Lord Abbett Bond Debenture Fund (LBNVX) N-CSRS Certified semi-annual shareholder report (management investment company)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES

Investment Company Act File Number: 811-02145

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: 6/30/2012

Item 1: Report(s) to Shareholders.

2 0 1 2

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, 2012

Lord Abbett Bond Debenture Fund
Semiannual Report

For the six-month period ended June 30, 2012

From left to right: Robert S. Dow, Director and Chairman of the Lord Abbett Funds; E. Thayer Bigelow, Independent Lead Director of the Lord Abbett Funds; and Daria L. Foster, Director and President of the Lord Abbett Funds.

Dear Shareholders: We are pleased to provide you with this semiannual report of the Lord Abbett Bond Debenture Fund for the six-month period ended June 30, 2012. 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,

Robert S. Dow

Chairman

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, 2012 through June 30, 2012).

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 entitled “Expenses Paid During Period 1/1/12 – 6/30/12” 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†
	1/1/12	6/30/12	1/1/12 - 6/30/12
Class A
Actual	$1,000.00	$1,059.20	$4.92
Hypothetical (5% Return Before Expenses)	$1,000.00	$1,020.09	$4.82
Class B
Actual	$1,000.00	$1,055.70	$8.23
Hypothetical (5% Return Before Expenses)	$1,000.00	$1,016.85	$8.07
Class C
Actual	$1,000.00	$1,055.70	$8.23
Hypothetical (5% Return Before Expenses)	$1,000.00	$1,016.85	$8.07
Class F
Actual	$1,000.00	$1,060.50	$3.64
Hypothetical (5% Return Before Expenses)	$1,000.00	$1,021.34	$3.57
Class I
Actual	$1,000.00	$1,059.70	$3.12
Hypothetical (5% Return Before Expenses)	$1,000.00	$1,021.78	$3.07
Class P
Actual	$1,000.00	$1,059.90	$4.92
Hypothetical (5% Return Before Expenses)	$1,000.00	$1,020.09	$4.82
Class R2
Actual	$1,000.00	$1,057.90	$6.19
Hypothetical (5% Return Before Expenses)	$1,000.00	$1,018.86	$6.07
Class R3
Actual	$1,000.00	$1,058.50	$5.68
Hypothetical (5% Return Before Expenses)	$1,000.00	$1,019.36	$5.57

^† For each class of the Fund, net expenses are equal to the annualized expense ratio for such class (0.96% for Classes A and P, 1.61% for Classes B and C, 0.71% for Class F, 0.61% for Class I, 1.21% for Class R2 and 1.11% for Class R3) multiplied by the average account value over the period, multiplied by 182/366 (to reflect one-half year period).

Portfolio Holdings Presented by Sector

June 30, 2012

Sector*	%**
Agency	0.01%
Automotive	3.84%
Banking	4.98%
Basic Industry	6.63%
Capital Goods	8.22%
Consumer Cyclical	4.55%
Consumer Non-Cyclical	2.81%
Energy	12.38%
Financial Services	6.19%
Foreign Government	0.25%

Sector*	%**
Healthcare	7.39%
Insurance	1.79%
Media	6.29%
Municipal	0.21%
Real Estate	1.58%
Services	10.18%
Technology & Electronics	9.35%
Telecommunications	9.04%
Utility	2.22%
Short-Term Investment	2.09%
Total	100.00%

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

3

Schedule of Investments (unaudited)

June 30, 2012

Investments	Shares (000)		Fair Value
LONG-TERM INVESTMENTS 97.03%
COMMON STOCKS 2.34%
Aerospace & Defense 0.10%
BE Aerospace, Inc.*		100	$	4,366,000
SAIC, Inc.		300		3,636,000
Total				8,002,000
Agency/Government Related 0.00%
Fannie Mae*		818		208,639
Auto Parts & Equipment 0.36%
Allison Transmission Holdings, Inc.		103		1,813,948
Cooper-Standard Holdings, Inc.*		753		27,670,508
Total				29,484,456
Banking 0.16%
Fifth Third Bancorp		300		4,020,000
Huntington Bancshares, Inc.		700		4,480,000
Regions Financial Corp.		600		4,050,000
Total				12,550,000
Chemicals 0.12%
LyondellBasell Industries NV Class A (Netherlands)(a)		100		4,027,000
Rockwood Holdings, Inc.*		100		4,435,000
TPC Group, Inc.*		35		1,301,083
Total				9,763,083
Diversified Capital Goods 0.16%
Actuant Corp. Class A		141		3,817,827
Emerson Electric Co.		200		9,316,000
Total				13,133,827
Electronics 0.07%
Broadcom Corp. Class A*		170		5,746,000
Energy: Exploration & Production 0.20%
Whiting Petroleum Corp.*		400		16,448,000
Food & Drug Retailers 0.03%
Ingles Markets, Inc. Class A		160		2,564,800

4 See Notes to Financial Statements.

Schedule of Investments (unaudited)(continued)

June 30, 2012

Investments	Shares (000)		Fair Value
Investments & Miscellaneous Financial Services 0.26%
SPDR S&P MidCap 400 ETF Trust		125	$	21,412,500
Machinery 0.02%
Rexnord Corp.*		68		1,352,700
Pharmaceuticals 0.16%
Mylan, Inc.*		400		8,548,000
Teva Pharmaceutical Industries Ltd. ADR		100		3,944,000
Total				12,492,000
Software/Services 0.46%
Facebook, Inc. Class A*		200		6,224,000
Fortinet, Inc.*		220		5,108,400
Informatica Corp.*		300		12,708,000
Monster Worldwide, Inc.*		300		2,550,000
Nuance Communications, Inc.*		250		5,955,000
VeriFone Systems, Inc.*		150		4,963,500
Total				37,508,900
Specialty Retail 0.08%
Home Depot, Inc. (The)		125		6,623,750
Telecommunications Equipment 0.09%
Aruba Networks, Inc.*		500		7,525,000
Telecommunications: Wireless 0.07%
QUALCOMM, Inc.		100		5,568,000
Total Common Stocks (cost $199,779,090)				190,383,655

	Interest Rate	Maturity Date	Principal Amount (000)
CONVERTIBLE BONDS 6.32%
Apparel/Textiles 0.12%
Iconix Brand Group, Inc.†	2.50%	6/1/2016	$	10,000	9,687,500
Auto Parts & Equipment 0.31%
Meritor, Inc. (Zero Coupon after 3/1/2016)~	4.625%	3/1/2026		28,515	24,914,981

See Notes to Financial Statements. 5

Schedule of Investments (unaudited)(continued)

June 30, 2012

Investments	Interest Rate	Maturity Date	Principal Amount (000)		Fair Value
Automakers 0.24%
Ford Motor Co.	4.25%	11/15/2016	$	10,000	$	13,950,000
Navistar International Corp.	3.00%	10/15/2014		6,350		5,953,125
Total						19,903,125
Computer Hardware 0.60%
Intel Corp.	2.95%	12/15/2035		10,000		11,362,500
Microchip Technology, Inc.	2.125%	12/15/2037		1,800		2,254,500
Micron Technology, Inc.†	2.375%	5/1/2032		15,000		13,893,750
NetApp, Inc.	1.75%	6/1/2013		16,500		18,933,750
SanDisk Corp.	1.50%	8/15/2017		2,100		2,170,875
Total						48,615,375
Electronics 0.16%
A123 Systems, Inc.	3.75%	4/15/2016		9,350		2,454,375
ON Semiconductor Corp.	2.625%	12/15/2026		9,800		10,547,250
Total						13,001,625
Energy: Exploration & Production 0.11%
Chesapeake Energy Corp.	2.50%	5/15/2037		10,000		8,612,500
Health Services 0.21%
Human Genome Sciences, Inc.	3.00%	11/15/2018		7,500		8,990,625
Incyte Corp.	4.75%	10/1/2015		3,000		7,946,250
Total						16,936,875
Hotels 0.13%
Host Hotels & Resorts LP†	2.50%	10/15/2029		8,000		10,410,000
Integrated Energy 0.11%
SunPower Corp.	4.50%	3/15/2015		10,000		8,775,000
Leisure 0.16%
priceline.com, Inc.†	1.00%	3/15/2018		12,325		13,049,094
Machinery 0.09%
Altra Holdings, Inc.	2.75%	3/1/2031		7,950		7,383,563
Media: Diversified 0.32%
Liberty Interactive LLC (convertible into Viacom, Inc., Class B and CBS Corp.)	3.25%	3/15/2031		30,000		26,362,500

6 See Notes to Financial Statements.

Schedule of Investments (unaudited)(continued)

June 30, 2012

Investments	Interest Rate	Maturity Date	Principal Amount (000)		Fair Value
Media: Services 0.09%
Omnicom Group, Inc.	Zero Coupon	7/1/2038	$	7,000	$	7,577,500
Medical Products 0.18%
NuVasive, Inc.	2.75%	7/1/2017		14,400		14,274,000
Metals/Mining (Excluding Steel) 0.52%
Alpha Appalachia Holdings, Inc.	3.25%	8/1/2015		7,225		6,267,687
Molycorp, Inc.	3.25%	6/15/2016		5,000		4,037,500
Newmont Mining Corp.	1.25%	7/15/2014		20,000		24,900,000
Newmont Mining Corp.	1.625%	7/15/2017		5,500		7,321,875
Total						42,527,062
Monoline Insurance 0.08%
Radian Group, Inc.	3.00%	11/15/2017		10,800		6,399,000
Oil Field Equipment & Services 0.09%
Exterran Energy Corp.	4.75%	1/15/2014		7,400		7,215,000
Packaging 0.21%
Owens-Brockway Glass Container, Inc.†	3.00%	6/1/2015		18,000		17,280,000
Pharmaceuticals 0.83%
BioMarin Pharmaceutical, Inc.	1.875%	4/23/2017		3,000		6,135,000
Gilead Sciences, Inc.	0.625%	5/1/2013		22,000		30,140,000
Medicis Pharmaceutical Corp.	1.375%	6/1/2017		3,000		2,988,750
Medivation, Inc.	2.625%	4/1/2017		15,000		17,981,250
Vertex Pharmaceuticals, Inc.	3.35%	10/1/2015		7,700		10,096,625
Total						67,341,625
Real Estate 0.05%
Boston Properties LP	3.75%	5/15/2036		3,500		4,016,250
Software/Services 1.59%
Alliance Data Systems Corp.	1.75%	8/1/2013		7,500		13,031,250
EMC Corp.	1.75%	12/1/2013		22,000		35,915,000
Nuance Communications, Inc.	2.75%	8/15/2027		9,900		13,699,125
Nuance Communications, Inc.†	2.75%	11/1/2031		9,300		10,311,375
Symantec Corp.	1.00%	6/15/2013		20,775		21,372,281
TIBCO Software, Inc.†	2.25%	5/1/2032		20,000		19,525,000
Xilinx, Inc.	2.625%	6/15/2017		12,000		15,450,000
Total						129,304,031

See Notes to Financial Statements. 7

Schedule of Investments (unaudited)(continued)

June 30, 2012

Investments	Interest Rate	Maturity Date	Principal Amount (000)		Fair Value
Telecommunications: Wireless 0.12%
SBA Communications Corp.	4.00%	10/1/2014	$	5,000	$	9,668,750
Total Convertible Bonds (cost $516,818,504)						513,255,356
			Shares (000)
CONVERTIBLE PREFERRED STOCKS 2.54%
Aerospace/Defense 0.18%
United Technologies Corp.	7.50%			270		14,226,300
Auto Parts & Equipment 0.04%
Cooper-Standard Holdings, Inc. PIK	7.00%			22		3,614,036
Automakers 0.11%
General Motors Co.	4.75%			275		9,130,000
Banking 0.73%
Bank of America Corp.	7.25%			37		36,133,500
Citigroup, Inc.	7.50%			270		23,101,200
Total						59,234,700
Electric: Integrated 0.22%
PPL Corp.	8.75%			335		17,912,450
Energy: Exploration & Production 0.42%
Apache Corp.	6.00%			676		33,957,216
Whiting Petroleum Corp.	6.25%			2		373,480
Total						34,330,696
Food: Wholesale 0.21%
Bunge Ltd.	4.875%			180		17,190,000
Investments & Miscellaneous Financial Services 0.27%
AMG Capital Trust I	5.10%			450		22,218,750
Life Insurance 0.31%
MetLife, Inc.	5.00%			400		24,748,000
Multi-Line Insurance 0.05%
Hartford Financial Services Group, Inc. (The)	7.25%			219		4,085,950
Total Convertible Preferred Stocks (cost $214,000,219)						206,690,882

8 See Notes to Financial Statements.

Schedule of Investments (unaudited)(continued)

June 30, 2012

Investments		Interest Rate	Maturity Date	Principal Amount (000)		Fair Value
FLOATING RATE LOANS(b) 3.22%
Aerospace 0.12%
DigitalGlobe, Inc. Term Loan B		5.75%	10/7/2018	$	9,950	$	9,847,963
Beverages 0.15%
Smart Balance, Inc. New Term Loan		7.00%	5/31/2018		12,000		11,970,000
Chemicals 0.05%
Momentive Performance Materials USA, Inc. Tranche B-1B Term Loan		3.75%	5/5/2015		3,965		3,804,236
Department Stores 0.12%
Neiman-Marcus Group, Inc. (The) Extended Term Loan		4.75%	5/16/2018		10,000		9,908,280
Electric: Generation 0.16%
Texas Competitive Electric Holdings Co. LLC Extended Term Loan		4.741%	10/10/2017		21,124		12,672,622
Electronics 0.10%
Freescale Semiconductor, Inc. Extended Term Loan B		4.489%	12/1/2016		8,971		8,504,188
Energy: Exploration & Production 0.19%
Chesapeake Energy Corp. Unsecured Term Loan		8.50%	12/1/2017		15,500		15,383,750
Gaming 0.21%
Caesars Entertainment Operating Co. Term Loan B1		3.245%	1/28/2015		10,000		9,315,280
Harrah’s Prop Co. Senior Note		3.24%	2/13/2013		10,000		7,712,500
Total							17,027,780
Health Facilities 0.25%
Community Health Systems, Inc. Non Extended Term Loan	2.495% - 2.717%		7/25/2014		6,919		6,830,446
Drumm Investors LLC Term Loan		5.00%	5/4/2018		6,913		6,584,679
HCA, Inc. Extended Term Loan B2		3.711%	3/31/2017		7,057		6,871,383
Total							20,286,508
Insurance Brokerage 0.10%
USI Holdings Corp. Incremental Term Loan		7.00%	5/5/2014		7,780		7,760,457

