N-CSRS

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: 811-02145

LORD ABBETT BOND-DEBENTURE FUND, INC.

(Exact name of Registrant as specified in charter)

90 Hudson Street, Jersey City, NJ 07302

(Address of principal executive offices)  (Zip code)

Thomas R. Phillips, Esq., Vice President & Assistant Secretary

90 Hudson Street, Jersey City, NJ 07302

(Name and address of agent for service)

Registrant’s telephone number, including area code: (800) 201-6984

Date of fiscal year end: 12/31

Date of reporting period: 6/30/2013

Item 1: Report(s) to Shareholders.

2 0 1 3

L O R D  A B B E T T

S E M I A N N U A L

R E P O R T

Lord Abbett

Bond Debenture Fund

For the six-month period ended June 30, 2013

Table of Contents

1	A Letter to Shareholders
2	Information About Your Fund’s Expenses and Holdings Presented by Sector
4	Schedule of Investments
38	Statement of Assets and Liabilities
40	Statement of Operations
41	Statement of Changes in Net Assets
42	Financial Highlights
50	Notes to Financial Statements
62	Supplemental Information to Shareholders

Lord Abbett Bond Debenture Fund
Semiannual Report

For the six-month period ended June 30, 2013

Dear Shareholders: We are pleased to provide you with this semiannual report for Lord Abbett Bond Debenture Fund for the six-month period ended June 30, 2013. For additional information about the Fund, please visit our Website at www.lordabbett.com, where you can access the quarterly commentaries by the Fund’s portfolio managers. General information about Lord Abbett mutual funds, as well as in-depth discussions of market trends and investment strategies, is also provided in Lord Abbett Insights, a quarterly newsletter available on our Website.

Thank you for investing in Lord Abbett mutual funds. We value the trust that you place in us and look forward to serving your investment needs in the years to come.

Best regards,

Daria L. Foster
Director, President and Chief Executive Officer

1

Expense Example

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments (these charges vary among the share classes); and (2) ongoing costs, including management fees; distribution and service (12b-1) fees (these charges vary among the share classes); and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to 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 (January 1, 2013 through June 30, 2013).

Actual Expenses

For each class of the Fund, the first line of the table on the following 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 titled “Expenses Paid During Period 1/1/13 – 6/30/13” to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

For each class of the Fund, the second line of the table on the following page provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. 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% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

2

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 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	Ending Account Value	Expenses Paid During Period†
	1/1/13	6/30/13	1/1/13 - 6/30/13
Class A
Actual	$1,000.00	$1,017.06	$4.80
Hypothetical (5% Return Before Expenses)	$1,000.00	$1,020.05	$4.81
Class B
Actual	$1,000.00	$1,012.64	$8.03
Hypothetical (5% Return Before Expenses)	$1,000.00	$1,016.82	$8.05
Class C
Actual	$1,000.00	$1,013.88	$8.04
Hypothetical (5% Return Before Expenses)	$1,000.00	$1,016.83	$8.05
Class F
Actual	$1,000.00	$1,018.40	$3.55
Hypothetical (5% Return Before Expenses)	$1,000.00	$1,021.28	$3.56
Class I
Actual	$1,000.00	$1,018.78	$3.05
Hypothetical (5% Return Before Expenses)	$1,000.00	$1,021.78	$3.06
Class P
Actual	$1,000.00	$1,017.44	$4.75
Hypothetical (5% Return Before Expenses)	$1,000.00	$1,020.10	$4.76
Class R2
Actual	$1,000.00	$1,015.83	$6.05
Hypothetical (5% Return Before Expenses)	$1,000.00	$1,018.80	$6.06
Class R3
Actual	$1,000.00	$1,015.08	$5.50
Hypothetical (5% Return Before Expenses)	$1,000.00	$1,019.32	$5.51

^† For each class of the Fund, net expenses are equal to the annualized expense ratio for such class (0.96% for Class A, 1.61% for Classes B and C, 0.71% for Class F, 0.61% for Class I, 0.95% for Class P, 1.21% for Class R2 and 1.10% for Class R3) multiplied by the average account value over the period, multiplied by 181/365 (to reflect one-half year period).

Portfolio Holdings Presented by Sector

June 30, 2013

Sector*	%**
Agency		0.04	%
Automotive		2.40	%
Banking		3.71	%
Basic Industry		6.58	%
Capital Goods		8.57	%
Consumer Cyclical		5.72	%
Consumer Non-Cyclical		3.53	%
Energy		15.38	%
Financial Services		5.27	%
Foreign Government		0.23	%
Health Care		7.64	%
Sector*		%**
Insurance		1.31	%
Media		5.48	%
Municipal		0.20	%
Real Estate		1.88	%
Services		8.38	%
Technology & Electronics		9.28	%
Telecommunications		8.52	%
U.S. Government		3.19	%
Utilities		2.37	%
Repurchase Agreement		0.32	%
Total		100.00	%

*	A sector may comprise several industries.
**	Represents percent of total investments.

3

Schedule of Investments (unaudited)

June 30, 2013

	Shares		Fair
Investments	(000)		Value
LONG-TERM INVESTMENTS 99.15%
COMMON STOCKS 3.82%
Agency/Government Related 0.01%
Fannie Mae*		818	$	1,153,648
Airlines 0.07%
United Continental Holdings, Inc.*		185		5,788,650
Auto Parts & Equipment 0.07%
Cooper-Standard Holdings, Inc.*		124		5,782,229
Banking 0.21%
Fifth Third Bancorp		350		6,317,500
Huntington Bancshares, Inc.		700		5,516,000
Regions Financial Corp.		600		5,718,000
Total				17,551,500
Chemicals 0.30%
Axiall Corp.		150		6,387,000
Monsanto Co.		185		18,278,000
Total				24,665,000
Computer Hardware 0.11%
Apple, Inc.		15		5,941,200
NVIDIA Corp.		220		3,086,600
Total				9,027,800
Consumer/Commercial/Lease Financing 0.05%
Nationstar Mortgage Holdings, Inc.*		100		3,744,000
Consumer Products 0.15%
Estee Lauder Cos., Inc. (The) Class A		185		12,167,450
Diversified Capital Goods 0.12%
Emerson Electric Co.		175		9,544,500
Electronics 0.06%
Broadcom Corp. Class A		150		5,064,000
Energy: Exploration & Production 0.63%
Concho Resources, Inc.*		248		20,787,676
Kodiak Oil & Gas Corp.*		500		4,445,000
SM Energy Co.		135		8,097,300

4 See Notes to Financial Statements.

Schedule of Investments (unaudited)(continued)

June 30, 2013

	Shares		Fair
Investments	(000)		Value
Energy: Exploration & Production (continued)
Whiting Petroleum Corp.*		409	$	18,854,051
Total				52,184,027
Food: Wholesale 0.06%
Boulder Brands, Inc.*		395		4,759,750
Health Services 0.11%
Team Health Holdings, Inc.*		220		9,035,400
Investments & Miscellaneous Financial Services 0.19%
SPDR S&P 500 ETF Trust		100		16,001,000
Life Insurance 0.11%
MetLife, Inc.		200		9,152,000
Machinery 0.16%
Chart Industries, Inc.*		125		11,761,250
Rexnord Corp.*		100		1,685,000
Total				13,446,250
Media: Diversified 0.09%
Time Warner, Inc.		125		7,227,500
Multi-Line Insurance 0.05%
Hartford Financial Services Group, Inc.		120		3,710,400
Pharmaceuticals 0.39%
Amarin Corp. plc ADR*		400		2,320,000
BioMarin Pharmaceutical, Inc.*		200		11,158,000
Bristol-Myers Squibb Co.		75		3,351,750
Onyx Pharmaceuticals, Inc.*		75		9,000,000
Vertex Pharmaceuticals, Inc.*		83		6,612,278
Total				32,442,028
Printing & Publishing 0.06%
Tribune Co.*		92		5,255,625
Real Estate Investment Trusts 0.08%
Camden Property Trust		100		6,914,000
Software/Services 0.35%
Facebook, Inc. Class A*		200		4,972,000
Fortinet, Inc.*		300		5,250,000
Informatica Corp.*		300		10,494,000

See Notes to Financial Statements. 5

Schedule of Investments (unaudited)(continued)

June 30, 2013

			Shares		Fair
Investments			(000)		Value
Software/Services (continued)
VMware, Inc. Class A*				125	$	8,373,750
Total						29,089,750
Specialty Retail 0.09%
Home Depot, Inc. (The)				100		7,747,000
Telecommunications Equipment 0.23%
Aruba Networks, Inc.*				550		8,448,000
Palo Alto Networks, Inc.*				260		10,961,600
Total						19,409,600
Telecommunications: Wireless 0.07%
QUALCOMM, Inc.				100		6,108,000
Total Common Stocks (cost $322,823,134)						316,971,107
			Principal
	Interest	Maturity	Amount
	Rate	Date	(000)
CONVERTIBLE BONDS 6.81%
Apparel/Textiles 0.13%
Iconix Brand Group, Inc.†	1.50%	3/15/2018	$	10,000		11,193,750
Auto Loans 0.23%
Volkswagen International Finance NV (Netherlands)†(a)	5.50%	11/9/2015	EUR	14,000		18,716,938
Auto Parts & Equipment 0.18%
Meritor, Inc.†	7.875%	3/1/2026	$	6,435		7,854,722
Meritor, Inc. (Zero Coupon after 2/15/2019)~	4.00%	2/15/2027		8,250		7,332,187
Total						15,186,909
Automakers 0.14%
Ford Motor Co.	4.25%	11/15/2016		6,250		11,324,219
Computer Hardware 0.63%
Intel Corp.	2.95%	12/15/2035		10,000		10,906,250
Intel Corp.	3.25%	8/1/2039		7,000		8,933,785
Micron Technology, Inc.†	2.375%	5/1/2032		9,775		15,664,438
SanDisk Corp.	1.50%	8/15/2017		12,500		16,726,562
Total						52,231,035

6 See Notes to Financial Statements.

Schedule of Investments (unaudited)(continued)

June 30, 2013

			Principal
	Interest	Maturity	Amount		Fair
Investments	Rate	Date	(000)		Value
Electronics 0.14%
ON Semiconductor Corp.	2.625%	12/15/2026	$	9,800	$	11,312,875
Energy: Exploration & Production 0.32%
Chesapeake Energy Corp.	2.50%	5/15/2037		15,000		14,203,125
Cobalt International Energy, Inc.	2.625%	12/1/2019		12,000		12,742,500
Total						26,945,625
Gaming 0.07%
MGM Resorts International	4.25%	4/15/2015		5,000		5,609,375
Health Services 0.42%
Brookdale Senior Living, Inc.	2.75%	6/15/2018		15,700		18,565,250
Illumina, Inc.†	0.25%	3/15/2016		7,600		8,236,500
Theravance, Inc.	3.00%	1/15/2015		5,565		8,309,241
Total						35,110,991
Hotels 0.33%
Host Hotels & Resorts LP†	2.50%	10/15/2029		20,000		27,150,000
Integrated Energy 0.12%
SunPower Corp.	4.50%	3/15/2015		8,350		9,785,156
Investments & Miscellaneous Financial Services 0.16%
Affiliated Managers Group, Inc.	3.95%	8/15/2038		10,000		12,887,500
Machinery 0.34%
Altra Holdings, Inc.	2.75%	3/1/2031		8,750		10,505,469
Chart Industries, Inc.	2.00%	8/1/2018		12,000		18,052,500
Total						28,557,969
Managed Care 0.11%
WellPoint, Inc.†	2.75%	10/15/2042		7,500		9,375,000
Medical Products 0.05%
Hologic, Inc. (Zero Coupon after 3/1/2018)~	2.00%	3/1/2042		4,000		3,967,500
Metals/Mining (Excluding Steel) 0.12%
Alpha Natural Resources, Inc.	3.75%	12/15/2017		6,000		5,130,000
Newmont Mining Corp.	1.25%	7/15/2014		5,000		5,062,500
Total						10,192,500
Oil Field Equipment & Services 0.26%
Hornbeck Offshore Services, Inc.†	1.50%	9/1/2019		17,500		21,262,500

See Notes to Financial Statements. 7

Schedule of Investments (unaudited)(continued)

June 30, 2013

			Principal
	Interest	Maturity	Amount		Fair
Investments	Rate	Date	(000)		Value
Pharmaceuticals 1.02%
Auxilium Pharmaceuticals, Inc.	1.50%	7/15/2018	$	1,900	$	1,837,063
Gilead Sciences, Inc.	1.625%	5/1/2016		14,000		31,710,070
Medivation, Inc.	2.625%	4/1/2017		21,500		27,237,812
Mylan, Inc.	3.75%	9/15/2015		10,000		23,750,000
Total						84,534,945
Software/Services 1.53%
Alliance Data Systems Corp.	1.75%	8/1/2013		10,000		22,731,250
Concur Technologies, Inc.†	0.50%	6/15/2018		4,725		4,725,000
EMC Corp.	1.75%	12/1/2013		7,250		10,716,443
NetSuite, Inc.†	0.25%	6/1/2018		11,175		11,426,437
Nuance Communications, Inc.	2.75%	8/15/2027		9,900		11,477,812
Nuance Communications, Inc.	2.75%	11/1/2031		9,300		9,625,500
Salesforce.com, Inc.	0.75%	1/15/2015		10,000		18,118,750
Shutterfly, Inc.†	0.25%	5/15/2018		6,475		7,158,922
Workday, Inc.†	0.75%	7/15/2018		8,275		8,461,188
Xilinx, Inc.	2.625%	6/15/2017		15,500		22,223,125
Total						126,664,427
Support: Services 0.27%
priceline.com, Inc.	1.00%	3/15/2018		14,000		16,345,000
priceline.com, Inc.	1.25%	3/15/2015		2,358		6,449,537
Total						22,794,537
Telecommunications Equipment 0.19%
Nortel Networks Corp. (Canada)(b)(c)	2.125%	4/15/2014		15,800		15,395,125
Telecommunications: Wireless 0.05%
Clearwire Communications LLC/Clearwire Finance, Inc.†	8.25%	12/1/2040		3,500		3,880,625
Total Convertible Bonds (cost $516,900,301)						564,079,501
	Dividend		Shares
	Rate		(000)
CONVERTIBLE PREFERRED STOCKS 2.73%
Aerospace/Defense 0.30%
United Technologies Corp.	7.50%			420		24,931,200
Auto Parts & Equipment 0.05%
Cooper-Standard Holdings, Inc. PIK	7.00%			22		4,378,970

8 See Notes to Financial Statements.

Schedule of Investments (unaudited)(continued)

June 30, 2013

	Dividend		Shares		Fair
Investments	Rate		(000)		Value
Automakers 0.17%
General Motors Co.	4.75%			300	$	14,448,000
Banking 0.33%
Bank of America Corp.	7.25%			25		27,762,500
Electric: Integrated 0.42%
NextEra Energy, Inc.	5.889%			300		16,662,000
PPL Corp.	8.75%			335		18,096,700
Total						34,758,700
Energy: Exploration & Production 0.12%
Apache Corp.	6.00%			200		9,548,000
Food: Wholesale 0.22%
Bunge Ltd.	4.875%			180		18,180,000
Investments & Miscellaneous Financial Services 0.35%
AMG Capital Trust I	5.10%			470		28,875,625
Life Insurance 0.26%
MetLife, Inc.	5.00%			400		21,916,000
Metals/Mining (Excluding Steel) 0.19%
Cliffs Natural Resources, Inc.	7.00%			866		15,357,358
Railroads 0.17%
Genesee & Wyoming, Inc.	5.00%			120		14,416,800
Real Estate Investment Trusts 0.04%
Alexandria Real Estate Equities, Inc.	7.00%			120		3,106,800
Steel Producers/Products 0.08%
ArcelorMittal (Luxembourg)(b)	6.00%			335		6,287,950
Telecommunications: Integrated/Services 0.03%
Intelsat SA (Luxembourg)(b)	5.75%			40		2,200,000
Total Convertible Preferred Stocks (cost $208,039,522)						226,167,903
			Principal
	Interest	Maturity	Amount
	Rate	Date	(000)
FLOATING RATE LOANS(d) 2.20%
Chemicals 0.05%
Oxea S.A.R.L. USD 2nd Lien Term (Germany)(b)	8.25%	5/22/2020	$	4,000		4,000,000

See Notes to Financial Statements. 9

Schedule of Investments (unaudited)(continued)

June 30, 2013

			Principal
	Interest	Maturity	Amount		Fair
Investments	Rate	Date	(000)		Value
Department Stores 0.06%
JC Penney Corp., Inc. Term Loan	6.00%	5/21/2018	$	4,700	$	4,715,087
Diversified Capital Goods 0.07%
Air Distribution Technologies, Inc. 1st Lien Term Loan	5.00%	11/9/2018		3,980		4,009,850
Air Distribution Technologies, Inc. 2nd Lien Term Loan	9.25%	5/1/2020		1,750		1,806,875
Total						5,816,725
Electric: Generation 0.09%
Texas Competitive Electric Holdings Co. LLC Extended Term Loan	4.693% - 4.775%	10/10/2017		11,124		7,791,986
Electric: Integrated 0.08%
Essential Power LLC Term Loan B	4.25% - 4.50%	8/8/2019		6,700		6,702,746
Food 0.08%
Hostess Brands, Inc. Term Loan	6.75%	3/6/2020		6,450		6,584,386
Food & Drug Retailers 0.19%
Albertson’s LLC Term Loan B2	4.75%	3/21/2019		7,232		7,197,994
Rite Aid Corp. Tranche 1 Term Loan (2nd Lien)	5.75%	8/21/2020		8,700		8,841,375
Total						16,039,369
Food/Tobacco 0.14%
GFA Brands, Inc. New Term Loan	7.00%	7/2/2018		11,610		11,653,537
Food: Wholesale 0.09%
Diamond Foods, Inc. Revolver	6.25%	2/25/2015		3,468		3,346,600
Diamond Foods, Inc. Term Loan	6.75%	2/25/2015		4,046		4,023,410
Total						7,370,010
Gaming 0.11%
Harrah’s Las Vegas Propco LLC Senior Loan	3.69%	2/13/2014		10,000		9,266,700
Health Facilities 0.12%
Ardent Medical Services, Inc. 2nd Lien Term Loan	11.00%	11/23/2018		3,400		3,455,250
Drumm Investors LLC Term Loan	5.00%	5/4/2018		6,841		6,593,169
Total						10,048,419
Health Services 0.12%
CHG Buyer Corp. 1st Lien Term Loan	5.00%	11/19/2019		9,870		9,928,314

10 See Notes to Financial Statements.

Schedule of Investments (unaudited)(continued)

