assets and liabilities			unaudited
at January 31, 2010	(dollars in thousands)

Assets:
Investment securities, at value:
Unaffiliated issuers (cost: $59,317,045)	$	60,290,048
Affiliated issuers (cost: $3,170,607)		2,764,779	$	63,054,827
Cash				836
Receivables for:
Sales of investments		353,980
Sales of fund's shares		68,871
Dividends and interest		403,582
Other assets		1,247		827,680
				63,883,343
Liabilities:
Payables for:
Purchases of investments		445,944
Repurchases of fund's shares		113,296
Investment advisory services		11,925
Services provided by affiliates		35,613
Directors' deferred compensation		2,938
Other		2,964		612,680
Net assets at January 31, 2010			$	63,270,663

Net assets consist of:
Capital paid in on shares of capital stock			$	72,727,914
Undistributed net investment income				322,333
Accumulated net realized loss				(10,346,636	)
Net unrealized appreciation				567,052
Net assets at January 31, 2010			$	63,270,663

	(dollars and shares in thousands, except per-share amounts)
Total authorized capital stock - 5,500,000 shares, $.001 par value (4,183,939 total shares outstanding)
	Net assets		Shares outstanding		Net asset value per share*
Class A	$	48,098,236		3,175,976	$	15.14
Class B		2,735,905		182,034		15.03
Class C		5,933,657		395,598		15.00
Class F-1		1,831,907		121,156		15.12
Class F-2		424,728		28,053		15.14
Class 529-A		689,180		45,569		15.12
Class 529-B		97,521		6,472		15.07
Class 529-C		263,907		17,503		15.08
Class 529-E		32,441		2,150		15.09
Class 529-F-1		20,623		1,364		15.12
Class R-1		83,840		5,561		15.08
Class R-2		506,385		33,718		15.02
Class R-3		1,030,023		68,216		15.10
Class R-4		708,842		46,865		15.13
Class R-5		422,836		27,921		15.14
Class R-6		390,632		25,783		15.15

(*) 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 $16.06 and $16.04, respectively.

See Notes to Financial Statements

Statement of operations				unaudited
for the six months ended January 31, 2010				(dollars in thousands)

Investment income:
Income:
Interest (includes $3,856 from affiliates)	$	776,384
Dividends (net of non-U.S. taxes of $21,561;
also includes $45,579 from affiliates)		761,022		$	1,537,406

Fees and expenses*:
Investment advisory services		79,017
Distribution services		111,815
Transfer agent services		22,645
Administrative services		9,756
Reports to shareholders		1,784
Registration statement and prospectus		7,738
Directors' compensation		698
Auditing and legal		52
Custodian		1,160
Other		1,096			235,761
Net investment income					1,301,645


Net realized gain and unrealized
appreciation on investments
and currency:
Net realized gain on:
Investments (includes $39,681 net gain from affiliates)		912,226
Currency transactions		2,336			914,562
Net unrealized appreciation (depreciation) on:
Investments		3,805,565
Currency translations		(570	)		3,804,995
Net realized gain and
unrealized appreciation
on investments and currency					4,719,557
Net increase in net assets resulting
from operations				$	6,021,202

(*) 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, 2010*			Year ended July 31, 2009
Operations:
Net investment income	$	1,301,645		$	3,123,141
Net realized gain (loss) on investments and currency transactions		914,562			(11,247,294	)
Net unrealized appreciation (depreciation) on investments and currency translations		3,804,995			(2,332,526	)
Net increase (decrease) in net assets resulting from operations		6,021,202			(10,456,679	)

Dividends paid to shareholders from net investment income		(1,346,886	)		(2,991,184	)

Net capital share transactions		(1,352,822	)		(3,089,104	)

Total increase (decrease) in net assets		3,321,494			(16,536,967	)

Net assets:
Begining of period		59,949,169			76,486,136
End of period (including undistributed
net investment income: $322,333 and $367,574, respectively)	$	63,270,663		$	59,949,169

*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.

On November 24, 2009, shareholders approved a proposal to reorganize the fund from a Maryland corporation to a Delaware statutory trust. The reorganization may be completed in 2010 or early 2011; however, the fund reserves the right to delay the implementation. Shareholders also approved amendments to the fund’s Investment Advisory and Service Agreement and amendments to and elimination of certain fundamental investment policies of the fund.

The fund has 16 share classes consisting of five retail share classes, five 529 college savings plan share classes and six 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 six retirement plan share classes (R-1, R-2, R-3, R-4, R-5 and R-6) 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, R-5 and R-6	None	None	None

*Class B and 529-B shares of the fund are not available for purchase.

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

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:

Net asset value – The fund generally determines its net asset value as of approximately 4:00 p.m. New York time each day the New York Stock Exchange is open.

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 one or more independent pricing vendors when such prices are available. However, where the investment adviser deems it appropriate to do so, such securities will be valued in good faith at the mean quoted bid and asked prices that are reasonably and timely available (or bid prices, if asked prices are not available) or at prices for securities of comparable maturity, quality and type. Vendors base bond prices on, among other things, valuation matrices that incorporate dealer-supplied valuations, proprietary pricing models and evaluations of the yield curve as of approximately 3:00 p.m. New York time. 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 guidelines 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. Fair valuations and valuations of investments that are not actively trading involve judgment and may differ materially from valuations that would have been used had greater market activity occurred.

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

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

Dividends and distributions to shareholders – Dividends and distributions paid to shareholders are recorded on the ex-dividend date.

Currency translation – Assets and liabilities, including investment securities, denominated in currencies other than U.S. dollars are translated into U.S. dollars at the exchange rates 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.

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, the common stocks and other securities held by the fund may decline in response to certain events taking place around the world, 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 debt securities generally have higher rates of interest and may be subject to greater price fluctuations than higher quality debt securities. Additionally, longer maturity debt securities generally have higher rates of interest and may be subject to greater price fluctuations than shorter maturity debt securities. The fund's investment adviser attempts to reduce these risks through diversification of the portfolio and ongoing credit analysis, 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 U.S. may be subject to the risks described on the previous page to a greater extent and may also be affected by currency controls; different accounting, auditing, financial reporting, and legal standards and practices; 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. Investments in securities issued by entities domiciled in the U.S. may also be subject to many of these risks.

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, 2010, 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 2005 and by state tax authorities for tax years before 2004.

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 different treatment for items such as currency gains and losses; short-term capital gains and losses; capital losses related to sales of certain securities within 30 days of purchase; paydowns on fixed-income securities; net capital losses; 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, 2009, the components of distributable earnings on a tax basis were as follows:

	(dollars in thousands)
Undistributed ordinary income		$	384,422
Post-October currency loss deferrals (realized during the period November 1, 2008, through July 31, 2009)*			(5,010	)
Capital loss carryforward expiring 2017†			(1,328,267	)
Post-October capital loss deferrals (realized during the period November 1, 2008, through July 31, 2009)*			(9,914,222	)

* These deferrals are considered incurred in the subsequent year.
† The capital loss carryforward will be used to offset any capital gains realized by the fund in the current year or in subsequent years through the expiration date. The fund will not make distributions from capital gains while a capital loss carryforward remains.

As of January 31, 2010, the tax basis unrealized appreciation (depreciation) and cost of investment securities were as follows:

	(dollars in thousands)
Gross unrealized appreciation on investment securities		$	4,817,433
Gross unrealized depreciation on investment securities			(4,260,593	)
Net unrealized appreciation on investment securities			556,840
Cost of investment securities			62,497,987

Ordinary income distributions paid to shareholders from net investment income were as follows (dollars in thousands):

Share class	Six months ended January 31, 2010		Year ended July 31, 2009
Class A	$	1,052,969	$	2,325,379
Class B		51,978		136,968
Class C		107,508		256,919
Class F-1		40,572		100,766
Class F-2		9,249		7,086
Class 529-A		14,328		28,341
Class 529-B		1,714		3,910
Class 529-C		4,578		9,875
Class 529-E		634		1,290
Class 529-F-1		451		884
Class R-1		1,442		3,112
Class R-2		8,904		18,615
Class R-3		20,355		42,400
Class R-4		14,828		27,738
Class R-5		9,712		24,864
Class R-6*		7,664		3,037
Total	$	1,346,886	$	2,991,184

*Class R-6 was offered beginning May 1, 2009.

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 Distributors,® Inc. ("AFD"), the principal underwriter of the fund’s shares, and American Funds Service Company® ("AFS"), the fund’s transfer agent.

Investment advisory services - The Investment Advisory and Service Agreement with CRMC provides for 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. For the six months ended January 31, 2010, the investment advisory services fee was $79,017,000, which was equivalent to an annualized rate of 0.247% 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, R-5 and R-6. 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 on the following page. 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 with a plan may use up to 0.25% of average daily net assets to pay service fees, or to compensate AFD for paying service fees, to firms that have entered into agreements with AFD to provide certain shareholder services. The remaining amounts available to be paid under each plan are paid to dealers to compensate them for their sales activities.

For 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, 2010, 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 has a 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 as described below.

Administrative services – The fund has an 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 and 0.05% for Class R-6) 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. 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, 2010, were as follows (dollars in thousands):

Share class	Distribution services	Transfer agent services	Administrative services
Share class	Distribution services	Transfer agent services	CRMC administrative services	Transfer agent services	Commonwealth of Virginia administrative services
Class A	$56,727	$21,360	Not applicable	Not applicable	Not applicable
Class B	14,474	1,285	Not applicable	Not applicable	Not applicable
Class C	30,070	Included in administrative services	$3,887	$428	Not applicable
Class F-1	2,260		1,006	68	Not applicable
Class F-2	Not applicable		263	12	Not applicable
Class 529-A	709		263	33	$336
Class 529-B	489		38	12	49
Class 529-C	1,301		102	26	131
Class 529-E	79		13	1	16
Class 529-F-1	-		8	1	10
Class R-1	404		50	13	Not applicable
Class R-2	1,896		376	761	Not applicable
Class R-3	2,546		752	293	Not applicable
Class R-4	860		509	20	Not applicable
Class R-5	Not applicable		191	4	Not applicable
Class R-6	Not applicable		84	-*	Not applicable
Total	$111,815	$22,645	$7,542	$1,672	$542

* Amount less than one thousand.

Directors’ deferred compensation – Since the adoption of the deferred compensation plan in 1993, directors who are unaffiliated with CRMC may elect to defer the cash payment of part or all of their compensation. These deferred amounts, which remain as liabilities of the fund, are treated as if invested in shares of the fund or other American Funds. These amounts represent general, unsecured liabilities of the fund and vary according to the total returns of the selected funds. Directors’ compensation of $698,000, shown on the accompanying financial statements, includes $288,000 in current fees (either paid in cash or deferred) and a net increase of $410,000 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 classifies 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, 2010 (dollars in thousands):

Investment securities:	Level 1		Level 2				Level 3		Total
Common stocks:
Industrials	$	3,882,735	$	1,129,600	(1	)	$	-	$	5,012,335
Consumer staples		3,861,109		796,038	(1	)		-		4,657,147
Utilities		2,568,113		1,582,222	(1	)		-		4,150,335
Health care		3,724,111		116,413	(1	)		24		3,840,548
Telecommunication services		1,978,540		1,736,717	(1	)		-		3,715,257
Financials		2,258,401		1,284,362	(1	)		-		3,542,763
Energy		2,954,288		440,794	(1	)		-		3,395,082
Consumer discretionary		1,758,460		561,437	(1	)		3		2,319,900
Information technology		1,848,603		402,310	(1	)		-		2,250,913
Materials		1,676,507		353,017	(1	)		-		2,029,524
Miscellaneous		2,015,776		899,599	(1	)		-		2,915,375
Preferred stocks		105,048		889,530				-		994,578
Convertible securities		459,989		711,292				-		1,171,281
Bonds & notes:
Corporate bonds & notes		-		12,294,486				23,338		12,317,824
Bonds & notes of U.S. government & government agencies		-		3,396,771				-		3,396,771
Mortgage-backed obligations		-		3,088,864				3,139		3,092,003
Other		-		1,562,043				2,958		1,565,001
Miscellaneous		-		28,954				-		28,954
Short-term securities		-		2,659,236				-		2,659,236
Total	$	29,091,680	$	33,933,685			$	29,462	$	63,054,827

The following table reconciles the valuation of the fund's Level 3 investment securities and related transactions for the six months ended January 31, 2010 (dollars in thousands):


	Beginning value at 8/1/2009		Net purchases and sales			Net realized loss (2)			Net unrealized appreciation (2)		Net transfers out of Level 3 (3)			Ending value at 1/31/2010
Investment securities	$	109,955	$	(75,181	)	$	(21,932	)	$	50,789	$	(34,169	)	$	29,462

Net unrealized appreciation during the period on Level 3 investment securities held at January 31, 2010 (dollars in thousands) (2):														$	10,109

(1) 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, $9,301,232 ,000 of investment securities were classified as Level 2 instead of Level 1.
(2) Net realized loss and unrealized appreciation are included in the related amounts on investments in the statement of operations.
(3) Transfers into or out of Level 3 are based on the beginning market value of the quarter in which they occurred.

6. Capital share transactions

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

	Sales(*)				Reinvestments of dividends and distributions				Repurchases(*)						Net (decrease) increase
Share class	Amount		Shares		Amount		Shares		Amount			Shares			Amount			Shares
Six months ended January 31, 2010
Class A	$	2,511,377		166,644	$	959,599		63,336	$	(4,497,053	)		(298,722	)	$	(1,026,077	)		(68,742	)
Class B		35,464		2,380		47,276		3,142		(401,854	)		(26,858	)		(319,114	)		(21,336	)
Class C		323,804		21,705		95,199		6,337		(560,712	)		(37,554	)		(141,709	)		(9,512	)
Class F-1		168,449		11,208		34,230		2,263		(311,423	)		(20,778	)		(108,744	)		(7,307	)
Class F-2		102,210		6,832		6,565		434		(61,803	)		(4,106	)		46,972			3,160
Class 529-A		65,746		4,356		14,325		946		(45,843	)		(3,045	)		34,228			2,257
Class 529-B		2,505		166		1,714		113		(5,277	)		(352	)		(1,058	)		(73	)
Class 529-C		26,417		1,755		4,576		303		(26,727	)		(1,783	)		4,266			275
Class 529-E		3,643		242		634		42		(3,048	)		(203	)		1,229			81
Class 529-F-1		3,009		199		451		30		(2,940	)		(195	)		520			34
Class R-1		14,492		960		1,426		95		(11,916	)		(795	)		4,002			260
Class R-2		70,612		4,722		8,892		591		(72,055	)		(4,808	)		7,449			505
Class R-3		122,804		8,155		20,335		1,345		(122,311	)		(8,135	)		20,828			1,365
Class R-4		103,349		6,859		14,801		977		(87,641	)		(5,817	)		30,509			2,019
Class R-5		51,820		3,454		9,700		640		(64,275	)		(4,274	)		(2,755	)		(180	)
Class R-6		92,910		6,135		7,661		504		(3,939	)		(253	)		96,632			6,386
Total net increase
(decrease)	$	3,698,611		245,772	$	1,227,384		81,098	$	(6,278,817	)		(417,678	)	$	(1,352,822	)		(90,808	)

Year ended July 31, 2009
Class A	$	7,205,248		549,358	$	2,373,774		178,565	$	(11,841,997	)		(900,906	)	$	(2,262,975	)		(172,983	)
Class B		225,316		17,290		138,270		10,469		(920,167	)		(70,319	)		(556,581	)		(42,560	)
Class C		878,445		67,357		254,471		19,314		(1,801,420	)		(137,322	)		(668,504	)		(50,651	)
Class F-1		590,677		45,076		93,918		7,046		(1,108,912	)		(83,595	)		(424,317	)		(31,473	)
Class F-2		383,801		28,528		3,803		299		(49,989	)		(3,934	)		337,615			24,893
Class 529-A		109,544		8,299		31,358		2,373		(84,367	)		(6,378	)		56,535			4,294
Class 529-B		8,754		662		4,324		329		(12,210	)		(936	)		868			55
Class 529-C		47,175		3,597		10,888		826		(46,838	)		(3,523	)		11,225			900
Class 529-E		5,281		403		1,428		108		(4,485	)		(340	)		2,224			171
Class 529-F-1		4,831		364		975		74		(4,473	)		(338	)		1,333			100
Class R-1		20,173		1,525		3,405		259		(20,485	)		(1,541	)		3,093			243
Class R-2		144,128		11,008		20,373		1,553		(130,743	)		(9,974	)		33,758			2,587
Class R-3		261,898		19,795		47,120		3,570		(251,304	)		(19,136	)		57,714			4,229
Class R-4		257,894		19,483		30,577		2,325		(158,713	)		(12,150	)		129,758			9,658
Class R-5		267,248		20,467		26,549		2,013		(349,808	)		(27,338	)		(56,011	)		(4,858	)
Class R-6†		242,772		19,212		3,035		233		(646	)		(48	)		245,161			19,397
Total net increase
(decrease)	$	10,653,185		812,424	$	3,044,268		229,356	$	(16,786,557	)		(1,277,778	)	$	(3,089,104	)		(235,998	)

*Includes exchanges between share classes of the fund.
†Class R-6 was offered beginning May 1, 2009.

7. Investment transactions

The fund made purchases and sales of investment securities, excluding short-term securities and U.S. government obligations, if any, of $9,868,932,000 and $11,636,554,000, respectively, during the six months ended January 31, 2010.