See Notes to Financial Statements. 9

Schedule of Investments (unaudited)(continued)

June 30, 2012

Investments		Interest Rate	Maturity Date	Principal Amount (000)		Fair Value
Investments & Miscellaneous Financial Services 0.39%
Nuveen Investments, Inc. 1st Lien Term Loan		3.46% - 3.466%	11/13/2014	$	11,509	$	11,445,649
Nuveen Investments, Inc. Extended Term Loan	5.961% - 5.967%		5/12/2017		13,447		13,248,887
Nuveen Investments, Inc. New 2nd Lien Term Loan		8.25%	2/28/2019		6,900		6,925,875
Total							31,620,411
Media: Broadcast 0.25%
Clear Channel Communication Term Loan B		3.895%	1/28/2016		9,489		7,571,588
Univision Communications, Inc. Extended Term Loan		4.489%	3/31/2017		10,162		9,599,984
Univision Communications, Inc. Initial Term Loan		2.239%	9/29/2014		3,506		3,417,456
Total							20,589,028
Media: Cable 0.18%
Atlantic Broadband Finance LLC 2nd Lien Term Loan		9.75%	10/4/2019		15,000		14,881,245
Media: Services 0.28%
Affinion Group, Inc. Term Loan B		5.00%	7/16/2015		15,594		14,239,445
DG FastChannel, Inc. Term Loan B		5.75%	7/26/2018		8,451		8,366,308
Total							22,605,753
Metals/Mining (Excluding Steel) 0.04%
Noranda Aluminum Acquisition Corp. New Term Loan B		5.75%	2/24/2019		3,591		3,613,444
Real Estate Development & Management 0.15%
Realogy Corp. Extended Letter of Credit		4.49%	10/10/2016		943		893,123
Realogy Corp. Extended Term Loan		4.491%	10/10/2016		12,054		11,414,002
Total							12,307,125
Software/Services 0.34%
Nuance Communications, Inc. Term Loan C		3.25%	3/31/2016		9,798		9,789,614
SRA International, Inc. Term Loan B		6.50%	7/20/2018		13,619		13,201,855
Syniverse Technologies, Inc. New Term Loan		5.00%	4/23/2019		5,000		4,975,000
Total							27,966,469
Specialty Retail 0.10%
Michaels Stores, Inc. Term Loan B2		5.00%	7/29/2016		8,009		7,993,895

10 See Notes to Financial Statements.

Schedule of Investments (unaudited)(continued)

June 30, 2012

Investments	Interest Rate	Maturity Date	Principal Amount (000)		Fair Value
Telecommunications Equipment 0.04%
Genesys Telecom Holdings, U.S., Inc. Term Loan B	6.75%	1/31/2019	$	2,993	$	3,009,955
Total Floating Rate Loans (cost $268,458,787)						261,753,109
FOREIGN BONDS(c) 0.55%
Luxembourg 0.09%
Matterhorn Mobile SA†	6.75%	5/15/2019	CHF	6,900		7,524,101
Netherlands 0.23%
Goodyear Dunlop Tires Europe BV†	6.75%	4/15/2019	EUR	5,200		6,712,208
Refresco Group BV†	7.375%	5/15/2018	EUR	2,000		2,379,139
Ziggo Bond Co. BV†	8.00%	5/15/2018	EUR	6,750		9,310,910
Total						18,402,257
United Kingdom 0.23%
Aston Martin Capital Ltd.†	9.25%	7/15/2018	GBP	4,150		5,280,865
R&R Ice Cream plc†	8.375%	11/15/2017	EUR	10,400		13,128,289
Total						18,409,154
Total Foreign Bonds (cost $47,037,021)						44,335,512
FOREIGN GOVERNMENT OBLIGATIONS 0.25%
Bermuda 0.12%
Bermuda Government†(d)	4.138%	1/3/2023	$	9,450		9,529,352
Canada 0.13%
Government of Canada(c)	2.75%	9/1/2016	CAD	10,000		10,428,543
Total Foreign Government Obligations (cost $20,098,187)						19,957,895
HIGH YIELD CORPORATE BONDS 80.07%
Aerospace/Defense 1.60%
BE Aerospace, Inc.	5.25%	4/1/2022	$	32,250		33,298,125
Esterline Technologies Corp.	6.625%	3/1/2017		8,000		8,310,000
Esterline Technologies Corp.	7.00%	8/1/2020		9,100		10,055,500
Huntington Ingalls Industries, Inc.	7.125%	3/15/2021		15,000		15,750,000
Mantech International Corp.	7.25%	4/15/2018		15,000		15,825,000
Moog, Inc.	6.25%	1/15/2015		6,300		6,378,750
Spirit Aerosystems, Inc.	6.75%	12/15/2020		19,000		20,805,000
Spirit Aerosystems, Inc.	7.50%	10/1/2017		7,575		8,275,687
Triumph Group, Inc.	8.00%	11/15/2017		10,440		11,431,800
Total						130,129,862

See Notes to Financial Statements. 11

Schedule of Investments (unaudited)(continued)

June 30, 2012

Investments	Interest Rate	Maturity Date		Principal Amount (000)		Fair Value
Airlines 0.50%
Delta Air Lines, Inc.	4.95%	5/23/2019		$	3,390	$	3,601,883
Delta Air Lines, Inc.†	9.50%	9/15/2014			3,492		3,705,885
United Airlines, Inc.	6.636%	7/2/2022			7,286		7,613,741
United Airlines, Inc.†	9.875%	8/1/2013			14,800		15,336,500
United Airlines, Inc.†	12.00%	11/1/2013			9,600		10,056,000
Total							40,314,009
Apparel/Textiles 0.44%
Hanesbrands, Inc.	6.375%	12/15/2020			10,000		10,575,000
Levi Strauss & Co.†	6.875%	5/1/2022			8,000		8,250,000
Levi Strauss & Co.	7.625%	5/15/2020			8,675		9,260,563
Perry Ellis International, Inc.	7.875%	4/1/2019			7,650		7,745,625
Total							35,831,188
Auto Loans 0.46%
Ford Motor Credit Co. LLC	4.25%	2/3/2017			17,500		18,363,065
Ford Motor Credit Co. LLC	5.875%	8/2/2021			7,300		8,135,792
Ford Motor Credit Co. LLC	8.00%	6/1/2014			10,000		11,097,920
Total							37,596,777
Auto Parts & Equipment 1.41%
Cooper-Standard Automotive, Inc.	8.50%	5/1/2018			15,000		16,256,250
Dana Holding Corp.	6.50%	2/15/2019			10,000		10,675,000
Dana Holding Corp.	6.75%	2/15/2021			10,000		10,850,000
International Automotive Components Group SA (Luxembourg)†(a)	9.125%	6/1/2018			14,500		13,303,750
Stanadyne Corp.	10.00%	8/15/2014			8,000		7,030,000
Stanadyne Holdings, Inc.	12.00%	2/15/2015			18,750		13,335,937
Stoneridge, Inc.†	9.50%	10/15/2017			7,250		7,476,562
Tenneco, Inc.	6.875%	12/15/2020			7,500		8,137,500
Tomkins LLC/Tomkins, Inc.	9.00%	10/1/2018			4,815		5,380,763
TRW Automotive, Inc.†	7.25%	3/15/2017			10,000		11,475,000
TRW Automotive, Inc.†	8.875%	12/1/2017			10,000		11,075,000
Total							114,995,762
Automakers 0.69%
Chrysler Group LLC/CG Co-Issuer, Inc.	8.25%	6/15/2021			16,000		16,520,000
Ford Motor Co.	7.45%	7/16/2031			15,000		18,862,500
General Motors Co.(e)	—	—	(f)		15,000		24,315
Navistar International Corp.	8.25%	11/1/2021			14,500		13,974,375

12 See Notes to Financial Statements.

Schedule of Investments (unaudited)(continued)

June 30, 2012

Investments	Interest Rate	Maturity Date		Principal Amount (000)		Fair Value
Automakers (continued)
Oshkosh Corp.	8.50%	3/1/2020		$	6,000	$	6,690,000
Total							56,071,190
Banking 3.73%
Ally Financial, Inc.	7.50%	9/15/2020			14,000		15,785,000
Ally Financial, Inc.	8.30%	2/12/2015			28,000		30,590,000
Astoria Depositor Corp†	5.744%	5/1/2016			8,444		8,338,205
Bank of America Corp.	3.875%	3/22/2017			9,000		9,178,101
Bank of America Corp.	5.42%	3/15/2017			5,000		5,182,515
Bank of America Corp.	8.00%	—	(f)		15,000		15,642,660
Capital One Capital VI	8.875%	5/15/2040			26,300		26,858,875
Fifth Third Capital Trust IV	6.50%	4/15/2037			16,250		16,209,375
Goldman Sachs Group, Inc. (The)	5.25%	7/27/2021			4,000		4,070,556
Goldman Sachs Group, Inc. (The)	5.75%	1/24/2022			15,000		15,863,235
HBOS plc (United Kingdom)†(a)	6.75%	5/21/2018			10,000		9,445,710
Huntington Bancshares, Inc.	7.00%	12/15/2020			5,050		5,922,842
JPMorgan Chase & Co.	4.50%	1/24/2022			16,500		17,808,829
JPMorgan Chase & Co.	7.90%	—	(f)		7,275		8,003,198
Macquarie Group Ltd. (Australia)†(a)	6.00%	1/14/2020			10,000		9,963,150
Morgan Stanley	4.75%	3/22/2017			14,200		14,183,599
Regions Bank	6.45%	6/26/2037			6,650		6,550,250
Regions Bank	7.50%	5/15/2018			7,987		9,005,343
Regions Financial Corp.	7.75%	11/10/2014			6,025		6,522,063
Regions Financing Trust II	6.625%	5/15/2047			10,000		9,550,000
SVB Financial Group	5.375%	9/15/2020			9,350		10,117,915
Synovus Financial Corp.	7.875%	2/15/2019			7,750		8,195,625
Wachovia Capital Trust III	5.57%	—	(f)		15,000		14,381,250
Washington Mutual Bank(g)	6.875%	6/15/2011			22,500		2,250
Zions Bancorporation	7.75%	9/23/2014			23,525		25,527,072
Total							302,897,618
Beverages 0.09%
CEDC Finance Corp. International, Inc.†	9.125%	12/1/2016			11,300		7,203,750
Brokerage 0.63%
Cantor Fitzgerald LP†	7.875%	10/15/2019			12,655		12,662,998
Lazard Group LLC	7.125%	5/15/2015			12,500		13,658,875
Raymond James Financial, Inc.	8.60%	8/15/2019			20,000		24,662,380
Total							50,984,253

See Notes to Financial Statements. 13

Schedule of Investments (unaudited)(continued)

June 30, 2012

Investments	Interest Rate	Maturity Date	Principal Amount (000)		Fair Value
Building & Construction 0.87%
Beazer Homes USA, Inc.	6.875%	7/15/2015	$	3,710	$	3,580,150
DR Horton, Inc.	4.75%	5/15/2017		4,000		4,132,500
K. Hovnanian Enterprises, Inc.†	5.00%	11/1/2021		5,779		4,059,748
KB Home	9.10%	9/15/2017		15,000		15,750,000
Lennar Corp.	12.25%	6/1/2017		15,000		19,462,500
Odebrecht Finance Ltd.†	6.00%	4/5/2023		6,000		6,349,800
Ryland Group, Inc.	8.40%	5/15/2017		7,500		8,531,250
Toll Brothers Finance Corp.	8.91%	10/15/2017		7,500		9,229,312
Total						71,095,260
Building Materials 0.47%
Griffon Corp.	7.125%	4/1/2018		6,200		6,324,000
Masco Corp.	7.125%	3/15/2020		12,000		13,260,144
Owens Corning, Inc.	9.00%	6/15/2019		15,000		18,727,905
Total						38,312,049
Chemicals 1.66%
Airgas, Inc.	7.125%	10/1/2018		10,500		11,331,852
Celanese US Holdings LLC	6.625%	10/15/2018		7,365		8,046,263
Chemtura Corp.	7.875%	9/1/2018		12,020		12,696,125
Dow Chemical Co. (The)	8.55%	5/15/2019		10,000		13,318,970
Huntsman International LLC	8.625%	3/15/2020		25,000		28,187,500
INEOS Finance plc (United Kingdom)†(a)	7.50%	5/1/2020		7,200		7,290,000
INEOS Finance plc (United Kingdom)†(a)	8.375%	2/15/2019		4,900		5,083,750
INEOS Finance plc (United Kingdom)†(a)	9.00%	5/15/2015		3,000		3,180,000
INEOS Group Holdings Ltd. (United Kingdom)†(a)	8.50%	2/15/2016		11,500		10,608,750
LyondellBasell Industries NV (Netherlands)†(a)	6.00%	11/15/2021		4,250		4,685,625
Methanex Corp. (Canada)(a)	5.25%	3/1/2022		4,425		4,599,668
Momentive Performance Materials, Inc.	9.00%	1/15/2021		12,000		9,150,000
Phibro Animal Health Corp.†	9.25%	7/1/2018		16,750		16,498,750
Total						134,677,253
Computer Hardware 0.48%
Brocade Communications Systems, Inc.	6.625%	1/15/2018		15,885		16,718,963
Brocade Communications Systems, Inc.	6.875%	1/15/2020		12,500		13,593,750
Seagate HDD Cayman	6.875%	5/1/2020		8,000		8,640,000
Total						38,952,713