June 30, 2013

			Principal
	Interest	Maturity	Amount		Fair
Investments	Rate	Date	(000)		Value
Investments & Miscellaneous Financial Services 0.15%
Nuveen Investments, Inc. Tranche B 2nd Lien Term Loan	6.50%	2/28/2019	$	6,900	$	6,833,863
Sedgwick Claims Management Services, Inc. Additional Term Loan B	8.00%	12/12/2018		5,250		5,299,219
Total						12,133,082
Media: Broadcast 0.21%
Clear Channel Communications, Inc. Tranche B Term Loan	3.845%	1/29/2016		17,564		16,081,735
NEP Supershooters LP 2nd Lien Term Loan	9.50%	8/18/2020		1,629		1,675,393
Total						17,757,128
Media: Cable 0.10%
Virgin Media Investment Holdings Ltd. USD Term Loan B (United Kingdom)(b)	3.50%	6/5/2020		8,500		8,423,288
Media: Services 0.27%
Affinion Group, Inc. Term Loan B	6.50%	10/10/2016		15,435		14,709,489
Digital Generation, Inc. Initial Term Loan	7.25%	7/26/2018		7,307		7,228,309
Total						21,937,798
Real Estate Development & Management 0.01%
Realogy Corp. Extended Letter of Credit	4.453%	10/10/2016		786		788,316
Software/Services 0.26%
ION Trading Technologies S.A.R.L. 2nd Lien Term Loan (Luxembourg)(b)	8.25%	5/21/2021		3,000		3,003,750
SRA International, Inc. Term Loan B	6.50%	7/20/2018		13,248		13,198,670
Syniverse Holdings, Inc. Term Loan	5.00%	4/23/2019		4,950		4,946,931
Total						21,149,351
Total Floating Rate Loans (cost $183,967,799)						182,106,242
FOREIGN BONDS(a) 0.51%
Luxembourg 0.13%
Matterhorn Mobile SA†	6.75%	5/15/2019	CHF	6,900		7,487,693
Mobile Challenger Intermediate Group SA PIK†	8.75%	3/15/2019	CHF	3,200		3,303,160
Total						10,790,853
Netherlands 0.12%
Goodyear Dunlop Tires Europe BV†	6.75%	4/15/2019	EUR	5,200		7,190,598
Refresco Group BV†	7.375%	5/15/2018	EUR	2,000		2,681,398
Total						9,871,996

See Notes to Financial Statements. 11

Schedule of Investments (unaudited)(continued)

June 30, 2013

				Principal
	Interest	Maturity		Amount		Fair
Investments	Rate	Date		(000)		Value
United Kingdom 0.26%
R&R Ice Cream plc†	8.375%	11/15/2017		EUR	10,400	$	14,299,296
Old Mutual plc	6.376%	—	(e)	GBP	5,258		6,969,518
Total							21,268,814
Total Foreign Bonds (cost $43,267,859)							41,931,663
FOREIGN GOVERNMENT OBLIGATIONS 0.23%
Bermuda 0.11%
Bermuda Government†	4.138%	1/3/2023		$	9,450		9,355,500
Canada 0.12%
Government of Canada(a)	2.75%	9/1/2016		CAD	10,000		9,884,092
Total Foreign Government Obligations (cost $19,999,003)							19,239,592
GOVERNMENT SPONSORED ENTERPRISES PASS-THROUGHS 0.74%
Federal National Mortgage Assoc.(f) (cost $61,476,563)	3.50%	TBA		$	60,000		60,928,122
HIGH YIELD CORPORATE BONDS 81.22%
Aerospace/Defense 1.84%
B/E Aerospace, Inc.	5.25%	4/1/2022			40,000		40,000,000
Bombardier, Inc. (Canada)†(b)	6.125%	1/15/2023			10,100		10,074,750
Esterline Technologies Corp.	7.00%	8/1/2020			9,100		9,805,250
GenCorp, Inc.†	7.125%	3/15/2021			15,000		15,600,000
Huntington Ingalls Industries, Inc.	7.125%	3/15/2021			15,000		16,200,000
ManTech International Corp.	7.25%	4/15/2018			17,000		17,765,000
Spirit Aerosystems, Inc.	6.75%	12/15/2020			21,300		22,258,500
Triumph Group, Inc.†	4.875%	4/1/2021			11,700		11,670,750
Triumph Group, Inc.	8.00%	11/15/2017			8,770		9,274,275
Total							152,648,525
Airlines 0.20%
American Airlines 2013-1 Class B Pass Through Trust†	5.625%	1/15/2021			4,000		4,140,000
United Airlines, Inc.	6.636%	7/2/2022			6,896		7,378,836
United Continental Holdings, Inc.	6.375%	6/1/2018			2,800		2,765,000
US Airways 2013-1 Class B Pass Through Trust	5.375%	11/15/2021			1,950		1,930,500
Total							16,214,336
Apparel/Textiles 0.56%
Hanesbrands, Inc.	6.375%	12/15/2020			7,500		8,034,375
Levi Strauss & Co.	6.875%	5/1/2022			5,000		5,450,000

12 See Notes to Financial Statements.

Schedule of Investments (unaudited)(continued)

June 30, 2013

				Principal
	Interest	Maturity		Amount		Fair
Investments	Rate	Date		(000)		Value
Apparel/Textiles (continued)
Levi Strauss & Co.	7.625%	5/15/2020		$	8,675	$	9,412,375
Perry Ellis International, Inc.	7.875%	4/1/2019			10,100		10,680,750
PVH Corp.	4.50%	12/15/2022			3,300		3,184,500
SIWF Merger Sub, Inc./Springs Industries, Inc.†	6.25%	6/1/2021			5,500		5,403,750
Wolverine World Wide, Inc.†	6.125%	10/15/2020			3,900		4,046,250
Total							46,212,000
Auto Loans 0.14%
Ford Motor Credit Co. LLC	5.875%	8/2/2021			7,300		7,971,724
General Motors Financial Co., Inc.†	4.25%	5/15/2023			3,900		3,641,625
Total							11,613,349
Auto Parts & Equipment 0.95%
Cooper-Standard Automotive, Inc.	8.50%	5/1/2018			5,000		5,325,000
Dana Holding Corp.	6.50%	2/15/2019			12,000		12,825,000
Delphi Corp.	5.00%	2/15/2023			10,500		10,841,250
International Automotive Components Group SA (Luxembourg)†(b)	9.125%	6/1/2018			14,500		14,572,500
Stanadyne Corp.	10.00%	8/15/2014			8,000		7,440,000
Stanadyne Holdings, Inc.	12.00%	2/15/2015			19,000		11,495,000
Stoneridge, Inc.†	9.50%	10/15/2017			7,250		7,793,750
Tenneco, Inc.	6.875%	12/15/2020			7,500		8,062,500
Total							78,355,000
Automakers 0.36%
Chrysler Group LLC/CG Co-Issuer, Inc.	8.25%	6/15/2021			10,000		11,087,500
General Motors Co.(c)	8.375%	—	(e)		15,000		1,500
Jaguar Land Rover Automotive plc (United Kingdom)†(b)	5.625%	2/1/2023			12,500		12,187,500
Oshkosh Corp.	8.50%	3/1/2020			6,000		6,517,500
Total							29,794,000
Banking 2.80%
Ally Financial, Inc.	8.30%	2/12/2015			10,000		10,800,000
Astoria Depositor Corp.†	5.744%	5/1/2016			7,118		7,260,136
Bank of America Corp.	8.00%	—	(e)		15,000		16,783,200
Bear Stearns Cos. LLC (The)	5.55%	1/22/2017			6,000		6,578,130
Fifth Third Capital Trust IV	6.50%	4/15/2037			16,250		16,250,000
HBOS plc (United Kingdom)†(b)	6.75%	5/21/2018			10,000		10,638,370
Huntington Bancshares, Inc.	7.00%	12/15/2020			5,050		6,034,397
JPMorgan Chase & Co.	3.375%	5/1/2023			10,000		9,330,740

See Notes to Financial Statements. 13

Schedule of Investments (unaudited)(continued)

June 30, 2013

				Principal
	Interest	Maturity		Amount		Fair
Investments	Rate	Date		(000)		Value
Banking (continued)
JPMorgan Chase & Co.	7.90%	—	(e)	$	5,000	$	5,655,735
LBG Capital No.1 plc†(g)	8.00%	—	(e)		7,500		7,668,195
Macquarie Group Ltd. (Australia)†(b)	6.00%	1/14/2020			10,000		10,397,780
Morgan Stanley	4.10%	5/22/2023			17,500		16,200,730
Morgan Stanley	6.25%	8/28/2017			10,000		11,161,220
Nordea Bank AB (Sweden)†(b)	4.25%	9/21/2022			9,000		8,895,933
People’s United Financial, Inc.	3.65%	12/6/2022			15,550		14,631,073
Regions Bank	6.45%	6/26/2037			6,650		7,004,212
Regions Bank	7.50%	5/15/2018			9,942		11,621,273
Royal Bank of Scotland Group plc (The) (United Kingdom)(b)	6.125%	12/15/2022			5,700		5,443,004
Royal Bank of Scotland Group plc (The) (United Kingdom)(b)	7.64%	—	(e)		17,570		15,900,850
SVB Financial Group	5.375%	9/15/2020			9,350		10,264,393
Synovus Financial Corp.	7.875%	2/15/2019			7,750		8,621,875
Wachovia Capital Trust III	5.57%	—	(e)		15,000		14,737,500
Washington Mutual Bank(c)	6.875%	6/15/2011			22,500		2,250
Total							231,880,996
Beverages 0.22%
Constellation Brands, Inc.	3.75%	5/1/2021			4,700		4,412,125
Constellation Brands, Inc.	4.25%	5/1/2023			14,350		13,578,688
Total							17,990,813
Brokerage 0.46%
Cantor Fitzgerald LP†	7.875%	10/15/2019			12,655		13,110,150
Raymond James Financial, Inc.	8.60%	8/15/2019			20,000		24,900,460
Total							38,010,610
Building & Construction 0.69%
Beazer Homes USA, Inc.†	7.25%	2/1/2023			1,550		1,573,250
K. Hovnanian Enterprises, Inc.	5.00%	11/1/2021			5,779		5,258,890
KB Home	9.10%	9/15/2017			15,000		16,875,000
Lennar Corp.†	4.125%	12/1/2018			5,500		5,238,750
Lennar Corp.	12.25%	6/1/2017			9,500		12,231,250
Ryland Group, Inc. (The)	5.375%	10/1/2022			8,500		8,223,750
Taylor Morrison Communities, Inc./Monarch Communities, Inc.†	5.25%	4/15/2021			8,500		8,096,250
Total							57,497,140

14 See Notes to Financial Statements.

Schedule of Investments (unaudited)(continued)

June 30, 2013

			Principal
	Interest	Maturity	Amount		Fair
Investments	Rate	Date	(000)		Value
Building Materials 0.90%
American Builders & Contractors Supply Co., Inc.†	5.625%	4/15/2021	$	3,700	$	3,644,500
Associated Materials LLC/AMH New Finance, Inc.†	9.125%	11/1/2017		2,300		2,426,500
Griffon Corp.	7.125%	4/1/2018		6,200		6,525,500
HD Supply, Inc.	10.50%	1/15/2021		3,100		3,220,125
HD Supply, Inc.	11.50%	7/15/2020		7,750		9,009,375
Interline Brands, Inc. PIK	10.00%	11/15/2018		2,675		2,889,000
Masco Corp.	7.125%	3/15/2020		12,000		13,440,000
Nortek, Inc.†	8.50%	4/15/2021		5,200		5,538,000
Owens Corning, Inc.	4.20%	12/15/2022		10,000		9,708,520
Owens Corning, Inc.	9.00%	6/15/2019		15,000		18,438,015
Total						74,839,535
Chemicals 2.44%
Airgas, Inc.	7.125%	10/1/2018		10,500		11,012,957
Ashland, Inc.†	4.75%	8/15/2022		11,200		11,116,000
Axiall Corp.†	4.875%	5/15/2023		14,000		13,352,500
CF Industries, Inc.	3.45%	6/1/2023		7,800		7,511,455
Chemtura Corp.	7.875%	9/1/2018		17,900		19,466,250
Dow Chemical Co. (The)	8.55%	5/15/2019		10,000		12,774,090
Eagle Spinco, Inc.†	4.625%	2/15/2021		22,075		21,274,781
Hexion U.S. Finance Corp./Hexion Nova Scotia Finance ULC	8.875%	2/1/2018		9,000		9,225,000
Huntsman International LLC	8.625%	3/15/2020		15,000		16,387,500
INEOS Finance plc (United Kingdom)†(b)	7.50%	5/1/2020		7,200		7,686,000
INEOS Group Holdings SA (Luxembourg)†(b)	6.125%	8/15/2018		2,900		2,776,750
LyondellBasell Industries NV (Netherlands)(b)	6.00%	11/15/2021		2,000		2,251,164
Methanex Corp. (Canada)(b)	5.25%	3/1/2022		9,900		10,395,782
NewMarket Corp.	4.10%	12/15/2022		6,780		6,581,488
Nufarm Australia Ltd. (Australia)†(b)	6.375%	10/15/2019		12,000		12,030,000
PetroLogistics LP/PetroLogistics Finance Corp.†	6.25%	4/1/2020		5,200		5,122,000
Phibro Animal Health Corp.†	9.25%	7/1/2018		16,300		17,604,000
Rockwood Specialties Group, Inc.	4.625%	10/15/2020		11,575		11,676,281
TPC Group, Inc.†	8.75%	12/15/2020		3,900		4,007,250
Total						202,251,248
Computer Hardware 0.41%
Apple, Inc.	2.40%	5/3/2023		10,000		9,294,670
Brocade Communications Systems, Inc.	6.875%	1/15/2020		12,500		13,406,250
NCR Corp.	5.00%	7/15/2022		3,200		3,104,000

See Notes to Financial Statements. 15

Schedule of Investments (unaudited)(continued)

June 30, 2013

				Principal
	Interest	Maturity		Amount		Fair
Investments	Rate	Date		(000)		Value
Computer Hardware (continued)
Seagate HDD Cayman	6.875%	5/1/2020		$	8,000	$	8,520,000
Total							34,324,920
Consumer/Commercial/Lease Financing 2.71%
Air Lease Corp.	6.125%	4/1/2017			15,000		15,600,000
Aircastle Ltd.	6.25%	12/1/2019			7,775		8,115,156
CIT Group, Inc.	4.25%	8/15/2017			20,000		20,175,000
CIT Group, Inc.	5.00%	8/15/2022			25,000		24,923,700
Discover Bank	8.70%	11/18/2019			2,655		3,396,024
Discover Financial Services	3.85%	11/21/2022			8,545		8,040,016
General Electric Capital Corp.	7.125%	—	(e)		10,000		11,319,060
International Lease Finance Corp.	6.25%	5/15/2019			10,000		10,325,000
International Lease Finance Corp.	8.25%	12/15/2020			6,100		6,870,125
International Lease Finance Corp.	8.75%	3/15/2017			34,000		38,037,500
Nationstar Mortgage LLC/Nationstar Capital Corp.	6.50%	6/1/2022			15,700		15,386,000
Nationstar Mortgage LLC/Nationstar Capital Corp.	6.50%	7/1/2021			22,660		21,866,900
Nationstar Mortgage LLC/Nationstar Capital Corp.	7.875%	10/1/2020			8,000		8,520,000
Provident Funding Associates LP/PFG Finance Corp.†	6.75%	6/15/2021			10,950		10,977,375
SLM Corp.	6.00%	1/25/2017			9,200		9,660,000
SLM Corp.	8.45%	6/15/2018			10,000		11,150,000
Total							224,361,856
Consumer Products 0.79%
Armored Autogroup, Inc.	9.25%	11/1/2018			7,400		6,826,500
Avon Products, Inc.	4.60%	3/15/2020			5,680		5,751,017
Avon Products, Inc.	5.00%	3/15/2023			7,000		6,971,153
Elizabeth Arden, Inc.	7.375%	3/15/2021			27,700		29,777,500
Prestige Brands, Inc.	8.125%	2/1/2020			1,435		1,574,913
Spectrum Brands Escrow Corp.†	6.375%	11/15/2020			11,350		11,917,500
Spectrum Brands Escrow Corp.†	6.625%	11/15/2022			2,850		2,992,500
Total							65,811,083
Department Stores 0.10%
Bon-Ton Department Stores, Inc. (The)†	8.00%	6/15/2021			7,800		7,965,750
Diversified Capital Goods 2.13%
Actuant Corp.	5.625%	6/15/2022			8,320		8,465,600
Amsted Industries, Inc.†	8.125%	3/15/2018			15,000		15,900,000
Anixter, Inc.	5.625%	5/1/2019			11,300		11,752,000
Belden, Inc.†	5.50%	9/1/2022			15,000		14,812,500

16 See Notes to Financial Statements.

Schedule of Investments (unaudited)(continued)

June 30, 2013

			Principal
	Interest	Maturity	Amount		Fair
Investments	Rate	Date	(000)		Value
Diversified Capital Goods (continued)
Mueller Water Products, Inc.	7.375%	6/1/2017	$	10,800	$	11,124,000
Park-Ohio Industries, Inc.	8.125%	4/1/2021		11,400		12,426,000
RBS Global, Inc./Rexnord LLC	8.50%	5/1/2018		31,000		33,092,500
Silver II Borrower/Silver II US Holdings LLC (Luxembourg)†(b)	7.75%	12/15/2020		20,000		20,200,000
SPX Corp.	6.875%	9/1/2017		21,000		22,785,000
Unifrax I LLC/Unifrax Holding Co.†	7.50%	2/15/2019		6,175		6,329,375
Valmont Industries, Inc.	6.625%	4/20/2020		17,500		19,981,832
Total						176,868,807
Electric: Generation 0.89%
Calpine Corp.†	7.875%	7/31/2020		2,525		2,752,250
Coso Geothermal Power Holdings LLC†	7.00%	7/15/2026		5,470		3,035,831
DPL, Inc.	7.25%	10/15/2021		15,725		16,354,000
Dynegy, Inc.†	5.875%	6/1/2023		3,900		3,558,750
Energy Future Intermediate Holding Co. LLC/EFIH Finance, Inc. PIK†	11.25%	12/1/2018		6,359		5,405,433
Mirant Americas Generation LLC	9.125%	5/1/2031		15,125		16,259,375
NRG Energy, Inc.	7.625%	1/15/2018		4,000		4,300,000
NSG Holdings LLC/NSG Holdings, Inc.†	7.75%	12/15/2025		17,485		18,184,400
Texas Competitive Electric Holdings Co. LLC/TCEH Finance, Inc.†	11.50%	10/1/2020		5,000		3,762,500
Total						73,612,539
Electric: Integrated 1.05%
AES Corp. (The)	4.875%	5/15/2023		7,000		6,545,000
AES Corp. (The)	8.00%	10/15/2017		12,500		14,125,000
Black Hills Corp.	5.875%	7/15/2020		8,000		8,935,864
Duquesne Light Holdings, Inc.†	6.40%	9/15/2020		20,500		23,894,144
National Fuel Gas Co.	4.90%	12/1/2021		4,000		4,256,272
National Fuel Gas Co.	6.50%	4/15/2018		20,000		23,273,100
National Fuel Gas Co.	8.75%	5/1/2019		5,000		6,286,190
Total						87,315,570
Electronics 1.07%
Advanced Micro Devices, Inc.	7.75%	8/1/2020		15,000		14,662,500
CPI International, Inc.	8.00%	2/15/2018		15,500		16,042,500
Freescale Semiconductor, Inc.†	9.25%	4/15/2018		8,800		9,526,000
Freescale Semiconductor, Inc.†	10.125%	3/15/2018		2,712		2,949,300
Freescale Semiconductor, Inc.	10.75%	8/1/2020		21,810		24,100,050

