Investment Company Act file number

811-02273

TRANSAMERICA INCOME SHARES, INC.

(Exact name of registrant as specified in charter)

570 Carillon Parkway, St. Petersburg, Florida

33716

(Address of principal executive offices)

(Zip code)

Dennis P. Gallagher, Esq.  P.O. Box 9012, Clearwater, Florida  33758-9771

(Name and address of agent for service)

Registrant’s telephone number, including area code:

(727) 299-1800

Date of fiscal year end:

March 31

Date of reporting period:

October 1, 2006 – December 31, 2006

Principal

Value

MORTGAGE-BACKED SECURITIES (1.2%)

Crown Castle Towers LLC, Series 2006-1A, Class C -144A
5.47%, due 11/15/2036

$

1,700

$

1,698

Total Mortgage-Backed Securities (cost: $1,700)

1,698

CORPORATE DEBT SECURITIES (96.0%)

Aerospace (3.0%)

Boeing Co. (The)
8.75%, due 08/15/2021

2,000

2,628

Embraer Overseas, Ltd., Guaranteed Note-144A
6.38%, due 01/24/2017

1,525

1,525

Agriculture (1.1%)

Michael Foods, Inc.
8.00%, due 11/15/2013

1,500

1,556

Air Transportation (0.9%)

FedEx Corp.
9.65%, due 06/15/2012

1,000

1,191

Amusement & Recreation Services (1.4%)

Harrah's Operating Co., Inc
5.50%, due 07/01/2010

1,000

980

Speedway Motorsports, Inc.
6.75%, due 06/01/2013

1,000

1,000

Automotive (0.3%)

General Motors Corp
7.13%, due 07/15/2013†

500

471

Automotive Service Stations (0.7%)

Petro Stopping Centers, LP / Petro Financial Corp
9.00%, due 02/15/2012

1,000

1,035

Beverages (1.7%)

Anheuser-Busch Cos., Inc.
5.75%, due 04/01/2036

875

839

Cia Brasileira de Bebidas
8.75%, due 09/15/2013

660

769

FBG Finance Ltd.-144A
5.88%, due 06/15/2035

800

725

Business Credit Institutions (2.5%)

Pemex Finance, Ltd.
9.03%, due 02/15/2011

3,315

3,531

Business Services (1.7%)

Cardtronics, Inc., Senior Subordinated Note
9.25%, due 08/15/2013†

800

842

Hertz Corp.-144A
10.50%, due 01/01/2016†

1,125

1,237

iPayment, Inc., Senior Subordinated Note
9.75%, due 05/15/2014

350

360

Chemicals & Allied Products (3.2%)

ICI Wilmington, Inc.
4.38%, due 12/01/2008

3,400

3,336

Ineos Group Holdings PLC-144A
8.50%, due 02/15/2016

500

477

Mosaic Global Holdings, Inc., Senior Note-144A
7.63%, due 12/01/2016

400

414

Reichhold Industries, Inc., Senior Note-144A
9.00%, due 08/15/2014

300

294

Commercial Banks (9.6%)

ACE Cash Express, Inc., Senior Note-144A
10.25%, due 10/01/2014

250

253

Barclays Bank PLC
6.28%, due 12/15/2034(a) (b)

1,500

1,476

HBOS PLC-144A
5.92%, due 10/01/2015(a) (b)

1,400

1,373

HSBC Capital Funding LP-144A
10.18%, due 06/30/2030(a) (b)

1,500

2,216

HSBK Europe BV-144A
7.75%, due 05/13/2013

500

527

Shinsei Finance Cayman, Ltd.-144A
6.42%, due 07/20/2016(a) (b)

1,000

999

Wachovia Capital Trust III
5.80%, due 03/15/2011(a) (b)

1,396

1,408

Wells Fargo & Co.
4.20%, due 01/15/2010

2,000

1,948

Wells Fargo Capital X
5.95%, due 12/15/2036

1,270

1,245

ZFS Finance USA Trust I-144A
6.45%, due 12/15/2065(b)