Financial highlights(1)

		Income (loss) from investment operations(2)										Dividends and distributions
		Net asset value, beginning of period		Net investment income		Net gains (losses) on securities (both realized and unrealized)			Total from investment operations			Dividends (from net investment income)			Distributions (from capital gains)			Total dividends and distributions			Net asset value, end of period		Total return(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 1/31/2010(5)	$	14.04	$	.32	$	1.11		$	1.43		$	(.33	)	$	-		$	(.33	)	$	15.14		10.20	%	$	48,098		.61	%(6)		.61	%(6)		4.20	%(6)
	Year ended 7/31/2009		16.98		.74		(2.98	)		(2.24	)		(.70	)		-			(.70	)		14.04		(12.72	)		45,569		.64			.63			5.50
	Year ended 7/31/2008		20.54		.87		(2.67	)		(1.80	)		(.91	)		(.85	)		(1.76	)		16.98		(9.46	)		58,029		.57			.54			4.53
	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

Class B:	Six months ended 1/31/2010(5)		13.94		.26		1.10			1.36			(.27	)		-			(.27	)		15.03		9.78			2,736		1.38	(6)		1.38	(6)		3.44	(6)
	Year ended 7/31/2009		16.87		.63		(2.95	)		(2.32	)		(.61	)		-			(.61	)		13.94		(13.37	)		2,835		1.41			1.39			4.74
	Year ended 7/31/2008		20.43		.72		(2.66	)		(1.94	)		(.77	)		(.85	)		(1.62	)		16.87		(10.16	)		4,149		1.33			1.31			3.76
	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

Class C:	Six months ended 1/31/2010(5)		13.91		.25		1.11			1.36			(.27	)		-			(.27	)		15.00		9.78			5,934		1.43	(6)		1.43	(6)		3.38	6)
	Year ended 7/31/2009		16.84		.62		(2.94	)		(2.32	)		(.61	)		-			(.61	)		13.91		(13.43	)		5,637		1.45			1.44			4.69
	Year ended 7/31/2008		20.39		.71		(2.65	)		(1.94	)		(.76	)		(.85	)		(1.61	)		16.84		(10.22	)		7,676		1.38			1.35			3.72
	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

Class F-1:	Six months ended 1/31/2010(5)		14.02		.32		1.11			1.43			(.33	)		-			(.33	)		15.12		10.20			1,832		.64	(6)		.64	(6)		4.17	(6)
	Year ended 7/31/2009		16.95		.74		(2.97	)		(2.23	)		(.70	)		-			(.70	)		14.02		(12.71	)		1,801		.66			.65			5.49
	Year ended 7/31/2008		20.52		.86		(2.68	)		(1.82	)		(.90	)		(.85	)		(1.75	)		16.95		(9.56	)		2,712		.61			.58			4.48
	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

Class F-2:	Six months ended 1/31/2010(5)		14.04		.33		1.12			1.45			(.35	)		-			(.35	)		15.14		10.31			425		.42	(6)		.42	(6)		4.36	(6)
	Year ended 7/31/2009		16.91		.68		(2.82	)		(2.14	)		(.73	)		-			(.73	)		14.04		(12.19	)		350		.44			.43			5.39


Class 529-A:	Six months ended 1/31/2010(5)		14.03		.31		1.11			1.42			(.33	)		-			(.33	)		15.12		10.09			689		.68	(6)		.68	(6)		4.11	(6)
	Year ended 7/31/2009		16.96		.73		(2.96	)		(2.23	)		(.70	)		-			(.70	)		14.03		(12.72	)		608		.70			.68			5.44
	Year ended 7/31/2008		20.52		.85		(2.66	)		(1.81	)		(.90	)		(.85	)		(1.75	)		16.96		(9.55	)		662		.65			.63			4.46
	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

Class 529-B:	Six months ended 1/31/2010(5)		13.98		.25		1.11			1.36			(.27	)		-			(.27	)		15.07		9.70			97		1.49	(6)		1.49	(6)		3.32	(6)
	Year ended 7/31/2009		16.92		.62		(2.96	)		(2.34	)		(.60	)		-			(.60	)		13.98		(13.47	)		91		1.51			1.50			4.63
	Year ended 7/31/2008		20.47		.69		(2.65	)		(1.96	)		(.74	)		(.85	)		(1.59	)		16.92		(10.25	)		110		1.46			1.43			3.65
	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

Class 529-C:	Six months ended 1/31/2010(5)		13.99		.25		1.11			1.36			(.27	)		-			(.27	)		15.08		9.70			264		1.48	(6)		1.48	(6)		3.32	(6)
	Year ended 7/31/2009		16.93		.62		(2.96	)		(2.34	)		(.60	)		-			(.60	)		13.99		(13.45	)		241		1.50			1.49			4.63
	Year ended 7/31/2008		20.49		.70		(2.67	)		(1.97	)		(.74	)		(.85	)		(1.59	)		16.93		(10.29	)		276		1.45			1.43			3.66
	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

Class 529-E:	Six months ended 1/31/2010(5)	$	14.00	$	.29	$	1.10		$	1.39		$	(.30	)	$	-		$	(.30	)	$	15.09		9.96	%	$	32		.97	%(6)		.97	%(6)		3.82	%(6)
	Year ended 7/31/2009		16.93		.68		(2.95	)		(2.27	)		(.66	)		-			(.66	)		14.00		(12.98	)		29		1.00			.98			5.14
	Year ended 7/31/2008		20.49		.79		(2.66	)		(1.87	)		(.84	)		(.85	)		(1.69	)		16.93		(9.83	)		32		.94			.92			4.17
	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

Class 529-F-1:	Six months ended 1/31/2010(5)		14.03		.33		1.10			1.43			(.34	)		-			(.34	)		15.12		10.21			21		.47	(6)		.47	(6)		4.32	(6)
	Year ended 7/31/2009		16.96		.75		(2.96	)		(2.21	)		(.72	)		-			(.72	)		14.03		(12.56	)		19		.50			.48			5.64
	Year ended 7/31/2008		20.52		.89		(2.66	)		(1.77	)		(.94	)		(.85	)		(1.79	)		16.96		(9.35	)		21		.44			.42			4.67
	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

Class R-1:	Six months ended 1/31/2010(5)		13.99		.25		1.11			1.36			(.27	)		-			(.27	)		15.08		9.73			84		1.44	(6)		1.44	(6)		3.36	(6)
	Year ended 7/31/2009		16.92		.62		(2.95	)		(2.33	)		(.60	)		-			(.60	)		13.99		(13.36	)		74		1.46			1.44			4.68
	Year ended 7/31/2008		20.48		.71		(2.67	)		(1.96	)		(.75	)		(.85	)		(1.60	)		16.92		(10.25	)		86		1.39			1.37			3.73
	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

Class R-2:	Six months ended 1/31/2010(5)		13.93		.25		1.11			1.36			(.27	)		-			(.27	)		15.02		9.74			506		1.48	(6)		1.48	(6)		3.32	(6)
	Year ended 7/31/2009		16.86		.61		(2.95	)		(2.34	)		(.59	)		-			(.59	)		13.93		(13.54	)		463		1.56			1.54			4.58
	Year ended 7/31/2008		20.42		.70		(2.66	)		(1.96	)		(.75	)		(.85	)		(1.60	)		16.86		(10.26	)		516		1.44			1.42			3.66
	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

Class R-3:	Six months ended 1/31/2010(5)		14.01		.29		1.10			1.39			(.30	)		-			(.30	)		15.10		9.95			1,030		.99	(6)		.99	(6)		3.81	(6)
	Year ended 7/31/2009		16.94		.68		(2.95	)		(2.27	)		(.66	)		-			(.66	)		14.01		(12.99	)		936		1.00			.99			5.14
	Year ended 7/31/2008		20.50		.79		(2.66	)		(1.87	)		(.84	)		(.85	)		(1.69	)		16.94		(9.83	)		1,061		.95			.93			4.16
	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

Class R-4:	Six months ended 1/31/2010(5)		14.03		.31		1.12			1.43			(.33	)		-			(.33	)		15.13		10.17			709		.68	(6)		.68	(6)		4.11	(6)
	Year ended 7/31/2009		16.96		.72		(2.95	)		(2.23	)		(.70	)		-			(.70	)		14.03		(12.72	)		629		.70			.69			5.43
	Year ended 7/31/2008		20.53		.85		(2.68	)		(1.83	)		(.89	)		(.85	)		(1.74	)		16.96		(9.56	)		597		.66			.63			4.49
	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

Class R-5:	Six months ended 1/31/2010(5)		14.04		.34		1.11			1.45			(.35	)		-			(.35	)		15.14		10.33			423		.37	(6)		.37	(6)		4.43	(6)
	Year ended 7/31/2009		16.97		.76		(2.96	)		(2.20	)		(.73	)		-			(.73	)		14.04		(12.53	)		395		.40			.38			5.72
	Year ended 7/31/2008		20.54		.91		(2.68	)		(1.77	)		(.95	)		(.85	)		(1.80	)		16.97		(9.26	)		559		.36			.33			4.80
	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

Class R-6:	Six months ended 1/31/2010(5)		14.05		.34		1.11			1.45			(.35	)		-			(.35	)		15.15		10.34			391		.33	(6)		.33	(6)		4.43	(6)
	Period from 5/1/2009 to 7/31/2009		12.55		.19		1.48			1.67			(.17	)		-			(.17	)		14.05		13.42			272		.09			.09			1.45

	Six months ended January 31,			Year ended July 31
	2010(5)			2009			2008			2007			2006			2005

Portfolio turnover rate for all classes of shares		18	%		49	%		38	%		32	%		35	%		24	%

(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 some of the periods shown, CRMC reduced fees for investment advisory services. In addition, during some of the periods shown, CRMC paid a portion of the fund's transfer agent fees for certain retirement plan share classes.

(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, 2009, through January 31, 2010).

Actual expenses:

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

Hypothetical example for comparison purposes:

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

Notes:

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

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

	Beginning account value 8/1/2009		Ending account value 1/31/2010		Expenses paid during period*		Annualized expense ratio

Class A -- actual return	$	1,000.00	$	1,101.96	$	3.23		.61	%
Class A -- assumed 5% return		1,000.00		1,022.13		3.11		.61
Class B -- actual return		1,000.00		1,097.76		7.30		1.38
Class B -- assumed 5% return		1,000.00		1,018.25		7.02		1.38
Class C -- actual return		1,000.00		1,097.81		7.56		1.43
Class C -- assumed 5% return		1,000.00		1,018.00		7.27		1.43
Class F-1 -- actual return		1,000.00		1,101.98		3.39		.64
Class F-1 -- assumed 5% return		1,000.00		1,021.98		3.26		.64
Class F-2 -- actual return		1,000.00		1,103.05		2.23		.42
Class F-2 -- assumed 5% return		1,000.00		1,023.09		2.14		.42
Class 529-A -- actual return		1,000.00		1,100.95		3.60		.68
Class 529-A -- assumed 5% return		1,000.00		1,021.78		3.47		.68
Class 529-B -- actual return		1,000.00		1,097.02		7.88		1.49
Class 529-B -- assumed 5% return		1,000.00		1,017.69		7.58		1.49
Class 529-C -- actual return		1,000.00		1,097.01		7.82		1.48
Class 529-C -- assumed 5% return		1,000.00		1,017.74		7.53		1.48
Class 529-E -- actual return		1,000.00		1,099.62		5.13		.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		1,102.08		2.49		.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		1,097.27		7.61		1.44
Class R-1 -- assumed 5% return		1,000.00		1,017.95		7.32		1.44
Class R-2 -- actual return		1,000.00		1,097.42		7.82		1.48
Class R-2 -- assumed 5% return		1,000.00		1,017.74		7.53		1.48
Class R-3 -- actual return		1,000.00		1,099.51		5.24		.99
Class R-3 -- assumed 5% return		1,000.00		1,020.21		5.04		.99
Class R-4 -- actual return		1,000.00		1,101.71		3.60		.68
Class R-4 -- assumed 5% return		1,000.00		1,021.78		3.47		.68
Class R-5 -- actual return		1,000.00		1,103.27		1.96		.37
Class R-5 -- assumed 5% return		1,000.00		1,023.34		1.89		.37
Class R-6 -- actual return		1,000.00		1,103.40		1.75		.33
Class R-6 -- assumed 5% return		1,000.00		1,023.54		1.68		.33

*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).

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, 2010. 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 considered, among other things, the impact of current market conditions on the fund and CRMC. 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, in each case as available at the time of the related meetings. In addition to the information reviewed by the board and the committee, 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 the fund’s 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. 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 termination of CRMC’s 10% advisory fee waiver effective December 31, 2008. 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.

Results of meeting of shareholders held November 24, 2009

Shares outstanding (all classes) on record date (August 28, 2009):			4,251,944,474
Total shares voting on November 24, 2009:			2,828,342,921		(66.5% of shares outstanding)

Election of board members

Director*	Votes for		Percent of shares voting for			Votes withheld		Percent of shares withheld

Hilda L. Applbaum		2,756,981,197		97.5	%		71,361,724		2.5	%
Mary Jane Elmore		2,757,190,817		97.5			71,152,104		2.5
Robert A. Fox		2,756,700,302		97.5			71,642,619		2.5
Leonade D. Jones		2,756,908,239		97.5			71,434,682		2.5
William D. Jones		2,756,916,164		97.5			71,426,757		2.5
John M. Lillie		2,756,914,123		97.5			71,428,798		2.5
John G. McDonald		2,756,474,820		97.5			71,868,101		2.5
James J. Postl		2,757,038,473		97.5			71,304,448		2.5
Isaac Stein		2,756,847,108		97.5			71,495,813		2.5

	Votes for		Percent of outstanding shares voting for			Votes against		Percent of outstanding shares voting against			Votes abstaining			Percent of outstanding shares abstaining

To approve an Agreement and Plan of Reorganization		2,206,836,481		51.9	%		55,040,840		1.3	%		566,465,600	†		13.3	%

	Votes for		Percent of shares voting for			Votes against		Percent of shares voting against			Votes abstaining			Percent of shares abstaining

To update the fund’s fundamental investment policies regarding:
Borrowing		2,201,412,794		77.8	%		61,250,007		2.2	%		565,680,120	†		20.0	%
Issuance of senior securities		2,200,040,995		77.7			60,855,452		2.2			567,446,474	†		20.1
Underwriting		2,202,405,760		77.9			57,116,517		2.0			568,820,644	†		20.1
Investments in real estate or commodities		2,195,531,204		77.6			66,283,411		2.4			566,528,306	†		20.0
Lending		2,194,498,218		77.6			65,845,607		2.3			567,999,096	†		20.1
Industry concentration		2,202,990,174		77.9			56,253,514		2.0			569,099,233	†		20.1
Elimination of certain policies		2,193,029,261		77.5			63,032,466		2.3			572,281,194	†		20.2

To approve a policy allowing CRMC to appoint subsidiary advisers for the fund’s day-to-day investment management without additional shareholder approval	2,180,265,243	77.0	77,881,090	2.8	570,196,588	†	20.2

To approve amendments to the fund’s Investment Advisory and Service Agreement with CRMC	2,188,038,501	77.3	66,721,459	2.4	573,582,961	†	20.3

To approve a form of Subsidiary Agreement and appointment of one or more subsidiary advisers for the fund	2,181,666,830	77.1	74,472,596	2.7	572,203,495	†	20.2

To consider a shareholder proposal regarding genocide-free investing (broker non-votes = 498,167,405)	272,710,169	11.7	1,923,670,857	82.6	133,794,49	†	5.7

*Henry E. Riggs did not stand for election at the Meeting of Shareholders because he plans to retire in December 2010.

†Includes broker non-votes.

Other share class results

unaudited

Classes B, C, F and 529

Average annual total returns for periods ended December 31, 2009
(the most recent calendar quarter-end):	1 year			5 years			Life of class

Class B shares1 — 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		18.56	%		1.62	%		5.91	%
Not reflecting CDSC		23.56			1.93			5.91

Class C shares — first sold 3/15/01
Reflecting CDSC, maximum of 1%, payable only
if shares are sold within one year of purchase		22.47			1.88			4.71
Not reflecting CDSC		23.47			1.88			4.71

Class F-1 shares2 — first sold 3/15/01
Not reflecting annual asset-based fee
charged by sponsoring firm		24.43			2.66			5.52

Class F-2 shares2 — first sold 8/1/08
Not reflecting annual asset-based fee
charged by sponsoring firm		24.81			—			–0.68

Class 529-A shares3 — first sold 2/15/02
Reflecting 5.75% maximum sales charge		17.28			1.43			4.85
Not reflecting maximum sales charge		24.46			2.63			5.64

Class 529-B shares1,3 — first sold 2/19/02
Reflecting applicable CDSC, maximum of 5%,
payable only if shares are sold within six years
of purchase		18.46			1.48			4.88
Not reflecting CDSC		23.46			1.80			4.88

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		22.46			1.80			4.89
Not reflecting CDSC		23.46			1.80			4.89

Class 529-E shares2,3 — first sold 2/25/02		23.99			2.32			5.28

Class 529-F-1 shares2,3 — first sold 9/17/02
Not reflecting annual asset-based fee charged
by sponsoring firm		24.64			2.81			7.27

1These shares are not available for purchase.

2These shares are sold without any initial or contingent deferred sales charge.

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

For information regarding the differences among the various share classes, 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

(Write to the address near you.)

P.O. Box 6007

Indianapolis, IN 46206-6007

P.O. Box 2280

Norfolk, VA 23501-2280

Custodian of assets

JPMorgan Chase Bank

270 Park Avenue

New York, NY 10017-2070

Counsel

Bingham McCutchen LLP

355 South Grand Avenue, Suite 4400

Los Angeles, CA 90071-3106

Independent registered public

accounting firm

Deloitte & Touche LLP

695 Town Center Drive

Suite 1200

Costa Mesa, CA 92626-7188

Principal underwriter

American Funds Distributors, Inc.

333 South Hope Street

Los Angeles, CA 90071-1406

Investors should carefully consider the investment objectives, risks, charges and expenses of the American Funds. This and other important information is contained in the fund’s summary prospectus and 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 Procedures and Principles” — which describes how we vote proxies relating to portfolio securities — is available on the American Funds website or upon request by calling AFS. The fund files its proxy voting record with the U.S. Securities and Exchange Commission (SEC) for the 12 months ended June 30 by August 31. The proxy voting record is available free of charge on the SEC website at sec.gov and on the American Funds website.

A complete January 31, 2010, portfolio of The Income Fund of America’s investments is available free of charge by calling AFS or visiting the SEC website (where it is part of Form N-CSR).

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

This report is for the information of shareholders of The Income Fund of America, but it also may be used as sales literature when preceded or accompanied by the current summary prospectus or prospectus, which gives details about charges, expenses, investment objectives and operating policies of the fund. If used as sales material after March 31, 2010, 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 30 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:

•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.

•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.

•The multiple portfolio counselor system

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

•Experienced investment professionals

American Funds portfolio counselors have an average of 26 years of investment experience, providing a depth of knowledge and broad perspective that few organizations have.