See Notes to Financial Statements. 17

Schedule of Investments (unaudited)(continued)

June 30, 2013

			Principal
	Interest	Maturity	Amount		Fair
Investments	Rate	Date	(000)		Value
Electronics (continued)
Jabil Circuit, Inc.	4.70%	9/15/2022	$	10,000	$	9,675,000
KLA-Tencor Corp.	6.90%	5/1/2018		3,200		3,729,046
Sensata Technologies BV (Netherlands)†(b)	6.50%	5/15/2019		7,550		8,154,000
Total						88,838,396
Energy: Exploration & Production 8.05%
Antero Resources Finance Corp.	7.25%	8/1/2019		10,000		10,475,000
Atlas Energy Holdings Operating Co. LLC/Atlas Resource Finance Corp.†	7.75%	1/15/2021		18,700		17,952,000
Berry Petroleum Co.	6.375%	9/15/2022		6,300		6,307,875
Berry Petroleum Co.	6.75%	11/1/2020		21,000		21,840,000
BreitBurn Energy Partners LP/BreitBurn Finance Corp.	7.875%	4/15/2022		20,100		20,602,500
Chaparral Energy, Inc.	7.625%	11/15/2022		13,850		14,196,250
Chaparral Energy, Inc.	8.25%	9/1/2021		19,400		20,515,500
Concho Resources, Inc.	5.50%	4/1/2023		28,400		28,116,000
Concho Resources, Inc.	7.00%	1/15/2021		10,700		11,556,000
Continental Resources, Inc.†	4.50%	4/15/2023		8,000		7,790,000
Continental Resources, Inc.	7.375%	10/1/2020		5,600		6,244,000
Continental Resources, Inc.	8.25%	10/1/2019		19,175		21,092,500
CrownRock LP/CrownRock Finance, Inc.†	7.125%	4/15/2021		14,000		13,790,000
Energy XXI Gulf Coast, Inc.	7.75%	6/15/2019		18,650		19,302,750
Forest Oil Corp.	7.25%	6/15/2019		25,000		23,625,000
Halcon Resources Corp.	8.875%	5/15/2021		14,200		13,845,000
Halcon Resources Corp.	9.75%	7/15/2020		6,600		6,616,500
Kerr-McGee Corp.	6.95%	7/1/2024		12,900		15,451,994
Kodiak Oil & Gas Corp.†	5.50%	1/15/2021		14,000		13,667,500
Kodiak Oil & Gas Corp.	8.125%	12/1/2019		19,165		20,889,850
Laredo Petroleum, Inc.	7.375%	5/1/2022		7,000		7,385,000
Legacy Reserves LP/Finance Corp.†	6.625%	12/1/2021		7,600		7,334,000
Legacy Reserves LP/Finance Corp.†	8.00%	12/1/2020		19,400		20,127,500
LINN Energy LLC/LINN Energy Finance Corp.	7.75%	2/1/2021		18,500		18,638,750
MEG Energy Corp. (Canada)†(b)	6.375%	1/30/2023		4,100		3,997,500
MEG Energy Corp. (Canada)†(b)	6.50%	3/15/2021		18,750		18,679,687
Newfield Exploration Co.	5.625%	7/1/2024		27,550		26,861,250
Oasis Petroleum, Inc.	6.50%	11/1/2021		7,500		7,725,000
Oasis Petroleum, Inc.	7.25%	2/1/2019		20,000		20,950,000
OGX Austria GmbH (Austria)†(b)	8.50%	6/1/2018		31,000		10,075,000
Pacific Rubiales Energy Corp. (Canada)†(b)	5.125%	3/28/2023		9,300		8,835,000

18 See Notes to Financial Statements.

Schedule of Investments (unaudited)(continued)

June 30, 2013

			Principal
	Interest	Maturity	Amount		Fair
Investments	Rate	Date	(000)		Value
Energy: Exploration & Production (continued)
Pan American Energy LLC (Argentina)†(b)	7.875%	5/7/2021	$	5,400	$	5,251,500
PDC Energy, Inc.†	7.75%	10/15/2022		17,800		18,467,500
Plains Exploration & Production Co.	6.50%	11/15/2020		22,250		23,616,283
Plains Exploration & Production Co.	6.875%	2/15/2023		6,200		6,643,263
QEP Resources, Inc.	6.80%	3/1/2020		10,000		11,100,000
QEP Resources, Inc.	6.875%	3/1/2021		8,000		8,660,000
Quicksilver Resources, Inc.	7.125%	4/1/2016		10,000		8,850,000
Range Resources Corp.	5.00%	3/15/2023		13,600		13,362,000
Range Resources Corp.	8.00%	5/15/2019		7,500		8,025,000
SM Energy Co.	6.50%	11/15/2021		10,000		10,550,000
SM Energy Co.	6.50%	1/1/2023		4,200		4,431,000
SM Energy Co.	6.625%	2/15/2019		18,700		19,681,750
Stone Energy Corp.	7.50%	11/15/2022		27,500		28,600,000
W&T Offshore, Inc.	8.50%	6/15/2019		10,275		10,660,313
Whiting Petroleum Corp.	6.50%	10/1/2018		4,200		4,462,500
WPX Energy, Inc.	6.00%	1/15/2022		20,000		20,300,000
Total						667,146,015
Environmental 0.24%
ADS Waste Holdings, Inc.†	8.25%	10/1/2020		5,000		5,125,000
Clean Harbors, Inc.	5.25%	8/1/2020		14,300		14,586,000
Total						19,711,000
Food & Drug Retailers 1.07%
Cencosud SA (Chile)†(b)	4.875%	1/20/2023		4,650		4,581,608
New Albertsons, Inc.	7.45%	8/1/2029		3,500		2,765,000
New Albertsons, Inc.	7.75%	6/15/2026		5,290		4,198,937
Rite Aid Corp.†	6.875%	12/15/2028		2,000		1,830,000
Rite Aid Corp.	7.70%	2/15/2027		27,000		27,135,000
Rite Aid Corp.	9.50%	6/15/2017		10,000		10,390,500
Rite Aid Corp.	10.25%	10/15/2019		10,000		11,300,000
Stater Bros Holdings, Inc.	7.375%	11/15/2018		5,000		5,312,500
Tops Holding Corp./Tops Markets LLC†	8.875%	12/15/2017		14,000		15,225,000
Tops Holding II Corp. PIK†	8.75%	6/15/2018		6,200		6,114,750
Total						88,853,295
Food: Wholesale 1.89%
B&G Foods, Inc.	4.625%	6/1/2021		10,000		9,575,000
BRF SA (Brazil)†(b)	3.95%	5/22/2023		4,250		3,750,625
Bumble Bee Holdco SCA PIK (Luxembourg)†(b)	9.625%	3/15/2018		5,725		5,982,625

See Notes to Financial Statements. 19

Schedule of Investments (unaudited)(continued)

June 30, 2013

			Principal
	Interest	Maturity	Amount		Fair
Investments	Rate	Date	(000)		Value
Food: Wholesale (continued)
Del Monte Corp.	7.625%	2/15/2019	$	18,000	$	18,585,000
Dole Food Co., Inc.	8.75%	7/15/2013		12,000		12,036,000
Hawk Acquisition Sub, Inc.†	4.25%	10/15/2020		7,800		7,478,250
Ingredion, Inc.	4.625%	11/1/2020		8,000		8,474,368
Land O’Lakes, Inc.†	6.00%	11/15/2022		9,750		10,066,875
Michael Foods Holding, Inc. PIK†	8.50%	7/15/2018		4,700		4,852,750
Post Holdings, Inc.	7.375%	2/15/2022		20,000		21,500,000
Shearer’s Foods LLC/Chip Finance Corp.†	9.00%	11/1/2019		10,500		11,156,250
Smithfield Foods, Inc.	6.625%	8/15/2022		4,710		5,075,025
US Foods, Inc.	8.50%	6/30/2019		16,000		16,800,000
Viterra, Inc. (Canada)†(b)	5.95%	8/1/2020		18,250		19,324,104
Wells Enterprises, Inc.†	6.75%	2/1/2020		1,550		1,627,500
Total						156,284,372
Forestry/Paper 0.64%
Longview Fibre Paper & Packaging, Inc.†	8.00%	6/1/2016		14,000		14,612,500
Louisiana-Pacific Corp.	7.50%	6/1/2020		8,000		8,760,000
Millar Western Forest Products Ltd. (Canada)(b)	8.50%	4/1/2021		10,000		9,925,000
Rock-Tenn Co.	3.50%	3/1/2020		5,000		4,899,805
Rock-Tenn Co.	4.90%	3/1/2022		3,248		3,353,508
Weyerhaeuser Co.	7.375%	10/1/2019		10,000		11,824,960
Total						53,375,773
Gaming 2.31%
Boyd Acquisition Sub LLC/Boyd Acquisition Finance Corp.†	8.375%	2/15/2018		12,000		12,540,000
Boyd Gaming Corp.	7.125%	2/1/2016		5,000		4,937,500
Caesars Entertainment Operating Co., Inc.	8.50%	2/15/2020		5,000		4,728,125
CCM Merger, Inc.†	9.125%	5/1/2019		14,000		14,700,000
Downstream Development Authority of the Quapaw Tribe of Oklahoma†	10.50%	7/1/2019		9,250		9,851,250
Graton Economic Development Authority†	9.625%	9/1/2019		20,725		22,797,500
MCE Finance Ltd.†	5.00%	2/15/2021		18,000		16,920,000
MGM Resorts International	7.625%	1/15/2017		7,500		8,231,250
Mohegan Tribal Gaming Authority†	11.50%	11/1/2017		20,000		22,200,000
MTR Gaming Group, Inc. PIK	11.50%	8/1/2019		8,200		8,610,000
Pinnacle Entertainment, Inc.	7.75%	4/1/2022		7,500		7,875,000
River Rock Entertainment Authority (The)	9.00%	11/1/2018		13,168		10,863,600
Rivers Pittsburgh Borrower LP/Rivers Pittsburgh Finance Corp.†	9.50%	6/15/2019		10,157		11,020,345

20 See Notes to Financial Statements.

Schedule of Investments (unaudited)(continued)

June 30, 2013

			Principal
	Interest	Maturity	Amount		Fair
Investments	Rate	Date	(000)		Value
Gaming (continued)
Snoqualmie Entertainment Authority†	9.125%	2/1/2015	$	17,000	$	16,776,875
Sugarhouse HSP Gaming Prop. Mezz. LP/Sugarhouse HSP Gaming Finance Corp.†	6.375%	6/1/2021		14,100		13,712,250
Wynn Las Vegas LLC/Capital Corp.	5.375%	3/15/2022		5,300		5,379,500
Total						191,143,195
Gas Distribution 3.30%
Chesapeake Midstream Partners LP/CHKM
Finance Corp.	6.125%	7/15/2022		5,000		5,087,500
El Paso Corp.	6.50%	9/15/2020		10,000		10,711,370
El Paso Corp.	7.00%	6/15/2017		12,000		13,105,908
El Paso Corp.	7.75%	1/15/2032		10,000		10,674,290
Energy Transfer Partners LP	5.20%	2/1/2022		22,100		23,427,480
Ferrellgas LP/Ferrellgas Finance Corp.	6.50%	5/1/2021		12,000		12,090,000
Ferrellgas Partners LP	8.625%	6/15/2020		9,750		9,969,375
Florida Gas Transmission Co. LLC†	7.90%	5/15/2019		7,700		9,631,807
Hiland Partners LP/Hiland Partners Finance Corp.†	7.25%	10/1/2020		7,400		7,659,000
IFM US Colonial Pipeline 2 LLC†	6.45%	5/1/2021		19,000		20,391,902
Inergy Midstream LP/NRGM Finance Corp.†	6.00%	12/15/2020		3,650		3,540,500
Kinder Morgan Finance Co. LLC†	6.00%	1/15/2018		15,000		15,823,485
LBC Tank Terminals Holding Netherlands BV (Belgium)†(b)	6.875%	5/15/2023		7,900		7,959,250
MarkWest Energy Partners LP/MarkWest Energy Finance Corp.	5.50%	2/15/2023		13,250		13,117,500
MarkWest Energy Partners LP/MarkWest Energy Finance Corp.	6.25%	6/15/2022		3,153		3,263,355
MarkWest Energy Partners LP/MarkWest Energy Finance Corp.	6.75%	11/1/2020		17,000		18,020,000
Martin Midstream Partners LP/Martin Midstream Finance Corp.†	7.25%	2/15/2021		5,000		5,037,500
Northwest Pipeline GP	6.05%	6/15/2018		5,025		5,866,537
Panhandle Eastern Pipeline Co. LP	7.00%	6/15/2018		7,600		9,109,398
Panhandle Eastern Pipeline Co. LP	8.125%	6/1/2019		13,800		16,901,812
Regency Energy Partners LP/Regency Energy Finance Corp.†	4.50%	11/1/2023		5,500		4,991,250
Regency Energy Partners LP/Regency Energy Finance Corp.	5.50%	4/15/2023		5,800		5,742,000
Sabine Pass Liquefaction LLC†	5.625%	2/1/2021		10,000		9,725,000
Suburban Propane Partners LP/Suburban Energy Finance Corp.	7.375%	8/1/2021		22,067		23,060,015

See Notes to Financial Statements. 21

Schedule of Investments (unaudited)(continued)

June 30, 2013

			Principal
	Interest	Maturity	Amount		Fair
Investments	Rate	Date	(000)		Value
Gas Distribution (continued)
Tesoro Logistics LP/Tesoro Logistics Finance Corp.†	5.875%	10/1/2020	$	8,525	$	8,439,750
Total						273,345,984
Health Facilities 3.48%
Amsurg Corp.	5.625%	11/30/2020		10,000		10,050,000
Capella Healthcare, Inc.	9.25%	7/1/2017		14,000		14,875,000
Community Health Systems, Inc.	8.00%	11/15/2019		55,000		58,781,250
DaVita, Inc.	5.75%	8/15/2022		21,500		21,553,750
Dignity Health	4.50%	11/1/2042		10,000		8,812,660
HCA Holdings, Inc.	6.25%	2/15/2021		5,000		5,112,500
HCA Holdings, Inc.	7.75%	5/15/2021		30,000		32,475,000
HCA, Inc.	6.50%	2/15/2020		20,000		21,687,500
HCA, Inc.	7.50%	2/15/2022		25,000		27,750,000
HCA, Inc.	7.69%	6/15/2025		5,935		6,439,475
HealthSouth Corp.	8.125%	2/15/2020		21,000		22,837,500
IASIS Healthcare LLC/IASIS Capital Corp.	8.375%	5/15/2019		5,000		5,071,875
Omega Healthcare Investors, Inc.	6.75%	10/15/2022		6,900		7,383,000
Omega Healthcare Investors, Inc.	7.50%	2/15/2020		7,750		8,292,500
Tenet Healthcare Corp.	9.25%	2/1/2015		5,000		5,431,250
Vanguard Health Holding Co. II LLC/Vanguard Holding Co. II, Inc.	8.00%	2/1/2018		30,000		31,950,000
Total						288,503,260
Health Services 0.44%
Service Corp. International†(h)	5.375%	1/15/2022		3,900		3,900,000
STHI Holding Corp.†	8.00%	3/15/2018		12,500		13,562,500
Truven Health Analytics, Inc.†	10.625%	6/1/2020		17,000		18,785,000
Total						36,247,500
Hotels 0.34%
Host Hotels & Resorts LP	5.25%	3/15/2022		3,880		4,026,447
RHP Hotel Properties LP/RHP Finance Corp.†	5.00%	4/15/2021		5,000		4,875,000
Starwood Hotels & Resorts Worldwide, Inc.	6.75%	5/15/2018		8,500		10,060,736
Wyndham Worldwide Corp.	3.90%	3/1/2023		10,000		9,546,200
Total						28,508,383
Household & Leisure Products 0.53%
American Standard Americas†	10.75%	1/15/2016		12,675		13,372,125
BC Mountain LLC/BC Mountain Finance, Inc.†	7.00%	2/1/2021		9,675		9,892,687
RSI Home Products, Inc.†	6.875%	3/1/2018		5,000		5,137,500

22 See Notes to Financial Statements.

Schedule of Investments (unaudited)(continued)

June 30, 2013

			Principal
	Interest	Maturity	Amount		Fair
Investments	Rate	Date	(000)		Value
Household & Leisure Products (continued)
Serta Simmons Holdings LLC†	8.125%	10/1/2020	$	15,000	$	15,337,500
Total						43,739,812
Insurance Brokerage 0.31%
A-S Co-Issuer Subsidiary, Inc./A-S Merger Sub LLC†	7.875%	12/15/2020		10,235		10,337,350
HUB International Ltd.†	8.125%	10/15/2018		14,500		15,152,500
Total						25,489,850
Integrated Energy 0.35%
Alta Wind Holdings LLC†	7.00%	6/30/2035		10,439		11,004,310
LUKOIL International Finance BV (Netherlands)†(b)	6.656%	6/7/2022		9,000		9,832,500
Rosneft Oil Co via Rosneft International Finance Ltd. (Ireland)†(b)	4.199%	3/6/2022		9,000		8,361,000
Total						29,197,810
Investments & Miscellaneous Financial Services 1.27%
FMR LLC†	5.35%	11/15/2021		14,800		16,067,546
KKR Group Finance Co.†	6.375%	9/29/2020		10,900		12,407,176
Legg Mason, Inc.	5.50%	5/21/2019		10,000		10,317,550
Neuberger Berman Group LLC/Neuberger Berman Finance Corp.†	5.625%	3/15/2020		3,700		3,848,000
Neuberger Berman Group LLC/Neuberger Berman Finance Corp.†	5.875%	3/15/2022		15,000		15,375,000
Nuveen Investments, Inc.†	9.125%	10/15/2017		27,000		27,202,500
Nuveen Investments, Inc.†	9.50%	10/15/2020		20,000		20,000,000
Total						105,217,772
Leisure 0.48%
Cedar Fair LP/Canada’s Wonderland Co./Magnum Management Corp.†	5.25%	3/15/2021		10,000		9,637,500
MU Finance plc (United Kingdom)†(b)	8.375%	2/1/2017		14,110		15,097,368
Royal Caribbean Cruises Ltd.	5.25%	11/15/2022		8,850		8,717,250
Viking Cruises Ltd.†	8.50%	10/15/2022		6,000		6,600,000
Total						40,052,118
Life Insurance 0.24%
MetLife Capital Trust X†	9.25%	4/8/2038		15,075		19,974,375
Machinery 1.14%
Cleaver-Brooks, Inc.†	8.75%	12/15/2019		10,500		11,051,250
Flowserve Corp.	3.50%	9/15/2022		3,880		3,733,697

See Notes to Financial Statements. 23

Schedule of Investments (unaudited)(continued)