14 See Notes to Financial Statements.

Schedule of Investments (unaudited)(continued)

June 30, 2012

Investments	Interest Rate	Maturity Date		Principal Amount (000)		Fair Value
Consumer/Commercial/Lease Financing 2.30%
Air Lease Corp.†	5.625%	4/1/2017		$	31,000	$	30,690,000
CIT Group, Inc.	5.25%	3/15/2018			3,000		3,101,250
CIT Group, Inc.†	7.00%	5/2/2016			31,000		31,116,250
CIT Group, Inc.†	7.00%	5/2/2017			3,839		3,851,106
Discover Bank	8.70%	11/18/2019			11,200		13,934,592
General Electric Capital Corp.	7.125%	—	(f)		13,500		14,315,076
International Lease Finance Corp.	6.25%	5/15/2019			5,400		5,502,600
International Lease Finance Corp.	8.25%	12/15/2020			6,100		7,000,805
International Lease Finance Corp.	8.75%	3/15/2017			34,000		38,335,000
NESCO LLC/NESCO Holdings Corp.†	11.75%	4/15/2017			12,400		12,772,000
Provident Funding Associates LP/ PFG Finance Corp.†	10.25%	4/15/2017			15,800		16,550,500
SLM Corp.	6.25%	1/25/2016			9,200		9,706,000
Total							186,875,179
Consumer Products 0.47%
Armored AutoGroup, Inc.†	9.50%	11/1/2018			12,675		10,995,563
Elizabeth Arden, Inc.	7.375%	3/15/2021			21,000		23,152,500
Prestige Brands, Inc.†	8.125%	2/1/2020			3,500		3,858,750
Total							38,006,813
Department Stores 0.15%
Bon-Ton Department Stores, Inc. (The)	10.25%	3/15/2014			8,500		7,225,000
J.C. Penney Corp., Inc.	7.125%	11/15/2023			5,025		4,692,094
Total							11,917,094
Diversified Capital Goods 2.20%
Actuant Corp.†	5.625%	6/15/2022			8,300		8,569,750
Amsted Industries, Inc.†	8.125%	3/15/2018			15,000		15,937,500
Anixter, Inc.	5.625%	5/1/2019			11,300		11,723,750
Belden, Inc.	7.00%	3/15/2017			17,500		18,112,500
Belden, Inc.	9.25%	6/15/2019			12,000		13,140,000
Mueller Water Products, Inc.	7.375%	6/1/2017			23,500		23,617,500
Park-Ohio Industries, Inc.	8.125%	4/1/2021			11,400		11,713,500
RBS Global, Inc./Rexnord LLC	8.50%	5/1/2018			30,000		32,700,000
SPX Corp.	6.875%	9/1/2017			21,000		22,995,000
Valmont Industries, Inc.	6.625%	4/20/2020			17,500		20,567,137
Total							179,076,637

See Notes to Financial Statements. 15

Schedule of Investments (unaudited)(continued)

June 30, 2012

Investments	Interest Rate	Maturity Date	Principal Amount (000)		Fair Value
Electric: Generation 0.53%
DPL, Inc.†	7.25%	10/15/2021	$	15,725	$	17,533,375
Mirant Americas Generation LLC	9.125%	5/1/2031		16,225		14,521,375
NRG Energy, Inc.	7.875%	5/15/2021		6,000		6,090,000
Texas Competitive Electric Holdings Co. LLC/TCEH Finance, Inc.†	11.50%	10/1/2020		7,500		5,156,250
Total						43,301,000
Electric: Integrated 1.29%
AES Corp. (The)	8.00%	10/15/2017		25,000		28,562,500
Black Hills Corp.	5.875%	7/15/2020		8,000		9,071,128
Duquesne Light Holdings, Inc.†	6.40%	9/15/2020		20,500		23,240,788
National Fuel Gas Co.	4.90%	12/1/2021		8,000		8,646,240
National Fuel Gas Co.	6.50%	4/15/2018		25,400		29,002,152
National Fuel Gas Co.	8.75%	5/1/2019		5,000		6,274,390
Total						104,797,198
Electronics 1.59%
Advanced Micro Devices, Inc.	7.75%	8/1/2020		16,000		17,680,000
CPI International, Inc.	8.00%	2/15/2018		15,500		14,046,875
Freescale Semiconductor, Inc.	8.05%	2/1/2020		14,200		14,093,500
Freescale Semiconductor, Inc.†	9.25%	4/15/2018		8,800		9,460,000
Freescale Semiconductor, Inc.†	10.125%	3/15/2018		8,134		8,927,065
Freescale Semiconductor, Inc.	10.75%	8/1/2020		5,800		6,264,000
KLA-Tencor Corp.	6.90%	5/1/2018		10,850		12,975,374
Nokia OYJ (Finland)(a)	5.375%	5/15/2019		8,000		6,308,528
NXP BV LLC (Netherlands)†(a)	9.75%	8/1/2018		12,500		14,312,500
Sensata Technologies BV (Netherlands)†(a)	6.50%	5/15/2019		7,550		7,833,125
Viasystems Group, Inc.†	7.875%	5/1/2019		17,000		17,042,500
Total						128,943,467
Energy: Exploration & Production 5.90%
Antero Resources Finance Corp.	7.25%	8/1/2019		10,000		10,400,000
Berry Petroleum Co.	6.375%	9/15/2022		6,300		6,520,500
Berry Petroleum Co.	6.75%	11/1/2020		21,000		22,050,000
BreitBurn Energy Partners LP/BreitBurn Finance Corp.†	7.875%	4/15/2022		9,900		9,949,500
Chaparral Energy, Inc.†	7.625%	11/15/2022		3,500		3,587,500
Chaparral Energy, Inc.	8.25%	9/1/2021		19,400		20,612,500
Concho Resources, Inc.	7.00%	1/15/2021		10,700		11,502,500

16 See Notes to Financial Statements.

Schedule of Investments (unaudited)(continued)

June 30, 2012

Investments	Interest Rate	Maturity Date	Principal Amount (000)		Fair Value
Energy: Exploration & Production (continued)
Concho Resources, Inc.	8.625%	10/1/2017	$	5,650	$	6,257,375
Continental Resources, Inc.	7.375%	10/1/2020		5,600		6,272,000
Continental Resources, Inc.	8.25%	10/1/2019		19,175		21,523,937
Energy XXI Gulf Coast, Inc.	7.75%	6/15/2019		16,075		16,316,125
Forest Oil Corp.	7.25%	6/15/2019		35,000		32,287,500
Forest Oil Corp.	8.50%	2/15/2014		9,825		10,267,125
Halcon Resources Corp.†(d)	9.75%	7/15/2020		6,600		6,510,636
Kerr-McGee Corp.	6.95%	7/1/2024		12,900		16,000,721
Kodiak Oil & Gas Corp.†	8.125%	12/1/2019		17,400		17,943,750
Laredo Petroleum, Inc.†	7.375%	5/1/2022		7,000		7,297,500
LINN Energy LLC/LINN Energy Finance Corp.	7.75%	2/1/2021		18,500		19,425,000
MEG Energy Corp. (Canada)†(a)	6.50%	3/15/2021		18,750		19,242,188
Newfield Exploration Co.	5.625%	7/1/2024		3,300		3,378,375
Newfield Exploration Co.	7.125%	5/15/2018		16,500		17,551,875
Oasis Petroleum, Inc.	6.50%	11/1/2021		7,500		7,462,500
Oasis Petroleum, Inc.	7.25%	2/1/2019		20,000		20,600,000
OGX Austria GmbH (Brazil)†(a)	8.50%	6/1/2018		41,750		37,366,250
Pan American Energy LLC (Argentina)†(a)	7.875%	5/7/2021		13,175		11,330,500
QEP Resources, Inc.	6.80%	3/1/2020		10,000		11,025,000
QEP Resources, Inc.	6.875%	3/1/2021		8,000		8,920,000
Quicksilver Resources, Inc.	7.125%	4/1/2016		10,000		7,750,000
Quicksilver Resources, Inc.	8.25%	8/1/2015		15,000		14,100,000
Range Resources Corp.	7.25%	5/1/2018		5,000		5,325,000
Range Resources Corp.	8.00%	5/15/2019		7,500		8,231,250
SM Energy Co.†	6.50%	1/1/2023		4,200		4,236,750
SM Energy Co.	6.50%	11/15/2021		10,000		10,225,000
SM Energy Co.	6.625%	2/15/2019		18,250		18,797,500
W&T Offshore, Inc.	8.50%	6/15/2019		10,275		10,660,313
Whiting Petroleum Corp.	6.50%	10/1/2018		4,200		4,494,000
WPX Energy, Inc.	6.00%	1/15/2022		14,000		14,000,000
Total						479,420,670
Environmental 0.03%
Clean Harbors, Inc.	7.625%	8/15/2016		2,278		2,389,053
Food & Drug Retailers 0.69%
Ingles Markets, Inc.	8.875%	5/15/2017		25,850		28,273,438
Rite Aid Corp.	9.50%	6/15/2017		7,500		7,706,250
Rite Aid Corp.	10.25%	10/15/2019		12,000		13,560,000

See Notes to Financial Statements. 17

Schedule of Investments (unaudited)(continued)

June 30, 2012

Investments	Interest Rate	Maturity Date	Principal Amount (000)		Fair Value
Food & Drug Retailers (continued)
Stater Bros Holdings, Inc.	7.375%	11/15/2018	$	6,000	$	6,532,500
Total						56,072,188
Food: Wholesale 1.68%
Bumble Bee Acquisition Corp.†	9.00%	12/15/2017		3,612		3,621,030
Bumble Bee Holdco SCA PIK (Luxembourg)†(a)	9.625%	3/15/2018		5,725		5,267,000
Del Monte Corp.	7.625%	2/15/2019		20,000		20,275,000
Dole Food Co., Inc.	8.75%	7/15/2013		30,000		31,725,000
Dole Food Co., Inc.	13.875%	3/15/2014		5,395		6,130,069
Ingredion, Inc.	4.625%	11/1/2020		10,000		10,854,590
Pinnacle Foods Finance LLC/Pinnacle Foods Finance Corp.	8.25%	9/1/2017		5,250		5,578,125
Pinnacle Foods Finance LLC/Pinnacle Foods Finance Corp.	9.25%	4/1/2015		8,250		8,518,125
Post Holdings, Inc.†	7.375%	2/15/2022		23,000		24,322,500
Viterra, Inc. (Canada)†(a)	5.95%	8/1/2020		18,250		20,020,012
Total						136,311,451
Forestry/Paper 0.75%
Longview Fibre Paper & Packaging, Inc.†	8.00%	6/1/2016		14,000		14,070,000
Louisiana-Pacific Corp.†	7.50%	6/1/2020		8,000		8,420,000
Millar Western Forest Products Ltd. (Canada)(a)	8.50%	4/1/2021		10,000		7,700,000
Sappi Papier Holding GmbH (Austria)†(a)(d)	7.75%	7/15/2017		3,900		3,963,375
Smurfit Kappa Funding plc (Ireland)(a)	7.75%	4/1/2015		15,000		15,225,000
Weyerhaeuser Co.	7.375%	10/1/2019		10,000		11,836,490
Total						61,214,865
Gaming 3.65%
Ameristar Casinos, Inc.†	7.50%	4/15/2021		2,000		2,150,000
Ameristar Casinos, Inc.	7.50%	4/15/2021		4,400		4,730,000
Boyd Gaming Corp.	7.125%	2/1/2016		12,500		12,125,000
Caesar’s Entertainment Operating Co., Inc.†	8.50%	2/15/2020		8,700		8,787,000
Caesar’s Entertainment Operating Co., Inc.	12.75%	4/15/2018		20,000		15,800,000
CCM Merger, Inc.†	9.125%	5/1/2019		14,000		14,192,500
Chester Downs & Marina LLC†	9.25%	2/1/2020		5,000		5,225,000
CityCenter Holdings LLC/CityCenter Finance Corp.	7.625%	1/15/2016		11,800		12,508,000
CityCenter Holdings LLC/CityCenter Finance Corp. PIK	10.75%	1/15/2017		7,535		7,940,510
Downstream Development Authority of the Quapaw Tribe of Oklahoma†	10.50%	7/1/2019		11,600		12,035,000

