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

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

Certified Shareholder Report of

Registered Management Investment Companies

Investment Company Act File Number: 811-1880

The Income Fund of America, Inc.

(Exact Name of Registrant as specified in charter)

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

San Francisco, California 94120

(Address of principal executive offices)

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

Date of fiscal year end: July 31

Date of reporting period: January 31, 2006

Patrick F. Quan

Capital Research and Management Company

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

San Francisco, California 94120

(name and address of agent for service)

Copies to:

Michael Glazer

Paul, Hastings, Janofsky & Walker LLP

515 South Flower Street

Los Angeles, California 90071

(Counsel for the Registrant)

ITEM 1 - Reports to Stockholders

[Logo - American Funds^®]

The right choice for the long term^®

The Income Fund of America

[cover: close-up photo of a woven mat]

Semi-annual report for the six months ended January 31, 2006

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

This fund is one of the 29 American Funds. The organization ranks among the nation’s three largest mutual fund families. For nearly 75 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.

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

Here are the average annual total returns on a $1,000 investment with all distributions reinvested for periods ended December 31, 2005 (the most recent calendar quarter):

Class A shares	1 year	5 years	10 years
Reflecting 5.75% maximum sales charge	-2.52%	+6.81%	+9.00%

The fund’s investment adviser waived 5% of its management fees from September 1, 2004, through March 31, 2005, and increased the waiver to 10% on April 1, 2005. Fund results shown reflect the waiver, without which they would have been lower. Please see the Financial Highlights table on page 26 for details.

The fund’s 30-day yield for Class A shares as of February 28, 2006, calculated in accordance with the Securities and Exchange Commission formula, was 3.78%, which reflects a fee waiver (3.76% without the fee waiver). The fund’s distribution rate for Class A shares as of that date was 3.52%. 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 35. Please see the inside back cover for important information about other share classes.

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

Fellow shareholders:

[close-up photo of a woven mat]

During the period ended January 31, 2006, rising interest rates and higher energy prices were driving forces behind The Income Fund of America’s six-month results. The Gulf Coast hurricanes dealt a serious blow to oil production and refineries in the United States. Oil prices rose to almost $70 a barrel as refineries in this area were shut down, and oil and natural gas production was temporarily halted. Despite higher energy prices, the U.S. economy remained strong. This strength reinforced the Federal Reserve’s resolve to increase the federal funds rate, a short-term lending rate. Over the course of the six-month period, the Fed raised rates five times to 4.5%.

A continued commitment to income

As the Federal Reserve raised rates, the yields for the fund’s cash and short-term bond holdings rose. This, coupled with higher dividends from the fund’s stock holdings, allowed us to increase the fund’s quarterly dividend to 17.5 cents a share in December. Also in December, we paid a special dividend of 5.0 cents a share. At this time, we’re pleased to announce that we will, once again, be increasing the fund’s quarterly dividend to 18.5 cents a share, beginning with the June payment.

Income has always been the primary objective of The Income Fund of America. Due to our unwavering adherence to stringent income guidelines, the fund has provided shareholders with a higher dividend rate than its peer group and the unmanaged Standard & Poor’s 500 Composite Index for more than a decade. As of January 31, 2006, the fund’s 3.8% dividend yield was more than twice the 1.7% yield for the S&P 500 and significantly higher than the 2.7% yield for the Lipper Income Funds Average.

The fund’s high dividend income also contributed to its overall results — accounting for more than half the fund’s six-month total return of 3.4%. Although less than the 4.7% total return for the S&P 500, the fund’s return was higher than the 3.0% total return for the Lipper Income Funds Average and well above the 0.8% total return of the unmanaged Lehman Brothers Aggregate Bond Index.

A review of the fund’s portfolio

During the past six months, The Income Fund of America’s substantial holdings in the financial and utility sectors — the fund’s two largest sector exposures — were strong contributors to results.

One of the key areas of strength in the financial sector was commercial banks. Historically, commercial banks have tended to do poorly in rising interest-rate environments. Over the past decade, banks have, however, expanded into non-lending sources of revenue, such as investment banking, brokerage and basic transaction fees. The advents of online banking and electronic bill pay have made customers more likely to maintain their current checking accounts to avoid the inconvenience of switching banks. Industry deregulation and consolidation have allowed banks to increase their efficiency and reduce risks by creating greater geographic diversification and more stable sources of revenue.

The fund’s strongest bank holdings had solid fundamentals and were poised to benefit from a recovery in the industry, markets or economies in which they operate. For example, Brazil’s Unibanco and Banco Itaú — two of the fund’s biggest price gainers during the last six months — benefited from the continuing recovery in the Brazilian economy.

Over the past few years, gas and electric utility companies also went through a transition that has strengthened their business and increased their attractiveness to investors. Shortly after the demise of Enron, these companies refocused on a more stable business model — generating reliable sources of electricity — and improved their balance sheets. During the beginning stages of the transition, the fund’s ability to invest in bonds allowed shareholders to take advantage of long-term opportunities without having to take excessive risks. As fundamentals and business prospects improved, we found more long-term opportunities in utility stocks.

During the six-month period, higher oil prices had differing effects on the fund’s results. They fueled huge profits and generated higher stock returns for oil companies like Royal Dutch Shell and Marathon Oil Corp. At the same time, higher energy prices caused chemical and automobile companies to lag the general stock market.

When energy prices spiked, chemical companies could not pass along all the additional expenses to their customers, such as automobile companies, because these companies were facing their own challenges and unable to pay higher prices. In the U.S. automotive industry, a large portion of past company profits were tied to the sales of sports utility vehicles (SUVs). However, over the more recent period, higher prices at the pumps caused SUV sales to slow. This, combined with the high cost of labor as well as increased commodity prices, added further stress on these companies’ bottom lines.

Despite the sharp increases in energy prices and the steady rate hikes by the Federal Reserve, the fund’s bond holdings had a modest, yet positive, return during the six-month period. In anticipation of continuing Fed increases, we had been lowering the fund’s bond holdings over the past few years. As of January 31, 2006, bonds represented approximately 23% of the fund’s total assets. Now that we believe we’re nearing the end of a rising interest-rate cycle, we do not anticipate significantly reducing the fund’s bond holdings further.

A look ahead

Going forward, we expect more modest returns in the U.S. stock market. It’s not unusual for periods of extraordinary returns like we had in the 1990s to be followed by periods when returns are more volatile and below long-term averages. During times like these, a significant portion of the total return for the market and the fund can be attributed to dividend income. In addition to bolstering the fund’s returns, high dividend income has helped us generate attractive long-term results with significantly less volatility than the S&P 500.

Cordially,

/s/ Hilda L. Applbaum

Hilda L. Applbaum 

Vice Chairman of the Board

/s/ David C. Barclay

David C. Barclay

President

March 9, 2006

In December 2005, Hilda L. Applbaum, the previous president of the fund, was elected vice chairman and director of the fund. Hilda succeeds Stephen E. Bepler, who has been part of the fund’s investment team for more than three decades. We’d like to thank Stephen for his many years of service. He continues to be involved as a portfolio counselor and officer for other American Funds and as a senior vice president and director of Capital Research and Management Company.

Also in December, David C. Barclay, a portfolio counselor for the fund, was elected president. David has served as a fixed-income portfolio counselor for the fund for nine years. One of his areas of investment expertise is U.S. high-yield fixed-income securities.

The Income Fund of America at a glance

Figures shown are past results and are not predictive of results in 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 the most current information and month-end results, visit americanfunds.com. Fund results shown, unless otherwise indicated, are at net asset value. If a sales charge (maximum 5.75%) had been deducted, the results would have been lower.

Results at a glance					For periods ended January 31, 2006
	Cumulative total returns					Average annual total returns
	6 months		1 year			5 years		10 years		Lifetime1
The Income Fund of America	+3.4	%	+8.0	%		+8.3	%	+9.7	%	+12.6	%
Standard & Poor’s 500 Composite Index	+4.7		+10.4			+0.4		+9.0		+12.0
Lipper Income Funds Average2	+3.0		+6.2			+4.2		+6.7		+12.2
Lehman Brothers Aggregate Bond Index	+0.8		+1.8			+5.5		+6.1		+8.53
Consumer Price Index (inflation)4	+1.5		+4.0			+2.5		+2.5		+4.7

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

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

³From December 1, 1973, through December 31, 1975, the Lehman Brothers Government/Credit Bond Index was used because the Aggregate index did not yet exist.

⁴Computed from data supplied by the U.S. Department of Labor, Bureau of Labor Statistics.

A history of high current income

For the five years ended January 31, 2006

Year-end	The Income Fund of America	Lipper Incme Funds Average	S&P 500
1/31/2001	4.78%	4.33%	1.20%
7/31/2001	4.80	4.18	1.30
1/31/2002	5.01	3.81	1.40
7/31/2002	5.49	3.67	1.75
1/31/2003	5.45	3.40	1.88
7/31/2003	4.69	3.07	1.66
1/31/2004	4.05	2.63	1.54
7/31/2004	3.98	2.59	1.69
1/31/2005	3.57	2.47	1.64
7/31/2005	3.44	2.33	1.70
1/31/2006	4.03	2.68	1.75

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

The portfolio at a glance

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

January 31, 2006			July 31, 2005
	Percent			Percent
	of net			of net
Investment portfolio	assets		Investment portfolio	assets
[begin pie chart]			[begin pie chart]
U.S. common stocks	46.8	%	U.S. common stocks	47.7	%
Non-U.S. common stocks	17.8		Non-U.S. common stocks	16.8
U.S. and non-U.S. convertible securities & preferred stocks	4.7		U.S. and non-U.S. convertible securities & preferred stocks	5.8
U. S. Treasury & agency bonds & notes	2.0		U. S. Treasury & agency bonds & notes	2.2
Other fixed-income securities	20.8		Other fixed-income securities	19.9
Short-term securities & other assets less liabilities	7.9		Short-term securities & other assets less liabilities	7.6
[end pie chart]			[end pie chart]
	Percent			Percent
	of net			of net
Five largest sectors in common stock holdings	assets		Five largest sectors in common stock holdings	assets
Financials	16.5	%	Financials	17.2	%
Utilities	8.4		Utilities	9.3
Telecommunication services	7.3		Telecommunication services	7.8
Energy	6.0		Energy	6.2
Consumer staples	5.8		Consumer staples	5.7
	Percent			Percent
	of net			of net
Ten largest common stock holdings	assets		Ten largest common stock holdings	assets
AT&T Inc.	2.3	%	Royal Dutch Shell	1.9	%
Royal Dutch Shell	2.0		BellSouth	1.7
BellSouth	1.9		SBC Communications	1.7
General Electric	1.6		Verizon Communications	1.3
Citigroup	1.4		Bristol-Myers Squibb	1.2
Chevron	1.3		Dow Chemical	1.2
Bristol-Myers Squibb	1.2		Chevron	1.2
Marathon Oil	1.2		General Electric	1.1
Weyerhaeuser	1.1		Washington Mutual	1.1
Altria Group	1.1		General Motors	1.1

Summary investment portfolio, January 31, 2006

unaudited

	Shares			Market			Percent
					value			of net
Common stocks - 64.58%					(000	)		assets
Financials - 16.53%
Citigroup Inc.		18,535,000		$	863,360			1.35	%
Washington Mutual, Inc.		15,705,100			664,640			1.04
Société Générale		4,536,500			597,757			.94
HSBC Holdings PLC (United Kingdom)		24,852,825			412,324
HSBC Holdings PLC (Hong Kong)		10,543,396			176,281			.92
Wells Fargo & Co.		8,656,800			539,838			.85
Lloyds TSB Group PLC		57,848,305			523,542			.82
U.S. Bancorp		17,235,000			515,499			.81
J.P. Morgan Chase & Co.		11,275,000			448,181			.70
Bank of America Corp.		9,565,550			423,084			.66
Equity Residential		9,037,700			383,289			.60
Hang Lung Properties Ltd.		156,637,000			304,898			.48
Fannie Mae		3,006,200			174,179			.27
Other securities					4,533,888			7.09
					10,560,760			16.53
Utilities - 8.35%
National Grid PLC		42,885,918			438,406			.69
E.ON AG		3,650,000			406,747			.64
Dominion Resources, Inc.		5,158,498			389,621			.61
Exelon Corp.		5,710,000			327,868			.51
Duke Energy Corp.		11,242,393			318,722			.50
Consolidated Edison, Inc.		6,765,000			318,023			.50
Other securities					3,135,528			4.90
					5,334,915			8.35
Telecommunication services - 7.25%
AT&T Inc.		55,660,575			1,444,392			2.26
BellSouth Corp.		42,025,000			1,209,059			1.89
Verizon Communications Inc.		15,100,000			478,066			.75
Koninklijke KPN NV		46,015,000			443,446			.70
Chunghwa Telecom Co., Ltd. (ADR)		16,324,400			303,961
Chunghwa Telecom Co., Ltd.		42,803,000			75,594			.59
Other securities					673,922			1.06
					4,628,440			7.25
Energy - 5.98%
Royal Dutch Shell PLC, Class A (ADR)		11,212,000			763,649
Royal Dutch Shell PLC, Class B		6,314,144			226,111
Royal Dutch Shell PLC, Class B (ADR)		3,021,565			216,948
Royal Dutch Shell PLC, Class A		1,340,000			45,514			1.96
Chevron Corp.		14,073,300			835,673			1.31
Marathon Oil Corp.		9,745,000			749,098			1.17
Other securities					981,865			1.54
					3,818,858			5.98
Consumer staples - 5.83%
Altria Group, Inc.		9,670,000			699,528			1.10
General Mills, Inc.		10,300,000			500,683			.78
Reynolds American Inc.		4,681,600			473,450			.74
H.J. Heinz Co.		13,385,000			454,287			.71
ConAgra Foods, Inc.		18,485,000			383,194			.60
Other securities					1,213,264			1.90
					3,724,406			5.83
Materials - 5.36%
Weyerhaeuser Co.		10,450,000			728,992			1.14
Dow Chemical Co.		11,742,500			496,708			.78
International Paper Co.		12,318,640			401,957			.63
E.I. du Pont de Nemours and Co.		9,950,000			389,543			.61
Akzo Nobel NV		7,173,500			346,437			.54
Other securities					1,061,064			1.66
					3,424,701			5.36
Industrials - 4.81%
General Electric Co.		30,135,000			986,921			1.55
Waste Management, Inc.		13,925,000			439,752			.69
Emerson Electric Co.		5,185,000			401,578			.63
R.R. Donnelley & Sons Co. (1)		11,577,000			377,410			.59
Other securities					866,001			1.35
					3,071,662			4.81
Health care - 3.99%
Bristol-Myers Squibb Co.		33,243,000			757,608			1.19
Eli Lilly and Co.		10,270,000			581,488			.91
Merck & Co., Inc.		14,008,300			483,286			.76
Pfizer Inc		13,475,000			346,038			.54
Other securities					378,004			.59
					2,546,424			3.99
Consumer discretionary - 2.10%
General Motors Corp.		13,775,000			331,427			.52
Other securities					1,011,170			1.58
					1,342,597			2.10
Other - 0.98%
Microsoft Corp.		14,360,000			404,234			.63
Other securities					221,206			.35
					625,440			.98
Miscellaneous - 3.40%
Other common stocks in initial period of acquisition					2,171,061			3.40
Total common stocks (cost: $33,765,899,000)					41,249,264			64.58
		Shares			Market			Percent
					value			of net
Preferred stocks - 1.18%					(000	)		assets
Financials - 1.01%
Fannie Mae, Series O, 7.00% preferred (2)		2,250,000			123,328			.20
HSBC Capital Funding LP, Series 1, 9.547% noncumulative step-up perpetual preferred (2) (3)		37,500,000			43,671
HSBC Capital Funding LP, Series 2, 10.176% noncumulative step-up perpetual preferred (2) (3)		10,000,000			15,085			.09
Other securities					459,725			.72
					641,809			1.01
Other - 0.01%
Other securities					7,148			.01
Miscellaneous - 0.16%
Other preferred stocks in initial period of acquisition					104,363			.16
Total preferred stocks (cost: $735,577,000)					753,320			1.18
					Market			Percent
					value			of net
Warrants - 0.00%					(000	)		assets
Other - 0.00%
Other securities					1,223			.00
Total warrants (cost: $818,000)					1,223			.00
		Shares or principal			Market			Percent
		amount			value			of net
Convertible securities - 3.53%					(000	)		assets
Financials - 1.01%
Fannie Mae 5.375% convertible preferred		1,530			147,454			.23
Other securities					499,110			.78
					646,564			1.01
Other - 2.47%
General Motors Corp., Series B, 5.25% convertible senior debentures 2032	$	17,540,000			11,590			.02
Other securities					1,566,952			2.45
					1,578,542			2.47
Miscellaneous - 0.05%
Other convertible securities in initial period of acquisition					28,775			.05
Total convertible securities (cost: $2,073,974,000)					2,253,881			3.53
		Principal			Market			Percent
		amount			value			of net
Bonds & notes - 22.85%		(000	)		(000	)		assets
Consumer discretionary - 4.71%
General Motors Acceptance Corp. 4.50%-7.75% 2006-2014 (3)	$	383,065			369,458
General Motors Corp. 6.375%-8.375% 2008-2033		125,330			99,215
Residential Capital Corp. 5.67%-6.375% 2008-2010 (3)		49,900			50,874
General Motors Nova Scotia Finance Co. 6.85% 2008		14,000			11,690			.83
Other securities					2,475,193			3.88
					3,006,430			4.71
Telecommunication services - 3.03%
SBC Communications Inc. 4.125%-6.45% 2008-2034 (3)		84,185			82,655
AT&T Corp. 9.05% 2011 (3)		23,228			25,628			.17
BellSouth Corp. 4.20% 2009		7,000			6,778			.01
Other securities					1,818,954			2.85
					1,934,015			3.03
Mortgage-backed obligations (4) - 2.84%
Fannie Mae 3.75%-11.876% 2010-2042 (3)		444,671			442,591			.69
Freddie Mac 2.64%-11.493% 2007-2036 (3)		135,328			133,729			.21
Other securities					1,241,525			1.94
					1,817,845			2.84
Financials - 2.58%
MBNA Global Capital Funding, Series B, 5.05% 2027 (3)		35,000			34,569
MBNA Corp. 5.00%-6.125% 2007-2013		30,000			30,620
MBNA Europe Funding PLC 4.55% 2007 (2) (3)		24,000			24,020
Bank of America Corp. 4.50% 2010		10,000			9,805			.16
Household Finance Corp. 4.125%-6.375% 2009-2012		41,000			41,876
HSBC Finance Corp. 4.625%-5.00% 2010-2015		21,720			21,197
HSBC Finance Capital Trust IX 5.911% 2035 (3)		10,000			10,041
HSBC Bank USA 4.625% 2014 (2)		5,000			4,774
Midland Bank 5.00% Eurodollar note (undated) (3)		5,000			4,294
HSBC Holdings PLC 5.25% 2012		3,500			3,505			.13
Washington Mutual, Inc. 4.00%-5.25% 2008-2017 (3)		52,500			51,598
Providian Financial Corp., Series A, 9.525% 2027 (2)		10,000			10,801
Dime Capital Trust I, Dime Bancorp, Inc., Series A, 9.33% 2027		9,425			10,279			.11
SocGen Real Estate Co. LLC, Series A, 7.64% (undated) (2) (3)		45,700			47,398
Société Générale 7.85% (undated) (2) (3)		11,200			11,527			.09
J.P. Morgan Chase & Co. 4.00%-6.75% 2008-2015		32,500			32,253
J.P. Morgan & Co. Inc. 6.70% 2007		5,000			5,127			.06
Citigroup Inc. 4.625% 2010		10,000			9,846			.02
Other securities					1,282,065			2.01
					1,645,595			2.58
Energy - 1.35%
Other securities					865,384			1.35
Utilities - 1.31%							��
Other securities					836,329			1.31
Industrials - 1.26%
General Electric Capital Corp., Series A, 5.375%-6.00% 2007-2012		16,000			16,429
General Electric Co. 5.00% 2013		5,000			4,967			.03
Other securities					784,402			1.23
					805,798			1.26
Information technology - 1.10%
Other securities					700,408			1.10
U.S. government & government agency bonds & notes - 1.09%
U.S. Treasury 0%-8.875% 2007-2026 (5)		517,978			557,585			.87
Freddie Mac 4.125% 2010		85,375			83,008			.13
Other securities					56,781			.09
					697,374			1.09
Materials - 1.06%
Weyerhaeuser Co. 5.95%-6.875% 2008-2033		24,919			25,976			.04
Other securities					654,761			1.02
					680,737			1.06
Other - 2.51%
Other securities					1,600,406			2.51
Miscellaneous - 0.01%
Other bonds & notes in initial period of acquisition					4,248			.01
Total bonds & notes (cost: $14,561,879,000)					14,594,569			22.85
		Principal			Market			Percent
		amount			value			of net
Short-term securities - 8.07%		(000	)		(000	)		assets
Freddie Mac 4.08%-4.42% due 2/2-4/11/2006		500,377			498,230			.78
Federal Home Loan Bank 4.06%-4.38% due 2/1-4/17/2006		492,021			490,377			.77
Fannie Mae 4.21%-4.332% due 2/13-4/5/2006		307,300			305,905			.48
Variable Funding Capital Corp. 4.37%-4.53% due 3/3-4/18/2006 (2) (6)		305,100			303,065			.47
Bank of America Corp. 4.385%-4.45% due 3/14-3/28/2006		200,000			198,889
Ranger Funding Co. LLC 4.24%-4.47% due 2/6-3/17/2006 (2)		92,913			92,651			.46
CAFCO, LLC 4.18%-4.37% due 2/3-3/1/2006 (2)		242,000			241,619			.38
HSBC Finance Corp. 4.27%-4.43% due 2/10-4/4/2006		238,900			238,223			.37
Wells Fargo Bank, N.A. 4.32%-4.52% due 2/10-3/31/2006		221,800			221,796			.35
Edison Asset Securitization LLC 4.38%-4.41% due 3/17-3/22/2006 (2)		100,000			99,445
General Electric Capital Corp. 4.36%-4.37% due 2/28-3/6/2006		71,100			70,848
General Electric Co. 4.48% due 3/28/2006		39,400			39,129			.33
Preferred Receivables Funding Corp. 4.30%-4.50% due 2/2-3/6/2006 (2)		160,100			159,785
Park Avenue Receivables Co., LLC 4.36% due 2/24/2006 (2)		34,300			34,205			.30
U.S. Treasury Bills 3.90%-4.125% due 3/2-4/13/2006		83,700			83,172			.13
BellSouth Corp. 4.32%-4.42% due 3/8-3/17/2006 (2)		46,000			45,788			.07
Other securities					2,034,901			3.18
Total short-term securities (cost: $5,158,251,000)					5,158,028			8.07
Total investment securities (cost: $56,296,398,000)					64,010,285			100.21
Other assets less liabilities					(135,170	)		(0.21	)
Net assets				$	63,875,115			100.00	%
"Miscellaneous" securities include holdings in their initial period of acquisition that have not previously been publicly disclosed.
"Other securities" includes all issues that are not disclosed separately in the summary investment portfolio.

 

Investments in affiliates

A company is considered to be an affiliate of the fund under the Investment Company Act of 1940 if the fund's holdings in that company represent 5% or more of the outstanding voting shares of that company.  Some of the fund's affiliated holdings listed below are also among the fund's largest holdings and are shown the preceding summary investment portfolio. Affiliated companies not among the fund's largest holdings are included in the market value of "Other securities" under their respective industry sectors. Further details on these holdings and related transactions during the six months ended January 31, 2006, appear below.