June 30, 2013

			Principal
	Interest	Maturity	Amount		Fair
Investments	Rate	Date	(000)		Value
Machinery (continued)
Manitowoc Co., Inc. (The)	5.875%	10/15/2022	$	11,750	$	11,867,500
Manitowoc Co., Inc. (The)	8.50%	11/1/2020		25,000		27,375,000
Mcron Finance Sub LLC/Mcron Finance Corp.†	8.375%	5/15/2019		16,500		16,912,500
Milacron LLC/Mcron Finance Corp.†	7.75%	2/15/2021		11,725		11,754,313
Steelcase, Inc.	6.375%	2/15/2021		11,175		12,088,444
Total						94,782,704
Managed Care 0.20%
Centene Corp.	5.75%	6/1/2017		15,525		16,340,063
Media: Broadcast 0.87%
Allbritton Communications Co.	8.00%	5/15/2018		5,000		5,337,500
AMC Networks, Inc.	4.75%	12/15/2022		10,960		10,631,200
AMC Networks, Inc.	7.75%	7/15/2021		12,000		13,170,000
Clear Channel Communications, Inc.	4.90%	5/15/2015		3,000		2,790,000
Clear Channel Communications, Inc.†	9.00%	12/15/2019		14,000		13,650,000
Clear Channel Communications, Inc.†	11.25%	3/1/2021		17,500		18,331,250
LIN Television Corp.	8.375%	4/15/2018		7,500		8,015,625
Total						71,925,575
Media: Cable 3.41%
Cablevision Systems Corp.	5.875%	9/15/2022		28,000		27,230,000
CCO Holdings LLC/CCO Holdings Capital Corp.†	5.25%	3/15/2021		8,100		8,019,000
CCO Holdings LLC/CCO Holdings Capital Corp.†	5.75%	9/1/2023		11,500		11,183,750
CCO Holdings LLC/CCO Holdings Capital Corp.	8.125%	4/30/2020		17,500		19,206,250
CSC Holdings LLC	8.625%	2/15/2019		7,375		8,555,000
DISH DBS Corp.†	4.25%	4/1/2018		12,136		11,953,960
DISH DBS Corp.	4.625%	7/15/2017		7,864		7,942,640
DISH DBS Corp.†	5.125%	5/1/2020		15,600		15,366,000
DISH DBS Corp.	5.875%	7/15/2022		15,000		15,300,000
DISH DBS Corp.	6.75%	6/1/2021		16,650		17,773,875
Harron Communications LP/Harron Finance Corp.†	9.125%	4/1/2020		6,600		7,161,000
Mediacom Broadband LLC/Mediacom Broadband Corp.	6.375%	4/1/2023		26,925		26,925,000
Mediacom Communications Corp.	9.125%	8/15/2019		32,450		35,046,000
Nara Cable Funding Ltd. (Ireland)†(b)	8.875%	12/1/2018		8,550		8,934,750
Ono Finance II plc (Ireland)†(b)	10.875%	7/15/2019		7,075		7,393,375
Unitymedia Hessen GmbH & Co. KG/ Unitymedia NRW GmbH (Germany)†(a)	5.50%	9/15/2022	EUR	6,000		7,595,125

24 See Notes to Financial Statements.

Schedule of Investments (unaudited)(continued)

June 30, 2013

			Principal
	Interest	Maturity	Amount		Fair
Investments	Rate	Date	(000)		Value
Media: Cable (continued)
Unitymedia Hessen GmbH & Co. KG/ Unitymedia NRW GmbH (Germany)†(b)	5.50%	1/15/2023	$	11,625	$	11,043,750
Unitymedia Hessen GmbH & Co. KG/ Unitymedia NRW GmbH (Germany)†(b)	7.50%	3/15/2019		4,450		4,705,875
UPCB Finance V Ltd.†	7.25%	11/15/2021		14,000		14,875,000
Virgin Media Finance plc (United Kingdom)(b)	8.375%	10/15/2019		15,000		16,350,000
Total						282,560,350
Media: Diversified 0.17%
Netflix, Inc.†	5.375%	2/1/2021		14,000		14,000,000
Media: Services 0.64%
Affinion Group, Inc.	11.50%	10/15/2015		18,500		14,337,500
Griffey Intermediate, Inc./Griffey Finance Sub LLC†	7.00%	10/15/2020		16,300		15,811,000
Southern Graphics, Inc.†	8.375%	10/15/2020		10,000		10,350,000
WMG Acquisition Corp.†	6.00%	1/15/2021		3,870		3,957,075
WMG Acquisition Corp.	11.50%	10/1/2018		7,500		8,625,000
Total						53,080,575
Medical Products 0.91%
Biomet, Inc.	6.50%	8/1/2020		31,500		32,622,187
Grifols, Inc.	8.25%	2/1/2018		5,100		5,508,000
Hologic, Inc.	6.25%	8/1/2020		9,000		9,376,875
Kinetic Concepts, Inc./KCI USA, Inc.	10.50%	11/1/2018		7,500		8,100,000
Life Technologies Corp.	6.00%	3/1/2020		5,300		5,979,116
Mallinckrodt International Finance SA†	4.75%	4/15/2023		5,750		5,488,007
Polymer Group, Inc.	7.75%	2/1/2019		8,000		8,360,000
Total						75,434,185
Metals/Mining (Excluding Steel) 1.14%
Allied Nevada Gold Corp.†(a)	8.75%	6/1/2019	CAD	4,300		3,536,655
Arch Coal, Inc.	7.25%	6/15/2021	$	15,000		12,300,000
Boart Longyear Management Pty Ltd. (Australia)†(b)	7.00%	4/1/2021		7,500		7,106,250
Cliffs Natural Resources, Inc.	5.90%	3/15/2020		8,000		7,719,336
FMG Resources (August 2006) Pty Ltd. (Australia)†(b)	8.25%	11/1/2019		23,000		23,805,000
Gold Fields Orogen Holding BVI Ltd.†	4.875%	10/7/2020		12,500		10,578,000
James River Coal Co.	7.875%	4/1/2019		5,000		2,275,000
KGHM International Ltd. (Canada)†(b)	7.75%	6/15/2019		6,500		6,630,000
Mirabela Nickel Ltd. (Australia)†(b)	8.75%	4/15/2018		15,875		12,700,000
New Gold, Inc. (Canada)†(b)	6.25%	11/15/2022		3,700		3,561,250

See Notes to Financial Statements. 25

Schedule of Investments (unaudited)(continued)

June 30, 2013

			Principal
	Interest	Maturity	Amount		Fair
Investments	Rate	Date	(000)		Value
Metals/Mining (Excluding Steel) (continued)
Teck Resources Ltd. (Canada)(b)	4.75%	1/15/2022	$	4,675	$	4,657,665
Total						94,869,156
Monoline Insurance 0.22%
Fidelity National Financial, Inc.	6.60%	5/15/2017		16,250		18,026,580
Oil Field Equipment & Services 1.88%
BakerCorp International, Inc.	8.25%	6/1/2019		4,400		4,334,000
Basic Energy Services, Inc.	7.75%	2/15/2019		8,000		7,940,000
Dresser-Rand Group, Inc.	6.50%	5/1/2021		16,000		17,040,000
FMC Technologies, Inc.	3.45%	10/1/2022		6,475		6,214,737
Gulfmark Offshore, Inc.	6.375%	3/15/2022		16,800		16,758,000
Hornbeck Offshore Services, Inc.†	5.00%	3/1/2021		12,000		11,160,000
Hornbeck Offshore Services, Inc.	5.875%	4/1/2020		20,000		20,200,000
Key Energy Services, Inc.	6.75%	3/1/2021		5,750		5,548,750
Offshore Group Investment Ltd.†	7.125%	4/1/2023		6,200		6,122,500
Oil States International, Inc.†	5.125%	1/15/2023		3,000		3,150,000
Oil States International, Inc.	6.50%	6/1/2019		16,000		16,640,000
Precision Drilling Corp. (Canada)(b)	6.50%	12/15/2021		3,250		3,306,875
Precision Drilling Corp. (Canada)(b)	6.625%	11/15/2020		2,825		2,881,500
SEACOR Holdings, Inc.	7.375%	10/1/2019		19,750		20,863,110
SESI LLC	6.375%	5/1/2019		6,700		6,951,250
Trinidad Drilling Ltd. (Canada)†(b)	7.875%	1/15/2019		6,600		6,963,000
Total						156,073,722
Oil Refining & Marketing 0.32%
Tesoro Corp.	5.375%	10/1/2022		10,000		10,175,000
Tesoro Corp.	9.75%	6/1/2019		15,000		16,650,000
Total						26,825,000
Packaging 2.51%
AEP Industries, Inc.	8.25%	4/15/2019		15,000		16,218,750
Ardagh Packaging Finance plc (Ireland)†(b)	9.125%	10/15/2020		9,500		10,176,875
Ball Corp.	4.00%	11/15/2023		12,000		11,145,000
Crown Cork & Seal Co., Inc.	7.375%	12/15/2026		46,570		51,459,850
Packaging Dynamics Corp.†	8.75%	2/1/2016		6,525		6,622,875
Reynolds Group Issuer, Inc./Reynolds Group Issuer LLC/Reynolds Group Issuer (Luxembourg) SA	5.75%	10/15/2020		10,000		10,100,000
Reynolds Group Issuer, Inc./Reynolds Group Issuer LLC/Reynolds Group Issuer (Luxembourg) SA	8.50%	5/15/2018		45,000		46,575,000

26 See Notes to Financial Statements.

Schedule of Investments (unaudited)(continued)

June 30, 2013

			Principal
	Interest	Maturity	Amount		Fair
Investments	Rate	Date	(000)		Value
Packaging (continued)
Reynolds Group Issuer, Inc./Reynolds Group Issuer LLC/Reynolds Group Issuer (Luxembourg) SA	9.875%	8/15/2019	$	8,225	$	8,841,875
Sealed Air Corp.†	6.875%	7/15/2033		25,000		23,875,000
Sealed Air Corp.†	8.375%	9/15/2021		13,500		15,322,500
Tekni-Plex, Inc.†	9.75%	6/1/2019		7,235		7,723,362
Total						208,061,087
Pharmaceuticals 0.46%
Sky Growth Acquisition Corp.†	7.375%	10/15/2020		23,100		23,793,000
Warner Chilcott Co. LLC/Warner Chilcott Finance LLC (Puerto Rico)(b)	7.75%	9/15/2018		10,000		10,850,000
Zoetis, Inc.†	1.875%	2/1/2018		4,000		3,920,072
Total						38,563,072
Printing & Publishing 0.15%
ProQuest LLC/ProQuest Notes Co.†	9.00%	10/15/2018		12,625		12,688,125
Property & Casualty 0.04%
Liberty Mutual Group, Inc.†	5.00%	6/1/2021		3,000		3,169,692
Railroads 0.45%
Florida East Coast Railway Corp.	8.125%	2/1/2017		20,000		21,250,000
Kansas City Southern de Mexico SA de CV (Mexico)†(b)	2.35%	5/15/2020		11,750		11,385,480
Watco Cos. LLC/Watco Finance Corp.†	6.375%	4/1/2023		4,700		4,700,000
Total						37,335,480
Real Estate Development & Management 0.20%
Brookfield Residential Properties, Inc. (Canada)†(b)	6.50%	12/15/2020		9,000		9,112,500
Jones Lang LaSalle, Inc.	4.40%	11/15/2022		7,200		7,078,572
Total						16,191,072
Real Estate Investment Trusts 1.48%
Camden Property Trust	2.95%	12/15/2022		10,000		9,104,000
DDR Corp.	7.875%	9/1/2020		11,000		13,436,335
Goodman Funding Pty Ltd. (Australia)†(b)	6.00%	3/22/2022		9,600		10,644,250
Goodman Funding Pty Ltd. (Australia)†(b)	6.375%	11/12/2020		10,000		11,210,510
Health Care REIT, Inc.	4.95%	1/15/2021		11,700		12,468,959
Health Care REIT, Inc.	6.125%	4/15/2020		10,000		11,376,030
Kilroy Realty LP	3.80%	1/15/2023		12,230		11,478,650
ProLogis LP(i)	6.875%	3/15/2020		21,000		24,399,438
ProLogis LP	8.65%	5/15/2016		8,150		8,665,812

See Notes to Financial Statements. 27

Schedule of Investments (unaudited)(continued)

June 30, 2013

			Principal
	Interest	Maturity	Amount		Fair
Investments	Rate	Date	(000)		Value
Real Estate Investment Trusts (continued)
Washington Real Estate Investment Trust	3.95%	10/15/2022	$	10,000	$	9,546,880
Total						122,330,864
Restaurants 0.24%
DineEquity, Inc.	9.50%	10/30/2018		8,000		8,920,000
Fiesta Restaurant Group, Inc.	8.875%	8/15/2016		4,380		4,686,600
Seminole Hard Rock Entertainment, Inc./ Seminole Hard Rock International LLC†	5.875%	5/15/2021		6,700		6,511,563
Total						20,118,163
Software/Services 4.12%
Alliance Data Systems Corp.†	6.375%	4/1/2020		53,000		54,855,000
Ceridian Corp.†	11.00%	3/15/2021		2,700		2,997,000
Ceridian Corp.	11.25%	11/15/2015		5,750		5,857,813
Dun & Bradstreet Corp. (The)	4.375%	12/1/2022		19,425		18,800,350
First Data Corp.†	8.25%	1/15/2021		27,000		27,675,000
First Data Corp.	11.25%	3/31/2016		5,148		5,057,910
First Data Corp.†	11.25%	1/15/2021		14,325		14,360,812
First Data Corp.	12.625%	1/15/2021		48,100		51,106,250
Infor US, Inc.	9.375%	4/1/2019		10,000		10,887,500
NeuStar, Inc.†	4.50%	1/15/2023		14,380		13,661,000
Nuance Communications, Inc.†	5.375%	8/15/2020		18,000		17,685,000
SERENA Software, Inc.	10.375%	3/15/2016		6,099		6,038,010
Sophia LP/Sophia Finance, Inc.†	9.75%	1/15/2019		20,000		21,500,000
SRA International, Inc.	11.00%	10/1/2019		7,475		7,774,000
SunGard Data Systems, Inc.†	6.625%	11/1/2019		31,500		31,815,000
SunGard Data Systems, Inc.	7.375%	11/15/2018		14,000		14,840,000
SunGard Data Systems, Inc.	7.625%	11/15/2020		6,100		6,496,500
Syniverse Holdings, Inc.	9.125%	1/15/2019		12,500		13,406,250
VeriSign, Inc.†	4.625%	5/1/2023		17,500		17,062,500
Total						341,875,895
Specialty Retail 2.99%
Brookstone Co., Inc.†	13.00%	10/15/2014		7,058		5,964,010
Brown Shoe Co., Inc.	7.125%	5/15/2019		12,500		13,125,000
CDR DB Sub, Inc.†	7.75%	10/15/2020		30,000		30,225,000
Claire’s Stores, Inc.†	7.75%	6/1/2020		6,000		5,835,000
Claire’s Stores, Inc.	8.875%	3/15/2019		7,000		7,385,000
Claire’s Stores, Inc.†	9.00%	3/15/2019		9,700		10,718,500
CST Brands, Inc.†	5.00%	5/1/2023		12,000		11,760,000

28 See Notes to Financial Statements.

Schedule of Investments (unaudited)(continued)

June 30, 2013

			Principal
	Interest	Maturity	Amount		Fair
Investments	Rate	Date	(000)		Value
Specialty Retail (continued)
J. Crew Group, Inc.	8.125%	3/1/2019	$	14,000	$	14,770,000
Limited Brands, Inc.	7.00%	5/1/2020		15,000		16,725,000
Limited Brands, Inc.	7.60%	7/15/2037		7,500		7,743,750
Limited Brands, Inc.	8.50%	6/15/2019		12,500		14,562,500
LKQ Corp.†	4.75%	5/15/2023		9,950		9,527,125
Michaels Stores, Inc.	7.75%	11/1/2018		7,400		7,955,000
PETCO Animal Supplies, Inc.†	9.25%	12/1/2018		10,000		10,825,000
PETCO Holdings, Inc. PIK†	8.50%	10/15/2017		5,000		5,125,000
QVC, Inc.†	4.375%	3/15/2023		7,750		7,242,964
QVC, Inc.†	7.375%	10/15/2020		17,500		19,099,815
Rent-A-Center, Inc.†	4.75%	5/1/2021		5,450		5,191,125
Sally Holdings LLC/Sally Capital, Inc.	5.75%	6/1/2022		7,700		7,854,000
Toys “R” Us Property Co. I LLC	10.75%	7/15/2017		20,000		21,200,000
Toys “R” Us Property Co. II LLC	8.50%	12/1/2017		14,000		14,612,500
Total						247,446,289
Steel Producers/Products 0.64%
Allegheny Ludlum Corp.	6.95%	12/15/2025		13,875		15,014,789
Allegheny Technologies, Inc.	9.375%	6/1/2019		10,200		12,601,274
ArcelorMittal (Luxembourg)(b)	6.00%	3/1/2021		5,000		5,012,500
Essar Steel Algoma, Inc. (Canada)†(b)	9.375%	3/15/2015		8,000		7,640,000
Essar Steel Algoma, Inc. (Canada)†(b)	9.875%	6/15/2015		6,500		5,070,000
JMC Steel Group†	8.25%	3/15/2018		8,000		7,860,000
Total						53,198,563
Support: Services 2.27%
Ashtead Capital, Inc.†	6.50%	7/15/2022		3,600		3,771,000
Avis Budget Car Rental	9.75%	3/15/2020		5,500		6,352,500
Compiler Finance Sub, Inc.†	7.00%	5/1/2021		18,700		18,232,500
Corrections Corp. of America†	4.125%	4/1/2020		3,600		3,528,000
FTI Consulting, Inc.†	6.00%	11/15/2022		9,300		9,462,750
FTI Consulting, Inc.	6.75%	10/1/2020		14,350		15,175,125
Hertz Corp. (The)	5.875%	10/15/2020		2,100		2,173,500
Hertz Corp. (The)	7.50%	10/15/2018		25,000		26,937,500
Iron Mountain, Inc.	5.75%	8/15/2024		9,250		8,718,125
Iron Mountain, Inc.	7.75%	10/1/2019		10,400		11,232,000
Iron Mountain, Inc.	8.375%	8/15/2021		11,250		12,023,437
NES Rentals Holdings, Inc.†	7.875%	5/1/2018		7,800		7,722,000
NESCO LLC/NESCO Holdings Corp.†	11.75%	4/15/2017		12,400		13,516,000

See Notes to Financial Statements. 29

Schedule of Investments (unaudited)(continued)

