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 | |||||||
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LORD ABBETT BOND-DEBENTURE FUND, INC. | ||||||||
(Exact name of registrant as specified in charter) | ||||||||
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90 Hudson Street, Jersey City, NJ |
| 07302 | ||||||
(Address of principal executive offices) |
| (Zip code) | ||||||
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Thomas R. Phillips, Esq., Vice President & Assistant Secretary 90 Hudson Street, Jersey City, NJ 07302 | ||||||||
(Name and address of agent for service) | ||||||||
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Registrant’s telephone number, including area code: | (800) 201-6984 |
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Date of fiscal year end: | 12/31 |
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Date of reporting period: | 6/30/2009 |
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Item 1: Report to Shareholders.
2009
LORD ABBETT
SEMIANNUAL REPORT
Lord Abbett
Bond Debenture Fund
For the six-month period ended June 30, 2009
Lord Abbett Bond Debenture Fund
Semiannual Report
For the six-month period ended June 30, 2009
Dear Shareholder: 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, 2009. For detailed and more timely 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
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.
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, 2009 through June 30, 2009).
Actual Expenses
For each class of the Fund, the first line of the table on the following page provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading titled "Expenses Paid During the Period 1/1/09 – 6/30/09" 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† | |||||||||||||
1/1/09 | 6/30/09 | 1/1/09 – 6/30/09 | |||||||||||||
Class A | |||||||||||||||
Actual | $ | 1,000.00 | $ | 1,154.60 | $ | 5.34 | |||||||||
Hypothetical (5% Return Before Expenses) | $ | 1,000.00 | $ | 1,019.82 | $ | 5.01 | |||||||||
Class B | |||||||||||||||
Actual | $ | 1,000.00 | $ | 1,151.40 | $ | 8.80 | |||||||||
Hypothetical (5% Return Before Expenses) | $ | 1,000.00 | $ | 1,016.61 | $ | 8.25 | |||||||||
Class C | |||||||||||||||
Actual | $ | 1,000.00 | $ | 1,151.80 | $ | 8.80 | |||||||||
Hypothetical (5% Return Before Expenses) | $ | 1,000.00 | $ | 1,016.61 | $ | 8.25 | |||||||||
Class F | |||||||||||||||
Actual | $ | 1,000.00 | $ | 1,158.50 | $ | 4.01 | |||||||||
Hypothetical (5% Return Before Expenses) | $ | 1,000.00 | $ | 1,021.08 | $ | 3.76 | |||||||||
Class I | |||||||||||||||
Actual | $ | 1,000.00 | $ | 1,157.70 | $ | 3.48 | |||||||||
Hypothetical (5% Return Before Expenses) | $ | 1,000.00 | $ | 1,021.54 | $ | 3.26 | |||||||||
Class P | |||||||||||||||
Actual | $ | 1,000.00 | $ | 1,156.30 | $ | 5.88 | |||||||||
Hypothetical (5% Return Before Expenses) | $ | 1,000.00 | $ | 1,019.32 | $ | 5.51 | |||||||||
Class R2 | |||||||||||||||
Actual | $ | 1,000.00 | $ | 1,154.80 | $ | 6.68 | |||||||||
Hypothetical (5% Return Before Expenses) | $ | 1,000.00 | $ | 1,018.58 | $ | 6.26 | |||||||||
Class R3 | |||||||||||||||
Actual | $ | 1,000.00 | $ | 1,156.00 | $ | 6.15 | |||||||||
Hypothetical (5% Return Before Expenses) | $ | 1,000.00 | $ | 1,019.08 | $ | 5.76 |
† For each class of the Fund, net expenses are equal to the annualized expense ratio for such class (1.00% for Class A, 1.65% for Classes B and C, 0.75% for Class F, 0.65% for Class I, 1.10% for Class P, 1.25% for Class R2 and 1.15% for Class R3) multiplied by the average account value over the period, multiplied by 181/365 (to reflect one-half year period).
3
Portfolio Holdings Presented by Sector
June 30, 2009
Sector* | %** | ||||||
Agency | 0.75 | % | |||||
Asset-Backed | 0.13 | % | |||||
Banking | 4.04 | % | |||||
Basic Industry | 8.35 | % | |||||
Brokerage | 0.38 | % | |||||
Capital Goods | 8.02 | % | |||||
Consumer Cyclical | 5.96 | % | |||||
Consumer Non-Cyclical | 7.77 | % | |||||
Energy | 11.78 | % | |||||
Finance & Investment | 1.98 | % | |||||
Foreign Government | 0.45 | % | |||||
Sector* | %** | ||||||
Insurance | 1.36 | % | |||||
Media | 6.58 | % | |||||
Mortgage-Backed | 2.02 | % | |||||
Real Estate | 0.36 | % | |||||
Services Cyclical | 8.97 | % | |||||
Services Non-Cyclical | 7.25 | % | |||||
Technology & Electronics | 6.37 | % | |||||
Telecommunications | 8.67 | % | |||||
Utility | 8.21 | % | |||||
Short-Term Investment | 0.60 | % | |||||
Total | 100.00 | % |
* A sector may comprise several industries.
** Represents percent of total investments.
4
Schedule of Investments (unaudited)
June 30, 2009
Investments | Shares (000) | Value | |||||||||||||||||||||
LONG-TERM INVESTMENTS 98.02% | |||||||||||||||||||||||
COMMON STOCKS 3.90% | |||||||||||||||||||||||
Aerospace & Defense 0.16% | |||||||||||||||||||||||
Hexcel Corp.* | 350 | $ | 3,335,500 | ||||||||||||||||||||
Lockheed Martin Corp. | 100 | 8,065,000 | |||||||||||||||||||||
Total | 11,400,500 | ||||||||||||||||||||||
Automotive 0.19% | |||||||||||||||||||||||
Honda Motor Co., Ltd. ADR | 325 | 8,895,250 | |||||||||||||||||||||
Oshkosh Corp. | 300 | 4,362,000 | |||||||||||||||||||||
Total | 13,257,250 | ||||||||||||||||||||||
Banking 0.10% | |||||||||||||||||||||||
JPMorgan Chase & Co. | 200 | 6,822,000 | |||||||||||||||||||||
Building & Construction 0.01% | |||||||||||||||||||||||
Fluor Corp. | 18 | 928,349 | |||||||||||||||||||||
Chemicals 0.00% | |||||||||||||||||||||||
Texas Petrochemicals, Inc.* | 35 | 123,242 | |||||||||||||||||||||
Computer Hardware 0.11% | |||||||||||||||||||||||
Hewlett-Packard Co. | 200 | 7,730,000 | |||||||||||||||||||||
Electric: Generation 0.20% | |||||||||||||||||||||||
NRG Energy, Inc.* | 500 | 12,980,000 | |||||||||||||||||||||
RRI Energy, Inc.* | 300 | 1,503,000 | |||||||||||||||||||||
Total | 14,483,000 | ||||||||||||||||||||||
Electric: Integrated 0.13% | |||||||||||||||||||||||
NiSource, Inc. | 500 | 5,830,000 | |||||||||||||||||||||
TECO Energy, Inc. | 300 | 3,579,000 | |||||||||||||||||||||
Total | 9,409,000 | ||||||||||||||||||||||
Electronics 0.26% | |||||||||||||||||||||||
Broadcom Corp. Class A* | 220 | 5,453,800 | |||||||||||||||||||||
Emerson Electric Co. | 400 | 12,960,000 | |||||||||||||||||||||
Total | 18,413,800 |
See Notes to Financial Statements.
5
Schedule of Investments (unaudited)(continued)
June 30, 2009
Investments | Shares (000) | Value | |||||||||||||||||||||
Energy: Exploration & Production 0.18% | |||||||||||||||||||||||
ConocoPhillips | 300 | $ | 12,618,000 | ||||||||||||||||||||
Food & Drug Retailers 0.10% | |||||||||||||||||||||||
Ingles Markets, Inc. Class A | 185 | 2,819,400 | |||||||||||||||||||||
SUPERVALU, INC. | 350 | 4,532,500 | |||||||||||||||||||||
Total | 7,351,900 | ||||||||||||||||||||||
Investments & Miscellaneous Financial Services 0.61% | |||||||||||||||||||||||
SPDR Trust Series 1 ETF | 375 | 34,470,000 | |||||||||||||||||||||
T. Rowe Price Group, Inc. | 220 | 9,167,400 | |||||||||||||||||||||
Total | 43,637,400 | ||||||||||||||||||||||
Machinery 0.19% | |||||||||||||||||||||||
Baldor Electric Co. | 215 | 5,114,850 | |||||||||||||||||||||
Roper Industries, Inc. | 180 | 8,155,800 | |||||||||||||||||||||
Total | 13,270,650 | ||||||||||||||||||||||
Media: Cable 0.48% | |||||||||||||||||||||||
CCH I LLC Class A**~ | 1,597 | 29,948,438 | |||||||||||||||||||||
Time Warner Cable, Inc. | 133 | 4,222,656 | |||||||||||||||||||||
Total | 34,171,094 | ||||||||||||||||||||||
Media: Services 0.11% | |||||||||||||||||||||||
Omnicom Group, Inc. | 250 | 7,895,000 | |||||||||||||||||||||
Multi-Line Insurance 0.22% | |||||||||||||||||||||||
MetLife, Inc. | 517 | 15,513,970 | |||||||||||||||||||||
Pharmaceuticals 0.17% | |||||||||||||||||||||||
Celgene Corp.* | 150 | 7,176,000 | |||||||||||||||||||||
Pfizer, Inc. | 300 | 4,500,000 | |||||||||||||||||||||
Total | 11,676,000 | ||||||||||||||||||||||
Railroads 0.16% | |||||||||||||||||||||||
Union Pacific Corp. | 220 | 11,453,200 | |||||||||||||||||||||
Software/Services 0.26% | |||||||||||||||||||||||
Adobe Systems, Inc.* | 220 | 6,226,000 | |||||||||||||||||||||
Microsoft Corp. | 250 | 5,942,500 |
See Notes to Financial Statements.
6
Schedule of Investments (unaudited)(continued)
June 30, 2009
Investments | Shares (000) | Value | |||||||||||||||||||||
Software/Services (continued) | |||||||||||||||||||||||
SAIC, Inc.* | 350 | $ | 6,492,500 | ||||||||||||||||||||
Total | 18,661,000 | ||||||||||||||||||||||
Support: Services 0.13% | |||||||||||||||||||||||
CRA International, Inc.* | 150 | 4,164,000 | |||||||||||||||||||||
FTI Consulting, Inc.* | 100 | 5,072,000 | |||||||||||||||||||||
Total | 9,236,000 | ||||||||||||||||||||||
Telecommunications: Integrated/Services 0.13% | |||||||||||||||||||||||
QUALCOMM, Inc. | 200 | 9,040,000 | |||||||||||||||||||||
Total Common Stocks (cost $332,047,865) | 277,091,355 | ||||||||||||||||||||||
Interest Rate | Maturity Date | Principal Amount (000) | |||||||||||||||||||||
CONVERTIBLE BONDS 8.11% | |||||||||||||||||||||||
Aerospace/Defense 0.57% | |||||||||||||||||||||||
Alliant Techsystems, Inc. | 2.75 | % | 2/15/2024 | $ | 15,000 | 16,143,750 | |||||||||||||||||
L-3 Communications Holdings, Inc. | 3.00 | % | 8/1/2035 | 25,000 | 24,156,250 | ||||||||||||||||||
Total | 40,300,000 | ||||||||||||||||||||||
Banking 0.26% | |||||||||||||||||||||||
National City Corp. | 4.00 | % | 2/1/2011 | 19,000 | 18,762,500 | ||||||||||||||||||
Building Materials 0.43% | |||||||||||||||||||||||
General Cable Corp. | 1.00 | % | 10/15/2012 | 39,000 | 30,810,000 | ||||||||||||||||||
Computer Hardware 0.24% | |||||||||||||||||||||||
Intel Corp. | 2.95 | % | 12/15/2035 | 20,000 | 16,900,000 | ||||||||||||||||||
Diversified Capital Goods 0.09% | |||||||||||||||||||||||
Ingersoll-Rand Co., Ltd. | 4.50 | % | 4/15/2012 | 5,000 | 6,718,750 | ||||||||||||||||||
Electronics 0.59% | |||||||||||||||||||||||
FLIR Systems, Inc. | 3.00 | % | 6/1/2023 | 1,365 | 2,803,369 | ||||||||||||||||||
Itron, Inc. | 2.50 | % | 8/1/2026 | 17,500 | 19,206,250 | ||||||||||||||||||
Millipore Corp. | 3.75 | % | 6/1/2026 | 20,000 | 19,850,000 | ||||||||||||||||||
Total | 41,859,619 |
See Notes to Financial Statements.
7
Schedule of Investments (unaudited)(continued)
June 30, 2009
Investments | Interest Rate | Maturity Date | Principal Amount (000) | Value | |||||||||||||||||||
Health Services 0.45% | |||||||||||||||||||||||
Fisher Scientific International, Inc. | 3.25 | % | 3/1/2024 | $ | 10,000 | $ | 12,212,500 | ||||||||||||||||
Life Technologies Corp. | 1.50 | % | 2/15/2024 | 20,000 | 19,925,000 | ||||||||||||||||||
Total | 32,137,500 | ||||||||||||||||||||||
Hotels 0.12% | |||||||||||||||||||||||
Host Hotels & Resorts LP† | 2.625 | % | 4/15/2027 | 10,000 | 8,537,500 | ||||||||||||||||||
Integrated Energy 0.16% | |||||||||||||||||||||||
SunPower Corp. | 4.75 | % | 4/15/2014 | 10,000 | 11,462,500 | ||||||||||||||||||
Media: Broadcast 0.23% | |||||||||||||||||||||||
Sinclair Broadcast Group, Inc. | 6.00 | % | 9/15/2012 | 22,545 | 9,468,900 | ||||||||||||||||||
Sinclair Broadcast Group, Inc. (2.00% after 1/15/2011)(a) | 4.875 | % | 7/15/2018 | 10,000 | 7,100,000 | ||||||||||||||||||
Total | 16,568,900 | ||||||||||||||||||||||
Media: Cable 0.26% | |||||||||||||||||||||||
Virgin Media, Inc.† | 6.50 | % | 11/15/2016 | 24,000 | 18,720,000 | ||||||||||||||||||
Media: Diversified 0.25% | |||||||||||||||||||||||
Liberty Media LLC (convertible into Viacom, Inc., Class B and CBS Corp.) | 3.25 | % | 3/15/2031 | 45,000 | 17,775,000 | ||||||||||||||||||
Metals/Mining (Excluding Steel) 0.39% | |||||||||||||||||||||||
Newmont Mining Corp. | 1.25 | % | 7/15/2014 | 20,000 | 21,775,000 | ||||||||||||||||||
Newmont Mining Corp. | 3.00 | % | 2/15/2012 | 5,000 | 5,662,500 | ||||||||||||||||||
Total | 27,437,500 | ||||||||||||||||||||||
Oil Field Equipment & Services 0.11% | |||||||||||||||||||||||
Hanover Compressor Co. | 4.75 | % | 1/15/2014 | 10,000 | 7,700,000 | ||||||||||||||||||
Pharmaceuticals 0.89% | |||||||||||||||||||||||
Gilead Sciences, Inc. | 0.625 | % | 5/1/2013 | 12,000 | 15,555,000 | ||||||||||||||||||
Teva Pharmaceutical Finance Co. BV (Israel)(b) | 1.75 | % | 2/1/2026 | 33,100 | 37,361,625 | ||||||||||||||||||
Wyeth | 0.965 | %# | 1/15/2024 | 10,000 | 10,031,000 | ||||||||||||||||||
Total | 62,947,625 | ||||||||||||||||||||||
Printing & Publishing 0.10% | |||||||||||||||||||||||
Omnicom Group, Inc. | Zero Coupon | 7/1/2038 | 7,000 | 6,772,500 |
See Notes to Financial Statements.