•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

•Growth funds

AMCAP Fund®

EuroPacific Growth Fund®

The Growth Fund of America®

The New Economy Fund®

New Perspective Fund®

New World Fund®

SMALLCAP World Fund®

•Growth-and-income funds

American Mutual Fund®

Capital World Growth and Income FundSM

Fundamental InvestorsSM

International Growth and Income FundSM

The Investment Company of America®

Washington Mutual Investors FundSM

•Equity-income funds

Capital Income Builder®

>The Income Fund of America®

•Balanced fund

American Balanced Fund®

•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

•Tax-exempt bond funds

American Funds Short-Term Tax-Exempt Bond FundSM

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®

•Money market fund

American Funds Money Market FundSM

•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-906-0310P

Litho in USA BAG/ALD/8088-S20702

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, 2010

unaudited

Common stocks — 59.79%	Shares				Value (000)

INDUSTRIALS — 7.92%
Waste Management, Inc.1		26,079,000			$	835,832
Emerson Electric Co.		19,855,000				824,777
Schneider Electric SA2		4,611,288				474,445
Boeing Co.		6,450,000				390,870
Honeywell International Inc.		8,675,000				335,202
United Technologies Corp.		4,848,000				327,143
Masco Corp.		16,253,200				220,393
Finmeccanica SpA2		12,400,000				171,721
Norfolk Southern Corp.		3,500,000				164,710
United Parcel Service, Inc., Class B		2,650,000				153,090
Hubbell Inc., Class B		3,272,100				140,897
Atlas Copco AB, Class A2		9,150,000				124,139
Eaton Corp.		1,914,833				117,264
De La Rue PLC1,2		6,369,718				98,554
Macquarie Korea Infrastructure Fund1,2		21,541,078				88,825
Cooper Industries PLC, Class A		2,005,000				86,014
AB SKF, Class B2		4,290,000				66,405
Applied Industrial Technologies, Inc.1		2,738,790				59,706
R.R. Donnelley & Sons Co.		2,845,400				56,396
Avery Dennison Corp.		1,648,182				53,582
Rockwell Automation		1,000,704				48,274
Vallourec SA2		253,982				43,860
SembCorp Industries Ltd2		16,689,500				41,348
Deere & Co.		825,000				41,209
Qantas Airways Ltd.2		8,095,285				20,303
Delta Air Lines, Inc.3		1,590,154				19,448
Watsco, Inc.		150,000				7,194
UAL Corp.3		59,995				734
						5,012,335


CONSUMER STAPLES — 7.36%
Kraft Foods Inc., Class A		26,700,821				738,545
Philip Morris International Inc.		14,715,000				669,680
Coca-Cola Co.		9,225,000				500,456
H.J. Heinz Co.		10,111,700				441,173
Unilever NV, depository receipts2		8,880,000				272,890
Unilever NV (New York registered)		5,051,750				154,482
Tesco PLC2		41,465,000				280,907
General Mills, Inc.		3,870,000				275,970
Hershey Co.		6,836,000				249,035
Reynolds American Inc.		4,500,000				239,400
Procter & Gamble Co.		3,500,000				215,425
Sysco Corp.		6,210,000				173,818
British American Tobacco PLC2		4,000,000				132,091
Kimberly-Clark Corp.		2,125,000				126,204
Coca-Cola Amatil Ltd.2		11,382,453				110,150
Clorox Co.		1,300,000				76,921
						4,657,147


UTILITIES — 6.56%
GDF Suez2		21,574,270				818,908
Duke Energy Corp.		36,066,172				596,174
FirstEnergy Corp.		8,096,500				353,169
Entergy Corp.		4,541,000				346,524
Exelon Corp.		6,770,000				308,847
SUEZ Environnement Co.2		12,280,000				279,292
DTE Energy Co.		5,000,000				210,200
PG&E Corp.		4,054,665				171,269
Progress Energy, Inc.		4,198,660				163,622
Hongkong Electric Holdings Ltd.2		26,754,000				149,609
Snam Rete Gas SpA2		29,708,326				139,777
Consolidated Edison, Inc.		3,000,000				131,220
PPL Corp.		4,200,000				123,858
American Electric Power Co., Inc.		2,712,300				93,981
Prime Infrastructure Group1,2,3		22,756,141				74,923
NiSource Inc.		4,859,596				69,249
DUET Group2		38,369,915				60,748
Spark Infrastructure2		50,400,000				58,965
						4,150,335


HEALTH CARE — 6.07%
Merck & Co., Inc.		39,858,511				1,521,798
Bristol-Myers Squibb Co.		35,025,500				853,221
Eli Lilly and Co.		14,940,000				525,888
Pfizer Inc		26,050,000				486,093
Novartis AG (ADR)		3,000,000				160,590
Johnson & Johnson		2,150,000				135,149
AstraZeneca PLC (United Kingdom)2		2,500,000				116,413
Alcon, Inc.		265,700				41,372
Clarent Hospital Corp. Liquidating Trust1,2,3		484,684				24
						3,840,548


TELECOMMUNICATION SERVICES — 5.87%
Verizon Communications Inc.		45,865,000				1,349,348
Telefónica, SA2		32,542,800				782,524
Koninklijke KPN NV2		46,239,757				767,660
AT&T Inc.		22,934,621				581,622
Telstra Corp. Ltd.2		45,368,954				134,225
Telefónica 02 Czech Republic, AS2		2,200,000				52,308
Bell Aliant Regional Communications Income Fund		1,700,000				41,509
Sprint Nextel Corp., Series 13		760,501				2,495
American Tower Corp., Class A3		42,271				1,794
CenturyTel, Inc.		52,094				1,772
						3,715,257


FINANCIALS — 5.60%
HSBC Holdings PLC (United Kingdom)2		19,481,373				209,123
HSBC Holdings PLC (Hong Kong)2		14,326,382				152,723
HSBC Holdings PLC (ADR)		1,460,000				78,125
Australia and New Zealand Banking Group Ltd.2		22,650,000				434,538
Equity Residential, shares of beneficial interest		6,842,800				219,312
People’s United Financial, Inc.		13,000,000				210,210
U.S. Bancorp		7,994,000				200,489
Citigroup Inc.3		59,123,076				196,289
Hospitality Properties Trust1		8,015,000				177,292
Bank of America Corp.		11,504,768				174,642
First Niagara Financial Group, Inc.1		11,650,000				159,953
Banco Santander, SA2		9,924,070				139,976
Arthur J. Gallagher & Co.1		6,000,000				135,300
Crédit Agricole SA2		8,000,000				124,990
Cullen/Frost Bankers, Inc.		1,900,000				97,508
BancorpSouth, Inc.1		4,255,800				97,373
QBE Insurance Group Ltd.2		4,662,792				94,505
FirstMerit Corp.1		4,325,000				88,619
Public Storage, Inc.		920,000				72,846
Absa Group Ltd.2		4,030,000				70,804
ProLogis, shares of beneficial interest		5,600,000				70,560
HCP, Inc.		2,442,300				69,239
Itaúsa — Investimentos Itaú SA, preferred nominative		9,337,770				55,607
Itaú Unibanco Holding SA, preferred nominative (ADR)		2,544,352				48,750
Alexandria Real Estate Equities, Inc.		721,265				43,081
Boardwalk Real Estate Investment Trust		1,199,000				41,984
Unibail-Rodamco SE, non-registered shares2		182,000				39,583
JPMorgan Chase & Co.		545,000				21,222
AXA SA2		875,000				18,120
						3,542,763


ENERGY — 5.36%
Royal Dutch Shell PLC, Class B (ADR)		8,100,000				432,378
Royal Dutch Shell PLC, Class A (ADR)		5,000,000				276,950
Royal Dutch Shell PLC, Class B2		3,797,147				101,552
Chevron Corp.		11,125,000				802,335
Spectra Energy Corp		20,311,414				431,617
TOTAL SA (ADR)		3,640,000				209,628
TOTAL SA2		3,255,000				189,266
Diamond Offshore Drilling, Inc.		3,030,000				277,336
ConocoPhillips		5,500,000				264,000
Penn West Energy Trust		10,775,000				177,650
BP PLC2		16,000,000				149,976
ARC Energy Trust		4,444,700				82,394
						3,395,082


CONSUMER DISCRETIONARY — 3.67%
McDonald’s Corp.		11,916,400				743,941
Home Depot, Inc.		23,900,000				669,439
H & M Hennes & Mauritz AB, Class B2		2,277,000				134,452
Vivendi SA2		4,500,000				116,622
Tatts Group Ltd.2		53,500,000				108,971
Pearson PLC2		7,000,000				99,590
CBS Corp., Class B, nonvoting shares		7,000,000				90,510
OPAP SA2		3,600,000				78,914
VF Corp.		1,065,000				76,712
Regal Entertainment Group, Class A		4,827,018				71,295
Nordstrom, Inc.		1,329,800				45,931
Leggett & Platt, Inc.		1,874,000				34,219
Ford Motor Co.3		2,169,728				23,520
Kesa Electricals PLC2		10,900,000				22,302
Time Warner Cable Inc.		66,361				2,893
Adelphia Recovery Trust, Series ACC-12,3		19,531,478				586
American Media Operations, Inc.2,3,4		281,006				3
						2,319,900


INFORMATION TECHNOLOGY — 3.56%
Microchip Technology Inc.1		14,128,000				364,644
Automatic Data Processing, Inc.		8,396,123				342,478
Microsoft Corp.		12,095,000				340,837
Nintendo Co., Ltd.2		1,044,000				291,632
Paychex, Inc.		9,293,000				269,404
Intel Corp.		11,500,000				223,100
Maxim Integrated Products, Inc.		12,000,000				209,760
MediaTek Inc.2		6,833,640				110,678
Taiwan Semiconductor Manufacturing Co. Ltd. (ADR)		9,619,997				97,739
ZiLOG, Inc.3		180,000				641
						2,250,913


MATERIALS — 3.21%
Weyerhaeuser Co.1		10,728,000				428,047
E.I. du Pont de Nemours and Co.		12,035,000				392,461
BHP Billiton PLC (ADR)		3,460,000				202,687
BHP Billiton PLC2		4,633,618				136,309
Dow Chemical Co.		8,600,000				232,974
MeadWestvaco Corp.		7,820,000				188,228
Fletcher Building Ltd.2		25,461,500				141,789
Grupo México, SAB de CV, Series B		52,500,000				106,885
Impala Platinum Holdings Ltd.2		2,937,112				74,919
PPG Industries, Inc.		1,106,900				64,953
Georgia Gulf Corp.1,3		2,623,146				40,265
Freeport-McMoRan Copper & Gold Inc.		300,000				20,007
						2,029,524


MISCELLANEOUS — 4.61%
Other common stocks in initial period of acquisition						2,915,375


Total common stocks (cost: $37,683,021,000)						37,829,179



Preferred stocks — 1.57%

FINANCIALS — 1.56%
SMFG Preferred Capital USD 3 Ltd. 9.50%4,5		155,885,000				172,058
SMFG Preferred Capital USD 2 Ltd. 8.75% noncumulative4		5,600,000				5,713
Mizuho Capital Investment (USD) 2 Ltd. 14.95%4,5		121,704,000				155,012
Mizuho Capital Investment (USD) 1 Ltd. 6.686% noncumulative4,5		50,000				43
JPMorgan Chase & Co., Series I, 7.90%5		107,472,000				110,442
Barclays Bank PLC 7.434%4,5		84,263,000				80,682
Barclays Bank PLC 8.55%4,5		21,718,000				21,066
Barclays Bank PLC 6.86%4,5		9,281,000				7,842
Vornado Realty Trust, Series I, 6.625%		3,380,000				72,738
Wells Fargo & Co., Series K, 7.98%5		51,373,000				52,144
BNP Paribas 7.195%4,5		31,000,000				30,225
BNP Paribas Capital Trust 9.003% noncumulative trust4,5		12,000,000				12,240
Société Générale 5.922%4,5		46,573,000				39,277
Public Storage, Inc., Series F, 6.45%		1,000,000				22,130
Public Storage, Inc., Series V, 7.50% cumulative depositary shares		400,000				10,180
Bank of America Corp., Series M, 8.125% noncumulative5		30,924,000				29,399
PNC Preferred Funding Trust I 6.517%4,5		30,900,000				24,393
Woori Bank 6.208%4,5		25,230,000				21,313
QBE Capital Funding II LP 6.797%4,5		18,715,000				16,687
GMAC LLC, Series G, 7.00%4		19,991				14,289
AXA SA, Series B, 6.379%4,5		15,625,000				12,832
HSBC Capital Funding LP, Series 2, 10.176% noncumulative step-up4,5		10,000,000				12,125
Resona Preferred Global Securities (Cayman) Ltd. 7.191%4,5		11,772,000				10,950
Royal Bank of Scotland Group PLC, Series U, 7.64%5		16,800,000				9,756
Shinsei Finance II (Cayman) Ltd. 7.16% noncumulative4,5		15,400,000				9,630
HBOS Capital Funding LP 6.071%4,5		12,400,000				9,300
Standard Chartered PLC 6.409%4,5		10,000,000				8,788
XL Capital Ltd., Series E, 6.50%5		10,000,000				7,700
Fannie Mae, Series O, 7.065%3,4,5		3,124,329				3,937
Fannie Mae, Series S, 8.25% noncumulative3		1,511,450				1,727
ILFC E-Capital Trust II 6.25%4,5		6,975,000				4,011
Freddie Mac, Series V, 5.57%3		368,022				306
IndyMac Bancorp, Inc., Series A, 8.50% noncumulative3,4		1,513,000				15
						988,950


MISCELLANEOUS — 0.01%
Other preferred stocks in initial period of acquisition						5,628


Total preferred stocks (cost: $1,088,048,000)						994,578



Warrants — 0.00%

TELECOMMUNICATION SERVICES — 0.00%
GT Group Telecom Inc., warrants, expire 20102,3,4		15,000				—


INDUSTRIALS — 0.00%
Atrium Corp., warrants, expire 20182,3,4		3,456				—


Total warrants (cost: $779,000)						—




Convertible securities — 1.85%	Shares or principal amount					Value (000	)

MATERIALS — 0.39%
Vale SA, Class A, 5.50% convertible preferred 2010		1,000,000			$	50,280
Vale SA, Series 1, 5.50% convertible preferred 2010		2,590,000				132,350
Sino-Forest Corp. 4.25% convertible notes 20164	$	30,000,000				31,912
Freeport-McMoRan Copper & Gold Inc. 6.75% convertible preferred 2010		290,000				28,550
						243,092


HEALTH CARE — 0.24%
Mylan Inc. 6.50% convertible preferred 2010		140,000				138,556
Incyte Corp. 3.50% convertible notes 20114	$	15,000,000				15,249
						153,805


CONSUMER STAPLES — 0.22%
Archer Daniels Midland Co. 6.25% convertible preferred 2011, units		2,570,000				110,253
Bunge Ltd. 5.125% convertible preferred 2010		13,300				7,936
Bunge Ltd. 4.875% convertible preferred		272,700				23,535
						141,724


INFORMATION TECHNOLOGY — 0.21%
Advanced Micro Devices, Inc. 6.00% convertible notes 2015	$	121,523,000				111,801
Advanced Micro Devices, Inc. 5.75% convertible notes 2012	$	20,429,000				20,174
						131,975


INDUSTRIALS — 0.18%
UAL Corp. 6.00% convertible notes 2029	$	30,000,000				47,775
UAL Corp. 4.50% convertible notes 2021	$	72,600,000				66,705
						114,480


ENERGY — 0.16%
El Paso Corp. 4.99% convertible preferred		73,150				68,048
Transocean Ltd. 1.50% convertible notes 2037	$	36,410,000				35,044
						103,092


FINANCIALS — 0.14%
Boston Properties, Inc. 2.875% convertible notes 2037	$	25,000,000				24,688
Boston Properties, Inc. 3.75% convertible notes 2036	$	25,000,000				25,219
Equity Residential 3.85% convertible notes 2026	$	23,500,000				23,648
Alexandria Real Estate Equities, Inc. 8.00% convertible notes 20294	$	463,000				749
Alexandria Real Estate Equities, Inc. 3.70% convertible notes 20274	$	14,920,000				14,286
						88,590


CONSUMER DISCRETIONARY — 0.00%
Ford Motor Co. 4.25% convertible notes 2036	$	700				1

					��
MISCELLANEOUS — 0.31%
Other convertible securities in initial period of acquisition						194,522


Total convertible securities (cost: $1,094,808,000)						1,171,281




	Principal amount				Value
Bonds & notes — 32.25%		(000	)			(000	)

BONDS & NOTES OF U.S. GOVERNMENT & GOVERNMENT AGENCIES — 5.37%
U.S. Treasury 1.00% 2011	$	24,660			$	24,832
U.S. Treasury 1.125% 2011		57,260				57,657
U.S. Treasury 2.375% 20112,6		20,348				21,110
U.S. Treasury 4.50% 2011		16,165				17,278
U.S. Treasury 4.625% 2011		339,750				364,592
U.S. Treasury 3.00% 20122,6		81,814				88,725
U.S. Treasury 1.875% 20132,6		29,446				31,367
U.S. Treasury 2.75% 2013		69,000				71,496
U.S. Treasury 3.375% 2013		146,750				155,578
U.S. Treasury 3.50% 2013		52,000				55,344
U.S. Treasury 3.625% 2013		242,410				259,219
U.S. Treasury 4.25% 2013		110,582				120,643
U.S. Treasury 1.875% 2014		76,000				75,626
U.S. Treasury 2.00% 20142,6		8,441				9,026
U.S. Treasury 4.25% 2014		91,000				99,513
U.S. Treasury 1.875% 20152,6		75,627				80,717
U.S. Treasury 2.375% 2016		8,600				8,381
U.S. Treasury 3.125% 2016		5,600				5,638
U.S. Treasury 3.25% 2016		66,895				68,369
U.S. Treasury 3.25% 2016		35,200				35,942
U.S. Treasury 4.75% 2017		7,000				7,736
U.S. Treasury 8.875% 2017		17,500				24,179
U.S. Treasury 1.625% 20182,6		20,652				21,512
U.S. Treasury 3.50% 2018		373,600				378,330
U.S. Treasury 3.75% 2018		42,900				43,791
U.S. Treasury 2.75% 2019		2,800				2,632
U.S. Treasury 3.125% 2019		110,250				106,473
U.S. Treasury 3.375% 2019		26,350				25,846
U.S. Treasury 3.625% 2019		54,750				54,898
U.S. Treasury 8.125% 2019		24,000				32,813
U.S. Treasury 7.875% 2021		50,000				68,426
U.S. Treasury 8.00% 2021		1,500				2,082
U.S. Treasury 6.25% 2023		235,190				287,539
U.S. Treasury 6.00% 2026		20,000				24,027
U.S. Treasury 6.50% 2026		14,385				18,195
U.S. Treasury 5.50% 2028		16,375				18,731
U.S. Treasury 5.25% 2029		4,025				4,476
U.S. Treasury 3.375% 20322,6		4,071				5,133
U.S. Treasury 4.50% 2036		218,640				220,433
U.S. Treasury 4.375% 2038		24,065				23,664
U.S. Treasury 3.50% 2039		42,000				35,201
U.S. Treasury 4.50% 2039		9,470				9,461
Fannie Mae 5.25% 2012		44,000				47,884
Fannie Mae 4.625% 2013		80,000				86,136
Fannie Mae 6.25% 2029		47,000				54,819
United States Government Agency-Guaranteed (FDIC insured), Citigroup Inc. 2.875% 2011		12,000				12,414
United States Government Agency-Guaranteed (FDIC insured), Citigroup Inc. 0.253% 20125		5,100				5,112
CoBank ACB 7.875% 20184		10,000				11,144
CoBank ACB 0.854% 20224,5		8,315				6,203
United States Government Agency-Guaranteed (FDIC insured), General Electric Capital Corp., Series G, 1.625% 2011		4,400				4,438
United States Government Agency-Guaranteed (FDIC insured), General Electric Capital Corp., Series G, 2.20% 2012		11,750				11,910
Federal Agricultural Mortgage Corp. 4.875% 20114		11,000				11,468
Federal Agricultural Mortgage Corp. 5.50% 20114		3,000				3,188
United States Government Agency-Guaranteed (FDIC insured), Regions Bank 3.25% 2011		13,375				13,930
United States Government Agency-Guaranteed (FDIC insured), Sovereign Bancorp, Inc. 2.75% 2012		12,500				12,911
United States Government Agency-Guaranteed (FDIC insured), PNC Funding Corp. 2.30% 2012		12,500				12,811
United States Government Agency-Guaranteed (FDIC insured), Bank of America Corp., Series L, 3.125% 2012		12,000				12,522
Federal Home Loan Bank 5.25% 2014		11,125				12,479
United States Agency for International Development, Republic of Egypt 4.45% 2015		10,000				10,771
						3,396,771