June 30, 2013

			Principal
	Interest	Maturity	Amount		Fair
Investments	Rate	Date	(000)		Value
Support: Services (continued)
RSC Equipment Rental, Inc./RSC Holdings III LLC	8.25%	2/1/2021	$	10,700	$	11,770,000
Sotheby’s†	5.25%	10/1/2022		20,000		19,500,000
United Rentals North America, Inc.	6.125%	6/15/2023		7,000		7,000,000
United Rentals North America, Inc.	7.625%	4/15/2022		10,000		10,875,000
Total						187,989,437
Telecommunications Equipment 0.42%
Alcatel-Lucent USA, Inc.	6.45%	3/15/2029		5,000		3,812,500
CommScope Holding Co., Inc. PIK†	6.625%	6/1/2020		9,800		9,408,000
CommScope, Inc.†	8.25%	1/15/2019		20,000		21,450,000
Total						34,670,500
Telecommunications: Integrated/Services 3.58%
CenturyLink, Inc.	6.15%	9/15/2019		15,000		15,675,000
CenturyLink, Inc.	6.45%	6/15/2021		30,000		31,425,000
DigitalGlobe, Inc.†	5.25%	2/1/2021		18,500		17,852,500
Dycom Investments, Inc.	7.125%	1/15/2021		16,750		17,838,750
Equinix, Inc.	5.375%	4/1/2023		3,950		3,890,750
Equinix, Inc.	7.00%	7/15/2021		12,150		13,228,312
Frontier Communications Corp.	7.125%	1/15/2023		3,950		3,945,063
Frontier Communications Corp.	7.625%	4/15/2024		7,800		7,858,500
Frontier Communications Corp.	9.25%	7/1/2021		7,275		8,348,063
GCI, Inc.	6.75%	6/1/2021		5,000		4,700,000
Hellas II (Luxembourg)†(b)(c)	Zero Coupon	1/15/2015		15,000		1,500
Hughes Satellite Systems Corp.	7.625%	6/15/2021		27,500		29,356,250
Intelsat Jackson Holdings SA (Luxembourg)(b)	7.25%	4/1/2019		3,500		3,679,375
Intelsat Jackson Holdings SA (Luxembourg)(b)	7.50%	4/1/2021		19,275		20,335,125
Intelsat Luxembourg SA (Luxembourg)†(b)	6.75%	6/1/2018		2,900		2,936,250
Intelsat Luxembourg SA (Luxembourg)†(b)	7.75%	6/1/2021		17,075		17,309,781
Intelsat Luxembourg SA (Luxembourg)†(b)	8.125%	6/1/2023		7,300		7,564,625
MasTec, Inc.	4.875%	3/15/2023		12,950		12,334,875
Sable International Finance Ltd.†	8.75%	2/1/2020		12,500		13,812,500
Softbank Corp. (Japan)†(b)	4.50%	4/15/2020		13,400		12,917,600
Telemar Norte Leste SA (Brazil)†(b)	5.50%	10/23/2020		9,532		8,912,420
Windstream Corp.	7.00%	3/15/2019		30,250		30,401,250
Windstream Corp.	7.50%	4/1/2023		12,000		12,240,000
Total						296,563,489

30 See Notes to Financial Statements.

Schedule of Investments (unaudited)(continued)

June 30, 2013

			Principal
	Interest	Maturity	Amount		Fair
Investments	Rate	Date	(000)		Value
Telecommunications: Wireless 4.65%
American Tower Corp.	4.70%	3/15/2022	$	20,300	$	20,510,775
CC Holdings GS V LLC/Crown Castle GS III Corp.	3.849%	4/15/2023		15,310		14,465,577
Clearwire Communications LLC/Clearwire Finance, Inc.†	12.00%	12/1/2015		7,500		7,987,500
Clearwire Communications LLC/Clearwire Finance, Inc.†	14.75%	12/1/2016		2,000		2,740,000
Cricket Communications, Inc.	7.75%	10/15/2020		29,000		27,985,000
Crown Castle International Corp.	5.25%	1/15/2023		6,825		6,577,594
Digicel Group Ltd. (Jamaica)†(b)	10.50%	4/15/2018		18,432		19,630,080
Digicel Ltd. (Jamaica)†(b)	7.00%	2/15/2020		16,500		16,747,500
MetroPCS Wireless, Inc.	6.625%	11/15/2020		15,000		15,618,750
MetroPCS Wireless, Inc.	7.875%	9/1/2018		20,000		21,400,000
Millicom International Cellular SA (Luxembourg)†(b)	4.75%	5/22/2020		5,350		5,097,266
NII Capital Corp.	8.875%	12/15/2019		14,000		11,970,000
NII Capital Corp.	10.00%	8/15/2016		2,500		2,437,500
SBA Telecommunications, Inc.†	5.75%	7/15/2020		9,000		9,056,250
SBA Telecommunications, Inc.	8.25%	8/15/2019		6,500		7,068,750
SES (Luxembourg)†(b)	3.60%	4/4/2023		8,600		8,383,925
Sprint Capital Corp.	6.90%	5/1/2019		50,000		52,250,000
Sprint Nextel Corp.†	7.00%	3/1/2020		15,500		16,778,750
Sprint Nextel Corp.	7.00%	8/15/2020		23,600		25,016,000
Sprint Nextel Corp.	9.125%	3/1/2017		15,000		17,325,000
Telemovil Finance Co., Ltd. (El Salvador)†(b)	8.00%	10/1/2017		11,450		12,165,625
ViaSat, Inc.	6.875%	6/15/2020		10,000		10,600,000
Vimpel Communications via VIP Finance Ireland Ltd. OJSC (Luxembourg)†(b)	7.748%	2/2/2021		8,550		9,137,812
Wind Acquisition Finance SA (Italy)†(b)	7.25%	2/15/2018		8,500		8,606,250
Wind Acquisition Finance SA (Italy)†(b)	11.75%	7/15/2017		34,000		35,530,000
Total						385,085,904
Theaters & Entertainment 0.19%
Live Nation Entertainment, Inc.†	8.125%	5/15/2018		15,000		15,975,000
Transportation (Excluding Air/Rail) 0.28%
Asciano Finance Ltd. (Australia)†(b)	4.625%	9/23/2020		9,750		9,839,856
Great Lakes Dredge & Dock Corp.	7.375%	2/1/2019		13,000		13,536,250
Total						23,376,106
Total High Yield Corporate Bonds (cost $6,562,932,911)						6,731,753,635

See Notes to Financial Statements. 31

Schedule of Investments (unaudited)(continued)

June 30, 2013

			Principal
	Interest	Maturity	Amount		Fair
Investments	Rate	Date	(000)		Value
MUNICIPAL BOND 0.20%
Other Revenue
NYC Indus Dev Agy, NY† (cost $12,000,000)	11.00%	3/1/2029	$	12,000	$	16,917,960
	Dividend			Shares
	Rate			(000)
PREFERRED STOCKS 0.58%
Agency/Government Related 0.03%
Fannie Mae*	—			481		2,190,370
Banking 0.36%
GMAC Capital Trust I	8.125%			275		7,163,750
Texas Capital Bancshares, Inc.	6.50%			467		11,424,585
U.S. Bancorp	3.50%			13		11,197,062
Total						29,785,397
Forestry/Paper 0.11%
Weyerhaeuser Co.	6.375%			177		9,049,174
Property & Casualty 0.08%
Allstate Corp. (The)	5.10%			274		7,017,802
Total Preferred Stocks (cost $55,598,301)						48,042,743
	Exercise	Expiration
	Price	Date
WARRANTS 0.11%
Auto Parts & Equipment 0.02%
Cooper-Standard Holdings, Inc.*	$27.33	11/27/2017		84		1,753,563
Media: Broadcast 0.01%
ION Media Networks, Inc.*(j)	687.00	12/18/2016		2		243,750
ION Media Networks, Inc.*(j)	500.00	12/18/2016		2		612,250
Total						856,000
Media: Cable 0.08%
Charter Communications, Inc.*	46.86	11/30/2014		84		6,726,240
Total Warrants (cost $11,220,353)						9,335,803
Total Long-Term Investments (cost $7,998,225,746)						8,217,474,271

32 See Notes to Financial Statements.

Schedule of Investments (unaudited)(continued)

June 30, 2013

			Principal
	Interest	Maturity	Amount		Fair
Investments	Rate	Date	(000)		Value
SHORT-TERM INVESTMENTS 0.47%
CONVERTIBLE BONDS 0.15%
Health Services 0.06%
LifePoint Hospitals, Inc.	3.50%	5/15/2014	$	5,000	$	5,431,250
Real Estate Investment Trusts 0.09%
Boston Properties LP†	3.625%	2/15/2014		7,000		7,240,625
Total Convertible Bonds (cost $12,883,308)						12,671,875
REPURCHASE AGREEMENT 0.32%
Repurchase Agreement dated 6/28/2013, 0.01% due 7/1/2013 with Fixed Income Clearing Corp. collateralized by $27,050,000 of U.S. Treasury Note at 1.00% due 10/31/2016; value: $27,243,408 proceeds: $26,709,233 (cost $26,709,211)				26,709		26,709,211
Total Short-Term Investments (cost $39,592,519)						39,381,086
Total Investments in Securities 99.62% (cost $8,037,818,265)						8,256,855,357
Cash, Foreign Cash and Other Assets in Excess of Liabilities(k) 0.38%						31,173,314
Net Assets 100.00%					$	8,288,028,671

See Notes to Financial Statements. 33

Schedule of Investments (unaudited)(continued)

June 30, 2013

CAD	Canadian dollar.
CHF	Swiss franc.
EUR	euro.
GBP	British pound.
ADR	American Depositary Receipt.
ETF	Exchange Traded Fund.
PIK	Payment-in-kind.
*	Non-income producing security.
†	Security was purchased pursuant to Rule 144A under the Securities Act of 1933 and, unless registered under such Act or exempted from registration, may only be resold to qualified institutional buyers.
~	Deferred interest debentures pay the stated rate, after which they pay a predetermined interest rate.
(a)	Investment in non-U.S. dollar denominated securities.
(b)	Foreign security traded in U.S. dollars.
(c)	Defaulted security.
(d)	Floating Rate Loans in which the Fund invests generally pay interest at rates which are periodically re-determined at a margin above the London Interbank Offered Rate (“LIBOR”) or the prime rate offered by major U.S. banks. The rate shown is the rate(s) in effect at June 30, 2013.
(e)	Security is perpetual in nature and has no stated maturity.
(f)	To-be-announced (“TBA”). Security purchased on a forward commitment basis with an approximate principal and maturity date. Actual principal and maturity will be determined upon settlement when the specific mortgage pools are assigned.
(g)	Debenture pays interest at an annual fixed rate of 8.00% through June 15, 2020. Thereafter, interest will be paid at an annual floating rate of 3-month LIBOR plus 6.405% through December 29, 2049. This debenture is subject to full redemption at the option of the issuer any time prior to December 29, 2049.
(h)	Securities purchased on a when-issued basis (See Note 2(i)).
(i)	Security has been partially segregated to cover margin requirements for open futures contracts as of June 30, 2013.
(j)	Restricted securities of ION Media Networks, Inc. acquired through private placement are as follows:

Investment Type	Acquisition Date	Acquired Shares	Cost on Acquisition Date	Fair value per share at June 30, 2013
Warrant	April 15, 2011	1,950	$4,318,663	$125.00
Warrant	April 15, 2011	1,975	5,785,009	310.00

^(k) Cash, Foreign Cash and Other Assets in Excess of Liabilities include net unrealized appreciation on open futures contracts and forward foreign currency exchange contracts as follows:

Open Futures Contracts at June 30, 2013:

Type	Expiration	Contracts	Position	Fair Value			Unrealized Appreciation
U.S. 10-Year Treasury Note	September 2013	1,000	Short	$	(126,562,500	)	$	3,105,541

Open Forward Foreign Currency Exchange Contracts at June 30, 2013:

Forward Foreign Currency  Exchange Contracts	Transaction Type	Counterparty	Expiration Date	Foreign Currency	U.S. $ Cost on Origination Date		U.S. $ Current Value		Unrealized Appreciation
British pound	Sell	J.P. Morgan	10/24/2013	4,780,000		$   7,391,620	$	7,264,886		$	126,734
euro	Sell	J.P. Morgan	9/11/2013	15,369,000		20,344,591		20,011,193			333,398
euro	Sell	UBS AG	9/11/2013	25,278,000		33,440,999		32,913,197			527,802
Unrealized Appreciation on Forward Foreign Currency Exchange Contracts										$	987,934

34 See Notes to Financial Statements.

Schedule of Investments (unaudited)(continued)

June 30, 2013

The following is a summary of the inputs used as of June 30, 2013 in valuing the Fund’s investments carried at fair value⁽¹⁾:

Investment Type(2)	Level 1			Level 2			Level 3		Total
Common Stocks	$	284,529,079	(3)	$	—		$	—	$	284,529,079
Pharmaceuticals		23,442,028			9,000,000	(4)		—		32,442,028
Convertible Bonds		—			576,751,376			—		576,751,376
Convertible Preferred Stocks
Aerospace/Defense		24,931,200			—			—		24,931,200
Auto Parts & Equipment		—			4,378,970			—		4,378,970
Automakers		14,448,000			—			—		14,448,000
Banking		27,762,500			—			—		27,762,500
Electric: Integrated		34,758,700			—			—		34,758,700
Energy: Exploration & Production		9,548,000			—			—		9,548,000
Food: Wholesale		—			18,180,000			—		18,180,000
Investments & Miscellaneous Financial Services		—			28,875,625			—		28,875,625
Life Insurance		21,916,000			—			—		21,916,000
Metals/Mining (Excluding Steel)		15,357,358			—			—		15,357,358
Railroads		—			14,416,800			—		14,416,800
Real Estate Investment Trusts		3,106,800			—			—		3,106,800
Steel Producers/Products		6,287,950			—			—		6,287,950
Telecommunications: Integrated/ Services		—			2,200,000			—		2,200,000
Floating Rate Loans(5)
Chemicals		—			4,000,000			—		4,000,000
Department Stores		—			4,715,087			—		4,715,087
Diversified Capital Goods		—			5,816,725			—		5,816,725
Electric: Generation		—			7,791,986			—		7,791,986
Electric: Integrated		—			—			6,702,746		6,702,746
Food		—			6,584,386			—		6,584,386
Food & Drug Retailers		—			16,039,369			—		16,039,369
Food/Tobacco		—			11,653,537			—		11,653,537
Food: Wholesale		—			—			7,370,010		7,370,010
Gaming		—			9,266,700			—		9,266,700
Health Facilities		—			10,048,419			—		10,048,419
Health Services		—			9,928,314			—		9,928,314
Investments & Miscellaneous Financial Services		—			6,833,863			5,299,219		12,133,082
Media: Broadcast		—			17,757,128			—		17,757,128
Media: Cable		—			8,423,288			—		8,423,288
Media: Services		—			14,709,489			7,228,309		21,937,798
Real Estate Development & Management		—			788,316			—		788,316
Software/Services		—			21,149,351			—		21,149,351
Foreign Bonds		—			41,931,663			—		41,931,663
Foreign Government Obligations		—			19,239,592			—		19,239,592
Government Sponsored Enterprises Pass-throughs		—			60,928,122			—		60,928,122

See Notes to Financial Statements. 35

Schedule of Investments (unaudited)(concluded)

June 30, 2013

Investment Type(2)	Level 1		Level 2		Level 3		Total
High Yield Corporate Bonds	$	—	$	6,173,515,150	$	—	$	6,173,515,150
Automakers		—		29,792,500		1,500		29,794,000
Banking		—		231,878,746		2,250		231,880,996
Telecommunications:
Integrated/Services		—		296,561,989		1,500		296,563,489
Municipal Bond		—		16,917,960		—		16,917,960
Preferred Stocks		18,257,346		—		—		18,257,346
Banking		18,588,335		11,197,062		—		29,785,397
Warrants		8,479,803		—		856,000		9,335,803
Repurchase Agreement		—		26,709,211		—		26,709,211
Total	$	511,413,099	$	7,717,980,724	$	27,461,534	$	8,256,855,357
Other Financial Instruments
Forward Foreign Currency Exchange Contracts
Assets	$	—	$	987,934	$	—	$	987,934
Liabilities		—		—		—		—
Futures Contracts
Assets		3,105,541		—		—		3,105,541
Liabilities		—		—		—		—
Unfunded Commitments
Assets		—		—		30,148		30,148
Liabilities		—		—		—		—
Total	$	3,105,541	$	987,934	$	30,148	$	4,123,623

(1)	Refer to note 2(l) for a description of fair value measurements and the three-tier hierarchy of inputs.
(2)	See Schedule of Investments for fair values in each industry and identification of foreign issuers and/or geography. The table above is presented by Investment Type. Industries are presented within an Investment Type should such Investment Type include securities classified as two or more levels within the three-tier fair value hierarchy.
(3)	Tribune Co. was categorized as Level 2 on December 31, 2012 due to the use of an observable dealer quotation. This security was listed on the NASDAQ on January 4, 2013. Therefore, as of June 30, 2013, this security was categorized as a Level 1 due to the use of an unadjusted quoted market closing price in an active market. Accordingly, $4,017,421 was transferred from Level 2 to Level 1 during the period ended June 30, 2013.
(4)	On June 30, 2013, Onyx Pharmaceuticals, Inc. announced that it rejected a stock buyout offer. This announcement took place subsequent to the most recent June 28, 2013 closing price on NASDAQ Stock Market LLC. Accordingly, observable input pricing was utilized resulting in a Level 2 valuation. During the period ended June 30, 2013, $5,664,750 was transferred from Level 1 to Level 2.
(5)	Floating Rate Loans categorized as Level 3 are valued based on a single quotation obtained from a dealer. The Fund does not have access to unobservable inputs and therefore cannot disclose such inputs in the valuation.