8
Schedule of Investments (unaudited)(continued)
June 30, 2009
Investments | Interest Rate | Maturity Date | Principal Amount (000) | Value | |||||||||||||||||||
Real Estate Development & Management 0.23% | |||||||||||||||||||||||
ProLogis | 2.25 | % | 4/1/2037 | $ | 20,000 | $ | 16,100,000 | ||||||||||||||||
Software/Services 1.36% | |||||||||||||||||||||||
Blackboard, Inc. | 3.25 | % | 7/1/2027 | 15,000 | 13,725,000 | ||||||||||||||||||
Cadence Design Systems, Inc. | 1.375 | % | 12/15/2011 | 14,000 | 11,567,500 | ||||||||||||||||||
EMC Corp. | 1.75 | % | 12/1/2011 | 22,000 | 22,880,000 | ||||||||||||||||||
Equinix, Inc. | 2.50 | % | 4/15/2012 | 25,000 | 22,500,000 | ||||||||||||||||||
Symantec Corp. | 0.75 | % | 6/15/2011 | 26,000 | 26,325,000 | ||||||||||||||||||
Total | 96,997,500 | ||||||||||||||||||||||
Support: Services 0.21% | |||||||||||||||||||||||
CRA International, Inc. | 2.875 | % | 6/15/2034 | 15,000 | 15,018,750 | ||||||||||||||||||
Telecommunications Equipment 0.47% | |||||||||||||||||||||||
Ciena Corp. | 0.25 | % | 5/1/2013 | 25,000 | 16,562,500 | ||||||||||||||||||
JDS Uniphase Corp. | 1.00 | % | 5/15/2026 | 22,500 | 16,762,500 | ||||||||||||||||||
Total | 33,325,000 | ||||||||||||||||||||||
Telecommunications: Wireless 0.70% | |||||||||||||||||||||||
Nextel Communications, Inc. | 5.25 | % | 1/15/2010 | 8,000 | 7,960,000 | ||||||||||||||||||
NII Holdings, Inc. | 2.75 | % | 8/15/2025 | 12,000 | 11,280,000 | ||||||||||||||||||
SBA Communications Corp.† | 4.00 | % | 10/1/2014 | 30,000 | 30,300,000 | ||||||||||||||||||
Total | 49,540,000 | ||||||||||||||||||||||
Total Convertible Bonds (cost $620,806,001) | 576,391,144 | ||||||||||||||||||||||
Shares (000) | |||||||||||||||||||||||
CONVERTIBLE PREFERRED STOCKS 2.95% | |||||||||||||||||||||||
Agency 0.01% | |||||||||||||||||||||||
Fannie Mae | 8.75 | % | 450 | 400,500 | |||||||||||||||||||
Banking 0.94% | |||||||||||||||||||||||
Bank of America Corp. | 7.25 | % | 43 | 35,531,275 | |||||||||||||||||||
Wells Fargo & Co. | 7.50 | % | 40 | 31,398,800 | |||||||||||||||||||
Total | 66,930,075 | ||||||||||||||||||||||
Food: Wholesale 0.46% | |||||||||||||||||||||||
Archer Daniels Midland Co. | 6.25 | % | 500 | 18,245,000 |
See Notes to Financial Statements.
9
Schedule of Investments (unaudited)(continued)
June 30, 2009
Investments | Interest Rate | Shares (000) | Value | ||||||||||||||||||||
Food: Wholesale (continued) | |||||||||||||||||||||||
Bunge Ltd. | 4.875 | % | 180 | $ | 14,625,000 | ||||||||||||||||||
Total | 32,870,000 | ||||||||||||||||||||||
Gas Distribution 0.55% | |||||||||||||||||||||||
El Paso Corp. | 4.99 | % | 22 | 17,055,500 | |||||||||||||||||||
Williams Cos., Inc. (The) | 5.50 | % | 300 | 21,956,250 | |||||||||||||||||||
Total | 39,011,750 | ||||||||||||||||||||||
Investments & Miscellaneous Financial Services 0.13% | |||||||||||||||||||||||
AMG Capital Trust I | 5.10 | % | 350 | 9,187,500 | |||||||||||||||||||
Metals/Mining (Excluding Steel) 0.28% | |||||||||||||||||||||||
Freeport-McMoRan Copper & Gold, Inc. | 6.75 | % | 120 | 9,531,600 | |||||||||||||||||||
Vale Capital Ltd. (Brazil)(b) | 5.50 | % | 283 | 10,364,925 | |||||||||||||||||||
Total | 19,896,525 | ||||||||||||||||||||||
Pharmaceuticals 0.58% | |||||||||||||||||||||||
Mylan, Inc. | 6.50 | % | 35 | 30,065,000 | |||||||||||||||||||
Schering-Plough Corp. | 6.00 | % | 50 | 11,335,000 | |||||||||||||||||||
Total | 41,400,000 | ||||||||||||||||||||||
Total Convertible Preferred Stocks (cost $253,803,378) | 209,696,350 | ||||||||||||||||||||||
Maturity Date | Principal Amount (000) | ||||||||||||||||||||||
FLOATING RATE LOANS^ 2.18% | |||||||||||||||||||||||
Aerospace/Defense 0.11% | |||||||||||||||||||||||
Hawker Beechcraft Acquistion Co. LLC Letter of Credit | 2.598% | 3/31/2014 | $ | 646 | 443,550 | ||||||||||||||||||
Hawker Beechcraft Corp. Term Loan | 2.31% - 2.598% | 3/31/2014 | 10,941 | 7,515,217 | |||||||||||||||||||
Total | 7,958,767 | ||||||||||||||||||||||
Auto Parts & Equipment 0.06% | |||||||||||||||||||||||
TRW Automotive, Inc. Term Loan B1 | 6.375% | 2/9/2014 | 5,000 | 4,431,250 | |||||||||||||||||||
Automotive 0.22% | |||||||||||||||||||||||
Oshkosh Corp. Term Loan B | 6.61% - 8.25% | 12/6/2013 | 17,161 | 15,798,535 |
See Notes to Financial Statements.
10
Schedule of Investments (unaudited)(continued)
June 30, 2009
Investments | Interest Rate | Maturity Date | Principal Amount (000) | Value | |||||||||||||||||||
Health Services 0.38% | |||||||||||||||||||||||
HCA, Inc. Term Loan B | 2.848% | 11/18/2013 | $ | 29,618 | $ | 26,804,724 | |||||||||||||||||
Healthcare 0.20% | |||||||||||||||||||||||
Biomet, Inc. Term Loan B | 3.308% - 3.608% | 3/25/2015 | 5,651 | 5,295,751 | |||||||||||||||||||
Community Health Systems, Inc. Delayed Draw Term Loan | 2.56% | 7/25/2014 | 477 | 430,212 | |||||||||||||||||||
Community Health Systems, Inc. Term Loan | 2.56% - 2.924% | 7/25/2014 | 9,343 | 8,432,959 | |||||||||||||||||||
Total | 14,158,922 | ||||||||||||||||||||||
Investments & Miscellaneous Financial Services 0.25% | |||||||||||||||||||||||
Nuveen Investments, Inc. Term Loan B | 3.308% - 3.31% | 11/13/2014 | 22,199 | 17,324,603 | |||||||||||||||||||
Machinery 0.14% | |||||||||||||||||||||||
Baldor Electric Co. Term Loan B | 5.25% | 1/31/2014 | 10,445 | 10,122,206 | |||||||||||||||||||
Non-Food & Drug Retailers 0.11% | |||||||||||||||||||||||
Neiman-Marcus Group, Inc. (The) Term Loan B | 2.318% - 2.629% | 4/6/2013 | 10,309 | 7,810,353 | |||||||||||||||||||
Pharmaceuticals 0.45% | |||||||||||||||||||||||
Mylan, Inc. Term Loan B | 3.563% - 3.875% | 12/1/2014 | 33,209 | 32,136,793 | |||||||||||||||||||
Printing & Publishing 0.06% | |||||||||||||||||||||||
Idearc, Inc. Term Loan B | 6.25% | 11/17/2014 | 9,634 | 4,159,835 | |||||||||||||||||||
Utility 0.20% | |||||||||||||||||||||||
Texas Competitive Electric Holdings Co. LLC Term Loan B2 | 3.81% - 3.821% | 10/10/2014 | 19,749 | 14,161,093 | |||||||||||||||||||
Total Floating Rate Loans (cost $164,729,235) | 154,867,081 | ||||||||||||||||||||||
Currency | |||||||||||||||||||||||
FOREIGN BONDS 0.52% | |||||||||||||||||||||||
Canada 0.44% | |||||||||||||||||||||||
Government of Canada(c) | CAD | 4.00% | 9/1/2010 | 20,000 | 17,877,659 | ||||||||||||||||||
Government of Canada(c) | CAD | 5.50% | 6/1/2010 | 15,000 | 13,482,655 | ||||||||||||||||||
Total | 31,360,314 |
See Notes to Financial Statements.
11
Schedule of Investments (unaudited)(continued)
June 30, 2009
Investments | Currency | Interest Rate | Maturity Date | Principal Amount (000) | Value | ||||||||||||||||||
Luxembourg 0.08% | |||||||||||||||||||||||
Hellas III† | EUR | 8.50 | % | 10/15/2013 | $ | 7,500 | $ | 5,681,539 | |||||||||||||||
Total Foreign Bonds (cost $39,156,629) | 37,041,853 | ||||||||||||||||||||||
GOVERNMENT SPONSORED ENTERPRISES BONDS 0.72% | |||||||||||||||||||||||
Federal National Mortgage Assoc. | 3.25 | % | 4/9/2013 | 25,000 | 25,980,325 | ||||||||||||||||||
Federal National Mortgage Assoc. | 6.625 | % | 9/15/2009 | 25,000 | 25,320,550 | ||||||||||||||||||
Total Government Sponsored Enterprises Bonds (cost $50,808,638) | 51,300,875 | ||||||||||||||||||||||
GOVERNMENT SPONSORED ENTERPRISES PASS-THROUGHS 1.99% | |||||||||||||||||||||||
Federal National Mortgage Assoc. | 4.50 | % | 2/1/2039 | 23,975 | 23,966,054 | ||||||||||||||||||
Federal National Mortgage Assoc. | 5.50 | % | 7/1/2033 - 1/1/2037 | 48,407 | 50,174,074 | ||||||||||||||||||
Federal National Mortgage Assoc. | 6.00 | % | 4/1/2036 | 44,266 | 46,375,897 | ||||||||||||||||||
Federal National Mortgage Assoc. | 6.50 | % | 9/1/2035 | 19,453 | 20,835,908 | ||||||||||||||||||
Total Government Sponsored Enterprises Pass-Throughs (cost $137,436,362) | 141,351,933 | ||||||||||||||||||||||
HIGH YIELD CORPORATE BONDS 77.38% | |||||||||||||||||||||||
Aerospace/Defense 0.88% | |||||||||||||||||||||||
Esterline Technologies Corp. | 6.625 | % | 3/1/2017 | 4,625 | 4,249,219 | ||||||||||||||||||
Esterline Technologies Corp. | 7.75 | % | 6/15/2013 | 16,000 | 15,600,000 | ||||||||||||||||||
L-3 Communications Corp. | 6.125 | % | 1/15/2014 | 19,925 | 18,629,875 | ||||||||||||||||||
L-3 Communications Corp. | 6.375 | % | 10/15/2015 | 18,000 | 16,425,000 | ||||||||||||||||||
Moog, Inc. | 6.25 | % | 1/15/2015 | 8,500 | 7,883,750 | ||||||||||||||||||
Total | 62,787,844 | ||||||||||||||||||||||
Agriculture 0.12% | |||||||||||||||||||||||
Bunge NA Finance LP | 5.90 | % | 4/1/2017 | 9,050 | 8,295,492 | ||||||||||||||||||
Apparel/Textiles 0.42% | |||||||||||||||||||||||
Levi Strauss & Co. | 8.875 | % | 4/1/2016 | 21,579 | 20,985,578 | ||||||||||||||||||
Quiksilver, Inc. | 6.875 | % | 4/15/2015 | 17,000 | 9,095,000 | ||||||||||||||||||
Total | 30,080,578 | ||||||||||||||||||||||
Auto Loans 1.21% | |||||||||||||||||||||||
Ford Motor Credit Co. LLC | 7.25 | % | 10/25/2011 | 55,000 | 47,595,460 | ||||||||||||||||||
Ford Motor Credit Co. LLC | 7.375 | % | 10/28/2009 | 10,000 | 9,915,040 | ||||||||||||||||||
Ford Motor Credit Co. LLC | 8.00 | % | 6/1/2014 | 25,000 | 20,247,175 |
See Notes to Financial Statements.
12
Schedule of Investments (unaudited)(continued)
June 30, 2009
Investments | Interest Rate | Maturity Date | Principal Amount (000) | Value | |||||||||||||||
Auto Loans (continued) | |||||||||||||||||||
Ford Motor Credit Co. LLC | 9.75 | % | 9/15/2010 | $ | 8,500 | $ | 8,144,317 | ||||||||||||
Total | 85,901,992 | ||||||||||||||||||
Auto Parts & Equipment 0.89% | |||||||||||||||||||
Cooper-Standard Automotive, Inc. | 8.375 | % | 12/15/2014 | 20,000 | 1,300,000 | ||||||||||||||
Goodyear Tire & Rubber Co. (The) | 10.50 | % | 5/15/2016 | 15,000 | 15,225,000 | ||||||||||||||
Stanadyne Corp. | 10.00 | % | 8/15/2014 | 10,000 | 7,850,000 | ||||||||||||||
Stanadyne Corp. (12.00% after 8/15/2009)** | Zero Coupon | 2/15/2015 | 15,000 | 6,825,000 | |||||||||||||||
Tenneco, Inc. | 8.625 | % | 11/15/2014 | 20,000 | 14,500,000 | ||||||||||||||
TRW Automotive, Inc.† | 7.25 | % | 3/15/2017 | 25,000 | 17,375,000 | ||||||||||||||
Total | 63,075,000 | ||||||||||||||||||
Automotive 0.24% | |||||||||||||||||||
Ford Motor Co. | 7.45 | % | 7/16/2031 | 18,375 | 10,933,125 | ||||||||||||||
Ford Motor Co. | 9.50 | % | 9/15/2011 | 7,000 | 5,845,000 | ||||||||||||||
Total | 16,778,125 | ||||||||||||||||||
Banking 2.68% | |||||||||||||||||||
Bank of America Corp. | 5.75 | % | 12/1/2017 | 16,500 | 14,715,690 | ||||||||||||||
Bank of America Corp. | 8.00 | %# | 12/29/2049 | 15,000 | 12,545,595 | ||||||||||||||
CIT Group, Inc. | 5.20 | % | 11/3/2010 | 32,750 | 25,878,428 | ||||||||||||||
GMAC LLC† | 7.25 | % | 3/2/2011 | 50,973 | 47,150,025 | ||||||||||||||
JPMorgan Chase & Co. | 6.00 | % | 1/15/2018 | 15,000 | 14,925,675 | ||||||||||||||
JPMorgan Chase & Co. | 7.90 | %# | 4/29/2049 | 15,925 | 13,974,665 | ||||||||||||||
Regions Financing Trust II | 6.625 | % | 5/15/2047 | 10,000 | 6,413,490 | ||||||||||||||
Royal Bank of Scotland Group plc (The) (United Kingdom)(b) | 5.00 | % | 11/12/2013 | 14,650 | 12,077,826 | ||||||||||||||
USB Capital IX | 6.189 | %# | 4/15/2049 | 6,505 | 4,392,508 | ||||||||||||||
Wachovia Corp. | 5.50 | % | 5/1/2013 | 12,500 | 12,923,612 | ||||||||||||||
Wells Fargo & Co. | 5.35 | % | 5/6/2018 | 20,000 | 18,881,040 | ||||||||||||||
Wells Fargo & Co. | 5.625 | % | 12/11/2017 | 6,500 | 6,408,760 | ||||||||||||||
Total | 190,287,314 | ||||||||||||||||||
Beverage 1.10% | |||||||||||||||||||
Anheuser-Busch InBev Worldwide, Inc.† | 7.75 | % | 1/15/2019 | 40,000 | 43,820,880 | ||||||||||||||
Constellation Brands, Inc. | 7.25 | % | 5/15/2017 | 22,000 | 20,460,000 | ||||||||||||||
Diageo Capital plc (United Kingdom)(b) | 7.375 | % | 1/15/2014 | 8,400 | 9,513,470 |
See Notes to Financial Statements.