2,000

2,040

Communication (8.5%)

Comcast Corp.
7.05%, due 03/15/2033

2,050

2,192

Echostar DBS Corp., Senior Note
7.13%, due 02/01/2016

1,250

1,250

Intelsat Subsidiary Holding Co., Ltd.
8.25%, due 01/15/2013

800

812

Kabel Deutschland GmbH
10.63%, due 07/01/2014

1,000

1,109

News America Holdings
9.25%, due 02/01/2013

2,985

3,503

Viacom, Inc., Senior Note
6.25%, due 04/30/2016

3,100

3,079

Department Stores (1.0%)

Neiman-Marcus Group, Inc.
9.00%, due 10/15/2015

1,275

1,391

Electric Services (4.6%)

AES Gener SA
7.50%, due 03/25/2014†

1,500

1,589

Dominion Resources, Inc.
5.69%, due 05/15/2008

1,900

1,903

PSEG Funding Trust
5.38%, due 11/16/2007

3,000

2,994

Electronic Components & Accessories (0.8%)

NXP BV, Senior Note-144A
7.88%, due 10/15/2014

275

284

Sensata Technologies BV, Senior Note-144A
8.25%, due 05/01/2014

850

816

Food & Kindred Products (1.2%)

ConAgra Foods, Inc,-144A
5.82%, due 06/15/2017

1,140

1,128

ConAgra Foods, Inc.
9.75%, due 03/01/2021

235

305

Nutro Products, Inc.-144A
10.75%, due 04/15/2014

290

317

Food Stores (0.9%)

Stater Brothers Holdings, Inc
8.13%, due 06/15/2012†

1,200

1,218

Gas Production & Distribution (3.9%)

El Paso Corp.
7.63%, due 09/01/2008

1,000

1,030

Kinder Morgan Energy Partners, LP
7.75%, due 03/15/2032

1,500

1,708

Markwest Energy Part/Finance-144A
8.50%, due 07/15/2016

700

728

Northwest Pipeline
9.00%, due 08/01/2022

175

180

Southern Union Co., Senior Note
6.15%, due 08/16/2008

1,800

1,807

Holding & Other Investment Offices (5.8%)

Ameriprise Financial, Inc.
7.52%, due 06/01/2066(b)

2,000

2,196

Healthcare Realty Trust, Inc. REIT, Senior Note
8.13%, due 05/01/2011

1,350

1,464

Hospitality Properties Trust REIT
6.30%, due 06/15/2016

1,968

2,014

Hutchison Whampoa International, Ltd.-144A
7.45%, due 11/24/2033

1,500

1,730

Rouse Co., LP/TRC Co-Issuer, Inc. REIT, Senior Note-144 A
6.75%, due 05/01/2013

800

803

Hotels & Other Lodging Places (4.6%)

Host Marriott, LP REIT
7.13%, due 11/01/2013

1,500

1,534

Las Vegas Sands Corp
6.38%, due 02/15/2015

800

775

Park Place Entertainment Corp.
7.00%, due 04/15/2013

1,500

1,534

Starwood Hotels & Resorts Worldwide, Inc.
7.88%, due 05/01/2012

1,500

1,584

Station Casinos, Inc., Subordinated Note
6.63%, due 03/15/2018

500

429

Wyndham Worldwide Corp.-144A
6.00%, due 12/01/2016

675

663

Industrial Machinery & Equipment (1.1%)

Cummins Engine Co., Inc.
5.65%, due 03/01/2098

2,000

1,513

Instruments & Related Products (0.3%)

Fisher Scientific International, Inc.
6.13%, due 07/01/2015

350

346

Insurance (3.7%)

Metlife, Inc.
6.40%, due 12/15/2036*

2,230

2,240

Oil Insurance, Ltd.-144A
7.56%, due 06/30/2011(a) (b)