The following is a reconciliation of investments with unobservable inputs (Level 3) that were used in determining fair value:

Investment Type	Floating Rate Loans			High Yield Corporate Bonds				Unfunded Commitments				Warrants
Balance as of January 1, 2013	$	14,455,169			$	42,975			$	(13,860	)	$	1,081,250
Accrued discounts/premiums		139,951				—				—			—
Realized gain (loss)		11,111				—				—			—
Change in unrealized appreciation/depreciation		946,255				(37,725	)			44,008			(225,250	)
Purchases		5,284,687				—				—			—
Sales		(1,167,149	)			—				—			—
Net transfers in or out of Level 3		6,930,260				—				—			—
Balance as of June 30, 2013	$	26,600,284			$	5,250			$	30,148		$	856,000

36 See Notes to Financial Statements.

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Statement of Assets and Liabilities (unaudited)

June 30, 2013

ASSETS:
Investments in securities, at fair value (cost $8,037,818,265)	$	8,256,855,357
Cash		3,794,556
Foreign cash, at value (cost $593,858)		582,140
Receivables:
Interest and dividends		127,041,826
Capital shares sold		47,217,769
Investment securities sold		31,478,070
Variation margin		78,222
Unrealized appreciation on unfunded commitments		30,148
Unrealized appreciation on forward foreign currency exchange contracts		987,934
Prepaid expenses and other assets		136,891
Total assets		8,468,202,913
LIABILITIES:
Payables:
Investment securities purchased		99,934,272
Capital shares reacquired		32,648,301
12b-1 distribution fees		4,376,371
Management fee		3,162,113
Directors’ fees		1,353,504
Fund administration		279,250
Distributions payable		37,194,569
Accrued expenses		1,225,862
Total liabilities		180,174,242
NET ASSETS	$	8,288,028,671
COMPOSITION OF NET ASSETS:
Paid-in capital	$	7,965,430,078
Distributions in excess of net investment income		(53,681,104	)
Accumulated net realized gain on investments, futures contracts and foreign currency related transactions		153,136,977
Net unrealized appreciation on investments, futures contracts, unfunded commitments and translation of assets and liabilities denominated in foreign currencies		223,142,720
Net Assets	$	8,288,028,671

38 See Notes to Financial Statements.

Statement of Assets and Liabilities (unaudited)(concluded)

June 30, 2013

Net assets by class:
Class A Shares	$	4,680,800,771
Class B Shares	$	186,480,940
Class C Shares	$	1,993,292,304
Class F Shares	$	1,029,721,362
Class I Shares	$	246,252,332
Class P Shares	$	75,338,820
Class R2 Shares	$	3,084,761
Class R3 Shares	$	73,057,381
Outstanding shares by class:
Class A Shares (1.14 billion shares of common stock authorized, $.001 par value)		581,058,628
Class B Shares (500 million shares of common stock authorized, $.001 par value)		23,069,902
Class C Shares (600 million shares of common stock authorized, $.001 par value)		246,831,277
Class F Shares (300 million shares of common stock authorized, $.001 par value)		127,989,098
Class I Shares (300 million shares of common stock authorized, $.001 par value)		30,710,231
Class P Shares (160 million shares of common stock authorized, $.001 par value)		9,157,768
Class R2 Shares (300 million shares of common stock authorized, $.001 par value)		382,918
Class R3 Shares (300 million shares of common stock authorized, $.001 par value)		9,082,593
Net asset value, offering and redemption price per share (Net assets divided by outstanding shares):
Class A Shares-Net asset value		$8.06
Class A Shares-Maximum offering price (Net asset value plus sales charge of 4.75%)		$8.46
Class B Shares-Net asset value		$8.08
Class C Shares-Net asset value		$8.08
Class F Shares-Net asset value		$8.05
Class I Shares-Net asset value		$8.02
Class P Shares-Net asset value		$8.23
Class R2 Shares-Net asset value		$8.06
Class R3 Shares-Net asset value		$8.04

See Notes to Financial Statements. 39

Statement of Operations (unaudited)

For the Six Months Ended June 30, 2013

Investment income:
Dividends	$	9,086,352
Interest		259,488,300
Total investment income		268,574,652
Expenses:
Management fee		19,444,069
12b-1 distribution plan-Class A		8,491,901
12b-1 distribution plan-Class B		1,043,847
12b-1 distribution plan-Class C		10,300,399
12b-1 distribution plan-Class F		524,598
12b-1 distribution plan-Class P		146,354
12b-1 distribution plan-Class R2		9,670
12b-1 distribution plan-Class R3		180,816
Shareholder servicing		4,185,991
Fund administration		1,717,342
Reports to shareholders		298,038
Registration		135,962
Directors’ fees		120,157
Professional		62,288
Custody		61,479
Other		91,306
Gross expenses		46,814,217
Expense reductions (See Note 9)		(4,749	)
Net expenses		46,809,468
Net investment income		221,765,184
Net realized and unrealized gain (loss):
Net realized gain on investments, futures contracts and foreign currency related transactions		146,053,723
Net change in unrealized appreciation/depreciation on investments, futures contracts, unfunded commitments and translation of assets and liabilities denominated in foreign currencies		(229,121,179	)
Net realized and unrealized loss		(83,067,456	)
Net Increase in Net Assets Resulting From Operations	$	138,697,728

40 See Notes to Financial Statements.

Statements of Changes in Net Assets

INCREASE (DECREASE) IN NET ASSETS	For the Six Months Ended June 30, 2013 (unaudited)			For the Year Ended December 31, 2012
Operations:
Net investment income	$	221,765,184		$	470,722,591
Net realized gain on investments, futures contracts and foreign currency related transactions		146,053,723			179,468,950
Net change in unrealized appreciation/depreciation on investments, futures contracts, unfunded commitments and translation of assets and liabilities denominated in foreign currencies		(229,121,179	)		348,185,327
Net increase in net assets resulting from operations		138,697,728			998,376,868
Distributions to shareholders from:
Net investment income
Class A		(131,363,865	)		(276,284,375	)
Class B		(4,980,809	)		(13,966,875	)
Class C		(49,068,410	)		(103,530,439	)
Class F		(29,619,384	)		(60,760,217	)
Class I		(6,970,739	)		(13,613,665	)
Class P		(2,361,439	)		(6,491,817	)
Class R2		(83,305	)		(135,484	)
Class R3		(1,918,219	)		(3,346,105	)
Total distributions to shareholders		(226,366,170	)		(478,128,977	)
Capital share transactions (Net of share conversions) (See Note 13):
Net proceeds from sales of shares		797,931,892			1,851,708,040
Reinvestment of distributions		193,053,165			398,371,696
Cost of shares reacquired		(1,191,230,353	)		(1,947,729,826	)
Net increase (decrease) in net assets resulting from capital share transactions		(200,245,296	)		302,349,910
Net increase (decrease) in net assets		(287,913,738	)		822,597,801
NET ASSETS:
Beginning of period	$	8,575,942,409		$	7,753,344,608
End of period	$	8,288,028,671		$	8,575,942,409
Distributions in excess of net investment income	$	(53,681,104	)	$	(49,080,118	)

See Notes to Financial Statements. 41

Financial Highlights

	Class A Shares
	Six Months Ended 6/30/2013				Year Ended 12/31
	(unaudited)				2012			2011			2010			2009			2008
Per Share Operating Performance
Net asset value, beginning of period			$8.14			$7.63			$7.81			$7.35			$5.86			$7.92
Investment operations:
Net investment income(a)			.22			.47			.47			.47			.45			.47
Net realized and unrealized gain (loss)			(.08	)		.51			(.17	)		.45			1.55			(2.01	)
Total from investment operations			.14			.98			.30			.92			2.00			(1.54	)
Distributions to shareholders from:
Net investment income			(.22	)		(.47	)		(.48	)		(.46	)		(.51	)		(.52	)
Net asset value, end of period			$8.06			$8.14			$7.63			$7.81			$7.35			$5.86
Total Return(b)			1.71	%(c)		13.22	%		3.88	%		12.94	%		35.37	%		(20.26	)%
Ratios to Average Net Assets:
Expenses, including expense reductions			.48	%(c)		.96	%		.97	%		.97	%		1.00	%		1.00	%
Expenses, excluding expense reductions			.48	%(c)		.96	%		.97	%		.97	%		1.00	%		1.00	%
Net investment income			2.63	%(c)		5.88	%		6.07	%		6.19	%		6.82	%		6.63	%
Supplemental Data:
Net assets, end of period (000)		$	4,680,801		$	4,850,567		$	4,345,679		$	4,415,645		$	4,709,961		$	3,316,663
Portfolio turnover rate			24.32	%(c)		45.87	%		35.73	%		42.65	%		41.93	%		29.01	%

(a)	Calculated using average shares outstanding during the period.
(b)	Total return does not consider the effects of sales loads and assumes the reinvestment of all distributions.
(c)	Not annualized.

42 See Notes to Financial Statements.

Financial Highlights (continued)

	Class B Shares
	Six Months Ended 6/30/2013			Year Ended 12/31
	(unaudited)			2012			2011			2010			2009			2008
Per Share Operating Performance
Net asset value, beginning of period		$8.17			$7.66			$7.84			$7.37			$5.87			$7.93
Investment operations:
Net investment income(a)		.19			.42			.42			.42			.41			.43
Net realized and unrealized gain (loss)		(.08	)		.51			(.17	)		.46			1.55			(2.02	)
Total from investment operations		.11			.93			.25			.88			1.96			(1.59	)
Distributions to shareholders from:
Net investment income		(.20	)		(.42	)		(.43	)		(.41	)		(.46	)		(.47	)
Net asset value, end of period		$8.08			$8.17			$7.66			$7.84			$7.37			$5.87
Total Return(b)		1.26	%(c)		12.47	%		3.35	%		12.16	%		34.52	%		(20.82	)%
Ratios to Average Net Assets:
Expenses, including expense reductions		.80	%(c)		1.61	%		1.62	%		1.62	%		1.65	%		1.65	%
Expenses, excluding expense reductions		.80	%(c)		1.61	%		1.62	%		1.62	%		1.65	%		1.65	%
Net investment income		2.31	%(c)		5.25	%		5.39	%		5.54	%		6.21	%		5.95	%
Supplemental Data:
Net assets, end of period (000)		$186,481			$225,154			$295,027			$530,340			$717,671			$660,920
Portfolio turnover rate		24.32	%(c)		45.87	%		35.73	%		42.65	%		41.93	%		29.01	%

(a)	Calculated using average shares outstanding during the period.
(b)	Total return does not consider the effects of sales loads and assumes the reinvestment of all distributions.
(c)	Not annualized.

See Notes to Financial Statements. 43

Financial Highlights (continued)

	Class C Shares
	Six Months Ended 6/30/2013				Year Ended 12/31
	(unaudited)				2012			2011			2010			2009			2008
Per Share Operating Performance
Net asset value, beginning of period			$8.16			$7.65			$7.83			$7.36			$5.87			$7.94
Investment operations:
Net investment income(a)			.19			.42			.42			.42			.41			.43
Net realized and unrealized gain (loss)			(.07	)		.51			(.17	)		.46			1.54			(2.03	)
Total from investment operations			.12			.93			.25			.88			1.95			(1.60	)
Distributions to shareholders from:
Net investment income			(.20	)		(.42	)		(.43	)		(.41	)		(.46	)		(.47	)
Net asset value, end of period			$8.08			$8.16			$7.65			$7.83			$7.36			$5.87
Total Return(b)			1.39	%(c)		12.47	%		3.22	%		12.34	%		34.44	%		(20.90	)%
Ratios to Average Net Assets:
Expenses, including expense reductions			.80	%(c)		1.61	%		1.62	%		1.62	%		1.65	%		1.65	%
Expenses, excluding expense reductions			.80	%(c)		1.61	%		1.62	%		1.62	%		1.65	%		1.65	%
Net investment income			2.31	%(c)		5.23	%		5.42	%		5.54	%		6.13	%		5.98	%
Supplemental Data:
Net assets, end of period (000)		$	1,993,292		$	2,051,198		$	1,790,610		$	1,866,405		$	1,888,177		$	1,018,175
Portfolio turnover rate			24.32	%(c)		45.87	%		35.73	%		42.65	%		41.93	%		29.01	%

(a)	Calculated using average shares outstanding during the period.
(b)	Total return does not consider the effects of sales loads and assumes the reinvestment of all distributions.
(c)	Not annualized.

44 See Notes to Financial Statements.

Financial Highlights (continued)

	Class F Shares
	Six Months Ended 6/30/2013				Year Ended 12/31
	(unaudited)				2012			2011			2010			2009			2008
Per Share Operating Performance
Net asset value, beginning of period			$8.13			$7.62			$7.80			$7.34			$5.85			$7.92
Investment operations:
Net investment income(a)			.23			.49			.49			.48			.46			.49
Net realized and unrealized gain (loss)			(.08	)		.51			(.17	)		.46			1.55			(2.02	)
Total from investment operations			.15			1.00			.32			.94			2.01			(1.53	)
Distributions to shareholders from:
Net investment income			(.23	)		(.49	)		(.50	)		(.48	)		(.52	)		(.54	)
Net asset value, end of period			$8.05			$8.13			$7.62			$7.80			$7.34			$5.85
Total Return(b)			1.84	%(c)		13.50	%		4.12	%		13.24	%		35.81	%		(20.17	)%
Ratios to Average Net Assets:
Expenses, including expense reductions			.35	%(c)		.71	%		.72	%		.72	%		.75	%		.75	%
Expenses, excluding expense reductions			.35	%(c)		.71	%		.72	%		.72	%		.75	%		.75	%
Net investment income			2.75	%(c)		6.11	%		6.30	%		6.42	%		6.87	%		7.44	%
Supplemental Data:
Net assets, end of period (000)		$	1,029,721		$	1,047,325			$847,032			$695,689			$435,085			$35,771
Portfolio turnover rate			24.32	%(c)		45.87	%		35.73	%		42.65	%		41.93	%		29.01	%

(a)	Calculated using average shares outstanding during the period.
(b)	Total return assumes the reinvestment of all distributions.
(c)	Not annualized.

See Notes to Financial Statements. 45

Financial Highlights (continued)

	Class I Shares
	Six Months Ended 6/30/2013			Year Ended 12/31
	(unaudited)			2012			2011			2010			2009			2008
Per Share Operating Performance
Net asset value, beginning of period		$8.10			$7.60			$7.77			$7.31			$5.83			$7.90
Investment operations:
Net investment income(a)		.23			.49			.50			.49			.47			.50
Net realized and unrealized gain (loss)		(.08	)		.51			(.16	)		.46			1.54			(2.02	)
Total from investment operations		.15			1.00			.34			.95			2.01			(1.52	)
Distributions to shareholders from:
Net investment income		(.23	)		(.50	)		(.51	)		(.49	)		(.53	)		(.55	)
Net asset value, end of period		$8.02			$8.10			$7.60			$7.77			$7.31			$5.83
Total Return(b)		1.88	%(c)		13.49	%		4.35	%		13.40	%		35.87	%		(20.14	)%
Ratios to Average Net Assets:
Expenses, including expense reductions		.30	%(c)		.62	%		.62	%		.62	%		.65	%		.65	%
Expenses, excluding expense reductions		.30	%(c)		.62	%		.62	%		.62	%		.65	%		.65	%
Net investment income		2.80	%(c)		6.25	%		6.39	%		6.53	%		7.15	%		6.98	%
Supplemental Data:
Net assets, end of period (000)		$246,252			$230,006			$316,777			$353,941			$294,144			$203,843
Portfolio turnover rate		24.32	%(c)		45.87	%		35.73	%		42.65	%		41.93	%		29.01	%

(a)	Calculated using average shares outstanding during the period.
(b)	Total return assumes the reinvestment of all distributions.
(c)	Not annualized.

46 See Notes to Financial Statements.

Financial Highlights (continued)

	Class P Shares
	Six Months Ended 6/30/2013			Year Ended 12/31
	(unaudited)			2012			2011			2010			2009			2008
Per Share Operating Performance
Net asset value, beginning of period		$8.31			$7.79			$7.98			$7.49			$5.97			$8.06
Investment operations:
Net investment income(a)		.22			.48			.48			.47			.45			.47
Net realized and unrealized gain (loss)		(.07	)		.52			(.18	)		.48			1.57			(2.05	)
Total from investment operations		.15			1.00			.30			.95			2.02			(1.58	)
Distributions to shareholders from:
Net investment income		(.23	)		(.48	)		(.49	)		(.46	)		(.50	)		(.51	)
Net asset value, end of period		$8.23			$8.31			$7.79			$7.98			$7.49			$5.97
Total Return(b)		1.74	%(c)		13.21	%		3.88	%		12.73	%		35.47	%		(20.50	)%
Ratios to Average Net Assets:
Expenses, including expense reductions		.47	%(c)		.96	%		1.03	%		1.07	%		1.10	%		1.10	%
Expenses, excluding expense reductions		.47	%(c)		.96	%		1.03	%		1.07	%		1.10	%		1.10	%
Net investment income		2.64	%(c)		5.88	%		6.01	%		6.08	%		6.70	%		6.55	%
Supplemental Data:
Net assets, end of period (000)		$75,339			$99,968			$109,252			$143,083			$150,002			$99,134
Portfolio turnover rate		24.32	%(c)		45.87	%		35.73	%		42.65	%		41.93	%		29.01	%

(a)	Calculated using average shares outstanding during the period.
(b)	Total return assumes the reinvestment of all distributions.
(c)	Not annualized.

See Notes to Financial Statements. 47

Financial Highlights (continued)

	Class R2 Shares
	Six Months Ended 6/30/2013			Year Ended 12/31
	(unaudited)			2012			2011			2010			2009			2008
Per Share Operating Performance
Net asset value, beginning of period		$8.14			$7.63			$7.81			$7.35			$5.86			$7.92
Investment operations:
Net investment income(a)		.21			.45			.46			.45			.43			.46
Net realized and unrealized gain (loss)		(.08	)		.52			(.18	)		.45			1.55			(2.02	)
Total from investment operations		.13			.97			.28			.90			1.98			(1.56	)
Distributions to shareholders from:
Net investment income		(.21	)		(.46	)		(.46	)		(.44	)		(.49	)		(.50	)
Net asset value, end of period		$8.06			$8.14			$7.63			$7.81			$7.35			$5.86
Total Return(b)		1.58	%(c)		12.94	%		3.62	%		12.63	%		35.26	%		(20.61	)%
Ratios to Average Net Assets:
Expenses, including expense reductions		.60	%(c)		1.21	%		1.22	%		1.22	%		1.25	%		1.24	%
Expenses, excluding expense reductions		.60	%(c)		1.21	%		1.22	%		1.22	%		1.25	%		1.24	%
Net investment income		2.51	%(c)		5.62	%		5.84	%		5.92	%		6.57	%		6.44	%
Supplemental Data:
Net assets, end of period (000)		$3,085			$2,624			$1,629			$1,234			$456			$338
Portfolio turnover rate		24.32	%(c)		45.87	%		35.73	%		42.65	%		41.93	%		29.01	%

(a)	Calculated using average shares outstanding during the period.
(b)	Total return assumes the reinvestment of all distributions.
(c)	Not annualized.

48 See Notes to Financial Statements.

Financial Highlights (concluded)

	Class R3 Shares
	Six Months Ended 6/30/2013			Year Ended 12/31
	(unaudited)			2012			2011			2010			2009			2008
Per Share Operating Performance
Net asset value, beginning of period		$8.13			$7.62			$7.80			$7.34			$5.85			$7.92
Investment operations:
Net investment income(a)		.21			.45			.46			.45			.44			.47
Net realized and unrealized gain (loss)		(.08	)		.52			(.17	)		.46			1.55			(2.03	)
Total from investment operations		.13			.97			.29			.91			1.99			(1.56	)
Distributions to shareholders from:
Net investment income		(.22	)		(.46	)		(.47	)		(.45	)		(.50	)		(.51	)
Net asset value, end of period		$8.04			$8.13			$7.62			$7.80			$7.34			$5.85
Total Return(b)		1.51	%(c)		13.07	%		3.73	%		12.83	%		35.31	%		(20.52	)%
Ratios to Average Net Assets:
Expenses, including expense reductions		.55	%(c)		1.11	%		1.12	%		1.12	%		1.14	%		1.15	%
Expenses, excluding expense reductions		.55	%(c)		1.11	%		1.12	%		1.12	%		1.14	%		1.15	%
Net investment income		2.56	%(c)		5.73	%		5.94	%		6.03	%		6.53	%		7.01	%
Supplemental Data:
Net assets, end of period (000)		$73,057			$69,100			$47,338			$34,991			$17,780			$5,399
Portfolio turnover rate		24.32	%(c)		45.87	%		35.73	%		42.65	%		41.93	%		29.01	%

(a)	Calculated using average shares outstanding during the period.
(b)	Total return assumes the reinvestment of all distributions.
(c)	Not annualized.