MORTGAGE-BACKED OBLIGATIONS7 — 4.89%
Fannie Mae, Series 2000-T5, Class B, 7.30% 2010		36,750				37,355
Fannie Mae 4.89% 2012		10,000				10,569
Fannie Mae 4.00% 2015		3,117				3,227
Fannie Mae 5.00% 2018		9,495				10,155
Fannie Mae 5.50% 2018		8,082				8,751
Fannie Mae 5.50% 2020		22,890				24,756
Fannie Mae 6.00% 2021		871				946
Fannie Mae, Series 2003-48, Class TJ, 4.50% 2022		14,018				14,605
Fannie Mae 5.00% 2022		13,087				13,862
Fannie Mae 5.50% 2022		1,911				2,046
Fannie Mae 5.50% 2022		442				474
Fannie Mae 5.00% 2023		4,874				5,154
Fannie Mae 5.50% 2023		42,090				45,140
Fannie Mae 5.50% 2023		20,782				22,301
Fannie Mae 5.50% 2023		3,000				3,211
Fannie Mae 5.50% 2023		2,337				2,501
Fannie Mae 5.50% 2023		1,038				1,111
Fannie Mae 4.00% 2024		33,094				33,734
Fannie Mae 4.00% 2024		20,053				20,440
Fannie Mae 4.00% 2024		18,806				19,170
Fannie Mae 4.00% 2024		3,035				3,093
Fannie Mae 4.50% 2024		27,936				29,117
Fannie Mae 4.50% 2024		17,811				18,564
Fannie Mae 4.50% 2024		6,746				7,031
Fannie Mae 4.50% 2024		3,499				3,647
Fannie Mae 5.50% 2024		1,605				1,719
Fannie Mae 4.00% 2025		40,250				41,028
Fannie Mae, Series 2001-4, Class GA, 10.018% 20255		549				632
Fannie Mae, Series 2001-4, Class NA, 11.821% 20255		38				43
Fannie Mae 6.00% 2026		14,243				15,388
Fannie Mae 7.00% 2026		1,826				2,010
Fannie Mae 6.00% 2028		20,418				22,059
Fannie Mae 7.00% 2028		5,766				6,346
Fannie Mae 7.00% 2028		903				994
Fannie Mae, Series 2001-20, Class E, 9.622% 20315		478				549
Fannie Mae 5.50% 2033		3,156				3,357
Fannie Mae 4.603% 20355		3,437				3,563
Fannie Mae 5.00% 2035		85,261				88,818
Fannie Mae 5.50% 2035		5,502				5,859
Fannie Mae 5.50% 2035		3,088				3,282
Fannie Mae 6.50% 2035		347				378
Fannie Mae 7.00% 2035		6,208				6,844
Fannie Mae 5.00% 2036		11,042				11,500
Fannie Mae 5.50% 2036		27,955				29,691
Fannie Mae 5.50% 2036		10,710				11,366
Fannie Mae 6.00% 2036		16,064				17,270
Fannie Mae, Series 2006-43, Class PX, 6.00% 2036		6,555				7,063
Fannie Mae 5.50% 2037		75,405				80,159
Fannie Mae, Series 2007-33, Class HE, 5.50% 2037		19,884				21,241
Fannie Mae 5.50% 2037		15,471				16,446
Fannie Mae 5.622% 20375		12,594				13,295
Fannie Mae 6.00% 2037		243,907				261,610
Fannie Mae 6.00% 2037		62,615				67,160
Fannie Mae 6.00% 2037		25,646				27,507
Fannie Mae 6.00% 2037		23,987				25,866
Fannie Mae 6.00% 2037		16,591				17,784
Fannie Mae, Series 2007-24, Class P, 6.00% 2037		14,947				16,167
Fannie Mae 6.00% 2037		8,885				9,581
Fannie Mae 6.00% 2037		7,456				7,993
Fannie Mae 6.00% 2037		1,906				2,036
Fannie Mae 6.50% 2037		12,171				13,158
Fannie Mae 6.50% 2037		10,174				10,999
Fannie Mae 6.50% 2037		9,225				9,931
Fannie Mae 6.50% 2037		8,217				8,879
Fannie Mae 6.50% 2037		3,779				4,084
Fannie Mae 7.00% 2037		17,962				19,770
Fannie Mae 7.00% 2037		10,933				11,924
Fannie Mae 7.00% 2037		7,558				8,243
Fannie Mae 7.50% 2037		15,006				16,381
Fannie Mae 7.50% 2037		2,709				2,957
Fannie Mae 7.50% 2037		1,481				1,616
Fannie Mae 7.50% 2037		912				996
Fannie Mae 7.50% 2037		747				815
Fannie Mae 8.00% 2037		1,158				1,274
Fannie Mae 8.00% 2037		701				772
Fannie Mae 4.50% 2038		12,424				12,562
Fannie Mae 5.50% 2038		69,344				73,543
Fannie Mae 5.50% 2038		17,671				18,746
Fannie Mae 6.00% 2038		26,524				28,424
Fannie Mae 6.00% 2038		21,467				23,000
Fannie Mae 6.00% 2038		13,881				14,872
Fannie Mae 6.00% 2038		9,195				9,851
Fannie Mae 6.00% 2038		2,819				3,019
Fannie Mae 6.50% 2038		8,952				9,669
Fannie Mae 6.50% 2038		6,333				6,840
Fannie Mae 6.50% 2038		4,444				4,800
Fannie Mae 5.00% 2039		22,357				23,266
Fannie Mae 6.00% 2039		21,994				23,570
Fannie Mae, Series 2001-50, Class BA, 7.00% 2041		1,183				1,287
Fannie Mae, Series 2001-T10, Class A-1, 7.00% 2041		812				905
Fannie Mae, Series 2002-W3, Class A-5, 7.50% 2041		553				627
Fannie Mae, Series 2002-W1, Class 2A, 7.50% 2042		1,275				1,444
Fannie Mae 6.50% 2047		4,601				4,950
Fannie Mae 6.50% 2047		4,088				4,398
Fannie Mae 6.50% 2047		3,391				3,648
Fannie Mae 6.50% 2047		3,375				3,631
Fannie Mae 6.50% 2047		2,520				2,711
Fannie Mae 6.50% 2047		1,736				1,868
Fannie Mae 6.50% 2047		1,406				1,512
Fannie Mae 6.50% 2047		1,031				1,109
Fannie Mae 7.00% 2047		4,960				5,415
Fannie Mae 7.00% 2047		2,921				3,190
Fannie Mae 7.00% 2047		2,750				3,002
Fannie Mae 7.00% 2047		2,423				2,646
Fannie Mae 7.00% 2047		1,251				1,366
Freddie Mac 5.00% 2018		5,601				5,988
Freddie Mac 5.50% 2018		2,825		��		3,056
Freddie Mac, Series 2890, Class KT, 4.50% 2019		25,425				26,627
Freddie Mac 5.50% 2019		7,708				8,338
Freddie Mac, Series 2289, Class NB, 11.277% 20225		100				116
Freddie Mac 5.00% 2023		20,386				21,573
Freddie Mac 5.00% 2023		17,501				18,520
Freddie Mac 5.00% 2023		11,803				12,490
Freddie Mac 5.00% 2023		6,341				6,720
Freddie Mac 5.00% 2024		20,271				21,456
Freddie Mac 6.00% 2026		3,056				3,309
Freddie Mac 6.00% 2027		5,330				5,769
Freddie Mac 4.632% 20355		4,970				5,171
Freddie Mac 5.00% 2035		9,508				9,901
Freddie Mac, Series 3061, Class PN, 5.50% 2035		4,574				4,913
Freddie Mac 5.00% 2036		8,333				8,670
Freddie Mac, Series 3257, Class PA, 5.50% 2036		19,871				21,358
Freddie Mac 5.00% 2037		2,484				2,585
Freddie Mac, Series 3286, Class JN, 5.50% 2037		26,657				28,412
Freddie Mac, Series 3312, Class PA, 5.50% 2037		20,334				21,668
Freddie Mac, Series 3318, Class JT, 5.50% 2037		14,969				15,953
Freddie Mac, Series 3271, Class OA, 6.00% 2037		18,494				20,135
Freddie Mac 6.50% 2037		5,814				6,294
Freddie Mac 6.50% 2038		24,556				26,524
Freddie Mac 5.00% 2039		12,521				13,032
Freddie Mac 5.00% 2039		8,694				9,048
Freddie Mac 5.00% 2039		5,653				5,884
American Tower Trust I, Series 2007-1A, Class A-FX, 5.42% 20374		7,250				7,452
American Tower Trust I, Series 2007-1A, Class B, 5.537% 20374		20,000				20,833
American Tower Trust I, Series 2007-1A, Class D, 5.957% 20374		37,375				38,903
American Tower Trust I, Series 2007-1A, Class E, 6.249% 20374		20,500				21,337
American Tower Trust I, Series 2007-1A, Class F, 6.639% 20374		5,550				5,778
Countrywide Alternative Loan Trust, Series 2005-49CB, Class A-1, 5.50% 2035		53,001				50,156
Countrywide Alternative Loan Trust, Series 2005-54CB, Class 2-A-5, 5.50% 2035		11,354				6,398
Countrywide Alternative Loan Trust, Series 2004-36CB, Class 1-A-1, 6.00% 2035		3,444				3,040
Countrywide Alternative Loan Trust, Series 2007-14T2, Class A-4, 0.581% 20375		25,010				14,569
Countrywide Alternative Loan Trust, Series 2007-HY4, Class 3-A-1, 5.724% 20475		9,561				6,035
Countrywide Alternative Loan Trust, Series 2007-HY4, Class 4-A-1, 5.868% 20475		15,036				9,163
WaMu Mortgage Pass-Through Certificates Trust, Series 2006-AR12, Class 1-A2, 5.785% 20365		10,000				7,702
WaMu Mortgage Pass-Through Certificates Trust, Series 2007-HY6, Class 2-A3, 5.734% 20375		44,148				33,574
WaMu Mortgage Pass-Through Certificates Trust, Series 2007-HY7, Class 2-A1, 5.789% 20375		15,168				10,455
WaMu Mortgage Pass-Through Certificates Trust, Series 2007-HY5, Class 3-A1, 5.808% 20375		28,668				24,050
WaMu Mortgage Pass-Through Certificates Trust, Series 2007-HY7, Class 4-A2, 5.835% 20375		14,630				11,287
CS First Boston Mortgage Securities Corp., Series 2001-CKN5, Class A-4, 5.435% 2034		3,581				3,673
CS First Boston Mortgage Securities Corp., Series 2004-5, Class IV-A-1, 6.00% 2034		2,514				2,317
CS First Boston Mortgage Securities Corp., Series 2001-CP4, Class A-4, 6.18% 2035		7,234				7,522
CS First Boston Mortgage Securities Corp., Series 2005-5, Class IV-A-1, 6.25% 2035		4,414				4,063
CS First Boston Mortgage Securities Corp., Series 2001-CK1, Class A-3, 6.38% 2035		8,134				8,329
CS First Boston Mortgage Securities Corp., Series 2005-C3, Class A-AB, 4.614% 2037		10,000				10,189
CS First Boston Mortgage Securities Corp., Series 2002-CKN2, Class A-3, 6.133% 2037		6,910				7,337
CS First Boston Mortgage Securities Corp., Series 2005-C5, Class A-2, 5.10% 20385		8,000				8,084
CS First Boston Mortgage Securities Corp., Series 2005-C6, Class A-2FX, 5.207% 20405		3,050				3,081
CS First Boston Mortgage Securities Corp., Series 2005-C6, Class A-3, 5.23% 20405		10,900				11,040
SBA CMBS Trust, Series 2006-1A, Class A, 5.314% 20364		12,000				12,421
SBA CMBS Trust, Series 2006-1A, Class D, 5.852% 20364		5,000				5,057
SBA CMBS Trust, Series 2006-1A, Class F, 6.709% 20364		18,000				18,262
SBA CMBS Trust, Series 2006-1A, Class G, 6.904% 20364		17,000				17,568
SBA CMBS Trust, Series 2006-1A, Class H, 7.389% 20364		1,670				1,726
CHL Mortgage Pass-Through Trust, Series 2005-HYB8, Class 4-A-1, 5.45% 20355		5,555				4,503
CHL Mortgage Pass-Through Trust, Series 2007-HY5, Class 3-A-1, 6.115% 20375		16,994				11,727
CHL Mortgage Pass-Through Trust, Series 2007-HY5, Class 1-A-1, 5.896% 20475		33,359				24,943
CHL Mortgage Pass-Through Trust, Series 2007-HY4, Class 1-A-1, 6.032% 20475		18,375				12,662
Wachovia Bank Commercial Mortgage Trust, Series 2005-C16, Class A-PB, 4.692% 2041		14,773				15,164
Wachovia Bank Commercial Mortgage Trust, Series 2005-C22, Class A-4, 5.27% 20445		22,000				22,750
Wachovia Bank Commercial Mortgage Trust, Series 2006-C23, Class A-PB, 5.446% 2045		12,500				12,694
Wells Fargo Alternative Loan Trust, Series 2007-PA4, Class III-A-1, 6.056% 20375		13,777				8,368
Wells Fargo Alternative Loan Trust, Series 2007-PA3, Class III-A-1, 6.25% 2037		29,612				21,930
Wells Fargo Alternative Loan Trust, Series 2007-PA3, Class IV-A-1, 6.50% 2037		24,086				15,663
Structured Adjustable Rate Mortgage Loan Trust, Series 2006-8, Class 3-AF, 0.611% 20365		5,814				3,861
Structured Adjustable Rate Mortgage Loan Trust, Series 2006-4, Class 5-A-1, 5.846% 20365		9,742				7,687
Structured Adjustable Rate Mortgage Loan Trust, Series 2006-9, Class 2-A2, 5.858% 20365		6,687				3,943
Structured Adjustable Rate Mortgage Loan Trust, Series 2006-4, Class 6-A, 5.908% 20365		24,147				17,573
Structured Adjustable Rate Mortgage Loan Trust, Series 2006-12, Class 2-A1, 5.818% 20375		9,315				6,019
Structured Adjustable Rate Mortgage Loan Trust, Series 2007-9, Class 2-A1, 5.858% 20475		5,786				3,684
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2002-CIBC5, Class A-1, 4.372% 2037		1,500				1,530
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2005-CIBC12, Class A-2, 4.739% 2037		1,475				1,479
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2005-CIBC11, Class A-2, 5.016% 2037		1,966				1,972
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2003-ML1, Class A-1, 3.972% 2039		701				714
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2004-C3, Class A-2, 4.223% 2042		8,960				8,953
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2005-LDP4, Class A-2, 4.79% 2042		2,730				2,751
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2006-LDP7, Class A-4, 5.874% 20455		14,700				14,250
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2005-LDP1, Class A-2, 4.625% 2046		6,299				6,296
Crown Castle Towers LLC, Series 2010-1, Class C, 4.523% 20154		10,000				10,095
Crown Castle Towers LLC, Series 2006-1, Class E, 6.065% 20364		9,000				9,364
Crown Castle Towers LLC, Series 2006-1, Class F, 6.65% 20364		16,575				17,514
GE Commercial Mortgage Corp., Series 2004-C1, Class A-2, 3.915% 2038		2,186				2,198
GE Commercial Mortgage Corp., Series 2006-C1, Class A-4, 5.337% 20445		13,000				12,754
GE Commercial Mortgage Corp., Series 2005-C4, Class A-3A, 5.335% 20455		17,000				17,684
Banc of America Commercial Mortgage Inc., Series 2001-1, Class A-2, 6.503% 2036		9,126				9,414
Banc of America Commercial Mortgage Inc., Series 2005-5, Class A-4, 5.115% 20455		3,000				2,995
Banc of America Commercial Mortgage Inc., Series 2005-5, Class A-3B, 5.219% 20455		17,730				17,319
Bear Stearns ARM Trust, Series 2005-6, Class I-A-1, 3.75% 20355		11,449				8,180
Bear Stearns ARM Trust, Series 2005-10, Class A-3, 4.429% 20355		20,000				16,227
Bear Stearns ARM Trust, Series 2006-2, Class 2-A-1, 5.65% 20365		4,507				3,147
IndyMac INDX Mortgage Loan Trust, Series 2006-AR5, Class 2-A-1, 5.586% 20365		14,362				10,213
IndyMac INDX Mortgage Loan Trust, Series 2006-AR25, Class 3-A-1, 5.902% 20365		30,773				16,466
ML-CFC Commercial Mortgage Trust, Series 2006-4, Class A-3, 5.172% (undated)5		27,410				24,843
Bank of America 5.50% 20124		22,500				23,978
Citicorp Mortgage Securities, Inc. 5.50% 2035		24,264				22,647
Banc of America Mortgage Securities, Inc., Series 2004-7, Class 7-A-1, 5.00% 2019		20,790				20,675
Greenwich Capital Commercial Funding Corp., Series 2005-GG5, Class A-2, 5.117% 2037		9,890				9,969
Greenwich Capital Commercial Funding Corp., Series 2005-GG5, Class A-4-1, 5.243% 20375		10,000				10,317
J.P. Morgan Chase Commercial Mortgage Securities Trust, Series 2006-LDP6, Class A-4, 5.475% 20435		20,250				19,990
Wells Fargo Mortgage-backed Securities Trust, Series 2006-1, Class A-3, 5.00% 2021		5,232				5,075
Wells Fargo Mortgage-backed Securities Trust, Series 2006-AR15, Class A-1, 5.637% 20365		10,482				8,834
Wells Fargo Mortgage-backed Securities Trust, Series 2006-AR4, Class 2-A-4, 5.771% 20365		6,200				5,595
L.A. Arena Funding, LLC, Series 1, Class A, 7.656% 20264		20,118				19,003
Nationwide Building Society, Series 2007-2, 5.50% 20124		17,500				18,833
Morgan Stanley Capital I Trust, Series 2005-HQ7, Class A-2, 5.207% 20425		17,875				18,671
Citigroup Mortgage Loan Trust, Inc., Series 2005-8, Class I-A4A, 5.51% 20355		3,378				2,613
Citigroup Mortgage Loan Trust, Inc., Series 2006-AR5, Class 2-A7A, 6.199% 20365		22,951				12,757
Citigroup Mortgage Loan Trust, Inc., Series 2007-AR5, Class 1-A2A, 5.58% 20375		4,868				2,966
Government National Mortgage Assn. 10.00% 2021		867				1,013
Government National Mortgage Assn. 10.00% 2025		812				943
Government National Mortgage Assn. 4.00% 2039		3,219				3,161
Government National Mortgage Assn. 4.50% 2040		10,500				10,650
Residential Accredit Loans, Inc., Series 2005-QR1, Class A, 6.00% 2034		5,597				5,087
Residential Accredit Loans, Inc., Series 2005-QA12, Class CB-I, 4.241% 20355		8,274				5,213
Residential Accredit Loans, Inc., Series 2007-QS11, Class A-1, 7.00% 2037		6,206				4,100
GSR Mortgage Loan Trust, Series 2004-2F, Class VIIA-1, 4.50% 2019		10,525				10,312
GSR Mortgage Loan Trust, Series 2004-15F, Class 5A-1, 5.50% 2020		2,855				2,873
Morgan Stanley Mortgage Loan Trust, Series 2005-3AR, Class 3-A, 5.00% 20355		15,189				11,269
Morgan Stanley Mortgage Loan Trust, Series 2006-3AR, Class 3-A-1, 5.923% 20365		821				579
GMAC Commercial Mortgage Securities, Inc., Series 2001-C1, Class A-2, 6.465% 2034		11,412				11,795
LB-UBS Commercial Mortgage Trust, Series 2005-C7, Class A-4, 5.197% 20305		11,422				11,766
J.P. Morgan Mortgage Trust, Series 2006-A3, Class 3-A-3, 5.732% 20365		2,000				1,480
J.P. Morgan Mortgage Trust, Series 2006-A7, Class 2-A-4, 5.756% 20375		13,875				9,253
American Home Mortgage Assets Trust, Series 2007-3, Class II-2A-1, 6.25% 20375		15,103				9,570
American General Mortgage Loan Trust, Series 2006-1, Class A-5, 5.75% 20354,5		9,002				8,586
Morgan Stanley Dean Witter Capital I Trust, Series 2000-LIFE2, Class A-2, 7.20% 2033		8,252				8,388
Commercial Mortgage Trust, Series 2003-LNB1, Class A-2, 4.084% 2038		6,925				6,960
GS Mortgage Securities Corp. II, Series 2001-ROCK, Class D, 6.878% 20184		6,000				6,386
BCAP LLC Trust, Series 2006-AA2, Class A-1, 0.401% 20375		12,229				6,254
Bear Stearns ALT-A Trust, Series 2006-2, Class II-4-A-1, 5.796% 20365		9,249				5,713
Bear Stearns Asset-backed Securities I Trust, Series 2005-AC3, Class II-A-1, 5.25% 2020		6,061				5,578
Washington Mutual Mortgage, WMALT Series 2007-2, Class 3-A-1, 5.50% 2022		4,026				3,542
Structured Products Asset Return Certificates Trust, Series 2001-CF1, Class A, 6.36% 20332		3,131				3,139
GE Capital Commercial Mortgage Corp., Series 2001-1, Class A-1, 6.079% 2033		122				123
GE Capital Commercial Mortgage Corp., Series 2002-3, Class A-1, 4.229% 2037		2,468				2,502
Harborview Mortgage Loan Trust, Series 2006-6, Class 1A, 3.614% 20365		2,686				1,667
Bear Stearns Commercial Mortgage Securities Inc., Series 1999-C1, Class X, interest only, 0.751% 20314,5		18,059				438
Bear Stearns Commercial Mortgage Securities Inc., Series 2002-PBW1, Class A-1, 3.97% 2035		1,050				1,065
Chase Commercial Mortgage Securities Corp., Series 2000-1, Class A-2, 7.757% 2032		419				419
Structured Asset Securities Corp., Series 1998-RF2, Class A, 8.202% 20274,5		201				192
Structured Asset Securities Corp., Series 1998-RF1, Class A, 8.366% 20274,5		173				164
Financial Asset Securitization, Inc., Series 1997-NAM1, Class B-1, 7.75% 2027		226				226
						3,092,003