Company
		Beginning shares or principal amount		Purchases		Sales		Ending shares or principal amount		Dividend or interest income (000	)		Market value of affiliates at 1/31/06 (000	)
R.R. Donnelley & Sons Co.		13,474,000		-		1,897,000		11,577,000	$	7,006		$	377,410
iStar Financial, Inc.		7,240,000		-		-		7,240,000		10,607			259,844
iStar Financial, Inc. 5.375% 2010	$	10,925,000	$	-	$	-	$	10,925,000		296			10,867
iStar Financial, Inc., Series F, 7.80% cumulative redeemable preferred		400,000		-		-		400,000		390			10,152
iStar Financial, Inc., Series B, 5.125% 2011	$	10,000,000	$	-	$	-	$	10,000,000		272			9,789
iStar Financial, Inc. 7.00% 2008	$	6,525,000	$	-	$	-	$	6,525,000		176			6,731
iStar Financial, Inc. 5.80% 2011	$	-	$	5,000,000	$	-	$	5,000,000		37			5,047
iStar Financial, Inc., Series B, 4.875% 2009	$	5,000,000	$	-	$	-	$	5,000,000		140			4,928
iStar Financial, Inc. 6.05% 2015	$	4,285,000	$	-	$	-	$	4,285,000		130			4,342
iStar Financial, Inc. 6.00% 2010	$	3,750,000	$	-	$	-	$	3,750,000		114			3,816
iStar Financial, Inc. 8.75% 2008	$	1,028,000	$	-	$	-	$	1,028,000		31			1,109
Packaging Corp. of America		-		6,736,800		-		6,736,800		2,358			156,294
Packaging Corp. of America 4.375% 2008	$	9,500,000	$	-	$	-	$	9,500,000		208			9,277
Arthur J. Gallagher & Co.		5,383,200		20,500		-		5,403,700		3,026			157,572
Sunstone Hotel Investors, Inc.		2,438,400		1,155,000		-		3,593,400		1,964			106,005
Premier Farnell PLC		-		23,550,000		-		23,550,000		1,699			86,906
Montpelier Re Holdings Ltd.		4,120,000		345,000		-		4,465,000		1,942			86,174
Tupperware Brands Corp.		3,125,500		739,500		-		3,865,000		1,538			85,803
Beverly Hills Bancorp Inc.		1,939,517		-		-		1,939,517		485			20,656
Clarent Hospital Corp. (7) (8)		484,684		-		-		484,684		-			242
									$	32,419		$	1,402,964

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

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

(2) Purchased in a private placement transaction; resale may be limited to qualified institutional buyers; resale to the public

may require registration. The total value of all such restricted securities, including those in "Other securities" in the summary investment

portfolio, was $5,741,472,000, which represented 8.99% of the net assets of the fund.

(3) Coupon rate may change periodically.

(4) Pass-through securities backed by a pool of mortgages or other loans on which principal payments are

periodically made. Therefore, the effective maturities are shorter than the stated maturities.

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

(6) This security, or a portion of this security, has been segregated to cover funding requirements on investment transactions settling in the future.

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

(8) Valued under fair value procedures adopted by authority of the board of directors.

ADR = American Depositary Receipts

See Notes to Financial Statements

Financial statements

Statement of assets and liabilities				unaudited
at January 31, 2006	(dollars and shares in thousands, except per-share amounts)
Assets:
Investment securities at market:
Unaffiliated issuers (cost: $54,859,961)		$	62,607,321
Affiliated issuers (cost: $1,436,437)			1,402,964	$	64,010,285
Cash denominated in non-U.S. currencies (cost: $3,453)					3,452
Cash					3,420
Receivables for:
Sales of investments			238,770
Sales of fund's shares			101,807
Dividends and interest			354,933		695,510
					64,712,667
Liabilities:
Payables for:
Purchases of investments			505,061
Repurchases of fund's shares			73,008
Dividends on fund's shares			214,194
Investment advisory services			10,957
Services provided by affiliates			31,500
Deferred directors' compensation			2,065
Other fees and expenses			767		837,552
Net assets at January 31, 2006				$	63,875,115
Net assets consist of:
Capital paid in on shares of capital stock				$	55,373,464
Undistributed net investment income					527,002
Undistributed net realized gain					260,609
Net unrealized appreciation					7,714,040
Net assets at January 31, 2006				$	63,875,115

Total authorized capital stock - 5,500,000 shares, $.001 par value (3,446,100 total shares outstanding)
		Net assets	Shares outstanding		Net asset value per share
Class A	$	49,883,461	2,688,278	$	18.56
Class B		4,245,414	230,008		18.46
Class C		6,173,803	334,953		18.43
Class F		1,741,438	93,963		18.53
Class 529-A		389,130	20,989		18.54
Class 529-B		82,268	4,447		18.50
Class 529-C		175,345	9,474		18.51
Class 529-E		20,112	1,086		18.51
Class 529-F		7,725	417		18.54
Class R-1		27,083	1,464		18.50
Class R-2		324,983	17,611		18.45
Class R-3		494,105	26,680		18.52
Class R-4		204,394	11,024		18.54
Class R-5		105,854	5,706		18.55
(1) Maximum offering price and redemption price per share were equal to the net asset value per share for all share classes, except for Class A and 529-A, for which the maximum offering prices per share were $19.69 and $19.67, respectively.
See Notes to Financial Statements

Statement of operations				unaudited
for the six months ended January 31, 2006	(dollars in thousands)
Investment income:
Income:
Dividends (net of non-U.S. withholding tax of $14,709; also includes $31,015 from affiliates)	$	871,246
Interest (net of non-U.S. withholding tax of $1; also includes $1,404 from affiliates)		612,375		$	1,483,621
Fees and expenses:(1)
Investment advisory services		76,442
Distribution services		113,216
Transfer agent services		15,383
Administrative services		6,350
Reports to shareholders		914
Registration statement and prospectus		1,762
Postage, stationery and supplies		1,889
Directors' compensation		286
Auditing and legal		50
Custodian		1,280
State and local taxes		1
Other		145
Total fees and expenses before reimbursements/waivers		217,718
Less reimbursement/waiver of fees and expenses:
Investment advisory services		7,644
Administrative services		151
Total fees and expenses after reimbursements/waivers					209,923
Net investment income					1,273,698
Net realized gain and unrealized appreciation on investments and non-U.S. currency:
Net realized gain on:
Investments (including $2,990 net loss from affiliates)		265,880
Non-U.S. currency transactions		1,913			267,793
Net unrealized appreciation on:
Investments		489,694
Non-U.S. currency translations		1,298			490,992
Net realized gain and unrealized appreciation on investments and non-U.S. currency					758,785
Net increase in net assets resulting from operations				$	2,032,483
(1) Additional information related to class-specific fees and expenses is included in the Notes to Financial Statements.
See Notes to Financial Statements
Statements of changes in net assets		(dollars in thousands)
		Six months ended January 31,			Year ended July 31,
		2006*			2005
Operations:
Net investment income	$	1,273,698		$	2,177,501
Net realized gain on investments and non-U.S. currency transactions		267,793			1,203,405
Net unrealized appreciation on investments and non-U.S. currency translations		490,992			3,378,509
Net increase in net assets resulting from operations		2,032,483			6,759,415
Dividends and distributions paid or accrued to shareholders:
Dividends from net investment income		(1,248,386	)		(1,825,496	)
Distributions from net realized gain on investments		(1,211,531	)		(377,655	)
Total dividends and distributions paid or accrued to shareholders		(2,459,917	)		(2,203,151	)
Capital share transactions		4,150,981			10,692,258
Total increase in net assets		3,723,547			15,248,522
Net assets:
Beginning of period		60,151,568			44,903,046
End of period (including undistributed
net investment income: $527,002 and $501,690, respectively)	$	63,875,115		$	60,151,568
*Unaudited.
See Notes to Financial Statements

Notes to financial statements     unaudited

1.    Organization and significant accounting policies

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

The fund offers 14 share classes consisting of four retail share classes, five CollegeAmerica® savings plan share classes and five retirement plan share classes. The CollegeAmerica savings plan share classes (529-A, 529-B, 529-C, 529-E and 529-F) can be utilized to save for college education. The five retirement plan share classes (R-1, R-2, R-3, R-4 and R-5) are sold without any sales charges and do not carry any conversion rights.The fund’s share classes are described below:

Share class	Initial sales charge	Contingent deferred sales charge upon redemption	Conversion feature
Class 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
Class B and 529-B	None	Declines from 5% to 0% for redemptions within six years of purchase	Class B and 529-B convert to Class 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 after 10 years
Class 529-C	None	1% for redemptions within one year of purchase	None
Class 529-E	None	None	None
Class F and 529-F	None	None	None
Class R-1, R-2, R-3, R-4 and R-5	None	None	None

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

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

Security valuation - Equity securities are valued at the official closing price of, or the last reported sale price on, the exchange or market on which such securities are traded, as of the close of business on the day the securities are being valued or, lacking any sales, at the last available bid price. Prices for each security are taken from the principal exchange or market in which the security trades. Fixed-income securities, including short-term securities purchased with more than 60 days left to maturity, are valued at prices obtained from an independent pricing service when such prices are available. However, where the investment adviser deems it appropriate, such securities will be valued at the mean quoted bid and asked prices (or bid prices, if asked prices are not available) or at prices for securities of comparable maturity, quality and type.Securities with both fixed-income and equity characteristics, or equity securities traded principally among fixed-income dealers, are valued in the manner described above for either equity or fixed-income securities, depending on which method is deemed most appropriate by the investment adviser. Short-term securities purchased within 60 days to maturity are valued at amortized cost, which approximates market value. The value of short-term securities originally purchased with maturities greater than 60 days is determined based on an amortized value to par when they reach 60 days or less remaining to maturity. The ability of the issuers of the debt securities held by the fund to meet their obligations may be affected by economic developments in a specific industry, state or region. Securities and other assets for which representative market quotations are not readily available are fair valued as determined in good faith under procedures adopted by authority of the fund's board of directors. Various factors may be reviewed in order to make a good faith determination of a security’s fair value. These factors include, but are not limited to, the type and cost of the security; contractual or legal restrictions on resale of the security; relevant financial or business developments of the issuer; actively traded similar or related securities; conversion or exchange rights on the security; related corporate actions; significant events occurring after the close of trading in the security; and changes in overall market conditions.

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

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

Dividends and distributions to shareholders -Dividends paid to shareholders are declared daily from net investment income and are paid to shareholders quarterly. Distributions paid to shareholders are recorded on the ex-dividend date.

Non-U.S. currency translation - Assets and liabilities, including investment securities, denominated in non-U.S. currencies are translated into U.S. dollars at the exchange rates in effect on the valuation date. Purchases and sales of investment securities and income and expenses are translated into U.S. dollars at the exchange rates on the dates of such transactions. In the accompanying financial statements, the effects of changes in non-U.S. 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 non-U.S. currencies are disclosed separately.

Mortgage dollar rolls - The fund may enter into mortgage dollar roll transactions in which the fund sells a mortgage-backed security to a counterparty and simultaneously enters into an agreement with the same counterparty to buy back a similar security on a specific future date at a predetermined price. Each mortgage dollar roll is treated as a financing transaction; therefore, any gain or loss is considered unrealized until the roll reaches completion. Risks may arise due to the delayed payment date and the potential inability of counterparties to complete the transaction. Income is generated as consideration for entering into these transactions and is included in interest income on the accompanying financial statements.

2.    Non-U.S. investments

Investment risk - The risks of investing in securities of non-U.S.issuers may include, but are not limited to, investment and repatriation restrictions; revaluation of currencies; adverse political, social and economic developments; government involvement in the private sector; limited and less reliable investor information; lack of liquidity; certain local tax law considerations; and limited regulation of the securities markets.

Taxation - Dividend and interest income is recorded net of non-U.S. withholding taxes paid.

3. Federal income taxation and distributions

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.

Distributions - Distributions paid to shareholders are based on net investment income and net realized gains determined on a tax basis, which may differ from net investment income and net realized gains for financial reporting purposes. These differences are due primarily to differing treatment for items such as non-U.S. currency gains and losses; short-term capital gains and losses; capital losses related to sales of certain securities within 30 days of purchase; unrealized appreciation of certain investments in non-U.S. securities; deferred expenses; cost of investments sold; and paydowns on fixed-income securities. 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. As of January 31, 2006, the cost of investment securities for federal income tax purposes was $56,317,342,000.

As of January 31, 2006, the components of distributable earnings on a tax basis were as follows (dollars in thousands):

Undistributed net investment income and non-U.S. currency gains	$	742,995
Accumulated short-term capital losses		(257,461	)
Undistributed long-term capital gains		537,044
Gross unrealized appreciation on investment securities		8,647,542
Gross unrealized depreciation on investment securities		(954,599	)
Net unrealized appreciation on investment securities		7,692,943

Undistributed net investment income and non-U.S. currency gains above include non-U.S. currency losses of $5,769,000 that were realized during the period November 1, 2004, through July 31, 2005. During the six months ended January 31, 2006, the fund realized, on a tax basis, a net capital gain of $280,832,000. 

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

	Six months ended January 31, 2006						Year ended July 31, 2005
Share class		Distributions from ordinary income		Distributions from long-term capital gains		Total distributions paid or accrued		Distributions from ordinary income		Distributions from long-term capital gains		Total distributions paid or accrued
Class A	$	1,010,448	$	945,599	$	1,956,047	$	1,507,294	$	299,587	$	1,806,881
Class B		71,493		81,516		153,009		105,906		27,212		133,118
Class C		100,845		117,974		218,819		132,396		34,316		166,712
Class F		34,874		33,306		68,180		45,544		9,107		54,651
Class 529-A		7,328		7,170		14,498		9,019		1,789		10,808
Class 529-B		1,274		1,542		2,816		1,649		447		2,096
Class 529-C		2,684		3,248		5,932		3,247		856		4,103
Class 529-E		353		372		725		433		95		528
Class 529-F		137		134		271		136		25		161
Class R-1		377		485		862		334		78		412
Class R-2		4,928		5,960		10,888		5,613		1,403		7,016
Class R-3		8,312		8,906		17,218		8,959		1,829		10,788
Class R-4		3,357		3,434		6,791		2,450		430		2,880
Class R-5		1,976		1,885		3,861		2,516		481		2,997
Total	$	1,248,386	$	1,211,531	$	2,459,917	$	1,825,496	$	377,655	$	2,203,151

4. Fees and transactions with related parties

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

Investment advisory services - The Investment Advisory and Service Agreement with CRMC providesfor monthly fees accrued daily. These fees are based on a declining series of annual rates beginning with 0.250% on the first $500 million of daily net assets and decreasing to 0.127% on such assets in excess of $55 billion. The board of directors approved an amended agreement effective January 1, 2006, continuing the series of rates to include an additional annual rate of 0.125% on daily net assets in excess of $71 billion. The agreement also provides for monthly fees, accrued daily, of 2.25% of the fund’s monthly gross income. CRMC is currently waiving 10% of investment advisory services fees. During the six months ended January 31, 2006, total investment advisory services fees waived by CRMC were $7,644,000. As a result, the fee shown on the accompanying financial statements of $76,442,000, which was equivalent to an annualized rate of 0.247%, was reduced to $68,798,000, or 0.222% of average daily net assets. 

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

Distribution services - The fund has adopted plans of distribution for all share classes, except Class R-5. Under the plans, the board of directors approves certain categories of expenses that are used to finance activities primarily intended to sell fund shares and service existing accounts. The plans provide for payments, based on an annualized percentage of average daily net assets, ranging from 0.25% to 1.00% as noted on the following page. In some cases, the board of directors has limited the amounts that may be paid to less than the maximum allowed by the plans.All share classes 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 for providing 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, the board of directors has also approved the reimbursement of dealer and wholesaler commissions paid by AFD for certain shares sold without a sales charge. These classes reimburse AFD for amounts billed within the prior 15 months but only to the extent that the overall annual expense limit of 0.25% is not exceeded. As of January 31, 2006, there were no unreimbursed expenses subject to reimbursement for Class A or 529-A.

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

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

Administrative services - The fund has an administrative services agreement with CRMC to provide transfer agent and other related shareholder services for all share classes other than Class A and B. Each relevant share class pays CRMC annual fees up to 0.15% (0.10% for Class R-5) based on its respective average daily net assets. Each relevant share class also pays AFS additional amounts for certain transfer agent services. CRMC and AFS may use these fees to compensate third parties for performing these services. CRMC has agreed to pay AFS on the fund's behalf for a portion of the transfer agent services fees for some of the retirement plan share classes. For the six months ended January 31, 2006, the total administrative services fees paid by CRMC were $2,000 and $149,000 for Class R-1 and R-2, respectively. Administrative services fees are presented gross of any payments made by CRMC. Each 529 share class is subject to an additional annual administrative services fee of 0.10% of its respective average daily net assets; this fee is payable to the Commonwealth of Virginia for the maintenance of the CollegeAmerica plan.Although these amounts are included with administrative services fees on the accompanying financial statements, the Commonwealth of Virginia is not considered a related party.

Expenses under the agreements described on the previous page for the six months ended January 31, 2006, were as follows (dollars in thousands):

Share class	Distribution services	Transfer agent services	Administrative services
			CRMC administrative services	Transfer agent services	Commonwealth of Virginia administrative services
Class A	$56,526	$14,012	Not applicable	Not applicable	Not applicable
Class B	20,855	1,371	Not applicable	Not applicable	Not applicable
Class C	29,680	Included in administrative services	$3,146	$467	Not applicable
Class F	2,073		642	114	Not applicable
Class 529-A	327		119	19	$178
Class 529-B	386		26	14	39
Class 529-C	809		54	22	81
Class 529-E	46		6	1	9
Class 529-F	-		2	-*	3
Class R-1	112		15	8	Not applicable
Class R-2	1,104		218	542	Not applicable
Class R-3	1,095		325	128	Not applicable
Class R-4	203		120	6	Not applicable
Class R-5	Not applicable		44	2	Not applicable
Total	$113,216	$15,383	$4,717	$1,323	$310

* Amount less than one thousand.

Deferred directors’ compensation - Since the adoption of the deferred compensation plan in 1993, directors who are unaffiliated with CRMC may elect to defer the cash payment of part or all of their compensation. These deferred amounts, which remain as liabilities of the fund, are treated as if invested in shares of the fund or other American Funds. These amounts represent general, unsecured liabilities of the fund and vary according to the total returns of the selected funds. Directors’ compensation of $286,000, shown on the accompanying financial statements, includes $165,000 in current fees (either paid in cash or deferred) and a net increase of $121,000 in the value of the deferred amounts.

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

5. Capital share transactions

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

Share class	Sales(1)			Reinvestments of dividends and distributions			Repurchases(1)					Net increase
		Amount	Shares		Amount	Shares		Amount		Shares			Amount	Shares
Six months ended January 31, 2006
Class A	$	4,080,060	221,272	$	1,776,181	97,180	$	(2,834,612	)	(153,831	)	$	3,021,629	164,621
Class B		219,405	11,961		136,915	7,535		(215,016	)	(11,723	)		141,304	7,773
Class C		672,142	36,685		193,645	10,671		(405,832	)	(22,168	)		459,955	25,188
Class F		275,237	14,943		54,542	2,988		(180,071	)	(9,791	)		149,708	8,140
Class 529-A		62,519	3,394		14,249	780		(13,860	)	(752	)		62,908	3,422
Class 529-B		8,106	441		2,800	154		(2,138	)	(117	)		8,768	478
Class 529-C		26,981	1,467		5,874	322		(9,699	)	(526	)		23,156	1,263
Class 529-E		3,420	186		717	40		(1,220	)	(67	)		2,917	159
Class 529-F		2,454	134		263	14		(320	)	(17	)		2,397	131
Class R-1		10,330	563		828	45		(2,632	)	(143	)		8,526	465
Class R-2		79,948	4,352		10,722	590		(34,291	)	(1,869	)		56,379	3,073
Class R-3		150,232	8,161		16,863	925		(64,310	)	(3,506	)		102,785	5,580
Class R-4		99,833	5,410		6,482	355		(21,474	)	(1,165	)		84,841	4,600
Class R-5		31,359	1,714		2,954	162		(8,605	)	(467	)		25,708	1,409
Total net increase
(decrease)	$	5,722,026	310,683	$	2,223,035	121,761	$	(3,794,080	)	(206,142	)	$	4,150,981	226,302
Year ended July 31, 2005
Class A	$	9,640,392	532,521	$	1,565,111	86,078	$	(3,709,618	)	(204,836	)	$	7,495,885	413,763
Class B		755,566	42,102		111,888	6,179		(287,281	)	(15,953	)		580,173	32,328
Class C		1,867,364	103,792		133,316	7,372		(485,019	)	(26,922	)		1,515,661	84,242
Class F		660,579	36,521		41,363	2,276		(208,234	)	(11,499	)		493,708	27,298
Class 529-A		114,656	6,328		10,343	569		(13,713	)	(756	)		111,286	6,141
Class 529-B		17,625	977		2,028	112		(2,180	)	(121	)		17,473	968
Class 529-C		52,313	2,889		3,934	216		(8,587	)	(473	)		47,660	2,632
Class 529-E		5,928	328		504	27		(618	)	(34	)		5,814	321
Class 529-F		2,757	152		149	8		(763	)	(43	)		2,143	117
Class R-1		13,146	724		374	20		(3,977	)	(218	)		9,543	526
Class R-2		143,180	7,950		6,558	362		(34,869	)	(1,935	)		114,869	6,377
Class R-3		241,450	13,332		9,950	547		(56,185	)	(3,110	)		195,215	10,769
Class R-4		97,347	5,337		2,546	140		(14,255	)	(782	)		85,638	4,695
Class R-5		24,245	1,332		1,947	107		(9,002	)	(498	)		17,190	941
Total net increase
(decrease)	$	13,636,548	754,285	$	1,890,011	104,013	$	(4,834,301	)	(267,180	)	$	10,692,258	591,118
(1) Includes exchanges between share classes of the fund.

6. Investment transactions

The fund made purchases and sales of investment securities, excluding short-term securities, of $12,921,363,000 and $10,324,153,000, respectively, during the six months ended January 31, 2006.