13
Schedule of Investments (unaudited)(continued)
June 30, 2009
Investments | Interest Rate | Maturity Date | Principal Amount (000) | Value | |||||||||||||||
Beverage (continued) | |||||||||||||||||||
PepsiCo, Inc. | 7.90 | % | 11/1/2018 | $ | 3,500 | $ | 4,265,429 | ||||||||||||
Total | 78,059,779 | ||||||||||||||||||
Brokerage 0.37% | |||||||||||||||||||
Lazard Group LLC | 7.125 | % | 5/15/2015 | 12,500 | 11,497,588 | ||||||||||||||
Morgan Stanley | 6.00 | % | 4/28/2015 | 12,000 | 11,983,176 | ||||||||||||||
Morgan Stanley | 6.625 | % | 4/1/2018 | 2,850 | 2,845,839 | ||||||||||||||
Total | 26,326,603 | ||||||||||||||||||
Building & Construction 0.59% | |||||||||||||||||||
Lennar Corp.† | 12.25 | % | 6/1/2017 | 20,000 | 21,100,000 | ||||||||||||||
Ryland Group, Inc. | 8.40 | % | 5/15/2017 | 7,500 | 7,237,500 | ||||||||||||||
Toll Brothers Finance Corp. | 8.91 | % | 10/15/2017 | 10,000 | 10,241,100 | ||||||||||||||
William Lyon Homes, Inc. | 10.75 | % | 4/1/2013 | 8,375 | 3,015,000 | ||||||||||||||
Total | 41,593,600 | ||||||||||||||||||
Building Materials 0.22% | |||||||||||||||||||
NTK Holdings, Inc. (10.75% after 9/1/2009)** | Zero Coupon | 3/1/2014 | 15,000 | 1,275,000 | |||||||||||||||
Owens Corning, Inc. | 9.00 | % | 6/15/2019 | 15,000 | 14,572,980 | ||||||||||||||
Total | 15,847,980 | ||||||||||||||||||
Chemicals 2.49% | |||||||||||||||||||
Airgas, Inc. | 6.25 | % | 7/15/2014 | 10,000 | 9,475,000 | ||||||||||||||
Airgas, Inc.† | 7.125 | % | 10/1/2018 | 5,275 | 4,958,500 | ||||||||||||||
Ashland, Inc.† | 9.125 | % | 6/1/2017 | 13,925 | 14,516,812 | ||||||||||||||
Dow Chemical Co. (The) | 8.55 | % | 5/15/2019 | 40,000 | 40,137,160 | ||||||||||||||
Equistar Chemicals LP(d) | 7.55 | % | 2/15/2026 | 26,000 | 8,320,000 | ||||||||||||||
Huntsman LLC | 11.50 | % | 7/15/2012 | 5,181 | 5,271,668 | ||||||||||||||
Ineos Group Holdings plc (United Kingdom)†(b) | 8.50 | % | 2/15/2016 | 30,000 | 9,450,000 | ||||||||||||||
INVISTA† | 9.25 | % | 5/1/2012 | 25,000 | 23,687,500 | ||||||||||||||
Nalco Co.† | 8.25 | % | 5/15/2017 | 15,000 | 15,150,000 | ||||||||||||||
Nalco Co. | 8.875 | % | 11/15/2013 | 10,425 | 10,685,625 | ||||||||||||||
Rockwood Specialties Group, Inc. | 7.50 | % | 11/15/2014 | 18,250 | 17,246,250 | ||||||||||||||
Terra Capital, Inc. | 7.00 | % | 2/1/2017 | 20,000 | 18,375,000 | ||||||||||||||
Total | 177,273,515 |
See Notes to Financial Statements.
14
Schedule of Investments (unaudited)(continued)
June 30, 2009
Investments | Interest Rate | Maturity Date | Principal Amount (000) | Value | |||||||||||||||
Consumer/Commercial/Lease Financing 0.43% | |||||||||||||||||||
American Express Bank FSB | 5.50 | % | 4/16/2013 | $ | 18,375 | $ | 18,047,815 | ||||||||||||
American Express Credit Corp. | 7.30 | % | 8/20/2013 | 12,000 | 12,487,548 | ||||||||||||||
Total | 30,535,363 | ||||||||||||||||||
Consumer Products 0.45% | |||||||||||||||||||
Elizabeth Arden, Inc. | 7.75 | % | 1/15/2014 | 25,000 | 21,750,000 | ||||||||||||||
H.J. Heinz Co. | 5.35 | % | 7/15/2013 | 10,000 | 10,465,020 | ||||||||||||||
Total | 32,215,020 | ||||||||||||||||||
Diversified Capital Goods 2.44% | |||||||||||||||||||
Actuant Corp. | 6.875 | % | 6/15/2017 | 19,905 | 18,213,075 | ||||||||||||||
Belden, Inc. | 7.00 | % | 3/15/2017 | 12,500 | 11,125,000 | ||||||||||||||
Belden, Inc.† | 9.25 | % | 6/15/2019 | 5,400 | 5,258,250 | ||||||||||||||
Eaton Corp. | 6.95 | % | 3/20/2019 | 15,000 | 15,983,790 | ||||||||||||||
Honeywell International, Inc. | 5.30 | % | 3/1/2018 | 15,175 | 15,875,645 | ||||||||||||||
Ingersoll-Rand Global Holding Co., Ltd. | 9.50 | % | 4/15/2014 | 25,800 | 28,280,515 | ||||||||||||||
Mueller Water Products, Inc. | 7.375 | % | 6/1/2017 | 22,075 | 16,390,688 | ||||||||||||||
Park-Ohio Industries, Inc. | 8.375 | % | 11/15/2014 | 13,900 | 6,880,500 | ||||||||||||||
RBS Global & Rexnord Corp. | 8.875 | % | 9/1/2016 | 15,000 | 10,725,000 | ||||||||||||||
RBS Global & Rexnord Corp. | 9.50 | % | 8/1/2014 | 29,500 | 25,370,000 | ||||||||||||||
Sensus Metering Systems, Inc. | 8.625 | % | 12/15/2013 | 21,000 | 19,845,000 | ||||||||||||||
Total | 173,947,463 | ||||||||||||||||||
Electric: Generation 4.54% | |||||||||||||||||||
AES Corp. (The) | 8.00 | % | 10/15/2017 | 33,950 | 31,743,250 | ||||||||||||||
Dynegy Holdings, Inc. | 7.75 | % | 6/1/2019 | 22,500 | 17,634,375 | ||||||||||||||
Dynegy Holdings, Inc. | 8.375 | % | 5/1/2016 | 40,000 | 34,100,000 | ||||||||||||||
Edison Mission Energy | 7.00 | % | 5/15/2017 | 65,000 | 50,212,500 | ||||||||||||||
Edison Mission Energy | 7.75 | % | 6/15/2016 | 51,000 | 41,820,000 | ||||||||||||||
Mirant Americas Generation LLC | 9.125 | % | 5/1/2031 | 34,250 | 24,831,250 | ||||||||||||||
Mirant North America LLC | 7.375 | % | 12/31/2013 | 15,225 | 14,692,125 | ||||||||||||||
NRG Energy, Inc. | 7.25 | % | 2/1/2014 | 21,500 | 20,908,750 | ||||||||||||||
NRG Energy, Inc. | 7.375 | % | 2/1/2016 | 12,300 | 11,669,625 | ||||||||||||||
NRG Energy, Inc. | 7.375 | % | 1/15/2017 | 15,000 | 14,175,000 | ||||||||||||||
RRI Energy, Inc. | 6.75 | % | 12/15/2014 | 7,648 | 7,409,000 | ||||||||||||||
RRI Energy, Inc. | 7.875 | % | 6/15/2017 | 12,500 | 11,250,000 | ||||||||||||||
Texas Competitive Electric Holdings Co. LLC | 10.25 | % | 11/1/2015 | 67,500 | 42,356,250 | ||||||||||||||
Total | 322,802,125 |
See Notes to Financial Statements.
15
Schedule of Investments (unaudited)(continued)
June 30, 2009
Investments | Interest Rate | Maturity Date | Principal Amount (000) | Value | |||||||||||||||
Electric: Integrated 3.02% | |||||||||||||||||||
Brown-Forman Corp. | 5.00 | % | 2/1/2014 | $ | 8,800 | $ | 9,076,681 | ||||||||||||
Commonwealth Edison Co. | 5.80 | % | 3/15/2018 | 18,000 | 18,310,266 | ||||||||||||||
Duke Energy Corp. | 6.30 | % | 2/1/2014 | 15,000 | 16,210,710 | ||||||||||||||
E. ON International Finance BV (Netherlands)†(b) | 5.80 | % | 4/30/2018 | 17,000 | 17,717,485 | ||||||||||||||
EDF SA (France)†(b) | 6.50 | % | 1/26/2019 | 12,000 | 13,166,400 | ||||||||||||||
Nevada Power Co. | 5.875 | % | 1/15/2015 | 15,000 | 15,384,390 | ||||||||||||||
NiSource Finance Corp. | 6.15 | % | 3/1/2013 | 7,000 | 6,963,817 | ||||||||||||||
NiSource Finance Corp. | 10.75 | % | 3/15/2016 | 2,200 | 2,443,186 | ||||||||||||||
Northeast Utilities | 5.65 | % | 6/1/2013 | 7,750 | 7,794,462 | ||||||||||||||
Northern States Power Co. Minnesota | 5.25 | % | 3/1/2018 | 15,000 | 15,638,550 | ||||||||||||||
Pacific Gas & Electric Co. | 4.80 | % | 3/1/2014 | 12,000 | 12,646,548 | ||||||||||||||
Pacific Gas & Electric Co. | 8.25 | % | 10/15/2018 | 7,500 | 9,167,948 | ||||||||||||||
PECO Energy Co. | 5.35 | % | 3/1/2018 | 11,002 | 11,272,143 | ||||||||||||||
PPL Energy Supply LLC | 6.40 | % | 11/1/2011 | 12,000 | 12,645,768 | ||||||||||||||
PSEG Energy Holdings, Inc. | 8.50 | % | 6/15/2011 | 28,425 | 28,840,460 | ||||||||||||||
Rochester Gas & Electric Corp.† | 5.90 | % | 7/15/2019 | 2,000 | 2,023,186 | ||||||||||||||
Toledo Edison Co. (The) | 7.25 | % | 5/1/2020 | 14,000 | 15,617,658 | ||||||||||||||
Total | 214,919,658 | ||||||||||||||||||
Electronics 1.25% | |||||||||||||||||||
Advanced Micro Devices, Inc. | 7.75 | % | 11/1/2012 | 32,500 | 21,693,750 | ||||||||||||||
Analog Devices, Inc. | 5.00 | % | 7/1/2014 | 7,400 | 7,420,735 | ||||||||||||||
Avago Technologies Ltd. (Singapore)(b) | 10.125 | % | 12/1/2013 | 10,000 | 10,250,000 | ||||||||||||||
Emerson Electric Co. | 4.875 | % | 10/15/2019 | 4,350 | 4,360,153 | ||||||||||||||
Emerson Electric Co. | 5.25 | % | 10/15/2018 | 15,600 | 16,007,690 | ||||||||||||||
Freescale Semiconductor, Inc. | 8.875 | % | 12/15/2014 | 37,900 | 19,329,000 | ||||||||||||||
NXP BV (Netherlands)(b) | 9.50 | % | 10/15/2015 | 13,000 | 4,647,500 | ||||||||||||||
NXP BV LLC (Netherlands)(b) | 3.881 | %# | 10/15/2013 | 12,500 | 5,046,875 | ||||||||||||||
Total | 88,755,703 | ||||||||||||||||||
Energy: Exploration & Production 3.83% | |||||||||||||||||||
Anadarko Petroleum Corp. | 7.625 | % | 3/15/2014 | 10,000 | 10,851,840 | ||||||||||||||
Chesapeake Energy Corp. | 6.25 | % | 1/15/2018 | 40,000 | 33,400,000 | ||||||||||||||
Chesapeake Energy Corp. | 7.00 | % | 8/15/2014 | 40,000 | 37,200,000 | ||||||||||||||
Cimarex Energy Co. | 7.125 | % | 5/1/2017 | 25,000 | 22,125,000 | ||||||||||||||
Florida Gas Transmission Co. LLC† | 7.90 | % | 5/15/2019 | 7,700 | 8,477,669 | ||||||||||||||
Forest Oil Corp. | 7.25 | % | 6/15/2019 | 30,700 | 27,630,000 |
See Notes to Financial Statements.
16
Schedule of Investments (unaudited)(continued)
June 30, 2009
Investments | Interest Rate | Maturity Date | Principal Amount (000) | Value | |||||||||||||||
Energy: Exploration & Production (continued) | |||||||||||||||||||
Forest Oil Corp.† | 8.50 | % | 2/15/2014 | $ | 9,825 | $ | 9,702,187 | ||||||||||||
KCS Energy Services, Inc. | 7.125 | % | 4/1/2012 | 25,000 | 23,687,500 | ||||||||||||||
Kerr-McGee Corp. | 6.95 | % | 7/1/2024 | 12,900 | 11,996,471 | ||||||||||||||
Newfield Exploration Co. | 7.125 | % | 5/15/2018 | 16,500 | 15,076,875 | ||||||||||||||
Quicksilver Resources, Inc. | 7.125 | % | 4/1/2016 | 12,325 | 9,675,125 | ||||||||||||||
Quicksilver Resources, Inc. | 8.25 | % | 8/1/2015 | 22,950 | 20,540,250 | ||||||||||||||
Range Resources Corp. | 7.25 | % | 5/1/2018 | 2,600 | 2,444,000 | ||||||||||||||
Range Resources Corp. | 7.375 | % | 7/15/2013 | 20,000 | 19,725,000 | ||||||||||||||
Range Resources Corp. | 8.00 | % | 5/15/2019 | 9,750 | 9,640,313 | ||||||||||||||
XTO Energy, Inc. | 5.50 | % | 6/15/2018 | 10,000 | 10,038,150 | ||||||||||||||
Total | 272,210,380 | ||||||||||||||||||
Environmental 1.14% | |||||||||||||||||||
Allied Waste North America, Inc. | 7.125 | % | 5/15/2016 | 25,000 | 25,158,825 | ||||||||||||||
Allied Waste North America, Inc. | 7.25 | % | 3/15/2015 | 55,000 | 55,889,625 | ||||||||||||||
Total | 81,048,450 | ||||||||||||||||||
Food & Drug Retailers 1.04% | |||||||||||||||||||
Ingles Markets, Inc.† | 8.875 | % | 5/15/2017 | 25,850 | 25,526,875 | ||||||||||||||
New Albertson's, Inc. | 7.25 | % | 5/1/2013 | 2,250 | 2,171,250 | ||||||||||||||
Stater Brothers Holdings, Inc. | 8.125 | % | 6/15/2012 | 27,000 | 26,730,000 | ||||||||||||||
SUPERVALU, INC. | 7.50 | % | 11/15/2014 | 20,000 | 19,300,000 | ||||||||||||||
Total | 73,728,125 | ||||||||||||||||||
Food: Wholesale 1.25% | |||||||||||||||||||
Dole Food Co., Inc. | 8.75 | % | 7/15/2013 | 35,000 | 32,375,000 | ||||||||||||||
Dole Food Co., Inc.† | 13.875 | % | 3/15/2014 | 8,300 | 9,171,500 | ||||||||||||||
General Mills, Inc. | 5.20 | % | 3/17/2015 | 11,000 | 11,612,799 | ||||||||||||||
Kellogg Co. | 4.25 | % | 3/6/2013 | 10,000 | 10,303,120 | ||||||||||||||
Kraft Foods, Inc. | 6.50 | % | 8/11/2017 | 5,000 | 5,274,435 | ||||||||||||||
Land O' Lakes, Inc. | 9.00 | % | 12/15/2010 | 13,750 | 13,956,250 | ||||||||||||||
M-Foods Holdings, Inc.† | 9.75 | % | 10/1/2013 | 6,000 | 5,805,000 | ||||||||||||||
Total | 88,498,104 | ||||||||||||||||||
Forestry/Paper 2.09% | |||||||||||||||||||
Buckeye Technologies, Inc. | 8.00 | % | 10/15/2010 | 16,662 | 16,412,070 | ||||||||||||||
Catalyst Paper Corp. (Canada)(b) | 7.375 | % | 3/1/2014 | 13,750 | 5,912,500 | ||||||||||||||
Cellu Tissue Holdings, Inc.† | 11.50 | % | 6/1/2014 | 10,000 | 9,875,000 |
See Notes to Financial Statements.