See Notes to Financial Statements. 49

Notes to Financial Statements (unaudited)

1. ORGANIZATION  

Lord Abbett Bond-Debenture Fund, Inc. (the “Fund”) is registered under the Investment Company Act of 1940, as amended (the “Act”), as a diversified, open-end management investment company. The Fund was incorporated under Maryland law on January 23, 1976.

The Fund’s investment objective is to seek high current income and the opportunity for capital appreciation to produce a high total return. The Fund has eight classes of shares: Class A, B, C, F, I, P, R2 and R3, each with different expenses and dividends. A front-end sales charge is normally added to the net asset value (“NAV”) for Class A shares. There is no front-end sales charge in the case of Class B, C, F, I, P, R2 and R3 shares, although there may be a contingent deferred sales charge (“CDSC”) in certain cases as follows: Class A shares purchased without a sales charge and redeemed before the first day of the month in which the one-year anniversary of the purchase falls (subject to certain exceptions as set forth in the Fund’s prospectus); Class B shares redeemed before the sixth anniversary of purchase; and Class C shares redeemed before the first anniversary of purchase. Class B shares will automatically convert to Class A shares on the 25^th day of the month (or, if the 25^th day is not a business day, the next business day thereafter) following the eighth anniversary of the day on which the purchase order was accepted. The Fund no longer issues Class B shares for purchase. The Fund’s Class P shares are closed to substantially all investors, with certain exceptions as set forth in the Fund’s prospectus.

The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.

2. SIGNIFICANT ACCOUNTING POLICIES  

(a)

Investment Valuation–Under procedures approved by the Fund’s Board of Directors (the “Board”), Lord, Abbett & Co. LLC (“Lord Abbett”), the Fund’s investment manager, has formed a Pricing Committee to administer the pricing and valuation of portfolio investments and to ensure that prices utilized reasonably reflect fair value. Among other things, these procedures allow the Fund to utilize independent pricing services, quotations from securities and financial instrument dealers and other market sources to determine fair value.

Securities actively traded on any recognized U.S. or non-U.S. exchange or on The NASDAQ Stock Market LLC are valued at the last sale price or official closing price on the exchange or system on which they are principally traded. Events occurring after the close of trading on non-U.S. exchanges may result in adjustments to the valuation of foreign securities to reflect their fair value as of the close of regular trading on the New York Stock Exchange LLC. The Fund may rely on an independent fair valuation service in adjusting the valuations of foreign securities. Unlisted equity securities are valued at the last quoted sale price or, if no sale price is available, at the mean between the most recently quoted bid and asked prices. Fixed income securities are valued at the mean between the bid and asked prices on the basis of prices supplied by independent pricing services, which reflect broker/dealer supplied valuations and the independent pricing services’ own electronic data processing techniques. Floating rate loans are valued at the average of bid and ask quotations obtained from dealers in loans on the basis of prices supplied by independent pricing services. Exchange-traded options and futures contracts

50

Notes to Financial Statements (unaudited)(continued)

	are valued at the last sale price in the market where they are principally traded. If no sale has occurred, the mean between the most recently quoted bid and asked prices is used. Forward foreign currency exchange contracts are valued using daily forward exchange rates.
	Securities for which prices are not readily available are valued at fair value as determined by the Pricing Committee and approved by the Board. The Pricing Committee considers a number of factors, including observable and unobservable inputs, when arriving at fair value. The Pricing Committee may use related or comparable assets or liabilities, recent transactions, market multiples, book values, yield curves, broker quotes, observable trading activity, option adjusted spread models and other relevant information to determine fair value of portfolio investments. The Board or a designated committee thereof regularly reviews fair value determinations made by the Pricing Committee and employs techniques such as reviewing related market activity, reviewing inputs and assumptions, and retrospectively comparing prices of subsequent purchases and sales transactions to fair value determinations made by the Pricing Committee.
	Short-term securities with 60 days or less remaining to maturity are valued using the amortized cost method, which approximates fair value.
(b)	Security Transactions–Security transactions are recorded as of the date that the securities are purchased or sold (trade date). Realized gains and losses on sales of portfolio securities are calculated using the identified-cost method. Realized and unrealized gains (losses) are allocated to each class of shares based upon the relative proportion of net assets at the beginning of the day.
(c)	Investment Income–Dividend income is recorded on the ex-dividend date. Interest income is recorded on the accrual basis as earned. Discounts are accreted and premiums are amortized using the effective interest method and are included in Interest income on the Statement of Operations. Investment income is allocated to each class of shares based upon the relative proportion of net assets at the beginning of the day.
(d)	Income Taxes–It is the policy of the Fund to meet the requirements of Subchapter M of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all taxable income and capital gains to its shareholders. Therefore, no income tax provision is required.
	The Fund files U.S. federal and various state and local tax returns. No income tax returns are currently under examination. The statute of limitations on the Fund’s filed U.S. federal tax returns remains open for the fiscal years ended December 31, 2009 through December 31, 2012. The statutes of limitations on the Fund’s state and local tax returns may remain open for an additional year depending upon the jurisdiction.
(e)	Expenses–Expenses, excluding class-specific expenses, are allocated to each class of shares based upon the relative proportion of net assets at the beginning of the day. Class A, B, C, F, P, R2 and R3 shares bear their class-specific share of all expenses and fees relating to the Fund’s 12b-1 Distribution Plan.
(f)	Foreign Transactions–The books and records of the Fund are maintained in U.S. dollars and transactions denominated in foreign currencies are recorded in the Fund’s records at the rate prevailing when earned or recorded. Asset and liability accounts that are denominated in foreign currencies are adjusted daily to reflect current exchange rates and any unrealized gain (loss) is included in Net change in unrealized appreciation/depreciation on investments, futures

51

Notes to Financial Statements (unaudited)(continued)

	contracts, unfunded commitments and translation of assets and liabilities denominated in foreign currencies on the Fund’s Statement of Operations. The resultant exchange gains and losses upon settlement of such transactions are included in Net realized gain on investments, futures contracts and foreign currency related transactions on the Fund’s Statement of Operations. The Fund does not isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the changes in market prices of the securities.
	The Fund uses foreign currency exchange contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts’ terms.
(g)	Forward Foreign Currency Exchange Contracts–The Fund may enter into forward foreign currency exchange contracts in order to reduce its exposure to changes in foreign currency exchange rates on its foreign portfolio holdings or gain or reduce exposure to foreign currency for investment purposes. A forward foreign currency exchange contract is a commitment to purchase or sell a foreign currency at a future date at a negotiated rate. The contracts are valued daily at forward exchange rates and any unrealized gain (loss) is included in Net change in unrealized appreciation/depreciation on investments, futures contracts, unfunded commitments and translation of assets and liabilities denominated in foreign currencies on the Fund’s Statement of Operations. The gain (loss) arising from the difference between the U.S. dollar cost of the original contract and the value of the foreign currency in U.S. dollars upon closing of such contracts is included in Net realized gain on investments, futures contracts and foreign currency related transactions on the Fund’s Statement of Operations.
(h)	Futures Contracts–The Fund may purchase and sell futures contracts to enhance returns, to attempt to hedge some of its investment risk, or as a substitute position for holding the underlying asset on which the instrument is based. At the time of entering into a futures transaction, an investor is required to deposit and maintain a specified amount of cash or eligible securities called “initial margin.” Subsequent payments made or received by the Fund called “variation margin” are made on a daily basis as the market price of the futures contract fluctuates. The Fund will record an unrealized gain (loss) based on the amount of variation margin. When a contract is closed, a realized gain (loss) is recorded equal to the difference between the opening and closing value of the contract.
(i)	When-Issued, Forward Transactions or To-Be-Announced (“TBA”) Transactions–The Fund may purchase portfolio securities on a when-issued or forward basis. When-issued, forward transactions or TBA transactions involve a commitment by a Fund to purchase securities, with payment and delivery (“settlement”) to take place in the future, in order to secure what is considered to be an advantageous price or yield at the time of entering into the transaction. During the period between purchase and settlement, the fair value of the securities will fluctuate and assets consisting of cash and/or marketable securities (normally short-term U.S. Government or U.S. Government sponsored enterprise securities) marked to market daily in an amount sufficient to make payment at settlement will be segregated at the Fund’s custodian in order to pay for the commitment. At the time the Fund makes the commitment to purchase a security on a when-issued basis, it will record the transaction and reflect the liability for the purchase and fair value of the security in determining its NAV. The Fund, generally, has the ability to close out a purchase obligation on or before the settlement date rather than take delivery of the security. Under no circumstances will settlement for such securities take place more than 120 days after the purchase date.

52

Notes to Financial Statements (unaudited)(continued)

(j)	Repurchase Agreements–The Fund may enter into repurchase agreements with respect to securities. A repurchase agreement is a transaction in which a fund acquires a security and simultaneously commits to resell that security to the seller (a bank or securities dealer) at an agreed-upon price on an agreed-upon date. The Fund requires at all times that the repurchase agreement be collateralized by cash, or by securities of the U.S. Government, its agencies, its instrumentalities, or U.S. Government sponsored enterprises having a value equal to, or in excess of, the value of the repurchase agreement (including accrued interest). If the seller of the agreement defaults on its obligation to repurchase the underlying securities at a time when the fair value of these securities has declined, the Fund may incur a loss upon disposition of the securities.
(k)	Floating Rate Loans–The Fund may invest in floating rate loans, which usually take the form of loan participations and assignments. Loan participations and assignments are agreements to make money available to U.S. or foreign corporations, partnerships or other business entities (the “Borrower”) in a specified amount, at a specified rate and within a specified time. A loan is typically originated, negotiated and structured by a U.S. or foreign bank, insurance company or other financial institution (the “Agent”) for a group of loan investors (“Loan Investors”). The Agent typically administers and enforces the loan on behalf of the other Loan Investors in the syndicate and may hold any collateral on behalf of the Loan Investors. Such loan participations and assignments are typically senior, secured and collateralized in nature. The Fund records an investment when the Borrower withdraws money and records interest as earned. These loans pay interest at rates which are periodically reset by reference to a base lending rate plus a spread. These base lending rates are generally the prime rate offered by a designated U.S. bank or London InterBank Offered Rate (“LIBOR”).
	The loans in which the Fund invests may be subject to some restrictions on resale. For example, the Fund may be contractually obligated to receive approval from the Agent and/or Borrower prior to the sale of these investments. The Fund generally has no right to enforce compliance with the terms of the loan agreement with the Borrower. As a result, the Fund assumes the credit risk of the Borrower, the selling participant and any other persons interpositioned between the Fund and the Borrower (“Intermediate Participants”). In the event that the Borrower, selling participant or Intermediate Participants become insolvent or enter into bankruptcy, the Fund may incur certain costs and delays in realizing payment or may suffer a loss of principal and/or interest.
	Unfunded commitments represent the remaining obligation of the Fund to the Borrower. At any point in time, up to the maturity date of the issue, the Borrower may demand the unfunded portion. Until demanded by the Borrower, unfunded commitments are not recognized as an asset on the Statement of Assets and Liabilities. Unrealized appreciation/depreciation on unfunded commitments presented on the Statement of Assets and Liabilities represents mark to market of the unfunded portion of the Fund’s floating rate notes. As of June 30, 2013, the Fund had the following unfunded loan commitments:

Security Name
Diamond Foods, Inc. Revolver	$	1,417,848
Gardner Denver, Inc. Bridge Term Loan		18,750,000
Total	$	20,167,848

53

Notes to Financial Statements (unaudited)(continued)

(l)	Fair Value Measurements–Fair value is defined as the price that the Fund would receive upon selling an investment or transferring a liability in an orderly transaction to an independent buyer in the principal or most advantageous market of the investment. A three-tier hierarchy is used to maximize the use of observable market data and minimize the use of unobservable inputs and to establish classification of fair value measurements for disclosure purposes. Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk—for example, the risk inherent in a particular valuation technique used to measure fair value (such as a pricing model) and/or the risk inherent in the inputs to the valuation technique. Inputs may be observable or unobservable. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability. Observable inputs are based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability. Unobservable inputs are based on the best information available in the circumstances. The three-tier hierarchy of inputs is summarized in the three broad Levels listed below:
	•	Level 1 –	unadjusted quoted prices in active markets for identical investments;
	•	Level 2 –	other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.); and
	•	Level 3 –	significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments).
	A summary of inputs used in valuing the Fund’s investments as of June 30, 2013, and, if applicable, Level 1/Level 2 transfers and Level 3 rollforwards for the six months then ended is included in the Fund’s Schedule of Investments.
	Changes in valuation techniques may result in transfers into or out of an assigned level within the three-tier hierarchy. All transfers between different levels within the three-tier hierarchy are deemed to have occurred as of the beginning of the reporting period. The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.

3. MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES  

Management Fee

The Fund has a management agreement with Lord Abbett, pursuant to which Lord Abbett supplies the Fund with investment management services and executive and other personnel, provides office space and pays for ordinary and necessary office and clerical expenses relating to research and statistical work and supervision of the Fund’s investment portfolio.

The management fee is based on the Fund’s average daily net assets at the following annual rate:

First $500 million	.50	%
Next $9.5 billion	.45	%
Over $10 billion	.40	%

For the six months ended June 30, 2013, the effective management fee paid to Lord Abbett was at an annualized rate of .45% of the Fund’s average daily net assets.

54

Notes to Financial Statements (unaudited)(continued)

In addition, Lord Abbett provides certain administrative services to the Fund pursuant to an Administrative Services Agreement in return for a fee at an annual rate of ..04% of the Fund’s average daily net assets.

12b-1 Distribution Plan

The Fund has adopted a distribution plan with respect to Class A, B, C, F, P, R2 and R3 shares pursuant to Rule 12b-1 under the Act, which provides for the payment of ongoing distribution and service fees to Lord Abbett Distributor LLC (the “Distributor”), an affiliate of Lord Abbett. The following annual rates have been approved by the Board pursuant to the plan:

Fees*	Class A			Class B		Class C		Class F		Class P		Class R2		Class R3
Service		.25%	(1)		.25%		.25%		—		.25%		.25%		.25%
Distribution		.10%			.75%		.75%		.10%		.20%		.35%		.25%

*	The Fund may designate a portion of the aggregate fee as attributable to service activities for purposes of calculating Financial Industry Regulatory Authority, Inc. (“FINRA”) sales charge limitations.
(1)	Annual service fee on shares sold prior to June 1, 1990 is .15% of the average daily net assets attributable to Class A shares.

Class I shares do not have a distribution plan.

Commissions

Distributor received the following commissions on sales of shares of the Fund, after concessions were paid to authorized dealers, for the six months ended June 30, 2013:

Distributor Commissions	Dealers’ Concessions
$1,131,026	$5,786,908

Distributor received CDSCs of $17,762 and $111,657 for Class A and Class C shares, respectively, for the six months ended June 30, 2013.

A Director and certain of the Fund’s officers have an interest in Lord Abbett.

4. DISTRIBUTIONS AND CAPITAL LOSS CARRYFORWARDS  

Dividends from net investment income, if any, are declared daily and paid monthly. Taxable net realized gains from investment transactions, reduced by allowable capital loss carryforwards, if any, are declared and distributed to shareholders at least annually. The capital loss carryforward amount, if any, is available to offset future net capital gains. Dividends and distributions to shareholders are recorded on the ex-dividend date. The amounts of dividends and distributions from net investment income and net realized capital gains are determined in accordance with federal income tax regulations, which may differ from accounting principles generally accepted in the United States of America. These book/tax differences are either considered temporary or permanent in nature. To the extent these differences are permanent in nature, such amounts are reclassified within the components of net assets based on their federal tax basis treatment; temporary differences do not require reclassification. Dividends and distributions, which exceed earnings and profits for tax purposes, are reported as a tax return of capital.

55

Notes to Financial Statements (unaudited)(continued)

The tax character of distributions paid during the six months ended June 30, 2013 and the fiscal year ended December 31, 2012 was as follows:

	Six Months Ended 6/30/2013 (unaudited)		Year Ended 12/31/2012
Distributions paid from:
Ordinary income	$	226,366,170	$	478,128,977
Total distributions paid	$	226,366,170	$	478,128,977

In accordance with the Regulated Investment Company Modernization Act of 2010, the Fund will carryforward capital losses incurred in taxable years beginning after December 22, 2010 (“post-enactment losses”) indefinitely. Post-enactment losses will also retain their character as either short-term or long-term and be utilized before any pre-enactment losses.

As of June 30, 2013, the aggregate unrealized security gains and losses based on cost for U.S. federal income tax purposes were as follows:

Tax cost	$	8,099,695,606
Gross unrealized gain		398,090,321
Gross unrealized loss		(240,930,570	)
Net unrealized security gain	$	157,159,751

The difference between book-basis and tax-basis unrealized gains (losses) is attributable to the tax treatment of wash sales, premium amortization and certain securities.

5. PORTFOLIO SECURITIES TRANSACTIONS  

Purchases and sales of investment securities (excluding short-term investments) for the six months ended June 30, 2013 were as follows:

U.S. Government Purchases*	Non-U.S. Government Purchases	U.S. Government Sales		Non-U.S. Government Sales
$61,476,563	$2,005,085,316		$ —	$2,156,570,008

* Includes U.S. Government sponsored enterprises securities.

6. DISCLOSURES ABOUT DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES  

The Fund entered into forward foreign currency exchange contracts for the six months ended June 30, 2013 (as described in note 2(g)). A forward foreign currency exchange contract reduces the Fund’s exposure to changes in the value of the currency it will deliver (or settle in cash) and increases its exposure to changes in the value of the currency it will receive (or settle in cash) for the duration of the contract. The Fund’s use of forward foreign currency exchange contracts involves the risk that Lord Abbett will not accurately predict currency movements, and the Fund’s returns could be reduced as a result. Forward foreign currency exchange contracts are subject to the risk that those currencies will decline in value relative to the U.S. dollar, or, in the case of hedged positions, that the U.S. dollar will decline relative to the currency being hedged. Currency rates in foreign countries may fluctuate significantly over short periods of time. The Fund’s risk of loss from counterparty credit risk is the unrealized appreciation on forward foreign currency exchange contracts.

56

Notes to Financial Statements (unaudited)(continued)

The Fund entered into U.S. Treasury futures contracts for the six months ended June 30, 2013 (as described in note 2(h)) to hedge against changes in interest rates. The Fund bears the risk of interest rates moving unexpectedly, in which case the Fund may not achieve the anticipated benefits of the futures contracts and realize a loss. There is minimal counterparty credit risk to the Fund since futures are exchange traded and the exchange’s clearinghouse, as counterparty to all exchange traded futures, guarantees futures against default.

As of June 30, 2013, the Fund had the following derivatives, grouped into appropriate risk categories that illustrate how and why the Fund uses derivative instruments:

Asset Derivatives	Interest Rate Contracts		Forward Foreign Currency Exchange Contracts		Fair Value
Forward Foreign Currency Exchange Contracts(1)	$	—	$	987,934	$	987,934
Futures Contracts(2)		3,105,541		—		3,105,541
Total	$	3,105,541	$	987,934	$	4,093,475

(1)	Statement of Assets and Liabilities location: Unrealized appreciation on forward foreign currency exchange contracts.
(2)	Statement of Assets and Liabilities location: Includes cumulative unrealized appreciation/depreciation of futures contracts as reported in the Schedule of Investments. Only current day’s variation margin is reported within the Statement of Assets and Liabilities.