Financial highlights(1)
						Income (loss) from investment operations(2)								Dividends and distributions
				Net asset value, beginning of period		Net investment income		Net gains (losses) on securities (both realized and unrealized	)		Total from investment operations			Dividends (from net investment income	)		Distributions (from capital gains	)		Total dividends and distributions			Net asset value, and of period	Total return(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		(4	)	Ratio of net income to average net assets
Class A:
Six months ended 1/31/2006	(5	)	$	18.70	$	.40	$	.21		$	.61		$	(.39	)	$	(.36	)	$	(.75	)	$	18.56	3.35	%	$	49,884				.56	%	(6	)	.53	%	(6	)	4.26	%	(6	)
Year ended 7/31/2005				17.10		.77		1.61			2.38			(.65	)		(.13	)		(.78	)		18.70	14.12			47,196				.55				.54				4.26
Year ended 7/31/2004				15.44		.70		1.70			2.40			(.74	)		-			(.74	)		17.10	15.76			36,075				.57				.57				4.15
Year ended 7/31/2003				14.49		.72		.98			1.70			(.73	)		(.02	)		(.75	)		15.44	12.18			25,891				.61				.61				4.98
Year ended 7/31/2002				16.44		.74		(1.73	)		(.99	)		(.80	)		(.16	)		(.96	)		14.49	(6.35	)		19,585				.61				.61				4.66
Year ended 7/31/2001				15.43		.83		1.46			2.29			(.80	)		(.48	)		(1.28	)		16.44	15.53			19,519				.62				.62				5.18
Class B:
Six months ended 1/31/2006	(5	)		18.61		.32		.21			.53			(.32	)		(.36	)		(.68	)		18.46	2.92			4,245				1.33		(6	)	1.31		(6	)	3.50		(6	)
Year ended 7/31/2005				17.01		.63		1.61			2.24			(.51	)		(.13	)		(.64	)		18.61	13.32			4,135				1.34				1.32				3.48
Year ended 7/31/2004				15.36		.56		1.69			2.25			(.60	)		-			(.60	)		17.01	14.84			3,231				1.35				1.35				3.37
Year ended 7/31/2003				14.42		.61		.97			1.58			(.62	)		(.02	)		(.64	)		15.36	11.37			2,015				1.39				1.39				4.17
Year ended 7/31/2002				16.39		.61		(1.73	)		(1.12	)		(.69	)		(.16	)		(.85	)		14.42	(7.14	)		800				1.37				1.37				3.88
Year ended 7/31/2001				15.39		.72		1.46			2.18			(.70	)		(.48	)		(1.18	)		16.39	14.77			254				1.38				1.38				4.15
Class C:
Six months ended 1/31/2006	(5	)		18.58		.32		.20			.52			(.31	)		(.36	)		(.67	)		18.43	2.90			6,174				1.38		(6	)	1.36		(6	)	3.43		(6	)
Year ended 7/31/2005				16.99		.61		1.60			2.21			(.49	)		(.13	)		(.62	)		18.58	13.17			5,756				1.43				1.41				3.38
Year ended 7/31/2004				15.34		.55		1.69			2.24			(.59	)		-			(.59	)		16.99	14.75			3,833				1.44				1.44				3.26
Year ended 7/31/2003				14.41		.59		.97			1.56			(.61	)		(.02	)		(.63	)		15.34	11.23			1,850				1.48				1.48				4.07
Year ended 7/31/2002				16.37		.59		(1.71	)		(1.12	)		(.68	)		(.16	)		(.84	)		14.41	(7.17	)		614				1.48				1.48				3.77
Period from 3/15/2001 to 7/31/2001				15.85		.21		.48			.69			(.17	)		-			(.17	)		16.37	4.35			89				.62				.62				1.28
Class F:
Six months ended 1/31/2006	(5	)		18.68		.39		.20			.59			(.38	)		(.36	)		(.74	)		18.53	3.28			1,742				.60		(6	)	.58		(6	)	4.21		(6	)
Year ended 7/31/2005				17.08		.75		1.61			2.36			(.63	)		(.13	)		(.76	)		18.68	14.01			1,603				.67				.65				4.14
Year ended 7/31/2004				15.42		.67		1.71			2.38			(.72	)		-			(.72	)		17.08	15.65			1,000				.69				.69				4.02
Year ended 7/31/2003				14.47		.71		.97			1.68			(.71	)		(.02	)		(.73	)		15.42	12.11			471				.72				.72				4.83
Year ended 7/31/2002				16.44		.71		(1.73	)		(1.02	)		(.79	)		(.16	)		(.95	)		14.47	(6.56	)		156				.73				.73				4.52
Period from 3/15/2001 to 7/31/2001				15.89		.27		.48			.75			(.20	)		-			(.20	)		16.44	4.71			22				.31				.31				1.58
Class 529-A:
Six months ended 1/31/2006	(5	)		18.68		.39		.21			.60			(.38	)		(.36	)		(.74	)		18.54	3.32			389				.63		(6	)	.61		(6	)	4.18		(6	)
Year ended 7/31/2005				17.08		.75		1.61			2.36			(.63	)		(.13	)		(.76	)		18.68	13.98			328				.70				.68				4.13
Year ended 7/31/2004				15.42		.68		1.70			2.38			(.72	)		-			(.72	)		17.08	15.61			195				.67				.67				4.06
Year ended 7/31/2003				14.48		.71		.97			1.68			(.72	)		(.02	)		(.74	)		15.42	12.10			93				.68				.68				4.87
Period from 2/15/2002 to 7/31/2002				15.76		.31		(1.20	)		(.89	)		(.39	)		-			(.39	)		14.48	(5.83	)		24				.37				.37				2.02
Class 529-B:
Six months ended 1/31/2006	(5	)		18.65		.31		.20			.51			(.30	)		(.36	)		(.66	)		18.50	2.84			82				1.47		(6	)	1.44		(6	)	3.35		(6	)
Year ended 7/31/2005				17.05		.59		1.61			2.20			(.47	)		(.13	)		(.60	)		18.65	13.05			74				1.55				1.53				3.28
Year ended 7/31/2004				15.36		.53		1.70			2.23			(.54	)		-			(.54	)		17.05	14.67			51				1.57				1.57				3.16
Year ended 7/31/2003				14.46		.58		.97			1.55			(.63	)		(.02	)		(.65	)		15.36	11.10			28				1.60				1.60				3.95
Period from 2/19/2002 to 7/31/2002				15.63		.25		(1.06	)		(.81	)		(.36	)		-			(.36	)		14.46	(5.40	)		7				.71				.71				1.62
Class 529-C:
Six months ended 1/31/2006	(5	)		18.65		.31		.22			.53			(.31	)		(.36	)		(.67	)		18.51	2.90			175				1.46		(6	)	1.43		(6	)	3.36		(6	)
Year ended 7/31/2005				17.06		.59		1.60			2.19			(.47	)		(.13	)		(.60	)		18.65	13.00			153				1.54				1.52				3.29
Year ended 7/31/2004				15.39		.53		1.71			2.24			(.57	)		-			(.57	)		17.06	14.69			95				1.56				1.56				3.17
Year ended 7/31/2003				14.46		.58		.97			1.55			(.60	)		(.02	)		(.62	)		15.39	11.10			44				1.59				1.59				3.96
Period from 2/19/2002 to 7/31/2002				15.63		.25		(1.06	)		(.81	)		(.36	)		-			(.36	)		14.46	(5.40	)		12				.70				.70				1.63
Class 529-E:
Six months ended 1/31/2006	(5	)		18.66		.36		.20			.56			(.35	)		(.36	)		(.71	)		18.51	3.11			20				.95		(6	)	.92		(6	)	3.87		(6	)
Year ended 7/31/2005				17.06		.69		1.61			2.30			(.57	)		(.13	)		(.70	)		18.66	13.63			17				1.02				1.01				3.80
Year ended 7/31/2004				15.40		.62		1.70			2.32			(.66	)		-			(.66	)		17.06	15.24			10				1.04				1.04				3.69
Year ended 7/31/2003				14.47		.66		.96			1.62			(.67	)		(.02	)		(.69	)		15.40	11.66			5				1.06				1.06				4.48
Period from 2/25/2002 to 7/31/2002				15.81		.27		(1.23	)		(.96	)		(.38	)		-			(.38	)		14.47	(6.24	)		1				.45				.45				1.79
Class 529-F:
Six months ended 1/31/2006	(5	)		18.68		.40		.22			.62			(.40	)		(.36	)		(.76	)		18.54	3.42			8				.44		(6	)	.42		(6	)	4.33		(6	)
Year ended 7/31/2005				17.08		.75		1.60			2.35			(.62	)		(.13	)		(.75	)		18.68	13.96			5				.70				.68				4.14
Year ended 7/31/2004				15.42		.67		1.69			2.36			(.70	)		-			(.70	)		17.08	15.53			3				.79				.79				3.95
Period from 9/17/2002 to 7/31/2003				14.11		.60		1.24			1.84			(.51	)		(.02	)		(.53	)		15.42	13.38			1				.81		(6	)	.81		(6	)	4.68		(6	)
Class R-1:
Six months ended 1/31/2006	(5	)	$	18.65	$	.31	$	.21		$	.52		$	(.31	)	$	(.36	)	$	(.67	)	$	18.50	2.85	%	$	27				1.47	%	(6	)	1.43	%	(6	)	3.32	%	(6	)
Year ended 7/31/2005				17.05		.61		1.61			2.22			(.49	)		(.13	)		(.62	)		18.65	13.15			19				1.50				1.45				3.36
Year ended 7/31/2004				15.39		.55		1.70			2.25			(.59	)		-			(.59	)		17.05	14.75			8				1.55				1.48				3.27
Year ended 7/31/2003				14.47		.60		.96			1.56			(.62	)		(.02	)		(.64	)		15.39	11.19			2				1.92				1.50				4.02
Period from 6/17/2002 to 7/31/2002				15.65		.06		(1.24	)		(1.18	)		-			-			-			14.47	(7.54	)		-		(7	)	.32				.18				.42
Class R-2:
Six months ended 1/31/2006	(5	)		18.60		.31		.21			.52			(.31	)		(.36	)		(.67	)		18.45	2.87			325				1.53		(6	)	1.41		(6	)	3.38		(6	)
Year ended 7/31/2005				17.01		.61		1.60			2.21			(.49	)		(.13	)		(.62	)		18.60	13.16			271				1.58				1.42				3.39
Year ended 7/31/2004				15.36		.55		1.69			2.24			(.59	)		-			(.59	)		17.01	14.75			139				1.75				1.44				3.30
Year ended 7/31/2003				14.48		.59		.95			1.54			(.64	)		(.02	)		(.66	)		15.36	11.12			52				1.81				1.46				4.02
Period from 5/31/2002 to 7/31/2002				16.26		.09		(1.69	)		(1.60	)		(.18	)		-			(.18	)		14.48	(9.95	)		1				.29				.24				.66
Class R-3:
Six months ended 1/31/2006	(5	)		18.67		.35		.21			.56			(.35	)		(.36	)		(.71	)		18.52	3.10			494				.97		(6	)	.95		(6	)	3.82		(6	)
Year ended 7/31/2005				17.07		.70		1.60			2.30			(.57	)		(.13	)		(.70	)		18.67	13.68			394				.97				.96				3.85
Year ended 7/31/2004				15.41		.62		1.70			2.32			(.66	)		-			(.66	)		17.07	15.25			176				1.02				1.02				3.70
Year ended 7/31/2003				14.48		.65		.98			1.63			(.68	)		(.02	)		(.70	)		15.41	11.68			56				1.12				1.08				4.42
Period from 6/4/2002 to 7/31/2002				16.09		.09		(1.51	)		(1.42	)		(.19	)		-			(.19	)		14.48	(8.90	)		1				.19				.17				.61
Class R-4:
Six months ended 1/31/2006	(5	)		18.69		.38		.21			.59			(.38	)		(.36	)		(.74	)		18.54	3.25			204				.67		(6	)	.64		(6	)	4.07		(6	)
Year ended 7/31/2005				17.09		.76		1.60			2.36			(.63	)		(.13	)		(.76	)		18.69	14.00			120				.67				.65				4.17
Year ended 7/31/2004				15.43		.68		1.70			2.38			(.72	)		-			(.72	)		17.09	15.64			30				.69				.69				4.05
Year ended 7/31/2003				14.49		.70		.98			1.68			(.72	)		(.02	)		(.74	)		15.43	12.07			12				.72				.72				4.81
Period from 6/27/2002 to 7/31/2002				15.25		.08		(.84	)		(.76	)		-			-			-			14.49	(4.98	)		-		(7	)	5.11				.03				.52
Class R-5:
Six months ended 1/31/2006	(5	)		18.70		.41		.21			.62			(.41	)		(.36	)		(.77	)		18.55	3.40			106				.37		(6	)	.34		(6	)	4.43		(6	)
Year ended 7/31/2005				17.10		.80		1.61			2.41			(.68	)		(.13	)		(.81	)		18.70	14.33			81				.37				.35				4.45
Year ended 7/31/2004				15.44		.73		1.71			2.44			(.78	)		-			(.78	)		17.10	16.01			57				.37				.37				4.35
Year ended 7/31/2003				14.49		.75		.98			1.73			(.76	)		(.02	)		(.78	)		15.44	12.43			39				.40				.40				5.17
Period from 5/15/2002 to 7/31/2002				16.31		.15		(1.77	)		(1.62	)		(.20	)		-			(.20	)		14.49	(9.99	)		22				.09				.09				.97

	Six months ended January 31,		Year ended July 31
	2006(5	)	2005		2004		2003		2002		2001
Portfolio turnover rate for all classes of shares	18	%	24	%	27	%	28	%	36	%	44	%

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

(2) Based on average shares outstanding.

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

(4) The ratios in this column reflect the impact, if any, of certain reimbursements/waivers from CRMC.

During some of the periods shown, CRMC reduced fees for investment advisory services for all share classes.

In addition, during the start-up period for the retirement plan share classes (except Class R-5),

CRMC agreed to pay a portion of the fees related to transfer agent services.

(5) Unaudited.

(6) Annualized.

(7) Amount less than $1 million.

See Notes to Financial Statements

Expense example unaudited

As a shareholder of the fund, you incur two types of costs: (1) transaction costs such as initial sales charges on purchase payments and contingent deferred sales charges on redemptions (loads); and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the fund so you can compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (August 1, 2005, through January 31, 2006).

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. There are some account fees that are charged to certain types of accounts, such as Individual Retirement Accounts and CollegeAmerica 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 and Class 529-F 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 also be lower by the amount of these fees.

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. There are some account fees that are charged to certain types of accounts, such as Individual Retirement Accounts and CollegeAmerica 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 and Class 529-F 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 also be lower by the amount of these fees.

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

	Beginning account value 8/1/2005		Ending account value 1/31/2006		Expenses paid during period*		Annualized expense ratio
Class A -- actual return	$	1,000.00	$	1,033.54	$	2.72		.53	%
Class A -- assumed 5% return		1,000.00		1,022.53		2.70		.53
Class B -- actual return		1,000.00		1,029.22		6.70		1.31
Class B -- assumed 5% return		1,000.00		1,018.60		6.67		1.31
Class C -- actual return		1,000.00		1,028.98		6.96		1.36
Class C -- assumed 5% return		1,000.00		1,018.35		6.92		1.36
Class F -- actual return		1,000.00		1,032.81		2.97		.58
Class F -- assumed 5% return		1,000.00		1,022.28		2.96		.58
Class 529-A -- actual return		1,000.00		1,033.19		3.13		.61
Class 529-A -- assumed 5% return		1,000.00		1,022.13		3.11		.61
Class 529-B -- actual return		1,000.00		1,028.44		7.36		1.44
Class 529-B -- assumed 5% return		1,000.00		1,017.95		7.32		1.44
Class 529-C -- actual return		1,000.00		1,029.02		7.31		1.43
Class 529-C -- assumed 5% return		1,000.00		1,018.00		7.27		1.43
Class 529-E -- actual return		1,000.00		1,031.09		4.71		.92
Class 529-E -- assumed 5% return		1,000.00		1,020.57		4.69		.92
Class 529-F -- actual return		1,000.00		1,034.15		2.15		.42
Class 529-F -- assumed 5% return		1,000.00		1,023.09		2.14		.42
Class R-1 -- actual return		1,000.00		1,028.50		7.31		1.43
Class R-1 -- assumed 5% return		1,000.00		1,018.00		7.27		1.43
Class R-2 -- actual return		1,000.00		1,028.69		7.21		1.41
Class R-2 -- assumed 5% return		1,000.00		1,018.10		7.17		1.41
Class R-3 -- actual return		1,000.00		1,030.96		4.86		.95
Class R-3 -- assumed 5% return		1,000.00		1,020.42		4.84		.95
Class R-4 -- actual return		1,000.00		1,032.46		3.28		.64
Class R-4 -- assumed 5% return		1,000.00		1,021.98		3.26		.64
Class R-5 -- actual return		1,000.00		1,033.97		1.74		.34
Class R-5 -- assumed 5% return		1,000.00		1,023.49		1.73		.34
* Expenses 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 (184), and divided by 365 (to reflect the one-half year period).

Approval of Investment Advisory and Service Agreement

The fund’s board has approved the fund’s Investment Advisory and Service Agreement (the “agreement”) with Capital Research and Management Company (“CRMC”) for an additional one-year term through December 31, 2006. The agreement was amended to add an additional advisory fee breakpoint if and when the fund’s net assets exceed $71 billion. The board approved the agreement following the recommendation of the fund’s Governance and Contracts Committee (the “committee”), which is composed of all of the fund’s independent board members. The information, material facts and conclusions that formed the basis for the committee’s recommendation and the board’s subsequent approval are described below.

1. Information reviewed

Materials reviewed — During the course of each year, board members review a wide variety of materials relating to the services provided by the investment adviser, including reports on the fund’s investment results, portfolio composition, portfolio trading practices, shareholder services, and other information relating to the nature, extent and quality of services provided by CRMC to the fund. In addition, the committee requests and reviews supplementary information that includes extensive materials regarding the fund’s investment results, advisory fee and expense comparisons, financial and profitability information regarding CRMC, descriptions of various functions such as compliance monitoring and portfolio trading practices, and information about the personnel providing investment management and administrative services to the fund.

Review process — The committee received assistance and advice regarding legal and industry standards from independent counsel to the board. The committee discussed the approval of the agreement with CRMC representatives and in a private session with counsel at which no representatives of CRMC were present. In deciding to recommend approval of the agreement, the committee did not identify any single or particular piece of information that, in isolation, was the controlling factor. This summary describes the most important, but not all, of the factors considered by the board and the committee.

2. Nature, extent and quality of services

CRMC, its personnel and its resources — The board and the committee considered the depth and quality of CRMC’s investment management process, including its global research capabilities; the experience, capability and integrity of its senior management and other personnel; the low turnover rates of its key personnel; the overall financial strength and stability of its organization; and the ability of its organizational structure to address the recent growth in assets under management. The board and the committee also considered that CRMC made available to its investment professionals a variety of resources and systems relating to investment management, compliance, trading, investment results and portfolio accounting. They considered CRMC’s commitment to investing in information technology supporting investment management and compliance. They further considered CRMC’s continuing need to attract and retain qualified personnel and to maintain and enhance its resources and systems. The board and the committee also considered the benefits to fund shareholders from investing in a fund that is part of a large family of funds offering a variety of investment objectives.

Other services — The board and the committee considered the investment adviser’s policies, procedures and systems designed to comply with applicable laws and regulations and its commitment to compliance; its efforts to keep the board members informed; and its attention to matters that may involve potential conflicts of interest with the fund. The board and the committee also considered the nature, extent, quality and cost of administrative, distribution and shareholder services provided by the investment adviser to the fund under the agreement and other agreements, including the information technology, legal, and fund accounting and treasury functions.

3. Investment results

The board and the committee considered the investment results of the fund in light of its objective of providing current income and, secondarily, growth of capital. They reviewed the fund’s absolute investment results, and compared the fund’s total returns with the total returns of the Lipper Income Funds Index (the Lipper category that includes the fund), the Lehman Brothers Aggregate Bond Index, and the averages of the funds included in that index as of June 30, 2005. The board and the committee noted that although the fund’s total returns were below these comparative measures for the six months ended June 30, 2005, they exceeded all the comparative measures for the one-year period ended June 30, 2005, and the five- and 10-year periods ended June 30, 2005. The board and the committee also considered the volatility of the fund’s results as well as the investment risks assumed by the fund relative to comparable market indexes and funds.

4. Advisory fees and total expenses

The board and the committee reviewed the advisory fees and total expenses of the fund (each as a percentage of average net assets) and compared such amounts with the median fee and expense levels of all other funds in the Lipper Income Funds Index (excluding funds of funds). The board and the committee observed that the fund’s advisory fees and total expenses had been below the median of all the other funds included in the index for the entire 10-year period ended on July 31, 2005. The board and the committee also noted the new additional advisory fee breakpoint if and when the fund’s net assets exceed $71 billion as well as the 5% advisory fee waiver that CRMC put into effect September 1, 2004, which was increased to 10% on April 1, 2005. The board and the committee also reviewed information regarding the advisory fees paid by institutional clients of an affiliate of CRMC with similar investment mandates. They noted that, although the fees paid by those clients generally were lower than those paid by the American Funds, these differences reflected the significant investment, operational and regulatory differences between advising mutual funds and institutional clients.

5. Adviser financial information

The board and the committee reviewed information regarding CRMC’s costs of providing services to the American Funds, as well as the resulting level of profits to CRMC, comparing those to the reported results of several large, publicly held investment management companies. The board and the committee considered CRMC’s willingness to invest in technology, infrastructure and staff to reinforce and offer new services and to accommodate changing regulatory requirements. They further considered the impact of the fund’s asset growth on advisory fee levels, noting the extent to which such fees are reduced through breakpoint discounts and the current 10% advisory fee waiver.

6. Ancillary benefits

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

7. Conclusions

Based on their review, including their consideration of each of the factors referred to above, the board and the committee concluded that the agreement is fair and reasonable to the fund and its shareholders, that the fund’s shareholders receive reasonable value in return for the advisory fees and other amounts paid to CRMC by the fund, that each of the factors discussed above supported approval of the agreement, and that approval of the agreement was in the best interests of the fund and its shareholders.

Other share class results                 unaudited

Class B, Class C, Class F and Class 529

Figures shown are past results and are not predictive of results in 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 the most current information and month-end results, visit americanfunds.com.

Average annual total returns for periods ended December 31, 2005
(the most recent calendar quarter):
	1 year		5 years		Life of class
Class B shares— first sold 3/15/00
Reflecting applicable contingent deferred sales
charge (CDSC), maximum of 5%, payable only
if shares are sold within six years of purchase	-2.24	%	+6.95	%	+8.49	%
Not reflecting CDSC	+2.64	%	+7.26	%	+8.60	%
Class C shares— first sold 3/15/01
Reflecting CDSC, maximum of 1%, payable only
if shares are sold within one year of purchase	+1.53	%	—		+7.28	%
Not reflecting CDSC	+2.51	%	—		+7.28	%
Class F shares1— first sold 3/15/01
Not reflecting annual asset-based fee charged
by sponsoring firm	+3.33	%	—		+8.10	%
Class 529-A shares2— first sold 2/15/02
Reflecting 5.75% maximum sales charge	-2.64	%	—		+7.37	%
Not reflecting maximum sales charge	+3.30	%	—		+9.02	%
Class 529-B shares2— first sold 2/19/02
Reflecting applicable CDSC, maximum of 5%,
payable only if shares are sold within six years
of purchase	-2.43	%	—		+7.74	%
Not reflecting CDSC	+2.45	%	—		+8.36	%
Class 529-C shares2— first sold 2/19/02
Reflecting CDSC, maximum of 1%, payable only
if shares are sold within one year of purchase	+1.48	%	—		+8.37	%
Not reflecting CDSC	+2.46	%	—		+8.37	%
Class 529-E shares1,2— first sold 2/25/02	+2.98	%	—		+8.63	%
Class 529-F shares1,2— first sold 9/17/02
Not reflecting annual asset-based fee charged
by sponsoring firm	+3.39	%	—		+13.14	%

The fund’s investment adviser waived 5% of its management fees from September 1, 2004, through March 31, 2005, and increased the waiver to 10% on April 1, 2005. Fund results shown reflect the waiver, without which they would have been lower. Please see the Financial Highlights table on page 26 for details.

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

²Results shown do not reflect the $10 initial account setup fee and an annual $10 account maintenance fee.

Office of the fund

One Market

Steuart Tower, Suite 1800

Mailing address: P.O. Box 7650

San Francisco, CA 94120-7650

Investment adviser

Capital Research and

Management Company

333 South Hope Street

Los Angeles, CA 90071-1406

135 South State College Boulevard

Brea, CA 92821-5823

Transfer agent for shareholder accounts

American Funds Service Company

(Please write to the address

nearest you.)

P.O. Box 25065

Santa Ana, CA 92799-5065

P.O. Box 659522

San Antonio, TX 78265-9522

P.O. Box 6007

Indianapolis, IN 46206-6007

P.O. Box 2280

Norfolk, VA 23501-2280

Custodian of assets

JPMorgan Chase Bank

270 Park Avenue

New York, NY 10017-2070

Counsel

Paul, Hastings, Janofsky & Walker LLP

515 South Flower Street

Los Angeles, CA 90071-2228

Independent registered public

accounting firm

Deloitte & Touche LLP

695 Town Center Drive

Suite 1200

Costa Mesa, CA 92626-7188

Principal underwriter

American Funds Distributors, Inc.