18 See Notes to Financial Statements.

Schedule of Investments (unaudited)(continued)
June 30, 2012

Investments	Interest Rate	Maturity Date	Principal Amount (000)		Fair Value
Gaming (continued)
Isle of Capri Casinos, Inc.	7.00%	3/1/2014	$	20,000	$	20,075,000
Marina District Finance Co., Inc.	9.875%	8/15/2018		20,000		18,950,000
MCE Finance Ltd.	10.25%	5/15/2018		11,000		12,512,500
MGM Resorts International	6.625%	7/15/2015		15,000		15,525,000
MGM Resorts International	9.00%	3/15/2020		4,950		5,519,250
Midwest Gaming Borrower LLC/Midwest Finance Corp.†	11.625%	4/15/2016		10,000		11,087,500
Mohegan Tribal Gaming Authority†	11.50%	11/1/2017		20,000		20,800,000
Peninsula Gaming LLC	8.375%	8/15/2015		8,200		8,671,500
Pinnacle Entertainment, Inc.	7.75%	4/1/2022		7,500		8,034,375
River Rock Entertainment Authority (The)	9.00%	11/1/2018		15,486		10,298,190
Rivers Pittsburgh Borrower LP/Rivers Pittsburgh Finance Corp.†	9.50%	6/15/2019		6,675		6,950,344
Snoqualmie Entertainment Authority†	9.125%	2/1/2015		17,000		17,148,750
Station Casinos, Inc.(g)	6.50%	2/1/2014		27,000		2,700
Sugarhouse HSP Gaming Prop. Mezz. LP/Sugarhouse HSP Gaming Finance Corp.†	8.625%	4/15/2016		16,500		17,490,000
Wynn Las Vegas LLC/Capital Corp.	7.75%	8/15/2020		5,300		5,896,250
Wynn Las Vegas LLC/Capital Corp.	7.875%	11/1/2017		20,000		22,100,000
Total						296,554,369
Gas Distribution 2.79%
Chesapeake Midstream Partners LP/ CHKM Finance Corp.	6.125%	7/15/2022		8,800		8,668,000
El Paso Corp.	6.50%	9/15/2020		5,000		5,502,625
El Paso Corp.	7.00%	6/15/2017		25,000		28,483,900
El Paso Corp.	7.75%	1/15/2032		10,000		11,293,500
Energy Transfer Partners LP	5.20%	2/1/2022		22,100		23,711,090
Ferrellgas LP/Ferrellgas Finance Corp.	6.50%	5/1/2021		12,000		11,010,000
Ferrellgas Partners LP	8.625%	6/15/2020		9,750		8,726,250
Florida Gas Transmission Co. LLC†	7.90%	5/15/2019		7,700		9,758,210
IFM US Colonial Pipeline 2 LLC†	6.45%	5/1/2021		19,000		20,951,414
Inergy LP/Inergy Finance Corp.	6.875%	8/1/2021		18,318		18,409,590
Kinder Morgan Finance Co. LLC†	6.00%	1/15/2018		17,000		17,765,000
MarkWest Energy Partners LP/ MarkWest Energy Finance Corp.	6.25%	6/15/2022		4,850		5,019,750
MarkWest Energy Partners LP/ MarkWest Energy Finance Corp.	6.75%	11/1/2020		17,000		18,147,500
Northwest Pipeline GP	6.05%	6/15/2018		5,025		5,960,072

See Notes to Financial Statements. 19

Schedule of Investments (unaudited)(continued)
June 30, 2012

Investments	Interest Rate	Maturity Date	Principal Amount (000)		Fair Value
Gas Distribution (continued)
Panhandle Eastern Pipeline Co. LP	7.00%	6/15/2018	$	7,600	$	9,018,016
Panhandle Eastern Pipeline Co. LP	8.125%	6/1/2019		13,800		17,124,447
Suburban Propane Partners LP/Suburban Energy Finance Corp.	7.375%	3/15/2020		6,600		6,897,000
Total						226,446,364
Health Facilities 3.67%
Capella Healthcare, Inc.	9.25%	7/1/2017		15,000		15,600,000
Community Health Systems, Inc.	8.00%	11/15/2019		33,000		35,310,000
Community Health Systems, Inc.	8.875%	7/15/2015		10,056		10,332,540
HCA Holdings, Inc.	7.75%	5/15/2021		30,000		32,325,000
HCA, Inc.	6.50%	2/15/2020		20,000		21,725,000
HCA, Inc.	7.50%	2/15/2022		28,000		30,590,000
HCA, Inc.	9.875%	2/15/2017		6,389		6,964,010
HealthSouth Corp.	8.125%	2/15/2020		21,000		23,047,500
Kindred Healthcare, Inc.	8.25%	6/1/2019		20,750		19,349,375
Omega Healthcare Investors, Inc.	6.75%	10/15/2022		6,900		7,400,250
Omega Healthcare Investors, Inc.	7.50%	2/15/2020		7,750		8,486,250
Select Medical Corp.	7.625%	2/1/2015		17,000		17,042,500
Tenet Healthcare Corp.	8.875%	7/1/2019		6,850		7,723,375
Tenet Healthcare Corp.	9.25%	2/1/2015		15,000		16,762,500
Vanguard Health Holding Co. II LLC/Vanguard Holding Co. II, Inc.	8.00%	2/1/2018		30,000		30,825,000
VWR Funding, Inc. PIK	10.25%	7/15/2015		13,969		14,457,818
Total						297,941,118
Health Services 0.38%
STHI Holding Corp.†	8.00%	3/15/2018		12,500		13,281,250
Truven Health Analytics, Inc.†	10.625%	6/1/2020		17,000		17,765,000
Total						31,046,250
Hotels 0.61%
Gaylord Entertainment Co.	6.75%	11/15/2014		9,600		9,696,000
Host Hotels & Resorts LP	6.375%	3/15/2015		7,325		7,453,188
Hyatt Hotels Corp.†	5.75%	8/15/2015		15,036		16,499,439
Starwood Hotels & Resorts Worldwide, Inc.	6.75%	5/15/2018		8,500		9,885,423
Wyndham Worldwide Corp.	5.75%	2/1/2018		5,315		5,916,642
Total						49,450,692

20 See Notes to Financial Statements.

Schedule of Investments (unaudited)(continued)
June 30, 2012

Investments	Interest Rate		Maturity Date	Principal Amount (000)		Fair Value
Household & Leisure Products 0.34%
American Standard Americas†	10.75%		1/15/2016	$	12,675	$	11,058,938
Whirlpool Corp.	8.60%		5/1/2014		15,000		16,707,330
Total							27,766,268
Insurance Brokerage 0.20%
USI Holdings Corp.†	4.342%	#	11/15/2014		17,250		16,085,625
Integrated Energy 0.36%
Alta Wind Holdings LLC†	7.00%		6/30/2035		11,334		12,779,546
Coso Geothermal Power Holdings LLC†	7.00%		7/15/2026		13,317		6,778,824
LUKOIL International Finance BV (Netherlands)†(a)	6.656%		6/7/2022		9,000		9,908,010
Total							29,466,380
Investments & Miscellaneous Financial Services 1.14%
FMR LLC†	5.35%		11/15/2021		14,800		15,944,987
KKR Group Finance Co.†	6.375%		9/29/2020		10,900		11,835,274
Legg Mason, Inc.†	5.50%		5/21/2019		6,650		6,734,555
Neuberger Berman Group LLC/Neuberger Berman Finance Corp.†	5.625%		3/15/2020		3,700		3,875,750
Neuberger Berman Group LLC/Neuberger Berman Finance Corp.†	5.875%		3/15/2022		15,000		15,750,000
Nuveen Investments, Inc.	10.50%		11/15/2015		38,050		38,811,000
Total							92,951,566
Leisure 0.71%
MU Finance plc (United Kingdom)†(a)	8.375%		2/1/2017		20,600		22,351,000
NCL Corp. Ltd.	9.50%		11/15/2018		10,825		11,799,250
Speedway Motorsports, Inc.	8.75%		6/1/2016		15,450		16,879,125
Universal City Development Partners Ltd./UCDP Finance, Inc.	8.875%		11/15/2015		5,996		6,425,422
Total							57,454,797
Life Insurance 0.23%
MetLife Capital Trust X†	9.25%		4/8/2038		15,075		18,542,250
Machinery 1.18%
Altra Holdings, Inc.	8.125%		12/1/2016		20,000		21,575,000
Kennametal, Inc.	3.875%		2/15/2022		3,500		3,608,238
Manitowoc Co., Inc. (The)	8.50%		11/1/2020		24,050		26,094,250
Mcron Finance Sub LLC/Mcron Finance Corp.†	8.375%		5/15/2019		15,200		15,124,000

See Notes to Financial Statements. 21

Schedule of Investments (unaudited)(continued)
June 30, 2012

Investments	Interest Rate	Maturity Date	Principal Amount (000)		Fair Value
Machinery (continued)
Roper Industries, Inc.	6.25%	9/1/2019	$	10,350	$	12,335,854
Steelcase, Inc.	6.375%	2/15/2021		11,175		11,865,581
Thermadyne Holdings Corp.	9.00%	12/15/2017		5,500		5,651,250
Total						96,254,173
Managed Care 0.13%
Centene Corp.	5.75%	6/1/2017		10,825		10,933,250
Media: Broadcast 1.18%
Allbritton Communications Co.	8.00%	5/15/2018		10,000		10,500,000
AMC Networks, Inc.†	7.75%	7/15/2021		12,000		13,290,000
Clear Channel Communications, Inc.	9.00%	3/1/2021		10,000		8,750,000
Cumulus Media Holdings, Inc.	7.75%	5/1/2019		8,000		7,580,000
Discovery Communications LLC	5.625%	8/15/2019		7,300		8,556,929
FoxCo Acquisition Sub LLC†	13.375%	7/15/2016		5,650		6,073,750
Gray Television, Inc.	10.50%	6/29/2015		14,175		14,812,875
LIN Television Corp.	8.375%	4/15/2018		7,500		7,706,250
Sinclair Television Group, Inc.†	9.25%	11/1/2017		8,750		9,712,500
Univision Communications, Inc.†	8.50%	5/15/2021		8,625		8,732,812
Total						95,715,116
Media: Cable 2.70%
CCO Holdings LLC/CCO Holdings Capital Corp.	7.00%	1/15/2019		9,450		10,253,250
CCO Holdings LLC/CCO Holdings Capital Corp.	8.125%	4/30/2020		17,500		19,600,000
CSC Holdings LLC	8.625%	2/15/2019		10,000		11,600,000
DISH DBS Corp.†	4.625%	7/15/2017		22,350		22,489,688
DISH DBS Corp.†	5.875%	7/15/2022		14,000		14,210,000
DISH DBS Corp.	6.75%	6/1/2021		16,650		18,065,250
Harron Communications LP/ Harron Finance Corp.†	9.125%	4/1/2020		5,750		5,980,000
Mediacom Broadband LLC	8.50%	10/15/2015		9,000		9,292,500
Mediacom Communications Corp.	9.125%	8/15/2019		32,450		35,776,125
Nara Cable Funding Ltd. (Ireland)†(a)	8.875%	12/1/2018		13,500		11,677,500
Ono Finance II plc (Ireland)†(a)	10.875%	7/15/2019		7,075		5,518,500
Unitymedia Hessen GmbH & Co. KG/Unitymedia NRW GmbH (Germany)†(a)	7.50%	3/15/2019		4,450		4,739,250
UPCB Finance V Ltd.†	7.25%	11/15/2021		14,000		14,700,000
Virgin Media Finance plc (United Kingdom)(a)	5.25%	2/15/2022		7,500		7,706,250
Virgin Media Finance plc (United Kingdom)(a)	8.375%	10/15/2019		15,000		16,931,250

22 See Notes to Financial Statements.

Schedule of Investments (unaudited)(continued)
June 30, 2012

Investments	Interest Rate		Maturity Date	Principal Amount (000)		Fair Value
Media: Cable (continued)
Virgin Media Finance plc (United Kingdom)(a)	9.50%		8/15/2016	$	7,240	$	8,108,800
Virgin Media Secured Finance plc (United Kingdom)(a)	5.25%		1/15/2021		2,250		2,496,962
Total							219,145,325
Media: Services 0.93%
Affinion Group, Inc.	11.50%		10/15/2015		17,000		14,577,500
Clear Channel Worldwide Holdings, Inc.†	7.625%		3/15/2020		7,000		6,877,500
Lamar Media Corp.	7.875%		4/15/2018		7,500		8,287,500
Nielsen Finance LLC/Nielsen Finance Co.	7.75%		10/15/2018		5,450		6,063,125
Nielsen Finance LLC/Nielsen Finance Co.	11.50%		5/1/2016		1,823		2,082,777
WMG Acquisition Corp.	9.50%		6/15/2016		25,000		27,375,000
WMG Acquisition Corp.	11.50%		10/1/2018		9,500		10,545,000
Total							75,808,402
Medical Products 1.13%
Bausch & Lomb, Inc.	9.875%		11/1/2015		25,000		26,250,000
Bio-Rad Laboratories, Inc.	8.00%		9/15/2016		7,500		8,325,000
Biomet, Inc.	10.00%		10/15/2017		22,000		23,608,750
Grifols, Inc.	8.25%		2/1/2018		5,100		5,495,250
Kinetic Concepts, Inc./KCI USA, Inc.†	10.50%		11/1/2018		9,500		10,022,500
Life Technologies Corp.	6.00%		3/1/2020		5,300		6,227,543
Polymer Group, Inc.	7.75%		2/1/2019		10,925		11,594,156
Total							91,523,199
Metals/Mining (Excluding Steel) 1.99%
Arch Coal, Inc.	7.25%		6/15/2021		15,000		12,637,500
Arch Coal, Inc.	8.75%		8/1/2016		10,000		9,600,000
Boart Longyear Management Pty Ltd. (Australia)†(a)	7.00%		4/1/2021		9,900		10,172,250
Cliffs Natural Resources, Inc.	5.90%		3/15/2020		10,000		10,577,990
CONSOL Energy, Inc.	6.375%		3/1/2021		2,500		2,362,500
CONSOL Energy, Inc.	8.25%		4/1/2020		8,000		8,440,000
FMG Resources (August 2006) Pty Ltd. (Australia)†(a)	8.25%		11/1/2019		20,000		21,300,000
Gold Fields Orogen Holding BVI Ltd.†	4.875%		10/7/2020		14,500		13,839,351
James River Coal Co.	7.875%		4/1/2019		21,700		11,067,000
Mirabela Nickel Ltd. (Australia)†(a)	8.75%		4/15/2018		15,000		10,350,000
Noranda Aluminum Acquisition Corp. PIK	4.73%	#	5/15/2015		16,786		16,114,500
Novelis, Inc.	8.75%		12/15/2020		6,000		6,495,000
Quadra FNX Mining Ltd. (Canada)†(a)	7.75%		6/15/2019		15,000		15,750,000

