American Funds The Income Fund of America (AMECX) N-CSR Certified 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

(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: July 31, 2012

Patrick F. Quan

The Income Fund of America

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

   

The Income Fund of America®

[photo of fall leaves]

Special feature

Diversity four ways

u See page 6

Annual report for the year ended July 31, 2012

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 more than 40 offered by American Funds, which is one of the nation’s largest mutual fund families. For more than 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 June 30, 2012 (the most recent calendar quarter-end):
Class A shares	1 year			5 years			10 years
Reflecting 5.75% maximum sales charge		–1.03	%		0.30	%		6.22	%

The total annual fund operating expense ratio is 0.59% for Class A shares as of the prospectus dated October 1, 2012 (unaudited).

Investment results assume all distributions are reinvested and reflect applicable fees and expenses. When applicable, investment results reflect fee waivers, without which results would have been lower. Visit americanfunds.com for more information.

The fund’s 30-day yield for Class A shares as of August 31, 2012, calculated in accordance with the U.S. Securities and Exchange Commission (SEC) formula, was 3.12%. The fund’s distribution rate for Class A shares as of that date was 3.69%. Both reflect the 5.75% maximum sales charge. The SEC yield reflects the rate at which the fund is earning income on its current portfolio of securities while the distribution rate reflects the fund’s past dividends paid to shareholders. Accordingly, the fund’s SEC yield and distribution rate may differ.

Results for other share classes can be found on page 34.  

The return of principal for bond funds and for funds with significant underlying bond holdings is not guaranteed. Fund shares are subject to the same interest rate, inflation and credit risks associated with the underlying bond holdings. High-yield bonds are subject to greater fluctuations in value and risk of loss of income and principal than investment-grade bonds. Bond ratings, which typically range from Aaa/AAA (highest) to D (lowest), are assigned by credit rating agencies such as Moody’s, Standard & Poor’s and/or Fitch as an indication of an issuer’s creditworthiness. 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. Refer to the fund prospectus and the Risk Factors section of this report for more information on these and other risks associated with investing in the fund.

Fellow investors:

For the 12 months ended July 31, 2012, The Income Fund of America (IFA) gained 8.4%. The fund’s return slightly trailed the 9.1% gain turned in by the unmanaged Standard & Poor’s 500 Composite Index, a broad measure of the U.S. stock market. IFA’s return outpaced the 7.3% gain posted by the unmanaged Barclays U.S. Aggregate Index, a gauge of the U.S. bond market, and doubled that of its income-fund peers as measured by the Lipper Income Funds Index, which rose 4.2%.

IFA seeks to deliver solid investment results over full market cycles, and its long-term results compare favorably with the broader stock and bond markets as well as its peer group. As you can see in the table below, it has bested the S&P 500 in all the longer time periods shown and meaningfully surpassed returns for the Barclays and Lipper benchmarks for the available 10-year and lifetime periods ended July 31, 2012.

Uncertainty abounds

The uncertainty that has hung over the global economy translated into considerable market volatility during the fund’s fiscal year. The outset of the period was punctuated by a market decline brought on by global economic slowing, the sovereign debt crisis in Europe and Standard & Poor’s downgrade of the U.S. credit rating. Markets reversed course in early fall and plotted a fairly steady rise into late spring when fear over Europe’s fiscal crisis resurfaced and sparked another sell-off.

[Begin Sidebar]

Results at a glance (with dividends reinvested or interest compounded)
	Average annual total returns for periods ended July 31, 2012
	1 year			5 years			10 years			Lifetime1
The Income Fund of America (Class A shares)		8.4	%		2.5	%		7.7	%		11.3	%
Standard & Poor’s 500 Composite Index2		9.1			1.1			6.3			10.5
Lipper Income Funds Index		4.2			3.4			5.9			—	3
Barclays U.S. Aggregate Index2		7.3			6.9			5.6			8.1	4
Consumer Price Index (inflation)5		1.4			1.9			2.4			4.2
1 Since December 1, 1973, when Capital Research and Management Company became the fund’s investment adviser.
2 The indexes are unmanaged and, therefore, have no expenses.
3 The inception date for the index was December 31, 1988.
4 From December 1, 1973, through December 31, 1975, the Barclays U.S. Government/Credit Index was used because the Barclays U.S. Aggregate Index did not yet exist.
5 Computed from data supplied by the U.S. Department of Labor, Bureau of Labor Statistics.

[End Sidebar]

[photo of fall leaves]

[Begin Sidebar]

In this report
	Special feature
6	Diversity four ways
	How a risk-sensitive approach to income creates significant diversity within IFA’s portfolio.
	Contents
1	Letter to investors
4	The value of a long-term perspective
12	About your fund
13	The portfolio at a glance
14	Summary investment portfolio
19	Financial statements
35	Board of trustees and other officers

[End Sidebar]

In keeping with its risk-sensitive orientation, The Income Fund of America held up better than the broader stock market during the period’s two biggest downturns while trailing during the climb.

Market trends influence results

The areas of the market turning in the best results were the higher yielding sectors that typically fare well during uncertain periods. Thanks to IFA’s income orientation and research-intensive approach to building the portfolio, the fund was heavily invested in select companies from a number of these areas. These included health care, consumer staples and telecommunication services.

Conversely, the uncertainty that arose at various points weighed on several areas that generally do better when economic conditions are improving. These included energy, materials and information technology, and IFA’s holdings within those sectors held back returns. However, thanks to solid stock selection, the fund was actually helped by excellent results for its investments among financials, another economically sensitive sector that otherwise struggled.

Solid stock selection at the top

Solid results for some of the fund’s 10 largest holdings were key drivers of results. Among those notching the best returns were Merck (29.4%), specialty real estate investment trust (REIT) HCP (28.5%), Verizon (27.9%) and Bristol-Myers Squibb (24.2%). And underscoring the potential for research to identify companies with the capacity to do well even in environments that might not be especially favorable to them, Home Depot (49.4%) and General Electric (15.9%) both outpaced the broader equity market.  

Not all top-10 investments fared as well. The return for Waste Management (9.2%) was in line with the S&P 500 while a challenging energy environment caused Chevron (5.4%) to lag equities and took a toll on Royal Dutch Shell (–5.3%); DuPont (–3.4%) finished in negative territory.  

Challenges abroad, with exceptions

To broaden IFA’s pool of potential opportunities, up to 25% of assets can be invested in stocks of companies domiciled outside the United States. As of period-end, IFA was well short of this threshold with 18.5% invested beyond our shores.

Markets abroad, particularly in Europe, were extremely challenging during the 12 months. For IFA, the uncertainty was manifested most acutely in a handful of the fund’s European telecommunications investments whose stock prices were hurt by concerns over the sustainability of their dividends. And though, on balance, non-U.S. investments detracted from results, once again our research led us to a number of companies whose results cut against the grain. These included Australian telecom giant Telstra (28.0%), British American Tobacco (15.1%) and Coca Cola Amatil (17.9%), the brand’s leading bottler in Australia.  

[Begin Sidebar]

Striking a balance between return and volatility

The Income Fund of America takes a prudent path to income. Looking back 10 years, as shown at right, the fund has provided higher returns than stocks, bonds and the average income fund and lower volatility than stocks. In addition, as can be seen on page 1, the fund’s lifetime results surpass those of both the stock and bond indexes.

For the 10-year period ended July 31, 2012

[begin chart]

	5 Years				10 Years				Since 12/31/75
Fund	Annual Return		Annual Std Dev		Annual Return		Annual Std Dev		Annual Return		Annual Std Dev
Income Fund of America		2.50		13.44		7.65		10.78		11.20		9.62
Barclays Capital US Aggregate Bond		6.91		3.54		5.65		3.62		8.28		5.57
S&P 500		1.13		18.98		6.33		15.54		11.04		15.32
Lipper Income Funds Index		3.40		9.51		5.85		7.43

[end chart]

Sources: Stocks — S&P 500; Bonds — Barclays U.S. Aggregate Index; Income Funds Index — Lipper. Returns include reinvestment of all distributions. Volatility is calculated at net asset value by Lipper using annualized standard deviation (based on monthly returns), a measure of how returns over time have varied from the mean; a lower number signifies lower volatility.

[End Sidebar]

Fixed income helps objectives

Fixed-income securities made up 26.8% of IFA’s portfolio and were drawn from across the credit-quality spectrum. High-yield bonds, which constituted one of the largest shares of the fund’s fixed-income investments and played a key role in delivering income, posted solid results for the 12 months. Also additive for IFA were U.S. Treasury bonds, which turned in the best results within the fixed-income universe as investors sought security amid the period’s uncertainty.

Shifts in the portfolio

IFA allows investment professionals considerable flexibility in their risk-sensitive pursuit of the fund’s income objective. And their adapting to market conditions can cause shifts in the fund’s portfolio. For example, in recent years declining interest rates have caused an erosion in bond yields which has, in many cases, reduced their attractiveness relative to dividend-paying stocks. IFA’s portfolio has gradually come to reflect this shift, with fixed-income securities representing the smallest share of the portfolio in several years.

In addition to benefiting from flexibility, the fund’s portfolio counselors and analysts rely on fundamental research to uncover opportunities within sectors and industries that may be out of favor and, as a result, feature attractive valuations. During the 12 months, two such areas of the market — energy and materials — fit that description and we took the opportunity to add to select holdings in both of those sectors.

Balancing optimism and caution

The challenges that continue to face the global economy are highly complex and won’t be resolved quickly or easily. Yet we are encouraged by some of the steps being taken to deal with the fiscal challenges facing various regions.

We will continue to pursue our income-focused approach while paying careful attention to market risk and keeping a close eye on valuations.

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

September 7, 2012

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

[Begin Sidebar]

A lifetime of high current income

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

Year ended July 31

[begin line chart]

Year-end	The Income Fund of America		Lipper Income Funds Average		S&P 500
1/31/1975		7.30		7.34		4.71
7/31/1975		7.24		6.98		4.18
1/31/1976		6.30		6.53		3.65
7/31/1976		7.06		6.54		3.66
1/31/1977		6.94		6.30		4.01
7/31/1977		6.15		6.26		4.47
1/31/1978		6.61		6.83		5.28
7/31/1978		6.70		6.68		4.92
1/31/1979		7.56		7.07		5.12
7/31/1979		7.38		7.04		5.19
1/31/1980		7.83		7.36		4.99
7/31/1980		7.63		7.37		4.95
1/31/1981		8.07		7.95		4.81
7/31/1981		8.16		9.57		4.91
1/31/1982		8.75		10.55		5.53
7/31/1982		9.81		11.02		6.37
1/31/1983		7.95		9.22		4.74
7/31/1983		7.95		8.42		4.28
1/31/1984		7.86		8.50		4.36
7/31/1984		8.60		9.37		4.87
1/31/1985		7.69		8.57		4.22
7/31/1985		7.45		8.22		4.07
1/31/1986		7.30		7.71		3.75
7/31/1986		7.27		7.34		3.45
1/31/1987		6.85		6.70		3.03
7/31/1987		7.02		6.66		2.69
1/31/1988		7.62		7.10		3.31
7/31/1988		6.96		7.40		3.27
1/31/1989		6.69		7.40		3.34
7/31/1989		6.67		7.31		3.04
1/31/1990		6.99		7.65		3.37
7/31/1990		6.51		7.60		3.31
1/31/1991		7.45		8.53		3.52
7/31/1991		7.00		7.52		3.11
1/31/1992		6.39		6.69		2.96
7/31/1992		6.08		6.16		2.89
1/31/1993		5.96		5.66		2.83
7/31/1993		5.76		5.23		2.79
1/31/1994		5.54		4.99		2.64
7/31/1994		6.03		5.14		2.80
1/31/1995		6.14		5.53		2.81
7/31/1995		5.55		4.78		2.41
1/31/1996		5.07		4.55		2.18
7/31/1996		5.19		4.62		2.28
1/31/1997		5.09		4.26		1.89
7/31/1997		4.74		4.08		1.61
1/31/1998		4.27		4.21		1.59
7/31/1998		4.32		4.12		1.43
1/31/1999		4.79		3.94		1.29
7/31/1999		4.86		4.14		1.24
1/31/2000		5.40		4.57		1.19
7/31/2000		5.49		4.69		1.15
1/31/2001		4.78		4.71		1.20
7/31/2001		4.80		4.58		1.30
1/31/2002		5.01		4.18		1.40
7/31/2002		5.49		3.94		1.75
1/31/2003		5.45		3.67		1.88
7/31/2003		4.69		3.32		1.66
1/31/2004		4.05		2.79		1.54
7/31/2004		3.98		2.77		1.69
1/31/2005		3.57		2.46		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		2.77		1.83
1/31/2007		4.24		3.00		1.75
7/31/2007		4.43		3.09		1.81
1/31/2008		4.68		3.58		2.03
7/31/2008		5.23		3.88		2.29
1/31/2009		6.72		4.52		3.39
7/31/2009		5.64		3.82		2.53
1/31/2010		4.56		3.18		2.07
7/31/2010		4.26		2.91		2.00
1/31/2011		4.45		2.79		1.78
7/31/2011		4.40		2.78		1.90
1/31/2012		4.09		2.63		2.03
7/31/2012		3.96		2.51		2.07

[end line chart]

All numbers calculated by Lipper.

[End Sidebar]

The value of a long-term perspective

How a $10,000 investment has grown

There have always been reasons not to invest. If you look beyond the negative headlines, however, you will find that despite occasional stumbles, financial markets have tended to reward investors over the long term. Active management — bolstered by experience and careful research — can add even more value. As the chart below shows, over its lifetime, The Income Fund of America (IFA) has delivered higher returns than both the broader stock and bond markets. Dividends, particularly when reinvested, have accounted for a large portion of the fund’s overall results.

Average annual total returns based on a $1,000 investment (for periods ended July 31, 2012)*
	1 year			5 years			10 years
Class A shares		2.19	%		1.29	%		7.02	%
*Assumes reinvestment of all distributions and payment of the maximum 5.75% sales charge.

Investment results assume all distributions are reinvested and reflect applicable fees and expenses. When applicable, investment results reflect fee waivers, without which results would have been lower. Visit americanfunds.com for more information.

Fund results shown are for Class A shares and reflect deduction of the maximum sales charge of 5.75% on the $10,000 investment.1 Thus, the net amount invested was $9,425.2 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. For current information and month-end results, visit americanfunds.com.

Expense ratios and turnover rates*
Year ended July 31, 2012
	The Income Fund of America			Industry average†
Expense ratio		0.59	%		1.07	%
Portfolio turnover rate		41	%		44	%

*The expense ratio is the annual percentage of net assets used to pay fund expenses. The portfolio turnover rate is a measure of how often securities are bought and sold by a fund.

†Source for industry average: Lipper Income Funds. Industry average expense ratio based on statistics for front-end load funds, excluding funds of funds, for the most recent fiscal year-ends available as of 6/30/12.

[begin mountain chart]

Year End July 31	IFA1,7,8 remaining amounts if dividends taken in cash		IFA1,4,8 with dividends reinvested		Barclays U.S. Aggregate Index5,6 with interest compounded		Standard & Poor’s 500 Composite Index5 with dividends reinvested
1974#		8,767		9,088		9,378		8,481
1975		10,141		11,391		10,580		9,951
1976		12,155		14,750		11,871		12,066
1977		12,701		16,392		13,189		12,042
1978		12,584		17,403		13,474		12,926
1979		12,693		18,921		14,373		14,069
1980		12,490		20,161		14,602		17,412
1981		12,818		22,484		13,871		19,675
1982		12,256		23,663		16,720		17,063
1983		16,112		33,683		20,383		27,174
1984		15,738		35,721		22,154		26,367
1985		19,443		47,674		27,452		34,914
1986		21,668		57,146		33,352		44,833
1987		23,568		66,671		34,859		62,449
1988		22,341		67,812		37,497		55,109
1989		25,644		83,698		43,200		72,685
1990		24,351		84,639		46,253		77,386
1991		25,390		95,046		51,203		87,239
1992		28,370		113,237		58,771		98,377
1993		29,917		126,680		64,746		106,947
1994		28,788		129,171		64,807		112,457
1995		31,571		150,378		71,358		141,775
1996		34,007		170,618		75,311		165,244
1997		41,731		220,576		83,416		251,353
1998		44,436		245,542		89,980		299,807
1999		45,588		264,664		92,220		360,395
2000		42,276		259,165		97,721		392,724
2001		46,460		299,416		110,124		336,476
2002		41,359		280,397		118,420		257,015
2003		44,136		314,550		124,835		284,354
2004		49,057		364,136		130,876		321,781
2005		54,032		415,525		137,146		366,973
2006		56,985		456,119		139,146		386,700
2007		61,946		518,361		146,909		449,054
2008		53,502		469,245		155,944		399,251
2009		44,011		409,572		168,179		319,605
2010		48,525		471,376		183,163		363,849
2011		53,196		540,592		191,288		435,335
2012		55,359		586,256		205,164		474,975

[end mountain chart]

Year ended July 31		1974	3	1975	1976		1977		1978		1979	1980	1981
Value of dividends
Dividends in cash8	$	343		734	859		781		843		937	952	1,046
Dividends reinvested8	$	346		785	997		970		1,117		1,333	1,463	1,743
Value of investment
Dividends in cash8	$	8,767		10,141	12,155		12,701		12,584		12,693	12,490	12,818
Dividends reinvested8	$	9,088		11,391	14,750		16,392		17,403		18,921	20,161	22,484
IFA total return		(9.1	)%	25.3	29.5		11.1		6.2		8.7	6.6	11.5
Year ended July 31		1982		1983	1984		1985		1986		1987	1988	1989
Value of dividends
Dividends in cash8		1,202		1,280	1,344		1,438		1,550		1,636	1,542	1,710
Dividends reinvested8		2,187		2,548	2,895		3,365		3,909		4,431	4,479	5,337
Value of investment
Dividends in cash8		12,256		16,112	15,738		19,443		21,668		23,568	22,341	25,644
Dividends reinvested8		23,663		33,683	35,721		47,674		57,146		66,671	67,812	83,698
IFA total return		5.2		42.3	6.0		33.5		19.9		16.7	1.7	23.4
Year ended July 31		1990		1991	1992		1993		1994		1995	1996	1997
Value of dividends
Dividends in cash8		1,577		1,764	1,715		1,713		1,727		1,752	1,766	1,968
Dividends reinvested8		5,269		6,311	6,579		6,995		7,471		8,046	8,581	10,074
Value of investment
Dividends in cash8		24,351		25,390	28,370		29,917		28,788		31,571	34,007	41,731
Dividends reinvested8		84,639		95,046	113,237		126,680		129,171		150,378	170,618	220,576
IFA total return		1.1		12.3	19.1		11.9		2.0		16.4	13.5	29.3
Year ended July 31		1998		1999	2000		2001		2002		2003	2004	2005
Value of dividends
Dividends in cash8		1,959		2,210	2,320		2,226		2,272		2,071	1,944	1,850
Dividends reinvested8		10,530		12,446	13,740		13,913		14,927		14,311	14,072	13,921
Value of investment
Dividends in cash8		44,436		45,588	42,276		46,460		41,359		44,136	49,057	54,032
Dividends reinvested8		245,542		264,664	259,165		299,416		280,397		314,550	364,136	415,525
IFA total return		11.3		7.8	(2.1	)	15.5		(6.4	)	12.2	15.8	14.1
Year ended July 31		2006		2007	2008		2009		2010		2011	2012
Value of dividends
Dividends in cash8		2,180		2,728	2,784		2,483		2,069		2,343	2,191
Dividends reinvested8		17,020		22,200	23,692		22,231		19,569		23,154	22,620
Value of investment
Dividends in cash8		56,985		61,946	53,502		44,011		48,525		53,196	55,359
Dividends reinvested8		456,119		518,361	469,245		409,572		471,376		540,592	586,256
IFA total return		9.8		13.6	(9.5	)	(12.7	)	15.1		14.7	8.4

Average annual total return for fund’s lifetime: 11.1%1

1As outlined in the prospectus, the sales charge is reduced for accounts (and aggregated investments) of $25,000 or more and is eliminated for purchases of $1 million or more. There is no sales charge on dividends or capital gain distributions that are reinvested in additional shares.

2The maximum initial sales charge was 8.5% prior to July 1, 1988.

3For the period December 1, 1973 (when Capital Research and Management Company became the fund’s investment adviser), through July 31, 1974.

4Includes reinvested dividends of $355,580 and reinvested capital gain distributions of $131,223.

5The indexes are unmanaged and, therefore, have no expenses.

6From December 1, 1973, through December 31, 1975, the Barclays U.S. Government/Credit Index was used because the Barclays U.S. Aggregate Index did not yet exist.

7Includes capital gain distributions of $24,067, but does not reflect income dividends of $65,808 taken in cash.

8From April 1990 to September 1994, and from September 2003 to March 2009, the fund accrued dividends daily but paid quarterly. Dividends reflect quarterly dividends actually paid during the period, while year-end values are adjusted for cumulative dividends accrued but not yet paid.

Diversity four ways

[photo of different colored leaves]

The men and women who manage The Income Fund of America take a risk-sensitive approach to pursuing the fund’s income objective. Central to that mission is a portfolio diversified in multiple ways.

The global economy and markets worldwide are awash in complexity and feature considerable uncertainty. How long will Europe remain in the grip of its financial crisis? Can interest rates go lower? Is the Chinese economy slowing? Will the U.S. economy continue to strengthen and gain stability? Predicting how any one of these scenarios will play out is difficult; getting all of them right borders on the impossible.

Yet for investors confronting this uncertainty, one time-tested investment principle deserves particular attention — diversification. In the next few pages, we’ll take a look at why a broad-based, multi-layered portfolio can help investors navigate market and economic uncertainty. We’ll also examine how The Income Fund of America (IFA) provides investors with four layers of diversification — 1) among asset classes; 2) within asset classes; 3) geographically; and 4) through diversity of opinion and perspective.

More important than ever

“As investment managers, we work hard to develop insights that will serve fund investors. But we are far from omniscient. Political, economic and market events unfold in ways we don’t always anticipate,” explains Hilda Applbaum, vice chairman of The Income Fund of America and one of its portfolio counselors. “So from an investment standpoint, we never want to have all our eggs in one basket even if we think it’s a well-crafted basket. We don’t want a portfolio that can only fare well under specific conditions. Being diversified among asset classes, countries, industries, companies and currencies helps us pursue the fund’s objectives amid a variety of conditions.”

Asset class diversification: Mitigating risk, increasing flexibility

For IFA, diversification is not necessarily a goal unto itself but rather a natural by-product of the risk-sensitive pursuit of the fund’s primary objective — providing investors with current income.

“Providing a high level of current income is our foremost goal. But in our search for that income, we always pay close attention to risk. One important way we do that is by incorporating a variety of asset classes into the portfolio,” explains fund president and fixed-income portfolio counselor David Barclay. “By investing in stocks, bonds, convertible securities and cash, we hope to lower risk and provide solid returns over full market cycles.”

[photo of leaves hanging on branches]

[Begin Sidebar]

Income from far and wide

With the goal of delivering current income, The Income Fund of America invests in a highly diverse mix of securities and seeks opportunity worldwide. How the portfolio is allocated among investment types shifts over time as economic conditions, interest rates, the political climate and dividend trends cause investment professionals to adjust their views on the potential risks and rewards of the various asset classes. For example, in recent years, declining interest rates have caused yields on certain types of bonds to dip below the dividend yields of many stocks. This has led some portfolio counselors to trim bond holdings and increase their investments in stocks, a trend visible in the table to the right.

	U.S. Equity			Non-U.S. Equity			Fixed-Income			Cash
2003		46.4	%		17.0	%		31.9	%		4.7	%
2004		49.8			18.7			23.9			7.6
2005		52.4			17.2			22.8			7.6
2006		53.0			17.5			22.7			6.8
2007		49.2			18.0			24.3			8.5
2008		45.1			18.1			27.7			9.1
2009		40.8			18.9			35.9			4.4
2010		43.5			18.9			33.1			4.5
2011		44.3			20.5			30.5			4.7
2012		48.7			18.5			26.8			6.0

[End Sidebar]

[photo of a tree - mountains in the background]

The risk-reducing properties David speaks of have to do with the tendency of individual asset classes to respond differently to certain political, economic or market conditions. For example, when stocks are faltering due to global uncertainty, high-quality bonds like U.S. Treasuries have tended to do well. A diverse mix of asset classes that move in opposing directions can help temper volatility while also offering some of the upside of the individual asset classes.

The fund’s diversified approach to pursuing its objectives also affords investment professionals flexibility, which is pivotal to risk-sensitive income investing. The current environment offers a case in point.

“Right now, interest rates are very low and, as a result, so are yields for many types of bonds. This has reduced their appeal as income-producing investments,” explains portfolio counselor Dina Perry. “Yet because IFA pursues its income mandate through investments in multiple asset classes, portfolio counselors can increase their focus on investment opportunities they believe offer superior risk/reward profiles. In recent years, one such area has been dividend-paying stocks. Of course, these investments have always been mainstays of the fund’s portfolio, but their relative appeal has increased as interest rates declined.”

Not surprisingly, the low-interest rate environment has led IFA’s portfolio to gradually reflect the reality described by Dina, with stocks comprising a rising percentage of fund assets. Yet it’s important to note that the shifting asset class allocation of the fund’s portfolio is not the result of top-down decision making. Rather it reflects the individual actions of all the portfolio counselors making decisions on a company-by-company or issuer-by-issuer basis.

Diversification within asset classes

Just as results often diverge between asset classes, different types of investments within the same asset class can also behave differently. Consider stocks: In a thriving economy, stock prices of companies in sectors that tend to benefit from economic expansion — such as energy, materials and industrials — often post the best results. Conversely, during economic downturns, sectors regarded as defensive — such as utilities, telecommunications, health care and consumer staples — often hold up better than the broader market.

Similarly, high-yield bonds, which are among the riskier fixed-income investments, tend to post their best results when economic conditions are good and when the ability of the issuers to service their debt is thought to be improving. At the other end of the spectrum are U.S. Treasuries, which are generally regarded as the safest of the safe investments. While they furnish less income than high-yield bonds, they’ve historically held up well during rocky economic stretches when many investors seek stability.

Broad diversification within a given asset class can limit the impact that a downturn in one area of the stock or bond market can have on fund results. IFA’s equity portfolio features meaningful investments in all 10 sectors that make up the S&P 500 — from more economically sensitive tech companies to historically less volatile utilities. And the fund’s fixed-income portfolio houses investments from across the credit-quality spectrum.