17
Schedule of Investments (unaudited)(continued)
June 30, 2009
Investments | Interest Rate | Maturity Date | Principal Amount (000) | Value | |||||||||||||||
Forestry/Paper (continued) | |||||||||||||||||||
Georgia-Pacific LLC† | 8.25 | % | 5/1/2016 | $ | 35,000 | $ | 34,125,000 | ||||||||||||
Graphic Packaging International Corp. | 9.50 | % | 8/15/2013 | 22,975 | 22,056,000 | ||||||||||||||
Graphic Packaging International Corp.† | 9.50 | % | 6/15/2017 | 5,000 | 4,950,000 | ||||||||||||||
International Paper Co. | 7.95 | % | 6/15/2018 | 5,675 | 5,483,469 | ||||||||||||||
Jefferson Smurfit Corp.(d) | 7.50 | % | 6/1/2013 | 20,000 | 7,550,000 | ||||||||||||||
Jefferson Smurfit Corp.(d) | 8.25 | % | 10/1/2012 | 17,000 | 6,460,000 | ||||||||||||||
Rock-Tenn Co.† | 9.25 | % | 3/15/2016 | 10,000 | 10,225,000 | ||||||||||||||
Smurfit Kappa Funding plc (Ireland)(b) | 7.75 | % | 4/1/2015 | 18,000 | 13,995,000 | ||||||||||||||
Stone Container Corp.(d) | 8.00 | % | 3/15/2017 | 20,000 | 7,500,000 | ||||||||||||||
Stone Container Corp.(d) | 8.375 | % | 7/1/2012 | 10,000 | 3,875,000 | ||||||||||||||
Total | 148,419,039 | ||||||||||||||||||
Gaming 2.99% | |||||||||||||||||||
Ameristar Casinos, Inc.† | 9.25 | % | 6/1/2014 | 14,000 | 14,350,000 | ||||||||||||||
Boyd Gaming Corp. | 7.125 | % | 2/1/2016 | 10,000 | 7,462,500 | ||||||||||||||
Downstream Development Quapaw† | 12.00 | % | 10/15/2015 | 12,500 | 6,812,500 | ||||||||||||||
Harrah's Operating Escrow LLC/Harrah's Escrow Corp.† | 11.25 | % | 6/1/2017 | 4,500 | 4,275,000 | ||||||||||||||
International Game Technology | 7.50 | % | 6/15/2019 | 15,000 | 15,160,980 | ||||||||||||||
Isle of Capri Casinos, Inc. | 7.00 | % | 3/1/2014 | 32,925 | 26,669,250 | ||||||||||||||
Las Vegas Sands Corp. | 6.375 | % | 2/15/2015 | 35,000 | 26,075,000 | ||||||||||||||
Mandalay Resort Group | 9.375 | % | 2/15/2010 | 17,500 | 16,712,500 | ||||||||||||||
MGM Mirage | 6.75 | % | 9/1/2012 | 7,000 | 5,005,000 | ||||||||||||||
MGM Mirage† | 10.375 | % | 5/15/2014 | 2,500 | 2,606,250 | ||||||||||||||
Mohegan Tribal Gaming Authority | 6.125 | % | 2/15/2013 | 15,382 | 11,690,320 | ||||||||||||||
River Rock Entertainment Authority | 9.75 | % | 11/1/2011 | 17,000 | 12,835,000 | ||||||||||||||
Scientific Games Corp. | 6.25 | % | 12/15/2012 | 10,000 | 9,587,500 | ||||||||||||||
Scientific Games International, Inc.† | 9.25 | % | 6/15/2019 | 7,500 | 7,537,500 | ||||||||||||||
Seneca Gaming Corp. | 7.25 | % | 5/1/2012 | 10,000 | 8,700,000 | ||||||||||||||
Snoqualmie Entertainment Authority† | 9.125 | % | 2/1/2015 | 19,500 | 10,237,500 | ||||||||||||||
Station Casinos, Inc. | 6.50 | % | 2/1/2014 | 27,000 | 675,000 | ||||||||||||||
Turning Stone Casino Resort† | 9.125 | % | 12/15/2010 | 15,000 | 14,062,500 | ||||||||||||||
Turning Stone Casino Resort† | 9.125 | % | 9/15/2014 | 10,000 | 8,575,000 | ||||||||||||||
Wynn Las Vegas LLC/Capital Corp. | 6.625 | % | 12/1/2014 | 4,000 | 3,540,000 | ||||||||||||||
Total | 212,569,300 |
See Notes to Financial Statements.
18
Schedule of Investments (unaudited)(continued)
June 30, 2009
Investments | Interest Rate | Maturity Date | Principal Amount (000) | Value | |||||||||||||||
Gas Distribution 4.14% | |||||||||||||||||||
El Paso Corp. | 7.00 | % | 6/15/2017 | $ | 26,275 | $ | 24,061,436 | ||||||||||||
El Paso Corp. | 7.25 | % | 6/1/2018 | 14,200 | 13,181,647 | ||||||||||||||
El Paso Corp. | 7.75 | % | 1/15/2032 | 10,000 | 8,190,210 | ||||||||||||||
El Paso Corp. | 8.25 | % | 2/15/2016 | 10,000 | 9,775,000 | ||||||||||||||
El Paso Corp. | 12.00 | % | 12/12/2013 | 4,000 | 4,420,000 | ||||||||||||||
Ferrellgas Partners LP | 6.75 | % | 5/1/2014 | 15,950 | 13,876,500 | ||||||||||||||
Ferrellgas Partners LP | 8.75 | % | 6/15/2012 | 17,625 | 16,479,375 | ||||||||||||||
Inergy Finance LP | 8.25 | % | 3/1/2016 | 17,000 | 16,277,500 | ||||||||||||||
Inergy Finance LP† | 8.75 | % | 3/1/2015 | 4,950 | 4,863,375 | ||||||||||||||
MarkWest Energy Partners LP† | 6.875 | % | 11/1/2014 | 10,000 | 8,300,000 | ||||||||||||||
MarkWest Energy Partners LP | 6.875 | % | 11/1/2014 | 23,050 | 19,362,000 | ||||||||||||||
MarkWest Energy Partners LP | 8.50 | % | 7/15/2016 | 3,775 | 3,265,375 | ||||||||||||||
MarkWest Energy Partners LP | 8.75 | % | 4/15/2018 | 6,000 | 5,220,000 | ||||||||||||||
National Fuel Gas Co. | 6.50 | % | 4/15/2018 | 25,400 | 24,841,911 | ||||||||||||||
National Fuel Gas Co. | 8.75 | % | 5/1/2019 | 5,000 | 5,652,960 | ||||||||||||||
NorthernStar Natural Gas, Inc. | 5.00 | % | 5/15/2014 | 4,126 | 3,610,042 | ||||||||||||||
Northwest Pipeline GP | 6.05 | % | 6/15/2018 | 5,025 | 5,043,341 | ||||||||||||||
Northwest Pipeline GP | 7.00 | % | 6/15/2016 | 12,500 | 13,203,488 | ||||||||||||||
Panhandle Eastern Pipe Line Co. | 7.00 | % | 6/15/2018 | 7,600 | 7,727,596 | ||||||||||||||
Panhandle Eastern Pipe Line Co. | 8.125 | % | 6/1/2019 | 23,000 | 24,830,570 | ||||||||||||||
Plains All American Pipeline LP | 8.75 | % | 5/1/2019 | 1,300 | 1,477,670 | ||||||||||||||
Rockies Express Pipeline LLC† | 6.25 | % | 7/15/2013 | 6,000 | 6,045,360 | ||||||||||||||
Williams Cos., Inc. (The) | 7.875 | % | 9/1/2021 | 36,550 | 36,071,195 | ||||||||||||||
Williams Partners LP | 7.25 | % | 2/1/2017 | 20,000 | 18,275,660 | ||||||||||||||
Total | 294,052,211 | ||||||||||||||||||
Health Services 4.98% | |||||||||||||||||||
Alliance Imaging, Inc. | 7.25 | % | 12/15/2012 | 10,150 | 9,896,250 | ||||||||||||||
Apria Healthcare Group, Inc.† | 11.25 | % | 11/1/2014 | 10,250 | 9,942,500 | ||||||||||||||
Bausch & Lomb, Inc. | 9.875 | % | 11/1/2015 | 30,000 | 28,800,000 | ||||||||||||||
Bio-Rad Laboratories, Inc. | 6.125 | % | 12/15/2014 | 16,325 | 14,937,375 | ||||||||||||||
Bio-Rad Laboratories, Inc.† | 8.00 | % | 9/15/2016 | 10,000 | 9,925,000 | ||||||||||||||
Biomet, Inc. | 10.00 | % | 10/15/2017 | 22,000 | 22,495,000 | ||||||||||||||
Centene Corp. | 7.25 | % | 4/1/2014 | 15,000 | 13,837,500 | ||||||||||||||
Community Health Systems | 8.875 | % | 7/15/2015 | 35,000 | 34,475,000 | ||||||||||||||
DaVita, Inc. | 7.25 | % | 3/15/2015 | 15,000 | 14,175,000 | ||||||||||||||
Hanger Orthopedic Group, Inc. | 10.25 | % | 6/1/2014 | 12,950 | 13,435,625 |
See Notes to Financial Statements.
19
Schedule of Investments (unaudited)(continued)
June 30, 2009
Investments | Interest Rate | Maturity Date | Principal Amount (000) | Value | |||||||||||||||
Health Services (continued) | |||||||||||||||||||
HCA, Inc. | 6.375 | % | 1/15/2015 | $ | 22,500 | $ | 18,393,750 | ||||||||||||
HCA, Inc.† | 8.50 | % | 4/15/2019 | 10,000 | 9,850,000 | ||||||||||||||
HCA, Inc. | 9.125 | % | 11/15/2014 | 33,500 | 33,248,750 | ||||||||||||||
HCA, Inc.† | 9.875 | % | 2/15/2017 | 12,000 | 12,180,000 | ||||||||||||||
Omnicare, Inc. | 6.875 | % | 12/15/2015 | 7,000 | 6,352,500 | ||||||||||||||
Select Medical Corp. | 7.625 | % | 2/1/2015 | 25,000 | 20,437,500 | ||||||||||||||
Tenet Healthcare Corp.† | 8.875 | % | 7/1/2019 | 6,850 | 6,918,500 | ||||||||||||||
Tenet Healthcare Corp. | 9.25 | % | 2/1/2015 | 15,000 | 13,800,000 | ||||||||||||||
United Surgical Partners, Inc. | 8.875 | % | 5/1/2017 | 21,500 | 19,672,500 | ||||||||||||||
Vanguard Health Holdings Co. II LLC | 9.00 | % | 10/1/2014 | 32,000 | 30,800,000 | ||||||||||||||
VWR Funding, Inc. PIK | 10.25 | % | 7/15/2015 | 13,225 | 10,513,875 | ||||||||||||||
Total | 354,086,625 | ||||||||||||||||||
Hotels 1.67% | |||||||||||||||||||
FelCor Lodging LP | 9.00 | % | 6/1/2011 | 17,000 | 15,045,000 | ||||||||||||||
Gaylord Entertainment Co. | 6.75 | % | 11/15/2014 | 9,600 | 7,224,000 | ||||||||||||||
Gaylord Entertainment Co. | 8.00 | % | 11/15/2013 | 37,500 | 32,156,250 | ||||||||||||||
Host Hotels & Resorts LP | 6.375 | % | 3/15/2015 | 15,000 | 13,050,000 | ||||||||||||||
Host Hotels & Resorts LP | 7.00 | % | 8/15/2012 | 22,000 | 21,340,000 | ||||||||||||||
Starwood Hotels & Resorts Worldwide, Inc. | 6.25 | % | 2/15/2013 | 9,350 | 8,702,391 | ||||||||||||||
Starwood Hotels & Resorts Worldwide, Inc. | 6.75 | % | 5/15/2018 | 6,600 | 5,668,489 | ||||||||||||||
Starwood Hotels & Resorts Worldwide, Inc. | 7.875 | % | 5/1/2012 | 6,300 | 5,799,534 | ||||||||||||||
Starwood Hotels & Resorts Worldwide, Inc. | 7.875 | % | 10/15/2014 | 10,500 | 9,880,406 | ||||||||||||||
Total | 118,866,070 | ||||||||||||||||||
Household & Leisure Products 0.49% | |||||||||||||||||||
Mattel, Inc. | 5.625 | % | 3/15/2013 | 13,950 | 14,145,119 | ||||||||||||||
Whirlpool Corp. | 8.60 | % | 5/1/2014 | 20,000 | 20,920,500 | ||||||||||||||
Total | 35,065,619 | ||||||||||||||||||
Integrated Energy 0.69% | |||||||||||||||||||
Marathon Oil Corp. | 7.50 | % | 2/15/2019 | 25,000 | 27,333,600 | ||||||||||||||
Petrobras International Finance Co. (Brazil)(b) | 5.875 | % | 3/1/2018 | 20,000 | 19,758,240 | ||||||||||||||
VeraSun Energy Corp.(d) | 9.375 | % | 6/1/2017 | 17,150 | 2,079,437 | ||||||||||||||
Total | 49,171,277 |
See Notes to Financial Statements.
20
Schedule of Investments (unaudited)(continued)
June 30, 2009
Investments | Interest Rate | Maturity Date | Principal Amount (000) | Value | |||||||||||||||
Investments & Miscellaneous Financial Services 0.53% | |||||||||||||||||||
General Electric Capital Corp. | 4.80 | % | 5/1/2013 | $ | 20,000 | $ | 20,039,080 | ||||||||||||
Prudential Financial, Inc. | 5.10 | % | 9/20/2014 | 6,525 | 6,171,860 | ||||||||||||||
Prudential Financial, Inc. | 5.15 | % | 1/15/2013 | 2,875 | 2,792,240 | ||||||||||||||
ZFS Finance (USA) Trust V† | 6.50 | %# | 5/9/2037 | 12,000 | 8,880,000 | ||||||||||||||
Total | 37,883,180 | ||||||||||||||||||
Leisure 0.31% | |||||||||||||||||||
Speedway Motorsports, Inc.† | 8.75 | % | 6/1/2016 | 15,050 | 15,313,375 | ||||||||||||||
Universal City Development Partners Ltd. | 11.75 | % | 4/1/2010 | 7,175 | 6,852,125 | ||||||||||||||
Total | 22,165,500 | ||||||||||||||||||
Machinery 1.05% | |||||||||||||||||||
Baldor Electric Co. | 8.625 | % | 2/15/2017 | 38,500 | 35,805,000 | ||||||||||||||
Briggs & Stratton Corp. | 8.875 | % | 3/15/2011 | 10,000 | 10,212,500 | ||||||||||||||
Gardner Denver, Inc. | 8.00 | % | 5/1/2013 | 23,450 | 22,394,750 | ||||||||||||||
Roper Industries, Inc. | 6.625 | % | 8/15/2013 | 6,350 | 6,347,162 | ||||||||||||||
Total | 74,759,412 | ||||||||||||||||||
Media: Broadcast 1.24% | |||||||||||||||||||
Allbritton Communications Co. | 7.75 | % | 12/15/2012 | 60,000 | 46,650,000 | ||||||||||||||
CBS Corp. | 8.875 | % | 5/15/2019 | 19,325 | 18,864,659 | ||||||||||||||
ION Media Networks, Inc. PIK†(d) | 8.381 | %# | 1/15/2013 | 11,064 | 138,294 | ||||||||||||||
Lin TV Corp. | 6.50 | % | 5/15/2013 | 10,075 | 7,304,375 | ||||||||||||||
Sinclair Broadcast Group, Inc. | 8.00 | % | 3/15/2012 | 7,000 | 4,707,500 | ||||||||||||||
Univision Communications, Inc. PIK† | 9.75 | % | 3/15/2015 | 18,150 | 10,663,125 | ||||||||||||||
Total | 88,327,953 | ||||||||||||||||||
Media: Cable 2.48% | |||||||||||||||||||
CCH I LLC | 11.75 | % | 5/15/2014 | 33,000 | 371,250 | ||||||||||||||
CCH I LLC/CCH I Capital Corp. | 11.00 | % | 10/1/2015 | 70,250 | 8,781,250 | ||||||||||||||
CCH II LLC/CCH II Capital Corp. | 10.25 | % | 9/15/2010 | 5,000 | 5,300,000 | ||||||||||||||
CSC Holdings, Inc.† | 8.625 | % | 2/15/2019 | 25,000 | 24,437,500 | ||||||||||||||
DirecTV Holdings LLC | 6.375 | % | 6/15/2015 | 25,000 | 23,250,000 | ||||||||||||||
DirecTV Holdings LLC | 8.375 | % | 3/15/2013 | 15,000 | 15,112,500 | ||||||||||||||
Echostar DBS Corp. | 7.125 | % | 2/1/2016 | 26,000 | 24,375,000 | ||||||||||||||
Mediacom Broadband LLC | 8.50 | % | 10/15/2015 | 10,000 | 9,050,000 | ||||||||||||||
Mediacom Communications Corp. | 9.50 | % | 1/15/2013 | 42,500 | 40,693,750 | ||||||||||||||
Time Warner Cable, Inc. | 7.50 | % | 4/1/2014 | 13,500 | 14,886,463 |
See Notes to Financial Statements.