See Notes to Financial Statements. 23

Schedule of Investments (unaudited)(continued)
June 30, 2012

Investments	Interest Rate	Maturity Date	Principal Amount (000)		Fair Value
Metals/Mining (Excluding Steel) (continued)
SunCoke Energy, Inc.	7.625%	8/1/2019	$	5,000	$	4,912,500
Teck Resources Ltd. (Canada)(a)	10.75%	5/15/2019		5,000		6,020,070
Thompson Creek Metals Co., Inc.	7.375%	6/1/2018		2,650		2,139,875
Total						161,778,536
Monoline Insurance 0.22%
Fidelity National Financial, Inc.	6.60%	5/15/2017		16,250		17,572,279
Multi-Line Insurance 0.40%
AXA SA (France)†(a)(h)	6.379%	12/31/2049		11,225		8,867,750
Genworth Financial, Inc.	7.625%	9/24/2021		13,575		12,846,783
Hartford Financial Services Group, Inc.	5.125%	4/15/2022		7,700		7,944,336
ZFS Finance USA Trust V†	6.50%	5/9/2037		3,024		2,978,640
Total						32,637,509
Oil Field Equipment & Services 1.63%
Basic Energy Services, Inc.	7.75%	2/15/2019		10,000		9,650,000
Dresser-Rand Group, Inc.	6.50%	5/1/2021		16,000		16,680,000
Gulfmark Offshore, Inc.†	6.375%	3/15/2022		16,800		17,010,000
Hornbeck Offshore Services, Inc.†	5.875%	4/1/2020		18,350		18,304,125
Key Energy Services, Inc.	6.75%	3/1/2021		5,750		5,635,000
Offshore Group Investments Ltd.†	11.50%	8/1/2015		2,300		2,507,000
Oil States International, Inc.	6.50%	6/1/2019		16,000		16,720,000
Precision Drilling Corp. (Canada)(a)	6.50%	12/15/2021		3,250		3,331,250
Precision Drilling Corp. (Canada)(a)	6.625%	11/15/2020		2,825		2,923,875
SEACOR Holdings, Inc.	7.375%	10/1/2019		19,750		21,449,705
SESI LLC	6.375%	5/1/2019		6,700		7,051,750
Transocean, Inc.	6.375%	12/15/2021		3,500		4,010,447
Trinidad Drilling Ltd. (Canada)†(a)	7.875%	1/15/2019		6,600		7,045,500
Total						132,318,652
Oil Refining & Marketing 0.42%
Alon Refining Krotz Springs, Inc.	13.50%	10/15/2014		7,850		8,232,687
Phillips 66†	4.30%	4/1/2022		6,550		6,904,126
Tesoro Corp.	9.75%	6/1/2019		17,000		19,295,000
Total						34,431,813

24 See Notes to Financial Statements.

Schedule of Investments (unaudited)(continued)
June 30, 2012

Investments	Interest Rate	Maturity Date	Principal Amount (000)		Fair Value
Packaging 2.40%
AEP Industries, Inc.	8.25%	4/15/2019	$	15,000	$	15,675,000
Ardagh Packaging Finance plc (Ireland)†(a)	7.375%	10/15/2017		5,000		5,337,500
Ardagh Packaging Finance plc (Ireland)†(a)	9.125%	10/15/2020		9,500		10,117,500
Ardagh Packaging Finance plc/ Ardagh MP Holdings USA, Inc. (Ireland)†(a)	9.125%	10/15/2020		3,350		3,534,250
Crown Cork & Seal Co., Inc.	7.375%	12/15/2026		47,770		50,875,050
Packaging Dynamics Corp.†	8.75%	2/1/2016		6,525		6,883,875
Reynolds Group Issuer, Inc./ Reynolds Group Issuer LLC/ Reynolds Group Issuer (Luxembourg) SA†	7.125%	4/15/2019		10,000		10,525,000
Reynolds Group Issuer, Inc./ Reynolds Group Issuer LLC/ Reynolds Group Issuer (Luxembourg) SA†	8.50%	5/15/2018		39,500		38,907,500
Reynolds Group Issuer, Inc./ Reynolds Group Issuer LLC/ Reynolds Group Issuer (Luxembourg) SA†	9.875%	8/15/2019		8,225		8,543,719
Rock-Tenn Co.†	4.90%	3/1/2022		2,400		2,477,203
Sealed Air Corp.†	6.875%	7/15/2033		15,000		14,475,000
Sealed Air Corp.	7.875%	6/15/2017		2,500		2,712,500
Sealed Air Corp.†	8.375%	9/15/2021		13,500		15,322,500
Tekni-Plex, Inc.†	9.75%	6/1/2019		10,000		10,125,000
Total						195,511,597
Pharmaceuticals 0.40%
Mylan, Inc.†	7.625%	7/15/2017		5,250		5,801,250
Mylan, Inc.†	7.875%	7/15/2020		7,500		8,446,875
Warner Chilcott Co. LLC/ Warner Chilcott Finance LLC	7.75%	9/15/2018		17,060		18,382,150
Total						32,630,275
Printing & Publishing 0.14%
ProQuest LLC/ProQuest Notes Co.†	9.00%	10/15/2018		12,625		11,299,375
Property & Casualty 0.20%
Liberty Mutual Group, Inc.†(i)	10.75%	6/15/2058		12,000		16,440,000
Railroads 0.26%
Florida East Coast Railway Corp.	8.125%	2/1/2017		20,000		21,000,000

See Notes to Financial Statements. 25

Schedule of Investments (unaudited)(continued)
June 30, 2012

Investments	Interest Rate	Maturity Date	Principal Amount (000)		Fair Value
Real Estate Investment Trusts 1.36%
DDR Corp.	4.625%	7/15/2022	$	5,010	$	4,954,314
DDR Corp.	7.875%	9/1/2020		11,000		13,173,259
DuPont Fabros Technology LP	8.50%	12/15/2017		13,875		15,331,875
Goodman Funding Pty Ltd. (Australia)†(a)	6.00%	3/22/2022		9,600		9,750,749
Goodman Funding Pty Ltd. (Australia)†(a)	6.375%	11/12/2020		12,000		12,584,088
Health Care REIT, Inc.	6.125%	4/15/2020		10,000		11,149,410
Kilroy Realty LP	5.00%	11/3/2015		8,000		8,541,032
ProLogis(j)	6.875%	3/15/2020		21,000		25,155,501
ProLogis	8.65%	5/15/2016		9,168		10,055,727
Total						110,695,955
Restaurants 0.45%
DineEquity, Inc.	9.50%	10/30/2018		8,000		8,800,000
Fiesta Restaurant Group†	8.875%	8/15/2016		4,380		4,620,900
Wendy’s Co. (The)	10.00%	7/15/2016		21,500		23,193,340
Total						36,614,240
Software/Services 2.89%
Alliance Data Systems Corp.†	6.375%	4/1/2020		53,000		54,590,000
BMC Software, Inc.	4.25%	2/15/2022		4,350		4,361,758
Ceridian Corp.	11.25%	11/15/2015		6,750		6,513,750
Fidelity National Information Services, Inc.	7.625%	7/15/2017		5,000		5,537,500
First Data Corp.†	8.25%	1/15/2021		17,000		17,085,000
First Data Corp.	9.875%	9/24/2015		2,514		2,557,995
First Data Corp.	12.625%	1/15/2021		30,000		30,187,500
Lawson Software, Inc.†	9.375%	4/1/2019		10,000		10,725,000
SERENA Software, Inc.	10.375%	3/15/2016		7,600		7,809,000
Sophia LP/Sophia Finance, Inc.†	9.75%	1/15/2019		21,500		22,951,250
SRA International, Inc.	11.00%	10/1/2019		7,475		7,549,750
SunGard Data Systems, Inc.	7.375%	11/15/2018		14,000		15,085,000
SunGard Data Systems, Inc.	7.625%	11/15/2020		6,100		6,527,000
SunGard Data Systems, Inc.	10.25%	8/15/2015		42,000		43,365,000
Total						234,845,503
Specialty Retail 1.99%
Brookstone Co., Inc.†	13.00%	10/15/2014		7,058		5,946,365
Brown Shoe Co., Inc.	7.125%	5/15/2019		12,500		12,359,375
J. Crew Group, Inc.	8.125%	3/1/2019		12,400		12,865,000
Limited Brands, Inc.	7.00%	5/1/2020		15,000		16,725,000

26 See Notes to Financial Statements.

Schedule of Investments (unaudited)(continued)
June 30, 2012

Investments	Interest Rate	Maturity Date	Principal Amount (000)		Fair Value
Specialty Retail (continued)
Limited Brands, Inc.	7.60%	7/15/2037	$	7,500	$	7,509,375
Limited Brands, Inc.	8.50%	6/15/2019		12,500		14,750,000
PETCO Animal Supplies, Inc.†	9.25%	12/1/2018		14,000		15,365,000
QVC, Inc.†	7.125%	4/15/2017		7,800		8,287,477
QVC, Inc.†	7.375%	10/15/2020		17,500		19,395,425
Sally Holdings LLC/Sally Capital, Inc.	5.75%	6/1/2022		7,700		8,094,625
Toys “R” Us Property Co. I LLC	10.75%	7/15/2017		23,575		25,873,562
Toys “R” Us Property Co. II LLC	8.50%	12/1/2017		14,000		14,647,500
Total						161,818,704
��
Steel Producers/Products 0.97%
AK Steel Corp.	8.375%	4/1/2022		3,900		3,334,500
Allegheny Ludlum Corp.	6.95%	12/15/2025		13,875		16,552,722
Allegheny Technologies, Inc.	9.375%	6/1/2019		10,200		12,996,963
Essar Steel Algoma, Inc. (Canada)†(a)	9.375%	3/15/2015		11,000		10,670,000
Essar Steel Algoma, Inc. (Canada)†(a)	9.875%	6/15/2015		18,700		15,941,750
JMC Steel Group†	8.25%	3/15/2018		11,050		11,022,375
Steel Dynamics, Inc.	7.625%	3/15/2020		7,500		8,062,500
Total						78,580,810
Support: Services 1.82%
ARAMARK Holdings Corp. PIK†	8.625%	5/1/2016		2,900		2,976,154
Ashtead Capital, Inc.†(d)	6.50%	7/15/2022		3,600		3,600,000
Audatex North America, Inc.†	6.75%	6/15/2018		7,215		7,629,863
Avis Budget Car Rental	9.625%	3/15/2018		15,340		16,874,000
Avis Budget Car Rental	9.75%	3/15/2020		5,500		6,139,375
BakerCorp International, Inc.†	8.25%	6/1/2019		4,400		4,389,000
FTI Consulting, Inc.	6.75%	10/1/2020		10,000		10,600,000
FTI Consulting, Inc.	7.75%	10/1/2016		12,075		12,542,906
Hertz Corp. (The)	7.50%	10/15/2018		25,000		26,937,500
Iron Mountain, Inc.	7.75%	10/1/2019		10,400		11,284,000
Iron Mountain, Inc.	8.375%	8/15/2021		11,250		12,262,500
RSC Equipment Rental, Inc./RSC Holdings III LLC	8.25%	2/1/2021		10,700		11,449,000
United Rentals (North America), Inc.	10.875%	6/15/2016		7,500		8,465,625
UR Merger Sub Corp.†	5.75%	7/15/2018		2,500		2,606,250
UR Merger Sub Corp.†	7.625%	4/15/2022		10,000		10,500,000
Total						148,256,173

See Notes to Financial Statements. 27

Schedule of Investments (unaudited)(continued)
June 30, 2012

Investments	Interest Rate	Maturity Date	Principal Amount (000)		Fair Value
Telecommunications Equipment 0.68%
Alcatel-Lucent USA, Inc.	6.45%	3/15/2029	$	13,600	$	9,316,000
Avaya, Inc.†	7.00%	4/1/2019		18,500		17,251,250
CommScope, Inc.†	8.25%	1/15/2019		26,850		28,528,125
Total						55,095,375
Telecommunications: Integrated/Services 3.54%
CenturyLink, Inc.	6.15%	9/15/2019		10,000		10,330,000
CenturyLink, Inc.	6.45%	6/15/2021		14,000		14,592,788
Dycom Investments, Inc.	7.125%	1/15/2021		16,750		17,252,500
Equinix, Inc.	7.00%	7/15/2021		12,150		13,395,375
Equinix, Inc.	8.125%	3/1/2018		10,000		11,125,000
Frontier Communications Corp.	9.25%	7/1/2021		7,275		7,857,000
GCI, Inc.	6.75%	6/1/2021		7,725		7,512,562
Hellas II (Luxembourg)†(a)(g)	6.001%	1/15/2015		15,000		1,500
Hughes Satellite Systems Corp.	7.625%	6/15/2021		27,500		30,043,750
Intelsat Jackson Holdings SA (Luxembourg)(a)	7.50%	4/1/2021		23,250		24,703,125
Intelsat Jackson Holdings SA (Luxembourg)(a)	11.25%	6/15/2016		6,929		7,275,450
Intelsat Luxembourg SA (Luxembourg)(a)	11.25%	2/4/2017		40,000		41,350,000
Level 3 Financing, Inc.	8.125%	7/1/2019		7,750		7,992,187
MasTec, Inc.	7.625%	2/1/2017		12,500		13,031,250
Sable International Finance Ltd.†	8.75%	2/1/2020		12,500		13,437,500
Telecom Italia Capital SA (Italy)(a)	7.175%	6/18/2019		6,100		6,100,000
Telefonica Emisiones SAU (Spain)(a)	7.045%	6/20/2036		6,700		5,873,388
Telemar Norte Leste SA (Brazil)†(a)	5.50%	10/23/2020		9,532		9,770,300
Windstream Corp.	7.00%	3/15/2019		30,250		31,157,500
Windstream Corp.	7.50%	4/1/2023		14,700		15,141,000
Total						287,942,175
Telecommunications: Wireless 5.18%
American Tower Corp.	4.70%	3/15/2022		10,000		10,285,780
CC Holdings GS V LLC/Crown Castle GS III Corp.†	7.75%	5/1/2017		30,500		33,206,875
Clearwire Communications LLC/Clearwire Finance, Inc.†	12.00%	12/1/2015		18,400		16,836,000
Clearwire Communications LLC/Clearwire Finance, Inc.†	14.75%	12/1/2016		2,000		1,970,000
Cricket Communications, Inc.	7.75%	10/15/2020		29,000		27,840,000
Digicel Group Ltd. (Jamaica)†(a)	10.50%	4/15/2018		18,432		19,445,760
Digicel Ltd. (Jamaica)†(a)	7.00%	2/15/2020		15,000		14,662,500
GeoEye, Inc.	8.625%	10/1/2016		3,500		3,456,250