1,500

1,552

Reinsurance Group of America
6.75%, due 12/15/2065(b)

1,400

1,399

Lumber & Other Building Materials (0.2%)

Masonite Corp., Senior Subordinated Note-144A
11.00%, due 04/06/2015

300

277

Management Services (0.2%)

FTI Consulting, Inc., Senior Note-144A
7.75%, due 10/01/2016

300

311

Metal Mining (2.3%)

Barrick Gold Finance, Inc.
7.50%, due 05/01/2007

2,000

2,014

Vale Overseas, Ltd., Guaranteed Note
6.25%, due 01/23/2017

1,175

1,180

Mortgage Bankers & Brokers (4.1%)

Galaxy Entertainment Finance Co., Ltd., Senior Note-144A
9.88%, due 12/15/2012

500

536

Glencore Funding LLC-144A
6.00%, due 04/15/2014

1,500

1,462

ILFC E-Capital Trust II-144A
6.25%, due 12/21/2065(b)

2,000

2,032

Innophos Investments Holdings, Inc.
13.38%, due 02/15/2015*

180

188

MUFG Capital Finance 1, Ltd.
6.35%, due 07/25/2016(a) (b)

750

761

Stripes acquisition LLC/Susser Finance Corp.-144A A
10.63%, due 12/15/2013

704

764

Motion Pictures (2.9%)

Time Warner, Inc.
9.13%, due 01/15/2013

3,500

4,077

Oil & Gas Extraction (4.0%)

Chesapeake Energy Corp.
6.88%, due 01/15/2016

1,500

1,513

Gazprom International SA-144A
7.20%, due 02/01/2020

600

634

Occidental Petroleum Corp.
10.13%, due 09/15/2009

500

559

OPTI Canada, Inc., Senior Note-144A
8.25%, due 12/15/2014

1,000

1,027

PetroHawk Energy Corp., Senior Note
9.13%, due 07/15/2013

1,000

1,050

Sabine Pass LNG, LP, Senior Secured Note-144A
7.50%, due 11/30/2016

850

847

Paper & Allied Products (1.6%)

Celulosa Arauco y Constitucion SA
8.63%, due 08/15/2010

2,000

2,196

Paperboard Containers & Boxes (0.5%)

Graham Packaging Co., Inc.
9.88%, due 10/15/2014†

650

657

Personal Credit Institutions (2.8%)

Aiful Corp.-144A
6.00%, due 12/12/2011

792

784

Erac USA Finance Company-144A
6.80%, due 02/15/2008

2,100

2,121

General Motors Acceptance Corp.
5.13%, due 05/09/2008

600

594

GMAC LLC, Senior Note
6.00%, due 12/15/2011

435

433

Petroleum Refining (0.5%)

Enterprise Products Operating, LP
8.38%, due 08/01/2066(b)

700

758

Primary Metal Industries (0.8%)

Metals USA Holdings Corp., Senior Note-144A
11.37%, due 01/15/2012*

290

278

PNA Group, Inc., Senior Note-144A
10.75%, due 09/01/2016

375

388

Texas Industries, Inc.
7.25%, due 07/15/2013

500

508

Printing & Publishing (0.4%)

RH Donnelley Corp., Senior Note
8.88%, due 01/15/2016

500

525

Radio & Television Broadcasting (2.4%)

Chancellor Media Corp.
8.00%, due 11/01/2008

1,415

1,471

Univision Communications, Inc.
7.85%, due 07/15/2011

1,950

1,965

Real Estate (1.1%)

Colonial Realty, LP
7.00%, due 07/14/2007

1,500

1,512

Restaurants (0.7%)

Carrols Corp.
9.00%, due 01/15/2013

500

511

Sbarro, Inc., Senior Note
11.00%, due 09/15/2009†

500

508

Retail Trade (0.3%)

Michaels Stores, Inc., Senior Subordinated Note-144A
11.38%, due 11/01/2016†

375

391

Rubber & Misc. Plastic Products (0.2%)