333 South Hope Street

Los Angeles, CA 90071-1406

There are several ways to invest in The Income Fund of America. Class A shares are subject to a 5.75% maximum up-front sales charge that declines for accounts (and aggregated investments) of $25,000 or more and is eliminated for purchases of $1 million or more. Other share classes, which are generally not available for certain employer-sponsored retirement plans, have no up-front sales charges but are subject to additional annual expenses and fees. Annualized expenses for Class B shares were 0.78 percentage points higher than for Class A shares; Class B shares convert to Class A shares after eight years of ownership. If redeemed within six years, Class B shares may also be subject to a contingent deferred sales charge (“CDSC”) of up to 5% that declines over time. Class C shares were subject to annualized expenses 0.83 percentage points higher than those for Class A shares and a 1% CDSC if redeemed within the first year after purchase. Class C shares convert to Class F shares after 10 years. Class F shares, which are available only through certain fee-based programs offered by broker-dealer firms and registered investment advisers, had higher annualized expenses (by 0.05 percentage points) than did Class A shares, and an annual asset-based fee charged by the sponsoring firm. Expenses are deducted from income earned by the fund. As a result, dividends and investment results will differ for each share class.

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

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

A complete January 31, 2006, portfolio of The Income Fund of America’s investments is available free of charge by calling AFS or visiting the SEC website (where it is part of Form N-CSR).

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

This report is for the information of shareholders of The Income Fund of America, but it may also be used as sales literature when preceded or accompanied by the current prospectus, which gives details about charges, expenses, investment objectives and operating policies of the fund. If used as sales material after March 31, 2006, this report must be accompanied by an American Funds statistical update for the most recently completed calendar quarter.

[Logo - American Funds^®]

The right choice for the long term^®

What makes American Funds different?

For nearly 75 years, we have followed a consistent philosophy that we firmly believe is in our investors’ best interests. The range of opportunities offered by our family of just 29 carefully conceived, broadly diversified funds has attracted over 35 million shareholder accounts.

Our unique combination of strengths includes these five factors:

•A long-term, value-oriented approach

We buy stocks and bonds of well-managed companies at reasonable prices and hold them for the long term.

•An extensive global research effort

American Funds investment professionals search the world to gain a comprehensive understanding of companies and markets.

•The multiple portfolio counselor system

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

•Experienced investment professionals

American Funds portfolio counselors have an average of 23 years of investment experience, providing a wealth of knowledge and experience that few organizations have.

•A commitment to low operating expenses

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

29 mutual funds, consistent philosophy, consistent results

•Growth funds

AMCAP Fund^®

EuroPacific Growth Fund^®

The Growth Fund of America^®

The New Economy Fund^®

New Perspective Fund^®

New World Fund^SM

SMALLCAP World Fund^®

•Growth-and-income funds

American Mutual Fund^®

Capital World Growth and Income Fund^SM

Fundamental Investors^SM

The Investment Company of America^®

Washington Mutual Investors Fund^SM

•Equity-income funds

Capital Income Builder^®

>The Income Fund of America^®

•Balanced fund

American Balanced Fund^®

•Bond funds

American High-Income Trust^SM

The Bond Fund of America^SM

Capital World Bond Fund^®

Intermediate Bond Fund of America^®

U.S. Government Securities Fund^SM

•Tax-exempt bond funds

American High-Income Municipal Bond Fund^®

Limited Term Tax-Exempt Bond Fund of America^SM

The Tax-Exempt Bond Fund of America^®

State-specific tax-exempt funds

The Tax-Exempt Fund of California^®

The Tax-Exempt Fund of Maryland^®

The Tax-Exempt Fund of Virginia^®

•Money market funds

The Cash Management Trust of America^®

The Tax-Exempt Money Fund of America^SM

The U.S. Treasury Money Fund of America^SM

The Capital Group Companies

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

Lit. No. MFGESR-906-0306P

Litho in USA BAG/AL/8088-S4904

Printed on recycled paper

ITEM 2 - Code of Ethics

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

ITEM 3 - Audit Committee Financial Expert

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

ITEM 4 - Principal Accountant Fees and Services

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

ITEM 5 - Audit Committee of Listed Registrants

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

ITEM 6 - Schedule of Investments

[Logo - American Funds®]