FINANCIALS — 4.76%
CIT Group Inc., Term Loan 2A, 9.50% 20125,7,8		105,060				107,621
CIT Group Inc., Term Loan, 13.00% 20125,7,8		52,000				53,761
CIT Group Inc., Series A, 7.00% 2013		18,123				16,673
CIT Group Inc., Series A, 7.00% 2014		13,072				11,748
CIT Group Inc., Series A, 7.00% 2015		40,168				35,097
CIT Group Inc., Series A, 7.00% 2016		10,490				9,048
Liberty Mutual Group Inc. 6.50% 20354		34,515				29,484
Liberty Mutual Group Inc. 7.50% 20364		10,530				10,082
Liberty Mutual Group Inc., Series B, 7.00% 20674,5		7,690				6,190
Liberty Mutual Group Inc., Series A, 7.80% 20874,5		78,650				68,425
Liberty Mutual Group Inc., Series C, 10.75% 20884,5		91,185				101,215
Simon Property Group, LP 4.875% 2010		5,000				5,021
Simon Property Group, LP 5.30% 2013		1,590				1,703
Simon Property Group, LP 6.75% 2014		5,310				5,909
Simon Property Group, LP 4.20% 2015		1,750				1,780
Simon Property Group, LP 5.25% 2016		79,670				81,184
Simon Property Group, LP 6.10% 2016		5,550				5,973
Simon Property Group, LP 5.875% 2017		32,510				34,163
Simon Property Group, LP 6.125% 2018		42,390				44,585
Simon Property Group, LP 10.35% 2019		5,000				6,521
Simon Property Group, LP 5.65% 2020		2,000				2,005
Simon Property Group, LP 6.75% 2040		2,000				2,056
Residential Capital Corp. 8.375% 2010		20,960				20,462
General Motors Acceptance Corp. 6.875% 2011		58,489				58,782
General Motors Acceptance Corp. 7.25% 2011		12,019				12,169
General Motors Acceptance Corp. 6.875% 2012		6,851				6,834
General Motors Acceptance Corp. 7.00% 2012		21,516				21,570
General Motors Acceptance Corp. 7.50% 2013		6,484				6,516
General Motors Acceptance Corp. 2.456% 20145		10,438				8,800
General Motors Acceptance Corp. 8.00% 2018		6,366				6,080
Westfield Group 5.40% 20124		4,350				4,648
Westfield Capital Corp. Ltd., WT Finance (Australia) Pty Ltd. and WEA Finance LLC 5.125% 20144		14,460				15,249
Westfield Group 7.50% 20144		4,000				4,568
Westfield Group 5.75% 20154		10,250				11,015
Westfield Group 5.70% 20164		47,925				49,764
Westfield Group 7.125% 20184		37,410				41,678
Bank of America Corp. 4.25% 2010		840				859
Bank of America Corp. 4.375% 2010		10,199				10,500
Bank of America Corp. 4.50% 2010		1,625				1,655
Countrywide Financial Corp., Series B, 5.80% 2012		14,715				15,788
Bank of America Corp., Series L, 7.375% 2014		12,000				13,614
Bank of America Corp. 0.511% 20165		3,000				2,728
Bank of America Corp. 0.534% 20165		5,700				5,176
Bank of America Corp. 5.30% 2017		45,500				44,873
Bank of America Corp. 5.75% 2017		17,350				17,722
NB Capital Trust II 7.83% 2026		5,575				5,310
NB Capital Trust IV 8.25% 2027		6,205				6,112
Zions Bancorporation 5.65% 2014		32,015				26,573
Zions Bancorporation 7.75% 2014		8,825				8,480
Zions Bancorporation 5.50% 2015		44,017				36,048
Zions Bancorporation 6.00% 2015		60,872				50,276
Ford Motor Credit Co. 9.75% 20105		45,600				47,056
Ford Motor Credit Co. 7.25% 2011		7,500				7,595
Ford Motor Credit Co. 7.375% 2011		1,800				1,832
Ford Motor Credit Co. 9.875% 2011		32,650				34,171
Ford Motor Credit Co. 3.001% 20125		26,685				25,251
Realogy Corp., Letter of Credit, 3.237% 20135,7,8		14,586				13,055
Realogy Corp., Term Loan B, 3.251% 20135,7,8		49,523				44,323
Realogy Corp., Term Loan DD, 3.251% 20135,7,8		8,947				8,007
Realogy Corp., Second Lien Term Loan A, 13.50% 20177,8		18,000				19,656
ProLogis 5.50% 2012		6,292				6,582
ProLogis 7.625% 2014		10,000				11,044
ProLogis 5.625% 2015		6,765				6,781
ProLogis 5.625% 2016		3,750				3,654
ProLogis 5.75% 2016		2,000				1,980
ProLogis 6.625% 2018		25,175				25,580
ProLogis 7.375% 2019		25,000				25,950
Lloyds TSB Bank PLC 4.375% 20154		10,000				9,952
HBOS PLC 6.75% 20184		47,050				46,070
Lloyds TSB Bank PLC 5.80% 20204		7,480				7,411
LBG Capital No.1 PLC, Series 2, 7.875% 20204		20,000				17,800
HBOS PLC 6.00% 20334		305				241
International Lease Finance Corp., Series R, 4.95% 2011		3,735				3,519
International Lease Finance Corp., Series Q, 5.45% 2011		9,210				8,690
International Lease Finance Corp., Series Q, 5.75% 2011		13,495				12,655
International Lease Finance Corp. 4.75% 2012		2,800				2,472
International Lease Finance Corp., Series R, 5.40% 2012		10,000				8,827
International Lease Finance Corp., Series R, 6.625% 2013		3,500				2,930
International Lease Finance Corp., Series R, 5.65% 2014		26,250				20,851
American General Finance Corp., Series I, 5.40% 2015		17,250				12,294
American General Finance Corp., Series J, 6.90% 2017		12,500				9,131
Rouse Co. 7.20% 20129		28,039				28,880
Rouse Co. 5.375% 20139		2,770				2,728
Rouse Co. 6.75% 20134,9		13,400				13,601
Rouse Co. 3.625% 20099		32,561				31,747
Abbey National Treasury Services PLC 3.875% 20144		9,950				10,098
Santander Issuances, SA Unipersonal 5.805% 20164,5		10,000				10,017
Sovereign Bancorp, Inc. 8.75% 2018		27,047				32,914
Santander Issuances, SA Unipersonal 6.50% 20194,5		12,500				13,139
SLM Corp., Series A, 4.50% 2010		4,000				4,021
SLM Corp., Series A, 0.479% 20115		5,000				4,613
SLM Corp., Series A, 5.40% 2011		15,000				14,844
SLM Corp., Series A, 0.549% 20145		10,000				8,158
SLM Corp., Series A, 5.00% 2015		12,000				10,407
SLM Corp., Series A, 8.45% 2018		24,500				24,045
Citigroup Inc. 6.50% 2013		5,000				5,405
Citigroup Inc. 6.01% 2015		22,500				23,442
Citigroup Inc. 6.125% 2017		8,000				8,103
Citigroup Inc. 6.125% 2018		18,875				18,988
Citigroup Capital XXI 8.30% 20775		7,500				7,012
Standard Chartered Bank 6.40% 20174		55,830				60,067
Kimco Realty Corp. 6.00% 2012		3,250				3,472
Kimco Realty Corp., Series C, 4.904% 2015		4,500				4,507
Kimco Realty Corp., Series C, 5.783% 2016		15,000				15,384
Kimco Realty Corp. 5.70% 2017		21,985				22,326
Kimco Realty Corp. 6.875% 2019		10,000				10,720
Metropolitan Life Global Funding I, 5.125% 20134		12,750				13,746
MetLife Capital Trust IV 7.875% 20674,5		32,930				33,259
MetLife Capital Trust X 9.25% 20684,5		1,500				1,695
MetLife Inc. 10.75% 20695		2,500				3,133
UnumProvident Finance Co. PLC 6.85% 20154		28,500				30,478
Unum Group 7.125% 2016		18,740				20,116
Hospitality Properties Trust 6.75% 20131		21,265				22,321
Hospitality Properties Trust 5.125% 20151		2,160				2,078
Hospitality Properties Trust 6.30% 20161		2,400				2,372
Hospitality Properties Trust 5.625% 20171		1,485				1,384
Hospitality Properties Trust 6.70% 20181		16,175				15,871
Capital One Capital III 7.686% 20365		16,445				15,458
Capital One Capital IV 6.745% 20375		10,850				9,168
Capital One Capital V 10.25% 2039		16,205				18,599
National City Preferred Capital Trust I 12.00% (undated)5		37,250				42,651
UniCredito Italiano SpA 5.584% 20174,5		22,525				22,357
UniCredito Italiano SpA 6.00% 20174		14,650				15,214
HVB Funding Trust I 8.741% 20314		4,670				4,717
Goldman Sachs Group, Inc. 6.25% 2017		2,000				2,156
Goldman Sachs Group, Inc. 5.95% 2018		12,918				13,628
Goldman Sachs Group, Inc. 6.15% 2018		21,582				23,001
Lazard Group LLC 7.125% 2015		30,622				32,983
Lazard Group LLC 6.85% 2017		5,322				5,513
Korea Development Bank 5.30% 2013		29,600				31,234
Korea Development Bank 8.00% 2014		6,050				6,996
PRICOA Global Funding I 5.30% 20134		2,500				2,732
Prudential Financial, Inc., Series D, 6.10% 2017		5,000				5,298
Prudential Holdings, LLC, Series C, 8.695% 20234,7		17,250				18,790
Prudential Financial, Inc. 8.875% 20685		9,275				10,095
Catlin Insurance Ltd. 7.249% (undated)4,5		43,590				35,526
HSBK (Europe) BV 7.25% 20174		36,110				34,124
Boston Properties, Inc. 5.875% 2019		32,500				33,903
Nationwide Mutual Insurance Co. 5.81% 20244,5		10,000				8,475
Nationwide Mutual Insurance Co. 9.375% 20394		20,000				22,635
Developers Diversified Realty Corp. 4.625% 2010		6,165				6,139
Developers Diversified Realty Corp. 5.375% 2012		2,000				1,948
Developers Diversified Realty Corp. 5.50% 2015		12,752				11,996
Developers Diversified Realty Corp. 9.625% 2016		10,000				10,858
ERP Operating LP 5.50% 2012		4,000				4,214
ERP Operating LP 6.625% 2012		2,000				2,147
ERP Operating LP 5.20% 2013		2,500				2,594
ERP Operating LP 5.25% 2014		2,000				2,108
ERP Operating LP 6.584% 2015		2,705				2,931
ERP Operating LP 5.75% 2017		3,660				3,795
ERP Operating LP 7.125% 2017		10,000				10,964
Morgan Stanley 6.00% 2014		11,000				11,993
Morgan Stanley, Series F, 6.00% 2015		8,000				8,622
Morgan Stanley, Series F, 5.625% 2019		7,000				7,078
Fifth Third Capital Trust IV 6.50% 20675		30,000				23,325
Barclays Bank PLC 2.50% 2013		4,625				4,635
Barclays Bank PLC 5.20% 2014		10,000				10,705
Barclays Bank PLC 5.125% 2020		5,500				5,446
New York Life Global Funding 4.65% 20134		19,500				20,703
Monumental Global Funding 5.50% 20134		10,000				10,731
Monumental Global Funding III 0.451% 20144,5		8,000				7,255
Monumental Global Funding III 5.25% 20144		1,500				1,601
American Express Co. 6.15% 2017		12,610				13,483
American Express Co. 8.15% 2038		4,500				5,786
HSBC Holdings PLC 6.50% 2037		18,000				18,892
Host Marriott, LP, Series K, 7.125% 2013		8,750				8,859
Host Marriott, LP, Series O, 6.375% 2015		950				931
Host Hotels & Resorts, LP, Series Q, 6.75% 2016		7,800				7,663
Host Hotels & Resorts LP 9.00% 20174		900				967
Regions Financial Corp. 7.75% 2014		17,500				18,101
Wells Fargo & Co. 4.375% 2013		10,850				11,421
Corestates Capital I 8.00% 20264		5,714				5,938
Development Bank of Singapore Ltd. 7.875% 20104		10,000				10,126
Development Bank of Singapore Ltd. 7.125% 20114		5,000				5,328
Nordea Bank 3.70% 20144		14,000				14,256
ZFS Finance (USA) Trust II 6.45% 20654,5		12,500				11,375
ZFS Finance (USA) Trust V 6.50% 20674,5		3,011				2,740
UBS AG 3.875% 2015		13,715				13,709
Lincoln National Corp. 5.65% 2012		12,000				12,532
AXA SA 6.463% (undated)4,5		15,000				11,944
Principal Life Insurance Co. 5.30% 2013		10,000				10,671
JPMorgan Chase Bank NA 0.584% 20164,5		2,250				2,127
JPMorgan Chase & Co. 6.30% 2019		6,500				7,200
CNA Financial Corp. 5.85% 2014		5,625				5,727
CNA Financial Corp. 7.35% 2019		3,000				3,149
Resona Bank, Ltd. 5.85% (undated)4,5		9,525				8,799
Royal Bank of Scotland Group PLC 5.05% 2015		5,306				4,845
Royal Bank of Scotland Group PLC 6.99% (undated)4,5		6,000				3,845
Banco Mercantil del Norte, SA 6.135% 20164,5		2,000				1,980
Banco Mercantil del Norte, SA 6.862% 20214,5		6,850				6,608
Société Générale 5.75% 20164		7,800				8,200
Glen Meadow Pass-Through Trust 6.505% 20674,5		10,000				7,899
Paribas, New York Branch 6.95% 2013		6,000				6,715
BNP Paribas 4.80% 20154		440				468
Nationwide Financial Services, Inc. 6.75% 20675		8,780				7,085
Charles Schwab Corp., Series A, 6.375% 2017		4,000				4,387
Schwab Capital Trust I 7.50% 20375		1,500				1,457
Allstate Life Global Funding Trust, Series 2008-4, 5.375% 2013		2,000				2,172
Allstate Corp., Series B, 6.125% 20675		2,445				2,298
TuranAlem Finance BV 8.25% 20374,9		10,000				4,150
Credit Suisse Group AG 5.50% 2014		3,000				3,283
First Tennessee Bank 5.05% 2015		3,400				3,122
ACE INA Holdings Inc. 5.875% 2014		2,500				2,780
United Dominion Realty Trust, Inc. 5.00% 2012		2,500				2,563
Assurant, Inc. 5.625% 2014		2,295				2,406
TIAA Global Markets 4.95% 20134		2,000				2,162
LaBranche & Co Inc. 11.00% 2012		1,750				1,803
Ambac Financial Group, Inc. 6.15% 20875,9		8,405				651
						3,014,188