28 See Notes to Financial Statements.

Schedule of Investments (unaudited)(continued)
June 30, 2012

Investments	Interest Rate	Maturity Date	Principal Amount (000)		Fair Value
Telecommunications: Wireless (continued)
GeoEye, Inc.	9.625%	10/1/2015	$	15,000	$	15,787,500
Inmarsat Finance plc (United Kingdom)†(a)	7.375%	12/1/2017		7,000		7,507,500
MetroPCS Wireless, Inc.	6.625%	11/15/2020		20,000		19,750,000
MetroPCS Wireless, Inc.	7.875%	9/1/2018		20,000		20,850,000
NII Capital Corp.	7.625%	4/1/2021		8,650		7,460,625
NII Capital Corp.	8.875%	12/15/2019		16,250		14,807,812
NII Capital Corp.	10.00%	8/15/2016		15,840		16,592,400
SBA Telecommunications, Inc.	8.25%	8/15/2019		6,500		7,150,000
Sprint Capital Corp.	6.90%	5/1/2019		50,000		47,250,000
Sprint Nextel Corp.†	7.00%	3/1/2020		15,500		16,158,750
Sprint Nextel Corp.†	9.125%	3/1/2017		25,000		26,312,500
Syniverse Holdings, Inc.	9.125%	1/15/2019		12,500		13,625,000
Telemovil Finance Co., Ltd. (El Salvador)†(a)	8.00%	10/1/2017		11,450		11,850,407
ViaSat, Inc.†	6.875%	6/15/2020		10,000		10,150,000
ViaSat, Inc.	8.875%	9/15/2016		12,750		13,706,250
Vimpel Communications via VIP Finance Ireland Ltd. OJSC (Luxembourg)†(a)	7.748%	2/2/2021		8,550		8,278,452
Wind Acquisition Finance SA (Italy)†(a)	7.25%	2/15/2018		6,100		5,368,000
Wind Acquisition Finance SA (Italy)†(a)	11.75%	7/15/2017		37,500		30,468,750
Total						420,777,111
Theaters & Entertainment 0.62%
Cinemark USA, Inc.	7.375%	6/15/2021		1,925		2,098,250
Cinemark USA, Inc.	8.625%	6/15/2019		10,000		11,125,000
Lions Gate Entertainment, Inc.†	10.25%	11/1/2016		15,450		16,995,000
Live Nation Entertainment, Inc.†	8.125%	5/15/2018		20,000		20,525,000
Total						50,743,250
Transportation (Excluding Air/Rail) 0.57%
Asciano Finance Ltd. (Australia)†(a)	4.625%	9/23/2020		9,750		9,716,411
Commercial Barge Line Co.	12.50%	7/15/2017		9,500		10,782,500
Great Lakes Dredge & Dock Corp.	7.375%	2/1/2019		13,000		13,065,000
Penske Truck Leasing Co. LP/PTL Finance Corp.†	3.75%	5/11/2017		12,500		12,612,275
Total						46,176,186
Total High Yield Corporate Bonds (cost $6,263,804,399)						6,507,637,961

See Notes to Financial Statements. 29

Schedule of Investments (unaudited)(continued)
June 30, 2012

Investments	Interest Rate	Maturity Date	Principal Amount (000)		Fair Value
MUNICIPAL BOND 0.21%
Other Revenue
New York City NY Indl Dev Agy Yankee Stadium Pj† (cost $12,000,000)	11.00%	3/1/2029	$	12,000	$	17,181,240
NON-AGENCY COMMERCIAL MORTGAGE-BACKED SECURITIES 1.14%
Banc of America Commercial Mortgage, Inc. 2006-4 AM	5.675%	7/10/2046		10,000		10,665,110
GE Capital Commercial Mortgage Corp. 2007-C1 AM	5.606%	12/10/2049		5,000		4,514,745
Greenwich Capital Commercial Funding Corp. 2006-GG7 AM	6.071%#	7/10/2038		10,000		10,477,395
GS Mortgage Securities Corp. II 2006-GG8 AM	5.591%	11/10/2039		10,000		10,417,550
JPMorgan Chase Commercial Mortgage Securities Corp. 2007-CB18 AJ	5.502%	6/12/2047		5,000		3,668,160
JPMorgan Chase Commercial Mortgage Securities Corp. 2007-CB20 AM	6.088%#	2/12/2051		5,000		5,354,005
LB-UBS Commercial Mortgage Trust 2007-C1 AM	5.455%	2/15/2040		10,000		10,466,850
Merrill Lynch/Countrywide Commercial Mortgage Trust 2006-1 AJ	5.706%#	2/12/2039		5,000		4,374,905
Morgan Stanley Capital I, Inc. 2011-C1†	5.422%#	9/15/2047		11,000		11,037,483
Morgan Stanley Capital I, Inc. 2007-IQ16 AJFL	1.689%#	12/12/2049		10,000		6,351,585
Wachovia Bank Commercial Mortgage Trust 2006-C28 AM	5.603%	10/15/2048		15,000		15,078,892
Total Non-Agency Commercial Mortgage-Backed Securities (cost $91,692,146)						92,406,680
			Shares (000)
PREFERRED STOCKS 0.33%
Agency/Government Related 0.01%
Fannie Mae*	Zero Coupon			481		784,682
Banking 0.32%
PNC Financial Services Group, Inc.	6.125%			600		15,810,000
U.S. Bancorp	3.50%#			13		10,270,812
Total						26,080,812
Total Preferred Stocks (cost $35,694,029)						26,865,494

30 See Notes to Financial Statements.

Schedule of Investments (unaudited)(continued)
June 30, 2012

Investments	Exercise Price	Expiration Date	Shares (000)		Fair Value
WARRANTS 0.06%
Auto Parts & Equipment 0.01%
Cooper-Standard Holdings, Inc.*	$27.33	11/27/2017		84	$	1,002,036
Automakers 0.01%
General Motors Co.*	10.00	7/10/2016		55		610,883
General Motors Co.*	18.33	7/10/2019		55		375,842
Total						986,725
Media: Broadcast 0.01%
ION Media Networks, Inc.*(k)	500.00	12/18/2016		2		493,750
ION Media Networks, Inc.*(k)	687.00	12/18/2016		2		292,500
Total						786,250
Media: Cable 0.03%
Charter Communications, Inc.*	46.86	11/30/2014		84		2,228,067
Total Warrants (cost $13,640,825)						5,003,078
Total Long-Term Investments (cost $7,683,023,207)						7,885,470,862
			Principal Amount (000)
SHORT-TERM INVESTMENT 2.07%
Repurchase Agreement
Repurchase Agreement dated 6/29/2012, 0.01% due 7/2/2012 with Fixed Income Clearing Corp. collateralized by $80,470,000 of Federal Home Loan Bank at 0.22% due 8/8/2013 and $91,055,000 of Federal Home Loan Bank at 0.28% due 8/13/2013; value: $171,638,819 proceeds: $168,269,760(cost $168,269,620)			$	168,270		168,269,620
Total Investments in Securities 99.10% (cost $7,851,292,827)						8,053,740,482
Cash and Other Assets in Excess of Liabilities(l) 0.90%						73,526,504
Net Assets 100.00%					$	8,127,266,986

See Notes to Financial Statements. 31

Schedule of Investments (unaudited)(concluded)
June 30, 2012

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.
#	Variable rate security. The interest rate represents the rate in effect at June 30, 2012.
(a)	Foreign security traded in U.S. dollars.
(b)	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(s) shown is the rate(s) in effect at June 30, 2012.
(c)	Investment in non-U.S. dollar denominated securities.
(d)	Securities purchased on a when-issued basis (See Note 2(i)).
(e)	Stub Rights issued in connection with a plan of reorganization.
(f)	Security is perpetual in nature and has no stated maturity.
(g)	Defaulted security.
(h)	Debenture pays interest at an annual fixed rate of 6.379% through December 14, 2036. Thereafter, interest will be paid at an annual floating rate of 3-month LIBOR plus 2.25% through December 14, 2049. This debenture is subject to full redemption at the option of the issuer any time prior to December 14, 2036.
(i)	Debenture pays interest at an annual fixed rate of 10.75% through June 15, 2038. Thereafter, interest will be paid at an annual floating rate of 3-month LIBOR plus 7.12% through June 15, 2058. This debenture is subject to full redemption at the option of the issuer any time prior to June 15, 2038.
(j)	Security has been fully or partially segregated to cover margin requirements for open futures contracts as of June 30, 2012.
(k)	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, 2012
Warrant	April 15, 2011	1,975	$5,785,009	$250.00
Warrant	April 15, 2011	1,950	4,318,663	150.00

^(l) Cash and Other Assets in Excess of Liabilities include net unrealized appreciation on open futures contracts, as follows:

Open Futures Contracts at June 30, 2012:

Type	Expiration	Contracts	Position	Market Value		Unrealized Appreciation
U.S. 10-Year Treasury Note	September 2012	300	Short	$(40,012,500	)		$97,919

32 See Notes to Financial Statements.

Statement of Assets and Liabilities (unaudited)

June 30, 2012

ASSETS:
Investments in securities, at fair value (cost $7,851,292,827)	$	8,053,740,482
Cash		117,644
Receivables:
Interest and dividends		132,815,729
Capital shares sold		56,239,748
Investment securities sold		35,773,297
Variation margin		164,156
Prepaid expenses and other assets		112,287
Total assets		8,278,963,343
LIABILITIES:
Payables:
Investment securities purchased		77,641,558
Capital shares reacquired		22,800,301
12b-1 distribution fees		4,290,592
Management fee		2,966,297
Directors’ fees		1,308,305
Fund administration		261,849
Distributions payable		41,407,682
Accrued expenses		1,019,773
Total liabilities		151,696,357
NET ASSETS	$	8,127,266,986
COMPOSITION OF NET ASSETS:
Paid-in capital	$	8,029,112,290
Distributions in excess of net investment income		(52,732,600	)
Accumulated net realized loss on investments, futures contracts and foreign currency related transactions		(51,650,772	)
Net unrealized appreciation on investments, futures contracts and translation of assets and liabilities denominated in foreign currencies		202,538,068
Net Assets	$	8,127,266,986

See Notes to Financial Statements. 33

Statement of Assets and Liabilities (unaudited)(concluded)

June 30, 2012

Net assets by class:
Class A Shares	$	4,581,814,175
Class B Shares	$	255,982,646
Class C Shares	$	1,928,229,633
Class F Shares	$	979,164,835
Class I Shares	$	214,543,103
Class P Shares	$	108,005,223
Class R2 Shares	$	2,337,705
Class R3 Shares	$	57,189,666
Outstanding shares by class:
Class A Shares (1.14 billion shares of common stock authorized, $.001 par value)		584,334,079
Class B Shares (500 million shares of common stock authorized, $.001 par value)		32,534,270
Class C Shares (600 million shares of common stock authorized, $.001 par value)		245,307,509
Class F Shares (300 million shares of common stock authorized, $.001 par value)		125,033,133
Class I Shares (300 million shares of common stock authorized, $.001 par value)		27,489,052
Class P Shares (160 million shares of common stock authorized, $.001 par value)		13,488,582
Class R2 Shares (300 million shares of common stock authorized, $.001 par value)		298,098
Class R3 Shares (300 million shares of common stock authorized, $.001 par value)		7,304,452
Net asset value, offering and redemption price per share (Net assets divided by outstanding shares):
Class A Shares-Net asset value		$7.84
Class A Shares-Maximum offering price (Net asset value plus sales charge of 4.75%)		$8.23
Class B Shares-Net asset value		$7.87
Class C Shares-Net asset value		$7.86
Class F Shares-Net asset value		$7.83
Class I Shares-Net asset value		$7.80
Class P Shares-Net asset value		$8.01
Class R2 Shares-Net asset value		$7.84
Class R3 Shares-Net asset value		$7.83

34 See Notes to Financial Statements.

Statement of Operations (unaudited)
For the Six Months Ended June 30, 2012

Investment income:
Dividends (net of foreign withholding taxes of $49,687)	$	8,285,953
Interest and other		271,512,501
Total investment income		279,798,454
Expenses:
Management fee		18,091,065
12b-1 distribution plan-Class A		7,905,942
12b-1 distribution plan-Class B		1,392,164
12b-1 distribution plan-Class C		9,387,639
12b-1 distribution plan-Class F		466,478
12b-1 distribution plan-Class P		189,858
12b-1 distribution plan-Class R2		6,345
12b-1 distribution plan-Class R3		130,096
Shareholder servicing		3,907,058
Fund administration		1,597,044
Reports to shareholders		281,065
Directors’ fees		119,120
Registration		109,916
Professional		86,572
Custody		52,976
Subsidy (See Note 3)		21,014
Other		104,767
Gross expenses		43,849,119
Expense reductions (See Note 7)		(2,850	)
Net expenses		43,846,269
Net investment income		235,952,185
Net realized and unrealized gain:
Net realized gain on investments, futures contracts and foreign currency related transactions		113,017,708
Net change in unrealized appreciation/depreciation on investments, futures contracts and translation of assets and liabilities denominated in foreign currencies		98,459,496
Net realized and unrealized gain		211,477,204
Net Increase in Net Assets Resulting From Operations	$	447,429,389