The Income Fund of America^®

Investment portfolio

January 31, 2006

unaudited

Common stocks — 64.58%	Shares			Market value (000)
FINANCIALS — 16.53%
Citigroup Inc.		18,535,000		$	863,360
Washington Mutual, Inc.		15,705,100			664,640
Société Générale		4,536,500			597,757
HSBC Holdings PLC (United Kingdom)		24,852,825			412,324
HSBC Holdings PLC (Hong Kong)		10,543,396			176,281
Wells Fargo & Co.		8,656,800			539,838
Lloyds TSB Group PLC		57,848,305			523,542
U.S. Bancorp		17,235,000			515,499
J.P. Morgan Chase & Co.		11,275,000			448,181
Bank of America Corp.		9,565,550			423,084
Equity Residential		9,037,700			383,289
Hang Lung Properties Ltd.		156,637,000			304,898
iStar Financial, Inc.1		7,240,000			259,844
Boston Properties, Inc.		3,305,000			258,649
Wachovia Corp.		4,700,000			257,701
Kimco Realty Corp.		6,580,000			230,892
Regions Financial Corp.		6,920,000			229,606
Equity Office Properties Trust		7,175,000			228,309
ING Groep NV		6,376,076			227,003
Banco Itaú Holding Financeira SA, preferred nominative		7,010,000			213,155
Developers Diversified Realty Corp.		4,270,000			210,340
Fannie Mae		3,006,200			174,179
Fortis		4,880,000			170,131
Arthur J. Gallagher & Co.1		5,403,700			157,572
Hospitality Properties Trust		3,375,100			144,691
Cathay Financial Holding Co., Ltd.		71,616,000			133,432
Westpac Banking Corp.		6,671,144			117,080
Bank of New York Co., Inc.		3,675,000			116,902
Allied Capital Corp.		3,848,020			109,707
Sunstone Hotel Investors, Inc.1		3,593,400			106,005
Sky Financial Group, Inc.		3,928,472			101,040
St. George Bank Ltd.		4,046,552			92,473
Montpelier Re Holdings Ltd.1		4,465,000			86,174
DnB NOR ASA		7,500,000			83,738
XL Capital Ltd., Class A		1,175,000			79,500
Unibail Holding		531,000			78,143
SunTrust Banks, Inc.		1,090,000			77,880
Westfield Group		5,702,912			76,173
Unibanco-União de Bancos Brasileiros SA, units (GDR)		872,000			73,440
General Growth Properties, Inc.		1,400,000			72,240
Banco Santander Central Hispano, SA		5,030,828			72,205
Health Care Property Investors, Inc.		2,442,300			67,774
Camden Property Trust		986,000			64,189
Archstone-Smith Trust		1,362,000			63,823
Regency Centers Corp.		900,000			58,005
Hysan Development Co. Ltd.		21,815,601			55,401
KBC Groupe SA		525,000			52,599
Fulton Financial Corp.		2,302,563			41,331
Federal Realty Investment Trust		345,000			23,053
Fubon Financial Holding Co., Ltd.		26,269,000			23,032
Beverly Hills Bancorp Inc.1		1,939,517			20,656
					10,560,760
UTILITIES — 8.35%
National Grid PLC		42,885,918			438,406
E.ON AG		3,650,000			406,747
Dominion Resources, Inc.		5,158,498			389,621
Exelon Corp.		5,710,000			327,868
Duke Energy Corp.		11,242,393			318,722
Consolidated Edison, Inc.		6,765,000			318,023
Progress Energy, Inc.		6,185,400			269,807
FirstEnergy Corp.		5,304,780			265,770
Entergy Corp.		3,723,292			258,806
Ameren Corp.		4,245,000			215,476
Public Service Enterprise Group Inc.		2,960,000			206,075
Equitable Resources, Inc.		5,470,000			201,843
Scottish Power PLC		19,708,000			200,592
Southern Co.		5,665,000			197,142
DTE Energy Co.		4,539,100			191,550
PPL Corp.		5,000,000			150,650
RWE AG, Class A		1,750,000			143,870
Cinergy Corp.		2,968,700			128,990
NSTAR		4,271,200			122,754
Edison International		2,500,000			109,550
Xcel Energy Inc.		5,543,700			107,659
American Electric Power Co., Inc.		2,500,000			93,300
KeySpan Corp.		2,160,000			77,587
MDU Resources Group, Inc.		1,770,000			64,074
FPL Group, Inc.		1,500,000			62,685
Northeast Utilities		2,355,500			46,827
PG&E Corp.		550,000			20,521
					5,334,915
TELECOMMUNICATION SERVICES — 7.25%
AT&T Inc.		55,660,575			1,444,392
BellSouth Corp.		42,025,000			1,209,059
Verizon Communications Inc.		15,100,000			478,066
Koninklijke KPN NV		46,015,000			443,446
Chunghwa Telecom Co., Ltd. (ADR)		16,324,400			303,961
Chunghwa Telecom Co., Ltd.		42,803,000			75,594
Deutsche Telekom AG		10,680,000			168,690
SK Telecom Co., Ltd. (ADR)		6,975,000			162,029
Teléfonos de México, SA de CV, Class L (ADR)		6,200,000			147,188
Belgacom SA		2,612,000			80,265
KT Corp. (ADR)		1,755,000			37,048
KT Corp.		738,480			29,612
Sprint Nextel Corp., Series 1		760,501			17,408
Dobson Communications Corp., Class A2,3		2,290,483			16,995
Vodafone Group PLC		7,000,000			14,672
XO Communications, Inc.2		6,837			15
					4,628,440
ENERGY — 5.98%
Royal Dutch Shell PLC, Class A (ADR)		11,212,000			763,649
Royal Dutch Shell PLC, Class B		6,314,144			226,111
Royal Dutch Shell PLC, Class B (ADR)		3,021,565			216,948
Royal Dutch Shell PLC, Class A		1,340,000			45,514
Chevron Corp.		14,073,300			835,673
Marathon Oil Corp.		9,745,000			749,098
Kinder Morgan, Inc.		2,675,200			257,488
Occidental Petroleum Corp.		1,800,000			175,878
ConocoPhillips		2,400,000			155,280
ENI SpA		3,930,000			118,527
Enbridge Inc.		3,123,709			98,560
TOTAL SA (ADR)		645,000			89,223
Exxon Mobil Corp.		1,385,000			86,909
					3,818,858
CONSUMER STAPLES — 5.83%
Altria Group, Inc.		9,670,000			699,528
General Mills, Inc.		10,300,000			500,683
Reynolds American Inc.		4,681,600			473,450
H.J. Heinz Co.		13,385,000			454,287
ConAgra Foods, Inc.		18,485,000			383,194
Unilever NV (New York registered)		2,634,500			184,942
Unilever NV		500,000			35,002
Albertson’s, Inc.		8,690,000			218,554
Diageo PLC		14,050,000			208,765
Sara Lee Corp.		8,000,000			146,240
Tesco PLC		20,740,000			117,153
UST Inc.		2,650,000			103,191
SABMiller PLC		4,311,000			87,603
Foster’s Group Ltd.		12,093,270			48,066
Woolworths Ltd.		3,510,482			45,671
Lion Nathan Ltd.		3,200,000			18,077
					3,724,406
MATERIALS — 5.36%
Weyerhaeuser Co.		10,450,000			728,992
Dow Chemical Co.		11,742,500			496,708
International Paper Co.		12,318,640			401,957
E.I. du Pont de Nemours and Co.		9,950,000			389,543
Akzo Nobel NV		7,173,500			346,437
MeadWestvaco Corp.		7,335,000			195,771
Packaging Corp. of America1		6,736,800			156,294
RPM International, Inc.		5,385,000			101,777
Alcoa Inc.		3,200,000			100,800
Eastman Chemical Co.		2,000,000			96,420
Temple-Inland Inc.		2,017,578			94,624
DSM NV		2,000,000			89,266
UPM-Kymmene Corp.		4,100,000			83,546
Lyondell Chemical Co.		2,220,000			53,302
Worthington Industries, Inc.		1,701,800			35,108
Holmen AB, Class B		942,900			34,881
Freeport-McMoRan Copper & Gold Inc., Class B		300,000			19,275
					3,424,701
INDUSTRIALS — 4.81%
General Electric Co.		30,135,000			986,921
Waste Management, Inc.		13,925,000			439,752
Emerson Electric Co.		5,185,000			401,578
R.R. Donnelley & Sons Co.1		11,577,000			377,410
Cooper Industries, Ltd., Class A		2,100,000			171,465
Caterpillar Inc.		2,400,000			162,960
Avery Dennison Corp.		2,700,000			161,298
Hubbell Inc., Class B		3,213,100			144,429
Sandvik AB		2,000,000			98,124
Wesfarmers Ltd.		2,205,000			63,278
Brambles Industries PLC		5,103,000			36,870
Macquarie Infrastructure Company Trust		560,900			18,341
Singapore Technologies Engineering Ltd.		4,823,000			8,894
Delta Air Lines, Inc.2,3		542,911			342
					3,071,662
HEALTH CARE — 3.99%
Bristol-Myers Squibb Co.		33,243,000			757,608
Eli Lilly and Co.		10,270,000			581,488
Merck & Co., Inc.		14,008,300			483,286
Pfizer Inc		13,475,000			346,038
GlaxoSmithKline PLC		9,948,055			254,105
Wyeth		1,431,500			66,207
Schering-Plough Corp.		3,000,000			57,450
Clarent Hospital Corp.1,2,4		484,684			242
					2,546,424
CONSUMER DISCRETIONARY — 2.10%
General Motors Corp.		13,775,000			331,427
ServiceMaster Co.		13,973,750			180,820
DSG International PLC		45,000,000			140,283
Clear Channel Communications, Inc.		3,200,400			93,676
Snap-on Inc.		2,310,000			92,700
KangwonLand Inc.		4,155,395			87,970
Kingfisher PLC		20,678,565			87,237
Tupperware Brands Corp.1		3,865,000			85,803
Publishing & Broadcasting Ltd.		5,955,100			74,466
Regal Entertainment Group, Class A		3,500,000			64,785
Kesa Electricals PLC		13,644,958			60,352
Harrah’s Entertainment, Inc.		585,300			43,078
TI Automotive Ltd., Class A2,4		7,000,000			—
					1,342,597
INFORMATION TECHNOLOGY — 0.98%
Microsoft Corp.		14,360,000		$	404,234
Taiwan Semiconductor Manufacturing Co. Ltd. (ADR)		12,340,000			133,272
Premier Farnell PLC1		23,550,000			86,906
ZiLOG, Inc.2		455,000			1,028
					625,440
MISCELLANEOUS — 3.40%
Other common stocks in initial period of acquisition					2,171,061
Total common stocks (cost: $33,765,899,000)					41,249,264
Preferred stocks — 1.18%
FINANCIALS — 1.01%
SB Treasury Co. LLC, Series A, 9.40% noncumulative preferred3,5		124,434,000			135,635
Fannie Mae, Series O, 7.00% preferred3		2,250,000			123,328
Fuji JGB Investment LLC, Series A, 9.87% noncumulative preferred3,5		55,950,000			61,573
IBJ Preferred Capital Co. LLC, Series A, 8.79% noncumulative preferred3,5		24,300,000			26,157
HSBC Capital Funding LP, Series 1, 9.547% noncumulative step-up perpetual preferred3,5		37,500,000			43,671
HSBC Capital Funding LP, Series 2, 10.176% noncumulative step-up perpetual preferred3,5		10,000,000			15,085
Tokai Preferred Capital Co. LLC, Series A, 9.98% noncumulative preferred3,5		52,000,000			57,316
Chuo Mitsui Trust and Banking Co., Ltd. 5.506% preferred3,5		36,590,000			35,618
BNP Paribas Capital Trust 9.003% noncumulative trust preferred3,5		13,750,000			15,833
BNP U.S. Funding LLC, Series A, 7.738% noncumulative preferred3,5		4,200,000			4,382
Resona Preferred Global Securities (Cayman) Ltd. 7.191%3,5		15,050,000			15,864
Duke Realty Corp., Series B, 7.99% preferred cumulative step-up premium rate		300,000			15,141
NB Capital Corp., Series A, 8.35% exchangeable preferred depositary shares		520,000			13,962
Simon Property Group, Inc., Series G, 7.89% preferred cumulative step-up premium rate		200,000			10,387
Public Storage, Inc., Series V, 7.50% cumulative preferred depositary shares		400,000			10,284
iStar Financial, Inc., Series F, 7.80% cumulative redeemable preferred1		400,000			10,152
Deutsche Bank Capital Funding Trust VII 5.628% noncumulative trust preferred3,5		10,000,000			9,944
DBS Capital Funding Corp., Series A, 7.657% noncumulative guaranteed preference shares3,5		6,500,000			7,158
ACE Ltd., Series C, 7.80% preferred depositary shares		256,550			6,742
New Plan Excel Realty Trust, Inc., Series D, 7.80% preferred cumulative step-up premium rate		112,500			5,776
Nationwide Health Properties, Inc., Series A, 7.677% preferred cumulative step-up premium rate		50,000			5,111
Barclays Bank PLC, Series 1, 6.278% noncumulative preferred5		5,000,000			4,996
RBS Capital Trust I 4.709% noncumulative trust preferred5		4,550,000			4,300
ING Capital Funding Trust III 8.439% noncumulative preferred5		3,000,000			3,394
					641,809
CONSUMER DISCRETIONARY — 0.01%
Delphi Corp., Series A, 8.25% cumulative trust preferred 2033		1,201,245			7,148
INFORMATION TECHNOLOGY — 0.00%
ZiLOG, Inc. — MOD III Inc., units2,4		513			0
TELECOMMUNICATION SERVICES — 0.00%
XO Communications, Inc. 14.00% preferred 20092,4,6		12			0
MISCELLANEOUS — 0.16%
Other preferred stocks in initial period of acquisition					104,363
Total preferred stocks (cost: $735,577,000)					753,320
Warrants — 0.00%		Shares			Market value (000	)
TELECOMMUNICATION SERVICES — 0.00%
American Tower Corp., warrants, expire 20082,3		3,000		$	1,215
XO Communications, Inc., Series A, warrants, expire 20102		13,674			4
XO Communications, Inc., Series B, warrants, expire 20102		10,256			2
XO Communications, Inc., Series C, warrants, expire 20102		10,256			2
Allegiance Telecom, Inc., warrants, expire 20082,3,4		20,000			0
GT Group Telecom Inc., warrants, expire 20102,3,4		15,000			0
Total warrants (cost: $818,000)					1,223
Convertible securities — 3.53%		Shares or principal amount
FINANCIALS — 1.01%
Metropolitan Life Insurance Co., Class B, 6.375% convertible preferred 2008		6,400,000 units			176,000
Fannie Mae 5.375% convertible preferred		1,530			147,454
XL Capital Ltd. 6.50% ACES convertible preferred 2007		1,340,000 units			29,842
XL Capital Ltd. 7.00% convertible preferred		2,810,000 units			72,104
Genworth Financial, Inc. 6.00% convertible preferred 2007		2,400,000 units			86,040
UnumProvident Corp. 8.25% ACES convertible 2006		2,100,000 units			81,396
Chubb Corp. 7.00% convertible preferred 2006		1,600,000 units			53,728
					646,564
INFORMATION TECHNOLOGY — 0.77%
Intel Corp. 2.95% convertible debentures 20353	$	154,825,000			141,471
Nortel Networks Corp. 4.25% convertible notes 2008	$	80,000,000			76,300
Nortel Networks Corp. 4.25% convertible notes 20083	$	40,000,000			38,150
ASM Lithography Holding NV 5.75% convertible notes 20063	$	57,500,000			70,909
SCI Systems, Inc. 3.00% convertible debentures 2007	$	57,500,000			55,919
International Rectifier Corp. 4.25% convertible notes 2007	$	52,000,000			51,220
Micron Technology, Inc. 2.50% convertible notes 20103	$	22,000,000			27,555
Liberty Media Corp. 3.50% exchangeable debentures 2031	$	25,000,000			26,000
LSI Logic Corp. 4.00% convertible notes 2006	$	3,000,000			2,985
Fairchild Semiconductor Corp. 5.00% convertible notes 2008	$	2,500,000			2,488
					492,997
HEALTH CARE — 0.40%
Schering-Plough Corp. 6.00% convertible preferred 2007		2,499,900			128,195
Baxter International Inc. 7.00% convertible preferred 2006		1,407,500 units			72,570
Sepracor Inc. 5.00% convertible debentures 2007	$	46,000,000			45,885
Incyte Corp. 3.50% convertible notes 20113	$	15,000,000			11,569
					258,219
TELECOMMUNICATION SERVICES — 0.29%
Qwest Communications International Inc. 3.50% convertible debenture 2025	$	100,000,000			122,375
American Tower Corp. 5.00% convertible debentures 2010	$	38,100,000			37,910
Liberty Media Corp. 4.00% exchangeable debentures 2029	$	36,000,000			21,420
					181,705
CONSUMER DISCRETIONARY — 0.26%
Ford Motor Co. Capital Trust II 6.50% cumulative convertible trust preferred 2032		2,132,900			68,573
Amazon.com, Inc. 4.75% convertible debentures 2009	$	59,137,000			57,437
Liberty Media Corp. 3.25% exchangeable debentures 2031	$	25,000,000			19,437
General Motors Corp., Series B, 5.25% convertible debentures 2032	$	17,540,000			11,590
Six Flags, Inc. 7.25% PIERS convertible preferred 2009		400,000			9,300
					166,337
INDUSTRIALS — 0.23%
Allied Waste Industries, Inc., Series D, 6.25%, convertible preferred 2008		240,000		$	64,212
Tyco International Group SA, Series B, 3.125% convertible debentures 20233	$	50,000,000			63,063
Cummins Capital Trust I 7.00% QUIPS convertible preferred 20313		178,000			18,289
					145,564
MATERIALS — 0.16%
Freeport-McMoRan Copper & Gold Inc. 5.50% convertible preferred3		50,000			68,247
Inco Ltd. 0% convertible notes LYON 2021	$	26,000,000			35,392
					103,639
UTILITIES — 0.15%
PG&E Corp. 9.50% convertible notes 2010	$	28,000,000			78,610
AES Trust VII 6.00% convertible preferred 2008		325,000			15,763
					94,373
ENERGY — 0.14%
El Paso Corp. 4.99% convertible preferred3		75,000			89,063
CONSUMER STAPLES — 0.07%
Albertson’s, Inc. 7.25% convertible preferred 2007		1,900,000 units			46,645
MISCELLANEOUS — 0.05%
Other convertible securities in initial period of acquisition					28,775
Total convertible securities (cost: $2,073,974,000)					2,253,881
Bonds & notes — 22.85%		Principal amount (000	)
CONSUMER DISCRETIONARY — 4.71%
General Motors Acceptance Corp. 4.50% 2006	$	10,000			9,903
General Motors Acceptance Corp. 6.125% 2006		10,000			9,895
General Motors Acceptance Corp. 5.50% 20075		4,000			3,906
General Motors Acceptance Corp. 6.125% 2007		45,020			44,247
General Motors Acceptance Corp. 6.125% 2007		20,500			19,860
Residential Capital Corp. 5.67% 20085		20,000			20,195
General Motors Corp. 6.375% 2008		4,605			3,880
General Motors Nova Scotia Finance Co. 6.85% 2008		14,000			11,690
General Motors Acceptance Corp. 5.85% 2009		20,500			19,321
Residential Capital Corp. 6.375% 2010		29,900			30,679
General Motors Acceptance Corp. 7.75% 2010		5,710			5,626
General Motors Acceptance Corp. 6.875% 2011		57,370			54,835
General Motors Corp. 7.20% 2011		69,575			56,356
General Motors Acceptance Corp. 7.25% 2011		146,030			141,037
General Motors Acceptance Corp. 6.875% 2012		12,130			11,529
General Motors Acceptance Corp. 7.00% 2012		29,805			28,414
General Motors Corp. 7.125% 2013		26,350			20,553
General Motors Acceptance Corp. 6.61% 20145		22,000			20,885
General Motors Corp. 7.70% 2016		7,800			5,831
General Motors Corp. 8.25% 2023		7,000			5,145
General Motors Corp. 8.375% 2033		10,000			7,450
Delphi Automotive Systems Corp. 6.55% 20067		17,105			9,793
Delphi Automotive Systems Corp. 6.50% 20097		54,466			31,318
Delphi Corp. 6.50% 20137		72,580			40,826
Delphi Automotive Systems Corp. 7.125% 20297		104,355			60,787
Ford Motor Credit Co. 6.50% 2007		7,000			6,926
Ford Motor Credit Co. 7.375% 2009		84,500			79,120
Ford Motor Credit Co. 6.17% 20105		5,055			4,554
Ford Motor Credit Co. 7.875% 2010		29,000			27,313
Ford Motor Credit Co. 7.375% 2011		5,250			4,872
CCMG Acquisition Corp. 8.875% 20143		4,000			4,150
CCMG Acquisition Corp. 10.50% 20163		7,625			8,006
Clear Channel Communications, Inc. 4.625% 2008		14,000			13,798
Chancellor Media Corp. of Los Angeles 8.00% 2008		23,750			25,220
Clear Channel Communications, Inc. 4.25% 2009		25,000			24,036
Clear Channel Communications, Inc. 7.65% 2010		15,550			16,564
Clear Channel Communications, Inc. 5.75% 2013		6,580			6,377
Clear Channel Communications, Inc. 5.50% 2014		39,170			36,973
Clear Channel Communications, Inc. 6.875% 2018		1,000			988
J.C. Penney Co., Inc. 8.00% 2010		39,205			42,989
J.C. Penney Co., Inc. 9.00% 2012		14,920			17,522
J.C. Penney Co., Inc. 7.65% 2016		4,000			4,537
J.C. Penney Co., Inc. 7.95% 2017		24,386			28,228
J.C. Penney Co., Inc. 7.125% 2023		1,272			1,443
J.C. Penney Co., Inc. 7.625% 2097		18,500			19,035
Comcast Cable Communications, Inc. 8.375% 2007		9,925			10,319
Comcast Cable Communications, Inc. 6.20% 2008		49,000			50,196
Lenfest Communications, Inc. 7.625% 2008		2,000			2,089
Comcast Cable Communications, Inc. 6.875% 2009		8,000			8,383
Comcast Corp. 5.45% 2010		12,500			12,546
Comcast Cable Communications, Inc. 7.125% 2013		3,100			3,342
Comcast Corp. 5.85% 2015		19,200			19,235
Comcast Corp. 6.50% 2015		5,000			5,226
Comcast Corp. 5.65% 2035		2,650			2,401
Dex Media West LLC and Dex Media West Finance Co., Series B, 5.875% 2011		21,275			21,594
R.H. Donnelley Inc. 10.875% 20123		1,000			1,130
R.H. Donnelley Corp., Series A-2, 6.875% 20133		39,025			36,001
R.H. Donnelley Corp., Series A-1, 6.875% 20133		20,650			18,998
R.H. Donnelley Corp., Series A-3, 8.875% 20163		35,175			35,747
DaimlerChrysler North America Holding Corp. 6.40% 2006		2,925			2,936
DaimlerChrysler North America Holding Corp. 4.05% 2008		2,560			2,490
DaimlerChrysler North America Holding Corp. 4.75% 2008		1,440			1,425
DaimlerChrysler North America Holding Corp. 7.20% 2009		22,950			24,201
DaimlerChrysler North America Holding Corp. 4.875% 2010		10,000			9,750
DaimlerChrysler North America Holding Corp. 8.00% 2010		15,000			16,385
DaimlerChrysler North America Holding Corp. 7.75% 2011		26,500			28,894
DaimlerChrysler North America Holding Corp. 6.50% 2013		3,200			3,327
Cox Communications, Inc. 7.75% 2006		6,000			6,074
Cox Communications, Inc. 5.039% 20075		8,250			8,316
Cox Communications, Inc. 7.875% 2009		12,500			13,403
Cox Communications, Inc. 4.625% 2010		33,250			32,139
Cox Communications, Inc. 7.75% 2010		10,000			10,787
Cox Communications, Inc. 5.45% 2014		13,500			13,089
Mirage Resorts, Inc. 7.25% 2006		4,960			5,047
MGM MIRAGE 6.00% 2009		35,100			35,100
Mandalay Resort Group 6.50% 2009		7,122			7,229
MGM MIRAGE 8.50% 2010		22,830			24,885
MGM MIRAGE 6.75% 2012		9,150			9,356
Liberty Media Corp. 7.75% 2009		10,950			11,564
Liberty Media Corp. 7.875% 2009		28,350			30,049
Liberty Media Corp. 5.70% 2013		12,350			11,621
Liberty Media Corp. 8.50% 2029		12,830			12,937
Liberty Media Corp. 8.25% 2030		10,740			10,698
CCH II, LLC and CCH II Capital Corp. 10.25% 2010		9,000			8,899
Charter Communications Holdings, LLC and Charter Communications Holdings Capital Corp. 0%/13.50% 20118		4,375			2,625
Charter Communications Operating, LLC and Charter Communications Operating Capital Corp. 8.00% 20123		36,730			36,914
CCO Holdings, LLC and CCO Holdings Capital Corp. 8.75% 2013		13,350			12,883
Charter Communications Operating, LLC and Charter Communications Operating Capital Corp. 8.375% 20143		10,000			10,038
Time Warner Inc. 8.18% 2007		20,000			20,872
AOL Time Warner Inc. 6.875% 2012		17,700			18,822
Time Warner Companies, Inc. 9.125% 2013		5,000			5,901
Time Warner Companies, Inc. 7.25% 2017		8,000			8,695
AOL Time Warner Inc. 7.625% 2031		9,750			10,863
Neiman Marcus Group, Inc. 9.00% 20153,6		52,810			55,054
Royal Caribbean Cruises Ltd. 7.00% 2007		3,000			3,093
Royal Caribbean Cruises Ltd. 8.00% 2010		3,500			3,824
Royal Caribbean Cruises Ltd. 8.75% 2011		30,475			34,523
Royal Caribbean Cruises Ltd. 6.875% 2013		6,500			6,933
Harrah’s Operating Co., Inc. 7.125% 2007		4,150			4,247
Harrah’s Operating Co., Inc. 5.50% 2010		26,375			26,389
Harrah’s Operating Co., Inc. 5.625% 2015		3,800			3,722
Harrah’s Operating Co., Inc. 5.75% 2017		10,000			9,690
Starwood Hotels & Resorts Worldwide, Inc. 7.375% 2007		12,350			12,705
Starwood Hotels & Resorts Worldwide, Inc. 7.875% 2012		22,450			24,695
D.R. Horton, Inc. 7.50% 2007		3,500			3,639
D.R. Horton, Inc. 5.00% 2009		3,000			2,976
D.R. Horton, Inc. 8.00% 2009		19,900			21,263
D.R. Horton, Inc. 9.75% 2010		3,000			3,413
D.R. Horton, Inc. 7.875% 2011		550			598
D.R. Horton, Inc. 5.25% 2015		5,000			4,691
Wynn Las Vegas, LLC and Wynn Las Vegas Capital Corp. 6.625% 2014		35,535			34,780
EchoStar DBS Corp. 5.75% 2008		9,300			9,207
EchoStar DBS Corp. 9.125% 2009		22,509			23,606
Vidéotron Ltée 6.875% 2014		21,069			21,490
Vidéotron Ltée 6.375% 20153		10,435			10,383
K. Hovnanian Enterprises, Inc. 10.50% 2007		16,275			17,658
K. Hovnanian Enterprises, Inc. 8.00% 2012		3,000			3,135
K. Hovnanian Enterprises, Inc. 7.75% 2013		2,500			2,531
K. Hovnanian Enterprises, Inc. 6.375% 2014		2,000			1,918
K. Hovnanian Enterprises, Inc. 6.25% 2016		7,000			6,601
Standard Pacific Corp. 6.50% 2008		5,000			5,013
Standard Pacific Corp. 5.125% 2009		17,750			16,907
Standard Pacific Corp. 6.875% 2011		6,500			6,321
Standard Pacific Corp. 6.25% 2014		3,500			3,194
Radio One, Inc., Series B, 8.875% 2011		16,750			17,692
Radio One, Inc. 6.375% 2013		12,950			12,464
KB Home 6.375% 2011		4,000			4,026
KB Home 5.75% 2014		1,500			1,420
KB Home 6.25% 2015		24,800			24,056
Emmis Operating Co. 6.875% 2012		27,185			26,641
Emmis Communications Corp. 10.366% 20125		2,297			2,311
British Sky Broadcasting Group PLC 6.875% 2009		10,000			10,442
British Sky Broadcasting Group PLC 8.20% 2009		16,250			17,707
Visteon Corp. 8.25% 2010		16,300			13,814
Visteon Corp. 7.00% 2014		18,000			14,040
Tenneco Automotive Inc., Series B, 10.25% 2013		5,325			5,991
Tenneco Automotive Inc. 8.625% 2014		19,000			19,190
CanWest Media Inc., Series B, 8.00% 2012		24,691			25,123
Technical Olympic USA, Inc. 9.00% 2010		8,965			9,245
Technical Olympic USA, Inc. 9.00% 2010		1,275			1,315
Technical Olympic USA, Inc. 7.50% 2011		12,775			11,737
Technical Olympic USA, Inc. 10.375% 2012		875			890
Mohegan Tribal Gaming Authority 6.375% 2009		19,780			20,077
Mohegan Tribal Gaming Authority 8.00% 2012		2,100			2,223
Mohegan Tribal Gaming Authority 6.125% 2013		750			747
Stoneridge, Inc. 11.50% 2012		21,300			21,620
Six Flags, Inc. 8.875% 2010		2,500			2,550
Six Flags, Inc. 9.75% 2013		3,525			3,626
Six Flags, Inc. 9.625% 2014		14,700			15,031
Kabel Deutschland GmbH 10.625% 20143		19,675			20,757
Toll Brothers, Inc. 6.875% 2012		6,000			6,275
Toll Brothers, Inc. 4.95% 2014		5,000			4,643
Toll Brothers Finance Corp. 5.15% 20153		10,500			9,747
MDC Holdings, Inc. 7.00% 2012		5,000			5,253
MDC Holdings, Inc. 5.50% 2013		15,750			15,070
Warner Music Group 7.375% 2014		20,000			20,050
News America Inc. 5.30% 2014		4,000			3,938
News America Inc. 6.75% 2038		15,000			15,872
Hilton Hotels Corp. 7.625% 2008		2,450			2,560
Hilton Hotels Corp. 7.20% 2009		4,850			5,103
Hilton Hotels Corp. 8.25% 2011		9,618			10,543
CSC Holdings, Inc. 7.25% 2008		8,000			8,060
CSC Holdings, Inc., Series B, 8.125% 2009		8,000			8,160
Cablevision Systems Corp., Series B, 8.00% 2012		2,050			1,963
Toys “R” Us, Inc. 7.875% 2013		21,184			17,265
Toys “R” Us, Inc. 7.375% 2018		1,000			738
American Media Operations, Inc., Series B, 10.25% 2009		11,230			10,332
American Media Operations, Inc. 8.875% 2011		8,930			7,635
DIRECTV Holdings LLC and DIRECTV Financing Co., Inc. 8.375% 2013		16,536			17,818
Univision Communications Inc. 7.85% 2011		15,685			17,258
Quebecor Media Inc. 7.75% 20163		16,675			17,092
Telenet Group Holding NV 0%/11.50% 20143,8		20,027			16,773
Blockbuster Inc. 9.75% 20123		18,450			16,328
NTL Cable PLC 8.75% 2014		15,019			15,470
TRW Automotive Acquisition Corp. 9.375% 2013		14,088			15,391
May Department Stores Co. 5.75% 2014		10,215			10,368
May Department Stores Co. 6.65% 2024		4,785			5,001
William Lyon Homes, Inc. 7.625% 2012		17,000			15,215
Young Broadcasting Inc. 10.00% 2011		15,640			14,272
Hyatt Equities, LLC 6.875% 20073		14,000			14,238
Boyd Gaming Corp. 7.75% 2012		12,950			13,565
Adelphia Communications Corp. 10.25% 20067		13,975			9,189
Adelphia Communications Corp. 10.25% 20117		6,100			4,285
AMC Entertainment Inc., Series B, 8.625% 2012		6,305			6,557
AMC Entertainment Inc. 8.00% 2014		7,500			6,525
Centex Corp. 4.75% 2008		8,075			7,977
Centex Corp. 5.25% 2015		5,000			4,746
Dana Corp. 5.85% 2015		18,000			12,510
Ryland Group, Inc. 5.375% 2012		12,350			11,885
YUM! Brands, Inc. 7.70% 2012		10,500			11,657
Cinemark USA, Inc. 9.00% 2013		10,575			11,223
Pulte Homes, Inc. 7.875% 2011		5,000			5,474
Pulte Homes, Inc. 7.625% 2017		5,000			5,482
LBI Media, Inc. 10.125% 2012		9,895			10,575
Staples, Inc. 7.375% 2012		9,000			9,964
Seminole Tribe of Florida 6.535% 20203,9		10,000			9,930
NVR, Inc. 5.00% 2010		10,000			9,663
Payless ShoeSource, Inc. 8.25% 2013		8,000			8,460
WCI Communities, Inc. 9.125% 2012		8,045			8,246
ArvinMeritor, Inc. 8.125% 20153		8,500			8,054
Cooper-Standard Automotive Inc. 7.00% 2012		3,000			2,820
Cooper-Standard Automotive Inc. 8.375% 2014		6,335			5,052
Regal Cinemas Corp., Series B, 9.375% 20124		7,250			7,562
Fisher Communications, Inc. 8.625% 2014		5,605			5,920
Aztar Corp. 7.875% 2014		5,500			5,734
Seneca Gaming Corp. 7.25% 20123		3,275			3,332
Seneca Gaming Corp. 7.25% 2012		2,000			2,035
GSC Holdings Corp. and GameStop, Inc. 8.405% 20113,5		5,000			5,075
Viacom Inc. 5.625% 2007		5,000			5,020
Carnival Corp. 3.75% 2007		5,000			4,890
Morris Publishing Group, LLC and Morris Publishing Finance Co., Series B, 7.00% 2013		5,000			4,687
Warnaco, Inc. 8.875% 2013		3,425			3,682
Marriott International, Inc. 5.81% 20153		3,000			3,014
Sealy Mattress Co. 8.25% 2014		2,825			2,931
Gannett Co., Inc. 6.375% 2012		2,635			2,726
Reader’s Digest Association, Inc. 6.50% 2011		2,550			2,531
Gray Communications Systems, Inc. 9.25% 2011		2,000			2,135
Boyds Collection, Ltd., Series B, 9.00% 20084,7		7,382			1,919
					3,006,430
TELECOMMUNICATION SERVICES — 3.03%
Sprint Capital Corp. 4.78% 2006		10,950			10,937
Sprint Capital Corp. 7.625% 2011		10,000			11,013
Nextel Communications, Inc., Series E, 6.875% 2013		125,730			131,930
Nextel Communications, Inc., Series D, 7.375% 2015		165,240			174,764
Sprint Capital Corp. 6.875% 2028		5,000			5,433
Qwest Capital Funding, Inc. 7.75% 2006		3,000			3,037
U S WEST Capital Funding, Inc. 6.375% 2008		7,100			7,064
Qwest Capital Funding, Inc. 7.00% 2009		2,625			2,658
Qwest Capital Funding, Inc. 7.90% 2010		29,635			30,746
Qwest Capital Funding, Inc. 7.25% 2011		22,395			22,675
Qwest Communications International Inc. 7.25% 2011		20,000			20,200
Qwest Corp. 8.875% 2012		12,400			13,795
U S WEST Capital Funding, Inc. 6.50% 2018		12,000			11,010
Qwest Capital Funding, Inc. 7.625% 2021		7,800			7,507
U S WEST Capital Funding, Inc. 6.875% 2028		55,425			50,714
Qwest Capital Funding, Inc. 7.75% 2031		69,620			66,835
Dobson Cellular Systems, Inc. 9.00% 20115		4,850			5,068
American Cellular Corp., Series B, 10.00% 2011		74,000			80,845
Dobson Communications Corp. 8.85% 20123,5		21,000			20,790
Dobson Cellular Systems, Inc. 9.875% 2012		3,850			4,254
Dobson Communications Corp. 8.875% 2013		48,250			48,853
American Tower Corp. 7.25% 2011		49,175			51,511
American Tower Corp. 7.125% 2012		59,975			62,524
American Tower Corp. 7.50% 2012		43,300			45,573
MetroPCS, Inc. 12.00% 20075		77,765			82,042
MetroPCS, Inc. 9.25% 20115		48,375			50,068
Triton PCS, Inc. 8.75% 2011		22,950			15,319
Triton PCS, Inc. 9.375% 2011		31,550			21,296
Triton PCS, Inc. 8.50% 2013		81,700			77,615
SBC Communications Inc. 4.542% 20085		7,110			7,128
SBC Communications Inc. 4.125% 2009		17,465			16,835
SBC Communications Inc. 6.25% 2011		5,500			5,724