CONSUMER DISCRETIONARY — 4.24%
Charter Communications Operating, LLC and Charter Communications Operating Capital Corp. 8.00% 20124		48,548				50,975
CCO Holdings, LLC and CCO Holdings Capital Corp. 8.75% 2013		33,350				33,975
Charter Communications Operating, LLC, Term Loan B, 2.26% 20145,7,8		49,319				45,974
Charter Communications Operating, LLC, Term Loan B, 7.25% 20145,7,8		6,878				7,024
Charter Communications Operating, LLC and Charter Communications Operating Capital Corp. 8.375% 20144		15,000				15,338
Charter Communications Operating, LLC and Charter Communications Operating Capital Corp. 10.875% 20144		24,550				27,619
Charter Communications, Inc. 13.50% 20164		28,638				34,294
NTL Cable PLC 8.75% 2014		6,307				6,512
NTL Cable PLC 9.125% 2016		32,000				33,440
NTL Cable PLC 9.50% 2016		86,065				91,659
Virgin Media Inc. 6.50% 20184		8,800				8,701
Virgin Media Finance 8.375% 20194		41,674				42,924
Allison Transmission Holdings, Inc., Term Loan B, 2.99% 20145,7,8		112,049				103,241
Allison Transmission Holdings, Inc. 11.00% 20154		20,750				21,995
Allison Transmission Holdings, Inc. 11.25% 20154,5,10		53,742				56,832
Univision Communications, Inc., First Lien Term Loan B, 2.501% 20145,7,8		63,344				54,951
Univision Communications Inc. 12.00% 20144		11,435				12,407
Univision Communications Inc. 10.50% 20154,5,10		112,613				99,662
Michaels Stores, Inc., Term Loan B1, 2.563% 20135,7,8		22,948				20,716
Michaels Stores, Inc. 10.00% 2014		81,365				82,585
Michaels Stores, Inc. 0%/13.00% 201611		2,245				1,869
Michaels Stores, Inc., Term Loan B2, 4.813% 20165,7,8		7,775				7,423
Time Warner Cable Inc. 6.20% 2013		5,100				5,635
Time Warner Cable Inc. 7.50% 2014		10,400				12,158
Time Warner Cable Inc. 3.50% 2015		4,000				4,012
Time Warner Cable Inc. 6.75% 2018		29,000				32,356
Time Warner Cable Inc. 5.00% 2020		22,000				21,520
Time Warner Cable Inc. 6.55% 2037		25,000				25,862
Toys “R” Us, Inc. 7.625% 2011		38,345				39,783
Toys “R” Us-Delaware, Inc., Term Loan B, 4.481% 20125,7,8		14,940				14,929
Toys “R” Us, Inc. 8.50% 20174		4,900				5,072
Toys “R” Us, Inc. 10.75% 20174		30,000				33,375
Federated Retail Holdings, Inc. 5.35% 2012		4,490				4,602
Macy’s Retail Holdings, Inc. 8.875% 20155		17,510				19,173
Federated Retail Holdings, Inc. 5.90% 2016		56,600				54,336
Federated Retail Holdings, Inc. 6.375% 2037		14,300				12,656
News America Inc. 5.30% 2014		29,150				32,039
News America Holdings Inc. 8.00% 2016		6,000				7,106
News America Inc. 6.90% 2019		28,000				32,168
News America Inc. 6.65% 2037		5,500				5,912
News America Inc. 6.90% 20394		10,000				11,104
MGM MIRAGE 8.50% 2010		49,305				49,798
MGM MIRAGE 6.75% 2012		9,150				8,487
MGM MIRAGE 6.75% 2013		8,200				7,503
MGM MIRAGE 13.00% 2013		10,725				12,468
MGM MIRAGE 10.375% 20144		1,675				1,847
MGM MIRAGE 7.50% 2016		4,000				3,360
MGM MIRAGE 11.125% 20174		2,450				2,769
Time Warner Inc. 5.50% 2011		5,185				5,542
AOL Time Warner Inc. 6.75% 2011		3,750				3,989
AOL Time Warner Inc. 6.875% 2012		14,000				15,502
Time Warner Companies, Inc. 9.125% 2013		5,000				5,859
Time Warner Inc. 5.875% 2016		19,985				21,900
Time Warner Companies, Inc. 7.25% 2017		9,500				11,060
Time Warner Inc. 6.50% 2036		17,000				18,164
Sally Holdings LLC and Sally Capital Inc. 9.25% 2014		63,875				66,590
Sally Holdings LLC and Sally Capital Inc. 10.50% 2016		2,650				2,849
Cox Communications, Inc. 7.75% 2010		10,000				10,461
Cox Communications, Inc. 5.45% 2014		5,000				5,483
Cox Communications, Inc. 5.875% 20164		25,000				27,003
Cox Communications, Inc. 8.375% 20394		16,845				21,383
Comcast Corp. 5.50% 2011		2,590				2,714
Comcast Cable Communications, Inc. 6.75% 2011		4,660				4,917
Comcast Corp. 5.85% 2015		13,200				14,677
Comcast Corp. 5.90% 2016		10,000				10,923
Comcast Corp. 6.30% 2017		3,000				3,321
Comcast Corp. 6.45% 2037		10,800				11,190
Comcast Corp. 6.95% 2037		10,275				11,267
Neiman Marcus Group, Inc. 9.00% 20155,10		36,747				35,920
Neiman Marcus Group, Inc. 10.375% 2015		16,400				16,154
J.C. Penney Co., Inc. 8.00% 2010		23,455				23,543
J.C. Penney Co., Inc. 9.00% 2012		12,006				13,387
J.C. Penney Corp., Inc. 5.75% 2018		13,000				12,805
Royal Caribbean Cruises Ltd. 8.75% 2011		26,625				27,757
Royal Caribbean Cruises Ltd. 11.875% 2015		18,175				21,310
AMC Entertainment Inc. 8.75% 2019		42,400				44,096
Cinemark USA, Inc., Term Loan B, 2.01% 20135,7,8		3,677				3,620
Cinemark USA, Inc. 8.625% 2019		34,375				36,008
Boyd Gaming Corp. 7.75% 2012		28,400				28,684
Boyd Gaming Corp. 6.75% 2014		10,504				9,769
Regal Cinemas Corp., Series B, 9.375% 2012		7,250				7,304
Regal Cinemas Corp. 8.625% 2019		29,095				30,186
Quebecor Media Inc. 7.75% 2016		24,450				24,572
Quebecor Media Inc. 7.75% 2016		11,195				11,251
CSC Holdings, Inc., Series B, 6.75% 2012		400				418
CSC Holdings, Inc. 8.50% 20144		16,175				17,226
CSC Holdings, Inc. 8.50% 20154		2,000				2,125
CSC Holdings, Inc. 8.625% 20194		14,375				15,741
Warner Music Group 7.375% 2014		22,665				22,098
Warner Music Group 9.50% 20164		12,300				13,253
Target Corp. 6.00% 2018		24,500				27,249
Target Corp. 7.00% 2038		5,000				5,776
Tenneco Automotive Inc., Series B, 10.25% 2013		2,572				2,649
Tenneco Automotive Inc. 8.625% 2014		27,750				27,473
Tenneco Inc. 8.125% 2015		2,385				2,373
Staples, Inc. 7.75% 2011		2,115				2,271
Staples, Inc. 7.375% 2012		9,000				10,083
Staples, Inc. 9.75% 2014		15,625				19,076
Dollar General Corp., Term Loan B2, 2.981% 20145,7,8		4,345				4,206
Dollar General Corp. 10.625% 2015		15,940				17,554
Dollar General Corp. 11.875% 20175,10		7,689				8,881
DaimlerChrysler North America Holding Corp., Series E, 5.75% 2011		14,150				15,046
DaimlerChrysler North America Holding Corp. 7.30% 2012		7,875				8,668
DaimlerChrysler North America Holding Corp. 6.50% 2013		5,400				6,062
Technical Olympic USA, Inc. 9.00% 20109		10,675				6,138
Technical Olympic USA, Inc. 9.00% 20109		7,815				4,494
Technical Olympic USA, Inc. 9.25% 20114,9		33,175				19,076
Marriott International, Inc., Series J, 5.625% 2013		8,330				8,813
Marriott International, Inc., Series I, 6.375% 2017		19,500				20,630
TL Acquisitions, Inc., Term Loan B, 2.75% 20145,7,8		4,627				4,120
Thomson Learning 10.50% 20154		25,500				24,799
Wynn Las Vegas, LLC and Wynn Las Vegas Capital Corp. 6.625% 2014		24,535				23,615
LBI Media, Inc. 8.50% 20174		26,074				22,293
Beazer Homes USA, Inc. 8.375% 2012		11,298				11,072
Beazer Homes USA, Inc. 8.125% 2016		13,050				11,027
Cooper-Standard Automotive Inc. 7.00% 20129		19,650				21,517
Radio One, Inc. 6.375% 2013		22,565				18,165
Clear Channel Worldwide, Series B, 9.25% 20174		17,300				17,906
Meritage Corp. 7.00% 2014		4,960				4,793
Meritage Homes Corp. 6.25% 2015		5,350				5,042
Meritage Corp. 7.731% 20174		9,500				8,004
Hanesbrands Inc., Series B, 3.831% 20145		14,800				14,134
Hanesbrands Inc. 8.00% 2016		2,600				2,678
KB Home 6.25% 2015		16,905				16,102
UPC Germany GmbH 8.125% 20174		15,800				16,037
Mohegan Tribal Gaming Authority 8.00% 2012		2,100				1,945
Mohegan Tribal Gaming Authority 6.125% 2013		4,175				3,611
Mohegan Tribal Gaming Authority 7.125% 2014		4,950				3,849
Mohegan Tribal Gaming Authority 6.875% 2015		8,775				6,472
Kabel Deutschland GmbH 10.625% 2014		14,825				15,566
American Axle & Manufacturing Holdings, Inc. 9.25% 20174		13,500				14,040
UPC Holding BV 9.875% 20184		12,500				13,281
Thomson Reuters Corp. 5.95% 2013		3,625				4,043
Thomson Reuters Corp. 6.50% 2018		8,000				9,124
Seminole Tribe of Florida 6.535% 20204,7		10,000				9,162
Seminole Tribe of Florida 7.804% 20204,7		3,295				3,087
Vidéotron Ltée 6.875% 2014		7,169				7,169
Vidéotron Ltée 6.375% 2015		4,905				4,807
Bon-Ton Department Stores, Inc. 10.25% 2014		12,850				11,822
Seneca Gaming Corp. 7.25% 2012		8,000				7,840
Seneca Gaming Corp., Series B, 7.25% 2012		3,275				3,209
Mediacom Broadband LLC and Mediacom Broadband Corp. 8.50% 2015		10,055				10,030
Lowe’s Companies, Inc. 6.10% 2017		3,258				3,672
Lowe’s Companies, Inc. 6.65% 2037		5,000				5,683
Fox Acquisition LLC 13.375% 20164		10,340				9,306
Education Management LLC and Education Management Finance Corp. 8.75% 2014		8,640				8,964
Marks and Spencer Group PLC 6.25% 20174		7,000				7,433
Marks and Spencer Group PLC 7.125% 20374		1,000				1,049
Kohl’s Corp. 6.25% 2017		6,450				7,243
Kohl’s Corp. 6.875% 2037		500				567
Libbey Glass Inc. 10.00% 20154		7,500				7,631
Norwegian Cruise Lines 11.75% 20164		7,000				7,455
Home Depot, Inc. 5.40% 2016		1,819				1,949
Home Depot, Inc. 5.875% 2036		5,000				4,861
Vitamin Shoppe Industries Inc. 7.773% 20125		6,218				6,249
Wendy’s/Arby’s Restaurants, LLC 10.00% 2016		5,400				5,913
Nordstrom, Inc. 6.25% 2018		5,000				5,476
Standard Pacific Corp. 6.25% 2014		2,800				2,492
Standard Pacific Corp. 7.00% 2015		3,010				2,694
Local T.V. Finance LLC 10.00% 20154,5,10		8,396				4,597
Grupo Televisa, SAB de CV 6.625% 20404		3,000				3,056
Walt Disney Co. 5.625% 2016		2,000				2,220
Sealy Mattress Co. 10.875% 20164		1,700				1,912
Jarden Corp. 8.00% 2016		1,550				1,624
Ford Motor Co. 9.50% 2011		1,000				1,050
American Media Operation 9.00% 20134,10		1,010				661
						2,682,803


TELECOMMUNICATION SERVICES — 2.44%
Sprint Capital Corp. 7.625% 2011		3,100				3,158
Sprint Capital Corp. 8.375% 2012		12,500				12,781
Nextel Communications, Inc., Series E, 6.875% 2013		68,500				64,219
Nextel Communications, Inc., Series F, 5.95% 2014		76,255				67,867
Nextel Communications, Inc., Series D, 7.375% 2015		142,340				129,174
Verizon Communications Inc. 3.75% 2011		33,750				34,892
ALLTEL Corp. 7.00% 2012		17,686				19,773
Verizon Communications Inc. 5.55% 2014		37,250				41,121
Verizon Global Funding Corp. 4.90% 2015		3,560				3,862
Verizon Communications Inc. 5.50% 2017		18,000				19,279
Verizon Communications Inc. 8.75% 2018		15,000				18,963
Verizon Communications Inc. 6.35% 2019		4,525				5,017
Verizon Communications Inc. 6.25% 2037		50,000				51,640
Qwest Capital Funding, Inc. 7.90% 2010		42,010				42,955
Qwest Capital Funding, Inc. 7.25% 2011		83,120				84,990
Qwest Communications International Inc. 7.25% 2011		30,025				30,025
Qwest Corp. 8.875% 2012		12,400				13,377
Qwest Communications International Inc. 8.00% 20154		5,000				5,200
Qwest Capital Funding, Inc. 7.625% 2021		3,900				3,608
Cricket Communications, Inc. 9.375% 2014		97,000				97,000
Cricket Communications, Inc. 10.00% 2015		2,500				2,519
Cricket Communications, Inc. 7.75% 2016		48,075				48,616
SBC Communications Inc. 6.25% 2011		5,500				5,825
AT&T Wireless Services, Inc. 8.125% 2012		16,935				19,294
AT&T Inc. 4.95% 2013		34,375				37,067
AT&T Inc. 6.70% 2013		15,000				17,147
SBC Communications Inc. 5.10% 2014		3,500				3,809
SBC Communications Inc. 5.625% 2016		10,000				11,003
AT&T Inc. 5.80% 2019		8,750				9,349
AT&T Corp. 8.00% 20315		5,000				6,197
AT&T Inc. 6.55% 2039		5,000				5,323
MetroPCS Wireless, Inc., Term Loan B, 2.563% 20135,7,8		8,630				8,377
MetroPCS Wireless, Inc. 9.25% 2014		42,925				43,408
MetroPCS Wireless, Inc. 9.25% 2014		31,550				31,905
Telecom Italia Capital SA 4.875% 2010		1,630				1,670
Telecom Italia Capital SA, Series B, 5.25% 2013		6,700				7,162
Telecom Italia Capital SA 5.25% 2015		22,000				23,285
Telecom Italia Capital SA 6.999% 2018		12,900				14,329
Telecom Italia Capital SA 7.175% 2019		10,000				11,249
Telecom Italia Capital SA 7.20% 2036		7,150				7,746
Telecom Italia Capital SA 7.721% 2038		6,600				7,558
Wind Acquisition SA 11.75% 20174		66,775				72,952
Windstream Corp. 8.125% 2013		6,000				6,330
Valor Telecommunications Enterprises, LLC and Valor Telecommunications Enterprises Finance Corp. 7.75% 2015		7,125				7,388
Windstream Corp. 8.625% 2016		54,100				55,791
Crown Castle International Corp. 9.00% 2015		33,850				36,685
Crown Castle International Corp. 7.75% 20174		13,750				14,884
Crown Castle International Corp. 7.125% 2019		15,000				14,963
Clearwire Communications LLC/Finance 12.00% 20154		38,700				39,087
Clearwire Communications LLC/Finance 12.00% 20154		26,700				26,967
American Tower Corp. 4.625% 2015		10,000				10,293
American Tower Corp. 7.00% 2017		11,200				12,502
American Tower Corp. 7.25% 20194		24,050				27,056
Sorenson Communications 10.50% 20154		47,825				45,434
Vodafone Group PLC 5.625% 2017		11,975				12,869
Vodafone Group PLC 6.15% 2037		7,810				8,090
Deutsche Telekom International Finance BV 5.875% 2013		5,625				6,166
Deutsche Telekom International Finance BV 4.875% 2014		10,000				10,630
Deutsche Telekom International Finance BV 6.75% 2018		2,000				2,266
Intelsat, Ltd. 9.25% 2016		10,000				10,450
Intelsat Jackson Holding Co. 8.50% 20194		3,500				3,596
Singapore Telecommunications Ltd. 6.375% 2011		4,825				5,236
Singapore Telecommunications Ltd. 7.375% 20314		3,800				4,925
SBA Telecommunications, Inc. 8.00% 20164		9,675				10,086
France Télécom 7.75% 20115		8,500				9,112
Koninklijke KPN NV 8.375% 2030		4,660				5,874
Trilogy International Partners LLC, Term Loan B, 3.751% 20125,7,8		5,250				4,436
Level 3 Financing, Inc. 9.25% 2014		4,000				3,770
Hawaiian Telcom Communications, Inc. 8.765% 20135,9		15,920				458
Hawaiian Telcom Communications, Inc. 9.75% 20139		16,945				487
Hawaiian Telcom Communications, Inc., Series B, 12.50% 20159		7,075				1
						1,540,523