21
Schedule of Investments (unaudited)(continued)
June 30, 2009
Investments | Interest Rate | Maturity Date | Principal Amount (000) | Value | |||||||||||||||
Media: Cable (continued) | |||||||||||||||||||
Virgin Media Finance plc (United Kingdom)(b) | 9.50 | % | 8/15/2016 | $ | 10,000 | $ | 9,900,000 | ||||||||||||
Total | 176,157,713 | ||||||||||||||||||
Media: Diversified 0.07% | |||||||||||||||||||
Grupo Televisa SA (Mexico)(b) | 6.00 | % | 5/15/2018 | 5,050 | 4,786,451 | ||||||||||||||
Media: Services 1.19% | |||||||||||||||||||
Affinion Group, Inc.† | 10.125 | % | 10/15/2013 | 6,000 | 5,580,000 | ||||||||||||||
Affinion Group, Inc. | 11.50 | % | 10/15/2015 | 12,200 | 10,492,000 | ||||||||||||||
Interpublic Group of Cos., Inc. (The) | 6.25 | % | 11/15/2014 | 24,575 | 21,626,000 | ||||||||||||||
Interpublic Group of Cos., Inc. (The)† | 10.00 | % | 7/15/2017 | 11,475 | 11,618,437 | ||||||||||||||
Lamar Media Corp. | 6.625 | % | 8/15/2015 | 3,500 | 2,975,000 | ||||||||||||||
Nielsen Finance LLC/Nielsen Finance Co.† | 11.50 | % | 5/1/2016 | 2,750 | 2,688,125 | ||||||||||||||
WMG Acquisition Corp. | 7.375 | % | 4/15/2014 | 12,000 | 10,215,000 | ||||||||||||||
WMG Acquisition Corp.† | 9.50 | % | 6/15/2016 | 19,600 | 19,600,000 | ||||||||||||||
Total | 84,794,562 | ||||||||||||||||||
Metals/Mining (Excluding Steel) 2.44% | |||||||||||||||||||
Aleris International, Inc.(d) | 10.00 | % | 12/15/2016 | 14,175 | 372,094 | ||||||||||||||
Aleris International, Inc. PIK(d) | 9.00 | % | 12/15/2014 | 7,500 | 121,875 | ||||||||||||||
Anglo American Capital plc (United Kingdom)†(b) | 9.375 | % | 4/8/2014 | 10,000 | 10,872,950 | ||||||||||||||
Barrick Gold Corp. (Canada)(b) | 6.95 | % | 4/1/2019 | 5,250 | 5,890,631 | ||||||||||||||
Foundation PA Coal Co. | 7.25 | % | 8/1/2014 | 11,000 | 10,835,000 | ||||||||||||||
Freeport-McMoRan Copper & Gold, Inc. | 8.25 | % | 4/1/2015 | 25,000 | 25,278,500 | ||||||||||||||
Freeport-McMoRan Copper & Gold, Inc. | 8.375 | % | 4/1/2017 | 27,500 | 27,745,245 | ||||||||||||||
Noranda Aluminum Acquisition Corp. PIK | 5.413 | %# | 5/15/2015 | 27,784 | 15,454,978 | ||||||||||||||
Peabody Energy Corp. | 5.875 | % | 4/15/2016 | 15,000 | 13,275,000 | ||||||||||||||
Peabody Energy Corp. | 7.375 | % | 11/1/2016 | 10,000 | 9,500,000 | ||||||||||||||
Teck Resources Ltd. (Canada)†(b) | 9.75 | % | 5/15/2014 | 10,750 | 11,136,957 | ||||||||||||||
Teck Resources Ltd. (Canada)†(b) | 10.75 | % | 5/15/2019 | 40,000 | 43,066,240 | ||||||||||||||
Total | 173,549,470 | ||||||||||||||||||
Mortgage Banks & Thrifts 0.00% | |||||||||||||||||||
Washington Mutual Bank(d) | 6.875 | % | 6/15/2011 | 22,500 | 28,125 | ||||||||||||||
Multi-Line Insurance 1.02% | |||||||||||||||||||
AXA SA (France)†(b) | 6.379 | %# | 12/29/2049 | 11,225 | 7,201,444 | ||||||||||||||
Hub International Holdings, Inc.† | 9.00 | % | 12/15/2014 | 12,875 | 10,573,594 | ||||||||||||||
Marsh & McLennan Cos., Inc. | 9.25 | % | 4/15/2019 | 10,000 | 11,271,770 |
See Notes to Financial Statements.
22
Schedule of Investments (unaudited)(continued)
June 30, 2009
Investments | Interest Rate | Maturity Date | Principal Amount (000) | Value | |||||||||||||||
Multi-Line Insurance (continued) | |||||||||||||||||||
MetLife Capital Trust X† | 9.25 | %# | 4/8/2038 | $ | 18,500 | $ | 16,502,869 | ||||||||||||
MetLife, Inc. | 5.00 | % | 6/15/2015 | 18,235 | 17,395,424 | ||||||||||||||
USI Holdings Corp.† | 4.758 | %# | 11/15/2014 | 15,000 | 9,825,000 | ||||||||||||||
Total | 72,770,101 | ||||||||||||||||||
Non-Food & Drug Retailers 1.54% | |||||||||||||||||||
Brookstone Co., Inc. | 12.00 | % | 10/15/2012 | 10,000 | 4,050,000 | ||||||||||||||
J.C. Penney Corp., Inc. | 6.875 | % | 10/15/2015 | 1,675 | 1,573,557 | ||||||||||||||
J.C. Penney Corp., Inc. | 7.125 | % | 11/15/2023 | 5,025 | 4,444,120 | ||||||||||||||
J.C. Penney Corp., Inc. | 7.95 | % | 4/1/2017 | 4,975 | 4,883,360 | ||||||||||||||
Limited Brands, Inc. | 5.25 | % | 11/1/2014 | 1,663 | 1,415,381 | ||||||||||||||
Limited Brands, Inc. | 6.90 | % | 7/15/2017 | 13,116 | 11,366,050 | ||||||||||||||
Limited Brands, Inc.† | 8.50 | % | 6/15/2019 | 7,000 | 6,717,585 | ||||||||||||||
Macy's Retail Holdings, Inc. | 5.90 | % | 12/1/2016 | 31,500 | 25,699,023 | ||||||||||||||
Macy's Retail Holdings, Inc. | 6.375 | % | 3/15/2037 | 12,900 | 8,792,279 | ||||||||||||||
Macy's Retail Holdings, Inc. | 8.875 | % | 7/15/2015 | 17,125 | 16,590,923 | ||||||||||||||
Nordstrom, Inc. | 6.25 | % | 1/15/2018 | 15,000 | 14,761,935 | ||||||||||||||
Toys 'R' Us, Inc. | 7.625 | % | 8/1/2011 | 10,000 | 9,300,000 | ||||||||||||||
Total | 109,594,213 | ||||||||||||||||||
Oil Field Equipment & Services 1.67% | |||||||||||||||||||
Bristow Group, Inc. | 6.125 | % | 6/15/2013 | 20,150 | 18,336,500 | ||||||||||||||
Bristow Group, Inc. | 7.50 | % | 9/15/2017 | 11,000 | 10,037,500 | ||||||||||||||
Cameron International Corp. | 6.375 | % | 7/15/2018 | 8,850 | 8,180,754 | ||||||||||||||
CGG Veritas (France)(b) | 7.75 | % | 5/15/2017 | 5,525 | 5,055,375 | ||||||||||||||
Complete Production Services, Inc. | 8.00 | % | 12/15/2016 | 20,000 | 17,200,000 | ||||||||||||||
Hornbeck Offshore Services, Inc. Series B | 6.125 | % | 12/1/2014 | 8,275 | 7,540,594 | ||||||||||||||
Key Energy Services, Inc. | 8.375 | % | 12/1/2014 | 9,200 | 8,165,000 | ||||||||||||||
Nabors Industries, Inc. | 6.15 | % | 2/15/2018 | 10,000 | 9,615,340 | ||||||||||||||
National Oilwell Varco, Inc. | 6.125 | % | 8/15/2015 | 15,000 | 14,296,215 | ||||||||||||||
Pride International, Inc. | 7.375 | % | 7/15/2014 | 20,000 | 19,950,000 | ||||||||||||||
Total | 118,377,278 | ||||||||||||||||||
Oil Refining & Marketing 0.29% | |||||||||||||||||||
Tesoro Corp. | 6.25 | % | 11/1/2012 | 9,375 | 8,953,125 | ||||||||||||||
Tesoro Corp. | 9.75 | % | 6/1/2019 | 12,000 | 11,910,000 | ||||||||||||||
Total | 20,863,125 |
See Notes to Financial Statements.
23
Schedule of Investments (unaudited)(continued)
June 30, 2009
Investments | Interest Rate | Maturity Date | Principal Amount (000) | Value | |||||||||||||||
Packaging 1.68% | |||||||||||||||||||
Ball Corp. | 6.625 | % | 3/15/2018 | $ | 16,000 | $ | 14,680,000 | ||||||||||||
Crown Americas LLC/Crown Americas Capital Corp. II† | 7.625 | % | 5/15/2017 | 15,000 | 14,550,000 | ||||||||||||||
Crown Cork & Seal Co., Inc. | 7.375 | % | 12/15/2026 | 47,770 | 40,843,350 | ||||||||||||||
Owens-Brockway Glass Container, Inc.† | 7.375 | % | 5/15/2016 | 15,000 | 14,625,000 | ||||||||||||||
Sealed Air Corp.† | 7.875 | % | 6/15/2017 | 12,250 | 12,158,370 | ||||||||||||||
Solo Cup Co. | 8.50 | % | 2/15/2014 | 15,400 | 12,705,000 | ||||||||||||||
Solo Cup Co.† | 10.50 | % | 11/1/2013 | 1,950 | 1,964,625 | ||||||||||||||
Vitro SA de CV (Mexico)(b)(d) | 9.125 | % | 2/1/2017 | 20,000 | 7,800,000 | ||||||||||||||
Total | 119,326,345 | ||||||||||||||||||
Pharmaceuticals 1.05% | |||||||||||||||||||
Abbott Laboratories | 5.125 | % | 4/1/2019 | 10,000 | 10,315,990 | ||||||||||||||
Axcan Intermediate Holdings, Inc. | 12.75 | % | 3/1/2016 | 9,500 | 9,666,250 | ||||||||||||||
Novartis Securities Investment Ltd. | 5.125 | % | 2/10/2019 | 10,000 | 10,250,180 | ||||||||||||||
Roche Holdings, Inc.† | 5.00 | % | 3/1/2014 | 15,500 | 16,228,314 | ||||||||||||||
Warner Chilcott Corp. | 8.75 | % | 2/1/2015 | 28,009 | 28,009,000 | ||||||||||||||
Total | 74,469,734 | ||||||||||||||||||
Printing & Publishing 0.02% | |||||||||||||||||||
Dex Media West | 9.875 | % | 8/15/2013 | 7,000 | 1,085,000 | ||||||||||||||
Property & Casualty 0.10% | |||||||||||||||||||
Liberty Mutual Group, Inc.† | 10.75 | %# | 6/15/2058 | 10,000 | 7,212,050 | ||||||||||||||
Real Estate Investment Trusts 0.13% | |||||||||||||||||||
ProLogis | 5.625 | % | 11/15/2016 | 12,000 | 9,237,348 | ||||||||||||||
Restaurants 0.51% | |||||||||||||||||||
Denny's Corp./Denny's Holdings, Inc. | 10.00 | % | 10/1/2012 | 17,000 | 16,575,000 | ||||||||||||||
Wendy's/Arby's Restaurants LLC† | 10.00 | % | 7/15/2016 | 20,500 | 19,705,625 | ||||||||||||||
Total | 36,280,625 | ||||||||||||||||||
Software/Services 1.67% | |||||||||||||||||||
Ceridian Corp. | 11.25 | % | 11/15/2015 | 6,750 | 5,678,437 | ||||||||||||||
First Data Corp. | 9.875 | % | 9/24/2015 | 18,000 | 12,870,000 | ||||||||||||||
SERENA Software, Inc. | 10.375 | % | 3/15/2016 | 7,600 | 6,080,000 | ||||||||||||||
SunGard Data Systems, Inc. | 9.125 | % | 8/15/2013 | 40,300 | 38,285,000 | ||||||||||||||
SunGard Data Systems, Inc. | 10.25 | % | 8/15/2015 | 27,000 | 25,076,250 |
See Notes to Financial Statements.
24
Schedule of Investments (unaudited)(continued)
June 30, 2009
Investments | Interest Rate | Maturity Date | Principal Amount (000) | Value | |||||||||||||||
Software/Services (continued) | |||||||||||||||||||
Syniverse Technologies, Inc. | 7.75 | % | 8/15/2013 | $ | 14,800 | $ | 13,986,000 | ||||||||||||
Unisys Corp. | 8.00 | % | 10/15/2012 | 10,000 | 6,050,000 | ||||||||||||||
Vangent, Inc. | 9.625 | % | 2/15/2015 | 12,500 | 10,437,500 | ||||||||||||||
Total | 118,463,187 | ||||||||||||||||||
Steel Producers/Products 0.43% | |||||||||||||||||||
Algoma Acquisition Corp. (Canada)†(b) | 9.875 | % | 6/15/2015 | 13,250 | 7,486,250 | ||||||||||||||
Allegheny Ludlum Corp. | 6.95 | % | 12/15/2025 | 13,875 | 12,226,761 | ||||||||||||||
Allegheny Technologies, Inc. | 9.375 | % | 6/1/2019 | 10,200 | 10,826,566 | ||||||||||||||
Total | 30,539,577 | ||||||||||||||||||
Support: Services 2.27% | |||||||||||||||||||
ARAMARK Corp. | 4.528 | %# | 2/1/2015 | 14,150 | 11,567,625 | ||||||||||||||
Ashtead Capital, Inc.† | 9.00 | % | 8/15/2016 | 14,000 | 11,935,000 | ||||||||||||||
Corrections Corp. of America | 7.75 | % | 6/1/2017 | 28,000 | 27,720,000 | ||||||||||||||
Education Management LLC/Education Management Finance Corp. | 8.75 | % | 6/1/2014 | 2,125 | 2,071,875 | ||||||||||||||
Expedia, Inc.† | 8.50 | % | 7/1/2016 | 12,775 | 12,327,875 | ||||||||||||||
FTI Consulting, Inc. | 7.75 | % | 10/1/2016 | 12,075 | 11,592,000 | ||||||||||||||
Hertz Corp. (The) | 8.875 | % | 1/1/2014 | 20,900 | 19,332,500 | ||||||||||||||
Hertz Corp. (The) | 10.50 | % | 1/1/2016 | 8,000 | 7,160,000 | ||||||||||||||
Iron Mountain, Inc. | 7.75 | % | 1/15/2015 | 8,600 | 8,299,000 | ||||||||||||||
Iron Mountain, Inc. | 8.625 | % | 4/1/2013 | 10,000 | 10,025,000 | ||||||||||||||
Rental Service Corp. | 9.50 | % | 12/1/2014 | 15,250 | 12,314,375 | ||||||||||||||
Rental Service Corp.† | 10.00 | % | 7/15/2017 | 7,350 | 7,359,187 | ||||||||||||||
United Rentals (North America), Inc.† | 10.875 | % | 6/15/2016 | 20,000 | 19,300,000 | ||||||||||||||
Total | 161,004,437 | ||||||||||||||||||
Telecommunications: Fixed Line 0.17% | |||||||||||||||||||
Valor Telecommunications Enterprises LLC | 7.75 | % | 2/15/2015 | 12,000 | 11,769,096 | ||||||||||||||
Telecommunications: Integrated/Services 4.30% | |||||||||||||||||||
AT&T, Inc. | 5.80 | % | 2/15/2019 | 15,000 | 15,257,490 | ||||||||||||||
Cincinnati Bell, Inc. | 8.375 | % | 1/15/2014 | 59,075 | 54,939,750 | ||||||||||||||
Hellas II (Luxembourg)†(b) | 6.881 | %# | 1/15/2015 | 17,850 | 4,641,000 | ||||||||||||||
Hughes Network Systems LLC† | 9.50 | % | 4/15/2014 | 18,450 | 18,081,000 | ||||||||||||||
Hughes Network Systems LLC | 9.50 | % | 4/15/2014 | 11,500 | 11,270,000 | ||||||||||||||
Intelsat Ltd. | 11.25 | % | 6/15/2016 | 11,000 | 11,275,000 |
See Notes to Financial Statements.