AT&T Corp. 9.05% 20115		23,228			25,628
SBC Communications Inc. 5.10% 2014		38,500			37,390
SBC Communications Inc. 6.15% 2034		10,610			10,481
SBC Communications Inc. 6.45% 2034		5,000			5,097
AT&T Wireless Services, Inc. 7.50% 2007		34,250			35,291
AT&T Wireless Services, Inc. 8.125% 2012		34,935			40,211
Centennial Cellular Corp. 10.75% 2008		3,858			3,954
Centennial Communications Corp. and Centennial Cellular Operating Co. LLC 10.125% 2013		16,000			17,600
Centennial Communications Corp. 10.25% 20133,5		30,125			30,953
Centennial Communications Corp. and Centennial Cellular Operating Co. LLC and
Centennial Puerto Rico Operations Corp. 8.125% 20145		14,500			14,826
Intelsat, Ltd. 9.609% 20123,5		20,575			21,038
Intelsat, Ltd. 8.25% 20133		39,135			39,233
Intelsat, Ltd. 8.625% 20153		6,560			6,609
France Télécom 7.75% 20115		45,450			50,478
Deutsche Telekom International Finance BV 8.50% 20105		7,150			7,932
Deutsche Telekom International Finance BV 5.25% 2013		15,000			14,805
Deutsche Telekom International Finance BV 8.75% 20305		7,000			8,759
Deutsche Telekom International Finance BV 9.25% 20325		10,000			13,458
NTELOS Inc. 9.57% 20125		15,500			15,732
NTELOS Holding Corp. 13.35% 20133,5,6		23,725			23,963
Telecom Italia Capital SA, Series A, 4.00% 2008		3,000			2,906
Telecom Italia Capital SA, Series B, 5.25% 2013		10,300			10,021
Telecom Italia Capital SA 4.95% 2014		9,000			8,523
Telecom Italia Capital SA 5.25% 2015		17,100			16,430
Hawaiian Telcom Communications, Inc. 9.75% 20133		15,895			15,776
Hawaiian Telcom Communications, Inc. 9.948% 20133,5		12,155			12,125
Hawaiian Telcom Communications, Inc. 9.948% 20133,5		365			364
Hawaiian Telcom Communications, Inc. 12.50% 20153		7,075			6,668
Koninklijke KPN NV 8.00% 2010		27,150			29,592
Koninklijke KPN NV 8.375% 2030		2,000			2,326
Rogers Wireless Inc. 7.25% 2012		11,825			12,564
Rogers Wireless Inc. 7.50% 2015		16,750			18,258
TELUS Corp. 7.50% 2007		19,000			19,563
TELUS Corp. 8.00% 2011		7,750			8,668
Cincinnati Bell Inc. 7.25% 2013		26,275			27,687
Nextel Partners, Inc. 8.125% 2011		19,250			20,742
Nextel Partners, Inc. 8.125% 2011		5,000			5,388
PCCW-HKT Capital Ltd. 8.00% 20113,5		15,000			16,546
PCCW-HKT Capital No. 3 Ltd. 5.25% 20153		4,300			4,106
Singapore Telecommunications Ltd. 6.375% 20113		12,000			12,741
Singapore Telecommunications Ltd. 6.375% 2011		4,825			5,123
SBA Communications Corp. 8.50% 2012		13,899			15,428
Verizon Global Funding Corp. 6.125% 2007		7,000			7,102
Verizon New York Inc., Series A, 6.875% 2012		6,500			6,821
Verizon Wireless Capital LLC and Cellco Partnership 5.375% 2006		11,000			11,034
Valor Telecommunications Enterprises, LLC and Valor Telecommunications Enterprises Finance Corp. 7.75% 2015		10,000			10,375
ALLTEL Corp. 4.656% 2007		8,700			8,662
Rural Cellular Corp. 10.041% 20123,5		8,000			8,260
BellSouth Corp. 4.20% 2009		7,000			6,778
Vodafone Group PLC 7.75% 2010		5,000			5,461
British Telecommunications PLC 8.375% 20105		2,000			2,269
British Telecommunications PLC 8.875% 2030		2,000			2,639
Millicom International Cellular SA 10.00% 2013		3,500			3,868
					1,934,015
MORTGAGE-BACKED OBLIGATIONS9— 2.84%
Fannie Mae, Series 2000-T5B, 7.30% 2010		19,000			20,716
Fannie Mae 9.00% 2010		313			325
Fannie Mae 4.89% 2012		10,000			9,858
Fannie Mae 4.00% 2015		8,653			8,313
Fannie Mae 6.00% 2016		1,491			1,523
Fannie Mae 6.00% 2016		812			830
Fannie Mae 7.00% 2016		334			342
Fannie Mae 5.00% 2018		20,651			20,462
Fannie Mae 5.50% 2018		18,434			18,578
Fannie Mae 10.00% 2018		453			508
Fannie Mae 9.50% 2022		431			473
Fannie Mae 7.50% 2023		167			176
Fannie Mae 7.50% 2023		19			20
Fannie Mae 10.00% 2025		300			336
Fannie Mae, Series 2001-4, Class GA, 10.251% 20255		1,496			1,663
Fannie Mae, Series 2001-4, Class NA, 11.876% 20255		139			156
Fannie Mae, Series 2002-W3, Class A-5, 7.50% 2028		1,287			1,344
Fannie Mae 6.50% 2031		712			732
Fannie Mae 7.00% 2031		1,002			1,043
Fannie Mae 7.00% 2031		607			631
Fannie Mae 7.50% 2031		517			542
Fannie Mae, Series 2001-20, Class E, 9.609% 20315		1,315			1,443
Fannie Mae 6.50% 2032		2,837			2,915
Fannie Mae 6.50% 2032		1,779			1,828
Fannie Mae 3.75% 20335		5,860			5,738
Fannie Mae 6.50% 2033		4,076			4,189
Fannie Mae 5.50% 2034		19,663			19,477
Fannie Mae 6.00% 2034		6,760			6,828
Fannie Mae 6.00% 2034		5,325			5,379
Fannie Mae 6.00% 2034		2,882			2,914
Fannie Mae 6.00% 2034		2,759			2,787
Fannie Mae 6.00% 2034		1,746			1,765
Fannie Mae 6.00% 2034		1,094			1,105
Fannie Mae 6.00% 2034		1,070			1,081
Fannie Mae 6.00% 2034		808			816
Fannie Mae 6.00% 2034		439			444
Fannie Mae 6.00% 2034		428			433
Fannie Mae 4.487% 20355		3,067			3,017
Fannie Mae 4.587% 20355		8,537			8,409
Fannie Mae 5.00% 2035		53,071			51,284
Fannie Mae 5.00% 2035		28,964			27,989
Fannie Mae 5.00% 2035		7,501			7,248
Fannie Mae 5.50% 2035		119,161			118,035
Fannie Mae 5.50% 2035		24,000			23,743
Fannie Mae 5.50% 2035		9,619			9,528
Fannie Mae 5.50% 2035		4,993			4,940
Fannie Mae 5.50% 2035		398			394
Fannie Mae 6.00% 2035		13,273			13,405
Fannie Mae 6.00% 2035		9,910			10,009
Fannie Mae 6.00% 2035		7,021			7,092
Fannie Mae 6.00% 2035		249			251
Fannie Mae 6.00% 2036		2,340			2,363
Fannie Mae, Series 2001-50, Class BA, 7.00% 2041		2,395			2,485
Fannie Mae, Series 2001-T10, Class A-1, 7.00% 2041		1,657			1,711
Fannie Mae, Series 2002-W1, Class 2A, 7.50% 2042		2,856			2,975
Countrywide Alternative Loan Trust, Series 2005-62, Class 2-A-1, 4.326% 20355		9,981			9,915
Countrywide Alternative Loan Trust, Series 2005-40CB, Class A-1, 5.50% 2035		154,524			152,608
Countrywide Alternative Loan Trust, Series 2005-49CB, Class A-1, 5.50% 2035		149,805			148,337
Countrywide Alternative Loan Trust, Series 2005-46CB, Class A-8, 5.50% 2035		29,565			29,494
Countrywide Alternative Loan Trust, Series 2005-64CB, Class 1-A-7, 5.50% 2035		11,113			11,109
Countrywide Alternative Loan Trust, Series 2005-54CB, Class 1-A-7, 5.50% 2035		9,500			9,487
Countrywide Alternative Loan Trust, Series 2005-23CB, Class A-15, 5.50% 2035		4,613			4,548
Countrywide Alternative Loan Trust, Series 2005-21CB, Class A-17, 6.00% 2035		12,581			12,492
Countrywide Alternative Loan Trust, Series 2004-36CB, Class 1-A-1, 6.00% 2035		7,322			7,307
Countrywide Alternative Loan Trust, Series 2005-73CB, Class 2-A-1, 5.75% 2036		1,235			1,237
Freddie Mac 9.00% 2007		15			15
Freddie Mac 8.50% 2008		12			12
Freddie Mac, Series SF02, Class GC, 2.64% 2009		5,000			4,850
Freddie Mac 8.50% 2009		88			91
Freddie Mac 8.50% 2010		147			153
Freddie Mac 5.00% 2018		12,970			12,853
Freddie Mac 5.50% 2018		6,484			6,531
Freddie Mac 11.00% 2018		426			476
Freddie Mac, Series 178, Class Z, 9.25% 2021		144			149
Freddie Mac, Series 2289, Class NB, 11.493% 20225		322			359
Freddie Mac 4.648% 20355		12,951			12,740
Freddie Mac 4.791% 20355		9,508			9,382
Freddie Mac 5.00% 2035		19,407			18,735
Freddie Mac 5.00% 2035		16,192			15,632
Freddie Mac 5.50% 2035		9,708			9,611
Freddie Mac 5.50% 2035		9,688			9,590
Freddie Mac, Series 3061, Class PN, 5.50% 2035		7,296			7,322
Freddie Mac 6.00% 2036		24,970			25,228
CS First Boston Mortgage Securities Corp., Series 2003-AR26, Class VI-A-1, 4.142% 20335		38,043			37,405
CS First Boston Mortgage Securities Corp., Series 2004-5, Class IV-A-1, 6.00% 2034		5,501			5,500
CS First Boston Mortgage Securities Corp., Series 2001-CF2, Class A-3, 6.238% 2034		5,146			5,238
CS First Boston Mortgage Securities Corp., Series 2005-6, Class VI-A-1, 6.00% 2035		9,085			9,042
CS First Boston Mortgage Securities Corp., Series 2005-5, Class IV-A-1, 6.25% 2035		7,797			7,855
CS First Boston Mortgage Securities Corp., Series 2001-CK1, Class A-3, 6.38% 2035		10,100			10,570
CS First Boston Mortgage Securities Corp., Series 2005-C3, Class A-AB, 4.614% 2037		10,000			9,634
CS First Boston Mortgage Securities Corp., Series 2002-CKN2, Class A-3, 6.133% 2037		6,910			7,221
CS First Boston Mortgage Securities Corp., Series 2005-C6, Class A-3, 5.23% 2040		10,000			9,938
CHL Mortgage Pass-Through Trust, Series 2003-27, Class A-1, 3.721% 20335		3,246			3,193
CHL Mortgage Pass-Through Trust, Series 2003-56, Class 6-A-1, 4.848% 20335		19,991			19,826
CHL Mortgage Pass-Through Trust, Series 2003-58, Class 2-A-2, 4.561% 20345		38,490			37,710
CHL Mortgage Pass-Through Trust, Series 2004-22, Class A-2, 4.666% 20345		6,089			5,987
CHL Mortgage Pass-Through Trust, Series 2005-HYB8, Class 4-A-1, 5.733% 20355		27,970			28,001
Merrill Lynch Mortgage Investors, Inc., Series 1999-C1, Class A-2, 7.56% 2031		11,328			12,093
Merrill Lynch Mortgage Investors, Inc., Series 2003-A6, Class II-A, 4.223% 20335		39,872			39,043
Merrill Lynch Mortgage Investors, Inc., Series 2004-A1, Class II-A-1, 4.602% 20345		5,019			4,960
Bear Stearns ARM Trust, Series 2003-8, Class II-A-1, 4.818% 20345		26,641			26,332
Bear Stearns ARM Trust, Series 2003-9, Class III-A-2, 4.981% 20345		2,677			2,643
Bear Stearns ARM Trust, Series 2005-10, Class A-3, 4.65% 20355		20,000			19,470
Banc of America Mortgage Securities Trust, Series 2003-G, Class 2-A-1, 4.088% 20335		3,635			3,597
Banc of America Mortgage Securities Trust, Series 2003-D, Class 2-A-1, 4.183% 20335		2,072			2,030
Banc of America Mortgage Securities Trust, Series 2003-J, Class 2-A-2, 4.416% 20335		41,545			40,955
Crown Castle Towers LLC, Series 2005-1, Class A-FX, 4.643% 20353		10,000			9,764
Crown Castle Towers LLC, Series 2005-1, Class D, 5.612% 20353		37,750			36,700
WaMu Mortgage Pass-Through Certificates Trust, Series 2003-AR8, Class A, 4.03% 20335		4,725			4,711
WaMu Mortgage Pass-Through Certificates Trust, Series 2003-AR5, Class A-7, 4.208% 20335		3,432			3,415
WaMu Mortgage Pass-Through Certificates Trust, Series 2003-AR6, Class A-1, 4.344% 20335		1,631			1,601
WaMu Mortgage Pass-Through Certificates Trust, Series 2003-AR1, Class A-6, 4.484% 20335		950			937
WaMu Mortgage Pass-Through Certificates Trust, Series 2004-AR1, Class A, 4.229% 20345		4,721			4,638
WaMu Mortgage Pass-Through Certificates Trust, Series 2004-AR11, Class A, 4.588% 20345		6,151			6,038
WaMu Mortgage Pass-Through Certificates Trust, Series 2005-AR15, Class A-1-A, 4.79% 20455		24,396			24,411
Morgan Stanley Mortgage Loan Trust, Series 2004-3, Class 4-A, 5.699% 20345		11,489			11,268
Morgan Stanley Mortgage Loan Trust, Series 2005-10, Class 4-A-1, 5.50% 2035		15,237			15,017
Morgan Stanley Mortgage Loan Trust, Series 2005-10, Class 5-A-1, 6.00% 2035		15,260			15,274
Wachovia Bank Commercial Mortgage Trust, Series 2002-C1, Class A-2, 5.681% 2034		8,200			8,276
Wachovia Bank Commercial Mortgage Trust, Series 2005-C16, Class A-PB, 4.692% 2041		15,000			14,580
Wachovia Bank Commercial Mortgage Trust, Series 2005-C17, Class A-2, 4.782% 2042		11,000			10,847
Banc of America Commercial Mortgage Inc., Series 2001-1, Class A-2, 6.503% 2036		9,957			10,431
Banc of America Commercial Mortgage Inc., Series 2005-5, Class A-3B, 5.229% 2045		15,000			15,021
L.A. Arena Funding, LLC, Series 1, Class A, 7.656% 20263		21,393			22,994
Chase Commercial Mortgage Securities Corp., Series 1998-1, Class A-2, 6.56% 2030		5,810			5,955
Chase Commercial Mortgage Securities Corp., Series 2000-1, Class A-2, 7.757% 2032		14,660			15,712
GS Mortgage Securities Corp. II, Series 1998-C1, Class D, 7.213% 20305		20,000			20,880
Government National Mortgage Assn. 9.50% 2009		407			424
Government National Mortgage Assn. 9.00% 2016		62			67
Government National Mortgage Assn. 5.50% 2017		4,332			4,392
Government National Mortgage Assn. 8.50% 2017		37			40
Government National Mortgage Assn. 8.50% 2017		9			10
Government National Mortgage Assn. 8.50% 2017		6			6
Government National Mortgage Assn. 10.00% 2020		1,296			1,479
Government National Mortgage Assn. 8.50% 2021		293			315
Government National Mortgage Assn. 8.50% 2021		96			103
Government National Mortgage Assn. 8.50% 2021		7			8
Government National Mortgage Assn. 9.50% 2021		211			231
Government National Mortgage Assn. 10.00% 2021		1,852			2,112
Government National Mortgage Assn. 10.00% 2025		1,785			2,026
Government National Mortgage Assn. 4.00% 20355		5,840			5,721
Government National Mortgage Assn. 4.00% 20355		1,764			1,723
Government National Mortgage Assn. 4.00% 20355		1,636			1,599
Bear Stearns Commercial Mortgage Securities Inc., Series 1999-C1, Class X, interest only, 1.137% 20313,5		77,066			2,573
Bear Stearns Commercial Mortgage Securities Inc., Series 2002-PBW1, Class A-1, 3.97% 2035		8,662			8,433
Bear Stearns Commercial Mortgage Securities Inc., Series 2001-TOP2, Class A-2, 6.48% 2035		7,665			8,080
Residential Accredit Loans, Inc., Series 2005-QR1, Class A, 6.00% 2034		10,942			10,896
Residential Accredit Loans, Inc., Series 2005-QS9, Class A-6, 5.50% 2035		4,500			4,328
Residential Accredit Loans, Inc., Series 2005-QS14, Class 2-A-1, 6.00% 2035		2,347			2,347
Residential Accredit Loans, Inc., Series 2005-QS15, Class 3-A, 6.00% 2035		1,200			1,200
Morgan Stanley Capital I Trust, Series 2005-HQ7, Class A-2, 5.205% 2042		17,875			17,885
GE Commercial Mortgage Corp., Series 2005-C4, Class A-3A, 5.333% 2045		17,000			17,119
SBA CMBS Trust, Series 2005-1, Class A, 5.369% 20353		10,000			10,011
SBA CMBS Trust, Series 2005-1, Class B, 5.565% 20353		7,000			7,010
Washington Mutual Securities Corp., Series 2005-AR1, Class A-1-A, 4.79% 20355		16,730			16,748
Lehman Mortgage Trust, Series 2005-2, Class 3-A3, 5.50% 2035		14,671			14,662
GMAC Commercial Mortgage Securities, Inc., Series 2001-C1, Class A-2, 6.465% 2034		12,250			12,902
GE Capital Commercial Mortgage Corp., Series 2001-1, Class A-1, 6.079% 2033		3,134			3,205
GE Capital Commerical Mortgage Corp., Series 2002-3, Class A-1, 4.229% 2037		8,897			8,681
Host Marriott Pool Trust, Series 1999-HMTA, Class D, 7.97% 20153		10,990			11,682
Structured Adjustable Rate Mortgage Loan Trust, Series 2005-22, Class 5-A1, 6.053% 20355		11,093			11,132
MASTR Asset Securitization Trust, Series 2003-9, Class 2-A-8, 5.50% 2033		10,350			10,009
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2005-LDP1, Class A-2, 4.625% 2046		10,000			9,829
HarborView Mortgage Loan Trust, Series 2005-15, Class 2-A1A2, 5.29% 20455		9,613			9,710
Residential Asset Mortgage Products Trust, Series 2004-RS3, Class A-I-2, 3.052% 2029		2,404			2,391
Residential Asset Mortgage Products Trust, Series 2003-RZ4, Class A-7, 4.79% 20335		7,000			6,851
Commercial Mortgage Trust, Series 2003-LNB1, Class A-2, 4.084% 2038		6,925			6,452
Salomon Brothers Commercial Mortgage Trust, Series 2000-C1, Class A-1, 7.46% 2008		2,038			2,091
Salomon Brothers Commercial Mortgage Trust, Series 2000-C3, Class A-1, 6.341% 20333		4,144			4,184
Metropolitan Asset Funding, Inc., Series 1998-A, Class B-1, 7.728% 20143		4,669			4,589
First Union National Bank-Bank of America, N.A. Commercial Mortgage Trust, Series 2001-C1, Class A-1, 5.711% 2033		1,799			1,803
Structured Asset Securities Corp., Series 1998-RF2, Class A, 8.535% 20273,5		403			410
Structured Asset Securities Corp., Series 1998-RF1, Class A, 8.739% 20273,5		324			329
Financial Asset Securitization, Inc., Series 1997-NAM1, Class B-1, 7.75% 2027		481			480
					1,817,845
FINANCIALS — 2.58%
MBNA Europe Funding PLC 4.55% 20073,5		24,000			24,020
MBNA Corp. 5.625% 2007		10,000			10,110
Bank of America Corp. 4.50% 2010		10,000			9,805
MBNA Corp., Series F, 5.00% 2010		10,000			9,984
MBNA Corp., Series F, 6.125% 2013		10,000			10,526
MBNA Global Capital Funding, Series B, 5.05% 20275		35,000			34,569
Capital One Bank 6.875% 2006		21,600			21,600
Capital One Financial Corp. 7.25% 2006		3,000			3,017
Capital One Financial Corp. 8.75% 2007		3,500			3,624
Capital One Bank 4.875% 2008		20,000			19,900
Capital One Financial Corp. 6.25% 2013		30,000			31,256
Capital One Financial Corp. 5.50% 2015		5,000			4,948
Capital One Capital I 5.80% 20273,5		10,500			10,574
Household Finance Corp. 4.125% 2009		15,000			14,459
HSBC Finance Corp. 4.625% 2010		19,000			18,573
Household Finance Corp. 6.375% 2011		16,000			16,869
HSBC Holdings PLC 5.25% 2012		3,500			3,505
Household Finance Corp. 6.375% 2012		10,000			10,548
HSBC Bank USA 4.625% 20143		5,000			4,774
HSBC Finance Corp. 5.00% 2015		2,720			2,624
HSBC Finance Capital Trust IX 5.911% 20355		10,000			10,041
Midland Bank 5.00% Eurodollar note (undated)5		5,000			4,294
ASIF Global Financing XVIII 3.85% 20073		8,500			8,332
International Lease Finance Corp. 4.50% 2008		4,000			3,952
International Lease Finance Corp. 4.75% 2009		10,000			9,870
International Lease Finance Corp. 5.125% 2010		15,000			14,910
International Lease Finance Corp. 5.00% 2012		5,000			4,890
American International Group, Inc. 5.05% 20153		4,000			3,903
American General Finance Corp., Series I, 5.40% 2015		17,250			17,072
ILFC E-Capital Trust I 5.90% 20653,5		19,000			19,055
ILFC E-Capital Trust II 6.25% 20653,5		800			808
Washington Mutual, Inc. 4.375% 2008		9,000			8,892
Washington Mutual, Inc. 4.00% 2009		9,000			8,731
Washington Mutual, Inc. 4.20% 2010		5,000			4,822
Washington Mutual, Inc. 4.90% 20105		16,000			16,032
Washington Mutual, Inc. 5.00% 2012		7,000			6,870
Washington Mutual, Inc. 5.25% 2017		6,500			6,251
Dime Capital Trust I, Dime Bancorp, Inc., Series A, 9.33% 2027		9,425			10,279
Providian Financial Corp., Series A, 9.525% 20273		10,000			10,801
Rouse Co. 3.625% 2009		32,561			30,380
Rouse Co. 7.20% 2012		34,289			35,721
SocGen Real Estate Co. LLC, Series A, 7.64% (undated)3,5		45,700			47,398
Société Générale 7.85% (undated)3,5		11,200			11,527
iStar Financial, Inc. 7.00% 20081		6,525			6,731
iStar Financial, Inc. 8.75% 20081		1,028			1,109
iStar Financial, Inc., Series B, 4.875% 20091		5,000			4,928
iStar Financial, Inc. 5.375% 20101		10,925			10,867
iStar Financial, Inc. 6.00% 20101		3,750			3,816
iStar Financial, Inc., Series B, 5.125% 20111		10,000			9,789
iStar Financial, Inc. 5.80% 20111		5,000			5,047
iStar Financial, Inc. 6.05% 20151		4,285			4,342
Sumitomo Mitsui Banking Corp. 5.625% (undated)3,5		39,000			38,773
Host Marriott, LP, Series G, 9.25% 2007		775			825
Host Marriott, LP, Series I, 9.50% 2007		750			781
Host Marriott, LP, Series M, 7.00% 2012		21,085			21,665
Host Marriott, LP, Series K, 7.125% 2013		10,000			10,337
Host Marriott, LP, Series O, 6.375% 2015		5,150			5,111
CIT Group Inc. 3.65% 2007		7,110			6,946
CIT Group Inc. 6.875% 2009		16,500			17,436
CIT Group Inc. 4.75% 2010		10,000			9,824
CIT Group Inc. 7.75% 2012		4,000			4,505
CNA Financial Corp. 6.75% 2006		4,370			4,422
CNA Financial Corp. 6.45% 2008		2,406			2,452
CNA Financial Corp. 6.60% 2008		9,630			9,930
CNA Financial Corp. 5.85% 2014		8,975			8,978
CNA Financial Corp. 7.25% 2023		10,788			11,747
J.P. Morgan & Co. Inc. 6.70% 2007		5,000			5,127
J.P. Morgan Chase & Co. 4.00% 2008		10,000			9,821
J.P. Morgan Chase & Co. 6.75% 2011		5,000			5,343
J.P. Morgan Chase & Co. 4.75% 2015		7,500			7,229
J.P. Morgan Chase & Co. 4.891% 2015		10,000			9,860
PRICOA Global Funding I, Series 2003-2, 3.90% 20083		1,500			1,455
PRICOA Global Funding I, Series 2004-4, 4.35% 20083		8,000			7,875
Prudential Holdings, LLC, Series C, 8.695% 20233,9		22,250			27,964
E*TRADE Financial Corp. 7.375% 20133		8,750			8,969
E*TRADE Financial Corp. 7.875% 2015		26,475			27,799
Lazard Group LLC 7.125% 2015		32,930			34,559
EOP Operating LP 7.75% 2007		5,000			5,218
EOP Operating LP 8.10% 2010		6,500			7,161
EOP Operating LP 7.00% 2011		15,000			16,039
EOP Operating LP 6.75% 2012		4,750			5,042
HBOS Treasury Services PLC 3.75% 20083		5,500			5,341
Scotland International Finance No. 2 BV 4.25% 20133		1,500			1,421
HBOS PLC 5.375% (undated)3,5		500			497
HBOS PLC, Series B, 5.92% (undated)3,5		22,300			22,328
Mangrove Bay Pass Through Trust 6.102% 20333,5		21,000			20,762
Twin Reefs Asset Trust (XLFA), Series B, 5.42% (undated)3,5		7,200			7,207
Liberty Mutual Group Inc. 6.50% 20353		27,595			27,220
Allstate Financial Global Funding LLC 5.25% 20073		16,750			16,765
Allstate Life Global Funding Trust, Series 2004-1, 4.50% 2009		10,000			9,834
Hospitality Properties Trust 7.00% 2008		1,210			1,250
Hospitality Properties Trust 6.75% 2013		23,315			24,721
USA Education, Inc. 5.625% 2007		12,895			12,936
SLM Corp., Series A, 4.50% 2010		5,000			4,864
SLM Corp., Series A, 5.375% 2013		7,000			7,005
Nationwide Life Insurance Co. 5.35% 20073		8,500			8,511
North Front Pass Through Trust 5.81% 20243,5		10,000			9,969
Nationwide Mutual Insurance Co. 7.875% 20333		5,000			5,969
United Dominion Realty Trust, Inc., Series E, 4.50% 2008		20,000			19,666
United Dominion Realty Trust, Inc. 5.00% 2012		2,500			2,422
ReliaStar Financial Corp. 8.00% 2006		8,000			8,159
ReliaStar Financial Corp. 6.50% 2008		3,000			3,106
ING Bank NV 5.125% 20153		3,500			3,456
ING Groep NV 5.775% (undated)5		7,100			7,148
ACE INA Holdings Inc. 5.875% 2014		7,000			7,197
ACE Capital Trust II 9.70% 2030		10,250			14,121
Wachovia Capital Trust III 5.80% (undated)		20,000			20,062
Downey Financial Corp. 6.50% 2014		20,000			19,952
Monumental Global Funding Trust II, Series 2002-A, 5.20% 20073		16,750			16,742
Development Bank of Singapore Ltd. 7.875% 20103		10,000			11,011
Development Bank of Singapore Ltd. 7.125% 20113		5,000			5,424
Simon Property Group, LP 4.875% 2010		6,375			6,295
Simon Property Group, Inc. 5.375% 20113		4,700			4,701
Simon Property Group, LP 6.35% 2012		5,000			5,244
TuranAlem Finance BV 8.00% 2014		2,390			2,488
TuranAlem Finance BV 8.50% 20153		10,000			10,662
TuranAlem Finance BV 8.50% 2015		2,610			2,783
BNP Paribas 4.80% 20153		8,000			7,745
BNP Paribas 5.186% noncumulative (undated)3,5		7,500			7,220
Developers Diversified Realty Corp. 4.625% 2010		10,140			9,810
Developers Diversified Realty Corp. 5.50% 2015		5,000			4,907
UnumProvident Finance Co. PLC 6.85% 20153		14,000			14,633
Independence Community Bank Corp. 4.90% 2010		5,000			4,896
Independence Community Bank 3.75% 20145		10,000			9,565
Skandinaviska Enskilda Banken AB 5.471% (undated)3,5		3,000			2,947
Skandinaviska Enskilda Banken 7.50% (undated)3,5		10,405			11,203
ProLogis Trust 7.05% 2006		12,000			12,083
ProLogis Trust 5.625% 20153		1,950			1,950
HVB Funding Trust I 8.741% 20313		2,100			2,742
HVB Funding Trust III 9.00% 20313		8,300			11,041
Banco Santander Central Hispano, SA 7.625% 2010		500			551
Santander Financial Issuances Ltd. 7.25% 2015		1,500			1,724
Abbey National PLC 6.70% (undated)5		3,635			3,748
Abbey National PLC 7.35% (undated)5		7,605			7,745
Assurant, Inc. 5.625% 2014		13,500			13,558
New York Life Global Funding 4.625% 20103		12,500			12,333
Westfield Capital Corp. Ltd. and WT Finance (Australia) Pty Ltd. and WEA Finance LLC 5.125% 20143		12,500			12,258
Kazkommerts International BV 8.50% 20133		1,500			1,639
Kazkommerts International BV 7.875% 20143		10,000			10,512
Standard Chartered Bank 4.875% Eurodollar note (undated)5		15,000			12,150
Resona Bank, Ltd. 5.85% (undated)3,5		12,100			12,050
Willis North America Inc. 5.125% 2010		4,900			4,869
Willis North America Inc. 5.625% 2015		5,500			5,500
Federal Realty Investment Trust 6.125% 2007		10,000			10,134
Protective Life Insurance Co., Series 2005-C, 4.85% 2010		10,000			9,957
United Overseas Bank Ltd. 5.375% 20193,5		10,000			9,862
Citigroup Inc. 4.625% 2010		10,000			9,846
Popular North America, Inc., Series E, 3.875% 2008		10,000			9,648
Duke Realty LP 4.625% 2013		10,000			9,502
Zions Bancorporation 5.50% 2015		4,000			3,997
Zions Bancorporation 6.00% 2015		5,000			5,190
Bayerische Landesbank, Series F, 2.50% 2006		9,000			8,969
Canadian Imperial Bank of Commerce 4.25% Eurodollar note 20855		10,000			8,350
Bank of Nova Scotia 4.25% Eurodollar note 20855		10,000			8,300
Bank of Ireland 6.107% (undated)3,5		8,000			8,090
Plum Creek Timberlands, LP 5.875% 2015		6,800			6,834
BCI U.S. Funding Trust I 8.01% noncumulative preferred (undated)3,5		5,000			5,292
Lincoln National Corp. 6.20% 2011		5,000			5,278
Barclays Bank PLC 8.55% (undated)3,5		3,500			4,011
Jackson National Life Global Funding, Series 2002-1, 5.25% 20073		4,000			3,994
UniCredito Italiano Capital Trust II 9.20% (undated)3		3,000			3,457
Swedish Export Credit Corp. 4.00% 2010		3,500			3,388
Kimco Realty Corp. 6.00% 2012		3,250			3,369
National Westminster Bank PLC 7.75% (undated)5		3,024			3,148
St. Paul Travelers Companies, Inc. 5.50% 2015		3,000			3,010
Principal Life Global Funding I 4.40% 20103		3,000			2,909
Marsh & McLennan Companies, Inc. 5.75% 2015		2,500			2,504
					1,645,595
ENERGY — 1.35%
Premcor Refining Group Inc. 9.25% 2010		13,875			14,954
Premcor Refining Group Inc. 6.125% 2011		37,500			38,898
Premcor Refining Group Inc. 6.75% 2011		15,650			16,638
Premcor Refining Group Inc. 9.50% 2013		57,215			63,813
Premcor Refining Group Inc. 6.75% 2014		46,000			48,149
Premcor Refining Group Inc. 7.50% 2015		22,000			23,444
Ras Laffan Liquefied Natural Gas Co. Ltd. 3.437% 20093,9		40,271			38,834
Ras Laffan Liquefied Natural Gas Co. Ltd. 3.437% 20099		775			747
Ras Laffan Liquefied Natural Gas Co. Ltd. 8.294% 20143,9		13,329			15,313
Ras Laffan Liquefied Natural Gas Co. Ltd. 8.294% 20149		4,325			4,969
Ras Laffan Liquefied Natural Gas II 5.298% 20203,9		49,350			48,251
Ras Laffan Liquefied Natural Gas III 5.838% 20273,9		61,650			60,811
Williams Companies, Inc. and Credit Linked Certificate Trust 6.75% 20093		8,000			8,180
Williams Companies, Inc. 6.375% 20103		4,700			4,747
Williams Companies, Inc. 6.536% 20103,5		8,000			8,220
Northwest Pipeline Corp. 8.125% 2010		5,000			5,344
Transcontinental Gas Pipe Line Corp., Series B, 7.00% 2011		19,765			20,926
Williams Companies, Inc. 7.125% 2011		38,750			40,591
Williams Companies, Inc. 8.125% 2012		14,810			16,272
Williams Companies, Inc. 7.875% 2021		10,000			11,100
Williams Companies, Inc. 8.75% 2032		7,000			8,365
El Paso Corp. 7.625% 2007		5,000			5,150
El Paso Corp. 6.375% 20093		800			800
El Paso Energy Corp. 7.75% 20103		2,500			2,612
El Paso Corp. 7.00% 2011		7,800			7,966
El Paso Energy Corp. 7.375% 2012		525			545
El Paso Corp. 7.875% 2012		2,000			2,125
El Paso Natural Gas Co. 7.50% 2026		900			958
Tennessee Gas Pipeline Co. 7.00% 2028		81,500			83,426
Southern Natural Gas Co. 7.35% 2031		5,300			5,651
Southern Natural Gas Co. 8.00% 2032		3,975			4,528
Newfield Exploration Co., Series B, 7.45% 2007		6,000			6,180
Newfield Exploration Co. 7.625% 2011		1,500			1,627
Newfield Exploration Co. 8.375% 2012		11,400			12,312
Newfield Exploration Co. 6.625% 2014		32,075			33,238
Devon Financing Corp., ULC 6.875% 2011		29,500			32,026
Devon Energy Corp. 7.95% 2032		7,250			9,260
Tengizchevroil Finance Co. S.àr.l., Series A, 6.124% 20143,9		28,500			28,856
Tengizchevroil Finance Co. S.àr.l., Series A, 6.124% 20149		9,000			9,112
Overseas Shipholding Group, Inc. 8.25% 2013		27,110			29,143
Overseas Shipholding Group, Inc. 7.50% 2024		850			852
Pogo Producing Co. 6.875% 20173		20,000			20,100
Western Oil Sands Inc. 8.375% 2012		10,175			11,472
Massey Energy Co. 6.875% 20133		10,000			10,137
Petroleum Export Ltd., Class A-2, XLCA insured, 4.633% 20103,9		8,500			8,414
Enterprise Products Operating LP, Series B, 5.00% 2015		7,000			6,663
Pemex Project Funding Master Trust 7.875% 2009		1,600			1,709
Pemex Project Funding Master Trust 7.375% 2014		3,500			3,873
Pemex Project Funding Master Trust 8.625% 2022		500			612
OXYMAR 7.50% 20163,9		5,500			5,938
Delek & Avner-Yam Tethys Ltd. 5.326% 20133,9		4,682			4,574
Peabody Energy Corp., Series B, 6.875% 2013		4,300			4,472
PETRONAS Capital Ltd. 7.00% 20123		4,000			4,384
Sunoco, Inc. 4.875% 2014		4,500			4,360
Reliance Industries Ltd., Series B, 10.25% 2097		3,125			3,743
					865,384
UTILITIES — 1.31%
AES Corp. 9.50% 2009		39,815			43,249
AES Corp. 9.375% 2010		13,252			14,544
AES Corp. 8.75% 20133		68,100			74,399
AES Red Oak, LLC, Series A, 8.54% 20199		33,812			37,194
AES Red Oak, LLC, Series B, 9.20% 20299		7,000			7,910
Edison Mission Energy 10.00% 2008		19,250			21,031
Mission Energy Holding Co. 13.50% 2008		22,230			25,787
Edison Mission Energy 7.73% 2009		16,720			17,263
Edison Mission Energy 9.875% 2011		32,930			38,363
Midwest Generation, LLC, Series B, 8.56% 20169		9,815			10,680
Homer City Funding LLC 8.734% 20269		9,893			11,525
Midwest Generation, LLC and Midwest Finance Corp. 8.75% 2034		24,675			27,143
NRG Energy, Inc. 7.25% 2014		24,525			24,985
NRG Energy, Inc. 7.375% 2016		76,625			78,349
Nevada Power Co., General and Refunding Mortgage Bonds, Series A, 8.25% 2011		6,000			6,675
Nevada Power Co., General and Refunding Mortgage Notes, Series I, 6.50% 2012		4,250			4,378
Nevada Power Co., General and Refunding Mortgage Notes, Series G, 9.00% 2013		19,595			21,788
Sierra Pacific Resources 8.625% 2014		2,725			2,979
Nevada Power Co., General and Refunding Mortgage Notes, Series L, 5.875% 2015		5,675			5,670
Nevada Power Co., Series M, 5.95% 20163		9,975			9,987