INDUSTRIALS — 2.32%
Nielsen Finance LLC, Term Loan A, 2.231% 20135,7,8		8,538				8,196
Nielsen Finance LLC and Nielsen Finance Co. 10.00% 2014		65,850				68,813
Nielsen Finance LLC and Nielsen Finance Co. 11.625% 2014		40,350				45,394
Nielsen Finance LLC and Nielsen Finance Co. 0%/12.50% 201611		81,675				75,141
Nielsen Finance LLC and Nielsen Finance Co. 11.50% 2016		24,510				27,574
Nielsen Finance LLC, Term Loan 1L, 8.50% 20177,8		12,000				12,000
Continental Airlines, Inc. 8.75% 2011		27,750				27,403
Continental Airlines, Inc., Series 2000-2, Class A-2, 7.487% 20127		11,700				11,773
Continental Airlines, Inc., Series 1997-1, Class A, 7.461% 20167		9,278				8,997
Continental Airlines, Inc., Series 2001-1, Class B, 7.373% 20177		5,176				4,723
Continental Airlines, Inc., Series 1998-1, Class B, 6.748% 20187		952				881
Continental Airlines, Inc., Series 1998-1, Class A, 6.648% 20197		15,929				15,312
Continental Airlines, Inc., Series 1997-4, Class A, 6.90% 20197		4,660				4,602
Continental Airlines, Inc., Series 2000-2, Class B, 8.307% 20197		806				752
Continental Airlines, Inc., Series 1999-1, Class A, 6.545% 20207		12,803				12,755
Continental Airlines, Inc., Series 1999-1, Class B, 6.795% 20207		745				689
Continental Airlines, Inc., Series 2003-ERJ3, Class A, 7.875% 20207		10,685				9,510
Continental Airlines, Inc., Series 1999-2, Class A-1, 7.256% 20217		668				671
Continental Airlines, Inc., Series 1999-2, Class B, 7.566% 20217		3,664				3,499
Continental Airlines, Inc., Series 2001-1, Class A-1, 6.703% 20227		14,609				13,760
Continental Airlines, Inc., Series 2007-1, Class B, 6.903% 20227		11,380				10,498
Continental Airlines, Inc., Series 2000-2, Class A-1, 7.707% 20227		2,506				2,479
Continental Airlines, Inc., Series 2000-1, Class A-1, 8.048% 20227		6,299				6,264
Continental Airlines, Inc., Series 2000-1, Class B, 8.388% 20227		5,527				5,113
Delta Air Lines, Inc., Series 2000-1, Class A-2, 7.57% 20127		8,050				8,216
Northwest Airlines, Inc., Term Loan B, 3.76% 20135,7,8		5,014				4,249
Delta Air Lines, Inc., Series 2002-1, Class G-2, MBIA insured, 6.417% 20147		58,790				57,026
Northwest Airlines, Inc., Term Loan A, 2.01% 20185,7,8		55,131				44,243
Delta Air Lines, Inc., Series 2002-1, Class G-1, MBIA insured, 6.718% 20247		25,084				22,827
Hawker Beechcraft Acquisition Co., LLC, Term Loan B, 2.231% 20145,7,8		68,053				51,316
Hawker Beechcraft Acquisition Co., LLC, Letter of Credit, 2.231% 20145,7,8		3,884				2,929
Hawker Beechcraft Acquisition Co., LLC, Term Loan B, 10.50% 20145,7,8		15,966				15,182
Hawker Beechcraft Acquisition Co., LLC 8.50% 2015		5,300				3,670
Hawker Beechcraft Acquisition Co., LLC 9.625% 20155,10		11,335				6,829
Hawker Beechcraft Acquisition Co., LLC 9.75% 2017		1,305				776
US Investigations Services, Inc., Term Loan B, 3.253% 20155,7,8		18,571				16,931
US Investigations Services, Inc. 10.50% 20154		47,515				44,783
US Investigations Services, Inc. 11.75% 20164		16,555				14,941
American Airlines, Inc., Series 2003-1, Class G, AMBAC insured, 3.857% 20127		1,169				1,154
American Airlines, Inc., Series 2001-1, Class A-2, 6.817% 20127		17,745				17,523
American Airlines, Inc., Series 2001-2, Class A-1, 6.978% 20127		1,038				1,039
American Airlines, Inc., Series 2001-2, Class B, 8.608% 20127		4,595				4,469
AMR Corp. 9.00% 2012		11,000				9,240
American Airlines, Inc., Series 2001-2, Class A-2, 7.858% 20137		17,138				17,249
AMR Corp. 9.00% 2016		2,000				1,470
American Airlines, Inc., Series 2001-1, Class B, 7.377% 20197		13,303				10,775
AMR Corp. 10.00% 2021		3,000				1,815
American Airlines, Inc., Series 2001-1, Class A-1, 6.977% 20227		6,445				5,205
Ashtead Group PLC 8.625% 20154		14,675				14,748
Ashtead Capital, Inc. 9.00% 20164		44,685				45,355
Iron Mountain Inc. 8.00% 2020		12,000				12,240
Iron Mountain Inc. 8.375% 2021		45,000				46,913
United Air Lines, Inc., Term Loan B, 2.25% 20145,7,8		37,512				30,568
United Air Lines, Inc., Series 1996-A2, 7.87% 20192,7,9		2,421				—
United Air Lines, Inc., Series 2007-1, Class B, 7.336% 20214,7		4,938				3,827
United Air Lines, Inc., Series 2007-1, Class A, 6.636% 20247		8,723				7,567
ARAMARK Corp., Term Loan B, 2.126% 20145,7,8		11,637				11,165
ARAMARK Corp., Letter of Credit, 2.276% 20145,7,8		765				734
ARAMARK Corp. 3.781% 20155		8,050				7,326
ARAMARK Corp. 8.50% 2015		20,575				20,729
RailAmerica, Inc. 9.25% 2017		35,253				37,544
CEVA Group PLC 10.00% 20144		8,825				8,527
CEVA Group PLC, Bridge Loan, 7.983% 20152,5,7,8		32,191				23,338
CEVA Group PLC 11.625% 20164		1,550				1,598
DynCorp International and DIV Capital Corp., Series B, 9.50% 2013		30,368				30,899
Norfolk Southern Corp. 5.75% 2016		15,760				17,298
Norfolk Southern Corp. 5.75% 2018		12,000				13,029
Union Pacific Corp. 5.125% 2014		15,325				16,548
Union Pacific Corp. 5.75% 2017		2,065				2,230
Union Pacific Corp. 5.70% 2018		8,000				8,540
Nortek, Inc. 11.00% 2013		25,661				27,073
Koninklijke Philips Electronics NV 5.75% 2018		23,250				25,116
Burlington Northern Santa Fe Corp. 7.00% 2014		13,885				16,037
Burlington Northern Santa Fe Corp. 4.70% 2019		5,390				5,404
BNSF Funding Trust I 6.613% 20555		2,910				2,830
Kansas City Southern Railway Co. 13.00% 2013		8,625				10,124
Kansas City Southern Railway Co. 8.00% 2015		1,500				1,551
Kansas City Southern de México, SA de CV 8.00% 20184		10,000				9,900
TransDigm Inc. 7.75% 2014		11,950				12,099
TransDigm Inc. 7.75% 20144		9,000				9,113
BAE Systems 2001 Asset Trust, Series 2001, Class B, 7.156% 20114,7		16,604				17,448
BAE Systems 2001 Asset Trust, Series 2001, Class G, MBIA insured, 6.664% 20134,7		2,296				2,457
Allied Waste North America, Inc., Series B, 6.125% 2014		2,500				2,571
Allied Waste North America, Inc. 7.25% 2015		8,500				8,849
Allied Waste North America, Inc. 6.875% 2017		7,250				7,841
Waste Management, Inc. 5.00% 20141		7,000				7,486
WMX Technologies, Inc. 7.10% 20261		10,125				11,289
Sequa Corp., Term Loan B, 3.89% 20145,7,8		19,263				17,918
Caterpillar Financial Services Corp., Series F, 4.85% 2012		8,335				9,049
Caterpillar Financial Services Corp., Series F, 6.20% 2013		2,500				2,823
Caterpillar Financial Services Corp., Series F, 5.50% 2016		5,000				5,421
American Standard Inc. 7.625% 2010		16,501				16,530
Honeywell International Inc. 3.875% 2014		13,605				14,367
Atrium Companies, Inc., Term Loan B, 11.75% 20125,7,8,10		13,174				12,033
Atrium Companies, Inc. 15.00% 20124,10		7,964				159
General Electric Co. 5.25% 2017		11,250				11,767
Esterline Technologies Corp. 6.625% 2017		11,240				10,987
USG Corp. 9.50% 20185		10,500				10,763
B/E Aerospace 8.50% 2018		9,525				10,001
Volvo Treasury AB 5.95% 20154		9,000				9,542
CSX Corp. 5.75% 2013		4,960				5,414
CSX Corp. 6.25% 2015		3,460				3,883
RBS Global, Inc. and Rexnord LLC 9.50% 2014		7,800				7,859
RBS Global, Inc. and Rexnord LLC 8.875% 2016		575				526
H&E Equipment Services, Inc. 8.375% 2016		7,800				7,898
Atlas Copco AB 5.60% 20174		7,405				7,755
Navios Maritime Holdings Inc. 8.875% 20174		7,405				7,701
Esco Corp. 4.129% 20134,5		3,725				3,464
Esco Corp. 8.625% 20134		4,000				4,035
John Deere Capital Corp. 5.40% 2011		2,000				2,146
John Deere Capital Corp. 5.10% 2013		500				542
John Deere Capital Corp., Series D, 5.50% 2017		2,500				2,719
Lockheed Martin Corp. 4.121% 2013		5,000				5,298
RSC Equipment Rental, Inc. and RSC Holdings III, LLC 9.50% 2014		1,375				1,399
						1,470,566


INFORMATION TECHNOLOGY — 1.81%
NXP BV and NXP Funding LLC 3.001% 20135		166,545				139,690
NXP BV and NXP Funding LLC 10.00% 201312		37,639				38,956
NXP BV and NXP Funding LLC 7.875% 2014		96,340				86,224
NXP BV and NXP Funding LLC 9.50% 2015		145,850				123,973
Freescale Semiconductor, Inc., Term Loan B, 1.981% 20135,7,8		60,877				54,904
Freescale Semiconductor, Inc. 4.129% 20145		16,350				13,325
Freescale Semiconductor, Inc. 8.875% 2014		90,430				80,935
Freescale Semiconductor, Inc. 9.875% 20145,10		48,271				42,719
Freescale Semiconductor, Inc., Term Loan B, 12.50% 20147,8		10,449				10,821
Freescale Semiconductor, Inc. 10.125% 2016		54,124				44,111
Sanmina-SCI Corp. 6.75% 2013		28,475				28,546
Sanmina-SCI Corp. 3.004% 20144,5		23,750				21,850
Sanmina-SCI Corp. 8.125% 2016		69,305				69,825
First Data Corp., Term Loan B2, 2.999% 20145,7,8		66,492				57,798
First Data Corp. 9.875% 2015		14,200				12,745
First Data Corp. 10.55% 201510		18,030				15,416
SunGard Data Systems Inc. 9.125% 2013		48,785				49,883
Hewlett-Packard Co. 6.125% 2014		20,000				22,640
Hewlett-Packard Co. 5.50% 2018		9,500				10,362
Electronic Data Systems Corp. 7.45% 2029		6,555				8,094
Jabil Circuit, Inc. 8.25% 2018		36,225				39,576
KLA-Tencor Corp. 6.90% 2018		29,000				31,529
Cisco Systems, Inc. 2.90% 2014		10,000				10,177
Cisco Systems, Inc. 4.95% 2019		20,000				20,835
Ceridian Corp. 11.25% 2015		28,425				27,856
National Semiconductor Corp. 6.15% 2012		15,000				16,053
National Semiconductor Corp. 6.60% 2017		7,250				7,605
Celestica Inc. 7.625% 2013		20,595				21,393
Advanced Micro Devices, Inc. 8.125% 20174		15,250				15,402
Serena Software, Inc. 10.375% 2016		13,430				13,514
Oracle Corp. 3.75% 2014		10,000				10,476
						1,147,233


HEALTH CARE — 1.46%
Tenet Healthcare Corp. 7.375% 2013		32,447				32,366
Tenet Healthcare Corp. 9.00% 20154		1,672				1,772
Tenet Healthcare Corp. 9.25% 2015		11,200				11,648
Tenet Healthcare Corp. 8.875% 20194		83,395				89,233
Elan Finance PLC and Elan Finance Corp. 4.273% 20115		20,780				19,637
Elan Finance PLC and Elan Finance Corp. 4.381% 20135		14,285				12,571
Elan Finance PLC and Elan Finance Corp. 8.875% 2013		30,355				30,659
Elan Finance PLC and Elan Finance Corp. 8.75% 20164		31,550				30,998
HealthSouth Corp. 10.75% 2016		84,200				91,567
VWR Funding, Inc. 11.25% 20155,10		74,371				78,089
Boston Scientific Corp. 5.45% 2014		10,100				10,625
Boston Scientific Corp. 6.40% 2016		21,735				23,454
Boston Scientific Corp. 5.125% 2017		640				641
Boston Scientific Corp. 7.00% 2035		25,860				25,902
Boston Scientific Corp. 7.375% 2040		11,810				12,616
HCA Inc., Term Loan B1, 2.501% 20135,7,8		20,664				19,696
HCA Inc. 9.125% 2014		5,090				5,319
HCA Inc. 9.25% 2016		5,480				5,795
HCA Inc. 9.625% 20165,10		3,000				3,187
HCA Inc. 8.50% 20194		21,895				23,263
PTS Acquisition Corp. 10.25% 20155,10		59,012				55,471
Pfizer Inc. 4.45% 2012		13,000				13,846
Pfizer Inc. 5.35% 2015		20,000				22,205
Pfizer Inc. 6.20% 2019		5,000				5,616
Coventry Health Care, Inc. 5.875% 2012		12,800				13,067
Coventry Health Care, Inc. 6.30% 2014		26,020				26,289
Cardinal Health, Inc. 4.00% 2015		25,000				25,140
Cardinal Health, Inc. 5.80% 2016		10,000				10,754
Roche Holdings Inc. 4.50% 20124		18,000				19,186
Roche Holdings Inc. 6.00% 20194		9,000				9,952
GlaxoSmithKline Capital Inc. 4.85% 2013		13,500				14,676
GlaxoSmithKline Capital Inc. 5.65% 2018		9,705				10,585
Novartis Capital Corp. 4.125% 2014		17,250				18,300
Novartis Securities Investment Ltd. 5.125% 2019		4,000				4,210
Abbott Laboratories 5.125% 2019		19,000				20,050
Surgical Care Affiliates, Inc. 8.875% 20154,5,10		6,591				6,493
Surgical Care Affiliates, Inc. 10.00% 20174		9,500				9,405
UnitedHealth Group Inc. 6.00% 2017		12,430				13,618
Symbion Inc. 11.75% 20155,10		16,713				13,287
WellPoint, Inc. 6.00% 2014		10,000				11,057
Express Scripts Inc. 7.25% 2019		8,985				10,493
Biogen Idec Inc. 6.00% 2013		6,000				6,430
Biogen Idec Inc. 6.875% 2018		2,650				2,897
Team Finance LLC and Health Finance Corp. 11.25% 2013		8,762				9,244
Merck & Co., Inc. 5.00% 2019		8,500				8,919
Viant Holdings Inc. 10.125% 20174		8,335				8,293
Quintiles Transnational 9.50% 20144,5,10		7,135				7,260
Accellent Inc. 8.375% 20174		5,900				5,988
Hospira, Inc. 5.55% 2012		5,295				5,689
United Surgical Partners International Inc. 9.25% 20175,10		3,265				3,416
Bausch & Lomb Inc. 9.875% 2015		2,250				2,374
CHS/Community Health Systems, Inc. 8.875% 2015		205				212
						923,460


ENERGY — 1.24%
Williams Companies, Inc. 6.375% 20104		4,700				4,826
Transcontinental Gas Pipe Line Corp., Series B, 7.00% 2011		10,000				10,788
Williams Companies, Inc. 7.125% 2011		38,750				42,448
Williams Companies, Inc. 8.125% 2012		14,810				17,032
Williams Companies, Inc. 8.75% 2020		13,875				17,861
Williams Companies, Inc. 7.875% 2021		14,900				18,066
Williams Companies, Inc. 8.75% 2032		14,530				18,169
Ras Laffan Liquefied Natural Gas III 5.50% 20144		2,950				3,109
Ras Laffan Liquefied Natural Gas Co. Ltd. 8.294% 20144,7		11,996				13,165
Ras Laffan Liquefied Natural Gas Co. Ltd. 8.294% 20147		3,893				4,272
Ras Laffan Liquefied Natural Gas II 5.298% 20204,7		34,850				35,143
Ras Laffan Liquefied Natural Gas III 5.838% 20274,7		50,650				50,985
TransCanada PipeLines Ltd. 6.50% 2018		375				426
TransCanada PipeLines Ltd. 7.125% 2019		13,280				15,649
TransCanada PipeLines Ltd. 6.20% 2037		400				420
TransCanada PipeLines Ltd. 7.625% 2039		11,000				13,541
TransCanada PipeLines Ltd. 6.35% 20675		71,645				68,098
Enbridge Energy Partners, LP, Series B, 6.50% 2018		5,225				5,771
Enbridge Energy Partners, LP 9.875% 2019		15,750				20,537
Enbridge Energy Partners, LP, Series B, 7.50% 2038		6,000				7,048
Enbridge Energy Partners, LP 8.05% 20775		20,045				19,981
Gaz Capital SA 6.51% 20224		24,700				22,971
Gaz Capital SA 7.288% 20374		20,650				19,539
Petroplus Finance Ltd. 6.75% 20144		5,065				4,711
Petroplus Finance Ltd. 7.00% 20174		20,550				18,546
Petroplus Finance Ltd. 9.375% 20194		12,475				12,413
Kinder Morgan Energy Partners LP 5.85% 2012		2,400				2,599
Kinder Morgan Energy Partners LP 5.125% 2014		10,325				11,121
Kinder Morgan Energy Partners LP 6.00% 2017		2,950				3,197
Kinder Morgan Energy Partners LP 9.00% 2019		11,770				15,004
Tengizchevroil Finance Co. S.àr.l., Series A, 6.124% 20144,7		20,365				20,976
Tengizchevroil Finance Co. S.àr.l., Series A, 6.124% 20147		9,646				9,936
Premcor Refining Group Inc. 6.125% 2011		14,500				15,105
Premcor Refining Group Inc. 6.75% 2011		11,150				11,659
BP Capital Markets PLC 3.625% 20144		10,000				10,415
BP Capital Markets PLC 3.875% 2015		11,800				12,337
Arch Coal Inc. 8.75% 20164		20,000				21,400
Shell International Finance B.V. 4.00% 2014		20,000				21,160
Enbridge Inc. 5.60% 2017		18,500				20,165
Petrobras International 5.75% 2020		17,225				17,119
Petrobras International 6.875% 2040		2,700				2,729
Enterprise Products Operating LP 4.95% 2010		2,400				2,427
Enterprise Products Operating LLC 5.65% 2013		10,000				10,799
Enterprise Products Operating LLC 7.00% 20675		4,830				4,410
Energy Transfer Partners, LP 9.00% 2019		6,535				8,069
Energy Transfer Partners, LP 9.70% 2019		4,660				5,938
Rockies Express Pipeline LLC 6.25% 20134		770				847
Rockies Express Pipeline LLC 6.85% 20184		10,000				11,354
StatoilHydro ASA 3.875% 2014		10,000				10,535
Pemex Project Funding Master Trust 5.75% 2018		4,500				4,549
Pemex Project Funding Master Trust 6.625% 2035		5,000				4,657
Williams Partners L.P. and Williams Partners Finance Corp. 7.25% 2017		7,200				8,081
Canadian Natural Resources Ltd. 5.70% 2017		7,350				7,957
General Maritime Corp. 12.00% 20174		7,500				7,875
Qatar Petroleum 5.579% 20114,7		6,668				6,892
Husky Energy Inc. 5.90% 2014		1,500				1,653
Husky Energy Inc. 7.25% 2019		155				181
Husky Energy Inc. 6.80% 2037		4,425				4,878
Devon Energy Corp. 5.625% 2014		3,000				3,284
Devon Energy Corp. 6.30% 2019		3,000				3,367
PETRONAS Capital Ltd. 7.00% 20124		4,000				4,435
Sunoco, Inc. 4.875% 2014		3,480				3,611
Apache Corp. 6.90% 2018		1,800				2,132
Total Capital 3.125% 2015		2,000				2,010
Chevron Corp. 3.95% 2014		500				530
Chevron Corp. 4.95% 2019		1,300				1,362
TNK-BP Finance SA 7.50% 20164		1,500				1,553
						783,823


UTILITIES — 1.19%
Texas Competitive Electric Holdings Co. LLC, Term Loan B2, 3.731% 20145,7,8		32,059				26,337
Texas Competitive Electric Holdings Co. LLC, Series A, 10.25% 2015		111,144				87,526
Texas Competitive Electric Holdings Co. LLC, Series B, 10.25% 2015		36,665				28,874
Texas Competitive Electric Holdings Co. LLC 11.25% 20165,10		15,200				11,210
Edison Mission Energy 7.50% 2013		35,525				33,926
Edison Mission Energy 7.75% 2016		35,300				30,534
Midwest Generation, LLC, Series B, 8.56% 20167		10,605				10,711
Edison Mission Energy 7.00% 2017		19,525				15,522
Edison Mission Energy 7.20% 2019		39,450				30,771
Homer City Funding LLC 8.734% 20267		12,405				12,343
Edison Mission Energy 7.625% 2027		20,850				15,429
AES Corp. 9.375% 2010		4,802				4,964
AES Corp. 8.75% 20134		34,656				35,522
AES Corp. 7.75% 2015		10,000				10,075
AES Red Oak, LLC, Series A, 8.54% 20197		18,294				18,752
AES Red Oak, LLC, Series B, 9.20% 20297		7,000				6,790
Israel Electric Corp. Ltd. 7.25% 20194		1,800				1,964
Israel Electric Corp. Ltd. 9.375% 20204		36,715				44,728
Israel Electric Corp. Ltd. 8.10% 20964		4,905				5,020
Consumers Energy Co., First Mortgage Bonds, 6.70% 2019		26,800				30,742
CMS Energy Corp. 6.25% 2020		20,000				20,013
NRG Energy, Inc. 7.25% 2014		7,825				7,874
NRG Energy, Inc. 7.375% 2016		40,225				40,124
NRG Energy, Inc. 7.375% 2017		1,400				1,395
MidAmerican Energy Co. 5.95% 2017		10,625				11,673
MidAmerican Energy Holdings Co. 5.75% 2018		15,320				16,309
PacifiCorp. 5.50% 2019		5,000				5,379
MidAmerican Energy Holdings Co. 6.50% 2037		3,000				3,260
Sierra Pacific Power Co., General and Refunding Mortgage Notes, Series H, 6.25% 2012		7,500				8,054
Nevada Power Co., General and Refunding Mortgage Notes, Series I, 6.50% 2012		4,250				4,586
Sierra Pacific Resources 8.625% 2014		2,725				2,820
Nevada Power Co., General and Refunding Mortgage Notes, Series L, 5.875% 2015		1,675				1,828
Nevada Power Co., General and Refunding Mortgage Notes, Series M, 5.95% 2016		13,700				14,994
Sierra Pacific Resources 6.75% 2017		3,000				3,040
Electricité de France SA 5.50% 20144		15,000				16,585
Electricité de France SA 6.95% 20394		8,000				9,355
PG&E Corp. 5.75% 2014		9,000				9,893
Pacific Gas and Electric Co., First Mortgage Bonds, 6.05% 2034		10,000				10,451
Alabama Power Co., Series R, 4.70% 2010		1,250				1,292
Alabama Power Co., Series 2008-B, 5.80% 2013		4,500				5,042
Alabama Power Co., Series Q, 5.50% 2017		1,000				1,082
Alabama Power Co. 6.00% 2039		9,000				9,536
National Rural Utilities Cooperative Finance Corp. 5.50% 2013		13,850				15,275
E.ON International Finance BV 5.80% 20184		13,000				14,346
Virginia Electric and Power Co., Series 2003-A, 4.75% 2013		6,000				6,344
Virginia Electric and Power Co., Series B, 5.95% 2017		4,500				4,967
PSEG Power LLC 7.75% 2011		7,500				8,040
Public Service Electric and Gas Co., Series E, 5.30% 2018		1,000				1,063
Abu Dhabi National Energy Co. PJSC (TAQA) 5.875% 20164		3,500				3,440
Abu Dhabi National Energy Co. PJSC (TAQA) 6.165% 20174		4,000				3,934
Abu Dhabi National Energy Co. PJSC (TAQA) 6.50% 20364		1,750				1,585
Veolia Environnement 5.25% 2013		8,000				8,600
Carolina Power & Light Co. d/b/a Progress Energy Carolinas, Inc. 5.25% 2015		6,000				6,659
AES Panamá, SA 6.35% 20164		4,500				4,523
Enersis SA 7.375% 2014		3,500				3,913
Appalachian Power Co., Series M, 5.55% 2011		3,000				3,139
Intergen Power 9.00% 20174		3,000				3,075
						755,228