“Were risk not a concern, the fund’s stock and bond portfolio might look markedly different. For example, the fund’s stock holdings might be concentrated in a handful of companies with the highest dividend yields while high-yield bonds would make up an even bigger share of IFA’s bond investments,” explains Hong Kong-based portfolio counselor Steve Watson. “But here again, we remain mindful of risk and alert to the fact that diversification plays an important part in tempering it.”

[photo of bushes with fall colored leaves]

[Begin Sidebar]

A deeper look at IFA’s portfolio

Stocks of companies in certain sectors have offered higher yields than the broader market and thus been mainstays of IFA’s portfolio. Yet as you can see, the fund’s stock holdings are drawn from all 10 of the economic sectors that make up equity markets — a manifestation of the fund’s company-by-company approach to portfolio construction.

	Percent of			Number of
Sector*	equity portfolio			companies
Financials		14.04	%		50
Industrials		13.88			28
Health care		12.23			10
Consumer staples		11.29			21
Energy		10.90			19
Telecommunication services		8.94			13
Consumer discretionary		8.76			20
Utilities		7.94			14
Materials		6.78			12
Information technology		5.24			15

IFA’s bond investments likewise cut a broad swath across the fixed-income universe. Holdings range from riskier high-yield corporate debt which plays a crucial role in helping the fund meet its income objectives, to U.S. Treasury securities which provide important ballast during rocky periods.

	Percent of
Bond type*	fixed-income investments
U.S. corporate bonds		56.03	%
Non-U.S. corporate bonds†		15.66
Mortgage- & asset-backed securities		15.59
U.S. Treasuries/agencies		11.06
Agency notes & bonds		1.01
Non-U.S. governments/agencies†		0.48
Municipal securities		0.17
*As of July 31, 2012.
† Must be denominated in U.S. dollars.

[End Sidebar]

The benefits of going global

IFA can invest up to 25% of its assets in companies domiciled outside the United States. This significantly expands the number of companies and issuers from which investment professionals can choose as they pursue the fund’s objectives.

But in addition to deepening the pool of potential investments, casting a wide net for income also confers a risk-management benefit to the fund. “Despite the fact that the global economy is more interconnected than ever and many markets move more synchronously than they once did, results for different countries and regions can still vary significantly,” explains David.

Consider the recent fiscal year. On the equity side, the fund’s investments in U.S. companies posted double-digit gains while, as a group, its holdings in non-U.S. firms finished in the red.

“A company’s country of domicile means less than it once did as many firms operate more globally and are diversified with respect to operations and revenues,” explains Hilda. “But the ever-changing global economic environment ensures that, at a given time, conditions in some countries will be favorable while in other countries they’ll be challenging. Though we invest in companies and issuers, and not countries, even investments we judge to be solid can get caught in regional downdrafts. In addition to expanding our set of investment opportunities, having a geographically diverse mix of companies and issuers can blunt the impact of a downturn in a particular country or region.”

[photo of fall colored leaves on a branch]

Diverse thinking

IFA features still another layer of diversification which, though harder to spot than others, has nonetheless been instrumental to the fund’s long-term success. And that is the diversity of investment perspectives captured within its portfolio. The ability to house a variety of individual viewpoints and outlooks within a single fund comes courtesy of the unique investment approach employed by all the American Funds.

Known as the Multiple Portfolio Counselor System,® it divides the fund into portions, each of which is independently managed by one of the fund’s nine portfolio counselors according to his or her investing perspective. Another portion is managed by the fund’s investment analysts. Though all are committed to a research-driven approach to investing, no two share the exact same background or philosophy. And just as some asset classes fare better amid certain market conditions, so too are certain investing styles better suited to particular investment environments.

“The Multiple Portfolio Counselor System makes for a highly diversified portfolio that, over the long-term, has helped investors navigate a variety of market environments in pursuit of their objectives,” says Hilda.

An appealing option in a challenging environment

For investors, the current global economic environment can be unsettling. Yet the reality is that for those with long-term financial needs, owning stocks and bonds has been an effective approach to pursuing them. Thanks in part to its highly diversified portfolio, The Income Fund of America has a long-term track record of delivering solid results while remaining considerably less volatile than the broader market. In the words of Steve Watson: “With so much uncertainty spread so far, investing in a portfolio that distributes risk around and offers lower volatility seems like an appealing proposition.” n

[photo of rocks in a body of water]

About your fund

Fund results shown 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. For current information and month-end results, visit americanfunds.com.

Resilience during stock declines	The Income Fund of America (IFA) vs. the
	S&P 500 during market declines*
Dates of decline	S&P 500			IFA cumulative			IFA advantage
	cumulative total return			total return			(percentage points)
September 21, 1976, through
March 6, 1978		–13.5	%		1.9	%		15.4	%
November 28, 1980, through
August 12, 1982		–20.2			19.0			39.2
August 25 through December 4, 1987		–32.8			–13.6			19.2
July 16 through October 11, 1990		–19.2			–10.2			9.0
July 17 through August 31, 1998		–19.1			–9.5			9.6
March 24, 2000, through
October 9, 2002		–47.4			0.7			48.1
October 9, 2007, through
March 9, 2009		–55.2			–43.5			11.7
April 29 through October 3, 2011		–18.6			–11.6			7.0
*Periods show S&P 500 price declines of 15% or greater (without dividends reinvested) based on 100% recovery after each decline (except for 1976–1978 and 2007–2009 declines, which recovered 78% and 77%, respectively). With respect to the most recent decline, the market has not returned to its high, reached in April 2011, and the decline may not be over. Nonetheless, we have elected to include the period to give investors a sense of how IFA’s results compared with those of the broader stock market during this tumultuous time. S&P 500 total returns, which include reinvestment of all distributions, may be higher. The index is unmanaged.

Withdrawing income: the dividend advantage

Most fund investors reinvest their dividends, but some use dividends to meet current expenses. As the charts below show, the fund’s income has allowed withdrawals to be made without invading principal.

Higher dividends …

[begin bar chart]

	Dividends produced
IFA		1,880,495
S&P 500		482,553

[end bar chart]

… have helped to keep principal

intact, letting compounding do

its work.

[begin bar chart]

	IFA		S&P 500
Amount withdrawn		538,548		538,548
Ending value		2,645,319		1,227,902
Initial investment		100,000		100,000

[end bar chart]

Charts show hypothetical $100,000 investments in the fund (at net asset value) and the S&P 500 from January 1, 1974, to July 31, 2012. Example assumes an annual withdrawal equaling $5,000 the first year on December 31, 1974, and increased by 5% each year thereafter. Over the period, total withdrawals from each of the fund and the index come to $538,548.

Historical benefits of income

This chart shows one-year snapshots of the annual income produced by three hypothetical $10,000 investments made on July 31, 1974, in each of The Income Fund of America, the S&P 500, and three-month certificates of deposit (CDs). Over the past 38 years, income from the fund has been substantially higher.

Year ended July 31

[begin bar chart]

	The Income Fund of America		S&P 500		CDs
7/31/1975	$	864	$	479	$	924
7/31/1976	$	1,097	$	511	$	652
7/31/1977	$	1,067	$	617	$	598
7/31/1978	$	1,229	$	728	$	814
7/31/1979	$	1,467	$	838	$	1,283
7/31/1980	$	1,610	$	980	$	1,998
7/31/1981	$	1,918	$	1,110	$	2,302
7/31/1982	$	2,407	$	1,241	$	3,003
7/31/1983	$	2,804	$	1,339	$	2,235
7/31/1984	$	3,186	$	1,477	$	2,376
7/31/1985	$	3,702	$	1,637	$	2,617
7/31/1986	$	4,301	$	1,788	$	2,217
7/31/1987	$	4,877	$	1,948	$	1,940
7/31/1988	$	4,930	$	2,084	$	2,417
7/31/1989	$	5,874	$	2,555	$	3,240
7/31/1990	$	6,340	$	2,969	$	3,382
7/31/1991	$	7,140	$	3,140	$	3,171
7/31/1992	$	7,299	$	3,302	$	2,226
7/31/1993	$	7,837	$	3,469	$	1,548
7/31/1994	$	8,341	$	3,658	$	1,680
7/31/1995	$	8,080	$	3,963	$	2,920
7/31/1996	$	9,462	$	4,388	$	3,049
7/31/1997	$	11,108	$	4,713	$	3,189
7/31/1998	$	11,612	$	4,955	$	3,414
7/31/1999	$	13,724	$	5,236	$	3,313
7/31/2000	$	15,151	$	5,333	$	4,011
7/31/2001	$	15,341	$	5,130	$	4,233
7/31/2002	$	16,460	$	5,265	$	1,806
7/31/2003	$	15,781	$	5,526	$	1,164
7/31/2004	$	17,021	$	6,344	$	837
7/31/2005	$	15,588	$	7,290	$	1,844
7/31/2006	$	19,236	$	8,261	$	3,532
7/31/2007	$	24,953	$	9,483	$	4,586
7/31/2008	$	26,672	$	10,663	$	3,842
7/31/2009	$	21,965	$	9,403	$	2,098
7/31/2010	$	21,582	$	8,491	$	258
7/31/2011	$	25,536	$	9,668	$	284
7/31/2012	$	24,947	$	11,439	$	309

[end bar chart]

All results are calculated at net asset value with dividends and capital gains (where applicable) reinvested. Source for CDs is the Federal Reserve. CD income assumes reinvestment of both principal and interest at prevailing rates at the time of purchase. CDs are guaranteed; the fund is not.

The portfolio at a glance

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

[begin pie chart]

Investment mix by security type	July 31, 2012
U.S. common stocks		47.3	%
Common stocks of issuers outside the U.S.		18.5
U.S. Treasury & agency bonds & notes		3.2
Convertible securities, preferred stocks & warrants		1.5
Other fixed-income securities		23.5
Short-term securities & other assets less liabilities		6.0

[end pie chart]

	Percent
	of net
Five largest sectors in common stock holdings	assets
Industrials		8.9	%
Health care		8.0
Financials		7.5
Consumer staples		7.0
Energy		6.8

	Percent
	of net
Ten largest common stock holdings	assets
Merck		2.6	%
Bristol-Myers Squibb		2.5
Verizon		2.3
General Electric		2.3
Home Depot		2.0
Royal Dutch Shell		1.6
Chevron		1.4
HCP		1.3
Waste Management		1.3
DuPont		1.3

	Percent
	of net
Country diversification	assets
United States		71.1	%
Euro zone*		5.8
United Kingdom		5.7
Canada		2.6
Australia		2.1
Switzerland		1.5
Other countries		5.2
Short-term securities & other assets less liabilities		6.0
*Countries using the euro as a common currency; those represented in the fund's portfolio are Belgium, France, Germany, Ireland, Italy, the Netherlands, Portugal and Spain.

[begin pie chart]

Investment mix by security type	July 31, 2011
U.S. common stocks		42.6	%
Common stocks of issuers outside the U.S.		20.5
U.S. Treasury & agency bonds & notes		3.6
Convertible securities, preferred stocks & warrants		1.7
Other fixed-income securities		26.9
Short-term securities & other assets less liabilities		4.7

[end pie chart]

	Percent
	of net
Five largest sectors in common stock holdings	assets
Industrials		8.3	%
Financials		7.0
Consumer staples		6.9
Energy		6.7
Health care		6.4

	Percent
	of net
Ten largest common stock holdings	assets
Verizon		2.4	%
Bristol-Myers Squibb		2.1
Royal Dutch Shell		1.9
Merck		1.9
Home Depot		1.7
Chevron		1.6
Philip Morris International		1.3
Waste Management		1.3
DuPont		1.3
General Electric		1.3

	Percent
	of net
Country diversification	assets
United States		70.0	%
Euro zone†		7.5
United Kingdom		6.6
Canada		2.7
Australia		2.0
Switzerland		.9
Other countries		5.6
Short-term securities & other assets less liabilities		4.7
†Countries using the euro as a common currency; those represented in the fund's portfolio were Belgium, France, Germany, Greece, Ireland, Italy, the Netherlands, Portugal and Spain.

Summary investment portfolio

July 31, 2012

								Percent
					Value			of net
Common stocks  - 65.76%		Shares				(000	)	assets
Industrials  - 8.85%
General Electric Co.			79,234,500		$	1,644,116			2.26
Waste Management, Inc.  (1)			27,471,706			945,027			1.30
Lockheed Martin Corp.			10,307,400			920,142			1.26
Iron Mountain Inc.  (1) (2)			11,117,270			358,087			.49
Eaton Corp.			8,046,200			352,745			.48
Other securities						2,230,040			3.06
						6,450,157			8.85
Health care  - 8.05%
Merck & Co., Inc.			42,318,040			1,869,188			2.57
Bristol-Myers Squibb Co.			51,825,000			1,844,970			2.53
Pfizer Inc			36,855,000			885,994			1.22
Eli Lilly and Co.			8,100,000			356,643			.49
Johnson & Johnson			4,545,000			314,605			.43
Other securities						592,603			.81
						5,864,003			8.05
Financials  - 7.51%
HCP, Inc.			20,305,800			958,637			1.32
Weyerhaeuser Co. (2)			26,212,881			612,071			.84
CME Group Inc., Class A			7,350,000			383,008			.53
Other securities						3,515,952			4.82
						5,469,668			7.51
Consumer staples  - 7.00%
PepsiCo, Inc.			8,505,000			618,569			.85
Altria Group, Inc.			15,930,000			573,002			.78
Unilever NV, depository receipts			9,295,000			323,140
Unilever NV (New York registered)			5,551,750			192,368			.71
Nestlé SA			8,145,000			500,980			.69
H.J. Heinz Co.			7,500,000			414,075			.57
Philip Morris International Inc.			4,472,000			408,920			.56
Kraft Foods Inc., Class A			8,950,821			355,437			.49
Procter & Gamble Co.			5,500,000			354,970			.48
Other securities						1,361,221			1.87
						5,102,682			7.00
	��
Energy  - 6.79%
Royal Dutch Shell PLC, Class B (ADR)			9,025,000			636,804
Royal Dutch Shell PLC, Class A (ADR)			6,000,000			409,200
Royal Dutch Shell PLC, Class B			3,797,147			133,921			1.62
Chevron Corp.			9,025,800			989,047			1.36
Spectra Energy Corp			20,150,500			618,419			.85
Crescent Point Energy Corp.			14,500,000			576,328			.79
Kinder Morgan, Inc.			14,135,000			506,174			.69
ConocoPhillips			6,108,000			332,519			.46
Other securities						747,751			1.02
						4,950,163			6.79
Telecommunication services  - 5.19%
Verizon Communications Inc.			36,987,500			1,669,616			2.29
Telstra Corp. Ltd.			149,270,000			627,471			.86
AT&T Inc.			15,424,621			584,902			.80
Other securities						902,154			1.24
						3,784,143			5.19
Utilities  - 5.15%
National Grid PLC			80,801,656			839,287			1.15
GDF SUEZ			22,974,914			514,060			.71
Power Assets Holdings Ltd.			59,138,000			465,191			.64
Duke Energy Corp.			5,937,057			402,414			.55
FirstEnergy Corp.			7,577,983			380,567			.52
PG&E Corp.			6,800,000			313,888			.43
Other securities						836,465			1.15
						3,751,872			5.15
Consumer discretionary  - 5.03%
Home Depot, Inc.			27,845,000			1,452,952			1.99
Time Warner Inc.			13,815,000			540,443			.74
McGraw-Hill Companies, Inc.			10,840,000			509,046			.70
Time Warner Cable Inc.			5,400,000			458,622			.63
Other securities						705,272			.97
						3,666,335			5.03
Materials  - 4.20%
E.I. du Pont de Nemours and Co.			18,841,000			936,398			1.29
Dow Chemical Co.			19,804,900			569,985			.78
Nucor Corp.			13,580,000			532,336			.73
MeadWestvaco Corp.  (1)			11,201,000			318,108			.44
Other securities						700,523			.96
						3,057,350			4.20
Information technology  - 3.29%
Microsoft Corp.			14,065,000			414,496			.57
Maxim Integrated Products, Inc.			14,156,000			385,468			.53
Paychex, Inc.			9,403,182			307,390			.42
Other securities						1,288,851			1.77
						2,396,205			3.29
Miscellaneous  -  4.70%
Other common stocks in initial period of acquisition						3,427,735			4.70
Total common stocks (cost: $41,924,970,000)						47,920,313			65.76
								Percent
					Value			of net
Preferred stocks  - 0.48%			Shares			(000	)	assets
Financials  - 0.32%
Fannie Mae, Series S, 8.25% noncumulative (2)			1,511,450			2,906			.00
Other securities						232,307			.32
						235,213			.32
Miscellaneous  -  0.16%
Other preferred stocks in initial period of acquisition						117,012			.16
Total preferred stocks (cost: $364,687,000)						352,225			.48
								Percent
					Value			of net
Warrants - 0.00%			Shares			(000	)	assets
Energy - 0.00%
Other securities						69			.00
Total warrants (cost: $2,171,000)						69			.00
Convertible securities  - 1.00%
Other - 1.00%
Other securities						727,431			1.00
Total convertible securities (cost: $863,673,000)						727,431			1.00
		Principal						Percent
		amount			Value			of net
Bonds & notes  - 26.77%			(000	)		(000	)	assets
Financials  - 4.42%
HCP, Inc. 3.75% 2016		$	20,000			21,158			.03
Other securities						3,203,575			4.39
						3,224,733			4.42
Mortgage-backed obligations  (3) - 4.08%
Fannie Mae 2.715%-11.355% 2018-2047  (4)			1,829,667			1,983,016			2.72
Freddie Mac 1.883%-10.763% 2019-2041  (4)  (5)			354,390			385,128			.53
Other securities						602,225			.83
						2,970,369			4.08
Bonds & notes of U.S. government & government agencies - 3.22%
U.S. Treasury 0.625%-8.75% 2012-2042  (6)			1,845,717			2,158,201			2.96
Fannie Mae 0.75%-6.625% 2013-2030			65,425			81,639			.11
Freddie Mac 0.375%-2.375% 2014-2022			61,215			62,850			.09
Other securities						41,130			.06
						2,343,820			3.22
Consumer discretionary  - 3.20%
Home Depot, Inc. 5.95% 2041			25,000			35,171			.05
Other securities						2,298,364			3.15
						2,333,535			3.20
Industrials  - 2.01%
General Electric Capital Corp. 2.25%-7.125% 2015-2021  (4)			226,250			243,537			.33
Other securities						1,220,218			1.68
						1,463,755			2.01
Telecommunication services  - 1.99%
Verizon Communications Inc. 3.00%-8.75% 2014-2041			94,015			112,093			.15
Other securities						1,341,529			1.84
						1,453,622			1.99
Energy  - 1.68%
Shell International Finance BV 1.875%-6.375% 2013-2038			38,750			43,503			.06
Chevron Corp. 3.95%-4.95% 2014-2019			10,500			12,738			.02
Other securities						1,170,475			1.60
						1,226,716			1.68
Health care  - 1.60%
Pfizer Inc 5.35% 2015			20,000			22,482			.03
Other securities						1,141,215			1.57
						1,163,697			1.60
Materials  - 0.93%
E.I. du Pont de Nemours and Co. 0.888% 2014 (4)			10,000			10,076			.01
Other securities						668,562			.92
						678,638			.93
Utilities  - 0.70%
National Grid PLC 6.30% 2016			4,000			4,638			.01
Other securities						506,612			.69
						511,250			.70
Other - 2.94%
Other securities						2,139,325			2.94
Total bonds & notes (cost: $18,479,930,000)						19,509,460			26.77
		Principal						Percent
		amount			Value			of net
Short-term securities  - 6.19%			(000	)		(000	)	assets
Freddie Mac 0.07%-0.205% due 8/1/2012-4/1/2013		$	1,086,450		$	1,086,036			1.49
U.S. Treasury Bills 0.106%-0.165% due 8/16/2012-4/4/2013			784,200			784,020			1.08
Fannie Mae 0.06%-0.19% due 8/1/2012-1/23/2013			530,800			530,638			.73
Federal Home Loan Bank 0.105%-0.21% due 8/24/2012-6/14/2013			425,000			424,785			.58
General Electric Co. 0.14% due 8/13/2012			60,000			59,997			.08
Other securities						1,624,060			2.23
Total short-term securities (cost: $4,509,442,000)						4,509,536			6.19
Total investment securities (cost: $66,144,873,000)						73,019,034			100.20
Other assets less liabilities						(147,679	)		(.20	)
Net assets					$	72,871,355			100.00	%

As permitted by U.S. Securities and Exchange Commission regulations, "Miscellaneous" securities include holdings in their first year of acquisition that have not previously been publicly disclosed.

“Other securities” includes all issues that are not disclosed separately in the summary investment portfolio. Some of these securities (with an aggregate value of $4,980,324,000, which represented 6.83% of the net assets of the fund) were acquired in transactions exempt from registration under Rule 144A or section 4(2) of the Securities Act of 1933 and may be resold  in the U.S. in transactions exempt from registration, normally to qualified institutional buyers. Some of these securities (with an aggregate value of $17,765,000, an aggregate cost of $23,565,000, and which represented .02% of the net assets of the fund) were acquired from 7/17/2009 to 4/30/2010 through private placement transactions exempt from registration under the Securities Act of 1933 which may subject them 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 year ended July 31, 2012, appear below.

	Beginning shares or principal amount		Additions		Reductions		Ending shares or principal amount		Dividendor interest income (000)		Value of affiliates at 7/31/2012 (000)
Waste Management, Inc.		28,115,000		2,560,000		3,203,294		27,471,706	$	39,702	$	945,027
Iron Mountain Inc.(7)		4,408,300		8,708,970		2,000,000		11,117,270		5,246		358,087
Iron Mountain Inc. 8.375% 2021	$	15,000,000		-	$	15,000,000		-		779		-
MeadWestvaco Corp.		7,820,000		3,381,000		-		11,201,000		10,187		318,108
Hospitality Properties Trust		8,015,000		-		-		8,015,000		14,427		194,524
Hospitality Properties Trust 6.30% 2016	$	13,577,000	$	9,000,000	$	2,750,000	$	19,827,000		1,102		21,466
Hospitality Properties Trust 6.70% 2018	$	16,175,000		-	$	3,550,000	$	12,625,000		964		14,096
Hospitality Properties Trust 6.75% 2013	$	12,650,000		-		-	$	12,650,000		858		12,677
Hospitality Properties Trust 5.625% 2017	$	10,169,000		-		-	$	10,169,000		633		10,887
Hospitality Properties Trust 5.125% 2015	$	2,160,000	$	1,000,000		-	$	3,160,000		210		3,258
Masco Corp.		21,789,951		-		1,993,200		19,796,751		6,537		238,155
Fletcher Building Ltd.		28,000,000		6,239,000		-		34,239,000		8,462		169,421
R.R. Donnelley & Sons Co.		12,795,400		550,000		-		13,345,400		13,736		161,746
TalkTalk Telecom Group PLC(7)		45,000,000		12,242,000		-		57,242,000		7,578		155,801
Trustmark Corp.		3,257,000		-		-		3,257,000		2,996		78,754
Douglas Dynamics, Inc.		-		1,350,000		-		1,350,000		830		18,050
Arthur J. Gallagher & Co. (8)		6,000,000		-		1,000,000		5,000,000		7,360		-
City Holding Co. (8)		741,000		-		-		741,000		1,030		-
Digital Realty Trust, Inc. (8)		5,790,000		-		2,315,000		3,475,000		14,408		-
FirstMerit Corp. (8)		5,495,000		-		1,664,778		3,830,222		3,517		-
KLA-Tencor Corp. (8)		8,190,000		680,000		4,470,000		4,400,000		11,459		-
Microchip Technology Inc. (8)		14,128,000		-		12,628,000		1,500,000		-		-
Portugal Telecom, SGPS, SA (8)		46,135,276		-		38,607,276		7,528,000		9,128		-
									$	161,149	$	2,700,057

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

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

(4) Coupon rate may change periodically.

(5) Valued under fair value procedures adopted by authority of the board of trustees. The total value of all such securities, including those in "Miscellaneous" and "Other securities," was $92,366,000, which represented .13% of the net assets of the fund.

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

(7) This security was an unaffiliated issuer in its initial period of acquisition at 7/31/2011; it was not publicly disclosed.

(8) Unaffiliated issuer at 7/31/2012.

Key to abbreviation

ADR = American Depositary Receipts

See Notes to Financial Statements

Financial statements

Statement of assets and liabilities
at July 31, 2012	(dollars in thousands)
Assets:
Investment securities, at value:
Unaffiliated issuers (cost: $63,327,144)	$	70,318,977
Affiliated issuers (cost: $2,817,729)		2,700,057	$	73,019,034
Cash denominated in currencies other than U.S. dollars
(cost: $3,303)				3,303
Cash				15,688
Receivables for:
Sales of investments		535,169
Sales of fund's shares		78,567
Dividends and interest		411,091		1,024,827
				74,062,852
Liabilities:
Payables for:
Purchases of investments		1,041,105
Repurchases of fund's shares		98,958
Investment advisory services		13,149
Services provided by related parties		34,040
Trustees' deferred compensation		3,940
Other		305		1,191,497
Net assets at July 31, 2012			$	72,871,355
Net assets consist of:
Capital paid in on shares of beneficial interest			$	72,033,746
Undistributed net investment income				408,336
Accumulated net realized loss				(6,444,208	)
Net unrealized appreciation				6,873,481
Net assets at July 31, 2012			$	72,871,355

	(dollars and shares in thousands, except per-share amounts)
Shares of beneficial interest issued and outstanding (no stated par value) -
unlimited shares authorized (4,132,485 total shares outstanding)
		Net assets		Shares outstanding		Net asset value per share
Class A		$	56,152,900		3,180,277	$	17.66
Class B			1,160,913		66,227		17.53
Class C			6,095,874		348,963		17.47
Class F-1			2,562,775		145,413		17.62
Class F-2			1,019,629		57,772		17.65
Class 529-A			1,102,588		62,549		17.63
Class 529-B			57,920		3,296		17.57
Class 529-C			370,076		21,069		17.56
Class 529-E			51,793		2,946		17.58
Class 529-F-1			36,327		2,061		17.63
Class R-1			122,134		6,954		17.56
Class R-2			567,396		32,437		17.49
Class R-3			1,203,867		68,409		17.60
Class R-4			880,074		49,915		17.63
Class R-5			461,810		26,155		17.66
Class R-6			1,025,279		58,042		17.66
See Notes to Financial Statements

Statement of operations
for the year ended July 31, 2012	(dollars in thousands)
Investment income:
Income:
Dividends (net of non-U.S. taxes of $64,440;
also includes $156,603 from affiliates)	$	1,896,457
Interest (includes $4,546 from affiliates)		1,195,966		$	3,092,423
Fees and expenses*:
Investment advisory services		164,171
Distribution services		224,825
Transfer agent services		63,527
Administrative services		10,117
Reports to shareholders		2,614
Registration statement and prospectus		764
Trustees' compensation		436
Auditing and legal		176
Custodian		2,036
Other		1,908			470,574
Net investment income					2,621,849
Net realized gain and unrealized appreciation
on investments and currency:
Net realized gain (loss) on:
Investments (net of non-U.S. taxes of $116; also includes $143,714 net loss from affiliates)		1,012,197
Currency transactions		(10,663	)		1,001,534
Net unrealized appreciation (depreciation) on:
Investments		1,915,161
Currency translations		(1,823	)		1,913,338
Net realized gain and unrealized appreciation
on investments and currency					2,914,872
Net increase in net assets resulting
from operations				$	5,536,721
(*) 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)
	Year ended July 31
		2012			2011
Operations:
Net investment income	$	2,621,849		$	2,824,569
Net realized gain on investments and currency transactions		1,001,534			1,795,627
Net unrealized appreciation on investments and currency translations		1,913,338			4,485,428
Net increase in net assets resulting from operations		5,536,721			9,105,624
Dividends paid to shareholders from net investment income		(2,766,884	)		(2,972,073	)
Net capital share transactions		1,227,028			(789,509	)
Total increase in net assets		3,996,865			5,344,042
Net assets:
Beginning of year		68,874,490			63,530,448
End of year (including undistributed
net investment income: $408,336 and $551,902, respectively)	$	72,871,355		$	68,874,490
See Notes to Financial Statements

Notes to financial statements

1.   Organization

The Income Fund of America (the "fund") is registered under the Investment Company Act of 1940 as an open-end, diversified management investment company. The fund seeks current income while secondarily striving for capital growth through investments in stocks and fixed-income securities.