Transactions in derivative instruments for the six months ended June 30, 2013, were as follows:

	Interest Rate Contracts		Forward Foreign Currency Exchange Contracts			Total
Net Realized Gain (Loss)(1)
Forward Foreign Currency Exchange Contracts	$	—	$	(722,033	)	$	(722,033	)
Futures Contracts		536,473		—			536,473
Net Change in Unrealized Appreciation/Depreciation(2)
Forward Foreign Currency Exchange Contracts	$	—	$	1,592,640		$	1,592,640
Futures Contracts		2,953,021		—			2,953,021
Average Number of Contracts/ Notional Amounts*
Forward Foreign Currency Exchange Contracts(3)	$	—	$	29,212,833		$	29,212,833
Futures Contracts(4)		643		—			643

*	Calculated based on the number of contracts or notional amounts for the six months ended June 30, 2013.
(1)	Statement of Operations location: Net realized gain on investments, futures contracts and foreign currency related transactions.
(2)	Statement of Operations location: Net change in unrealized appreciation/depreciation on investments, futures contracts, unfunded commitments and translation of assets and liabilities denominated in foreign currencies.
(3)	Amount represents notional amounts in U.S. dollars.
(4)	Amount represents number of contracts.

57

Notes to Financial Statements (unaudited)(continued)

7. DISCLOSURES ABOUT OFFSETTING ASSETS AND LIABILITIES  

The Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2011–11 “Disclosures about Offsetting Assets and Liabilities” (“ASU 2011–11”). These disclosure requirements are intended to help better assess the effect or potential effect of offsetting arrangements on a fund’s financial position. In addition, FASB issued Accounting Standards Update No. 2013–01 “Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities” (“ASU 2013–01”), specifying which transactions are subject to disclosures about offsetting.

The following tables illustrate gross and net information about recognized assets and liabilities eligible for offset in the Statement of Assets and Liabilities; and disclose such amounts subject to an enforceable master netting agreement or similar agreement, by counterparty. A master netting agreement is an agreement between two counterparties who have multiple contracts with each other that provides for the net settlement of all contracts, as well as cash collateral, through a single payment in the event of default on or termination of any one contract:

Description	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Statement of Assets and Liabilities		Net Amounts of Assets Presented in the Statement of Assets and Liabilities
Forward Foreign Currency Exchange Contracts	$	987,934	$	—	$	987,934
Repurchase Agreement		26,709,211		—		26,709,211
Total	$	27,697,145	$	—	$	27,697,145

			Gross Amounts Not Offset in the Statement of Assets and Liabilities
Counterparty	Net Amounts of Assets Presented in the Statement of Assets and Liabilities		Financial Instrument Collateral Received(a)			Cash Collateral Received(a)			Net Amount(b)
J.P. Morgan	$	460,132	$	—		$	(430,000	)	$	30,132
UBS AG		527,802		—			(300,000	)		227,802
State Street Bank & Trust		26,709,211		(26,709,211	)		—			—
Total	$	27,697,145	$	(26,709,211	)	$	(730,000	)	$	257,934

(a)	Collateral received is limited to an amount not to exceed 100% of the net amount of assets in the tables presented above, for each respective counterparty.
(b)	Net Amount represents the amount that is subject to loss in the event of a counterparty failure as of June 30, 2013.

8. DIRECTORS’ REMUNERATION  

The Fund’s officers and a Director, who are associated with Lord Abbett, do not receive any compensation from the Fund for serving in such capacities. Independent Directors’ fees are allocated among all Lord Abbett-sponsored funds based on the net assets of each fund. There is an equity-based plan available to all Independent Directors under which Independent Directors must defer receipt of a portion of, and may elect to defer receipt of an additional portion of Directors’ fees. The deferred amounts are treated as though equivalent dollar amounts had been invested in the funds. Such amounts and earnings accrued thereon are included in Directors’ fees on the Statement of Operations and in Directors’ fees payable on the Statement of Assets and Liabilities and are not deductible for U.S. federal income tax purposes until such amounts are paid.

58

Notes to Financial Statements (unaudited)(continued)

9. EXPENSE REDUCTIONS  

The Fund has entered into an arrangement with its transfer agent and custodian, whereby credits realized as a result of uninvested cash balances are used to reduce a portion of the Fund’s expenses.

10. LINE OF CREDIT  

On April 2, 2012, the Fund and certain other funds managed by Lord Abbett (the “participating funds”) entered into an unsecured revolving credit facility (“Facility”) with State Street Bank and Trust Company (“SSB”), to be used for temporary or emergency purposes as an additional source of liquidity to fund redemptions of investor shares. The Facility is renewed annually under terms that depend on market conditions at the time of the renewal. The amounts available under the Facility are (i) the lesser of either $250,000,000 or 33.33% of total assets per participating fund and (ii) $350,000,000 in the aggregate for all participating funds. The annual fee to maintain the Facility is .09% of the amount available under the Facility. Each participating fund pays its pro rata share based on the net assets of each participating fund. This amount is included in Other expenses on the Fund’s Statement of Operations. Any borrowings under this Facility will bear interest at current market rates as set forth in the credit agreement.

Effective April 1, 2013, the Fund and the participating funds entered into a short term extension of the Facility through June 30, 2013. Effective July 1, 2013 the Fund and participating funds renewed the Facility through June 30, 2014 under the same terms as described above.

During the six months ended June 30, 2013, a participating fund utilized the Facility and fully repaid its borrowings on June 13, 2013. As of June 30, 2013, there were no outstanding loans pursuant to this Facility.

11. CUSTODIAN AND ACCOUNTING AGENT  

SSB is the Fund’s custodian and accounting agent. SSB performs custodial, accounting and recordkeeping functions relating to portfolio transactions and calculating the Fund’s NAV.

12. INVESTMENT RISKS  

The Fund is subject to the general risks and considerations associated with investing in debt securities. The value of an investment will change as interest rates fluctuate and in response to market movements. When interest rates rise, the prices of debt securities are likely to decline; when rates fall, such prices tend to rise. Longer-term debt securities are usually more sensitive to interest rate changes. There is also the risk that an issuer of a debt security will fail to make timely payments of principal and/or interest to the Fund, a risk that is greater with high-yield securities (sometimes called “junk bonds”), in which the Fund may substantially invest. Some issuers, particularly of high-yield securities, may default as to principal and/or interest payments after the Fund purchases its securities. A default, or concerns in the market about an increase in risk of default, may result in losses to the Fund. High-yield bonds are subject to greater price fluctuations, as well as additional risks.

The mortgage-related securities in which the Fund may invest may be particularly sensitive to changes in prevailing interest rates, and economic conditions, including delinquencies and/or defaults. These changes can affect the value, income and/or liquidity of such positions. When interest rates are declining, the value of these securities with prepayment features may not increase as much as other fixed income securities. Early principal repayment may deprive the Fund of income payments above current market rates. The prepayment rate also will affect the price and volatility of a mortgage-related security. In addition, while securities of government sponsored

59

Notes to Financial Statements (unaudited)(continued)

enterprises are guaranteed with respect to the timely payment of interest and principal by the particular enterprise involved, they are not guaranteed by the U.S. Government. In addition, the Fund may invest in non-agency asset backed and mortgage related securities, which are issued by private institutions, not by government-sponsored enterprises.

The Fund may invest up to 20% of its net assets in equity securities, the value of which fluctuates in response to movements in the equity securities market in general and to the changing prospects of individual companies in which the Fund invests.

The Fund may invest in convertible securities, which have both equity and fixed income risk characteristics. Generally, convertible securities offer lower interest or dividend yields than non-convertible securities of similar quality and less potential for gains or capital appreciation in a rising equity securities market than equity securities. They tend to be more volatile than other fixed income securities and the markets for convertible securities may be less liquid than markets for stocks or bonds. A significant portion of convertible securities have below investment grade credit ratings and are subject to increased credit and liquidity risks.

Due to the Fund’s exposure to foreign companies and ADRs, the Fund may experience increased market, liquidity, currency, political, information, and other risks.

The Fund is subject to the risks associated with derivatives, which may be different from and greater than the risks associated with directly investing in securities. Derivatives may be subject to risks such as liquidity risk, leveraging risk, interest rate risk, market risk, and credit risk. Illiquid securities may lower the Fund’s returns since the Fund may be unable to sell these securities at their desired time or price. Derivatives also may involve the risk of mispricing or improper valuation and the risk that changes in the value of the derivative may not correlate perfectly with the value of the underlying asset, rate or index. Whether the Fund’s use of derivatives is successful will depend on, among other things, the Fund’s ability to correctly forecast market movements and other factors. If the Fund incorrectly forecasts these and other factors, the Fund’s performance could suffer. The Fund’s use of derivatives could result in a loss exceeding the amount of the Fund’s investment in these instruments.

The Fund may invest up to 15% of its net assets in floating rate or adjustable rate senior loans, including bridge loans, novations, assignments, and participations, which are subject to increased credit and liquidity risks. Senior loans are business loans made to borrowers that may be U.S. or foreign corporations, partnerships or other business entities.

These factors can affect the Fund’s performance.

60

Notes to Financial Statements (unaudited)(continued)

13. SUMMARY OF CAPITAL TRANSACTIONS  

Transactions in shares of beneficial interest were as follows:

	Six Months Ended June 30, 2013 (unaudited)						Year Ended December 31, 2012
Class A Shares		Shares			Amount			Shares			Amount
Shares sold		45,515,433		$	376,353,174			113,405,450		$	901,531,118
Converted from Class B*		2,545,455			21,005,332			7,952,536			63,182,965
Reinvestment of distributions		14,501,119			119,545,583			30,870,088			245,805,551
Shares reacquired		(77,339,840	)		(637,106,977	)		(125,783,061	)		(998,948,340	)
Increase (decrease)		(14,777,833	)	$	(120,202,888	)		26,445,013		$	211,571,294
Class B Shares
Shares sold		282,453		$	2,345,285			728,928		$	5,808,870
Reinvestment of distributions		505,908			4,186,147			1,459,038			11,647,331
Shares reacquired		(2,744,492	)		(22,724,468	)		(5,222,900	)		(41,627,628	)
Converted to Class A*		(2,536,607	)		(21,005,332	)		(7,926,571	)		(63,182,965	)
Decrease		(4,492,738	)	$	(37,198,368	)		(10,961,505	)	$	(87,354,392	)
Class C Shares
Shares sold		18,053,428		$	149,699,620			43,431,158		$	345,607,243
Reinvestment of distributions		4,615,980			38,144,832			9,698,893			77,422,450
Shares reacquired		(27,182,816	)		(224,885,355	)		(35,818,624	)		(285,600,334	)
Increase (decrease)		(4,513,408	)	$	(37,040,903	)		17,311,427		$	137,429,359
Class F Shares
Shares sold		24,629,484		$	203,515,009			49,243,438		$	390,285,417
Reinvestment of distributions		2,617,357			21,549,293			5,478,089			43,569,360
Shares reacquired		(28,072,487	)		(231,083,838	)		(37,026,612	)		(294,113,712	)
Increase (decrease)		(825,646	)	$	(6,019,536	)		17,694,915		$	139,741,065
Class I Shares
Shares sold		5,245,394		$	43,037,036			19,113,668		$	150,302,380
Reinvestment of distributions		651,403			5,346,028			1,273,862			10,102,393
Shares reacquired		(3,571,901	)		(29,283,265	)		(33,699,673	)		(262,212,677	)
Increase (decrease)		2,324,896		$	19,099,799			(13,312,143	)	$	(101,807,904	)
Class P Shares
Shares sold		446,060		$	3,762,732			2,822,147		$	22,863,521
Reinvestment of distributions		278,742			2,347,014			793,851			6,453,217
Shares reacquired		(3,591,948	)		(30,300,702	)		(5,608,703	)		(45,634,569	)
Decrease		(2,867,146	)	$	(24,190,956	)		(1,992,705	)	$	(16,317,831	)

61

Notes to Financial Statements (unaudited)(concluded)

	Six Months Ended June 30, 2013 (unaudited)					Year Ended December 31, 2012
Class R2 Shares	Shares			Amount		Shares			Amount
Shares sold	183,493		$	1,509,599		284,046		$	2,249,955
Reinvestment of distributions	2,526			20,819		3,903			31,129
Shares reacquired	(125,483	)		(1,036,844	)	(179,073	)		(1,425,565	)
Increase	60,536		$	493,574		108,876		$	855,519
Class R3 Shares
Shares sold	2,145,673		$	17,709,437		4,155,103		$	33,059,536
Reinvestment of distributions	232,448			1,913,449		419,876			3,340,265
Shares reacquired	(1,796,251	)		(14,808,904	)	(2,286,070	)		(18,167,001	)
Increase	581,870		$	4,813,982		2,288,909		$	18,232,800

* Automatic conversion of Class B shares occurs on the 25th day of the month (or, if the 25th day is not a business day, the next business day thereafter) following the eighth anniversary of the day on which the purchase order was accepted.

End of Financial Statements

Householding

The Fund has adopted a policy that allows it to send only one copy of the Fund’s prospectus, proxy material, annual report and semiannual report to certain shareholders residing at the same “household.” This reduces Fund expenses, which benefits you and other shareholders. If you need additional copies or do not want your mailings to be “householded,” please call Lord Abbett at 888-522-2388 or send a written request with your name, the name of your fund or funds and your account number or numbers to Lord Abbett Family of Funds, P.O. Box 219336, Kansas City, MO 64121.

Proxy Voting Policies, Procedures and Records

A description of the policies and procedures that Lord Abbett uses to vote proxies related to the Fund’s portfolio securities, and information on how Lord Abbett voted the Fund’s proxies during the 12-month period ended June 30 are available without charge, upon request, (i) by calling 888-522-2388; (ii) on Lord Abbett’s Website at www.lordabbett.com; and (iii) on the Securities and Exchange Commission’s (“SEC”) Website at www.sec.gov.

Shareholder Reports and Quarterly Portfolio Disclosure

The Fund is required to file its complete schedule of portfolio holdings with the SEC for its first and third fiscal quarters on Form N-Q. Copies of the filings are available without charge, upon request on the SEC’s Website at www.sec.gov and may be available by calling Lord Abbett at 888-522-2388. You can also obtain copies of Form N-Q by visiting the SEC’s Public Reference Room in Washington, DC (information on the operation of the Public Reference Room may be obtained by calling 800-SEC-0330).

62

This report, when not used for the general information of shareholders of the Fund, is to be distributed only if preceded or accompanied by a current fund prospectus.
Lord Abbett mutual fund shares are distributed by LORD ABBETT DISTRIBUTOR LLC.	Lord Abbett Bond-Debenture Fund, Inc.	LABD-3-0613 (08/13)

Item 2:	Code of Ethics.
	Not applicable.
Item 3:	Audit Committee Financial Expert.
	Not applicable.
Item 4:	Principal Accountant Fees and Services.
	Not applicable.
Item 5:	Audit Committee of Listed Registrants.
	Not applicable.
Item 6:	Investments.
	Not applicable.
Item 7:	Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
	Not applicable.
Item 8:	Portfolio Managers of Closed-End Management Investment Companies.
	Not applicable.
Item 9:	Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.
	Not applicable.
Item 10:	Submission of Matters to a Vote of Security Holders.
	Not applicable.
Item 11:	Controls and Procedures.

(a) Based on their evaluation of the Registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) as of a date within 90 days prior to the filing date of this report, the Chief Executive Officer and Chief Financial Officer of the Registrant have concluded that such disclosure controls and procedures are reasonably designed and effective to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to them by others within those entities.

(b) There were no changes in the Registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) that occurred during the second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Registrant’s internal control over financial reporting.

Item 12: Exhibits.

(a)(1)	Code of Ethics. Not applicable.
(a)(2)	Certification of each principal executive officer and principal financial officer of the Registrant as required by Rule 30a-2 under the Investment Company Act of 1940 is attached hereto as a part of EX-99.CERT.
(b)	Certification of each principal executive officer and principal financial officer of the Registrant as required by Section 906 of the Sarbanes-Oxley Act of 2002 is provided as a part of EX-99.906CERT.

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.

	LORD ABBETT BOND-DEBENTURE FUND, INC.
	By:	/s/ Daria L. Foster
		Daria L. Foster
		President and Chief Executive Officer
Date: August 21, 2013
	By:	/s/ Joan A. Binstock
		Joan A. Binstock
		Chief Financial Officer and Vice President
Date: August 21, 2013

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/ Daria L. Foster
		Daria L. Foster
		President and Chief Executive Officer
Date: August 21, 2013
	By:	/s/ Joan A. Binstock
		Joan A. Binstock
		Chief Financial Officer and Vice President
Date: August 21, 2013

EX-99.CERT

EX-99.CERT

CERTIFICATIONS

Pursuant to Section 302 of the

Sarbanes-Oxley Act of 2002

I, Daria L. Foster, certify that:

1. I have reviewed this report on Form N-CSR of Lord Abbett Bond-Debenture Fund, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the Registrant as of, and for, the periods presented in this report;

4. The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the Registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and

(d) disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the 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; and

5. The Registrant’s other certifying officer and I have disclosed to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize, and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Date: August 21, 2013

/s/ Daria L. Foster

Daria L. Foster

President and Chief Executive Officer

CERTIFICATIONS

Pursuant to Section 302 of the

Sarbanes-Oxley Act of 2002

I, Joan A. Binstock, certify that:

1. I have reviewed this report on Form N-CSR of Lord Abbett Bond-Debenture Fund, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the Registrant as of, and for, the periods presented in this report;

4. The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the Registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and

(d) disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the 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; and

5. The Registrant’s other certifying officer and I have disclosed to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize, and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Date: August 21, 2013

/s/ Joan A. Binstock

Joan A. Binstock

Chief Financial Officer and Vice President

EX-99.906 CERT

EX-99.906CERT

CERTIFICATIONS

Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002

Each of the undersigned below certifies that:

1. This report on Form N-CSR of Lord Abbett Bond-Debenture Fund, Inc. (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the issuer.

Date: August 21, 2013

By:	/s/ Daria L. Foster
	Daria L. Foster
	President and Chief Executive Officer

By:	/s/ Joan A. Binstock
	Joan A. Binstock
	Chief Financial Officer and Vice President

A SIGNED ORIGINAL OF THIS WRITTEN STATEMENT REQUIRED BY SECTION 906, OR OTHER DOCUMENT AUTHENTICATING, ACKNOWLEDGING, OR OTHERWISE ADOPTING THE SIGNATURE THAT APPEARS IN TYPED FORM WITHIN THE ELECTRONIC VERSION OF THIS WRITTEN STATEMENT REQUIRED BY SECTION 906, HAS BEEN PROVIDED TO THE REGISTRANT AND WILL BE RETAINED BY THE REGISTRANT AND FURNISHED TO THE SECURITIES AND EXCHANGE COMMISSION OR ITS STAFF UPON REQUEST.