CONSUMER STAPLES — 0.98%
Altria Group, Inc. 9.70% 2018		18,000				22,578
Altria Group, Inc. 9.25% 2019		54,890				67,697
Altria Group, Inc. 9.95% 2038		23,500				31,172
Anheuser-Busch InBev NV 4.125% 20154		14,950				15,379
Anheuser-Busch InBev NV 7.75% 20194		25,000				29,702
Anheuser-Busch InBev NV 5.375% 20204		4,950				5,087
SUPERVALU INC., Term Loan B, 1.531% 20125,7,8		1,510				1,478
SUPERVALU INC. 7.50% 2012		3,323				3,431
Albertson’s, Inc. 7.25% 2013		14,122				14,475
SUPERVALU INC. 7.50% 2014		1,000				1,008
SUPERVALU INC. 8.00% 2016		18,700				18,794
Albertson’s, Inc. 7.45% 2029		2,000				1,715
Albertson’s, Inc. 8.00% 2031		2,650				2,398
CVS Caremark Corp. 6.60% 2019		2,000				2,225
CVS Caremark Corp. 5.789% 20264,7		4,170				3,982
CVS Caremark Corp. 6.036% 20287		12,962				13,065
CVS Caremark Corp. 6.943% 20307		5,754				6,098
CVS Caremark Corp. 7.507% 20324,7		15,000				16,209
Stater Bros. Holdings Inc. 8.125% 2012		22,625				22,964
Stater Bros. Holdings Inc. 7.75% 2015		17,750				18,194
Constellation Brands, Inc. 8.125% 2012		11,250				11,250
Constellation Brands, Inc. 8.375% 2014		3,675				3,951
Constellation Brands, Inc. 7.25% 2017		21,000				21,184
PepsiCo, Inc. 3.10% 2015		15,000				15,252
PepsiCo, Inc. 7.90% 2018		15,000				18,604
Wesfarmers Ltd. 6.998% 20134		25,000				27,737
Kroger Co. 7.50% 2014		11,130				12,925
Kroger Co. 6.40% 2017		8,250				9,233
Kroger Co. 6.15% 2020		3,620				3,962
Rite Aid Corp., Term Loan T4, 9.50% 20155,7,8		10,000				10,456
Rite Aid Corp. 9.75% 2016		10,000				10,750
Rite Aid Corp. 10.25% 20194		2,250				2,391
Rite Aid Corp. 6.875% 2028		2,300				1,299
Diageo Capital PLC 7.375% 2014		16,255				19,158
Diageo Capital PLC 5.50% 2016		3,745				4,136
Tyson Foods, Inc. 10.50% 2014		6,050				7,018
Tyson Foods, Inc. 7.85% 20165		11,500				12,132
Unilever Capital Corp. 3.65% 2014		17,500				18,313
Procter & Gamble Co. 3.50% 2015		17,250				17,960
Safeway Inc. 6.25% 2014		4,000				4,474
Safeway Inc. 6.35% 2017		8,000				8,938
Safeway Inc. 7.45% 2027		3,000				3,476
Duane Reade Inc. 11.75% 2015		14,150				15,247
Delhaize Group 6.50% 2017		6,301				7,028
Delhaize America, Inc. 9.00% 2031		5,000				6,403
Kraft Foods Inc. 6.75% 2014		10,820				12,185
British American Tobacco International Finance PLC 9.50% 20184		8,705				11,256
Kimberly-Clark Corp. 7.50% 2018		9,000				11,121
Smithfield Foods, Inc., Series B, 7.75% 2013		2,800				2,709
Smithfield Foods, Inc. 10.00% 20144		5,050				5,523
Tesco PLC 5.50% 20174		4,000				4,305
Elizabeth Arden, Inc. 7.75% 2014		3,150				3,134
Dole Food Co., Inc. 8.875% 2011		870				871
						622,032


MATERIALS — 0.75%
Dow Chemical Co. 7.60% 2014		40,450				46,582
Dow Chemical Co. 8.55% 2019		32,800				39,292
Dow Chemical Co. 9.40% 2039		1,160				1,534
International Paper Co. 7.40% 2014		12,500				14,141
International Paper Co. 7.95% 2018		36,545				42,415
International Paper Co. 9.375% 2019		1,505				1,887
International Paper Co. 7.30% 2039		7,000				7,572
Georgia Gulf Corp. 9.00% 20171,4		50,965				52,621
Owens-Brockway Glass Container Inc. 8.25% 2013		19,165				19,644
Owens-Brockway Glass Container Inc. 6.75% 2014		585				594
Owens-Brockway Glass Container Inc. 7.375% 2016		30,255				31,616
Nalco Co. 8.875% 2013		1,000				1,033
Nalco Finance Holdings LLC and Nalco Finance Holdings Inc. 9.00% 2014		7,200				7,452
Nalco Co., Term Loan B, 5.75% 20165,7,8		5,512				5,601
Nalco Co. 8.25% 20174		19,795				21,082
Freeport-McMoRan Copper & Gold Inc. 8.25% 2015		10,055				10,896
Freeport-McMoRan Copper & Gold Inc. 8.375% 2017		15,600				16,988
BHP Billiton Finance (USA) Ltd. 5.50% 2014		17,595				19,403
Rio Tinto Finance (USA) Ltd. 5.875% 2013		10,000				10,914
Rio Tinto Finance (USA) Ltd. 8.95% 2014		6,500				7,847
Georgia-Pacific Corp. 8.125% 2011		5,875				6,213
Georgia-Pacific Corp., First Lien Term Loan B, 2.256% 20125,7,8		4,271				4,190
Georgia-Pacific LLC 8.25% 20164		7,315				7,864
ArcelorMittal 6.125% 2018		17,500				18,240
AMH Holdings, Inc. 11.25% 2014		15,645				15,723
Associated Materials Inc. 9.875% 20164		825				879
Graphic Packaging International, Inc. 9.50% 2017		11,150				11,958
Gerdau Holdings Inc. 7.00% 20204		9,235				9,327
FMG Finance Pty Ltd. 10.625% 20164		6,000				6,825
Ball Corp. 7.125% 2016		3,700				3,876
Ball Corp. 7.375% 2019		2,125				2,226
Airgas, Inc. 7.125% 20184		3,500				3,688
Rockwood Specialties Group, Inc. 7.50% 2014		3,240				3,272
Reynolds Group 7.75% 20164		2,880				2,916
Arbermarle Corp. 5.10% 2015		2,570			��	2,710
Plastipak Holdings, Inc. 8.50% 20154		2,275				2,332
Smurfit Capital Funding PLC 7.50% 2025		2,475				2,190
CRH America Inc. 6.95% 2012		815				887
CRH America, Inc. 8.125% 2018		1,095				1,297
Newpage Corp. 11.375% 2014		2,015				1,960
Solutia Inc. 8.75% 2017		1,680				1,785
Corporación Nacional del Cobre de Chile 6.375% 20124		1,500				1,688
Rock-Tenn Co. 9.25% 20164		1,430				1,562
Praxair, Inc. 4.375% 2014		1,000				1,068
C10 Capital (SPV) Ltd. 6.722% (undated)4,5		1,300				923
						474,713


ASSET-BACKED OBLIGATIONS7 — 0.50%
Honda Auto Receivables Owner Trust, Series 2006-3, Class A-4, 5.11% 2012		14,548				14,709
Honda Auto Receivables Owner Trust, Series 2007-2, Class A-4, 5.57% 2013		24,500				25,465
AmeriCredit Automobile Receivables Trust, Series 2007-C-M, Class A-4-A, MBIA insured, 5.55% 2014		12,000				12,665
AmeriCredit Automobile Receivables Trust, Series 2007-D-F, Class A-4-A, FSA insured, 5.56% 2014		7,000				7,309
AmeriCredit Automobile Receivables Trust, Series 2008-A-F, Class A-4, FSA insured, 6.96% 2014		15,000				16,001
CPS Auto Receivables Trust, Series 2006-A, Class 1-A-4, FSA insured, 5.33% 20124		3,586				3,653
CPS Auto Receivables Trust, Series 2006-B, Class A-4, MBIA insured, 5.81% 20124		1,737				1,759
CPS Auto Receivables Trust, Series 2006-C, Class A-4, XLCA insured, 5.14% 20134		7,268				7,404
CPS Auto Receivables Trust, Series 2007-B, Class A-4, FSA insured, 5.60% 20144		10,000				10,469
UPFC Auto Receivables Trust, Series 2007-B, Class A-3, AMBAC insured, 6.15% 2014		17,884				18,610
American Express Issuance Trust, Series 2005-1, Class C, 0.563% 20115		17,500				17,394
Nissan Auto Lease Trust, Series 2008-A, Class A-3a, 5.14% 2011		14,000				14,290
PG&E Energy Recovery Funding LLC, Series 2005-1, Class A-3, 4.14% 2012		4,914				4,982
PG&E Energy Recovery Funding LLC, Series 2005-2, Class A-3, 5.12% 2014		8,040				8,742
Drive Auto Receivables Trust, Series 2006-2, Class A-3, MBIA insured, 5.33% 20144		11,564				11,889
Long Beach Acceptance Auto Receivables Trust, Series 2006-B, Class A-4, FSA insured, 5.18% 2013		10,767				10,984
Chase Issuance Trust, Series 2008-4, Class A, 4.65% 2015		10,000				10,772
CWHEQ Revolving Home Equity Loan Trust, Series 2006-I, Class 2-A, FSA insured, 0.373% 20375		5,109				3,703
CWHEQ Revolving Home Equity Loan Trust, Series 2007-C, Class A, FGIC insured, 0.383% 20375		21,868				5,633
First Horizon ABS Trust, Series 2006-HE2, Class A, FSA insured, 0.361% 20265		4,578				2,733
First Horizon ABS Trust, Series 2007-HE1, Class A, FSA insured, 0.361% 20295		8,891				6,323
AEP Texas Central Transitioning Funding II LLC, Secured Transition Bonds, Series A, Class A-3, 5.09% 2017		8,265				8,993
J.P. Morgan Mortgage Acquisition Corp., Series 2005-FRE1, Class A-F-4, 5.488% 20355		9,699				8,491
Washington Mutual Master Note Trust, Series 2007-C1, Class C-1, 0.633% 20144,5		7,550				7,527
Hertz Vehicle Financing LLC, Rental Car Asset-backed Notes, Series 2005-2, Class A-6, AMBAC insured, 5.08% 20114		6,375				6,507
Home Equity Asset Trust, Series 2004-7, Class M-1, 0.851% 20355		10,000				6,333
Citibank Credit Card Issuance Trust, Series 2008, Class C6, 6.30% 2014		2,000				2,139
Citibank Credit Card Issuance Trust, Series 2008, Class A5, 4.85% 2015		3,000				3,245
MBNA Credit Card Master Note Trust, Series 2001-C, Class C, 7.10% 20134		5,000				5,263
MBNA Master Credit Card Trust II, Series 2000-H, Class B, 0.833% 20135		5,000				4,982
Conseco Finance Home Loan Trust, Series 1999-G, Class B-2, 10.96% 2029		13,851				4,817
Capital One Multi-asset Execution Trust, Series 2003-3, Class C, 2.483% 20165		4,600				4,616
RAMP Trust, Series 2003-RZ4, Class A-7, 4.79% 20335		4,910				4,560
Ameriquest Mortgage Securities Inc., Series 2003-12, Class M-1, 0.981% 20345		5,289				3,852
Vanderbilt Mortgage and Finance, Inc., Series 1999-B, Class I-A-6, 6.925% 2024		3,691				3,711
Residential Asset Securities Corp. Trust, Series 2001-KS3, Class A-I-6, 5.96% 2031		3,807				3,477
Residential Asset Securities Corp. Trust, Series 2003-KS6, Class A-2, 0.831% 20335		110				82
CWHEQ Home Equity Loan Trust, Series 2006-S2, Class A-5, FGIC insured, 5.753% 2027		8,503				3,435
BA Credit Card Trust, Series 2007-2, Class C-2, 0.503% 20125		3,315				3,303
Prestige Auto Receivables Trust, Series 2006-1A, Class A-2, FSA insured, 5.25% 20134		3,186				3,295
Metropolitan Asset Funding, Inc., Series 1998-A, Class B-1, 7.728% 20142,4		3,224				2,958
Advanta Business Card Master Trust, Series 2005-A2, Class A-2, 0.361% 20135		2,583				2,504
CarMax Auto Owner Trust, Series 2007-2, Class A-3, 5.23% 2011		2,202				2,235
Home Equity Mortgage Trust, Series 2006-6, Class 2A-1, 0.331% 20375		15,726				659
Home Equity Mortgage Trust, Series 2006-5, Class A-1, 5.50% 20375		13,575				1,311
SACO I Trust, Series 2006-12, Class I-A, 0.371% 20365		8,898				1,020
Triad Automobile Receivables Trust, Series 2006-C, Class A-3, AMBAC insured, 5.26% 2011		173				174
						314,978


BONDS & NOTES OF GOVERNMENTS & GOVERNMENT AGENCIES OUTSIDE THE U.S. — 0.24%
United Mexican States Government Global 6.375% 2013		5,550				6,202
United Mexican States Government Global 5.875% 2014		20,000				21,937
United Mexican States Government Global 5.625% 2017		3,640				3,840
United Mexican States Government Global 6.75% 2034		7,740				8,166
United Mexican States Government Global 6.05% 2040		2,000				1,935
Russian Federation 8.25% 20107		333				339
Russian Federation 7.50% 20307		18,114				20,460
Croatian Government 6.75% 20194		14,000				14,856
Croatian Government 6.75% 2019		3,000				3,184
Hungarian Government 6.25% 2020		13,685				13,777
Polish Government 6.375% 2019		9,985				10,853
France Government Agency-Guaranteed, Société Finance 2.875% 20144		10,000				10,166
Province of Ontario 1.875% 2012		10,000				10,035
Brazil (Federal Republic of) Global 6.00% 2017		6,000				6,429
State of Qatar 9.75% 2030		4,000				5,580
Banque Centrale de Tunisie 7.375% 2012		3,500				3,850
Aries Vermögensverwaltungs GmbH, Series C, 9.60% 2014		2,500				3,156
South Africa (Republic of) 6.875% 2019		2,050				2,281
Corporación Andina de Fomento 5.75% 2017		2,000				2,068
Peru (Republic of) 7.125% 2019		1,080				1,225
						150,339


MUNICIPALS — 0.01%
State of South Dakota, Educational Enhancement Funding Corp., Tobacco Settlement Asset-backed Bonds,
Series 2002-A, Class A, 6.72% 2025		3,068				2,487
State of Louisiana, Tobacco Settlement Financing Corp., Tobacco Settlement Asset-backed Bonds,
Series 2001-A, Class A, 6.36% 2025		534				452
						2,939


MISCELLANEOUS — 0.05%
Other bonds & notes in initial period of acquisition						28,954


Total bonds & notes (cost: $19,962,482,000)						20,400,553



Short-term securities — 4.20%

Freddie Mac 0.06%–0.33% due 2/16–9/15/2010		966,400				965,897
Fannie Mae 0.085%–0.36% due 3/3–10/4/2010		488,736				488,222
U.S. Treasury Bills 0.22%–0.335% due 5/6–9/23/2010		223,500				223,340
Straight-A Funding LLC 0.16%–0.18% due 3/1–4/26/20104		161,180				161,149
Federal Farm Credit Banks 0.20%–0.35% due 6/15–9/30/2010		125,000				124,887
General Electric Co. 0.17%–0.18% due 3/22–3/24/2010		120,100				120,060
Bank of America Corp. 0.11%–0.21% due 2/1–5/12/2010		110,900				110,860
Private Export Funding Corp. 0.15%–0.29% due 2/19–4/5/20104		99,700				99,683
Jupiter Securitization Co., LLC 0.14% due 2/10–2/23/20104		97,900				97,895
Coca-Cola Co. 0.22% due 5/11–5/12/20104		69,400				69,366
Federal Home Loan Bank 0.10%–0.35% due 4/23–10/4/2010		57,900				57,846
NetJets Inc. 0.13% due 3/16/20104		50,000				49,989
Johnson & Johnson 0.22% due 7/12/20104		35,000				34,965
Variable Funding Capital Company LLC 0.18% due 4/14/20104		30,100				30,080
Walt Disney Co. 0.12% due 3/8/20104		25,000				24,997

Total short-term securities (cost: $2,658,514,000)						2,659,236


Total investment securities (cost: $62,487,652,000)						63,054,827
Other assets less liabilities						215,836

Net assets					$	63,270,663

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

1Represents an affiliated company as defined under the Investment Company Act of 1940.

2Valued under fair value procedures adopted by authority of the board of directors. The total value of all such securities, including those in “Miscellaneous,” was $9,588,870,000, which represented 15.16% of the net assets of the fund. This amount includes $9,301,232,000 related to certain securities trading outside the U.S. whose values were adjusted as a result of significant market movements following the close of local trading.

3Security did not produce income during the last 12 months.

4Purchased 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 $4,673,629,000, which represented 7.39% of the net assets of the fund.

5Coupon rate may change periodically.

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

7Principal payments may be made periodically. Therefore, the effective maturity date may be earlier than the stated maturity date.

8Loan participations and assignments; may be subject to legal or contractual restrictions on resale. The total value of all such loans was $967,523,000, which represented 1.53% of the net assets of the fund.

9Scheduled interest and/or principal payment was not received.

10Payment in kind; the issuer has the option of paying additional securities in lieu of cash.

11Step bond; coupon rate will increase at a later date.

12Purchased in a transaction exempt from registration under the Securities Act of 1933. This security (acquired 7/17/2009 at a cost of $30,192,000) may be subject to legal or contractual restrictions on resale.

Key to abbreviation

ADR = American 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.

MFGEFP-906-0310O-S21475

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: March 31, 2010

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: March 31, 2010

By /s/ Jennifer M. Buchheim

Jennifer M. Buchheim, Treasurer and

Principal Financial Officer

Date: March 31, 2010

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