25
Schedule of Investments (unaudited)(continued)
June 30, 2009
Investments | Interest Rate | Maturity Date | Principal Amount (000) | Value | |||||||||||||||
Telecommunications: Integrated/Services (continued) | |||||||||||||||||||
MasTec, Inc. | 7.625 | % | 2/1/2017 | $ | 12,500 | $ | 10,890,625 | ||||||||||||
Nordic Telephone Holdings Co. (Denmark)†(b) | 8.875 | % | 5/1/2016 | 39,000 | 37,830,000 | ||||||||||||||
Qwest Capital Funding, Inc. | 7.90 | % | 8/15/2010 | 82,650 | 83,063,250 | ||||||||||||||
Qwest Communications International, Inc. | 7.25 | % | 2/15/2011 | 30,000 | 29,250,000 | ||||||||||||||
Telemar Norte Leste SA (Brazil)†(b) | 9.50 | % | 4/23/2019 | 4,175 | 4,566,406 | ||||||||||||||
Windstream Corp. | 7.00 | % | 3/15/2019 | 28,000 | 24,500,000 | ||||||||||||||
Total | 305,564,521 | ||||||||||||||||||
Telecommunications: Wireless 3.19% | |||||||||||||||||||
CC Holdings GS V LLC/Crown Castle GS III Corp.† | 7.75 | % | 5/1/2017 | 44,000 | 43,120,000 | ||||||||||||||
Centennial Communications Corp. | 10.00 | % | 1/1/2013 | 12,750 | 13,515,000 | ||||||||||||||
Centennial Communications Corp. | 10.125 | % | 6/15/2013 | 10,000 | 10,362,500 | ||||||||||||||
DigitalGlobe, Inc.† | 10.50 | % | 5/1/2014 | 33,250 | 34,580,000 | ||||||||||||||
IPCS, Inc. PIK | 5.028 | %# | 5/1/2014 | 4,700 | 3,125,500 | ||||||||||||||
MetroPCS Wireless, Inc. | 9.25 | % | 11/1/2014 | 35,000 | 34,956,250 | ||||||||||||||
Sprint Capital Corp. | 6.90 | % | 5/1/2019 | 43,000 | 35,797,500 | ||||||||||||||
Sprint Capital Corp. | 8.375 | % | 3/15/2012 | 20,000 | 19,800,000 | ||||||||||||||
Verizon Wireless Capital LLC† | 5.55 | % | 2/1/2014 | 10,000 | 10,626,990 | ||||||||||||||
Verizon Wireless Capital LLC† | 8.50 | % | 11/15/2018 | 7,500 | 8,978,235 | ||||||||||||||
Wind Acquisition Finance SA (Italy)†(b) | 10.75 | % | 12/1/2015 | 12,000 | 12,060,000 | ||||||||||||||
Total | 226,921,975 | ||||||||||||||||||
Theaters & Entertainment 0.38% | |||||||||||||||||||
AMC Entertainment, Inc. | 8.00 | % | 3/1/2014 | 18,000 | 15,435,000 | ||||||||||||||
Cinemark USA, Inc.† | 8.625 | % | 6/15/2019 | 11,825 | 11,736,313 | ||||||||||||||
Total | 27,171,313 | ||||||||||||||||||
Total High Yield Corporate Bonds (cost $6,164,860,013) | 5,500,300,645 | ||||||||||||||||||
NON-AGENCY COMMERCIAL MORTGAGE-BACKED SECURITIES 0.13% | |||||||||||||||||||
Crown Castle Towers LLC 2006-1A AFX† (cost $9,039,292) | 5.245 | % | 11/15/2036 | 9,810 | 9,417,600 | ||||||||||||||
Shares (000) | |||||||||||||||||||
NON-CONVERTIBLE PREFERRED STOCKS 0.14% | |||||||||||||||||||
Agency 0.01% | |||||||||||||||||||
Fannie Mae | Zero Coupon | 481 | 645,076 |
See Notes to Financial Statements.
26
Schedule of Investments (unaudited)(concluded)
June 30, 2009
Investments | Interest Rate | Shares (000) | Value | ||||||||||||
Consumer Products 0.13% | |||||||||||||||
H.J. Heinz Co.† | 8.00 | % | – | (e) | $ | 9,425,000 | |||||||||
Total Non-Convertible Preferred Stocks (cost $22,089,804) | 10,070,076 | ||||||||||||||
Total Long-Term Investments (cost $7,794,777,217) | 6,967,528,912 | ||||||||||||||
Principal Amount (000) | |||||||||||||||
SHORT-TERM INVESTMENT 0.59% | |||||||||||||||
Repurchase Agreement | |||||||||||||||
Repurchase Agreement dated 6/30/2009, Zero Coupon due 7/1/2009 with State Street Bank & Trust Co. collateralized by $39,215,000 of Federal Home Loan Mortgage Corp. at 6.875% due 9/15/2010; value: $42,940,425; proceeds: $42,095,570 (cost $42,095,570) | $ | 42,096 | 42,095,570 | ||||||||||||
Total Investments in Securities 98.61% (cost $7,836,872,787) | 7,009,624,482 | ||||||||||||||
Foreign Cash and Other Assets in Excess of Liabilities 1.39% | 98,694,066 | ||||||||||||||
Net Assets 100.00% | $ | 7,108,318,548 |
CAD Canadian Dollar.
EUR Euro Dollar.
ADR American Depositary Receipt.
ETF Exchange Traded Fund.
PIK Payment-in-kind.
* Non-income producing security.
** Restricted security. The Fund acquired 1,597,250 shares in a private placement on June 11, 2009 for a cost of $29,948,438. The fair value per share on June 30, 2009 is $18.75.
~ Fair valued security.
† Security was purchased pursuant to Rule 144A under the Securities Act of 1933 and, unless registered under the Act or exempted from registration, may only be resold to qualified institutional investors. Unless otherwise noted, 144A securities are deemed to be liquid.
# Variable rate security. The interest rate represents the rate at June 30, 2009.
^ Floating Rate Loans in which the Fund invests generally pay interest at rates that are periodically re-determined at a margin above the London Inter-Bank Offered Rate ("LIBOR") or the prime rate offered by major U.S. banks.
†† Deferred interest debentures pay the stated rate, after which they pay a predetermined interest rate.
(a) On the maturity date, the issuer will redeem the notes at their accreted principal price, which will be equal to 125.66% of principal amount at issuance. The "accreted principal price" of the note will be equal to the principal amount of the note at issuance plus accretion on the principal amount at issuance beginning January 15, 2011.
(b) Foreign security traded in U.S. dollars.
(c) Investment in non-U.S. dollar denominated securities.
(d) Defaulted security.
(e) Amount represents less than 1,000 shares.
See Notes to Financial Statements.
27
Statement of Assets and Liabilities (unaudited)
June 30, 2009
ASSETS: | |||||||
Investments in securities, at value (cost $7,836,872,787) | $ | 7,009,624,482 | |||||
Foreign cash, at value (cost $700,300) | 706,783 | ||||||
Receivables: | |||||||
Capital shares sold | 188,409,329 | ||||||
Interest and dividends | 129,756,907 | ||||||
Investment securities sold | 8,886,427 | ||||||
Prepaid expenses and other assets | 230,806 | ||||||
Total assets | 7,337,614,734 | ||||||
LIABILITIES: | |||||||
Payables: | |||||||
Capital shares reacquired | 169,623,525 | ||||||
Investment securities purchased | 17,764,139 | ||||||
12b-1 distribution fees | 4,468,355 | ||||||
Management fee | 2,636,777 | ||||||
Directors' fees | 1,061,265 | ||||||
Fund administration | 234,680 | ||||||
To affiliate (See Note 3) | 29,676 | ||||||
Distributions payable | 31,841,094 | ||||||
Accrued expenses | 1,636,675 | ||||||
Total liabilities | 229,296,186 | ||||||
NET ASSETS | $ | 7,108,318,548 | |||||
COMPOSITION OF NET ASSETS: | |||||||
Paid-in capital | $ | 8,686,925,547 | |||||
Distributions in excess of net investment income | (79,423,499 | ) | |||||
Accumulated net realized loss on investments and foreign currency related transactions | (671,949,050 | ) | |||||
Net unrealized depreciation on investments and translation of assets and liabilities denominated in foreign currencies | (827,234,450 | ) | |||||
Net Assets | $ | 7,108,318,548 |
See Notes to Financial Statements.
28
Statement of Assets and Liabilities (unaudited)(concluded)
June 30, 2009
Net assets by class: | |||||||
Class A Shares | $ | 4,160,337,979 | |||||
Class B Shares | $ | 703,568,296 | |||||
Class C Shares | $ | 1,549,438,909 | |||||
Class F Shares | $ | 314,156,106 | |||||
Class I Shares | $ | 246,964,420 | |||||
Class P Shares | $ | 123,377,006 | |||||
Class R2 Shares | $ | 545,013 | |||||
Class R3 Shares | $ | 9,930,819 | |||||
Outstanding shares by class: | |||||||
Class A Shares (1.14 billion shares of common stock authorized, $.001 par value) | 642,670,448 | ||||||
Class B Shares (500 million shares of common stock authorized, $.001 par value) | 108,348,868 | ||||||
Class C Shares (600 million shares of common stock authorized, $.001 par value) | 238,658,574 | ||||||
Class F Shares (300 million shares of common stock authorized, $.001 par value) | 48,580,825 | ||||||
Class I Shares (300 million shares of common stock authorized, $.001 par value) | 38,319,071 | ||||||
Class P Shares (160 million shares of common stock authorized, $.001 par value) | 18,692,273 | ||||||
Class R2 Shares (300 million shares of common stock authorized, $.001 par value) | 84,182 | ||||||
Class R3 Shares (300 million shares of common stock authorized, $.001 par value) | 1,535,110 | ||||||
Net asset value, offering and redemption price per share (Net assets divided by outstanding shares): | |||||||
Class A Shares–Net asset value | $ | 6.47 | |||||
Class A Shares–Maximum offering price | |||||||
(Net asset value plus sales charge of 4.75%) | $ | 6.79 | |||||
Class B Shares–Net asset value | $ | 6.49 | |||||
Class C Shares–Net asset value | $ | 6.49 | |||||
Class F Shares–Net asset value | $ | 6.47 | |||||
Class I Shares–Net asset value | $ | 6.44 | |||||
Class P Shares–Net asset value | $ | 6.60 | |||||
Class R2 Shares–Net asset value | $ | 6.47 | |||||
Class R3 Shares–Net asset value | $ | 6.47 |
See Notes to Financial Statements.
29
Statement of Operations (unaudited)
For the Six Months Ended June 30, 2009
Investment income: | |||||||
Dividends | $ | 13,608,192 | |||||
Interest and other | 239,414,016 | ||||||
Total investment income | 253,022,208 | ||||||
Expenses: | |||||||
Management fee | 13,903,654 | ||||||
12b-1 distribution plan–Class A | 6,447,175 | ||||||
12b-1 distribution plan–Class B | 3,373,812 | ||||||
12b-1 distribution plan–Class C | 6,298,716 | ||||||
12b-1 distribution plan–Class F | 83,806 | ||||||
12b-1 distribution plan–Class P | 246,068 | ||||||
12b-1 distribution plan–Class R2 | 1,349 | ||||||
12b-1 distribution plan–Class R3 | 17,237 | ||||||
Shareholder servicing | 4,016,334 | ||||||
Fund administration | 1,224,861 | ||||||
Reports to shareholders | 367,649 | ||||||
Subsidy (See Note 3) | 197,866 | ||||||
Registration | 139,717 | ||||||
Directors' fees | 97,926 | ||||||
Professional | 50,464 | ||||||
Custody | 43,003 | ||||||
Other | 85,732 | ||||||
Gross expenses | 36,595,369 | ||||||
Expense reductions (See Note 7) | (11,476 | ) | |||||
Net expenses | 36,583,893 | ||||||
Net investment income | 216,438,315 | ||||||
Net realized and unrealized gain (loss): | |||||||
Net realized loss on investments and foreign currency related transactions | (176,970,240 | ) | |||||
Net change in unrealized depreciation on investments and translation of assets and liabilities denominated in foreign currencies | 879,502,611 | ||||||
Net realized and unrealized gain | 702,532,371 | ||||||
Net Increase in Net Assets Resulting From Operations | $ | 918,970,686 |
See Notes to Financial Statements.
30
Statements of Changes in Net Assets
INCREASE (DECREASE) IN NET ASSETS | For the Six Months Ended June 30, 2009 (unaudited) | For the Year Ended December 31, 2008 | |||||||||
Operations: | |||||||||||
Net investment income | $ | 216,438,315 | $ | 419,613,323 | |||||||
Net realized loss on investments, credit default swap agreements and foreign currency related transactions | (176,970,240 | ) | (115,983,108 | ) | |||||||
Net change in unrealized appreciation/depreciation on investments, credit default swap agreements and translation of assets and liabilities denominated in foreign currencies | 879,502,611 | (1,725,819,765 | ) | ||||||||
Net increase (decrease) in net assets resulting from operations | 918,970,686 | (1,422,189,550 | ) | ||||||||
Distributions to shareholders from: | |||||||||||
Net investment income | |||||||||||
Class A | (172,637,983 | ) | (294,255,527 | ) | |||||||
Class B | (28,761,572 | ) | (58,353,843 | ) | |||||||
Class C | (53,775,408 | ) | (79,422,542 | ) | |||||||
Class F | (7,544,652 | ) | (1,065,894 | ) | |||||||
Class I | (10,463,295 | ) | (18,721,315 | ) | |||||||
Class P | (4,944,241 | ) | (8,229,674 | ) | |||||||
Class R2 | (20,048 | ) | (31,103 | ) | |||||||
Class R3 | (319,232 | ) | (199,081 | ) | |||||||
Total distributions to shareholders | (278,466,431 | ) | (460,278,979 | ) | |||||||
Capital share transactions (Net of share conversions) (See Note 11): | |||||||||||
Net proceeds from sales of shares | 1,817,118,568 | 1,230,615,749 | |||||||||
Reinvestment of distributions | 188,952,600 | 354,653,059 | |||||||||
Cost of shares reacquired | (878,499,871 | ) | (1,656,541,163 | ) | |||||||
Net increase (decrease) in net assets resulting from capital share transactions | 1,127,571,297 | (71,272,355 | ) | ||||||||
Net increase (decrease) in net assets | 1,768,075,552 | (1,953,740,884 | ) | ||||||||
NET ASSETS: | |||||||||||
Beginning of period | $ | 5,340,242,996 | $ | 7,293,983,880 | |||||||
End of period | $ | 7,108,318,548 | $ | 5,340,242,996 | |||||||
Distributions in excess of net investment income | $ | (79,423,499 | ) | $ | (17,395,383 | ) |
See Notes to Financial Statements.