The fund has 16 share classes consisting of five retail share classes (Classes A, B and C, as well as two F share classes, F-1 and F-2), five 529 college savings plan share classes (Classes 529-A, 529-B, 529-C, 529-E and 529-F-1) and six retirement plan share classes (Classes R-1, R-2, R-3, R-4, R-5 and R-6). The 529 college savings plan share classes can be used to save for college education. The retirement plan share classes are generally offered only through eligible employer-sponsored retirement plans. The fund’s share classes are further 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.

2.   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 fund follows the significant accounting policies described below, as well as the valuation policies described in the next section on valuation.

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 recognizedon 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 supplied by one or more pricing vendors 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.

3.   Valuation

Capital Research and Management Company (“CRMC”), the fund’s investment adviser, values the fund’s investments at fair value as defined by accounting principles generally accepted in the United States of America. The net asset value of each share class of the fund is generally determined as of approximately 4:00 p.m. New York time each day the New York Stock Exchange is open.

Methods and inputs –The fund’sinvestment adviser uses the following methods and inputs to establish the fair value of the fund’s assets and liabilities. Use of particular methods and inputs may vary over time based on availability and relevance as market and economic conditions evolve.

Equity securities are generally 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 on which the security trades.

Fixed-income securities, including short-term securities purchased with more than 60 days left to maturity, are generally valued at prices obtained from one or more pricing vendors. Vendors value such securities based on one or more of the inputs described in the following table. The table provides examples of inputs that are commonly relevant for valuing particular classes of fixed-income securities in which the fund is authorized to invest. However, these classifications are not exclusive, and any of the inputs may be used to value any other class of fixed-income security.

Fixed-income class	Examples of standard inputs
All	Benchmark yields, transactions, bids, offers, quotations from dealers and trading systems, new issues, spreads and other relationships observed in the markets among comparable securities; and proprietary pricing models such as yield measures calculated using factors such as cash flows, financial or collateral performance and other reference data (collectively referred to as “standard inputs”)
Corporate bonds & notes; convertible securities	Standard inputs and underlying equity of the issuer
Bonds & notes of governments & government agencies	Standard inputs and interest rate volatilities
Mortgage-backed; asset-backed obligations	Standard inputs and cash flows, prepayment information, default rates, delinquency and loss assumptions, collateral characteristics, credit enhancements and specific deal information
Municipal securities	Standard inputs and, for certain distressed securities, cash flows or liquidation values using a net present value calculation based on inputs that include, but are not limited to, financial statements and debt contracts

When the fund’sinvestment adviser deems it appropriate to do so (such as when vendor prices are unavailable or not deemed to be representative), fixed-income securities will be valued in good faith at the mean quoted bid and ask prices that are reasonably and timely available (or bid prices, if ask prices are not available) or at prices for securities of comparable maturity, quality and type.

Securities with both fixed-income and equity characteristics, or equity securities traded principally among fixed-income dealers, are generally valued in the manner described above for either equity or fixed-income securities, depending on which method is deemed most appropriate by the fund’sinvestment adviser.Short-term securities purchased within 60 days to maturity are valued at amortized cost, which approximates fair 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.

Securities and other assets for which representative market quotations are not readily available or are considered unreliable by the fund’sinvestment adviser are fair valued as determined in good faith under fair value guidelines adopted by authority of the fund’sboard of trustees as further described below. The investment adviser follows fair valuation guidelines, consistent with U.S. Securities and Exchange Commission rules and guidance, to consider relevant principles and factors when making fair value determinations. The investment adviser considers relevant indications of value that are reasonably and timely available to it in determining the fair value to be assigned to a particular security, such as the type and cost of the security; contractual or legal restrictions on resale of the security; relevant financial or business developments of the issuer; actively traded similar or related securities; conversion or exchange rights on the security; related corporate actions; significant events occurring after the close of trading in the security; and changes in overall market conditions. In addition, the closing prices of equity securities that trade in markets outside U.S. time zones may be adjusted to reflect significant events that occur after the close of local trading but before the net asset value of each share class of the fund is determined. Fair valuations and valuations of investments that are not actively trading involve judgment and may differ materially from valuations that would have been used had greater market activity occurred.

Processes and structure – The fund’sboard of trustees has delegated authority to the fund’sinvestment adviser to make fair value determinations, subject to board oversight. The investment adviser has established a Joint Fair Valuation Committee (the “Fair Valuation Committee”) to administer, implement and oversee the fair valuation process, and to make fair value decisions. The Fair Valuation Committee regularly reviews its own fair value decisions, as well as decisions made under its standing instructions to the investment adviser’s valuation teams. The Fair Valuation Committee reviews changes in fair value measurements from period to period and may, as deemed appropriate, update the fair valuation guidelines to better reflect the results of back testing and address new or evolving issues. The Fair Valuation Committee reports any changes to the fair valuation guidelines to the board of trustees with supplemental information to support the changes. The fund’sboard and audit committee also regularly review reports that describe fair value determinations and methods.

The fund’sinvestment adviser has also established a Fixed-Income Pricing Review Group to administer and oversee the fixed-income valuation process, including the use of fixed-income pricing vendors. This group regularly reviews pricing vendor information and market data. Pricing decisions, processes and controls over security valuation are also subject to additional internal reviews, including an annual control self-evaluation program facilitated by the investment adviser’s compliance group.

Classifications – The fund’s investment adviser classifies the fund’sassets and liabilities into three levels based on the inputs used to value the assets or liabilities. Level 1 values are based on quoted prices in active markets for identical securities. Level 2 values are based on significant observable market inputs, such as quoted prices for similar securities and quoted prices in inactive markets. Certain securities trading outside the U.S. may transfer between Level 1 and Level 2 due to valuation adjustments resulting from significant market movements following the close of local trading.Level 3 values are based on significant unobservable inputs that reflect the investment adviser’s determination of assumptions that market participants might reasonably use in valuing the securities. The valuation levels are not necessarily an indication of the risk or liquidity associated with the underlying investment. For example, U.S. government securities are reflected as Level 2 because the inputs used to determine fair value may not always be quoted prices in an active market.The following table presentsthe fund’s valuation levels as of July 31, 2012 (dollars in thousands):

		Investment securities
		Level 1		Level 2		Level 3		Total
Assets:
Common stocks:
	Industrials	$	6,450,084	$	-	$	73	$	6,450,157
	Health care		5,864,003		-		-		5,864,003
	Financials		5,469,668		-		-		5,469,668
	Consumer staples		5,102,682		-		-		5,102,682
	Energy		4,949,960		-		203		4,950,163
	Telecommunication services		3,784,143		-		-		3,784,143
	Utilities		3,751,872		-		-		3,751,872
	Consumer discretionary		3,666,315		-		20		3,666,335
	Materials		3,057,350		-		-		3,057,350
	Information technology		2,396,205		-		-		2,396,205
	Miscellaneous		3,404,173		23,562		-		3,427,735
Preferred stocks			111,369		240,856				352,225
Warrants			-		-		69		69
Convertible securities			524,694		202,737		-		727,431
Bonds & notes:
	Corporate bonds & notes		-		12,024,792		31,154		12,055,946
	Mortgage-backed obligations		-		2,970,369		-		2,970,369
	Bonds & notes of U.S. government & government agencies		-		2,343,820		-		2,343,820
	Other		-		2,139,325		-		2,139,325
Short-term securities			-		4,509,536		-		4,509,536
Total		$	48,532,518	$	24,454,997	$	31,519	$	73,019,034

4.   Risk factors

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

Market conditions — The prices of, and the income generated by, the common stocks and other securities held by the fund may decline due to market conditions and other factors, including those directly involving the issuers of securities held by the fund.

Investing in income-oriented stocks — Income provided by the fund may be reduced by changes in the dividend policies of, and the capital resources available at, the companies in which the fund invests.

Investing in bonds — Rising interest rates will generally cause the prices of bonds and other debt securities to fall. Longer maturity debt securities may be subject to greater price fluctuations than shorter maturity debt securities. 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.

Bonds and other debt securities are 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.

Investing in lower rated bonds — Lower rated bonds and other lower rated debt securities generally have higher rates of interest and involve greater risk of default or price declines due to changes in the issuer’s creditworthiness than those of higher quality debt securities. The market prices of these securities may fluctuate more than the prices of higher quality debt securities and may decline significantly in periods of general economic difficulty. These risks may be increased with respect to investments in junk bonds.

Investing outside the U.S. — Securities of issuers domiciled outside the U.S., or with significant operations outside the U.S., may lose value because of political, social, economic or market developments or instability in the countries or regions in which the issuer operates. These securities may also lose value due to changes in foreign currency exchange rates against the U.S. dollar and/or currencies of other countries. Securities markets in certain countries may be more volatile and/or less liquid than those in the U.S. Investments outside the U.S. may also be subject to different settlement and accounting practices and different regulatory, legal and reporting standards, and may be more difficult to value, than those in the U.S. The risks of investing outside the U.S. may be heightened in connection with investments in emerging and developing countries.

Management — The investment adviser to the fund actively manages the fund’sinvestments. Consequently, the fund is subject to the risk that the methods and analysesemployed by the investment adviser in this process may not produce the desired results. This could cause the fund to lose value or its investment results to lag relevantbenchmarks or other funds with similar objectives.

5.   Certain investment techniques

Loan transactions – The fund has entered 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.

Unfunded commitments – The fund has participated in transactions that involve unfunded commitments, which may obligate the fund to lend additional sums based upon the terms of the loan agreement. As of July 31, 2012, the fund’s maximum exposure of unfunded loan commitments was $18,685,000, which would represent 0.03% of the net assets of the fund should such commitments become due. Unrealized appreciation of $290,000 is included in net unrealized appreciation on investments in the statement of operations.

6.   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 July 31, 2012, 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 2008 and by state tax authorities for tax years before 2007.

Non-U.S. taxation – Dividend and interest income are recorded net of non-U.S. taxes paid. Gains realized by the fund on the sale of securities in certain countries are subject to non-U.S. taxes. The fund records a liability based on unrealized gains to provide for potential non-U.S. taxes payable upon the sale of these securities.

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; cost of investments sold; paydowns on fixed-income securities; and net capital losses. 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.

During the year ended July 31, 2012, the fund reclassified $1,551,000 from accumulated net realized loss to undistributed net investment income and $82,000 from undistributed net investment income to capital paid in on shares of beneficial interest to align financial reporting with tax reporting.

Under the Regulated Investment Company Modernization Act of 2010 (the “Act”), net capital losses recognized after July 31, 2011, may be carried forward indefinitely, and their character is retained as short-term and/or long-term losses. Previously, net capital losses were carried forward for eight years and treated as short-term losses. As a transition rule, the Act requires that post-enactment net capital losses be used before pre-enactment net capital losses.

As of July 31, 2012, the tax basis components of distributable earnings, unrealized appreciation (depreciation) and cost of investment securities were as follows:

(dollars in thousands)
Undistributed ordinary income	$	417,285
Capital loss carryforward expiring 2018*		(6,321,134	)
Post-October capital loss deferral†		115,303
Gross unrealized appreciation on investment securities		10,049,776
Gross unrealized depreciation on investment securities		(3,194,923	)
Net unrealized appreciation on investment securities		6,854,853
Cost of investment securities		66,164,181
*Reflects the utilization of capital loss carryforward of $1,121,275,000. The capital loss carryforward will be used to offset any capital gains realized by the fund in future years through the expiration date. The fund will not make distributions from capital gains while a capital loss carryforward remains.
†This deferral is considered incurred in the subsequent year.

Tax-basis distributions paid to shareholders from ordinary income were as follows (dollars in thousands):

	Year ended July 31
Share class	2012		2011
Class A	$	2,184,216	$	2,330,998
Class B		46,211		80,729
Class C		200,257		230,046
Class F-1		89,867		85,584
Class F-2		36,868		30,163
Class 529-A		40,081		38,154
Class 529-B		2,067		3,103
Class 529-C		11,153		11,366
Class 529-E		1,773		1,682
Class 529-F-1		1,404		1,288
Class R-1		3,657		3,860
Class R-2		18,298		20,558
Class R-3		42,360		46,768
Class R-4		33,776		35,774
Class R-5		18,601		22,040
Class R-6		36,295		29,960
Total	$	2,766,884	$	2,972,073

7.   Fees and transactions with related parties

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 fund has an investment advisory and service agreement with CRMC that providesfor monthly fees accrued daily. These fees are based on a series of decreasing 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 year ended July 31, 2012, the investment advisory services fee was $164,171,000, which was equivalent to an annualized rate of 0.239% of average dailynet 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 plans of distribution for all share classes, except Class F-2, R-5 and R-6 shares. Under the plans, the board of trustees approves certain categories of expenses that are used to finance activities primarily intended to sell fund shares and service existing accounts. The plans provide for payments, based on an annualized percentage of average daily net assets, ranging from 0.25% to 1.00% as noted below. In some cases, the board of trustees 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 Class A and 529-A shares, distribution-related expenses include 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 July 31, 2012, there were no unreimbursed expenses subject to reimbursement for Class A or 529-A shares.

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 shareholder services agreement with AFS under which the fund compensates AFS for providing transfer agent services to each of the fund’s share classes. These services include recordkeeping, shareholder communications and transaction processing. In addition, the fund reimburses AFS for amounts paid to third parties for performing transfer agent services on behalf of fund shareholders.

During the period August 1, 2011, through December 31, 2011, only Class A and B shares were subject to the shareholder services agreement with AFS. During this period, AFS and other third parties were compensated for providing transfer agent services to Class C, F, 529 and R shares through the fees paid by the fund to CRMC under the fund’s administrative services agreement with CRMC as described in the administrative services section below; CRMC paid for any transfer agent services expenses in excess of 0.10% of the respective average daily net assets of each of such share classes.

Effective January 1, 2012, the shareholder services agreement with AFS was modified to include Class C, F, 529 and R shares and payment for transfer agent services for such classes under the administrative services agreement terminated. Under this structure, transfer agent services expenses for some classes may exceed 0.10% of average daily net assets, resulting in an increase in expenses paid by some share classes.

For the year ended July 31, 2012, the total transfer agent services fee paid under these agreements was $63,527,000, of which $59,397,000 was paid by the fund to AFS and $4,130,000 was paid by the fund to CRMC through its administrative services agreement with the fund. Amounts paid to CRMC by the fund were then paid by CRMC to AFS and other third parties.

Administrative services – The fund has an administrative services agreement with CRMC under which the fund compensates CRMC for providing administrative services to Class A, C, F, 529 and R shares. These services include, but are not limited to, coordinating, monitoring, assisting and overseeing third parties that provide services to fund shareholders.

During the period August 1, 2011, through December 31, 2011, the agreement applied only to Class C, F, 529 and R shares. The agreement also required CRMC to arrange for the provision of transfer agent services for such share classes, which paid CRMC annual fees up to 0.15% (0.10% for Class R-5 and 0.05% for Class R-6) of their respective average daily net assets. During this period, up to 0.05% of these fees were used to compensate CRMC for performing administrative services; all other amounts paid under this agreement were used to compensate AFS and other third parties for transfer agent services.

Effective January 1, 2012, the administrative services agreement with CRMC was modified to include Class A shares. Under the revised agreement, Class A shares pay an annual fee of 0.01% and Class C, F, 529 and R shares pay an annual fee of 0.05% of their respective average daily net assets to CRMC for administrative services. Fees for transfer agent services are no longer included as part of the administrative services fee paid by the fund to CRMC.

For the year ended July 31, 2012, total fees paid to CRMC for performing administrative services were $10,117,000.

529 plan services – Each 529 share class is subject to service fees to compensate the Commonwealth of Virginia for the maintenance of the 529 college savings plan.The quarterly fee is based on a series of decreasing 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. The fee is included in other expenses on the accompanying financial statements. The Commonwealth of Virginia is not considered a related party.

Class-specific expenses under the agreements described above/on the previous page for the year ended July 31, 2012, were as follows (dollars in thousands):

Share class	Distribution services		Transfer agent services		Administrative services		529 plan services
Class A	$	126,851	$	48,238	$	3,170	Not applicable
Class B		13,897		1,289	Not applicable		Not applicable
Class C		59,302		5,303		2,773	Not applicable
Class F-1		5,478		1,953		1,067	Not applicable
Class F-2	Not applicable			882		422	Not applicable
Class 529-A		2,179		651		478	$	989
Class 529-B		644		52		31		64
Class 529-C		3,388		251		164		339
Class 529-E		233		18		23		47
Class 529-F-1		-		22		16		33
Class R-1		1,099		106		57	Not applicable
Class R-2		4,061		1,932		278	Not applicable
Class R-3		5,602		1,800		579	Not applicable
Class R-4		2,091		815		432	Not applicable
Class R-5	Not applicable			211		215	Not applicable
Class R-6	Not applicable			4		412	Not applicable
Total class-specific expenses	$	224,825	$	63,527	$	10,117	$	1,472

Trustees’ deferred compensation –Trustees who are unaffiliated with CRMCmay elect to defer the cash payment of part or all of their compensation. These deferred amounts, which remain as liabilities of the fund, are treated as if invested in shares of the fund or other American Funds. These amounts represent general, unsecured liabilities of the fund and vary according to the total returns of the selected funds. Trustees’ compensation of $436,000, shown on the accompanying financial statements, includes $399,000 in current fees (either paid in cash or deferred) and a net increase of $37,000 in the value of the deferred amounts.

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

8.   Capital share transactions

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

	Sales(*)				Reinvestments of dividends				Repurchases(*)						Net increase (decrease)
Share class	Amount		Shares		Amount		Shares		Amount			Shares			Amount			Shares
Year ended July 31, 2012
Class A	$	6,409,309		380,692	$	2,076,112		123,088	$	(7,424,453	)		(442,493	)	$	1,060,968			61,287
Class B		53,846		3,232		44,577		2,668		(732,865	)		(44,184	)		(634,442	)		(38,284	)
Class C		772,114		46,260		186,801		11,185		(1,246,159	)		(75,003	)		(287,244	)		(17,558	)
Class F-1		855,471		50,731		87,301		5,178		(502,848	)		(29,980	)		439,924			25,929
Class F-2		357,474		21,135		30,977		1,834		(155,227	)		(9,207	)		233,224			13,762
Class 529-A		205,725		12,229		40,070		2,377		(125,549	)		(7,469	)		120,246			7,137
Class 529-B		4,732		283		2,066		123		(27,015	)		(1,622	)		(20,217	)		(1,216	)
Class 529-C		69,306		4,131		11,149		663		(55,114	)		(3,294	)		25,341			1,500
Class 529-E		10,662		636		1,772		105		(6,783	)		(404	)		5,651			337
Class 529-F-1		9,503		564		1,404		84		(7,312	)		(431	)		3,595			217
Class R-1		31,835		1,893		3,647		217		(26,611	)		(1,603	)		8,871			507
Class R-2		152,861		9,155		18,275		1,093		(177,532	)		(10,631	)		(6,396	)		(383	)
Class R-3		291,667		17,334		42,296		2,514		(294,208	)		(17,542	)		39,755			2,306
Class R-4		260,468		15,470		33,752		2,002		(256,507	)		(15,282	)		37,713			2,190
Class R-5		120,163		7,104		18,581		1,102		(168,184	)		(10,211	)		(29,440	)		(2,005	)
Class R-6		248,413		14,532		36,215		2,144		(55,149	)		(3,263	)		229,479			13,413
Total net increase (decrease)	$	9,853,549		585,381	$	2,634,995		156,377	$	(11,261,516	)		(672,619	)	$	1,227,028			69,139
Year ended July 31, 2011
Class A	$	6,109,385		365,399	$	2,176,992		132,135	$	(8,467,235	)		(506,767	)	$	(180,858	)		(9,233	)
Class B		68,204		4,123		75,787		4,644		(1,027,318	)		(61,791	)		(883,327	)		(53,024	)
Class C		721,625		43,532		209,682		12,849		(1,216,808	)		(73,505	)		(285,501	)		(17,124	)
Class F-1		542,351		32,437		78,645		4,779		(583,617	)		(35,130	)		37,379			2,086
Class F-2		390,748		23,557		23,003		1,394		(178,431	)		(10,685	)		235,320			14,266
Class 529-A		184,842		11,076		38,140		2,316		(110,881	)		(6,657	)		112,101			6,735
Class 529-B		4,176		252		3,102		190		(31,146	)		(1,874	)		(23,868	)		(1,432	)
Class 529-C		62,459		3,749		11,361		692		(51,065	)		(3,081	)		22,755			1,360
Class 529-E		8,543		513		1,682		102		(5,027	)		(303	)		5,198			312
Class 529-F-1		11,653		700		1,288		78		(5,993	)		(361	)		6,948			417
Class R-1		32,530		1,958		3,829		233		(27,745	)		(1,658	)		8,614			533
Class R-2		143,026		8,622		20,524		1,256		(179,860	)		(10,818	)		(16,310	)		(940	)
Class R-3		265,796		15,932		46,708		2,843		(352,638	)		(21,095	)		(40,134	)		(2,320	)
Class R-4		218,671		13,063		35,718		2,171		(258,147	)		(15,392	)		(3,758	)		(158	)
Class R-5		134,567		8,000		22,019		1,338		(168,389	)		(10,041	)		(11,803	)		(703	)
Class R-6		226,926		13,561		29,959		1,813		(29,150	)		(1,735	)		227,735			13,639
Total net increase (decrease)	$	9,125,502		546,474	$	2,778,439		168,833	$	(12,693,450	)		(760,893	)	$	(789,509	)		(45,586	)
* Includes exchanges between share classes of the fund.

9.   Investment transactions

The fund made purchases and sales of investment securities, excluding short-term securities and U.S. government obligations, if any, of $25,358,990,000 and $24,989,177,000, respectively, during the year ended July 31, 2012.