See Notes to Financial Statements. 35

Statements of Changes in Net Assets

INCREASE (DECREASE) IN NET ASSETS	For the Six Months Ended June 30, 2012 (unaudited)			For the Year Ended December 31, 2011
Operations:
Net investment income	$	235,952,185		$	469,136,131
Net realized gain on investments, futures contracts and foreign currency related transactions		113,017,708			202,753,874
Net change in unrealized appreciation/depreciation on investments, futures contracts and translation of assets and liabilities denominated in foreign currencies		98,459,496			(377,507,825	)
Net increase in net assets resulting from operations		447,429,389			294,382,180
Distributions to shareholders from:
Net investment income
Class A		(138,732,597	)		(271,009,329	)
Class B		(7,645,716	)		(21,834,446	)
Class C		(51,530,099	)		(100,540,728	)
Class F		(29,718,533	)		(48,451,124	)
Class I		(6,703,828	)		(23,151,825	)
Class P		(3,327,503	)		(8,150,401	)
Class R2		(62,519	)		(83,634	)
Class R3		(1,573,042	)		(2,379,825	)
Total distributions to shareholders		(239,293,837	)		(475,601,312	)
Capital share transactions (Net of share conversions) (See Note 11):
Net proceeds from sales of shares		983,377,300			1,764,688,120
Reinvestment of distributions		197,218,259			379,969,129
Cost of shares reacquired		(1,014,808,733	)		(2,251,421,962	)
Net increase (decrease) in net assets resulting from capital share transactions		165,786,826			(106,764,713	)
Net increase (decrease) in net assets		373,922,378			(287,983,845	)
NET ASSETS:
Beginning of period	$	7,753,344,608		$	8,041,328,453
End of period	$	8,127,266,986		$	7,753,344,608
Distributions in excess of net investment income	$	(52,732,600	)	$	(49,390,948	)

36 See Notes to Financial Statements.

Financial Highlights

	Class A Shares
	Six Months Ended 6/30/2012 (unaudited)
				Year Ended 12/31
				2011			2010			2009			2008			2007
Per Share Operating Performance
Net asset value,
beginning of period		$7.63			$7.81			$7.35			$5.86			$7.92			$8.02
Investment operations:
Net investment income(a)		.24			.47			.47			.45			.47			.46
Net realized and
unrealized gain (loss)		.21			(.17	)		.45			1.55			(2.01	)		(.04	)
Total from investment
operations		.45			.30			.92			2.00			(1.54	)		.42
Distributions to shareholders
from:
Net investment income		(.24	)		(.48	)		(.46	)		(.51	)		(.52	)		(.52	)
Net asset value,
end of period		$7.84			$7.63			$7.81			$7.35			$5.86			$7.92
Total Return(b)		5.92	%(c)		3.88	%		12.94	%		35.37	%		(20.26	)%		5.34	%
Ratios to Average Net Assets:
Expenses, including expense reductions		.48	%(c)		.97	%		.97	%		1.00	%		1.00	%		.99	%
Expenses, excluding expense reductions		.48	%(c)		.97	%		.97	%		1.00	%		1.00	%		.99	%
Net investment income		3.01	%(c)		6.07	%		6.19	%		6.82	%		6.63	%		5.73	%
Supplemental Data:
Net assets,
end of period (000)		$4,581,814			$4,345,679			$4,415,645			$4,709,961			$3,316,663			$4,526,753
Portfolio turnover rate		21.03	%(c)		35.73	%		42.65	%		41.93	%		29.01	%		40.08	%

(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. 37

Financial Highlights (continued)

	Class B Shares
	Six Months Ended 6/30/2012 (unaudited)
				Year Ended 12/31
				2011			2010			2009			2008			2007
Per Share Operating Performance
Net asset value,
beginning of period		$7.66			$7.84			$7.37			$5.87			$7.93			$8.03
Investment operations:
Net investment income(a)		.21			.42			.42			.41			.43			.41
Net realized and
unrealized gain (loss)		.22			(.17	)		.46			1.55			(2.02	)		(.04	)
Total from investment
operations		.43			.25			.88			1.96			(1.59	)		.37
Distributions to shareholders
from:
Net investment income		(.22	)		(.43	)		(.41	)		(.46	)		(.47	)		(.47	)
Net asset value,
end of period		$7.87			$7.66			$7.84			$7.37			$5.87			$7.93
Total Return(b)		5.57	%(c)		3.35	%		12.16	%		34.52	%		(20.82	)%		4.63	%
Ratios to Average Net Assets:
Expenses, including expense reductions		.80	%(c)		1.62	%		1.62	%		1.65	%		1.65	%		1.64	%
Expenses, excluding expense reductions		.80	%(c)		1.62	%		1.62	%		1.65	%		1.65	%		1.64	%
Net investment income		2.69	%(c)		5.39	%		5.54	%		6.21	%		5.95	%		5.08	%
Supplemental Data:
Net assets,
end of period (000)		$255,983			$295,027			$530,340			$717,671			$660,920			$1,061,150
Portfolio turnover rate		21.03	%(c)		35.73	%		42.65	%		41.93	%		29.01	%		40.08	%

(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.

38 See Notes to Financial Statements.

Financial Highlights (continued)

	Class C Shares
	Six Months Ended 6/30/2012 (unaudited)
				Year Ended 12/31
				2011			2010			2009			2008			2007
Per Share Operating Performance
Net asset value,
beginning of period		$7.65			$7.83			$7.36			$5.87			$7.94			$8.03
Investment operations:
Net investment income(a)		.21			.42			.42			.41			.43			.41
Net realized and
unrealized gain (loss)		.21			(.17	)		.46			1.54			(2.03	)		(.03	)
Total from investment
operations		.42			.25			.88			1.95			(1.60	)		.38
Distributions to shareholders
from:
Net investment income		(.21	)		(.43	)		(.41	)		(.46	)		(.47	)		(.47	)
Net asset value,
end of period		$7.86			$7.65			$7.83			$7.36			$5.87			$7.94
Total Return(b)		5.57	%(c)		3.22	%		12.34	%		34.44	%		(20.90	)%		4.77	%
Ratios to Average Net Assets:
Expenses, including expense reductions		.80	%(c)		1.62	%		1.62	%		1.65	%		1.65	%		1.64	%
Expenses, excluding expense reductions		.80	%(c)		1.62	%		1.62	%		1.65	%		1.65	%		1.64	%
Net investment income		2.68	%(c)		5.42	%		5.54	%		6.13	%		5.98	%		5.08	%
Supplemental Data:
Net assets,
end of period (000)		$1,928,230			$1,790,610			$1,866,405			$1,888,177			$1,018,175			$1,322,738
Portfolio turnover rate		21.03	%(c)		35.73	%		42.65	%		41.93	%		29.01	%		40.08	%

(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. 39

Financial Highlights (continued)

	Class F Shares
	Six Months Ended 6/30/2012 (unaudited)															9/7/2007(a) to 12/31/2007
				Year Ended 12/31
				2011			2010			2009			2008
Per Share Operating Performance
Net asset value,
beginning of period		$7.62			$7.80			$7.34			$5.85			$7.92			$7.92
Investment operations:
Net investment income(b)																	—	(c)
Net realized and
unrealized gain																	.03
Total from investment
operations																	.03
Net asset value on SEC
Effective Date, 9/14/2007																	$7.95
Investment operations:
Net investment income(b)		.25			.49			.48			.46			.49			.15
Net realized and
unrealized gain (loss)		.21			(.17	)		.46			1.55			(2.02	)		(.04	)
Total from investment
operations		.46			.32			.94			2.01			(1.53	)		.11
Distributions to
shareholders from:
Net investment income		(.25	)		(.50	)		(.48	)		(.52	)		(.54	)		(.14	)
Net asset value,
beginning of period		$7.83			$7.62			$7.80			$7.34			$5.85			$7.92
Total Return(d)																	.38	%(e)(f)
Total Return(d)		6.05	%(e)		4.12	%		13.24	%		35.81	%		(20.17	)%		1.31	%(e)(g)
Ratios to Average Net Assets:
Expenses, including expense reductions		.35	%(e)		.72	%		.72	%		.75	%		.75	%		.25	%(e)
Expenses, excluding expense reductions		.35	%(e)		.72	%		.72	%		.75	%		.75	%		.25	%(e)
Net investment income		3.12	%(e)		6.30	%		6.42	%		6.87	%		7.44	%		1.87	%(e)
Supplemental Data:
Net assets,
end of period (000)		$979,165			$847,032			$695,689			$435,085			$35,771			$10
Portfolio turnover rate		21.03	%(e)		35.73	%		42.65	%		41.93	%		29.01	%		40.08	%

(a)	Commencement of operations was 9/7/2007, SEC effective date was 9/14/2007 and date shares first became available to the public was 10/1/2007.
(b)	Calculated using average shares outstanding during the period.
(c)	Amount is less than $.01.
(d)	Total return assumes the reinvestment of all distributions.
(e)	Not annualized.
(f)	Total return for the period 9/7/2007 through 9/14/2007.
(g)	Total return for the period 9/14/2007 through 12/31/2007.

40 See Notes to Financial Statements.

Financial Highlights (continued)

	Class I Shares
	Six Months Ended 6/30/2012 (unaudited)
				Year Ended 12/31
				2011			2010			2009			2008			2007
Per Share Operating Performance
Net asset value,
beginning of period		$7.60			$7.77			$7.31			$5.83			$7.90			$8.00
Investment operations:
Net investment income(a)		.25			.50			.49			.47			.50			.49
Net realized and
unrealized gain (loss)		.20			(.16	)		.46			1.54			(2.02	)		(.04	)
Total from investment
operations		.45			.34			.95			2.01			(1.52	)		.45
Distributions to shareholders
from:
Net investment income		(.25	)		(.51	)		(.49	)		(.53	)		(.55	)		(.55	)
Net asset value,
end of period		$7.80			$7.60			$7.77			$7.31			$5.83			$7.90
Total Return(b)		5.97	%(c)		4.35	%		13.40	%		35.87	%		(20.14	)%		5.72	%
Ratios to Average Net Assets:
Expenses, including expense reductions		.31	%(c)		.62	%		.62	%		.65	%		.65	%		.64	%
Expenses, excluding expense reductions		.31	%(c)		.62	%		.62	%		.65	%		.65	%		.64	%
Net investment income		3.22	%(c)		6.39	%		6.53	%		7.15	%		6.98	%		6.07	%
Supplemental Data:
Net assets,
end of period (000)		$214,543			$316,777			$353,941			$294,144			$203,843			$262,929
Portfolio turnover rate		21.03	%(c)		35.73	%		42.65	%		41.93	%		29.01	%		40.08	%

(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. 41

Financial Highlights (continued)

	Class P Shares
	Six Months Ended 6/30/2012 (unaudited)
				Year Ended 12/31
				2011			2010			2009			2008			2007
Per Share Operating Performance
Net asset value, beginning of period		$7.79			$7.98			$7.49			$5.97			$8.06			$8.15
Investment operations:
Net investment income(a)		.24			.48			.47			.45			.47			.46
Net realized and unrealized gain (loss)		.22			(.18	)		.48			1.57			(2.05	)		(.04	)
Total from investment operations		.46			.30			.95			2.02			(1.58	)		.42
Distributions to shareholders from:
Net investment income		(.24	)		(.49	)		(.46	)		(.50	)		(.51	)		(.51	)
Net asset value, end of period		$8.01			$7.79			$7.98			$7.49			$5.97			$8.06
Total Return(b)		5.99	%(c)		3.88	%		12.73	%		35.47	%		(20.50	)%		5.27	%
Ratios to Average Net Assets:
Expenses, including expense reductions		.48	%(c)		1.03	%		1.07	%		1.10	%		1.10	%		1.09	%
Expenses, excluding expense reductions		.48	%(c)		1.03	%		1.07	%		1.10	%		1.10	%		1.09	%
Net investment income		3.01	%(c)		6.01	%		6.08	%		6.70	%		6.55	%		5.64	%
Supplemental Data:
Net assets, end of period (000)		$108,005		$109,252			$143,083			$150,002			$99,134			$120,343
Portfolio turnover rate		21.03	%(c)		35.73	%		42.65	%		41.93	%		29.01	%		40.08	%

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

42 See Notes to Financial Statements.

Financial Highlights (continued)

	Class R2 Shares
	Six Months Ended 6/30/2012 (unaudited)																9/7/2007(a) to 12/31/2007
					Year Ended 12/31
					2011			2010			2009			2008
Per Share Operating Performance
Net asset value, beginning of period			$7.63			$7.81			$7.35			$5.86			$7.92			$7.92
Investment operations:
Net investment income(b)																		—	(c)
Net realized and unrealized gain																		.03
Total from investment operations																		.03
Net asset value on SEC Effective Date, 9/14/2007																		$7.95
Investment operations:
Net investment income(b)			.23			.46			.45			.43			.46			.14
Net realized and unrealized gain (loss)			.21			(.18	)		.45			1.55			(2.02	)		(.05	)
Total from investment operations			.44			.28			.90			1.98			(1.56	)		.09
Distributions to shareholders from:
Net investment income			(.23	)		(.46	)		(.44	)		(.49	)		(.50	)		(.12	)
Net asset value, end of period			$7.84			$7.63			$7.81			$7.35			$5.86			$7.92
Total Return(d)																		.38	%(e)(f)
Total Return(d)			5.79	%(e)		3.62	%		12.63	%		35.26	%		(20.61	)%		1.18	%(e)(g)
Ratios to Average Net Assets:
Expenses, including expense reductions			.60	%(e)		1.22	%		1.22	%		1.25	%		1.24	%		.39	%(e)
Expenses, excluding expense reductions			.60	%(e)		1.22	%		1.22	%		1.25	%		1.24	%		.39	%(e)
Net investment income			2.89	%(e)		5.84	%		5.92	%		6.57	%		6.44	%		1.72	%(e)
Supplemental Data:
Net assets, end of period (000)		$2,338			$1,629			$1,234				$456			$338			$46
Portfolio turnover rate			21.03	%(e)		35.73	%		42.65	%		41.93	%		29.01	%		40.08	%

(a)	Commencement of operations was 9/7/2007, SEC effective date was 9/14/2007 and date shares first became available to the public was 10/1/2007.
(b)	Calculated using average shares outstanding during the period.
(c)	Amount is less than $.01.
(d)	Total return assumes the reinvestment of all distributions.
(e)	Not annualized.
(f)	Total return for the period 9/7/2007 through 9/14/2007.
(g)	Total return for the period 9/14/2007 through 12/31/2007.