31
Financial Highlights
Class A Shares | |||||||||||||||||||||||||||
Six Months Ended 6/30/2009 | Year Ended 12/31 | ||||||||||||||||||||||||||
(unaudited) | 2008 | 2007 | 2006 | 2005 | 2004 | ||||||||||||||||||||||
Per Share Operating Performance | |||||||||||||||||||||||||||
Net asset value, beginning of period | $ | 5.86 | $ | 7.92 | $ | 8.02 | $ | 7.80 | $ | 8.20 | $ | 8.06 | |||||||||||||||
Investment operations: | |||||||||||||||||||||||||||
Net investment income(a) | .22 | .47 | .46 | .43 | .43 | .46 | |||||||||||||||||||||
Net realized and unrealized gain (loss) | .67 | (2.01 | ) | (.04 | ) | .31 | (.31 | ) | .20 | ||||||||||||||||||
Total from investment operations | .89 | (1.54 | ) | .42 | .74 | .12 | .66 | ||||||||||||||||||||
Distributions to shareholders from: | |||||||||||||||||||||||||||
Net investment income | (.28 | ) | (.52 | ) | (.52 | ) | (.52 | ) | (.52 | ) | (.52 | ) | |||||||||||||||
Net asset value, end of period | $ | 6.47 | $ | 5.86 | $ | 7.92 | $ | 8.02 | $ | 7.80 | $ | 8.20 | |||||||||||||||
Total Return(b) | 15.46 | %(c) | (20.26 | )% | 5.34 | % | 9.87 | % | 1.56 | % | 8.56 | % | |||||||||||||||
Ratios to Average Net Assets: | |||||||||||||||||||||||||||
Expenses, including expense reductions | .50 | %(c) | 1.00 | % | .99 | % | .99 | % | .99 | % | .99 | % | |||||||||||||||
Expenses, excluding expense reductions | .50 | %(c) | 1.00 | % | .99 | % | .99 | % | 1.00 | % | .99 | % | |||||||||||||||
Net investment income | 3.59 | %(c) | 6.63 | % | 5.73 | % | 5.54 | % | 5.45 | % | 5.71 | % | |||||||||||||||
Supplemental Data: | |||||||||||||||||||||||||||
Net assets, end of period (000) | $ | 4,160,338 | $ | 3,316,663 | $ | 4,526,753 | $ | 4,731,545 | $ | 4,815,148 | $ | 5,093,236 | |||||||||||||||
Portfolio turnover rate | 22.10 | %(c) | 29.01 | % | 40.08 | % | 32.40 | % | 46.63 | % | 42.02 | % |
(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.
32
Financial Highlights (continued)
Class B Shares | |||||||||||||||||||||||||||
Six Months Ended 6/30/2009 | Year Ended 12/31 | ||||||||||||||||||||||||||
(unaudited) | 2008 | 2007 | 2006 | 2005 | 2004 | ||||||||||||||||||||||
Per Share Operating Performance | |||||||||||||||||||||||||||
Net asset value, beginning of period | $ | 5.87 | $ | 7.93 | $ | 8.03 | $ | 7.80 | $ | 8.20 | $ | 8.06 | |||||||||||||||
Investment operations: | |||||||||||||||||||||||||||
Net investment income(a) | .20 | .43 | .41 | .38 | .38 | .41 | |||||||||||||||||||||
Net realized and unrealized gain (loss) | .68 | (2.02 | ) | (.04 | ) | .32 | (.31 | ) | .20 | ||||||||||||||||||
Total from investment operations | .88 | (1.59 | ) | .37 | .70 | .07 | .61 | ||||||||||||||||||||
Distributions to shareholders from: | |||||||||||||||||||||||||||
Net investment income | (.26 | ) | (.47 | ) | (.47 | ) | (.47 | ) | (.47 | ) | (.47 | ) | |||||||||||||||
Net asset value, end of period | $ | 6.49 | $ | 5.87 | $ | 7.93 | $ | 8.03 | $ | 7.80 | $ | 8.20 | |||||||||||||||
Total Return(b) | 15.14 | %(c) | (20.82 | )% | 4.63 | % | 9.26 | % | .88 | % | 7.86 | % | |||||||||||||||
Ratios to Average Net Assets: | |||||||||||||||||||||||||||
Expenses, including expense reductions | .82 | %(c) | 1.65 | % | 1.64 | % | 1.64 | % | 1.64 | % | 1.64 | % | |||||||||||||||
Expenses, excluding expense reductions | .82 | %(c) | 1.65 | % | 1.64 | % | 1.64 | % | 1.64 | % | 1.64 | % | |||||||||||||||
Net investment income | 3.28 | %(c) | 5.95 | % | 5.08 | % | 4.88 | % | 4.80 | % | 5.07 | % | |||||||||||||||
Supplemental Data: | |||||||||||||||||||||||||||
Net assets, end of period (000) | $ | 703,568 | $ | 660,920 | $ | 1,061,150 | $ | 1,269,914 | $ | 1,473,891 | $ | 1,803,609 | |||||||||||||||
Portfolio turnover rate | 22.10 | %(c) | 29.01 | % | 40.08 | % | 32.40 | % | 46.63 | % | 42.02 | % |
(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.
33
Financial Highlights (continued)
Class C Shares | |||||||||||||||||||||||||||
Six Months Ended 6/30/2009 | Year Ended 12/31 | ||||||||||||||||||||||||||
(unaudited) | 2008 | 2007 | 2006 | 2005 | 2004 | ||||||||||||||||||||||
Per Share Operating Performance | |||||||||||||||||||||||||||
Net asset value, beginning of period | $ | 5.87 | $ | 7.94 | $ | 8.03 | $ | 7.81 | $ | 8.21 | $ | 8.07 | |||||||||||||||
Investment operations: | |||||||||||||||||||||||||||
Net investment income(a) | .20 | .43 | .41 | .38 | .38 | .41 | |||||||||||||||||||||
Net realized and unrealized gain (loss) | .68 | (2.03 | ) | (.03 | ) | .31 | (.31 | ) | .20 | ||||||||||||||||||
Total from investment operations | .88 | (1.60 | ) | .38 | .69 | .07 | .61 | ||||||||||||||||||||
Distributions to shareholders from: | |||||||||||||||||||||||||||
Net investment income | (.26 | ) | (.47 | ) | (.47 | ) | (.47 | ) | (.47 | ) | (.47 | ) | |||||||||||||||
Net asset value, end of period | $ | 6.49 | $ | 5.87 | $ | 7.94 | $ | 8.03 | $ | 7.81 | $ | 8.21 | |||||||||||||||
Total Return(b) | 15.18 | %(c) | (20.90 | )% | 4.77 | % | 9.13 | % | .89 | % | 7.86 | % | |||||||||||||||
Ratios to Average Net Assets: | |||||||||||||||||||||||||||
Expenses, including expense reductions | .82 | %(c) | 1.65 | % | 1.64 | % | 1.64 | % | 1.64 | % | 1.64 | % | |||||||||||||||
Expenses, excluding expense reductions | .82 | %(c) | 1.65 | % | 1.64 | % | 1.64 | % | 1.64 | % | 1.64 | % | |||||||||||||||
Net investment income | 3.26 | %(c) | 5.98 | % | 5.08 | % | 4.88 | % | 4.80 | % | 5.07 | % | |||||||||||||||
Supplemental Data: | |||||||||||||||||||||||||||
Net assets, end of period (000) | $ | 1,549,439 | $ | 1,018,175 | $ | 1,322,738 | $ | 1,312,440 | $ | 1,423,141 | $ | 1,703,329 | |||||||||||||||
Portfolio turnover rate | 22.10 | %(c) | 29.01 | % | 40.08 | % | 32.40 | % | 46.63 | % | 42.02 | % |
(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.
34
Financial Highlights (continued)
Class F Shares | |||||||||||||||
Six Months Ended 6/30/2009 (unaudited) | Year Ended 12/31/2008 | 9/7/2007(a) to 12/31/2007 | |||||||||||||
Per Share Operating Performance | |||||||||||||||
Net asset value, beginning of period | $ | 5.85 | $ | 7.92 | $ | 7.92 | |||||||||
Investment operations: | |||||||||||||||
Net investment income(b) | .00 | (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) | .22 | .49 | .15 | ||||||||||||
Net realized and unrealized gain (loss) | .69 | (2.02 | ) | (.04 | ) | ||||||||||
Total from investment operations | .91 | (1.53 | ) | .11 | |||||||||||
Distributions to shareholders from: | |||||||||||||||
Net investment income | (.29 | ) | (.54 | ) | (.14 | ) | |||||||||
Net asset value, end of period | $ | 6.47 | $ | 5.85 | $ | 7.92 | |||||||||
Total Return(d) | .38 | %(e)(f) | |||||||||||||
Total Return(d) | 15.85 | %(e) | (20.17 | )% | 1.31 | %(e)(g) | |||||||||
Ratios to Average Net Assets: | |||||||||||||||
Expenses, including expense reductions | .37 | %(e) | .75 | % | .25 | %(e) | |||||||||
Expenses, excluding expense reductions | .37 | %(e) | .75 | % | .25 | %(e) | |||||||||
Net investment income | 3.63 | %(e) | 7.44 | % | 1.87 | %(e) | |||||||||
Supplemental Data: | |||||||||||||||
Net assets, end of period (000) | $ | 314,156 | $ | 35,771 | $ | 10 | |||||||||
Portfolio turnover rate | 22.10 | %(e) | 29.01 | % | 40.08 | % |
(a) Commencement of investment 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.
35
Financial Highlights (continued)
Class I Shares | |||||||||||||||||||||||||||
Six Months Ended 6/30/2009 | Year Ended 12/31 | ||||||||||||||||||||||||||
(unaudited) | 2008 | 2007 | 2006 | 2005 | 2004 | ||||||||||||||||||||||
Per Share Operating Performance | |||||||||||||||||||||||||||
Net asset value, beginning of period | $ | 5.83 | $ | 7.90 | $ | 8.00 | $ | 7.78 | $ | 8.18 | $ | 8.04 | |||||||||||||||
Investment operations: | |||||||||||||||||||||||||||
Net investment income(a) | .23 | .50 | .49 | .46 | .46 | .48 | |||||||||||||||||||||
Net realized and unrealized gain (loss) | .68 | (2.02 | ) | (.04 | ) | .31 | (.31 | ) | .21 | ||||||||||||||||||
Total from investment operations | .91 | (1.52 | ) | .45 | .77 | .15 | .69 | ||||||||||||||||||||
Distributions to shareholders from: | |||||||||||||||||||||||||||
Net investment income | (.30 | ) | (.55 | ) | (.55 | ) | (.55 | ) | (.55 | ) | (.55 | ) | |||||||||||||||
Net asset value, end of period | $ | 6.44 | $ | 5.83 | $ | 7.90 | $ | 8.00 | $ | 7.78 | $ | 8.18 | |||||||||||||||
Total Return(b) | 15.77 | %(c) | (20.14 | )% | 5.72 | % | 10.29 | % | 1.93 | % | 8.97 | % | |||||||||||||||
Ratios to Average Net Assets: | |||||||||||||||||||||||||||
Expenses, including expense reductions | .33 | %(c) | .65 | % | .64 | % | .64 | % | .64 | % | .64 | % | |||||||||||||||
Expenses, excluding expense reductions | .33 | %(c) | .65 | % | .64 | % | .64 | % | .64 | % | .64 | % | |||||||||||||||
Net investment income | 3.76 | %(c) | 6.98 | % | 6.07 | % | 5.89 | % | 5.80 | % | 6.07 | % | |||||||||||||||
Supplemental Data: | |||||||||||||||||||||||||||
Net assets, end of period (000) | $ | 246,964 | $ | 203,843 | $ | 262,929 | $ | 342,363 | $ | 304,725 | $ | 284,627 | |||||||||||||||
Portfolio turnover rate | 22.10 | %(c) | 29.01 | % | 40.08 | % | 32.40 | % | 46.63 | % | 42.02 | % |
(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.
36
Financial Highlights (continued)
Class P Shares | |||||||||||||||||||||||||||
Six Months Ended 6/30/2009 | Year Ended 12/31 | ||||||||||||||||||||||||||
(unaudited) | 2008 | 2007 | 2006 | 2005 | 2004 | ||||||||||||||||||||||
Per Share Operating Performance | |||||||||||||||||||||||||||
Net asset value, beginning of period | $ | 5.97 | $ | 8.06 | $ | 8.15 | $ | 7.91 | $ | 8.31 | $ | 8.17 | |||||||||||||||
Investment operations: | |||||||||||||||||||||||||||
Net investment income(a) | .22 | .47 | .46 | .43 | .43 | .45 | |||||||||||||||||||||
Net realized and unrealized gain (loss) | .69 | (2.05 | ) | (.04 | ) | .32 | (.32 | ) | .20 | ||||||||||||||||||
Total from investment operations | .91 | (1.58 | ) | .42 | .75 | .11 | .65 | ||||||||||||||||||||
Distributions to shareholders from: | |||||||||||||||||||||||||||
Net investment income | (.28 | ) | (.51 | ) | (.51 | ) | (.51 | ) | (.51 | ) | (.51 | ) | |||||||||||||||
Net asset value, end of period | $ | 6.60 | $ | 5.97 | $ | 8.06 | $ | 8.15 | $ | 7.91 | $ | 8.31 | |||||||||||||||
Total Return(b) | 15.63 | %(c) | (20.50 | )% | 5.27 | % | 9.86 | % | 1.45 | % | 8.37 | % | |||||||||||||||
Ratios to Average Net Assets: | |||||||||||||||||||||||||||
Expenses, including expense reductions | .55 | %(c) | 1.10 | % | 1.09 | % | 1.09 | % | 1.09 | % | 1.09 | % | |||||||||||||||
Expenses, excluding expense reductions | .55 | %(c) | 1.10 | % | 1.09 | % | 1.09 | % | 1.09 | % | 1.09 | % | |||||||||||||||
Net investment income | 3.55 | %(c) | 6.55 | % | 5.64 | % | 5.43 | % | 5.35 | % | 5.62 | % | |||||||||||||||
Supplemental Data: | |||||||||||||||||||||||||||
Net assets, end of period (000) | $ | 123,377 | $ | 99,134 | $ | 120,343 | $ | 106,734 | $ | 134,592 | $ | 113,216 | |||||||||||||||
Portfolio turnover rate | 22.10 | %(c) | 29.01 | % | 40.08 | % | 32.40 | % | 46.63 | % | 42.02 | % |
(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.
37
Financial Highlights (continued)
Class R2 Shares | |||||||||||||||
Six Months Ended 6/30/2009 (unaudited) | Year Ended 12/31/2008 | 9/7/2007(a) to 12/31/2007 | |||||||||||||
Per Share Operating Performance | |||||||||||||||
Net asset value, beginning of period | $ | 5.86 | $ | 7.92 | $ | 7.92 | |||||||||
Investment operations: | |||||||||||||||
Net investment income(b) | .00 | (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) | .21 | .46 | .14 | ||||||||||||
Net realized and unrealized gain (loss) | .67 | (2.02 | ) | (.05 | ) | ||||||||||
Total from investment operations | .88 | (1.56 | ) | .09 | |||||||||||
Distributions to shareholders from: | |||||||||||||||
Net investment income | (.27 | ) | (.50 | ) | (.12 | ) | |||||||||
Net asset value, end of period | $ | 6.47 | $ | 5.86 | $ | 7.92 | |||||||||
Total Return(d) | .38 | %(e)(f) | |||||||||||||
Total Return(d) | 15.48 | %(e) | (20.61 | )% | 1.18 | %(e)(g) | |||||||||
Ratios to Average Net Assets: | |||||||||||||||
Expenses, including expense reductions | .62 | %(e) | 1.24 | % | .39 | %(e) | |||||||||
Expenses, excluding expense reductions | .62 | %(e) | 1.24 | % | .39 | %(e) | |||||||||
Net investment income | 3.47 | %(e) | 6.44 | % | 1.72 | %(e) | |||||||||
Supplemental Data: | |||||||||||||||
Net assets, end of period (000) | $ | 545 | $ | 338 | $ | 46 | |||||||||
Portfolio turnover rate | 22.10 | %(e) | 29.01 | % | 40.08 | % |
(a) Commencement of investment 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.
38
Financial Highlights (concluded)
Class R3 Shares | |||||||||||||||
Six Months Ended 6/30/2009 (unaudited) | Year Ended 12/31/2008 | 9/7/2007(a) to 12/31/2007 | |||||||||||||
Per Share Operating Performance | |||||||||||||||
Net asset value, beginning of period | $ | 5.85 | $ | 7.92 | $ | 7.92 | |||||||||
Investment operations: | |||||||||||||||
Net investment income(b) | .00 | (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) | .21 | .47 | .14 | ||||||||||||
Net realized and unrealized gain (loss) | .69 | (2.03 | ) | (.04 | ) | ||||||||||
Total from investment operations | .90 | (1.56 | ) | .10 | |||||||||||
Distributions to shareholders from: | |||||||||||||||
Net investment income | (.28 | ) | (.51 | ) | (.13 | ) | |||||||||
Net asset value, end of period | $ | 6.47 | $ | 5.85 | $ | 7.92 | |||||||||
Total Return(d) | .38 | %(e)(f) | |||||||||||||
Total Return(d) | 15.60 | %(e) | (20.52 | )% | 1.21 | %(e)(g) | |||||||||
Ratios to Average Net Assets: | |||||||||||||||
Expenses, including expense reductions | .57 | %(e) | 1.15 | % | .35 | %(e) | |||||||||
Expenses, excluding expense reductions | .57 | %(e) | 1.15 | % | .35 | %(e) | |||||||||
Net investment income | 3.50 | %(e) | 7.01 | % | 1.77 | %(e) | |||||||||
Supplemental Data: | |||||||||||||||
Net assets, end of period (000) | $ | 9,931 | $ | 5,399 | $ | 14 | |||||||||
Portfolio turnover rate | 22.10 | %(e) | 29.01 | % | 40.08 | % |
(a) Commencement of investment 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.