Financial highlights

			Income (loss) from investment operations(1)								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(2) (3)			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(3)			Ratio of net income to average net assets(3)
Class A:
Year ended 7/31/2012	$	16.97	$	.66	$	.73		$	1.39		$	(.70	)	$	-		$	(.70	)	$	17.66		8.45	%	$	56,153		.59	%		.59	%		3.92	%
Year ended 7/31/2011		15.48		.71		1.53			2.24			(.75	)		-			(.75	)		16.97		14.68			52,940		.58			.58			4.24
Year ended 7/31/2010		14.04		.73		1.37			2.10			(.66	)		-			(.66	)		15.48		15.09			48,437		.61			.61			4.82
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
Class B:
Year ended 7/31/2012		16.85		.53		.71			1.24			(.56	)		-			(.56	)		17.53		7.56			1,161		1.34			1.34			3.19
Year ended 7/31/2011		15.37		.58		1.52			2.10			(.62	)		-			(.62	)		16.85		13.82			1,760		1.34			1.34			3.48
Year ended 7/31/2010		13.94		.60		1.37			1.97			(.54	)		-			(.54	)		15.37		14.24			2,421		1.38			1.38			4.01
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
Class C:
Year ended 7/31/2012		16.80		.52		.71			1.23			(.56	)		-			(.56	)		17.47		7.55			6,096		1.38			1.38			3.13
Year ended 7/31/2011		15.33		.57		1.51			2.08			(.61	)		-			(.61	)		16.80		13.77			6,157		1.39			1.39			3.43
Year ended 7/31/2010		13.91		.60		1.36			1.96			(.54	)		-			(.54	)		15.33		14.17			5,882		1.43			1.43			4.00
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
Class F-1:
Year ended 7/31/2012		16.94		.65		.72			1.37			(.69	)		-			(.69	)		17.62		8.35			2,563		.64			.64			3.87
Year ended 7/31/2011		15.46		.70		1.52			2.22			(.74	)		-			(.74	)		16.94		14.58			2,025		.64			.64			4.19
Year ended 7/31/2010		14.02		.73		1.37			2.10			(.66	)		-			(.66	)		15.46		15.08			1,815		.65			.65			4.78
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
Class F-2:
Year ended 7/31/2012		16.97		.69		.72			1.41			(.73	)		-			(.73	)		17.65		8.59			1,020		.40			.40			4.09
Year ended 7/31/2011		15.48		.74		1.53			2.27			(.78	)		-			(.78	)		16.97		14.90			747		.40			.40			4.42
Year ended 7/31/2010		14.04		.77		1.36			2.13			(.69	)		-			(.69	)		15.48		15.31			460		.42			.42			5.04
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:
Year ended 7/31/2012		16.95		.64		.72			1.36			(.68	)		-			(.68	)		17.63		8.30			1,102		.68			.68			3.82
Year ended 7/31/2011		15.46		.69		1.53			2.22			(.73	)		-			(.73	)		16.95		14.62			939		.67			.67			4.15
Year ended 7/31/2010		14.03		.73		1.35			2.08			(.65	)		-			(.65	)		15.46		14.95			753		.69			.69			4.77
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
Class 529-B:
Year ended 7/31/2012		16.89		.51		.71			1.22			(.54	)		-			(.54	)		17.57		7.41			58		1.47			1.47			3.06
Year ended 7/31/2011		15.41		.56		1.52			2.08			(.60	)		-			(.60	)		16.89		13.66			76		1.46			1.46			3.37
Year ended 7/31/2010		13.98		.59		1.37			1.96			(.53	)		-			(.53	)		15.41		14.10			92		1.49			1.49			3.92
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
Class 529-C:
Year ended 7/31/2012		16.89		.51		.71			1.22			(.55	)		-			(.55	)		17.56		7.43			370		1.47			1.47			3.04
Year ended 7/31/2011		15.41		.56		1.53			2.09			(.61	)		-			(.61	)		16.89		13.71			331		1.46			1.46			3.37
Year ended 7/31/2010		13.99		.60		1.35			1.95			(.53	)		-			(.53	)		15.41		14.04			281		1.48			1.48			3.97
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
Class 529-E:
Year ended 7/31/2012		16.91		.60		.71			1.31			(.64	)		-			(.64	)		17.58		7.99			52		.93			.93			3.57
Year ended 7/31/2011		15.43		.65		1.52			2.17			(.69	)		-			(.69	)		16.91		14.27			44		.94			.94			3.88
Year ended 7/31/2010		14.00		.68		1.36			2.04			(.61	)		-			(.61	)		15.43		14.66			35		.97			.97			4.49
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
Class 529-F-1:
Year ended 7/31/2012	$	16.95	$	.68	$	.72		$	1.40		$	(.72	)	$	-		$	(.72	)	$	17.63		8.53	%	$	36		.46	%		.46	%		4.04	%
Year ended 7/31/2011		15.46		.73		1.53			2.26			(.77	)		-			(.77	)		16.95		14.87			31		.45			.45			4.37
Year ended 7/31/2010		14.03		.76		1.35			2.11			(.68	)		-			(.68	)		15.46		15.19			22		.47			.47			4.99
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
Class R-1:
Year ended 7/31/2012		16.89		.52		.71			1.23			(.56	)		-			(.56	)		17.56		7.50			122		1.40			1.40			3.11
Year ended 7/31/2011		15.41		.57		1.52			2.09			(.61	)		-			(.61	)		16.89		13.76			109		1.41			1.41			3.42
Year ended 7/31/2010		13.99		.61		1.35			1.96			(.54	)		-			(.54	)		15.41		14.10			91		1.44			1.44			4.03
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
Class R-2:
Year ended 7/31/2012		16.82		.52		.71			1.23			(.56	)		-			(.56	)		17.49		7.52			567		1.40			1.40			3.11
Year ended 7/31/2011		15.35		.57		1.51			2.08			(.61	)		-			(.61	)		16.82		13.75			552		1.41			1.41			3.41
Year ended 7/31/2010		13.93		.60		1.35			1.95			(.53	)		-			(.53	)		15.35		14.10			518		1.47			1.47			3.97
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
Class R-3:
Year ended 7/31/2012		16.92		.60		.72			1.32			(.64	)		-			(.64	)		17.60		8.01			1,204		.96			.96			3.55
Year ended 7/31/2011		15.44		.64		1.53			2.17			(.69	)		-			(.69	)		16.92		14.23			1,118		.96			.96			3.86
Year ended 7/31/2010		14.01		.68		1.35			2.03			(.60	)		-			(.60	)		15.44		14.63			1,056		.99			.99			4.45
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
Class R-4:
Year ended 7/31/2012		16.95		.65		.72			1.37			(.69	)		-			(.69	)		17.63		8.33			880		.65			.65			3.86
Year ended 7/31/2011		15.46		.70		1.53			2.23			(.74	)		-			(.74	)		16.95		14.62			809		.66			.66			4.17
Year ended 7/31/2010		14.03		.72		1.36			2.08			(.65	)		-			(.65	)		15.46		14.95			740		.68			.68			4.77
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
Class R-5:
Year ended 7/31/2012		16.97		.70		.73			1.43			(.74	)		-			(.74	)		17.66		8.70			462		.35			.35			4.17
Year ended 7/31/2011		15.48		.75		1.53			2.28			(.79	)		-			(.79	)		16.97		14.94			478		.36			.36			4.46
Year ended 7/31/2010		14.04		.77		1.37			2.14			(.70	)		-			(.70	)		15.48		15.36			447		.38			.38			5.07
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
Class R-6:
Year ended 7/31/2012		16.98		.71		.72			1.43			(.75	)		-			(.75	)		17.66		8.69			1,025		.30			.30			4.21
Year ended 7/31/2011		15.49		.76		1.52			2.28			(.79	)		-			(.79	)		16.98		14.99			758		.31			.31			4.51
Year ended 7/31/2010		14.05		.79		1.35			2.14			(.70	)		-			(.70	)		15.49		15.40			480		.33			.33		��	5.20
Period from 5/1/2009 to 7/31/2009(4)		12.55		.19		1.48			1.67			(.17	)		-			(.17	)		14.05		13.42			272		.09			.09			1.45

	Year ended July 31
	2012			2011			2010			2009			2008
Portfolio turnover rate for all share classes		41	%		38	%		35	%		49	%		38	%

(1)Based on average shares outstanding.

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

(3)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.

(4)Based on operations for the period shown and, accordingly, is not representative of a full year.

See Notes to Financial Statements

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Trustees of The Income Fund of America:

We have audited the accompanying statement of assets and liabilities of The Income Fund of America (the “Fund”), including the summary investment portfolio, as of July 31, 2012, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods presented. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of July 31, 2012, by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of The Income Fund of Americaas of July 31, 2012, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America.

Deloitte & Touche LLP

Costa Mesa, California

September 7, 2012

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 six-month period (February 1, 2012, through July 31, 2012).

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 2/1/2012		Ending account value 7/31/2012		Expenses paid during period*		Annualized expense ratio
Class A -- actual return	$	1,000.00	$	1,053.81	$	3.01		.59	%
Class A -- assumed 5% return		1,000.00		1,021.93		2.97		.59
Class B -- actual return		1,000.00		1,049.40		6.83		1.34
Class B -- assumed 5% return		1,000.00		1,018.20		6.72		1.34
Class C -- actual return		1,000.00		1,049.65		7.08		1.39
Class C -- assumed 5% return		1,000.00		1,017.95		6.97		1.39
Class F-1 -- actual return		1,000.00		1,053.13		3.27		.64
Class F-1 -- assumed 5% return		1,000.00		1,021.68		3.22		.64
Class F-2 -- actual return		1,000.00		1,054.25		2.04		.40
Class F-2 -- assumed 5% return		1,000.00		1,022.87		2.01		.40
Class 529-A -- actual return		1,000.00		1,053.45		3.47		.68
Class 529-A -- assumed 5% return		1,000.00		1,021.48		3.42		.68
Class 529-B -- actual return		1,000.00		1,048.65		7.49		1.47
Class 529-B -- assumed 5% return		1,000.00		1,017.55		7.37		1.47
Class 529-C -- actual return		1,000.00		1,048.38		7.49		1.47
Class 529-C -- assumed 5% return		1,000.00		1,017.55		7.37		1.47
Class 529-E -- actual return		1,000.00		1,051.69		4.80		.94
Class 529-E -- assumed 5% return		1,000.00		1,020.19		4.72		.94
Class 529-F-1 -- actual return		1,000.00		1,054.56		2.40		.47
Class 529-F-1 -- assumed 5% return		1,000.00		1,022.53		2.36		.47
Class R-1 -- actual return		1,000.00		1,049.39		7.08		1.39
Class R-1 -- assumed 5% return		1,000.00		1,017.95		6.97		1.39
Class R-2 -- actual return		1,000.00		1,048.96		7.08		1.39
Class R-2 -- assumed 5% return		1,000.00		1,017.95		6.97		1.39
Class R-3 -- actual return		1,000.00		1,051.48		4.90		.96
Class R-3 -- assumed 5% return		1,000.00		1,020.09		4.82		.96
Class R-4 -- actual return		1,000.00		1,052.99		3.27		.64
Class R-4 -- assumed 5% return		1,000.00		1,021.68		3.22		.64
Class R-5 -- actual return		1,000.00		1,055.06		1.79		.35
Class R-5 -- assumed 5% return		1,000.00		1,023.12		1.76		.35
Class R-6 -- actual return		1,000.00		1,054.71		1.53		.30
Class R-6 -- assumed 5% return		1,000.00		1,023.37		1.51		.30
*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 366 (to reflect the one-half year period).

 Tax information                                                                                                                

  unaudited

We are required to advise you of the federal tax status of certain distributions received by shareholders during the fiscal year. The fund hereby designates the following amounts for the fund’s fiscal year ended July 31, 2012:

Qualified dividend income	$	2,072,192,000
Corporate dividends received deduction	$	1,311,711,000
U.S. government income that may be exempt from state taxation	$	42,156,000

Individual shareholders should refer to their Form 1099 or other tax information, which will be mailed in January 2013, to determine the calendar year amounts to be included on their 2012 tax returns. Shareholders should consult their tax advisers.

Other share class results

unaudited

Classes B, C, F and 529

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

Average annual total returns for periods ended June 30, 2012 (the most recent calendar quarter-end):
							10 years/
	1 year			5 years			Life of class1
Class B shares2
Reflecting applicable contingent deferred sales charge
(CDSC), maximum of 5%, payable only if shares
are sold within six years of purchase		–0.89	%		0.39	%		6.20	%
Not reflecting CDSC		4.11			0.71			6.20
Class C shares
Reflecting CDSC, maximum of 1%, payable only
if shares are sold within one year of purchase		3.09			0.67			5.97
Not reflecting CDSC		4.09			0.67			5.97
Class F-1 shares3
Not reflecting annual asset-based fee charged
by sponsoring firm		4.84			1.45			6.78
Class F-2 shares3 — first sold 8/1/08
Not reflecting annual asset-based fee charged
by sponsoring firm		5.14			—			5.70
Class 529-A shares4
Reflecting 5.75% maximum sales charge		–1.18			0.21			6.12
Not reflecting maximum sales charge		4.84			1.41			6.76
Class 529-B shares2,4
Reflecting applicable CDSC, maximum of 5%, payable
only if shares are sold within six years of purchase		–0.96			0.28			6.05
Not reflecting CDSC		4.04			0.60			6.05
Class 529-C shares4
Reflecting CDSC, maximum of 1%, payable only
if shares are sold within one year of purchase		3.05			0.61			5.89
Not reflecting CDSC		4.05			0.61			5.89
Class 529-E shares3,4		4.60			1.13			6.43
Class 529-F-1 shares3,4 — first sold 9/17/02
Not reflecting annual asset-based fee charged
by sponsoring firm		5.07			1.64			7.82

1Applicable to Class F-2 and 529-F-1 shares only. All other share classes reflect 10-year results.

2These shares are not available for purchase.

3These shares are sold without any initial or contingent deferred sales charge.

4Results shown do not reflect the $10 account setup fee and an annual $10 account maintenance fee.

Investment results assume all distributions are reinvested and reflect applicable fees and expenses. When applicable, investment results reflect fee waivers, without which results would have been lower. Visit americanfunds.com for more information.

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

Board of trustees and other officers

“Independent” trustees1
	Year first
	elected a
	trustee of
Name and age	the fund2	Principal occupation(s) during past five years
Vanessa C. L. Chang, 60	2011	Director, EL & EL Investments (real estate)
Mary Jane Elmore, 58	2008	Managing Director and General Partner, Institutional Venture Partners; independent private angel investor
Robert A. Fox, 75	1972	Managing General Partner, Fox Investments LP;
Chairman of the Board		corporate director
(Independent and Non-Executive)
Linda Griego, 64	2012	President and CEO, Griego Enterprises, Inc.
		(business management company); President, Zapgo
		Entertainment LLC (television production company
		focused on programming for the Latino market)
Leonade D. Jones, 64	1993	Retired; former Treasurer, The Washington Post
		Company
William D. Jones, 57	2008	Real estate developer/owner, President and CEO,
		CityLink Investment Corporation (acquires, develops
		and manages real estate ventures in selected urban
		communities) and City Scene Management Company
		(provides commercial asset and property
		management services)
John M. Lillie, 75	2003	Business consultant
John G. McDonald, 75	1976	Stanford Investors Professor, Graduate School of
		Business, Stanford University
James J. Postl, 66	2008	Retired; former President and CEO, Pennzoil-Quaker
		State Company (automotive products and services)
Margaret Spellings, 54	2012	President and CEO, Margaret Spellings & Company
		(public policy and strategic consulting); President,
		U.S. Forum for Policy Innovation and Senior Advisor
		to the President and CEO, U.S. Chamber of
		Commerce; former United States Secretary of
		Education, United States Department of Education
Isaac Stein, 65	2004	President, Waverly Associates (private investment
		fund); Chairman Emeritus of the Board of Trustees,
		Stanford University
“Independent” trustees1
	Number of
	portfolios
	in fund
	complex3
	overseen by
Name and age	trustee	Other directorships4 held by trustee
Vanessa C. L. Chang, 60	6	Edison International; Transocean Ltd.
Mary Jane Elmore, 58	3	None
Robert A. Fox, 75	9	None
Chairman of the Board
(Independent and Non-Executive)
Linda Griego, 64	3	AECOM Technology Corporation; CBS Corporation
Leonade D. Jones, 64	9	None
William D. Jones, 57	7	Sempra Energy
John M. Lillie, 75	3	None
John G. McDonald, 75	13	iStar Financial, Inc.; Plum Creek Timber Co.;
		QuinStreet, Inc.; Scholastic Corporation
James J. Postl, 66	3	Cooper Industries; Pulte, Inc.
Margaret Spellings, 54	61	None
Isaac Stein, 65	3	Alexza Pharmaceuticals, Inc.; Maxygen, Inc.

“Interested” trustee5,7
	Year first
	elected a
	trustee or	Principal occupation(s) during past five years and
Name, age and	officer of	positions held with affiliated entities or the
position with fund	the fund2	principal underwriter of the fund
Hilda L. Applbaum, 51	1998	Senior Vice President — Capital World Investors,
Vice Chairman of the Board		Capital Research and Management Company
“Interested” trustee5,7
	Number of
	portfolios in
	fund complex3
Name, age and	overseen
position with fund	by trustee	Other directorships4 held by trustee
Hilda L. Applbaum, 51	1	None
Vice Chairman of the Board

The fund’s statement of additional information includes further details about fund trustees and is available without charge upon request by calling American Funds Service Company at 800/421-4225 or by visiting the American Funds website at americanfunds.com. The address for all trustees and officers of the fund is 333 South Hope Street, Los Angeles, CA 90071, Attention: Secretary.

See page 36 for footnotes.

Other officers7
	Year first
	elected	Principal occupation(s) during past five years
Name, age and	an officer	and positions held with affiliated entities or the
position with fund	of the fund2	principal underwriter of the fund
David C. Barclay, 55	1998	Senior Vice President — Fixed Income, Capital
President		Research and Management Company; Director,
		Capital Research and Management Company
Dina N. Perry, 66	1994	Senior Vice President — Capital World Investors,
Senior Vice President		Capital Research and Management Company;
		Director, Capital Research and Management
		Company
Paul F. Roye, 58	2007	Senior Vice President — Fund Business Management
Senior Vice President		Group, Capital Research and Management Company;
		Director, American Funds Service Company;6 former
		Director, Division of Investment Management, United
		States Securities and Exchange Commission
Andrew B. Suzman, 45	2004	Senior Vice President — Capital World Investors,
Senior Vice President		Capital Research Company;6 Director, American
		Funds Distributors, Inc.;6 Director, Capital Strategy
		Research, Inc.6
Joanna F. Jonsson, 49	2006	Senior Vice President — Capital World Investors,
Vice President		Capital Research Company;6 Director, Capital
		International Limited6
Donald H. Rolfe, 40	2012	Chief Compliance Officer, Capital Research
Vice President		Company;6 Chief Compliance Officer, Capital
		Research and Management Company; Vice President
		and Senior Counsel — Fund Business Management
		Group, Capital Research and Management Company
John H. Smet, 56	1994	Senior Vice President — Fixed Income, Capital
Vice President		Research and Management Company; Director,
		The Capital Group Companies, Inc.6
Steven T. Watson, 57	2006	Senior Vice President — Capital World Investors,
Vice President		Capital Research Company;6 Director, Capital
		Research Company6
Patrick F. Quan, 54	1986	Vice President — Fund Business Management
Secretary		Group, Capital Research and Management Company
Jeffrey P. Regal, 41	2011	Vice President — Fund Business Management
Treasurer		Group, Capital Research and Management Company
Julie E. Lawton, 39	2009	Assistant Vice President — Fund Business
Assistant Secretary		Management Group, Capital Research and
		Management Company
Ari M. Vinocor, 37	2012	Vice President — Fund Business Management
Assistant Treasurer		Group, Capital Research and Management Company
Dori Laskin, 61	2011	Vice President — Fund Business Management
Assistant Treasurer		Group, Capital Research and Management Company

1The term “independent” trustee refers to a trustee who is not an “interested person” of the fund within the meaning of the Investment Company Act of 1940.

2Trustees and officers of the fund serve until their resignation, removal or retirement.

3Capital Research and Management Company manages the American Funds. Capital Research and Management Company also manages American Funds Insurance Series,® which is composed of 19 funds and serves as the underlying investment vehicle for certain variable insurance contracts; American Funds Target Date Retirement Series,® which is composed of 10 funds and is available through tax-deferred retirement plans and IRAs; American Funds Portfolio Series,SM which is composed of eight funds; and American Funds College Target Date Series,SM which is composed of seven funds.

4This includes all directorships (other than those in the American Funds or other funds managed by Capital Research and Management Company) that are held by each trustee as a trustee or director of a public company or a registered investment company.

5“Interested persons” within the meaning of the Investment Company Act of 1940, on the basis of their affiliation with the fund’s investment adviser, Capital Research and Management Company, or affiliated entities (including the fund’s principal underwriter).

6Company affiliated with Capital Research and Management Company.

7All of the officers listed are officers and/or directors/trustees of one or more of the other funds for which Capital Research and Management Company serves as investment adviser.

Office of the fund

One Market

Steuart Tower, Suite 2000

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 investment objectives, risks, charges and expenses. This and other important information is contained in the fund prospectus and summary prospectus, which can be obtained from your financial professional and should be read carefully before investing. You may also call American Funds Service Company (AFS) at 800/421-4225 or visit the American Funds website at americanfunds.com.

“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 July 31, 2012, 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 prospectus or summary prospectus, which gives details about charges, expenses, investment objectives and operating policies of the fund. If used as sales material after September 30, 2012, this report must be accompanied by an American Funds statistical update for the most recently completed calendar quarter.

   

The American Funds difference

Since 1931, American Funds has helped investors pursue long-term investment success. Our consistent approach — in combination with a proven system — has resulted in a superior long-term track record.

Consistent approach

We base our decisions on a long-term perspective because we believe it is the best way to achieve superior long-term investment results. Our portfolio counselors average 25 years of investment experience, including 21 years at our company, reflecting a career commitment to our long-term approach.1

Proven system

Our system combines individual accountability with teamwork. Each fund is divided into portions that are managed by investment professionals with varied backgrounds, ages and investment styles. An extensive global research effort is the backbone of our system.

Superior long-term track record

Our equity funds have beaten their Lipper peer indexes in 91% of 10-year periods and 96% of 20-year periods. Our fixed-income funds have beaten their Lipper indexes in 60% of 10-year periods and 67% of 20-year periods.2 Our fund management fees have been among the lowest in the industry.3

1As of 12/31/11.

2Based on Class A share results for periods through 12/31/11. Periods covered are the shorter of the fund’s lifetime or since the comparable Lipper index inception date.

3Based on management fees for the 20-year period ended 12/31/11 versus comparable Lipper categories, excluding funds of funds.

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 Fund®

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 funds

American Balanced Fund®

American Funds Global Balanced FundSM

•Bond funds

American Funds Mortgage Fund®

American High-Income Trust®

The Bond Fund of America®

Capital World Bond Fund®

Intermediate Bond Fund of America®

Short-Term Bond Fund of America®

U.S. Government Securities Fund®

•Tax-exempt bond funds

American Funds Short-Term Tax-Exempt Bond Fund®

American High-Income Municipal Bond Fund®

Limited Term Tax-Exempt Bond Fund of America®

The Tax-Exempt Bond Fund of America®

State-specific tax-exempt funds

American Funds Tax-Exempt Fund of New York®

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 Fund®

•American Funds Portfolio SeriesSM

American Funds Global Growth PortfolioSM

American Funds Growth PortfolioSM

American Funds Growth and Income PortfolioSM

American Funds Balanced PortfolioSM

American Funds Income PortfolioSM

American Funds Tax-Advantaged Income PortfolioSM

American Funds Preservation PortfolioSM

American Funds Tax-Exempt Preservation PortfolioSM

•American Funds Target Date Retirement Series®

•American Funds College Target Date SeriesSM

The Capital Group Companies

American FundsCapital Research and ManagementCapital InternationalCapital GuardianCapital Bank and Trust

Lit No. MFGEAR-906-0912P

Litho in USA BAG/Q/8061-S33522

Printed on paper containing 10% post-consumer waste

Printed with inks containing soy and/or vegetable oil

ITEM 2 – Code of Ethics

The Registrant has adopted a Code of Ethics that applies to its Principal Executive Officer and Principal Financial Officer.  The Registrant undertakes to provide to any person without charge, upon request, a copy of the Code of Ethics.  Such request can be made to American Funds Service Company at 800/421-0180 or to the Secretary of the Registrant, One Market, Steuart Tower, Suite 2000, San Francisco, California 94105.

ITEM 3 – Audit Committee Financial Expert

The Registrant’s board has determined that John M. Lillie, a member of the Registrant’s audit committee, is an “audit committee financial expert” and "independent," as such terms are defined in this Item. This designation will not increase the designee’s duties, obligations or liability as compared to his or her duties, obligations and liability as a member of the audit committee and of the board, nor will it reduce the responsibility of the other audit committee members.  There may be other individuals who, through education or experience, would qualify as "audit committee financial experts" if the board had designated them as such.  Most importantly, the board believes each member of the audit committee contributes significantly to the effective oversight of the Registrant’s financial statements and condition.

ITEM 4 – Principal Accountant Fees and Services

Registrant:
	a)  Audit Fees:
		2011	$122,000
		2012	$120,000
	b)  Audit-Related Fees:
		2011	$21,000
		2012	$22,000
		The audit-related fees consist of assurance and related services relating to the examination of the Registrant’s investment adviser conducted in accordance with Statement on Standards for Attestation Engagements Number 16 issued by the American Institute of Certified Public Accountants.
	c)  Tax Fees:
		2011	$8,000
		2012	$7,000
		The tax fees consist of professional services relating to the preparation of the Registrant’s tax returns including returns relating to the Registrant’s investments in non-U.S. jurisdictions.
	d)  All Other Fees:
		2011	None
		2012	None
Adviser and affiliates (includes only fees for non-audit services billed to the adviser and affiliates for engagements that relate directly to the operations and financial reporting of the Registrant and were subject to the pre-approval policies described below):
	a)  Audit Fees:
		Not Applicable
	b)  Audit-Related Fees:
		2011	$1,184,000
		2012	$763,000
		The audit-related fees consist of assurance and related services relating to the examination of the Registrant’s transfer agent, principal underwriter and investment adviser conducted in accordance with Statement on Standards for Attestation Engagements Number 16 issued by the American Institute of Certified Public Accountants.
	c)  Tax Fees:
		2011	$17,000
		2012	$59,000
		The tax fees consist of consulting services relating to the Registrant’s investments.
	d)  All Other Fees:
		2011	$2,000
		2012	$2,000
		The other fees consist of subscription services related to an accounting research tool.

All audit and permissible non-audit services that the Registrant’s audit committee considers compatible with maintaining the independent registered public accounting firm’s independence are required to be pre-approved by the committee.  The pre-approval requirement will extend to all non-audit services provided to the Registrant, the investment adviser, and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the Registrant, if the engagement relates directly to the operations and financial reporting of the Registrant. The committee will not delegate its responsibility to pre-approve these services to the investment adviser. The committee may delegate to one or more committee members the authority to review and pre-approve audit and permissible non-audit services.  Actions taken under any such delegation will be reported to the full committee at its next meeting. The pre-approval requirement is waived with respect to non-audit services if certain conditions are met. The pre-approval requirement was not waived for any of the non-audit services listed above provided to the Registrant, adviser and affiliates.

Aggregate non-audit fees paid to the Registrant’s auditors, including fees for all services billed to the Registrant, adviser and affiliates that provide ongoing services to the Registrant, were $1,767,000 for fiscal year 2011 and $1,431,000 for fiscal year 2012. The non-audit services represented by these amounts were brought to the attention of the committee and considered to be compatible with maintaining the auditors’ independence.