See Notes to Financial Statements. 43

Financial Highlights (concluded)

	Class R3 Shares
	Six Months Ended 6/30/2012 (unaudited)																9/7/2007(a) to 12/31/2007
					Year Ended 12/31
					2011			2010			2009			2008
Per Share Operating Performance
Net asset value, beginning of period			$7.62			$7.80			$7.34			$5.85			$7.92			$7.92
Investment operations:
Net investment income(b)																		—	(c)
Net realized and unrealized gain																		.03
Total from investment operations																		.03
Net asset value on SEC Effective Date, 9/14/2007																		$7.95
Investment operations:
Net investment income(b)			.23			.46			.45			.44			.47			.14
Net realized and unrealized gain (loss)			.21			(.17	)		.46			1.55			(2.03	)		(.04	)
Total from investment operations			.44			.29			.91			1.99			(1.56	)		.10
Distributions to shareholders from:
Net investment income			(.23	)		(.47	)		(.45	)		(.50	)		(.51	)		(.13	)
Net asset value, end of period			$7.83			$7.62			$7.80			$7.34			$5.85			$7.92
Total Return(d)																		.38	%(e)(f)
Total Return(d)			5.85	%(e)		3.73	%		12.83	%		35.31	%		(20.52	)%		1.21	%(e)(g)
Ratios to Average Net Assets:
Expenses, including expense reductions			.55	%(e)		1.12	%		1.12	%		1.14	%		1.15	%		.35	%(e)
Expenses, excluding expense reductions			.55	%(e)		1.12	%		1.12	%		1.14	%		1.15	%		.35	%(e)
Net investment income			2.94	%(e)		5.94	%		6.03	%		6.53	%		7.01	%		1.77	%(e)
Supplemental Data:
Net assets, end of period (000)		$57,190			$47,338			$34,991			$17,780			$5,399				$14
Portfolio turnover rate			21.03	%(e)		35.73	%		42.65	%		41.93	%		29.01	%		40.08	%

(a)	Commencement of operations was 9/7/2007, SEC effective date was 9/14/2007 and date shares first became available to the public was 10/1/2007.
(b)	Calculated using average shares outstanding during the period.
(c)	Amount is less than $.01.
(d)	Total return assumes the reinvestment of all distributions.
(e)	Not annualized.
(f)	Total return for the period 9/7/2007 through 9/14/2007.
(g)	Total return for the period 9/14/2007 through 12/31/2007.

44 See Notes to Financial Statements.

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 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. 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 more accurately 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. Exchange-traded options and futures contracts 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

45

Notes to Financial Statements (unaudited)(continued)

	asked prices is used. 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.
	Securities for which prices are not readily available are valued at fair value as determined by the Pricing Committee and approved in good faith by the Board. The Pricing Committee considers a number of factors, including unobservable inputs, when arriving at fair value. The Pricing Committee may use observable inputs such as 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 transactional back-testing comparison analysis.
	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 and other income on the Statement of Operations. Withholding taxes on foreign dividends have been provided for in accordance with the applicable country’s tax rules and rates. 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, 2008 through December 31, 2011. 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 contracts 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

46

Notes to Financial Statements (unaudited)(continued)

	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)	When-Issued or Forward Transactions–The Fund may purchase portfolio securities on a when-issued or forward basis. When-issued or forward 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.
(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 a 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)	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.
(j)	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

47

Notes to Financial Statements (unaudited)(continued)

	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. A 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. As of June 30, 2012, the Fund had no unfunded loan commitments.
(k)	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).
	The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.

48

Notes to Financial Statements (unaudited)(continued)

The following is a summary of the inputs used as of June 30, 2012 in valuing the Fund’s investments carried at fair value:

Investment Type*	Level 1		Level 2		Level 3		Total
Common Stocks**	$	190,383,655	$	—	$	—	$	190,383,655
Convertible Bonds		—		513,255,356		—		513,255,356
Convertible Preferred Stocks		163,668,096		43,022,786		—		206,690,882
Floating Rate Loans		—		261,753,109		—		261,753,109
Foreign Bonds		—		44,335,512		—		44,335,512
Foreign Government Obligations		—		19,957,895		—		19,957,895
High Yield Corporate Bonds		—		6,507,607,196		30,765		6,507,637,961
Municipal Bond		—		17,181,240		—		17,181,240
Non-Agency Commercial Mortgage-Backed Securities		—		92,406,680		—		92,406,680
Preferred Stocks		16,594,682		10,270,812		—		26,865,494
Warrants		3,214,792		1,002,036		786,250		5,003,078
Repurchase Agreement		—		168,269,620		—		168,269,620
Total	$	373,861,225	$	7,679,062,242	$	817,015	$	8,053,740,482

*	See Schedule of Investments for fair values in each industry.
**	As of June 30, 2012, Cooper Standard Holding, Inc. (“Cooper Standard”) common stock, valued at $27,670,508, was included in Level 1 since it was actively traded and valued based on the last sales price on its principal exchange. At December 31, 2011, Cooper Standard was included in Level 2.

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

Investment Type	High Yield Corporate Bonds			Warrants
Balance as of January 1, 2012	$	229,200		$	786,250
Accrued discounts/premiums		—			—
Realized gain (loss)		—			—
Change in unrealized appreciation/depreciation		(121,786	)		—
Purchase		—			—
Sales		(135,149	)		—
Net transfers in or out of Level 3		58,500			—
Balance as of June 30, 2012	$	30,765		$	786,250

(l)

Disclosures about Derivative Instruments and Hedging Activities–The Fund entered into U.S. Treasury futures contracts during the six months ended June 30, 2012 (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.

Realized loss of $1,070,107 and unrealized appreciation of $97,919 are included on the Statement of Operations related to futures contracts under the captions Net realized gain on investments, futures contracts and foreign currency related transactions and Net change in unrealized appreciation/depreciation on investments, futures contracts and translation of assets and liabilities denominated in foreign currencies, respectively. The average number of futures contracts throughout the period was 262.

49

Notes to Financial Statements (unaudited)(continued)

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, 2012, the effective management fee was at an annualized rate of .45% of the Fund’s average daily net assets.

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 fees are accrued daily at annual rates based upon the Fund’s average daily net assets as follows:

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, 2012:

Distributor Commissions	Dealers’ Concessions
$1,389,492	$7,006,907

Distributor received CDSCs of $59,144 and $61,366 for Class A and Class C shares, respectively, for the six months ended June 30, 2012.

Two Directors 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

50

Notes to Financial Statements (unaudited)(continued)

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.

The tax character of distributions paid during the six months ended June 30, 2012 and the fiscal year ended December 31, 2011 was as follows:

	Six Months Ended 6/30/2012 (unaudited)	Year Ended 12/31/2011
Distributions paid from:
Ordinary income	$239,293,837	$475,601,312
Total distributions paid	$239,293,837	$475,601,312

As of December 31, 2011, the Fund had a capital loss carryforward of $145,799,985 set to expire in 2017.

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 retain their character as either short-term or long-term and be utilized before any pre-enactment losses.

As of June 30, 2012, the aggregate unrealized security gains and losses based on cost for U.S. federal income tax purposes were as follows:

Tax cost	$	7,906,547,430
Gross unrealized gain		453,725,188
Gross unrealized loss		(306,532,136	)
Net unrealized security gain	$	147,193,052

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, 2012 were as follows:

Purchases	Sales
$1,859,630,310	$1,648,999,455

There were no purchases or sales of U.S. Government securities for the six months ended June 30, 2012.

6.         DIRECTORS’ REMUNERATION 

The Fund’s officers and the two Directors 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

51

Notes to Financial Statements (unaudited)(continued)

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.

7. 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.

8. 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. As of June 30, 2012, there were no loans outstanding pursuant to this Facility.

For the period February 3, 2011 through April 1, 2012, the Fund and certain other funds managed by Lord Abbett had an amount of $200,000,000 available under a Facility from SSB with an annual fee to maintain the Facility of .125% of the amount available under the Facility.

9. 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.

10. 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 or interest to the Fund, a risk that is greater with high yield securities (sometimes called “lower-rated bonds” or “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

52

Notes to Financial Statements (unaudited)(continued)

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 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 market 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 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.

53

Notes to Financial Statements (unaudited)(continued)

11. SUMMARY OF CAPITAL TRANSACTIONS

Transactions in shares of capital stock were as follows:

	Six Months Ended June 30, 2012 (unaudited)					Year Ended December 31, 2011
Class A Shares	Shares			Amount		Shares			Amount
Shares sold	57,717,743		$	453,892,532		97,086,667		$	757,133,051
Converted from Class B*	4,436,922			34,971,315		20,884,767			164,674,901
Reinvestment of distributions	15,474,439			122,021,928		29,625,896			231,514,709
Shares reacquired	(62,686,473	)		(492,636,498	)	(143,676,633	)		(1,122,936,580	)
Increase	14,942,631		$	118,249,277		3,920,697		$	30,386,081
Class B Shares
Shares sold	383,087		$	3,022,260		1,000,755		$	7,878,556
Reinvestment of distributions	801,144			6,341,679		2,210,804			17,405,478
Shares reacquired	(2,751,401	)		(21,723,973	)	(11,556,155	)		(91,321,896	)
Converted to Class A*	(4,422,705	)		(34,971,315	)	(20,811,510	)		(164,674,901	)
Decrease	(5,989,875	)	$	(47,331,349	)	(29,156,106	)	$	(230,712,763	)
Class C Shares
Shares sold	23,400,555		$	184,503,557		34,334,037		$	268,754,112
Reinvestment of distributions	4,806,743			37,989,624		8,783,332			68,753,292
Shares reacquired	(16,933,047	)		(133,493,259	)	(47,505,908	)		(372,750,593	)
Increase (decrease)	11,274,251		$	88,999,922		(4,388,539	)	$	(35,243,189	)
Class F Shares
Shares sold	27,622,794		$	217,103,989		58,314,898		$	454,487,913
Reinvestment of distributions	2,685,587			21,147,880		4,052,088			31,585,935
Shares reacquired	(16,395,077	)		(128,729,899	)	(40,481,178	)		(314,697,255	)
Increase	13,913,304		$	109,521,970		21,885,808		$	171,376,593
Class I Shares
Shares sold	12,893,500		$	100,648,867		30,123,858		$	232,846,660
Reinvestment of distributions	614,651			4,827,461		2,593,664			20,255,778
Shares reacquired	(27,716,577	)		(214,185,082	)	(36,551,118	)		(279,551,497	)
Decrease	(14,208,426	)	$	(108,708,754	)	(3,833,596	)	$	(26,449,059	)
Class P Shares
Shares sold	1,016,707		$	8,136,534		2,637,317		$	21,147,848
Reinvestment of distributions	410,498			3,305,748		1,009,250			8,066,008
Shares reacquired	(1,956,242	)		(15,664,492	)	(7,568,696	)		(59,073,983	)
Decrease	(529,037	)	$	(4,222,210	)	(3,922,129	)	$	(29,860,127	)
Class R2 Shares
Shares sold	160,058		$	1,257,334		95,147		$	751,686
Reinvestment of distributions	1,653			13,039		3,199			24,989
Shares reacquired	(77,119	)		(605,441	)	(42,941	)		(335,935	)
Increase	84,592		$	664,932		55,405		$	440,740

54

Notes to Financial Statements (unaudited)(concluded)

	Six Months Ended June 30, 2012 (unaudited)					Year Ended December 31, 2011
Class R3 Shares	Shares			Amount		Shares			Amount
Shares sold	1,882,542		$	14,812,227		2,786,978		$	21,688,294
Reinvestment of distributions	199,556			1,570,900		303,444			2,362,940
Shares reacquired	(989,460	)		(7,770,089	)	(1,367,048	)		(10,754,223	)
Increase	1,092,638		$	8,613,038		1,723,374		$	13,297,011

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

55

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).

56

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-3-0612 (08/12)

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)	Amendments to 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.
(a)(3)	Not applicable.
(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/ Robert S. Dow
	Robert S. Dow
	Chief Executive Officer and Chairman

Date: August 21, 2012

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

Date: August 21, 2012

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

By:	/s/ Robert S. Dow
	Robert S. Dow
	Chief Executive Officer and Chairman

Date: August 21, 2012

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

Date: August 21, 2012