Titan International, Inc., Senior Note-144A
8.00%, due 01/15/2012

300

302

Savings Institutions (0.7%)

Sovereign Capital Trust VI, Guaranteed Note
7.91%, due 06/13/2036

875

984

Security & Commodity Brokers (3.6%)

E*Trade Financial Corp.
8.00%, due 06/15/2011

1,500

1,568

JP Morgan Chase Capital XVIII
6.95%, due 08/17/2036

2,000

2,163

Residential Capital Corp.
6.38%, due 06/30/2010

585

592

Western Union Co. (T he)-144A
5.93%, due 10/01/2016

685

678

Stone, Clay & Glass Products (1.0%)

Lafarge SA
7.13%, due 07/15/2036

1,300

1,412

Telecommunications (0.9%)

Verizon Global Funding Corp.
7.75%, due 12/01/2030

1,100

1,290

Water Transportation (1.6%)

Royal Caribbean Cruises, Ltd.
8.75%, due 02/02/2011

2,000

2,186

Wholesale Trade Nondurable Goods (0.7%)

Supervalu, Inc., Senior Note
7.50%, due 11/15/2014

1,000

1,043

Total Corporate Debt Securities (cost: $132,192)

134,864

Shares

Value

PREFERRED STOCKS (1.3%)

Holding & Other Investment Offices (0.6%)

Tanger Factory Outlet Centers REIT

33,334

863

Telecommunications (0.7%)

Centaur Funding Corp.-144A

852

994

Total Preferred Stocks (cost: $1,671)

1,857

Principal

Value

SECURITY LENDING COLLATERAL (4.6%)

Debt (4.6%)

Repurchase Agreements (4.6%)††

Merrill Lynch & Co. 5.30%, dated 12/29/2006 to be repurchased at
$3,189 on 01/02/2007

3,188

3,188

Morgan Stanley Dean Witter & Co. 5.36%, dated 12/29/2006 to be
repurchased at $3,202 on 01/02/2007

3,200

3,200

Total Security Lending Collateral (cost: $6,388)

6,388

Total Investment Securities (cost: $141,951)#

$

144,807

†

At December 31, 2006, all or a portion of this security is on loan. The value at December 31, 2006, of all securities on loan is $6,246.

(a)

The security has a perpetual maturity. The date shown is the next call date.

(b)

Coupon rate is fixed for a predetermined period of time and then converts to a floating rate until maturity/call date. Rate is listed as of December 31, 2006.

*

Floating or variable rate note. Rate is listed as of December 31, 2006.

††

Cash collateral for the Repurchase Agreements, valued at $6,664, that serve as collateral for securities lending, is invested in corporate bonds with interest rates and maturity dates ranging from 0.00% - 8.38% and 1/26/2007 - 12/01/2096, respectively.

#

Aggregate cost for federal income tax purposes is $142,985. Aggregate gross unrealized appreciation for all securities in which there is an excess of value over tax cost and aggregate gross unrealized depreciation for all securities in which there is an excess of tax cost over value were $2,525 and $703, respectively. Net unrealized appreciation for tax purposes is $1,822.

144A

144A Securities are registered pursuant to Rule 144A of the Securities Act of 1933. These securities are deemed to be liquid for purposes of compliance limitations on holdings of illiquid securities and may be resold as transactions exempt from registration, normally to qualified institutional buyers. At December 31, 2006, these securities aggregated $35,625 or 25.4% of the net assets of the Fund.

REIT

Real Estate Investment Trust

TRANSAMERICA INCOME SHARES, INC.

(Registrant)

By:

/s/ John K. Carter

John K. Carter

Chief Executive Officer

Date: March 1, 2007

By:

/s/ John K. Carter

John K. Carter

Chief Executive Officer

Date:

March 1, 2007

By:

/s/ Glenn E. Brightman

Glenn E. Brightman

Principal Financial Officer

Date:

March 1, 2007