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

The Income Fund of America®

Investment portfolio

July 31, 2012

Common stocks — 65.76%	Shares				Value (000)
INDUSTRIALS — 8.85%
General Electric Co.		79,234,500			$	1,644,116
Waste Management, Inc.1		27,471,706				945,027
Lockheed Martin Corp.		10,307,400				920,142
Iron Mountain Inc.1		11,117,270				358,087
Eaton Corp.		8,046,200				352,745
Schneider Electric SA		5,343,606				302,637
Hubbell Inc., Class B		3,430,000				282,220
Masco Corp.1		19,796,751				238,155
Emerson Electric Co.		4,300,000				205,411
R.R. Donnelley & Sons Co.1		13,345,400				161,746
Keppel Corp. Ltd.		16,300,000				146,443
Ryanair Holdings PLC (ADR)2		4,615,000				135,958
Norfolk Southern Corp.		1,800,000				133,290
Boeing Co.		1,700,000				125,647
CCR SA, ordinary nominative		14,607,300				121,894
Honeywell International Inc.		1,575,000				91,429
United Technologies Corp.		1,200,000				89,328
AB SKF, Class B		4,290,000				88,883
Atlas Copco AB, Class B		2,825,000				56,702
Geberit AG		158,758				31,221
Douglas Dynamics, Inc.1		1,350,000				18,050
Nortek, Inc.2		18,686				953
Atrium Corp.2,3,4		1,807				73
						6,450,157
HEALTH CARE — 8.05%
Merck & Co., Inc.		42,318,040				1,869,188
Bristol-Myers Squibb Co.		51,825,000				1,844,970
Pfizer Inc		36,855,000				885,994
Eli Lilly and Co.		8,100,000				356,643
Johnson & Johnson		4,545,000				314,605
Roche Holding AG		1,400,000				248,510
AstraZeneca PLC (United Kingdom)		4,000,000				187,295
Sonic Healthcare Ltd.		9,590,000				127,488
Novartis AG (ADR)		500,000				29,310
						5,864,003
FINANCIALS — 7.51%
HCP, Inc.		20,305,800				958,637
Weyerhaeuser Co.2		26,212,881				612,071
CME Group Inc., Class A		7,350,000				383,008
Prologis, Inc.		8,447,500				273,108
Digital Realty Trust, Inc.		3,475,000				271,293
Hospitality Properties Trust1		8,015,000				194,524
Sanlam Ltd.		44,802,500				192,516
HSBC Holdings PLC (United Kingdom)		18,638,722				156,020
HSBC Holdings PLC (Hong Kong)		3,126,382				26,467
Public Storage		1,200,000				178,740
Arthur J. Gallagher & Co.		5,000,000				177,400
M&T Bank Corp.		2,065,000				177,260
Toronto-Dominion Bank		2,150,000				169,196
Bank of Nova Scotia		2,800,000				146,163
United Overseas Bank Ltd.		8,922,339				143,400
Prudential PLC		11,775,000				140,861
British Land Co. PLC		16,450,475				137,858
New York Community Bancorp, Inc.		9,160,000				118,897
IG Group Holdings PLC		14,650,000				103,062
Industrial and Commercial Bank of China Ltd., Class H		176,959,000				101,547
Cullen/Frost Bankers, Inc.		1,700,000				94,027
Sumitomo Mitsui Financial Group, Inc.		2,500,000				79,616
Trustmark Corp.1		3,257,000				78,754
Boardwalk Real Estate Investment Trust		1,199,000				76,518
Mercury General Corp.		2,000,000				72,440
QBE Insurance Group Ltd.		4,521,328				66,710
Capitol Federal Financial, Inc.		5,294,700				62,054
FirstMerit Corp.		3,830,222				62,050
People’s United Financial, Inc.		5,350,000				61,311
Northwest Bancshares, Inc.		4,850,000				56,502
Allianz SE		350,000				34,921
City Holding Co.		741,000				24,490
Itaúsa — Investimentos Itaú SA, preferred nominative		5,219,716				24,478
AXA SA		875,000				10,712
American Tower Corp.		42,271				3,057
						5,469,668
CONSUMER STAPLES — 7.00%
PepsiCo, Inc.		8,505,000				618,569
Altria Group, Inc.		15,930,000				573,002
Unilever NV, depository receipts		9,295,000				323,140
Unilever NV (New York registered)		5,551,750				192,368
Nestlé SA		8,145,000				500,980
H.J. Heinz Co.		7,500,000				414,075
Philip Morris International Inc.		4,472,000				408,920
Kraft Foods Inc., Class A		8,950,821				355,437
Procter & Gamble Co.		5,500,000				354,970
Sysco Corp.		10,128,500				297,677
General Mills, Inc.		5,925,000				229,297
Coca-Cola Co.		2,500,000				202,000
Coca-Cola Amatil Ltd.		11,640,441				170,405
British American Tobacco PLC		2,940,000				156,607
Hershey Co.		2,000,000				143,480
Tesco PLC		16,725,000				83,413
Kimberly-Clark Corp.		766,000				66,573
Kimberly-Clark de México, SAB de CV, Class A		5,629,800				11,769
						5,102,682
ENERGY — 6.79%
Royal Dutch Shell PLC, Class B (ADR)		9,025,000				636,804
Royal Dutch Shell PLC, Class A (ADR)		6,000,000				409,200
Royal Dutch Shell PLC, Class B		3,797,147				133,921
Chevron Corp.		9,025,800				989,047
Spectra Energy Corp		20,150,500				618,419
Crescent Point Energy Corp.		14,500,000				576,328
Kinder Morgan, Inc.		14,135,000				506,174
ConocoPhillips		6,108,000				332,519
Husky Energy Inc.		9,760,000				242,431
TOTAL SA (ADR)		5,110,000				234,804
Penn West Petroleum Ltd.		10,775,000				146,983
Diamond Offshore Drilling, Inc.		1,885,200				123,330
General Maritime Corp.2,3,4		5,506				203
						4,950,163
TELECOMMUNICATION SERVICES — 5.19%
Verizon Communications Inc.		36,987,500				1,669,616
Telstra Corp. Ltd.		149,270,000				627,471
AT&T Inc.		15,424,621				584,902
CenturyLink, Inc.		5,711,120				237,240
France Télécom SA		17,340,000				232,340
TalkTalk Telecom Group PLC1		57,242,000				155,801
Koninklijke KPN NV		13,619,107				111,785
Vodafone Group PLC		30,000,000				85,887
Bell Aliant Inc.		1,895,000				47,146
Portugal Telecom, SGPS, SA		7,528,000				31,955
						3,784,143
UTILITIES — 5.15%
National Grid PLC		80,801,656				839,287
GDF SUEZ		22,974,914				514,060
Power Assets Holdings Ltd.		59,138,000				465,191
Duke Energy Corp.		5,937,057				402,414
FirstEnergy Corp.		7,577,983				380,567
PG&E Corp.		6,800,000				313,888
DTE Energy Co.		5,000,000				306,850
Exelon Corp.		5,500,000				215,160
Snam SpA		27,201,945				109,444
ONEOK, Inc.		2,420,000				107,714
DUET Group		44,511,723				97,297
Prime AET&D Holdings No 1 Pty Ltd.2,4		22,756,141				—
						3,751,872
CONSUMER DISCRETIONARY — 5.03%
Home Depot, Inc.		27,845,000				1,452,952
Time Warner Inc.		13,815,000				540,443
McGraw-Hill Companies, Inc.		10,840,000				509,046
Time Warner Cable Inc.		5,400,000				458,622
SES SA, Class A (FDR)		6,940,000				167,108
Marks and Spencer Group PLC		30,000,000				156,957
McDonald’s Corp.		1,500,000				134,040
H & M Hennes & Mauritz AB, Class B		3,054,000				113,032
VF Corp.		710,000				106,003
Cooper-Standard Holdings Inc.2		586,012				20,510
Esprit Holdings Ltd.		6,251,399				7,602
Adelphia Recovery Trust, Series ACC-12,4		19,531,478				20
						3,666,335
MATERIALS — 4.20%
E.I. du Pont de Nemours and Co.		18,841,000				936,398
Dow Chemical Co.		19,804,900				569,985
Nucor Corp.		13,580,000				532,336
MeadWestvaco Corp.1		11,201,000				318,108
Cliffs Natural Resources Inc.		5,573,000				227,880
Fletcher Building Ltd.1		34,239,000				169,421
Israel Chemicals Ltd.		10,000,000				118,356
BASF SE		1,500,000				109,776
Impala Platinum Holdings Ltd.		4,287,112				67,346
Georgia Gulf Corp.		236,235				7,744
						3,057,350
INFORMATION TECHNOLOGY — 3.29%
Microsoft Corp.		14,065,000				414,496
Maxim Integrated Products, Inc.		14,156,000				385,468
Paychex, Inc.		9,403,182				307,390
Analog Devices, Inc.		6,250,000				244,250
Intel Corp.		9,355,000				240,423
KLA-Tencor Corp.		4,400,000				224,004
Taiwan Semiconductor Manufacturing Co. Ltd.		80,653,000				217,818
Automatic Data Processing, Inc.		1,800,000				101,790
HTC Corp.		7,405,275				72,096
Nintendo Co., Ltd.		630,000				70,560
Canon, Inc.		2,000,000				67,840
Microchip Technology Inc.2		1,500,000				50,070
						2,396,205
MISCELLANEOUS — 4.70%
Other common stocks in initial period of acquisition						3,427,735
Total common stocks (cost: $41,924,970,000)						47,920,313
Preferred stocks — 0.48%
FINANCIALS — 0.32%
Vornado Realty Trust, Series I, 6.625%		3,380,000				85,649
Citigroup Inc. 7.875% preferred		2,381,610				65,345
HSBC Holdings PLC, Series 2, 8.00%		1,825,000				50,644
Public Storage, Inc., Series F, 6.45% depositary shares		1,000,000				25,720
Zions Bancorporation, Series C, 9.50% noncumulative depositary shares		186,400				4,949
Fannie Mae, Series S, 8.25% noncumulative2		1,511,450				2,906
						235,213
MISCELLANEOUS — 0.16%
Other preferred stocks in initial period of acquisition						117,012
Total preferred stocks (cost: $364,687,000)						352,225
Warrants — 0.00%
ENERGY — 0.00%
General Maritime Corp., warrants, expire 20172,3,4		8,514				69
Total warrants (cost: $2,171,000)						69
	Shares or
Convertible securities — 1.00%	principal amount
CONSUMER DISCRETIONARY — 0.43%
General Motors Co., Series B, 4.75% convertible preferred 2013		8,830,000				295,540
MGM Resorts International 4.25% convertible notes 2015	$	17,037,000				16,909
						312,449
UTILITIES — 0.15%
PPL Corp. 9.50% convertible preferred 2013, units		2,007,787				109,123
ENERGY — 0.13%
Apache Corp., Series D, 6.00% convertible preferred 2013		1,930,000				93,740
INDUSTRIALS — 0.11%
United Continental Holdings, Inc. 4.50% convertible notes 2021	$	72,600,000				65,282
AMR Corp. 6.25% convertible notes 20145	$	26,400,000				17,259
						82,541
MATERIALS — 0.08%
Alcoa Inc. 5.25% convertible notes 2014	$	41,500,000				60,902
TELECOMMUNICATION SERVICES — 0.06%
Leap Wireless International, Inc. 4.50% convertible notes 2014	$	25,000,000				23,625
Clearwire Corp. 8.25% convertible notes 20406	$	28,000,000				18,760
						42,385
CONSUMER STAPLES — 0.04%
Bunge Ltd. 4.875% convertible preferred		272,700				26,291
Total convertible securities (cost: $863,673,000)						727,431
	Principal amount
Bonds & notes — 26.77%		(000	)
FINANCIALS — 4.42%
Realogy Corp., Letter of Credit, 4.491% 20167,8,9	$	8,298				7,891
Realogy Corp., Term Loan B, 4.499% 20167,8,9		95,391				90,717
Realogy Corp., Second Lien Term Loan A, 13.50% 20178,9		51,550				52,323
Realogy Corp. 7.875% 20196		79,249				80,438
Realogy Corp. 9.00% 20206		12,540				13,198
Wells Fargo & Co. 5.25% 2012		12,880				13,029
Wells Fargo & Co. 3.676% 2016		10,000				10,879
Wells Fargo & Co. 4.60% 2021		45,000				51,897
Wells Fargo & Co., Series I, 3.50% 2022		14,000				14,977
Wells Fargo & Co., Series K, junior subordinated 7.98% (undated)7		86,566				97,387
Westfield Group 5.40% 20126		4,350				4,383
Westfield Capital Corp. Ltd., WT Finance (Australia) Pty Ltd. and WEA Finance LLC 5.125% 20146		18,485				19,621
Westfield Group 7.50% 20146		5,555				6,063
Westfield Group 5.75% 20156		10,250				11,243
Westfield Group 5.70% 20166		44,075				49,123
Westfield Group 7.125% 20186		39,925				47,647
Westfield Group 6.75% 20196		20,000				23,905
WEA Finance LLC 4.625% 20216		20,000				21,684
CIT Group Inc., Series C, 4.75% 20156		99,815				104,193
CIT Group Inc., Series C, 7.00% 20166		3,000				3,019
CIT Group Inc. 4.25% 2017		14,000				14,000
CIT Group Inc. 5.00% 2017		38,600				40,361
CIT Group Inc., Series C, 7.00% 20176		1,152				1,159
CIT Group Inc., Series C, 5.50% 20196		13,650				14,435
Prologis, Inc. 7.625% 2014		11,000				12,170
Prologis, Inc. 6.25% 2017		8,900				10,173
Prologis, Inc. 6.625% 2018		57,365				67,607
Prologis, Inc. 6.625% 2019		3,611				4,347
Prologis, Inc. 7.375% 2019		22,690				28,350
Prologis, Inc. 6.875% 2020		34,045				42,050
SMFG Preferred Capital USD 3 Ltd., junior subordinated 9.50% (undated)6,7		116,330				147,332
Simon Property Group, LP 6.75% 2014		5,310				5,762
Simon Property Group, LP 5.25% 2016		73,435				83,621
Simon Property Group, LP 6.10% 2016		4,250				4,848
Simon Property Group, LP 5.875% 2017		22,265				26,068
Simon Property Group, LP 6.125% 2018		10,790				12,984
Simon Property Group, LP 10.35% 2019		5,000				7,177
Goldman Sachs Group, Inc. 3.625% 2016		22,600				23,154
Murray Street Investment Trust I 4.647% 2017		20,045				20,631
Goldman Sachs Group, Inc. 5.25% 2021		40,000				42,224
Goldman Sachs Group, Inc. 5.75% 2022		46,500				50,939
Bank of America Corp., Series L, 3.625% 2016		13,660				14,047
Bank of America Corp. 3.75% 2016		9,975				10,343
Bank of America Corp. 5.75% 2017		8,100				8,955
Bank of America Corp. 5.625% 2020		14,195				15,826
Bank of America Corp. 5.00% 2021		5,480				5,924
Bank of America Corp. 5.875% 2021		655				745
Bank of America Corp. 5.70% 2022		24,755				28,360
Bank of America Corp., Series M, junior subordinated 8.125% noncumulative (undated)7		30,924				33,410
JPMorgan Chase & Co. 3.45% 2016		10,000				10,585
JPMorgan Chase & Co., Series I, junior subordinated 7.90% (undated)7		76,875				85,133
International Lease Finance Corp. 5.00% 2012		1,250				1,258
International Lease Finance Corp. 4.875% 2015		77,310				78,774
PNC Preferred Funding Trust I, junior subordinated 2.118% (undated)6,7		23,800				18,623
PNC Financial Services Group, Inc., Series O, junior subordinated 6.75% (undated)7		10,250				11,149
PNC Preferred Funding Trust III, junior subordinated 8.70% (undated)6,7		40,700				41,645
National City Preferred Capital Trust I 12.00% (undated)7		5,640				5,851
Zions Bancorporation 5.50% 2015		40,017				40,922
Zions Bancorporation 6.00% 2015		32,732				34,073
Developers Diversified Realty Corp. 5.50% 2015		15,776				16,886
Developers Diversified Realty Corp. 9.625% 2016		3,170				3,856
Developers Diversified Realty Corp. 7.50% 2017		32,887				37,892
Developers Diversified Realty Corp. 4.75% 2018		5,000				5,329
Developers Diversified Realty Corp. 7.875% 2020		6,505				8,052
Kimco Realty Corp. 6.00% 2012		3,250				3,294
Kimco Realty Corp., Series C, 4.82% 2014		3,000				3,176
Kimco Realty Corp., Series C, 4.904% 2015		4,500				4,757
Kimco Realty Corp., Series C, 5.783% 2016		15,000				16,574
Kimco Realty Corp. 5.70% 2017		23,485				26,899
Kimco Realty Corp. 4.30% 2018		3,000				3,187
Kimco Realty Corp. 6.875% 2019		10,844				13,297
Mizuho Capital Investment (USD) 2 Ltd, junior subordinated 14.95% (undated)6,7		55,766				68,254
HBOS PLC 6.75% 20186		17,300				16,762
LBG Capital No.1 PLC, Series 2, 7.875% 20206		48,335				45,818
HBOS PLC 6.00% 20336		2,200				1,717
HBOS Capital Funding LP 6.071% (undated)6,7		5,000				3,437
Standard Chartered PLC 3.85% 20156		10,345				10,921
Standard Chartered PLC 3.20% 20166		13,123				13,659
Standard Chartered Bank 6.40% 20176		35,000				39,435
Hospitality Properties Trust 6.75% 20131		12,650				12,677
Hospitality Properties Trust 5.125% 20151		3,160				3,258
Hospitality Properties Trust 6.30% 20161		19,827				21,466
Hospitality Properties Trust 5.625% 20171		10,169				10,887
Hospitality Properties Trust 6.70% 20181		12,625				14,096
Royal Bank of Scotland PLC 3.40% 2013		7,950				8,084
Royal Bank of Scotland PLC 3.95% 2015		10,000				10,277
Royal Bank of Scotland PLC 4.875% 2015		9,000				9,476
Royal Bank of Scotland Group PLC 4.375% 2016		1,250				1,306
Royal Bank of Scotland Group PLC 4.70% 2018		14,000				12,296
RBS Capital Trust II 6.425% noncumulative trust (undated)7		12,605				9,643
Royal Bank of Scotland Group PLC, junior subordinated 6.99% (undated)5,6,7		11,135				9,186
Synovus Financial Corp. 5.125% 2017		31,353				30,020
Synovus Financial Corp. 7.875% 2019		18,816				20,462
Citigroup Inc. 4.587% 2015		10,885				11,590
Citigroup Inc. 3.953% 2016		27,115				28,287
Citigroup Inc. 8.50% 2019		5,800				7,380
Citigroup Inc. 4.50% 2022		500				528
American Tower Corp. 4.625% 2015		9,280				9,855
American Tower Corp. 7.00% 2017		12,431				14,549
American Tower Corp. 7.25% 2019		15,025				17,850
MetLife Global Funding I 5.125% 20136		12,000				12,372
MetLife Global Funding I 2.50% 20156		10,000				10,334
MetLife Capital Trust IV, junior subordinated 7.875% 20676,7		14,430				16,522
MetLife Capital Trust X, junior subordinated 9.25% 20686,7		500				625
UnumProvident Finance Co. PLC 6.85% 20156		28,500				31,938
Unum Group 7.125% 2016		6,740				7,857
iStar Financial Inc. 9.00% 20176		34,760				35,151
American International Group, Inc. 3.00% 2015		14,000				14,261
American International Group, Inc. 4.875% 2016		4,000				4,321
American International Group, Inc. 3.80% 2017		11,500				11,968
American International Group, Inc. 4.875% 2022		3,000				3,204
Société Générale, junior subordinated 5.922% (undated)6,7		45,073				33,379
Springleaf Finance Corp., Term Loan B, 5.50% 20177,8,9		34,345				32,935
HSBK (Europe) BV 7.25% 20176		30,570				30,876
ERP Operating LP 5.50% 2012		4,000				4,031
ERP Operating LP 5.20% 2013		2,500				2,568
ERP Operating LP 5.25% 2014		2,000				2,167
ERP Operating LP 6.584% 2015		2,705				3,052
ERP Operating LP 5.75% 2017		4,000				4,722
ERP Operating LP 7.125% 2017		10,000				11,963
Lazard Group LLC 7.125% 2015		25,187				27,646
NASDAQ OMX Group, Inc. 5.25% 2018		25,020				27,026
Morgan Stanley, Series F, 2.875% 2014		10,000				9,983
Morgan Stanley 3.80% 2016		5,125				5,081
Morgan Stanley, Series F, 5.625% 2019		8,154				8,260
HCP, Inc. 3.75% 2016		20,000				21,158
Regions Financial Corp. 7.75% 2014		1,863				2,054
Regions Financial Corp. 5.20% 2015		3,115				3,216
Regions Financial Corp. 5.75% 2015		14,761				15,776
Liberty Mutual Group Inc., Series A, 7.80% 20876,7		19,415				20,337
New York Life Global Funding 4.65% 20136		19,000				19,619
Toyota Motor Credit Corp. 1.375% 2013		10,000				10,107
Toyota Motor Credit Corp. 0.875% 2015		8,500				8,545
Monumental Global Funding 5.50% 20136		10,000				10,281
Monumental Global Funding III 0.655% 20146,7		8,000				7,885
BNP Paribas 3.60% 2016		10,000				10,315
BNP Paribas 5.00% 2021		7,000				7,513
Berkshire Hathaway Inc. 2.20% 2016		11,500				12,041
Berkshire Hathaway Inc. 1.60% 2017		2,000				2,045
Berkshire Hathaway Inc. 4.40% 2042		3,000				3,263
Prudential Financial, Inc. 4.50% 2021		3,000				3,286
Prudential Holdings, LLC, Series C, 8.695% 20236,8		10,250				12,718
BBVA Bancomer SA 4.50% 20166		8,125				8,450
BBVA Bancomer SA 6.50% 20216		7,200				7,452
Host Marriott, LP, Series O, 6.375% 2015		950				967
Host Hotels & Resorts, LP, Series Q, 6.75% 2016		7,800				8,053
Host Hotels & Resorts LP 9.00% 2017		5,000				5,537
Host Hotels & Resorts LP 6.00% 2020		1,000				1,111
American Express Co. 6.15% 2017		12,610				15,286
AXA SA, Series B, junior subordinated 6.379% (undated)6,7		11,530				9,483
AXA SA, junior subordinated 6.463% (undated)6,7		6,000				5,257
Barclays Bank PLC 2.50% 2013		4,625				4,657
Barclays Bank PLC 5.125% 2020		5,500				6,001
Barclays Bank PLC 5.14% 2020		3,075				3,052
Boston Properties, Inc. 3.70% 2018		12,000		��		12,819
UBS AG 2.25% 2014		10,000				10,112
UBS AG 4.875% 2020		1,694				1,880
QBE Capital Funding II LP 6.797% (undated)6,7		12,215				10,754
Bank of New York Mellon Corp., Series G, 2.50% 2016		10,000				10,505
ANZ National (International) Ltd. 3.125% 20156		10,000				10,360
Principal Life Insurance Co. 5.30% 2013		10,000				10,349
US Bancorp., Series T, 1.65% 2017		10,000				10,221
Lincoln National Corp. 5.65% 2012		10,000				10,035
Bank of Nova Scotia 2.55% 2017		9,000				9,502
Toronto-Dominion Bank 2.375% 2016		9,000				9,442
Westpac Banking Corp. 3.00% 2015		9,000				9,437
Brandywine Operating Partnership, LP 5.40% 2014		6,000				6,297
Brandywine Operating Partnership, LP 4.95% 2018		2,426				2,578
Ford Motor Credit Co. 2.50% 2016		7,000				6,978
Ford Motor Credit Co. 8.00% 2016		1,500				1,777
Santander Issuances, SA Unipersonal 6.50% 20196,7		9,400				8,131
CNA Financial Corp. 5.85% 2014		5,625				6,041
CNA Financial Corp. 6.50% 2016		1,750				1,991
ACE INA Holdings Inc. 2.60% 2015		7,445				7,800
Nationwide Mutual Insurance Co. 5.81% 20246,7		8,150				7,465
Goodman Funding Pty Ltd. 6.00% 20226		6,185				6,436
Development Bank of Kazakhstan 5.50% 2015		3,000				3,171
Development Bank of Kazakhstan 5.50% 20156		2,055				2,172
VEB Finance Ltd. 6.80% 20256		3,000				3,441
UDR, Inc., Series A, 5.25% 2015		3,000				3,222
Allstate Corp., Series B, junior subordinated 6.125% 20677		2,445				2,491
Intesa Sanpaolo SpA 6.50% 20216		2,750				2,482
Nordea Bank, Series 2, 3.70% 20146		2,000				2,094
ACE Cash Express, Inc. 11.00% 20196		2,275				2,036
						3,224,733
MORTGAGE-BACKED OBLIGATIONS8 — 4.08%
Fannie Mae 5.50% 2018		107				116
Fannie Mae 6.00% 2021		415				455
Fannie Mae, Series 2012-M5, Class A2, multifamily 2.715% 2022		7,000				7,306
Fannie Mae, Series 2003-48, Class TJ, 4.50% 2022		2,494				2,542
Fannie Mae 4.50% 2024		5,507				5,932
Fannie Mae 5.50% 2024		594				651
Fannie Mae 3.50% 2025		15,617				16,618
Fannie Mae 3.50% 2025		11,542				12,281
Fannie Mae 3.50% 2025		9,300				9,896
Fannie Mae 3.50% 2025		9,298				9,894
Fannie Mae 3.50% 2025		8,921				9,493
Fannie Mae 3.50% 2025		5,624				5,984
Fannie Mae 3.50% 2025		1,344				1,430
Fannie Mae 3.50% 2025		556				592
Fannie Mae 3.50% 2025		443				472
Fannie Mae 4.50% 2025		5,896				6,352
Fannie Mae 4.50% 2025		3,578				3,871
Fannie Mae 4.50% 2025		3,250				3,501
Fannie Mae 4.50% 2025		3,249				3,500
Fannie Mae, Series 2001-4, Class GA, 9.704% 20257		279				325
Fannie Mae, Series 2001-4, Class NA, 11.355% 20257		13				14
Fannie Mae 3.50% 2026		9,775				10,402
Fannie Mae 6.00% 2026		7,682				8,681
Fannie Mae 7.00% 2026		975				1,132
Fannie Mae 3.00% 2027		71,400				75,171
Fannie Mae 3.00% 2027		67,122				70,782
Fannie Mae 3.00% 2027		33,063				35,075
Fannie Mae 3.50% 2027		7,000				7,443
Fannie Mae 6.00% 2028		9,422				10,379
Fannie Mae 7.00% 2028		3,102				3,616
Fannie Mae 7.00% 2028		473				550
Fannie Mae, Series 2001-20, Class E, 9.596% 20317		262				301
Fannie Mae 5.50% 2033		1,473				1,632
Fannie Mae 4.50% 2034		43,575				47,377
Fannie Mae 5.00% 2035		38,906				42,462
Fannie Mae 5.50% 2035		1,484				1,638
Fannie Mae 5.00% 2036		34,317				37,491
Fannie Mae 5.50% 2036		11,975				13,167
Fannie Mae, Series 2006-43, Class PX, 6.00% 2036		3,977				4,439
Fannie Mae 3.459% 20377		4,432				4,641
Fannie Mae, Series 2007-33, Class HE, 5.50% 2037		13,242				14,673
Fannie Mae 6.00% 2037		82,944				91,526
Fannie Mae 6.00% 2037		21,719				23,966
Fannie Mae 6.00% 2037		12,655				14,043
Fannie Mae, Series 2007-24, Class P, 6.00% 2037		9,500				10,695
Fannie Mae 6.00% 2037		8,825				9,727
Fannie Mae 6.00% 2037		8,745				9,650
Fannie Mae 6.00% 2037		624				683
Fannie Mae 6.00% 2037		569				629
Fannie Mae 6.50% 2037		4,464				5,025
Fannie Mae 6.50% 2037		3,421				3,851
Fannie Mae 6.50% 2037		3,201				3,650
Fannie Mae 6.50% 2037		3,134				3,518
Fannie Mae 6.50% 2037		1,163				1,326
Fannie Mae 7.00% 2037		1,817				2,041
Fannie Mae 7.00% 2037		1,503				1,688
Fannie Mae 7.50% 2037		1,493				1,706
Fannie Mae 7.50% 2037		487				556
Fannie Mae 7.50% 2037		220				251
Fannie Mae 7.50% 2037		174				201
Fannie Mae 7.50% 2037		165				188
Fannie Mae 8.00% 2037		106				121
Fannie Mae 5.50% 2038		3,359				3,686
Fannie Mae 6.00% 2038		34,018				37,611
Fannie Mae 6.00% 2038		11,871				13,099
Fannie Mae 6.00% 2038		11,279				12,424
Fannie Mae 6.00% 2038		4,668				5,161
Fannie Mae 6.00% 2038		3,841				4,288
Fannie Mae 4.50% 2039		54,298				60,215
Fannie Mae 6.00% 2039		5,945				6,573
Fannie Mae 6.00% 2039		4,740				5,230
Fannie Mae 6.00% 2039		3,674				4,050
Fannie Mae 6.50% 2039		2,802				3,195
Fannie Mae 3.50% 2040		16,080				17,086
Fannie Mae 3.50% 2040		13,437				14,408
Fannie Mae 3.50% 2040		10,242				10,883
Fannie Mae 3.50% 2040		6,926				7,359
Fannie Mae 4.00% 2040		23,488				25,227
Fannie Mae 4.00% 2040		19,919				21,394
Fannie Mae 4.00% 2040		17,568				18,825
Fannie Mae 4.00% 2040		17,480				18,775
Fannie Mae 4.00% 2040		15,568				16,722
Fannie Mae 4.00% 2040		4,788				5,143
Fannie Mae 4.17% 20407		2,168				2,310
Fannie Mae 4.50% 2040		44,476				48,280
Fannie Mae 4.50% 2040		22,853				24,736
Fannie Mae 4.50% 2040		5,526				5,981
Fannie Mae 4.50% 2040		4,147				4,502
Fannie Mae 4.50% 2040		2,182				2,369
Fannie Mae 4.50% 2040		157				176
Fannie Mae 4.50% 2040		153				171
Fannie Mae 4.50% 2040		49				54
Fannie Mae 5.00% 2040		18,240				19,973
Fannie Mae 6.00% 2040		9,364				10,307
Fannie Mae 3.50% 2041		15,334				16,442
Fannie Mae 3.50% 2041		14,996				15,934
Fannie Mae 3.50% 2041		7,263				7,718
Fannie Mae 3.758% 20417		3,175				3,371
Fannie Mae 4.00% 2041		40,706				43,721
Fannie Mae 4.00% 2041		14,126				15,173
Fannie Mae 4.50% 2041		100,566				109,357
Fannie Mae 4.50% 2041		59,241				64,420
Fannie Mae 4.50% 2041		11,697				12,720
Fannie Mae 4.50% 2041		6,952				7,560
Fannie Mae 4.50% 2041		2,837				3,085
Fannie Mae 4.50% 2041		463				517
Fannie Mae 4.50% 2041		96				107
Fannie Mae 5.00% 2041		11,103				12,442
Fannie Mae 5.00% 2041		3,663				4,119
Fannie Mae 5.00% 2041		1,101				1,234
Fannie Mae 5.00% 2041		903				1,016
Fannie Mae 5.00% 2041		852				958
Fannie Mae 5.00% 2041		704				791
Fannie Mae 5.00% 2041		688				774
Fannie Mae 5.00% 2041		652				731
Fannie Mae 5.00% 2041		647				727
Fannie Mae 5.50% 2041		53,451				58,667
Fannie Mae 5.50% 2041		19,128				20,994
Fannie Mae, Series 2001-50, Class BA, 7.00% 2041		713				816
Fannie Mae, Series 2001-T10, Class A-1, 7.00% 2041		562				659
Fannie Mae, Series 2002-W3, Class A-5, 7.50% 2041		387				465
Fannie Mae 3.50% 2042		81,562				86,379
Fannie Mae 3.50% 2042		67,415				72,630
Fannie Mae 3.50% 2042		43,793				46,535
Fannie Mae 3.50% 2042		31,008				32,950
Fannie Mae 3.50% 2042		15,800				16,773
Fannie Mae 3.50% 2042		11,710				12,590
Fannie Mae 3.50% 2042		7,765				8,340
Fannie Mae 3.50% 2042		4,993				5,305
Fannie Mae 3.50% 2042		1,852				1,975
Fannie Mae 4.00% 2042		9,000				9,635
Fannie Mae 4.50% 2042		37,938				41,050
Fannie Mae 5.50% 2042		9,750				10,698
Fannie Mae 6.00% 2042		102,520				113,092
Fannie Mae, Series 2002-W1, Class 2A, 7.055% 20427		981				1,162
Fannie Mae 6.50% 2047		1,909				2,118
Fannie Mae 6.50% 2047		1,336				1,482
Fannie Mae 6.50% 2047		1,081				1,199
Fannie Mae 6.50% 2047		900				998
Fannie Mae 6.50% 2047		652				724
Fannie Mae 6.50% 2047		522				579
Fannie Mae 6.50% 2047		128				142
Fannie Mae 7.00% 2047		1,220				1,363
Fannie Mae 7.00% 2047		1,211				1,353
Fannie Mae 7.00% 2047		805				900
Fannie Mae 7.00% 2047		730				815
Fannie Mae 7.00% 2047		161				180
Freddie Mac, Series K710, Class A2, multifamily 1.883% 2019		6,906				7,041
Freddie Mac, Series K709, Class A2, multifamily 2.086% 2019		5,880				6,104
Freddie Mac, Series 2890, Class KT, 4.50% 2019		25,425				28,302
Freddie Mac, Series K019, Class A2, multifamily 2.272% 20224		8,000				8,093
Freddie Mac, Series 2289, Class NB, 10.763% 20227		41				45
Freddie Mac 5.00% 2023		7,434				8,003
Freddie Mac 5.00% 2023		7,119				7,658
Freddie Mac 5.00% 2023		6,322				6,800
Freddie Mac 5.00% 2023		2,343				2,534
Freddie Mac 6.00% 2026		1,298				1,425
Freddie Mac 6.00% 2027		2,307				2,533
Freddie Mac 2.726% 20357		2,699				2,883
Freddie Mac 4.50% 2035		48,594				52,410
Freddie Mac, Series 3061, Class PN, 5.50% 2035		2,648				2,945
Freddie Mac, Series 3257, Class PA, 5.50% 2036		13,506				14,966