Sierra Pacific Resources 6.75% 20173		3,000			3,023
Dynegy Holdings Inc. 9.875% 20103		14,400			15,840
Dynegy Holdings Inc. 10.125% 20133		26,400			29,931
Israel Electric Corp. Ltd. 7.95% 20113		5,000			5,569
Israel Electric Corp. Ltd. 7.70% 20183		22,500			25,181
Israel Electric Corp. Ltd. 8.10% 20963		9,155			10,425
Virginia Electric and Power Co., Series 2002-A, 5.375% 2007		8,000			8,021
Dominion Resources, Inc., Series 2002-D, 5.125% 2009		22,500			22,392
Dominion Resources, Inc., Series 2000-A, 8.125% 2010		5,000			5,528
Texas Genco LLC and Texas Genco Financing Corp. 6.875% 20143		25,925			28,193
PSEG Energy Holdings Inc. 8.625% 2008		8,800			9,306
PSEG Power LLC 7.75% 2011		7,500			8,296
PSEG Power LLC 5.00% 2014		10,000			9,640
Alabama Power Co., Series U, 2.65% 2006		5,000			4,996
Alabama Power Co., Series X, 3.125% 2008		3,750			3,598
Alabama Power Co., Series R, 4.70% 2010		1,250			1,229
Southern Power Co., Series B, 6.25% 2012		9,000			9,410
Alabama Power Co., Series Q, 5.50% 2017		5,000			5,049
Cilcorp Inc. 8.70% 2009		9,000			9,947
Union Electric Co. 5.40% 2016		8,000			7,998
Cilcorp Inc. 9.375% 2029		3,000			3,919
Duke Capital Corp. 7.50% 2009		7,000			7,495
Duke Capital Corp. 6.25% 2013		4,500			4,686
Duke Capital Corp. 5.50% 2014		5,000			4,974
Duke Capital LLC 5.668% 2014		1,500			1,507
Reliant Energy Resources Corp. 7.75% 2011		13,000			14,367
Centerpoint Energy, Inc., Series B, 6.85% 2015		3,000			3,228
NiSource Finance Corp. 7.875% 2010		15,000			16,582
Exelon Corp. 6.75% 2011		1,000			1,061
Exelon Generation Co., LLC 6.95% 2011		11,300			12,139
Constellation Energy Group, Inc. 6.125% 2009		12,000			12,357
Consolidated Edison Co. of New York, Inc., Series 2005-C, 5.375% 2015		12,000			12,101
Appalachian Power Co., Series G, 3.60% 2008		6,770			6,546
Oncor Electric Delivery Co. 6.375% 2015		5,000			5,275
Progress Energy, Inc. 6.75% 2006		5,000			5,007
Pacific Gas and Electric Co., First Mortgage Bonds, 6.05% 2034		4,000			4,087
Enersis SA 7.375% 2014		3,000			3,205
MidAmerican Energy Co. 4.65% 2014		3,200			3,056
Tri-State Generation and Transmission Association Inc., Pass Through Trust, Series 2003-A, 6.04% 20183,9		2,965			3,026
FPL Energy National Wind Portfolio, LLC 6.125% 20193,9		2,143			2,127
Calpine Corp. 8.40% 20123,9		2,246			2,113
					836,329
INDUSTRIALS — 1.26%
Bombardier Capital Inc., Series A, 6.125% 20063	$	40,625		$	40,869
Bombardier Inc. 6.75% 20123		40,530			37,997
Bombardier Inc. 6.30% 20143		40,400			36,461
Allied Waste North America, Inc. 8.50% 2008		8,300			8,767
Allied Waste North America, Inc., Series B, 8.875% 2008		48,750			51,614
Allied Waste North America, Inc., Series B, 6.50% 2010		16,000			15,960
Allied Waste North America, Inc., Series B, 5.75% 2011		10,000			9,575
Allied Waste North America, Inc., Series B, 6.125% 2014		7,925			7,588
Allied Waste North America, Inc., Series B, 7.375% 2014		4,500			4,376
Allied Waste North America, Inc. 7.25% 2015		8,500			8,628
Cendant Corp. 6.25% 2008		28,000			28,460
Cendant Corp. 7.375% 2013		31,900			35,502
Cendant Corp. 7.125% 2015		7,000			7,788
Continental Airlines, Inc., Series 2000-2, Class A-1, 7.487% 2012		11,500			11,741
Continental Airlines, Inc., Series 2001-1, Class B, 7.373% 20179		6,880			6,192
Continental Airlines, Inc., Series 1998-1, Class A, 6.648% 20199		13,550			13,445
Continental Airlines, Inc., Series 1997-4, Class A, 6.90% 20199		4,877			4,893
Continental Airlines, Inc., Series 1999-1, Class A, 6.545% 20209		13,169			13,217
Continental Airlines, Inc., Series 2001-1, Class A-1, 6.703% 20229		13,822			13,367
Continental Airlines, Inc., Series 2000-1, Class A-1, 8.048% 20229		3,372			3,481
Continental Airlines, Inc., Series 2000-1, Class B, 8.388% 20229		6,050			5,339
United Air Lines, Inc. 9.00% 200310		8,000			1,760
United Air Lines, Inc., Series 2001-1, Class A-2, 6.201% 20109		5,013			4,927
United Air Lines, Inc., Series 2000-1, Class A-2, 7.73% 20129		4,996			4,951
United Air Lines, Inc., Series 2001-1, Class A-1, 6.071% 20149		12,247			11,941
United Air Lines, Inc., Series 2001-1, Class A-3, 6.602% 20159		7,729			7,615
United Air Lines, Inc., Series 2000-1, Class A-1, 7.783% 20159		5,670			5,622
United Air Lines, Inc., Series 1996-A2, 7.87% 20197,9		5,000			2,678
BAE SYSTEMS 2001 Asset Trust, Series 2001, Class B, 7.156% 20113,9		23,801			24,848
BAE SYSTEMS 2001 Asset Trust, Series 2001, Class G, MBIA insured, 6.664% 20133,9		12,265			13,093
Hutchison Whampoa International Ltd. 7.00% 20113		5,000			5,368
Hutchison Whampoa International Ltd. 6.50% 20133		21,000			22,174
Hutchison Whampoa Finance Ltd., Series B, 7.45% 20173		6,750			7,627
American Standard Inc. 7.375% 2008		5,935			6,165
American Standard Inc. 8.25% 2009		2,124			2,301
American Standard Inc. 7.625% 2010		20,501			21,954
American Standard Inc. 5.50% 2015		3,000			2,919
Waste Management, Inc. 7.00% 2006		7,000			7,096
Waste Management, Inc. 6.50% 2008		5,000			5,175
Waste Management, Inc. 5.00% 2014		7,000			6,793
WMX Technologies, Inc. 7.10% 2026		10,125			11,376
NTK Holdings Inc. 0%/10.75% 20148		12,500			8,047
THL Buildco, Inc. 8.50% 2014		22,325			21,823
American Airlines, Inc., Series 2003-1, Class G, AMBAC insured, 3.857% 20129		1,981			1,903
American Airlines, Inc., Series 2001-2, Class A-1, 6.978% 20129		3,805			3,878
American Airlines, Inc., Series 2001-2, Class A-2, 7.858% 2013		13,138			13,979
American Airlines, Inc., Series 2001-1, Class B, 7.377% 20199		8,947			7,350
Tyco International Group SA 6.125% 2008		8,000			8,173
Tyco International Group SA 6.375% 2011		6,800			7,127
Tyco International Group SA 6.00% 2013		8,600			8,888
General Electric Capital Corp., Series A, 5.375% 2007		8,000			8,041
General Electric Capital Corp., Series A, 6.00% 2012		8,000			8,388
General Electric Co. 5.00% 2013		5,000			4,967
Horizon Lines, LLC and Horizon Lines Holding Corp. 9.00% 2012		11,100			11,780
H-Lines Finance Holding Corp. 0%/11.00% 20138		8,448			7,054
Raytheon Co. — RC Trust I 7.00% trust preferred 2006		18,000			18,180
Delta Air Lines, Inc. 8.00% 20073,7		24,410			5,858
Delta Air Lines, Inc., Series 2001-1, Class A-2, 7.111% 20139		5,000			4,947
Delta Air Lines, Inc., Series 1992-A2, 9.20% 20147,9		5,000			3,495
Delta Air Lines, Inc. 10.375% 20227		3,000			731
Northwest Airlines, Inc. 9.875% 20077		8,400			3,192
Northwest Airlines, Inc. 7.875% 20087		4,000			1,520
Northwest Airlines, Inc. 10.00% 20097		10,000			3,650
Northwest Airlines, Inc., Series 1999-2, Class A, 7.575% 20209		2,461			2,469
Northwest Airlines, Inc., Series 2001-1, Class A-1, 7.041% 20239		4,180			4,017
Southwest Airlines Co. 5.25% 2014		15,000			14,534
Jacuzzi Brands, Inc. 9.625% 2010		13,441			14,348
Caterpillar Financial Services Corp., Series F, 3.10% 2007		5,000			4,885
Caterpillar Financial Services Corp., Series F, 4.73% 20085		400			401
Caterpillar Inc. 4.50% 2009		7,000			6,884
John Deere Capital Corp., Series D, 4.375% 2008		9,000			8,891
John Deere Capital Corp. 4.875% 2009		2,000			1,989
Accuride Corp. 8.50% 2015		10,200			10,200
Goodman Global Holdings 7.875% 20123		8,850			8,408
Kansas City Southern Railway Co. 7.50% 2009		5,750			5,958
Terex Corp., Class B, 10.375% 2011		2,000			2,125
Terex Corp. 7.375% 2014		3,500			3,535
TFM, SA de CV 12.50% 2012		4,165			4,748
DynCorp International and DIV Capital Corp., Series A, 9.50% 2013		4,325			4,476
United Rentals (North America), Inc. 7.75% 2013		1,750			1,741
Ashtead Group PLC 8.625% 20153		1,000			1,055
Williams Scotsman, Inc. 8.50% 2015		500			520
Jet Equipment Trust, Series 1995-A, Class B, 8.64% 20153,7,9		7,790			—
Jet Equipment Trust, Series 1995-B, Class C, 9.71% 20153,7,9		5,500			—
					805,798
INFORMATION TECHNOLOGY — 1.10%
Electronic Data Systems Corp. 6.334% 2006		10,000			10,078
Electronic Data Systems Corp. 7.125% 2009		43,250			45,913
Electronic Data Systems Corp., Series B, 6.50% 20135		137,150			140,617
Electronic Data Systems Corp. 7.45% 2029		10,555			11,207
Sanmina-SCI Corp. 10.375% 2010		35,500			39,094
Sanmina-SCI Corp. 6.75% 2013		22,150			21,264
Sanmina-SCI Corp. 8.125% 2016		47,925			48,404
Celestica Inc. 7.875% 2011		63,905			64,704
Celestica Inc. 7.625% 2013		36,195			35,562
Jabil Circuit, Inc. 5.875% 2010		53,450			54,240
Flextronics International Ltd. 6.50% 2013		46,000			46,575
Motorola, Inc. 4.608% 2007		10,000			9,931
Motorola, Inc. 8.00% 2011		23,985			27,371
Motorola, Inc. 5.22% 2097		7,500			6,158
SunGard Data Systems Inc. 9.125% 20133		21,050			21,997
SunGard Data Systems Inc. 10.25% 20153		12,500			12,625
Xerox Corp. 7.125% 2010		21,000			21,945
Nortel Networks Ltd. 6.125% 2006		21,000			21,000
MagnaChip Semiconductor SA and MagnaChip Semiconductor Finance Co. 6.875% 2011		10,975			10,810
MagnaChip Semiconductor SA and MagnaChip Semiconductor Finance Co. 7.741% 20115		7,275			7,366
Amkor Technology, Inc. 7.125% 2011		16,250			14,463
Amkor Technology, Inc. 7.75% 2013		3,225			2,854
Freescale Semiconductor, Inc. 6.875% 2011		15,000			15,750
Solectron Corp., Series B, 7.375% 2006		5,450			5,477
Hyundai Semiconductor America, Inc. 8.625% 20073		4,860			5,003
					700,408
U.S. GOVERNMENT & GOVERNMENT AGENCY BONDS & NOTES — 1.09%
U.S. Treasury 3.25% 2007		35,000			34,336
U.S. Treasury 3.875% 2007		50,000			49,523
U.S. Treasury 2.625% 2008		5,000			4,798
U.S. Treasury 3.625% 200811		12,234			12,653
U.S. Treasury 3.625% 2009		88,250			85,809
U.S. Treasury 3.875% 200911		48,208			50,988
U.S. Treasury 3.50% 201111		11,356			12,208
U.S. Treasury Principal Strip 0% 2011		5,660			4,433
U.S. Treasury 3.625% 2013		5,000			4,725
U.S. Treasury 4.25% 2013		80,000			78,500
U.S. Treasury Principal Strip 0% 2013		6,585			4,619
U.S. Treasury 2.00% 201411		18,185			18,173
U.S. Treasury 8.875% 2017		35,000			48,076
U.S. Treasury 6.875% 2025		107,500			136,441
U.S. Treasury 6.50% 2026		10,000			12,303
Freddie Mac 4.125% 2010		85,375			83,008
Federal Home Loan Bank 3.70% 2007		10,000			9,836
Federal Home Loan Bank 5.823% 2009		17,000			17,488
Federal Agricultural Mortgage Corp. 4.25% 2008		20,000			19,728
Republic of Egypt; United States Agency for International Development 4.45% 2015		10,000			9,729
					697,374
MATERIALS — 1.06%
Abitibi-Consolidated Co. of Canada 5.25% 2008		25,650			24,432
Abitibi-Consolidated Finance LP 7.875% 2009		6,136			6,013
Abitibi-Consolidated Inc. 8.55% 2010		10,872			10,709
Abitibi-Consolidated Co. of Canada 7.991% 20115		11,850			11,435
Abitibi-Consolidated Co. of Canada 6.00% 2013		10,625			8,819
Abitibi-Consolidated Co. of Canada 8.375% 2015		28,125			26,578
Owens-Illinois, Inc. 8.10% 2007		750			769
Owens-Illinois, Inc. 7.35% 2008		9,800			9,923
Owens-Brockway Glass Container Inc. 8.875% 2009		20,975			21,998
Owens-Illinois, Inc. 7.50% 2010		750			765
Owens-Brockway Glass Container Inc. 7.75% 2011		13,500			14,175
Owens-Brockway Glass Container Inc. 8.75% 2012		6,000			6,480
Owens-Brockway Glass Container Inc. 8.25% 2013		14,000			14,805
Norske Skogindustrier ASA 7.625% 20113		38,991			41,325
Norske Skogindustrier ASA 6.125% 20153		11,250			10,751
Domtar Inc. 7.875% 2011		18,505			16,747
Domtar Inc. 7.125% 2015		38,950			32,523
Boise Cascade, LLC and Boise Cascade Finance Corp. 7.125% 2014		49,680			46,078
Lyondell Chemical Co. 9.50% 2008		18,314			19,298
Equistar Chemicals, LP 10.125% 2008		9,825			10,758
Equistar Chemicals, LP and Equistar Funding Corp. 8.75% 2009		625			661
Equistar Chemicals, LP and Equistar Funding Corp. 10.625% 2011		2,125			2,348
Lyondell Chemical Co. 11.125% 2012		4,825			5,440
Stone Container Corp. 9.25% 2008		8,375			8,647
Stone Container Corp. 9.75% 2011		875			888
Jefferson Smurfit Corp. (U.S.) 8.25% 2012		3,200			3,056
Stone Container Corp. 8.375% 2012		8,475			8,157
Jefferson Smurfit Corp. (U.S.) 7.50% 2013		14,975			13,665
Graphic Packaging International, Inc. 8.50% 2011		22,750			22,864
Graphic Packaging International, Inc. 9.50% 2013		11,550			10,915
JSG Funding PLC 9.625% 2012		8,200			8,508
JSG Funding PLC 7.75% 2015		20,650			18,379
United States Steel Corp. 10.75% 2008		10,500			11,708
United States Steel Corp. 9.75% 2010		13,205			14,459
Weyerhaeuser Co. 5.95% 2008		8,529			8,682
Weyerhaeuser Co. 6.75% 2012		13,390			14,156
Weyerhaeuser Co. 6.875% 2033		3,000			3,138
Teck Cominco Ltd. 5.375% 2015		7,950			7,809
Teck Cominco Ltd. 6.125% 2035		10,000			9,790
Georgia-Pacific Corp. 7.50% 2006		6,500			6,549
Georgia-Pacific Corp. 8.125% 2011		6,160			6,299
Georgia-Pacific Corp. 8.875% 2031		3,350			3,467
Crystal US Holdings 3 LLC and Crystal US Sub 3 Corp., Series B, 0%/10.50% 20148		13,000			9,685
BCP Caylux Holdings Luxembourg SCA 9.625% 2014		4,550			5,073
Rhodia 10.25% 2010		11,668			12,981
International Paper Co. 4.00% 2010		2,725			2,578
International Paper Co. 6.75% 2011		3,000			3,174
International Paper Co. 5.85% 2012		6,855			6,931
Ainsworth Lumber Co. Ltd. 7.25% 2012		4,150			3,797
Ainsworth Lumber Co. Ltd. 6.75% 2014		10,000			8,650
Allegheny Technologies, Inc. 8.375% 2011		10,500			11,498
NewPage Corp., Series A, 10.50% 20125		10,000			10,175
Packaging Corp. of America 4.375% 20081		9,500			9,277
Temple-Inland Inc. 7.875% 2012		7,600			8,265
AEP Industries Inc. 7.875% 2013		7,300			7,118
Ball Corp. 6.875% 2012		6,000			6,157
AMH Holdings, Inc. 0%/11.25% 20148		11,500			5,980
Crompton Corp. 10.198% 20105		4,775			5,264
Scotia Pacific Co. LLC, Series B, Class A-2, 7.11% 20289		5,780			4,570
Inco Ltd. 7.75% 2012		4,000			4,433
NOVA Chemicals Corp. 7.561% 20133,5		4,000			4,070
Ispat Inland ULC 9.75% 2014		3,207			3,704
Building Materials Corp. of America, Series B, 8.00% 2007		3,500			3,570
Freeport-McMoRan Copper & Gold Inc. 6.875% 2014		3,050			3,107
Gerdau Ameristeel Corp. and GUSAP Partners 10.375% 2011		2,750			3,046
Rockwood Specialties Group, Inc. 10.625% 2011		1,500			1,646
Rockwood Specialties Group, Inc. 7.50% 2014		1,175			1,165
Earle M. Jorgensen Co. 9.75% 2012		2,000			2,180
Oregon Steel Mills, Inc. 10.00% 2009		1,750			1,868
Airgas, Inc. 6.25% 2014		1,750			1,733
Corporación Nacional del Cobre de Chile 6.375% 20123		1,500			1,597
AK Steel Corp. 7.75% 2012		1,575			1,543
Nalco Co. 8.875% 2013		1,000			1,050
UPM-Kymmene Corp. 5.625% 20143		900			886
					680,737
HEALTH CARE — 0.83%
HCA Inc. 7.125% 2006	$	6,285		$	6,353
Columbia/HCA Healthcare Corp. 7.00% 2007		6,250			6,401
Columbia/HCA Healthcare Corp. 8.85% 2007		12,500			12,906
Columbia/HCA Healthcare Corp. 7.25% 2008		1,000			1,038
HCA Inc. 5.50% 2009		16,900			16,746
Columbia/HCA Healthcare Corp. 8.70% 2010		9,500			10,323
HCA — The Healthcare Co. 8.75% 2010		7,750			8,583
HCA — The Healthcare Co. 7.875% 2011		58,300			62,695
Warner Chilcott Corp. 8.75% 20153		65,065			64,089
Tenet Healthcare Corp. 6.375% 2011		17,300			15,613
Tenet Healthcare Corp. 9.875% 2014		34,775			34,949
Tenet Healthcare Corp. 9.25% 20153		13,000			12,805
Cardinal Health, Inc. 6.75% 2011		26,500			28,170
Cardinal Health, Inc. 4.00% 2015		25,000			22,358
AMR HoldCo, Inc. and EmCare HoldCo, Inc. 10.00% 2015		29,470			31,533
Quintiles Transnational Corp. 10.00% 2013		13,050			14,551
Pharma Services Intermediate Holding Corp. 0%/11.50% 20148		20,660			15,702
Aetna Inc. 7.375% 2006		22,000			22,043
Aetna Inc. 7.875% 2011		4,500			5,034
Team Finance LLC and Health Finance Corp. 11.25% 20133		18,000			18,720
Wyeth 5.50% 20163		18,000			18,090
Triad Hospitals, Inc. 7.00% 2012		15,000			15,469
Humana Inc. 7.25% 2006		13,375			13,482
Health Net, Inc. 9.875% 20115		10,000			11,599
WellPoint, Inc. 4.25% 2009		11,000			10,681
Select Medical Corp. 7.625% 2015		3,975			3,558
Select Medical Holdings Corp. 9.933% 20153,5		6,275			5,616
Amgen Inc. 4.00% 2009		9,125			8,828
Concentra Operating Corp. 9.50% 2010		4,975			5,186
Concentra Operating Corp. 9.125% 2012		3,105			3,237
HealthSouth Corp. 8.375% 2011		1,975			2,074
HealthSouth Corp. 7.625% 2012		5,325			5,485
Accellent Inc. 10.50% 20133		5,800			6,090
Omnicare, Inc. 6.75% 2013		6,000			6,030
MedCath Holdings Corp. 9.875% 2012		3,875			4,107
					530,144
CONSUMER STAPLES — 0.74%
Ahold Finance U.S.A., Inc. 6.25% 2009		39,089			39,871
Ahold Finance U.S.A., Inc. 8.25% 2010		42,170			45,754
Ahold Lease Pass Through Trust, Series 2001-A-1, 7.82% 20209		10,906			11,731
Ahold Lease Pass Through Trust, Series 2001-A-2, 8.62% 20259		14,400			16,065
Rayovac Corp. 8.50% 2013		30,000			25,875
Spectrum Brands, Inc. 7.375% 2015		49,775			41,189
Delhaize America, Inc. 7.375% 2006		10,000			10,089
Delhaize America, Inc. 8.125% 2011		35,345			38,585
Rite Aid Corp. 9.50% 2011		4,500			4,748
Rite Aid Corp. 6.875% 2013		15,715			13,201
Rite Aid Corp. 9.25% 2013		26,800			25,192
Rite Aid Corp. 7.50% 2015		2,500			2,406
Jean Coutu Group (PJC) Inc. 7.625% 2012		2,500			2,513
Jean Coutu Group (PJC) Inc. 8.50% 2014		33,500			32,076
Kraft Foods Inc. 6.25% 2012		14,000			14,648
Kraft Foods Inc. 6.50% 2031		5,000			5,405
Stater Bros. Holdings Inc. 7.991% 20105		6,525			6,590
Stater Bros. Holdings Inc. 8.125% 2012		12,275			12,275
Anheuser-Busch Companies, Inc. 9.00% 2009		10,000			11,411
Anheuser-Busch Companies, Inc. 4.70% 2012		4,000			3,934
Vitamin Shoppe Industries, Inc. 11.84% 20123,5		11,650			11,883
Playtex Products, Inc. 8.00% 2011		10,000			10,763
Pepsi Bottling Group, Inc. 5.625% 20093		10,000			10,188
Diageo Finance BV 5.30% 2015		10,000			10,011
Cadbury Schweppes US Finance LLC 5.125% 20133		10,000			9,856
SUPERVALU INC. 7.50% 2012		8,025			8,311
Winn-Dixie Pass Through Trust, Series 1999-1, Class A-1, 4.40% 20173,9,12		8,285			6,426
H.J. Heinz Co. 6.428% 20203		6,135			6,318
Kellogg Co. 7.45% 2031		5,000			6,088
Gold Kist Inc. 10.25% 2014		5,306			5,916
PepsiAmericas, Inc. 4.875% 2015		6,000			5,872
Duane Reade Inc. 8.991% 20105		6,000			5,820
Molson Coors Capital Finance ULC 4.85% 2010		5,000			4,927
CVS Corp. 5.298% 20273,9		2,603			2,522
Pathmark Stores, Inc. 8.75% 2012		1,870			1,777
Albertson’s, Inc. 7.50% 2011		1,700			1,733
					471,969
ASSET-BACKED OBLIGATIONS9— 0.57%
ARG Funding Corp., Series 2005-1, Class A-1, MBIA insured, 4.02% 20093		10,000			9,793
ARG Funding Corp., Series 2005-2, Class A-4, AMBAC insured, 4.84% 20113		20,000			19,873
Drive Auto Receivables Trust, Series 2005-2, Class A-3, MBIA insured, 4.26% 20123		8,900			8,690
Drive Auto Receivables Trust, Series 2005-3, Class A-4, FSA insured, 5.09% 20133		20,000			20,109
Green Tree Financial Corp., Series 1995-3, Class B-2, 8.10% 20257		12,867			3,346
Green Tree Financial Corp., Series 1995-2, Class B-2, 8.80% 20267		9,283			4,270
Green Tree Financial Corp., Series 1996-2, Class B-2, 7.90% 20277		8,186			1
Green Tree Financial Corp., Series 1997-6, Class B-2, 7.75% 20297		6,530			1
Conseco Finance Home Loan Trust, Series 1999-G, Class B-2, 10.96% 20297		17,523			17,302
Green Tree Financial Corp., Series 1998-4, Class B-2, 8.11% 20307		3,999			0
CWABS, Inc., Series 2004-12, Class 2-AV-2, 4.81% 20335		7,891			7,902
CWABS, Inc., Series 2005-11, Class AF-2, 4.657% 2036		11,330			11,188
CWABS, Inc., Series 2005-12, Class 1-A-1, 4.68% 20365		4,758			4,760
Advanta Business Card Master Trust, Series 2005-A2, Class A-1, 4.62% 20135		18,000			17,966
UPFC Auto Receivables Trust, Series 2004-A, Class A-3, AMBAC insured, 3.27% 2010		5,000			4,926
UPFC Auto Receivables Trust, Series 2005-B, Class A-3, XLCA insured, 4.98% 2011		10,000			10,023
AmeriCredit Automobile Receivables Trust, Series 2002-C, Class A-4, FSA insured, 3.55% 2009		3,907			3,875
AmeriCredit Automobile Receivables Trust, Series 2003-C-F, Class A-4, FSA insured, 3.48% 2010		9,000			8,903
Residential Funding Mortgage Securities II, Inc., Series 2005-HS1, Class A-1-2, FGIC insured, 4.66% 2020		12,500			12,338
Consumer Credit Reference Index Securities Program Trust, Series 2002-2A, Class FL, 9.621% 20073,5		5,000			5,072
Consumer Credit Reference Index Securities Program Trust, Series 2002-2A, Class FX, 10.421% 20073		5,000			5,097
Home Equity Asset Trust, Series 2004-7, Class M-1, 5.15% 20355		10,000			10,087
Providian Master Note Trust, Series 2005-A1A, Class A, 4.53% 20123,5		10,000			10,008
First Investors Auto Owner Trust, Series 2006-A, Class A-4, MBIA insured, 5.00% 20133		10,000			9,909
Prestige Auto Receivables Trust, Series 2005-1A, Class A-2, FSA insured, 4.37% 20123		10,000			9,886
MBNA Master Credit Card Trust II, Series 1999-D, Class C, 6.95% 20083		4,700			4,736
MBNA Master Credit Card Trust II, Series 2000-H, Class B, 5.07% 20135		5,000			5,096
Triad Automobile Receivables Trust, Series 2005-A, Class A-4, AMBAC insured, 4.22% 2012		10,000			9,818
PG&E Energy Recovery Funding LLC, Series 2005-1, Class A-3, 4.14% 2012		10,000			9,762
Structured Asset Investment Loan Trust, Series 2004-BNC2, Class A-4, 4.85% 20345		9,407			9,424
Bear Stearns Asset-backed Securities I Trust, Series 2005-CL1, Class A-1, 5.03% 20345		9,087			9,117
Residential Asset Securities Corp. Trust, Series 2001-KS3, Class A-I-6, 5.96% 2031		7,650			7,674
Residential Asset Securities Corp. Trust, Series 2003-KS6, Class A-2, 4.83% 20335		982			983
First USA Credit Card Master Trust, Series 1997-4, Class C, 5.47% 20103,5		6,500			6,526
First USA Credit Card Master Trust, Series 1998-6, Class C, 6.16% 20113		2,000			2,048
PG&E Energy Recovery Funding LLC, Series 2005-2, Class A-3, 5.12% 2014		8,040			8,093
Vanderbilt Mortgage and Finance, Inc., Series 1999-B, Class I-A-6, 6.925% 2024		7,706			8,009
Ameriquest Mortgage Securities Inc., Series 2003-12, Class M-1, 5.28% 20335		7,000			7,056
Drivetime Auto Owner Trust, Series 2005-C, Class A-3, MBIA insured, 5.006% 20113		6,709			6,724
AESOP Funding II LLC, Series 2003-2, Class A-1, MBIA insured, 2.74% 20073		6,667			6,634
Hertz Vehicle Financing LLC, Rental Car Asset-backed Notes, Series 2005-2, Class A-6, AMBAC insured, 5.08% 20113		6,375			6,333
CitiFinancial Mortgage Securities Inc., Series 2003-3, Class AF-5, 4.553% 2033		6,500			6,322
Specialty Underwriting and Residential Finance Trust, Series 2004-BC4, Class A-2B, 4.84% 20355		5,000			5,008
Centex Home Equity Loan Trust, Series 2005-A, Class AF-3, 4.14% 2028		5,000			4,917
Fremont Home Loan Trust, Series 2005-E, Class 2-A-1, 4.62% 20365		4,759			4,763
WFS Financial Owner Trust, Series 2002-3, Class A-4, 3.50% 2010		4,617			4,584
Chevy Chase Auto Receivables Trust, Series 2001-2, Class B, 5.16% 2008		4,332			4,335
MMCA Auto Owner Trust, Series 2002-4, Class A-4, 3.05% 2009		2,412			2,392
MMCA Auto Owner Trust, Series 2002-4, Class B, 3.82% 2009		1,387			1,376
CPS Auto Receivables Trust, Series 2002-C, Class A-2, XLCA insured, 3.52% 20093		2,565			2,557
Financial Pacific Funding II, LLC, Series 2003-A, Class A, FSA insured, 2.29% 20093		1,588			1,570
California Infrastructure and Economic Development Bank, Special Purpose Trust, PG&E-1,
Series 1997-1, Class A-7, 6.42% 2008		1,353			1,361
PECO Energy Transition Trust, Series 1999-A, Class A-7, 6.13% 2009		1,250			1,278
Nebhelp Trust, Student Loan Interest Margin Securities, Series 1, Class A, MBIA insured, 6.68% 20163		1,125			1,135
Long Beach Mortgage Loan Trust, Series 2004-A, Class M-3, 5.48% 20245		977			983
SeaWest Securitization, LLC, Series 2002-A, Class A-3, XLCA insured, 3.58% 20083		348			347
SeaWest Securitization, LLC, Series 2003-A, Class A-2, XLCA insured, 2.84% 20093		616			609
NPF XII, Inc., Series 1999-3, Class B, 2.389% 20033,5,10		3,000			0
NPF XII, Inc., Series 2001-1A, Class A, 1.99% 20043,5,10		5,000			200
NPF XII, Inc., Series 2001-3, Class A, 5.52% 20073,7		1,000			40
					367,135
NON-U.S. GOVERNMENT BONDS & NOTES — 0.28%
United Mexican States Government Global 4.625% 2008		8,000			7,958
United Mexican States Government Global 8.625% 2008		5,000			5,398
United Mexican States Government Eurobonds, Global 8.375% 2011		3,000			3,413
United Mexican States Government Eurobonds, Global 7.50% 2012		6,310			7,032
United Mexican States Government Global 6.375% 2013		2,500			2,654
United Mexican States Government Global 11.375% 2016		31,684			46,655
United Mexican States Government Global 8.125% 2019		2,061			2,520
United Mexican States Government Global 8.30% 2031		1,965			2,481
United Mexican States Government Global 7.50% 2033		2,833			3,320
Russian Federation 8.25% 2010		25,250			26,911
Russian Federation 8.25% 20103		10,000			10,658
Russian Federation 5.00%/7.50% 20308		24,770			27,680
State of Qatar 9.75% 2030		9,000			13,770
El Salvador (Republic of) 7.75% 2023		3,000			3,368
El Salvador (Republic of) 7.75% 20233		1,250			1,403
Banque Centrale de Tunisie 7.375% 2012		3,500			3,872
Bulgaria (Republic of) 8.25% 2015		3,000			3,596
Aries Vermögensverwaltungs GmbH, Series C, 9.60% 2014		2,500			3,206
					175,895
MUNICIPALS — 0.09%
State of California, Golden State Tobacco Securitization Corp., Tobacco Settlement Asset-backed Bonds, Series 2003-A-1, 6.25% 2033	$	19,750		$	21,584
State of New Jersey, Tobacco Settlement Financing Corp., Tobacco Settlement Asset-backed Bonds, Series 2003, 6.125% 2024		9,625			10,570
State of Wisconsin, Badger Tobacco Asset Securitization Corp., Tobacco Settlement Asset-backed Bonds, 6.125% 2027		9,030			9,572
State of Louisiana, Tobacco Settlement Financing Corp., Tobacco Settlement Asset-backed Bonds,Series 2001-A, Class A, 6.36% 2025		4,761			4,734
State of California, Department of Water Resources, Power Supply Revenue Bonds, Series 2002-E, 4.33% 2006		4,500			4,493
State of South Dakota, Educational Enhancement Funding Corp., Tobacco Settlement Asset-backed Bonds, Series 2002-A, Class A, 6.72% 2025		4,349			4,310
					55,263
MISCELLANEOUS — 0.01%
Other bonds & notes in initial period of acquisition					4,248
Total bonds & notes (cost: $14,561,879,000)					14,594,569
Short-term securities — 8.07%
Freddie Mac 4.08%-4.42% due 2/2-4/11/2006		500,377			498,230
Federal Home Loan Bank 4.06%-4.38% due 2/1-4/17/2006		492,021			490,377
Fannie Mae 4.21%-4.332% due 2/13-4/5/2006		307,300			305,905
Variable Funding Capital Corp. 4.37%-4.53% due 3/3-4/10/20063		255,100			253,552
Variable Funding Capital Corp. 4.47% due 4/18/20063,13		50,000			49,513
Ranger Funding Co. LLC 4.24%-4.47% due 2/6-3/17/20063		92,913			92,651
Bank of America Corp. 4.385%-4.45% due 3/14-3/28/2006		200,000			198,889
CAFCO, LLC 4.18%-4.37% due 2/3-3/1/20063		242,000			241,619
HSBC Finance Corp. 4.27%-4.43% due 2/10-4/4/2006		238,900			238,223
Wells Fargo Bank, N.A. 4.32%-4.52% due 2/10-3/31/2006		221,800			221,796
General Electric Capital Corp. 4.36%-4.37% due 2/28-3/6/2006		71,100			70,848
Edison Asset Securitization LLC 4.38%-4.41% due 3/17-3/22/20063		100,000			99,445
General Electric Co. 4.48% due 3/28/2006		39,400			39,129
Clipper Receivables Co., LLC 4.32%-4.50% due 2/9-3/23/20063		202,561			201,944
Pfizer Investment Capital PLC 4.24%-4.40% due 2/2-3/23/20063		201,377			200,665
Preferred Receivables Funding Corp. 4.30%-4.50% due 2/2-3/6/20063		160,100			159,785
Park Avenue Receivables Co., LLC 4.36% due 2/24/20063		34,300			34,205
International Lease Finance Corp. 4.28%-4.43% due 2/8-3/7/2006		182,000			181,438
Atlantic Industries 4.30%-4.47% due 2/17-4/3/20063		140,000			139,208
Coca-Cola Co. 4.36% due 3/30/2006		35,000			34,756
Tennessee Valley Authority 4.19%-4.28% due 2/9-3/16/2006		163,700			162,772
FCAR Owner Trust I 4.30%-4.40% due 2/15-3/20/2006		112,000			111,591
Cloverleaf International Holdings, SA 4.26%-4.30% due 2/2-2/13/20063		108,000			107,885
Gannett Co. 4.25%-4.49% due 2/14-4/4/20063		100,000			99,525
U.S. Treasury Bills 3.90%-4.125% due 3/2-4/13/2006		83,700			83,172
Anheuser-Busch Companies, Inc. 4.33%-4.52% due 3/27-5/1/20063		75,500			74,840
IBM Capital Inc. 4.33%-4.40% due 2/23-3/9/20063		75,000			74,713
American Express Credit Corp. 4.37%-4.42% due 3/13-3/21/2006		75,000			74,586
Wal-Mart Stores Inc. 4.36%-4.41% due 3/21-4/11/20063		75,000			74,486
Federal Farm Credit Banks 4.23%-4.29% due 3/8-4/6/2006		75,000			74,477
Procter & Gamble Co. 4.26%-4.36% due 2/8-2/23/20063		74,200			74,086
Concentrate Manufacturing Co. of Ireland 4.20%-4.35% due 2/7-3/20/20063		65,000			64,871
BellSouth Corp. 4.32%-4.42% due 3/8-3/17/20063		46,000			45,788
NetJets Inc. 4.30%-4.40% due 2/17-3/6/20063		45,000			44,866
Verizon Global Funding Corp. 4.33% due 2/16/20063		40,500			40,422
Kimberly-Clark Worldwide Inc. 4.29% due 2/27/20063		37,900			37,778
Harley-Davidson Funding Corp. 4.28%-4.46% due 2/14-3/15/20063		32,000			31,892
Private Export Funding Corp. 4.18% due 2/13/20063		31,000			30,952
Caterpillar Financial Services Corp. 4.25% due 2/6/2006		28,700			28,680
Triple-A One Funding Corp. 4.32% due 3/1/20063		28,647			28,550
USAA Capital Corp. 4.18% due 2/15/2006		25,000			24,957
Scripps (E.W.) Co. 4.29% due 2/22/20063		15,000			14,961
Total short-term securities (cost: $5,158,251,000)					5,158,028
Total investment securities (cost: $56,296,398,000)					64,010,285
Other assets less liabilities					(135,170	)
Net assets				$	63,875,115