Freddie Mac, Series 3286, Class JN, 5.50% 2037		14,934				16,360
Freddie Mac, Series 3312, Class PA, 5.50% 2037		13,364				14,640
Freddie Mac, Series 3318, Class JT, 5.50% 2037		8,255				9,039
Freddie Mac 5.50% 2037		3,654				3,994
Freddie Mac, Series 3271, Class OA, 6.00% 2037		11,708				13,306
Freddie Mac 5.50% 2038		8,183				8,937
Freddie Mac 6.50% 2038		8,417				9,603
Freddie Mac 6.50% 2038		3,219				3,615
Freddie Mac 5.00% 2039		6,786				7,445
Freddie Mac 5.00% 2039		6,519				7,230
Freddie Mac 5.00% 2039		3,197				3,465
Freddie Mac 5.50% 2039		4,423				4,835
Freddie Mac 5.50% 2039		3,945				4,309
Freddie Mac 4.50% 2040		88,170				95,011
Freddie Mac 4.00% 2041		18,933				20,298
Freddie Mac 4.00% 2041		4,538				4,993
Freddie Mac 5.00% 2041		3,102				3,479
Freddie Mac 5.00% 2041		625				701
Freddie Mac 5.00% 2041		603				676
Freddie Mac 5.00% 2041		570				639
Freddie Mac 5.00% 2041		416				467
Freddie Mac 5.00% 2041		307				344
Government National Mortgage Assn. 10.00% 2021		509				566
Government National Mortgage Assn. 10.00% 2025		489				543
Government National Mortgage Assn. 4.00% 2040		90,310				99,496
Government National Mortgage Assn. 4.50% 2040		4,657				5,079
Government National Mortgage Assn. 5.00% 2040		5,125				5,606
Government National Mortgage Assn. 5.00% 2040		1,777				1,945
Government National Mortgage Assn. 3.50% 2042		12,000				13,028
Government National Mortgage Assn. 3.50% 2042		5,000				5,430
American Tower Trust I, Series 2007-1A, Class A-FX, 5.42% 20376		7,250				7,596
American Tower Trust I, Series 2007-1A, Class B, 5.537% 20376		20,000				21,178
American Tower Trust I, Series 2007-1A, Class D, 5.957% 20376		29,375				30,336
American Tower Trust I, Series 2007-1A, Class E, 6.249% 20376		15,000				15,876
American Tower Trust I, Series 2007-1A, Class F, 6.639% 20376		550				561
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2003-ML1, Class A-1, 3.972% 2039		—				—
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2006-LDP7, Class A-4, 5.871% 20457		14,700				16,859
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2011-C4, Class A-2, 3.341% 20466		7,500				8,029
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2011-C3A, Class A-2, 3.673% 20466		24,000				25,884
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2005-LDP1, Class A-2, 4.625% 2046		2,030				2,050
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2007-CB19, Class A-4, 5.734% 20497		15,450				17,958
CS First Boston Mortgage Securities Corp., Series 2004-5, Class IV-A-1, 6.00% 2034		1,994				2,059
CS First Boston Mortgage Securities Corp., Series 2005-C3, Class A-AB, 4.614% 2037		5,531				5,733
CS First Boston Mortgage Securities Corp., Series 2002-CKN2, Class A-3, 6.133% 2037		96				96
CS First Boston Mortgage Securities Corp., Series 2007-C4, Class A-4, 5.772% 20397		18,880				20,823
CS First Boston Mortgage Securities Corp., Series 2005-C6, Class A-3, 5.23% 20407		5,003				5,144
Wachovia Bank Commercial Mortgage Trust, Series 2005-C16, Class A-PB, 4.692% 2041		7,060				7,281
Wachovia Bank Commercial Mortgage Trust, Series 2005-C22, Class A-4, 5.266% 20447		22,000				24,740
Wachovia Bank Commercial Mortgage Trust, Series 2006-C23, Class A-PB, 5.446% 2045		1,694				1,706
Greenwich Capital Commercial Funding Corp., Series 2005-GG5, Class A-2, 5.117% 2037		3,072				3,082
Greenwich Capital Commercial Funding Corp., Series 2005-GG5, Class A-4-1, 5.243% 20377		10,000				10,360
Greenwich Capital Commercial Funding Corp., Series 2006-GG7, Class A-4, 5.874% 20387		7,000				8,061
Greenwich Capital Commercial Funding Corp., Series 2007-GG9, Class A-4, 5.444% 2039		10,000				11,361
GE Commercial Mortgage Corp., Series 2006-C1, Class A-4, 5.303% 20447		13,000				14,621
GE Commercial Mortgage Corp., Series 2005-C4, Class A-3A, 5.308% 20457		17,000				17,248
ML-CFC Commercial Mortgage Trust, Series 2006-4, Class A-3, 5.172% (undated)7		27,410				30,761
Banc of America Commercial Mortgage Inc., Series 2005-5, Class A-4, 5.115% 20457		3,000				3,347
Banc of America Commercial Mortgage Inc., Series 2005-5, Class A-3B, 5.231% 20457		16,893				17,404
Banc of America Commercial Mortgage Inc., Series 2007-3, Class A-4, 5.661% (undated)7		5,000				5,717
J.P. Morgan Chase Commercial Mortgage Securities Trust, Series 2006-LDP6, Class A-4, 5.475% 20437		20,250				22,886
Citigroup-Deutsche Bank Commercial Mortgage Trust, Series 2005-CD1, Class A-4, 5.219% 20447		5,500				6,163
Citigroup-Deutsche Bank Commercial Mortgage Trust, Series 2006-CD3, Class A-5, 5.617% 2048		13,250				15,258
LB-UBS Commercial Mortgage Trust, Series 2005-C7, Class A-4, 5.197% 20307		11,422				12,735
Countrywide Alternative Loan Trust, Series 2005-54CB, Class 2-A-5, 5.50% 2035		10,447				7,594
Countrywide Alternative Loan Trust, Series 2007-HY4, Class 3-A-1, 5.231% 20477		6,823				4,527
Bank of Montreal 2.85% 20156		10,000				10,630
Crown Castle Towers LLC, Series 2010-1, Class C, 4.523% 20356		10,000				10,534
L.A. Arena Funding, LLC, Series 1, Class A, 7.656% 20266		8,521				9,458
DBUBS Mortgage Trust, Series 2011-LC1A, Class A1, 3.742% 20466		7,568				8,137
IndyMac INDX Mortgage Loan Trust, Series 2006-AR5, Class 2-A-1, 5.00% 20367		10,544				7,897
Structured Adjustable Rate Mortgage Loan Trust, Series 2006-4, Class 6-A, 5.414% 20367		8,397				6,632
Residential Accredit Loans, Inc., Series 2005-QR1, Class A, 6.00% 2034		4,163				4,216
GSR Mortgage Loan Trust, Series 2004-2F, Class VIIA-1, 4.50% 2019		3,800				3,876
FDIC Structured Sale Guaranteed Notes, Series 2010-L2A, Class A, 3.00% 20196		1,524				1,562
Morgan Stanley Capital I Trust, Series 2005-HQ7, Class A-2, 5.211% 20427		1,510				1,510
National Credit Union Administration, Series 2011-M1, Class A2, 1.40% 2015		709				723
Financial Asset Securitization, Inc., Series 1997-NAM1, Class B-1, 7.75% 2027		172				176
Bear Stearns Commercial Mortgage Securities Inc., Series 1999-C1, Class X, interest only, 0.605% 20316,7		14,422				147
						2,970,369
BONDS & NOTES OF U.S. GOVERNMENT & GOVERNMENT AGENCIES — 3.22%
U.S. Treasury 0.625% 2012		17,150				17,184
U.S. Treasury 0.75% 2013		1,500				1,509
U.S. Treasury 1.125% 2013		142,125				143,296
U.S. Treasury 1.375% 2013		245,375				247,694
U.S. Treasury 1.50% 2013		40,000				40,731
U.S. Treasury 1.875% 201310		31,283				32,148
U.S. Treasury 2.75% 2013		109,500				112,969
U.S. Treasury 3.50% 2013		92,125				94,666
U.S. Treasury 1.875% 2014		17,555				18,060
U.S. Treasury 1.875% 201510		44,899				49,289
U.S. Treasury 1.50% 2016		7,625				7,945
U.S. Treasury 2.00% 2016		20,375				21,543
U.S. Treasury 4.50% 2016		10,925				12,513
U.S. Treasury 7.50% 2016		20,000				25,938
U.S. Treasury 1.00% 2017		7,250				7,400
U.S. Treasury 3.50% 2018		22,650				26,093
U.S. Treasury 1.125% 2019		67,500				68,315
U.S. Treasury 8.75% 2020		26,900				42,784
U.S. Treasury 2.125% 2021		124,250				132,535
U.S. Treasury 8.00% 2021		9,025				14,320
U.S. Treasury 2.00% 2022		189,875				199,488
U.S. Treasury 6.25% 2023		135,000				199,051
U.S. Treasury 6.75% 2026		4,575				7,310
U.S. Treasury 4.50% 2036		98,935				137,289
U.S. Treasury 4.375% 2039		14,000				19,342
U.S. Treasury 4.625% 2040		143,870				206,318
U.S. Treasury 3.125% 2041		3,575				4,001
U.S. Treasury 3.75% 2041		74,350				93,193
U.S. Treasury 4.75% 2041		107,125				156,971
U.S. Treasury 3.00% 2042		1,400				1,528
U.S. Treasury 3.125% 2042		15,000				16,778
Fannie Mae 0.75% 2013		17,825				17,922
Fannie Mae 1.125% 2017		14,350				14,599
Fannie Mae 6.25% 2029		32,000				47,172
Fannie Mae 6.625% 2030		1,250				1,946
Freddie Mac 0.375% 2014		6,850				6,864
Freddie Mac 1.75% 2015		29,500				30,715
Freddie Mac 1.00% 2017		18,000				18,193
Freddie Mac 1.00% 2017		3,215				3,251
Freddie Mac 2.375% 2022		3,650				3,827
CoBank ACB 7.875% 20186		10,000				12,346
CoBank ACB 1.068% 20226,7		8,315				6,660
United States Agency for International Development, Republic of Egypt 4.45% 2015		10,000				11,128
Federal Farm Credit Banks, Consolidated Systemwide Designated Bonds, 1.625% 2014		6,975				7,183
Federal Home Loan Bank 4.125% 2020		1,600				1,909
Tennessee Valley Authority, Series A, 3.875% 2021		850				1,000
Tennessee Valley Authority, Series 2008, Class A, 4.875% 2048		700				904
						2,343,820
CONSUMER DISCRETIONARY — 3.20%
Virgin Media Finance PLC, Series 1, 9.50% 2016		86,065				96,716
Virgin Media Secured Finance PLC 6.50% 2018		8,800				9,724
Virgin Media Finance PLC 8.375% 20196		41,674				47,352
Virgin Media Secured Finance PLC 5.25% 2021		8,225				9,399
Virgin Media Finance PLC 5.25% 2022		25,000				26,000
MGM Resorts International 6.75% 2012		17,385				17,515
MGM Resorts International 6.75% 2013		19,860				20,456
MGM Resorts International 13.00% 2013		10,725				12,253
MGM Resorts International 5.875% 2014		51,925				53,483
MGM Resorts International 6.625% 2015		22,500				23,372
MGM Resorts International 7.50% 2016		4,000				4,155
MGM Resorts International 11.125% 2017		500				561
MGM Resorts International 9.00% 2020		5,150				5,762
MGM Resorts International 7.75% 2022		19,000				19,143
Boyd Gaming Corp. 6.75% 2014		17,059				17,123
Boyd Gaming Corp. 7.125% 2016		13,925				13,507
Boyd Gaming Corp. 9.125% 2018		88,575				91,675
Boyd Gaming Corp. 9.00% 20206		5,000				4,975
Univision Communications Inc., Term Loan B, 4.496% 20177,8,9		108,999				104,656
Univision Communications Inc. 8.50% 20216		3,030				3,075
Allison Transmission Holdings, Inc., Term Loan B, 2.75% 20147,8,9		103,047				102,849
Time Warner Inc. 5.875% 2016		8,000				9,474
Time Warner Companies, Inc. 7.25% 2017		1,500				1,898
Time Warner Inc. 4.75% 2021		19,000				21,986
Time Warner Inc. 3.40% 2022		2,750				2,911
Time Warner Cable Inc. 4.00% 2022		40,100				44,242
Time Warner Inc. 6.25% 2041		8,000				10,121
Charter Communications, Inc. 13.50% 2016		24,238				26,904
Charter Communications Operating, LLC and Charter Communications Operating Capital Corp. 7.25% 2017		38,100				42,053
Charter Communications Operating, LLC and Charter Communications Operating Capital Corp. 7.875% 2018		8,425				9,236
CCO Holdings LLC and CCO Holdings Capital Corp. 7.00% 2019		10,000				11,025
Comcast Corp. 5.90% 2016		10,000				11,625
Comcast Corp. 6.30% 2017		3,000				3,692
Comcast Corp. 3.125% 2022		10,655				11,189
Comcast Corp. 5.65% 2035		7,000				8,391
Comcast Corp. 6.45% 2037		25,000				32,751
Comcast Corp. 6.95% 2037		10,275				14,189
Comcast Corp. 4.65% 2042		6,315				6,970
EchoStar DBS Corp 7.75% 2015		7,350				8,260
DISH DBS Corp. 4.625% 20176		45,105				46,007
DISH DBS Corp 7.875% 2019		1,425				1,664
DISH DBS Corp 6.75% 2021		17,400				19,118
DISH DBS Corp. 5.875% 20226		12,490				12,927
Toys “R” Us-Delaware, Inc., Term Loan B, 6.00% 20167,8,9		6,214				5,911
Toys “R” Us-Delaware, Inc. 7.375% 20166		3,755				3,778
Toys “R” Us Property Co. II, LLC 8.50% 2017		14,125				15,326
Toys “R” Us Property Co. I, LLC 10.75% 2017		31,775				35,270
Toys “R” Us-Delaware, Inc., Term Loan B2, 5.25% 20187,8,9		26,606				24,844
Time Warner Cable Inc. 6.20% 2013		1,600				1,678
Time Warner Cable Inc. 7.50% 2014		10,400				11,523
Time Warner Cable Inc. 6.75% 2018		22,500				28,336
Time Warner Cable Inc. 5.00% 2020		19,000				22,043
Time Warner Cable Inc. 4.125% 2021		16,000				17,687
Time Warner Cable Inc. 5.50% 2041		1,485				1,744
Limited Brands, Inc. 5.25% 2014		1,585				1,678
Limited Brands, Inc. 8.50% 2019		16,105				19,185
Limited Brands, Inc. 7.00% 2020		19,965				22,286
Limited Brands, Inc. 6.625% 2021		29,565				33,002
Michaels Stores, Inc., Term Loan B3, 5.00% 20167,8,9		20,139				20,284
Michaels Stores, Inc., Term Loan B2, 5.00% 20167,8,9		3,727				3,754
Michaels Stores, Inc. 13.00% 2016		4,020				4,301
Michaels Stores, Inc. 7.75% 2018		25,500				27,444
CityCenter Holdings, LLC and CityCenter Finance Corp. 7.625% 2016		44,200				46,797
CityCenter Holdings, LLC and CityCenter Finance Corp. 7.625% 20166		5,000				5,294
CSC Holdings, Inc. 8.50% 2014		14,975				16,547
CSC Holdings, Inc. 8.625% 2019		6,175				7,302
Cablevision Systems Corp. 8.00% 2020		20,000				22,250
Neiman Marcus Group, Inc. 10.375% 2015		9,875				10,245
Neiman Marcus Group, Inc., Term Loan B, 4.75% 20187,8,9		31,320				31,132
Revel Entertainment, Term Loan B, 9.00% 20177,8,9		48,950				39,813
Home Depot, Inc. 5.95% 2041		25,000				35,171
Mediacom Broadband LLC and Mediacom Broadband Corp. 8.50% 2015		10,055				10,394
Mediacom LLC and Mediacom Capital Corp. 9.125% 2019		15,000				16,650
Mediacom LLC and Mediacom Capital Corp. 7.25% 2022		7,775				8,125
Cox Communications, Inc. 5.45% 2014		5,000				5,529
Cox Communications, Inc. 5.875% 20166		25,000				29,227
DaimlerChrysler North America Holding Corp. 6.50% 2013		5,400				5,795
Daimler Finance NA LLC 1.30% 20156		8,500				8,516
Daimler Finance NA LLC 2.625% 20166		2,000				2,084
Daimler AG 2.40% 20176		14,000				14,397
DaimlerChrysler North America Holding Corp. 8.50% 2031		2,000				3,189
Videotron Ltd. 6.375% 2015		4,905				5,028
Quebecor Media Inc. 7.75% 2016		13,000				13,406
Videotron Ltd. 5.00% 2022		13,600				14,280
Marriott International, Inc., Series J, 5.625% 2013		8,330				8,537
Marriott International, Inc., Series I, 6.375% 2017		19,500				23,073
Tousa, Inc. 9.00% 20104,5		10,675				6,437
Tousa, Inc. 9.00% 20104,5		7,815				4,712
Tousa, Inc. 9.25% 20114,5,6,7		33,175				20,005
Target Corp. 6.00% 2018		24,500				30,370
News America Inc. 5.30% 2014		20,000				21,999
News America Holdings Inc. 8.00% 2016		1,000				1,247
News America Inc. 4.50% 2021		5,000				5,747
News America Inc. 6.65% 2037		1,000				1,299
Cinemark USA, Inc., Term Loan, 3.50% 20167,8,9		3,585				3,592
Cinemark USA, Inc. 8.625% 2019		23,075				25,844
J.C. Penney Co., Inc. 5.75% 2018		13,808				12,134
J.C. Penney Co., Inc. 5.65% 2020		20,230				17,069
Volkswagen International Finance NV 1.071% 20146,7		10,000				10,012
Volkswagen International Finance NV 2.875% 20166		4,000				4,187
Volkswagen International Finance NV 2.375% 20176		14,500				14,996
PETCO Animal Supplies, Inc. 9.25% 20186		25,750				28,357
Burlington Coat Factory Warehouse Corp., Term Loan B1, 5.50% 20177,8,9		24,079				24,073
Burlington Coat Factory Warehouse Corp. 10.00% 2019		3,700				3,945
Royal Caribbean Cruises Ltd. 11.875% 2015		22,175				27,164
DIRECTV Holdings LLC and DIRECTV Financing Co., Inc. 3.50% 2016		24,463				26,112
Clear Channel Worldwide Holdings, Inc., Series B, 9.25% 2017		23,300				25,281
Macy’s Retail Holdings, Inc. 7.875% 20157		12,930				15,273
Federated Department Stores, Inc. 6.90% 2029		7,925				9,778
Walt Disney Co. 0.875% 2014		19,000				19,212
Walt Disney Co. 5.625% 2016		2,000				2,372
NBCUniversal Media, LLC 2.10% 2014		3,000				3,060
NBCUniversal Media, LLC 2.875% 2016		10,000				10,563
NBCUniversal Media, LLC 4.375% 2021		4,750				5,384
UPC Germany GmbH 8.125% 20176		5,000				5,450
UPC Germany GmbH 7.50% 20196		12,500				13,310
Burger King Corp 0%/11.00% 20196,11		23,475				18,633
Needle Merger Sub Corp. 8.125% 20196		16,220				16,362
Mohegan Tribal Gaming Authority 10.50% 20166		6,275				5,553
Mohegan Tribal Gaming Authority 11.00% 20186,7,12		13,725				9,196
Marina District Finance Co., Inc. 9.50% 2015		14,500				14,156
Sally Holdings LLC and Sally Capital Inc. 6.875% 2019		11,950				13,399
Seminole Tribe of Florida 6.535% 20206,8		10,000				10,380
Seminole Tribe of Florida 7.804% 20206,8		2,885				2,886
Tenneco Inc. 6.875% 2020		11,300				12,246
Education Management LLC and Education Management Finance Corp. 8.75% 2014		10,965				10,060
Academy, Ltd., Term Loan B, 6.00% 20187,8,9		9,950				10,025
Staples, Inc. 9.75% 2014		8,000				8,915
Warner Music Group 9.50% 2016		925				1,021
Warner Music Group 9.50% 2016		850				938
Warner Music Group 11.50% 2018		5,700				6,341
Seneca Gaming Corp. 8.25% 20186		7,925				8,252
Thomson Reuters Corp. 5.95% 2013		3,625				3,807
Thomson Reuters Corp. 6.50% 2018		3,000				3,713
Tower Automotive Holdings 10.625% 20176		6,797				7,162
CBS Corp. 1.95% 2017		7,000				7,143
Marks and Spencer Group PLC 6.25% 20176		4,902				5,427
Marks and Spencer Group PLC 7.125% 20376		1,000				1,113
Jarden Corp. 8.00% 2016		5,725				6,212
NCL Corp. Ltd. 9.50% 2018		5,575				6,133
Local T.V. Finance LLC 9.25% 20156,7,12		5,730				5,873
Dynacast International LLC 9.25% 2019		5,325				5,525
WPP Finance 2010 4.75% 2021		5,000				5,504
Omnicom Group Inc. 3.625% 2022		4,500				4,802
Choice Hotels International Inc. 5.75% 2022		500				535
						2,333,535
INDUSTRIALS — 2.01%
General Electric Capital Corp., Series A, 2.25% 2015		12,000				12,358
General Electric Capital Corp. 2.95% 2016		4,650				4,895
General Electric Capital Corp., Series A, 6.00% 2019		9,000				10,872
General Electric Capital Corp. 4.65% 2021		14,000				16,050
General Electric Capital Corp., Series B, junior subordinated 6.25% (undated)7		56,000				57,518
General Electric Capital Corp., Series A, junior subordinated 7.125% (undated)7		130,600				141,844
Hawker Beechcraft Acquisition Co., LLC, Debtor in Possession Delayed Draw, 9.75% 20127,8,9		25,280				25,961
Hawker Beechcraft Acquisition Co., LLC, Letter of Credit, 2.361% 20147,8,9		4,442				3,208
Hawker Beechcraft Acquisition Co., LLC, Term Loan B, 4.25% 20147,8,9		141,942				102,502
Hawker Beechcraft Acquisition Co., LLC, Term Loan B, 10.75% 20147,8,9		24,818				18,045
Hawker Beechcraft Acquisition Co., LLC 8.50% 20155		3,570				750
Hawker Beechcraft Acquisition Co., LLC 8.875% 20155,12		14,057				2,952
Hawker Beechcraft Acquisition Co., LLC 9.75% 20175		4,450				44
CEVA Group PLC 11.625% 20166		3,725				3,921
CEVA Group PLC 8.375% 20176		7,950				7,811
CEVA Group PLC 11.50% 20186		28,080				26,430
CEVA Group PLC 12.75% 20206		77,775				71,747
Ply Gem Industries, Inc. 13.125% 2014		14,862				15,382
Ply Gem Industries, Inc. 8.25% 2018		86,175				89,837
US Investigations Services, Inc., Term Loan B, 2.997% 20157,8,9		13,204				12,552
US Investigations Services, Inc., Term Loan D, 7.75% 20157,8,9		18,652				18,636
US Investigations Services, Inc. 10.50% 20156		49,850				44,366
US Investigations Services, Inc. 11.75% 20166		19,814				16,941
United Air Lines, Inc., Term Loan B, 2.25% 20147,8,9		16,283				15,998
Continental Airlines, Inc., Series 1997-1, Class A, 7.461% 20168		1,445				1,489
Continental Airlines, Inc., Series 2001-1, Class B, 7.373% 20178		2,194				2,246
Continental Airlines, Inc., Series 1998-1, Class B, 6.748% 20188		586				588
Continental Airlines, Inc., Series 1997-4B, Class B, 6.90% 20188		198				200
Continental Airlines, Inc., Series 1998-1, Class A, 6.648% 20198		6,838				7,229
Continental Airlines, Inc., Series 1997-4, Class A, 6.90% 20198		2,475				2,690
United Air Lines, Inc., Series 1996-A2, 7.87% 20194,5,8		2,421				0
Continental Airlines, Inc., Series 2000-2, Class B, 8.307% 20198		361				370
Continental Airlines, Inc., Series 1999-1, Class A, 6.545% 20208		13,491				14,646
Continental Airlines, Inc., Series 1999-1, Class B, 6.795% 20208		382				385
Continental Airlines, Inc., Series 1999-2, Class A-1, 7.256% 20218		525				573
United Air Lines, Inc., Series 2007-1, Class B, 7.336% 20216,8		4,530				4,428
Continental Airlines, Inc., Series 1999-2, Class B, 7.566% 20218		1,465				1,498
Continental Airlines, Inc., Series 2001-1, Class A-1, 6.703% 20228		3,610				3,917
Continental Airlines, Inc., Series 2007-1, Class B, 6.903% 20228		10,856				11,290
Continental Airlines, Inc., Series 2000-2, Class A-1, 7.707% 20228		2,852				3,155
Continental Airlines, Inc., Series 2000-1, Class A-1, 8.048% 20228		5,203				5,834
Continental Airlines, Inc., Series 2000-1, Class B, 8.388% 20228		461				472
United Air Lines, Inc., Series 2007-1, Class A, 6.636% 20248		7,434				7,838
Associated Materials, LLC and AMH New Finance, Inc. 9.125% 2017		75,245				72,800
BE Aerospace, Inc. 5.25% 2022		49,405				51,999
Northwest Airlines, Inc., Term Loan B, 3.97% 20137,8,9		2,709				2,709
Northwest Airlines, Inc., Term Loan A, 2.22% 20187,8,9		45,630				42,664
Delta Air Lines, Inc., Series 2002-1, Class G-1, MBIA insured, 6.718% 20248		5,428				5,876
JELD-WEN Escrow Corp. 12.25% 20176		43,750				49,437
Nielsen Finance LLC and Nielsen Finance Co. 11.625% 2014		25,868				29,619
Nielsen Finance LLC and Nielsen Finance Co. 11.50% 2016		3,901				4,408
Nielsen Finance LLC, Term Loan 1L, 8.50% 20178,9		12,000				12,960
Nielsen Finance LLC and Nielsen Finance Co. 7.75% 2018		1,000				1,130
Nortek Inc. 10.00% 2018		22,255				24,147
Nortek Inc. 8.50% 2021		21,625				22,382
Esterline Technologies Corp. 6.625% 2017		13,025				13,562
Esterline Technologies Corp. 7.00% 2020		16,590				18,415
Euramax International, Inc. 9.50% 2016		31,755				28,738
Union Pacific Corp. 5.125% 2014		15,325				16,336
Union Pacific Corp. 5.75% 2017		2,065				2,472
Union Pacific Corp. 5.70% 2018		8,000				9,717
Ashtead Capital, Inc. 9.00% 20166		27,020				27,932
United Technologies Corp. 1.20% 2015		1,115				1,134
United Technologies Corp. 1.80% 2017		6,905				7,183
United Technologies Corp. 3.10% 2022		11,400				12,301
United Technologies Corp. 5.70% 2040		2,000				2,686
United Technologies Corp. 4.50% 2042		1,765				2,061
ARAMARK Corp. 8.50% 2015		20,500				21,013
ARAMARK Corp. 8.625% 20166,7,12		2,000				2,050
Burlington Northern Santa Fe LLC 7.00% 2014		13,885				15,206
Burlington Northern Santa Fe LLC 4.10% 2021		7,000				7,823
TransDigm Inc. 7.75% 2018		17,395				19,482
Navios Maritime Acquisition Corporation and Navios Acquisition Finance (US) Inc. 8.625% 2017		14,115				13,303
Navios Maritime Holdings Inc. and Navios Maritime Finance II (US) Inc. 8.125% 2019		6,100				5,307
Honeywell International Inc. 3.875% 2014		13,605				14,324
Florida East Coast Railway Corp. 8.125% 2017		12,075				12,769
Kansas City Southern de México, SA de CV 8.00% 2018		10,000				11,275
AMR Corp. 10.00% 20215		3,000				1,875
American Airlines, Inc., Series 2011-2, Class A, 8.625% 20238		8,734				9,226
Norfolk Southern Corp. 5.75% 2016		6,710				7,755
Norfolk Southern Corp. 5.75% 2018		2,000				2,403
Volvo Treasury AB 5.95% 20156		8,835				9,707
CSX Corp. 5.75% 2013		4,960				5,113
CSX Corp. 6.25% 2015		3,460				3,955
Odebrecht Finance Ltd 7.00% 2020		2,250				2,509
Odebrecht Finance Ltd 5.125% 20226		6,000				6,150
Odebrecht Finance Ltd 6.00% 20236		250				272
Atlas Copco AB 5.60% 20176		7,405				8,610
ERAC USA Finance Co. 5.25% 20206		5,000				5,673
Sequa Corp., Term Loan B, 3.72% 20147,8,9		5,521				5,476
RBS Global, Inc. and Rexnord LLC 8.50% 2018		4,900				5,427
Canadian National Railway Co. 1.45% 2016		5,010				5,070
H&E Equipment Services, Inc. 8.375% 2016		4,800				4,962
Danaher Corp. 2.30% 2016		2,000				2,109
ABB Finance (USA) Inc. 1.625% 2017		1,000				1,019
ABB Finance (USA) Inc. 2.875% 2022		1,000				1,045
John Deere Capital Corp., Series D, 5.75% 2018		575				711
						1,463,755
TELECOMMUNICATION SERVICES — 1.99%
Nextel Communications, Inc., Series E, 6.875% 2013		21,102				21,287
Nextel Communications, Inc., Series F, 5.95% 2014		59,360				59,805
Nextel Communications, Inc., Series D, 7.375% 2015		177,295				179,511
Sprint Nextel Corp. 8.375% 2017		21,975				24,118
Sprint Nextel Corp. 9.125% 20176		42,196				47,154
Sprint Nextel Corp. 9.00% 20186		5,000				5,850
Sprint Nextel Corp. 11.50% 20216		20,975				25,249
Clearwire Communications and Clearwire Finance, Inc., Series B, 12.00% 20156		79,320				75,354
Clearwire Communications and Clearwire Finance, Inc., Series A, 12.00% 20156		72,825				69,184
Clearwire Communications and Clearwire Finance, Inc. 14.75% 20166		6,125				6,186
Clearwire Communications and Clearwire Finance, Inc. 12.00% 20176		38,045				32,528
Wind Acquisition SA 11.75% 20176		102,805				85,842
Wind Acquisition SA 7.25% 20186		49,055				43,904
Verizon Communications Inc. 5.55% 2014		37,250				39,848
Verizon Communications Inc. 3.00% 2016		17,000				18,279
Verizon Communications Inc. 8.75% 2018		4,765				6,639
Verizon Communications Inc. 4.75% 2041		2,075				2,458
Verizon Communications Inc. 6.00% 2041		32,925				44,869
Frontier Communications Corp. 7.875% 2015		18,475				20,507
Frontier Communications Corp. 8.25% 2017		36,875				40,563
Frontier Communications Corp. 8.125% 2018		2,467				2,701
Frontier Communications Corp. 8.50% 2020		15,475				16,829
Frontier Communications Corp. 9.25% 2021		20,625				22,791
Frontier Communications Corp. 8.75% 2022		6,425				6,907
Vodafone Group PLC, Term Loan B, 6.875% 20158,9,12		69,082				72,536
Vodafone Group PLC, Term Loan B, 6.25% 20164,8,9,12		19,623				20,212
Cricket Communications, Inc. 10.00% 2015		26,010				27,311
Cricket Communications, Inc. 7.75% 2016		50,790				54,091
Cricket Communications, Inc. 7.75% 2020		7,775				7,464
Crown Castle International Corp. 9.00% 2015		33,850				37,108
Crown Castle International Corp. 7.75% 20176		9,950				10,833
Crown Castle International Corp. 7.125% 2019		19,000				20,948
LightSquared, Term Loan B, 12.00% 20145,8,9,12		96,867				66,734
Telecom Italia Capital SA, Series B, 5.25% 2013		4,000				4,090
Telecom Italia Capital SA 5.25% 2015		15,035				15,035
Telecom Italia Capital SA 6.999% 2018		24,140				24,562
Telecom Italia Capital SA 7.175% 2019		2,000				2,040
SBC Communications Inc. 5.10% 2014		3,500				3,831
AT&T Inc. 0.875% 2015		5,410				5,457
AT&T Inc. 2.40% 2016		9,000				9,491
SBC Communications Inc. 5.625% 2016		10,000				11,743
AT&T Inc. 1.70% 2017		2,500				2,572
AT&T Inc. 5.35% 2040		7,500				9,229
France Télécom 2.75% 2016		9,000				9,314
France Télécom 4.125% 2021		15,000				16,398
Deutsche Telekom International Finance BV 4.875% 2014		10,000				10,631
Deutsche Telekom International Finance BV 9.25% 2032		8,420				13,179
Deutsche Telekom International Finance BV 4.875% 20426		350				373
tw telecom holdings inc. 8.00% 2018		20,000				22,450
Telefónica Emisiones, SAU 3.729% 2015		3,050				2,870
Telefónica Emisiones, SAU 3.992% 2016		10,000				9,364
Telefónica Emisiones, SAU 5.134% 2020		7,950				7,102
Trilogy International Partners, LLC, 10.25% 20166		22,150				17,831
SBA Telecommunications, Inc. 8.00% 2016		10,824				11,571
SBA Communications Corp. 5.75% 20206		3,375				3,565
Level 3 Communications, Inc. 8.125% 2019		7,000				7,403
Level 3 Communications, Inc. 11.875% 2019		4,625				5,180
Syniverse Holdings, Inc. 9.125% 2019		7,800				8,560
Qwest Capital Funding, Inc. 7.625% 2021		3,900				4,181
						1,453,622
ENERGY — 1.68%
Transocean Inc. 5.05% 2016		22,500				24,941
Transocean Inc. 6.375% 2021		66,400				80,109
Transocean Inc. 7.35% 2041		1,340				1,802
TransCanada PipeLines Ltd. 7.625% 2039		10,750				16,931
TransCanada PipeLines Ltd., junior subordinated 6.35% 20677		61,150				63,915
Kinder Morgan Energy Partners, LP 5.125% 2014		10,325				11,212
Kinder Morgan Energy Partners, LP 3.50% 2016		33,950				36,287
Kinder Morgan Energy Partners, LP 6.00% 2017		2,950				3,432
Kinder Morgan Energy Partners, LP 9.00% 2019		1,660				2,176
Kinder Morgan Energy Partners, LP 3.95% 2022		4,500				4,763
Kinder Morgan Energy Partners, LP 4.15% 2022		12,145				13,079
Kinder Morgan Energy Partners, LP 6.95% 2038		750				947
Kinder Morgan Energy Partners, LP 6.375% 2041		2,500				3,091
Petrobras International Finance Co. 2.875% 2015		2,570				2,634
Petrobras International 5.75% 2020		6,535				7,422
Petrobras International 5.375% 2021		51,515				57,942
Petrobras International Finance Co. 6.75% 2041		580				733
Laredo Petroleum, Inc. 9.50% 2019		57,550				65,319
Anadarko Petroleum Corp. 5.95% 2016		10,500				12,164
Anadarko Petroleum Corp. 6.375% 2017		3,500				4,204
Anadarko Petroleum Corp. 8.70% 2019		31,625				42,321
Anadarko Petroleum Corp. 6.20% 2040		500				624
Total Capital SA 3.00% 2015		11,500				12,336
Total Capital SA 3.125% 2015		1,200				1,289
Total Capital International 1.55% 2017		20,000				20,365
Total Capital SA 4.45% 2020		1,000				1,163
Total Capital International 2.875% 2022		17,040				18,175
Ras Laffan Liquefied Natural Gas III 5.50% 20146		2,400				2,595
Ras Laffan Liquefied Natural Gas III 6.75% 2019		4,000				4,940
Ras Laffan Liquefied Natural Gas III 6.75% 20196		1,000				1,235
Ras Laffan Liquefied Natural Gas II 5.298% 20206,8		26,181				29,388
Ras Laffan Liquefied Natural Gas III 5.838% 20276,8		10,325				11,770
Peabody Energy Corp. 6.00% 20186		22,840				22,954
Peabody Energy Corp. 6.25% 20216		23,575				23,398
StatoilHydro ASA 3.875% 2014		10,000				10,553
StatoilHydro ASA 1.80% 2016		15,000				15,507
Statoil ASA 3.125% 2017		10,000				10,982
StatoilHydro ASA 5.25% 2019		2,000				2,418
Statoil ASA 3.15% 2022		4,000				4,330
StatoilHydro ASA 4.25% 2041		1,350				1,546
Shell International Finance BV 1.875% 2013		10,000				10,102
Shell International Finance BV 4.00% 2014		20,000				21,163
Shell International Finance BV 4.30% 2019		3,000				3,551
Shell International Finance BV 6.375% 2038		5,750				8,687
Arch Coal, Inc. 7.00% 2019		29,200				25,696
Arch Coal, Inc. 7.25% 2020		2,125				1,870
Arch Coal, Inc. 7.25% 2021		17,725				15,509
Alpha Natural Resources, Inc. 6.00% 2019		17,450				15,269
Alpha Natural Resources, Inc. 6.25% 2021		17,475				15,203
Enbridge Energy Partners, LP, Series B, 6.50% 2018		5,225				6,358
Enbridge Energy Partners, LP 9.875% 2019		10,500				14,439
Enbridge Energy Partners, LP, Series B, 7.50% 2038		6,000				8,082
Enterprise Products Operating LLC 5.65% 2013		10,000				10,294
Enterprise Products Operating LLC 5.20% 2020		11,250				13,251
Enterprise Products Operating LLC 4.05% 2022		4,250				4,662
QGOG Atlantic/Alaskan Rigs Ltd. 5.25% 20186,8		26,495				27,688
BG Energy Capital PLC 2.50% 20156		7,000				7,294
BG Energy Capital PLC 2.875% 20166		11,505				12,198
BG Energy Capital PLC 4.00% 20216		6,550				7,239
Woodside Finance Ltd. 4.60% 20216		21,655				23,694
Enbridge Inc. 5.60% 2017		20,067				23,058
Reliance Holdings Ltd. 4.50% 2020		11,250				11,210
Reliance Holdings Ltd. 4.50% 20206		1,260				1,256
Reliance Holdings Ltd. 5.40% 20226		8,350				8,748
Reliance Holdings Ltd. 6.25% 20406		1,250				1,311
Devon Energy Corp. 1.875% 2017		6,990				7,123
Devon Energy Corp. 3.25% 2022		14,500				15,277
Williams Partners L.P. 4.125% 2020		6,500				7,087
Williams Partners L.P. and Williams Partners Finance Corp. 5.25% 2020		1,960				2,265
Williams Partners L.P. 4.00% 2021		11,820				12,671
Southwestern Energy Co. 4.10% 20226		21,010				22,023
Petroplus Finance Ltd. 6.75% 20145,6		39,340				5,704
Petroplus Finance Ltd. 7.00% 20175,6		60,011				8,702
Petroplus Finance Ltd. 9.375% 20195,6		50,518				7,325
Spectra Energy Partners, LP 2.95% 2016		3,750				3,830
Spectra Energy Partners 4.60% 2021		15,730				16,926
El Paso Pipeline Partners Operating Co., LLC 5.00% 2021		15,745				17,271
Cenovus Energy Inc. 4.50% 2014		12,000				12,866
Cenovus Energy Inc. 6.75% 2039		2,500				3,389
CONSOL Energy Inc. 8.00% 2017		4,650				4,952
CONSOL Energy Inc. 8.25% 2020		10,225				10,941
Energy Transfer Partners, LP 7.50% 2020		12,250				14,057
Chevron Corp. 3.95% 2014		500				528
Chevron Corp. 4.95% 2019		10,000				12,210
Canadian Natural Resources Ltd. 5.70% 2017		7,350				8,719
Canadian Natural Resources Ltd. 3.45% 2021		3,700				3,967
Gazprom OJSC, Series 9, 6.51% 2022		2,000				2,331
Gazprom OJSC 6.51% 20226		500				583
Gazprom OJSC 7.288% 20376		4,650				5,859
Gazprom OJSC 7.288% 2037		2,500				3,150
NGPL PipeCo LLC 7.119% 20176		3,100				3,201
NGPL PipeCo LLC 9.625% 20196		7,200				7,848
Petróleos Mexicanos 5.50% 20446		9,800				10,951
PTT Exploration & Production Ltd 5.692% 20216		500				554
PTT Exploration & Production Ltd 6.35% 20426		8,825				9,887
Phillips 66 5.875% 20426		8,760				10,105
Williams Companies, Inc. 8.75% 2032		4,824				6,684
Western Gas Partners LP 4.00% 2022		5,500				5,597
Husky Energy Inc. 5.90% 2014		3,500				3,815
Regency Energy Partners LP and Regency Energy Finance Corp. 6.50% 2021		2,800				2,996
XTO Energy Inc. 5.50% 2018		1,750				2,180
Odebrecht Drilling Norbe VIII/IX Ltd 6.35% 20216,8		1,804				1,967
Energy Transfer Partners, L.P. 6.50% 2042		955				1,094
Transportadora de Gas Internacional 5.70% 20226		850				892
Dolphin Energy Ltd. 5.50% 20216		325				365
						1,226,716
HEALTH CARE — 1.60%
Amgen Inc. 2.50% 2016		21,375				22,398
Amgen Inc. 2.125% 2017		8,500				8,762
Amgen Inc. 3.875% 2021		20,400				22,354
Amgen Inc. 3.625% 2022		5,885				6,293
Amgen Inc. 5.15% 2041		3,500				3,899
Amgen Inc. 5.375% 2043		46,060				52,861
VWR Funding, Inc., Series B, 10.25% 201512		79,476				82,059
PTS Acquisition Corp. 9.50% 201512		73,175				75,279
Express Scripts Inc. 2.75% 20146		1,000				1,031
Express Scripts Inc. 6.25% 2014		4,000				4,379
Medco Health Solutions, Inc. 2.75% 2015		6,305				6,537
Express Scripts Inc. 3.125% 2016		24,864				26,348
Express Scripts Inc. 7.25% 2019		8,985				11,434
Express Scripts Inc. 4.75% 20216		1,000				1,145
Express Scripts Inc. 3.90% 20226		8,500				9,166
Express Scripts Inc. 6.125% 20416		2,750				3,660
Quintiles, Term Loan B, 5.00% 20187,8,9		60,721				60,834
Tenet Healthcare Corp. 7.375% 2013		32,447				33,420
Tenet Healthcare Corp. 9.25% 2015		22,805				25,599
inVentiv Health Inc. 10.00% 20186		46,175				38,325
inVentiv Health Inc. 10.00% 20186		20,490				17,007
Boston Scientific Corp. 6.40% 2016		21,735				25,335
Boston Scientific Corp. 6.00% 2020		23,580				28,497
Kinetic Concepts, Inc. 10.50% 20186		30,160				32,045
Kinetic Concepts, Inc. 12.50% 20196		20,100				18,693
Novartis Capital Corp. 4.125% 2014		17,250				18,213
Novartis Capital Corp. 2.90% 2015		14,000				14,918
Novartis Securities Investment Ltd. 5.125% 2019		10,500				12,741
GlaxoSmithKline Capital Inc. 4.85% 2013		13,500				13,970
GlaxoSmithKline Capital PLC 1.50% 2017		16,160				16,508
GlaxoSmithKline Capital PLC 2.85% 2022		14,000				14,731
Elan Finance PLC and Elan Finance Corp. 8.75% 2016		25,865				28,257
Elan Finance PLC and Elan Finance Corp. 8.75% 2016		8,965				9,817
Gilead Sciences, Inc. 3.05% 2016		10,265				10,998
Gilead Sciences, Inc. 4.40% 2021		15,010				17,103
Gilead Sciences, Inc. 5.65% 2041		5,215				6,617
Roche Holdings Inc. 6.00% 20196		21,250				26,996
Roche Holdings Inc. 7.00% 20396		4,000				6,243
Symbion Inc. 8.00% 2016		32,230				32,391
Alkermes, Inc., Term Loan B, 6.75% 20177,8,9		19,410				19,629
Alkermes, Inc., Term Loan B, 9.50% 20187,8,9		9,535				9,761
Patheon Inc. 8.625% 20176		26,276				25,882
Grifols Inc. 8.25% 2018		21,643				23,807
Pfizer Inc 5.35% 2015		20,000				22,482
Merge Healthcare Inc 11.75% 2015		21,065				22,329
HCA Inc. 6.375% 2015		7,400				7,997
HCA Inc., Term Loan B2, 3.711% 20177,8,9		6,292				6,208
HCA Inc. 7.50% 2022		4,350				4,905
Centene Corp. 5.75% 2017		17,140				18,061
UnitedHealth Group Inc. 6.00% 2017		12,430				15,232
UnitedHealth Group Inc. 4.625% 2041		2,000				2,269
Multiplan Inc. 9.875% 20186		15,100				16,667
Surgical Care Affiliates, Inc. 8.875% 20156,7,12		6,591				6,723
Surgical Care Affiliates, Inc. 10.00% 20176		9,500				9,714
Cardinal Health, Inc. 4.00% 2015		3,000				3,244
Cardinal Health, Inc. 5.80% 2016		10,000				11,639
Cardinal Health, Inc. 1.90% 2017		740				753
Bausch & Lomb Inc. 9.875% 2015		14,175				14,866
McKesson Corp. 3.25% 2016		7,525				8,123
McKesson Corp. 4.75% 2021		3,475				4,090
Rotech Healthcare Inc. 10.50% 2018		19,385				10,856
WellPoint, Inc. 6.00% 2014		10,000				10,749
Sanofi 0.661% 20137		10,000				10,025
Endo Pharmaceuticals Holdings Inc. 7.00% 2019		2,450				2,719
Endo Pharmaceuticals Holdings Inc. 7.00% 2020		6,350				7,056
Coventry Health Care, Inc. 6.30% 2014		8,370				9,111
Biogen Idec Inc. 6.00% 2013		6,000				6,180
DENTSPLY International Inc. 2.75% 2016		5,620				5,757
						1,163,697
INFORMATION TECHNOLOGY — 1.47%
First Data Corp. 9.875% 2015		4,958				5,032
First Data Corp. 9.875% 2015		1,451				1,480
First Data Corp. 10.55% 201512		13,581				13,989
First Data Corp. 11.25% 2016		230,150				220,369
First Data Corp., Term Loan D, 5.247% 20177,8,9		71,536				69,427
First Data Corp. 7.375% 20196		21,575				22,627
First Data Corp. 8.875% 20206		7,300				8,030
First Data Corp. 8.25% 20216		32,230				32,311
First Data Corp. 12.625% 2021		46,558				47,256
First Data Corp. 8.75% 20226,7,12		88,116				88,887
SRA International, Inc., Term Loan B, 6.50% 20187,8,9		67,305				64,823
SRA International, Inc. 11.00% 2019		58,195				59,068
Freescale Semiconductor, Inc., Term Loan, 4.495% 20167,8,9		13,647				12,870
Freescale Semiconductor, Inc. 10.125% 2016		4,500				4,736
Freescale Semiconductor, Inc. 9.25% 20186		18,000				19,350
Freescale Semiconductor, Inc. 10.125% 20186		24,756				27,108
Freescale Semiconductor, Inc., Term Loan B, 6.00% 20197,8,9		27,830				27,158
International Business Machines Corp. 1.95% 2016		14,750				15,402
International Business Machines Corp. 2.00% 2016		35,000				36,492
International Business Machines Corp. 5.60% 2039		96				133
International Business Machines Corp. 4.00% 2042		1,910				2,147
Blackboard Inc., Term Loan B, 7.50% 20187,8,9		54,775				53,804
SunGard Data Systems Inc. 7.375% 2018		28,000				29,890
SunGard Data Systems Inc. 7.625% 2020		18,165				19,596
Cisco Systems, Inc. 0.718% 20147		10,000				10,053
Cisco Systems, Inc. 2.90% 2014		10,000				10,570
Cisco Systems, Inc. 4.95% 2019		20,000				24,043
Jabil Circuit, Inc. 8.25% 2018		20,925				25,215
Jabil Circuit, Inc. 5.625% 2020		11,150				11,903
Jabil Circuit, Inc. 4.70% 2022		2,050				2,050
NXP BV and NXP Funding LLC 10.00% 20133		16,241				17,420
NXP BV and NXP Funding LLC 9.75% 20186		7,000				8,050
Advanced Micro Devices, Inc. 8.125% 2017		10,100				10,681
Advanced Micro Devices, Inc. 7.75% 2020		6,250				6,578
Ceridian Corp. 11.25% 2015		15,000				14,775
Serena Software, Inc. 10.375% 2016		13,430				13,900
Hughes Satellite Systems Corp. 6.50% 2019		9,550				10,314
Hughes Satellite Systems Corp. 7.625% 2021		1,175				1,304
Xerox Corp. 6.40% 2016		768				876
Xerox Corp. 2.95% 2017		7,940				8,037
Xerox Corp. 6.75% 2017		360				421
Lawson Software, Inc. 9.375% 20196		6,000				6,450
Samsung Electronics America, Inc., 1.75% 20176		3,500				3,536
						1,068,161
CONSUMER STAPLES — 1.18%
Altria Group, Inc. 9.70% 2018		18,000				25,713
Altria Group, Inc. 9.25% 2019		54,890				77,616
Altria Group, Inc. 4.75% 2021		3,000				3,527
Altria Group, Inc. 9.95% 2038		23,500				39,745
Anheuser-Busch InBev NV 0.815% 20147		15,150				15,234
Anheuser-Busch InBev NV 0.80% 2015		2,500				2,511
Anheuser-Busch InBev NV 3.625% 2015		21,000				22,555
Anheuser-Busch InBev NV 4.125% 2015		10,000				10,827
Anheuser-Busch InBev NV 1.375% 2017		11,500				11,632
Anheuser-Busch InBev NV 7.75% 2019		25,000				33,656
Anheuser-Busch InBev NV 5.375% 2020		2,000				2,457
Anheuser-Busch InBev NV 2.50% 2022		3,000				3,069
Anheuser-Busch InBev NV 3.75% 2042		2,500				2,645
Albertson’s, Inc. 7.25% 2013		10,730				10,609
SUPERVALU Inc. 7.50% 2014		42,615				40,804
SUPERVALU Inc. 8.00% 2016		22,305				19,322
Albertson’s, Inc. 8.00% 2031		4,510				2,599
Kraft Foods Inc. 1.625% 20156		2,000				2,035
Kraft Foods Inc. 2.25% 20176		4,105				4,241
Kraft Foods Inc. 6.125% 2018		2,500				3,067
Kraft Foods Inc. 5.375% 20206		6,021				7,288
Kraft Foods Inc. 5.375% 2020		5,479				6,619
Kraft Foods Inc. 3.50% 20226		3,000				3,190
Kraft Foods Inc. 6.50% 20406		3,000				4,024
Kraft Foods Inc. 5.00% 20426		32,000				36,336
Rite Aid Corp. 9.75% 2016		10,000				11,075
Rite Aid Corp. 10.375% 2016		11,488				12,177
Rite Aid Corp. 10.25% 2019		19,590				22,186
Rite Aid Corp. 8.00% 2020		11,450				12,953
SABMiller Holdings Inc. 1.85% 20156		2,000				2,048
SABMiller Holdings Inc. 2.45% 20176		14,865				15,506
SABMiller Holdings Inc. 3.75% 20226		23,000				25,302
SABMiller Holdings Inc. 4.95% 20426		11,000				13,299
PepsiCo, Inc. 3.10% 2015		10,000				10,576
PepsiCo, Inc. 2.50% 2016		5,000				5,283
PepsiCo, Inc. 7.90% 2018		15,000				20,311
Pernod Ricard SA 2.95% 20176		23,000				23,761
Pernod Ricard SA 4.45% 20226		7,000				7,619
Pernod Ricard SA 5.50% 20426		3,000				3,418
Coca-Cola Co. 1.50% 2015		14,090				14,485
Coca-Cola Co. 1.80% 2016		12,000				12,491
Coca-Cola Co. 3.15% 2020		4,000				4,381
Constellation Brands, Inc. 8.375% 2014		3,675				4,201
Constellation Brands, Inc. 7.25% 2017		16,425				19,032
Constellation Brands, Inc. 6.00% 2022		2,825				3,132
Wesfarmers Ltd. 6.998% 20136		25,000				25,900
Stater Bros. Holdings Inc. 7.75% 2015		14,250				14,588
Stater Bros. Holdings Inc. 7.375% 2018		8,575				9,282
British American Tobacco International Finance PLC 2.125% 20176		10,500				10,695
British American Tobacco International Finance PLC 9.50% 20186		8,705				11,969
Wal-Mart Stores, Inc. 2.875% 2015		10,000				10,637
Wal-Mart Stores, Inc. 2.80% 2016		10,000				10,772
Procter & Gamble Co. 3.50% 2015		17,250				18,535
Unilever Capital Corp. 3.65% 2014		17,500				18,376
General Mills, Inc. 0.816% 20147		15,000				15,046
Diageo Capital PLC 5.50% 2016		11,161				13,154
Tyson Foods, Inc. 6.85% 20167		11,500				13,052
Kimberly-Clark Corp. 7.50% 2018		9,000				12,165
Kroger Co. 6.40% 2017		8,250				9,907
Delhaize Group 5.70% 2040		10,691				8,946
Smithfield Foods, Inc., Series B, 7.75% 2013		1,495				1,585
Smithfield Foods, Inc. 10.00% 2014		2,696				3,188
Smithfield Foods, Inc. 6.625% 2022		3,400				3,536
Philip Morris International Inc. 1.625% 2017		2,000				2,050
Philip Morris International Inc. 4.375% 2041		3,000				3,384
Del Monte Corp. 7.625% 2019		4,125				4,115
TreeHouse Foods, Inc. 7.75% 2018		3,100				3,356
Safeway Inc. 3.95% 2020		3,020				2,879
						861,674
MATERIALS — 0.93%
ArcelorMittal 5.375% 2013		4,750				4,884
ArcelorMittal 3.75% 20157		17,500				17,751
ArcelorMittal 4.50% 20177		11,430				11,329
ArcelorMittal 5.50% 20217		23,815				23,069
ArcelorMittal 6.25% 20227		35,410				35,583
ArcelorMittal 6.75% 20417		23,250				21,777
Reynolds Group Inc. 7.75% 2016		17,902				18,887
Reynolds Group Inc. 8.50% 2018		19,595				19,840
Reynolds Group Inc. 7.125% 2019		8,000				8,540
Reynolds Group Inc. 7.875% 2019		13,960				15,461
Reynolds Group Inc. 9.875% 2019		20,235				21,550
Reynolds Group Inc. 9.875% 20196		17,730				18,816
Georgia Gulf Corp. 9.00% 20176		53,480				60,566
International Paper Co. 7.40% 2014		12,500				13,824
International Paper Co. 7.95% 2018		15,545				19,978
International Paper Co. 7.30% 2039		5,615				7,424
Inmet Mining Corp. 8.75% 20206		33,140				32,809
Cliffs Natural Resources Inc. 4.875% 2021		28,275				28,360
Cliffs Natural Resources Inc. 6.25% 2040		2,480				2,520
Ball Corp. 7.125% 2016		12,700				13,859
Ball Corp. 5.75% 2021		8,615				9,390
Ball Corp. 5.00% 2022		940				995
Teck Resources Ltd. 3.15% 2017		2,500				2,596
Teck Resources Ltd. 10.75% 2019		8,500				10,298
Teck Resources Ltd. 4.75% 2022		7,745				8,420
Teck Resources Ltd. 6.25% 2041		1,750				1,947
Xstrata Canada Financial Corp. 2.85% 20146		5,000				5,137
Xstrata Canada Financial Corp. 3.60% 20176		5,000				5,220
Xstrata Canada Financial Corp. 4.95% 20216		11,500				12,293
Dow Chemical Co. 7.60% 2014		14,450				16,081
Dow Chemical Co. 5.25% 2041		4,000				4,691
Newpage Corp. 11.375% 20145		29,615				20,138
Consolidated Minerals Ltd. 8.875% 20166		24,255				18,919
BHP Billiton Finance (USA) Ltd. 5.50% 2014		11,730				12,714
BHP Billiton Finance (USA) Ltd. 1.00% 2015		3,000				3,025
BHP Billiton Finance (USA) Ltd. 1.625% 2017		3,000				3,064
Rio Tinto Finance (USA) Ltd. 8.95% 2014		2,500				2,845
Rio Tinto Finance (USA) Ltd. 2.25% 2016		9,000				9,415
Rio Tinto Finance (USA) Ltd. 9.00% 2019		3,000				4,187
Graphic Packaging International, Inc. 9.50% 2017		13,150				14,580
Graphic Packaging International, Inc. 7.875% 2018		1,500				1,673
Newcrest Finance Pty Ltd. 4.45% 20216		11,895				12,352
Newcrest Finance Pty Ltd. 5.75% 20416		2,000				2,115
Ardagh Packaging Finance 7.375% 20176		9,070				9,773
Ardagh Packaging Finance 11.125% 20186,7,12		4,273				3,835
Ardagh Packaging Finance 9.125% 20206		585				616
FMG Resources 6.375% 20166		3,000				3,030
FMG Resources 6.00% 20176		8,400				8,421
MacDermid 9.50% 20176		10,850				11,365
E.I. du Pont de Nemours and Co. 0.888% 20147		10,000				10,076
Ecolab Inc. 3.00% 2016		7,455				7,958
Ecolab Inc. 4.35% 2021		1,000				1,137
Ecolab Inc. 5.50% 2041		750				945
JMC Steel Group Inc. 8.25% 20186		9,250				9,319
OMNOVA Solutions Inc. 7.875% 2018		8,500				8,681
Smurfit Capital Funding PLC 7.50% 2025		7,125				7,232
Anglo American Capital PLC 2.15% 20136		5,000				5,043
Packaging Dynamics Corp. 8.75% 20166		2,865				3,044
Arbermarle Corp. 5.10% 2015		2,570				2,800
Taminco Global Chemical Corp. 9.75% 20206		2,440				2,574
Airgas, Inc. 7.125% 2018		1,250				1,328
Praxair, Inc. 4.375% 2014		1,000				1,063
CEMEX SA 9.25% 20206		979				871
CRH America, Inc. 8.125% 2018		500				605
						678,638
UTILITIES — 0.70%
Consumers Energy Co., First Mortgage Bonds, 6.125% 2019		7,548				9,495
Consumers Energy Co., First Mortgage Bonds, 6.70% 2019		29,193				38,363
Consumers Energy Co. 5.65% 2020		4,731				5,919
CMS Energy Corp. 6.25% 2020		20,345				23,139
Consumers Energy Co. 2.85% 2022		3,370				3,531
CMS Energy Corp. 5.05% 2022		8,817				9,453
TXU, Term Loan, 4.746% 20177,8,9		79,442				50,753
Texas Competitive Electric Holdings Co. LLC, 11.50% 20206		39,780				29,636
Nevada Power Co., General and Refunding Mortgage Notes, Series L, 5.875% 2015		690				770
Nevada Power Co., General and Refunding Mortgage Notes, Series M, 5.95% 2016		13,700				15,882
Nevada Power Co., General and Refunding Mortgage Notes, Series O, 6.50% 2018		460				571
Nevada Power Co., General and Refunding Mortgage Notes, Series V, 7.125% 2019		4,043				5,248
NV Energy, Inc 6.25% 2020		17,500				20,371
AES Corp. 7.75% 2015		10,000				11,450
AES Corp. 8.00% 2017		4,000				4,670
AES Corp. 8.00% 2020		7,000				8,260
AES Corp. 7.375% 20216		10,125				11,631
MidAmerican Energy Co. 5.95% 2017		10,625				12,751
PacifiCorp., First Mortgage Bonds, 5.65% 2018		5,500				6,719
MidAmerican Energy Holdings Co. 5.75% 2018		10,000				12,047
MidAmerican Energy Holdings Co. 5.95% 2037		3,375				4,449
Electricité de France SA 5.50% 20146		19,000				20,154
Electricité de France SA 6.95% 20396		8,000				10,377
National Rural Utilities Cooperative Finance Corp. 5.50% 2013		13,850				14,492
National Rural Utilities Cooperative Finance Corp. 1.00% 2015		8,250				8,318
E.ON International Finance BV 5.80% 20186		17,000				20,268
NRG Energy, Inc. 7.375% 2017		14,400				14,976
NRG Energy, Inc. 8.25% 2020		3,850				4,168
CenterPoint Energy Resources Corp. 4.50% 2021		16,130				17,859
Intergen Power 9.00% 20176		18,000				17,595
Abu Dhabi National Energy Co. PJSC (TAQA) 6.165% 2017		10,000				11,650
Abu Dhabi National Energy Co. PJSC (TAQA) 6.165% 20176		4,000				4,660
Virginia Electric and Power Co., Series 2003-A, 4.75% 2013		6,000				6,149
Virginia Electric and Power Co., Series B, 5.95% 2017		4,500				5,579
Midwest Generation, LLC, Series B, 8.56% 20164,8		9,761				8,980
Entergy Corp. 4.70% 2017		8,000				8,591
Eskom Holdings Ltd. 5.75% 20216		6,820				7,596
Carolina Power & Light Co. d/b/a Progress Energy Carolinas, Inc. 5.25% 2015		6,000				6,839
Public Service Co. of Colorado 5.80% 2018		122				150
Xcel Energy Inc. 4.70% 2020		5,000				5,889
Teco Finance, Inc. 5.15% 2020		5,172				5,985
AES Panamá, SA 6.35% 20166		4,500				4,943
Israel Electric Corp. Ltd. 8.10% 20966		4,905				4,798
National Grid PLC 6.30% 2016		4,000				4,638
CEZ, a s 4.25% 20226		2,820				2,969
Veolia Environnement 6.00% 2018		2,500				2,832
Enel Finance International SA 6.00% 20396		3,000				2,494
Colbun SA 6.00% 20206		2,000				2,188
Iberdrola Finance Ireland 5.00% 20196		1,060				1,005
						511,250
BONDS & NOTES OF GOVERNMENTS & GOVERNMENT AGENCIES OUTSIDE THE U.S. — 0.14%
Polish Government 5.25% 2014		1,500				1,588
Polish Government 6.375% 2019		15,985				19,601
Polish Government 5.00% 2022		3,000				3,450
Hungarian Government 6.25% 2020		12,935				13,291
Israeli Government 5.125% 2019		3,000				3,459
Israeli Government 4.00% 2022		8,500				9,060
Russian Federation 3.25% 20176		2,800				2,906
Russian Federation 3.25% 2017		2,000				2,076
Russian Federation 7.50% 20308		4,645				5,777
France Government Agency-Guaranteed, Société Finance 2.875% 20146		10,000				10,416
Province of Ontario, Series 1, 1.875% 2012		10,000				10,046
South Africa (Republic of) 5.50% 2020		3,500				4,182
South Africa (Republic of) 6.25% 2041		2,500				3,425
Croatian Government 6.25% 20176		485				504
Croatian Government 6.75% 2019		4,800				5,064
Latvia (Republic of) 5.25% 20176		5,240				5,515
Romanian Government 6.75% 20226		3,000				3,184
KfW 1.00% 2015		1,825				1,846
						105,390
ASSET-BACKED OBLIGATIONS8 — 0.10%
Chase Issuance Trust, Series 2008-4, Class A, 4.65% 2015		10,000				10,261
AEP Texas Central Transitioning Funding II LLC, Secured Transition Bonds, Series A, Class A-3, 5.09% 2017		8,265				8,933
Home Equity Asset Trust, Series 2004-7, Class M-1, 1.176% 20357		10,000				7,567
AmeriCredit Automobile Receivables Trust, Series 2008-A-F, Class A-4, FSA insured, 6.96% 2014		6,966				7,064
First Horizon ABS Trust, Series 2006-HE2, Class A, FSA insured, 0.376% 20267		2,664				2,007
First Horizon ABS Trust, Series 2007-HE1, Class A, FSA insured, 0.376% 20297		5,800				4,403
CWHEQ Revolving Home Equity Loan Trust, Series 2006-I, Class 2-A, FSA insured, 0.389% 20377		2,799				2,168
CWHEQ Revolving Home Equity Loan Trust, Series 2007-B, Class A, FSA insured, 0.399% 20377		4,923				3,644
PG&E Energy Recovery Funding LLC, Series 2005-2, Class A-3, 5.12% 2014		4,930				4,965
Countryplace Manufactured Housing Contract, Series 2005-1, Class A-3, AMBAC insured, 4.80% 20356		3,486				3,489
Countryplace Manufactured Housing Contract, Series 2005-1, Class A-4, AMBAC insured, 5.20% 20356,7		1,145				1,050
Citibank Credit Card Issuance Trust, Series 2008, Class A5, 4.85% 2015		3,000				3,096
Conseco Finance Home Loan Trust, Series 1999-G, Class B-2, 10.96% 2029		13,630				2,758
RAMP Trust, Series 2003-RZ4, Class A-7, 4.79% 20337		2,281				2,309
Ameriquest Mortgage Securities Inc., Series 2003-12, Class M-1, 1.371% 20347		2,721				2,150
IndyMac Home Equity Mortgage Loan Asset-backed Trust, Series 2007-H1, Class A-1, FSA insured, 0.406% 20377		2,804				2,050
CPS Auto Receivables Trust, Series 2007-B, Class A-4, FSA insured, 5.60% 20146		1,568				1,584
Home Equity Mortgage Trust, Series 2006-6, Class 2A-1, 0.346% 20377		14,648				1,118
Residential Asset Securities Corp. Trust, Series 2003-KS6, Class A-2, 0.846% 20337		92				81
						70,697
MUNICIPALS — 0.05%
State of California, Various Purpose General Obligation Bonds (Federally Taxable), 6.20% 2019		24,675				29,518
State of New Jersey, Economic Development Authority, Energy Facility Revenue Bonds (ACR Energy Partners, LLC Project),
Series 2011-B, 12.00% 20306		1,875				2,032
State of South Dakota, Educational Enhancement Funding Corp., Tobacco Settlement Asset-backed Bonds,
Series 2002-A, Class A, 6.72% 2025		1,838				1,853
						33,403
Total bonds & notes (cost: $18,479,930,000)						19,509,460
Short-term securities — 6.19%
Freddie Mac 0.07%–0.205% due 8/1/2012–4/1/2013		1,086,450				1,086,036
U.S. Treasury Bills 0.106%–0.165% due 8/16/2012–4/4/2013		784,200				784,020
Fannie Mae 0.06%–0.19% due 8/1/2012–1/23/2013		530,800				530,638
Federal Home Loan Bank 0.105%–0.21% due 8/24/2012–6/14/2013		425,000				424,785
Coca-Cola Co. 0.15%–0.22% due 8/9–11/13/20126		168,000				167,941
Procter & Gamble Co. 0.11%–0.14% due 8/8–9/25/20126		158,900				158,888
Federal Farm Credit Banks 0.18%–0.22% due 9/12/2012–7/3/2013		155,500				155,334
Straight-A Funding LLC 0.17%–0.18% due 9/20–10/23/20126		145,905				145,847
Variable Funding Capital Company LLC 0.16%–0.18% due 8/1–9/24/20126		145,000				144,977
Wal-Mart Stores, Inc. 0.10%–0.15% due 8/6–8/27/20126		125,000				124,993
United Technologies Corp. 0.15%–0.18% due 8/27–9/26/20126		110,400				110,366
Private Export Funding Corp. 0.16%–0.17% due 8/31–9/11/20126		85,000				84,980
Abbott Laboratories 0.14%–0.15% due 8/28–8/29/20126		76,500				76,492
National Rural Utilities Cooperative Finance Corp. 0.12%–0.13% due 8/15–8/16/2012		76,100				76,096
Regents of the University of California 0.15% due 8/13–9/17/2012		67,200				67,191
NetJets Inc. 0.11%–0.12% due 8/9–8/24/20126		61,500				61,497
General Electric Co. 0.14% due 8/13/2012		60,000				59,997
Paccar Financial Corp. 0.13% due 8/21–8/22/2012		52,000				51,996
Chariot Funding, LLC 0.17% due 8/29/20126		50,000				49,993
eBay Inc. 0.17% due 9/19/20126		50,000				49,986
John Deere Credit Ltd. 0.13% due 8/17/20126		40,000				39,998
Texas Instruments Inc. 0.11% due 8/28/20126		37,500				37,497
Medtronic Inc. 0.15% due 10/25/20126		20,000				19,988
Total short-term securities (cost: $4,509,442,000)						4,509,536
Total investment securities (cost: $66,144,873,000)						73,019,034
Other assets less liabilities						(147,679	)
Net assets					$	72,871,355