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

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

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

³Purchased in a private placement transaction; resale may be limited to qualified institutional buyers; resale to the public may require registration. The total value of all such restricted securities was $5,741,472,000, which represented 8.99% of the net assets of the fund.

⁴Valued under fair value procedures adopted by authority of the board of directors.

⁵Coupon rate may change periodically.

⁶Payment in kind; the issuer has the option of paying additional securities in lieu of cash.

⁷Company not making scheduled interest payments; bankruptcy proceedings pending.

⁸Step bond; coupon rate will increase at a later date.

⁹Pass-through securities backed by a pool of mortgages or other loans on which principal payments are periodically made. Therefore, the effective maturities are shorter than the stated maturities.

¹⁰Company did not make principal payment upon scheduled maturity date; reorganization pending.

¹¹Index-linked bond whose principal amount moves with a government retail price index.

¹²Scheduled interest payments not made; reorganization pending.

¹³This security, or a portion of this security, has been segregated to cover funding requirements on investment transactions settling in the future.

ADR = American Depositary Receipts

GDR = Global Depositary Receipts

MFGEFP-906-0306-S4533

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

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

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

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

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

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

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

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

ITEM 11 - Controls and Procedures

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

ITEM 12 - Exhibits

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

SIGNATURES

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

THE INCOME FUND OF AMERICA, INC.

By /s/ Hilda L. Applbaum

Hilda L. Applbaum, Vice Chairman and PEO

Date: April 10, 2006

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 PEO

Date: April 10, 2006

By /s/ Jennifer M. Buchheim

Jennifer M. Buchheim, Treasurer and PFO

Date: April 10, 2006