As permitted by U.S. Securities and Exchange Commission regulations, “Miscellaneous” securities include holdings in their first year of acquisition that have not previously been publicly disclosed.

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

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

3Acquired through a private placement transaction exempt from registration under the Securities Act of 1933. May be subject to legal or contractual restrictions on resale. Further details on these holdings appear below.

								Percent
	Acquisition	Cost			Value			of net
	date(s)		(000	)		(000	)	assets
NXP BV and NXP Funding LLC 10.00% 2013	7/17/2009	$	15,154		$	17,420			.02	%
General Maritime Corp.	11/6/2009–4/14/2010		6,077			203			.00
General Maritime Corp., warrants, expire 2017	11/6/2009–4/14/2010		2,171			69			.00
Atrium Corp.	4/30/2010		163			73			.00
Total restricted securities		$	23,565		$	17,765			.02	%

4Valued under fair value procedures adopted by authority of the board of trustees. The total value of all such securities, including those in “Miscellaneous,” was $92,366,000, which represented .13% of the net assets of the fund.

5Scheduled interest and/or principal payment was not received.

6Acquired in a transaction exempt from registration under Rule 144A or section 4(2) of 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 $4,980,324,000, which represented 6.83% of the net assets of the fund.

7Coupon rate may change periodically.

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

9Loan participations and assignments; may be subject to legal or contractual restrictions on resale. The total value of all such loans was $1,350,259,000, which represented 1.85% of the net assets of the fund.

10Index-linked bond whose principal amount moves with a government price index.

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

12Payment in kind; the issuer has the option of paying additional securities in lieu of cash.

Key to abbreviations

ADR = American Depositary Receipts

FDR = Fiduciary Depositary Receipts

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

Investors should carefully consider investment objectives, risks, charges and expenses. This and other important information is contained in the fund prospectus and summary prospectus, which can be obtained from your financial professional and should be read carefully before investing. You may also call American Funds Service Company (AFS) at 800/421-4225 or visit the American Funds website at americanfunds.com.

MFGEFP-906-0912O-S32882

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON INVESTMENT PORTFOLIO

To the Shareholders and Board of Trustees of

The Income Fund of America:

We have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the financial statements of The Income Fund of America (the “Fund”) as of July 31, 2012, and for the year then ended and have issued our report thereon dated September 7, 2012, which report and financial statements are included in Item 1 of this Certified Shareholder Report on Form N-CSR.  Our audit also included the Fund’s investment portfolio (the “Schedule”) as of July 31, 2012, appearing in Item 6 of this Form N-CSR.  This Schedule is the responsibility of the Fund’s management.  Our responsibility is to express an opinion based on our audit.  In our opinion, the Schedule referred to above, when considered in relation to the basic financial statements taken as a whole of the Fund referred to above, presents fairly, in all material respects, the information set forth therein.

DELOITTE & TOUCHE LLP

Costa Mesa, California

September 7, 2012

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 trustees since the Registrant last submitted a proxy statement to its shareholders.  The procedures are as follows.  The Registrant has a nominating and governance 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 trustees. 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 and governance 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 and governance 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)	The Code of Ethics that is the subject of the disclosure required by Item 2 is attached as an exhibit hereto.
(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

By /s/ Hilda L. Applbaum

Hilda L. Applbaum, Vice Chairman and

Principal Executive Officer

Date: September 28, 2012

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: September 28, 2012

By /s/ Jeffrey P. Regal

Jeffrey P. Regal, Treasurer and

Principal Financial Officer

Date: September 28, 2012