39
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 offers 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") 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); 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 25 th 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's Class P shares are closed to substantially all new retirement and benefit plans and fee-based programs, with certain exceptions as set forth in the Fund's prospectus.
The preparation of 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–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 in come 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 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 asked prices is used. Loans are valued at the average of bid and asked quotations from dealers in loans on the basis of prices supplied by independent pricing services. Securities for which market quotations are not readily available are valued at fair value as determined by management and approved in good faith by the
40
Notes to Financial Statements (unaudited)(continued)
Board of Directors. Short-term securities with 60 days or less remaining to maturity are valued using the amortized cost method, which approximates current market 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. Discounts are accreted and premiums are amortized using the effective interest method. 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 U.S. federal tax returns remains open for the fiscal years ended December 31, 2005 through December 31, 2008. 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 depreciation on investments 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 are included in Net realized loss on investments 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.
(g) When-Issued or Forward Transactions–The Fund may purchase securities on a when-issued or forward basis. When-issued, forward transactions or to-be-announced ("TBA") transactions involve a commitment by the 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 value of the securities will fluctuate and assets consisting of cash and/or marketable securities (normally short-term U.S. Government or
41
Notes to Financial Statements (unaudited)(continued)
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 value of the security in determining its net asset value. 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) Repurchase Agreements–The Fund may enter into repurchase agreements with respect to securities. A repurchase agreement is a transaction in which the 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 value of these securities has dec lined, the Fund may incur a loss upon disposition of the securities.
(i) Structured Securities–The Fund may invest in structured securities. Structured securities are a type of derivative security whose value is determined by reference to changes in the value of specific underlying securities, currencies, interest rates, commodities, indices, credit default swaps, or other indicators (the "Reference"), or to relative changes in two or more References. The interest rate or principal amount payable upon maturity or redemption may be increased (decreased) depending upon changes in the applicable Reference or certain specified events. Structured securities may be positively or negatively indexed with the result that the appreciation of the Reference may produce an increase (decrease) in the interest rate or the value of the security at maturity.
(j) Disclosures About Credit Derivatives–The Fund adopted Financial Accounting Standards Board ("FASB") Staff Position No. 133-1 and FIN 45-4, Disclosures about Credit Derivatives and Certain Guarantees: An Amendment of FASB Statement No. 133 and FASB Interpretation No. 45; and Clarification of the Effective Date of FASB Statement No. 161 (the "FSP") effective December 31, 2008. The FSP amends FASB Statement No. 133 ("SFAS 133"), Accounting for Derivative Instruments and Hedging Activities, to require disclosures by sellers of credit derivatives, including credit derivatives embedded in hybrid instruments. A credit derivative is a derivative instrument (a) in which one or more of its underlyings are related to the credit risk of a specific entity (or group of entities) or an in dex based on the credit risk of a group of entities and (b) that exposes the seller to the potential loss from credit-risk related events specified in the contract. As of June 30, 2009, the Fund had no outstanding credit derivatives.
Credit Default Swaps
The Fund may enter into credit default swap contracts ("swaps") for investment purposes to hedge credit risk or for speculative purposes. As a seller of a credit default swap contract, the Fund is required to pay the notional amount or other agreed-upon value of a referenced debt obligation to the counterparty in the event of a default by a third party, such as a U.S. or foreign corporate issuer, on the referenced debt obligation. In return, the Fund receives from
42
Notes to Financial Statements (unaudited)(continued)
the counterparty a periodic stream of payments over the term of the contract provided that no event of default occurs. If no default occurs, the Fund keeps the stream of payments and has no payment obligations. Such periodic payments are accrued daily and recorded as a realized gain.
The Fund may also purchase swaps in order to hedge against the risk of default of debt securities held, in which case the Fund would function as the counterparty referenced in the preceding paragraph. As a purchaser of a credit default swap contract, the Fund would receive the notional amount or other agreed upon value of a referenced debt obligation from the counterparty in the event of default by a third party, such as a U.S. or foreign corporate issuer on the referenced obligation. In return, the Fund would make periodic payments to the counterparty over the term of the contracts, provided no event of default has occurred. Such periodic payments are accrued daily and recorded as a realized loss.
Swaps are marked to market daily based upon quotations from counterparties, brokers or market-makers and the change in value, if any, is recorded as an unrealized appreciation or depreciation. For a credit default swap sold by the Fund, payment of the agreed-upon amount made by the Fund in the event of default of the referenced debt obligation is recorded as the cost of the referenced debt obligation purchased/received. For a credit default swap purchased by the Fund, the agreed-upon amount received by the Fund in the event of default of the referenced debt obligation is recorded as proceeds from sale/delivery of the referenced debt obligation and the resulting gain or loss realized on the referenced debt obligation is recorded as such by the Fund.
Any upfront payments made or received upon entering a credit default swap contract would be amortized or accreted over the life of the swap and recorded as realized gains or losses. Collateral, in the form of cash or securities, may be required to be held in segregated accounts with the custodian bank or broker in accordance with the swap agreement. The value and credit rating of each credit default swap where the Fund is the seller of protection are both measures of the current payment/performance risk of the swap. As the value of the swap changes as a positive or negative percentage of the total notional amount, the payment/performance risk may decrease or increase, respectively. The maximum potential amount of future payments (undiscounted) that the Fund as a seller of protection could be required to make under a credit default swap agreement would be an amount equal to the notional amount of the agreement. These potential amounts would b e partially offset by any recovery values of the respective referenced obligations, upfront payments received upon entering into the agreement, or net amounts received from the settlement of buy protection credit default swap agreements entered into by the Fund for the same referenced entity or entities.
Entering into swaps involves, to varying degrees, elements of credit, market and documentation risk. Such risks involve the possibility that there will be no liquid market for these agreements, that the counterparty to an agreement may default on its obligation to perform or disagree as to the meaning of the contractual terms in the agreement, and that there may be unfavorable changes in net interest rates.
(k) Floating Rate Loans–The Fund may invest in floating rate loans, which usually take the form of loan participations and assignments. Loan participations and assignments are agreements to make money available to U.S. or foreign corporations, partnerships or other business entities (the "Borrower") in a specified amount, at a specified rate and within a
43
Notes to Financial Statements (unaudited)(continued)
specified time. A loan is typically originated, negotiated and structured by a U.S. or foreign bank, insurance company or other financial institution (the "Agent") for a group of loan investors ("Loan Investors"). The Agent typically administers and enforces the loan on behalf of the other Loan Investors in the syndicate and may hold any collateral on behalf of the Loan Investors. Such loan participations and assignments are typically senior, secured and collateralized in nature. 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 are generally readily marketable, but 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 becomes insolvent or enters 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. These unfunded amounts are recorded in memorandum accounts. As of June 30, 2009, the Fund had no unfunded loan commitments.
(l) Fair Value Measurements–In accordance with FASB Statement of Financial Accounting Standards No. 157, Fair Value Measurements ("SFAS 157"), fair value is defined as the price that the Fund would receive upon selling an investment in an orderly transaction to an independent buyer in the principal or most advantageous market of the investment. SFAS 157 established a three-tier hierarchy 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 t o 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 – 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).
44
Notes to Financial Statements (unaudited)(continued)
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
The following is a summary of the inputs used as of June 30, 2009 in valuing the Fund's investments carried at value:
Investment Type | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||
Common Stocks | $ | 247,142,917 | $ | - | $ | 29,948,438 | $ | 277,091,355 | |||||||||||
Convertible Bonds | - | 576,391,144 | - | 576,391,144 | |||||||||||||||
Convertible Preferred Stocks | 125,994,600 | 83,701,750 | - | 209,696,350 | |||||||||||||||
Floating Rate Loans | - | 154,867,081 | - | 154,867,081 | |||||||||||||||
Foreign Bonds | - | 37,041,853 | - | 37,041,853 | |||||||||||||||
Government Sponsored Enterprises Bonds | - | 51,300,875 | - | 51,300,875 | |||||||||||||||
Government Sponsored Enterprises Pass-Throughs | - | 141,351,933 | - | 141,351,933 | |||||||||||||||
High Yield Corporate Bonds | - | 5,500,300,645 | - | 5,500,300,645 | |||||||||||||||
Non-Agency Commercial Mortgage- Backed Securities | - | 9,417,600 | - | 9,417,600 | |||||||||||||||
Non-Convertible Preferred Stocks | 645,076 | 9,425,000 | - | 10,070,076 | |||||||||||||||
Repurchase Agreement | - | 42,095,570 | - | 42,095,570 | |||||||||||||||
Total | $ | 373,782,593 | $ | 6,605,893,451 | $ | 29,948,438 | $ | 7,009,624,482 |
The following is a reconciliation of investment for unobservable inputs (Level 3) that were used in determining fair value:
Investment Type | Balance as of January 1, 2009 | Accrued discounts/ premiums | Realized gain (loss) | Change in unrealized appreciation (depreciation) | Net purchase (sales) | Net transfers in or out of Level 3 | Balance as of June 30, 2009 | ||||||||||||||||||||||||
Common Stock | $ | - | $ | - | $ | - | $ | - | $ | 29,948,438 | $ | - | $ | 29,948,438 |
3. MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Management Fee
The Fund has a management agreement with Lord, Abbett & Co. LLC ("Lord Abbett") pursuant to which Lord Abbett supplies the Fund with investment management services and executive and other personnel, pays the remuneration of officers, 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 rates:
First $500 million | .50 | % | |||||
Next $9.5 billion | .45 | % | |||||
Over $10 billion | .40 | % |
For the six months ended June 30, 2009, the effective management fee paid to Lord Abbett was at an annualized rate of .45% of the Fund's average daily net assets.
Lord Abbett provides certain administrative services to the Fund pursuant to an Administrative Services Agreement at an annual rate of .04% of the Fund's average daily net assets.
45
Notes to Financial Statements (unaudited)(continued)
The Fund, along with certain other funds managed by Lord Abbett (the "Underlying Funds") has entered into a Servicing Arrangement with Lord Abbett Balanced Strategy Fund of Lord Abbett Investment Trust (the "Balanced Strategy Fund") and Lord Abbett Diversified Income Strategy Fund of Lord Abbett Investment Trust (the "Diversified Income Strategy Fund"), pursuant to which each Underlying Fund pays a portion of the expenses (excluding management fees and distribution and service fees) of Balanced Strategy Fund and Diversified Income Strategy Fund in proportion to the average daily value of Underlying Fund shares owned by Balanced Strategy Fund and Diversified Income Strategy Fund. Amounts paid pursuant to the Servicing Arrangement are included in Subsidy expense on the Fund's Statement of Operations and Payable to affiliates on the Fund's Statement of Assets and Liabilities.
As of June 30, 2009, the percentages of the Fund's outstanding shares owned by Balanced Strategy Fund and Diversified Income Strategy Fund were 2.08% and 0.21%, respectively.
12b-1 Distribution Plan
The Fund has adopted a distribution plan with respect to its 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 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 | % | - | .20 | % | .25 | % | .25 | % | ||||||||||||||||||
Distribution | .10 | % | .75 | % | .75 | % | .10 | % | .25 | % | .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 net asset value.
Class I does 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, 2009:
Distributor Commissions | Dealers' Concessions | ||||||
$ | 2,398,237 | $ | 12,356,093 |
Distributor received CDSCs of $17,505 and $134,271 for Class A and Class C shares, respectively, for the six months ended June 30, 2009.
Two Directors and certain of the Fund's officers have an interest in Lord Abbett.
4. DISTRIBUTIONS AND CAPITAL LOSS CARRYFORWARDS
Prior to May 8, 2009, dividends from net investment income, if any, were declared and paid monthly. Effective May 8, 2009, dividends from net investment income, if any, are declared daily and paid monthly. Taxable net realized gains from investment transactions, reduced by allowable capital loss carryforwards, if any, are declared and distributed to shareholders at least annually. The capital loss carryforward amount, if any, is available to offset future net capital gains. Dividends and distributions to shareholders are recorded on the ex-dividend date. The amount of dividends and distributions from net investment income and net realized capital gains is
46
Notes to Financial Statements (unaudited)(continued)
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, 2009 and the fiscal year ended December 31, 2008 was as follows:
Six Months Ended 6/30/2009 (unaudited) | Year Ended 12/31/2008 | ||||||||||
Distributions paid from: | |||||||||||
Ordinary income | $ | 278,466,431 | $ | 460,278,979 | |||||||
Total distributions paid | $ | 278,466,431 | $ | 460,278,979 |
As of December 31, 2008, the capital loss carryforwards, along with the related expiration dates, were as follows:
2009 | 2010 | 2016 | Total | ||||||||||||
$ | 25,484,842 | $ | 303,185,812 | $ | 19,692,828 | $ | 348,363,482 |
As of June 30, 2009, the aggregate unrealized security gains and losses based on cost for U.S. federal income tax purposes were as follows:
Tax cost | $ | 7,904,781,001 | |||||
Gross unrealized gain | 140,105,991 | ||||||
Gross unrealized loss | (1,035,262,510 | ) | |||||
Net unrealized security loss | $ | (895,156,519 | ) |
The difference between book-basis and tax-basis unrealized gains (losses) is attributable to the tax treatment of wash sales, 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, 2009 were as follows:
U.S. Government Purchases* | Non-U.S. Government Purchases | U.S. Government Sales* | Non-U.S. Government Sales | ||||||||||||
$ | 273,153,132 | $ | 2,363,002,962 | $ | 771,762,343 | $ | 537,119,601 |
* Includes U.S. Government sponsored enterprises securities.
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. Outside 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 outside Directors under which outside Directors must defer receipt of
47
Notes to Financial Statements (unaudited)(continued)
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 have 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 the Fund's transfer agent 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
The Fund and certain other funds managed by Lord Abbett have available an unsecured revolving credit facility ("Facility") from 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. Accordingly, effective December 5, 2008, the amount available under the Facility was changed from $250,000,000 to $200,000,000 and the annual fee to maintain the Facility (of which each participating fund pays its pro rata share based on the net assets of each participating fund) was changed from .08% of the amount available under the Facility to .125%. Any borrowings under this Facility will bear interest at current market rates as set forth in the credit agreement. As of June 30, 2009, there were no loans outstanding pursuant to this Facility no r was the Facility utilized at any time during the six months ended June 30, 2009.
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 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
48
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. Alternatively, rising interest rates may cause payments to occur at a slower-than-expected rate, extending the duration of a security and typically reducing its value. The payment rate will thus 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 commonly are not guaranteed by the U.S. Government.
The Fund may invest up to 5% of its net assets in structured securities. The Fund typically may use these securities as a substitute for taking a position in the underlying asset and/or as part of a strategy designed to reduce exposure to other risk, such as interest rate or currency risk. Structured securities may present additional risks that are different from those associated with a direct investment in fixed-income or equity securities; they may be volatile, less liquid and more difficult to price accurately and subject to additional credit risks. Changes in the value of structured securities may not correlate perfectly with the underlying asset, rate or index. The Fund that invests in structured securities could lose more than the principal amount invested.
The Fund may invest up to 20% of its net assets in equity securities which may subject it to the general risks and considerations associated with investing in equity securities. The value of an investment will fluctuate 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 up to 20% of its net assets in foreign securities which may present market liquidity, currency, political, information, and other risks.
Swap contracts are bi-lateral agreements between the Fund and its counterparty, each party is exposed to the risk of default by the other. In addition, they may involve a small investment of cash compared to the risk assumed with the result that small changes may produce disproportionate and substantial gains or losses to the Fund.
The Fund may invest up to 10% of its net assets in floating rate or adjustable rate senior loans, 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.
49
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, 2009 (unaudited) | Year Ended December 31, 2008 | ||||||||||||||||||
Class A Shares | Shares | Amount | Shares | Amount | |||||||||||||||
Shares sold | 149,331,562 | $ | 905,481,597 | 109,646,315 | $ | 744,343,221 | |||||||||||||
Converted from Class B* | 9,014,126 | 53,323,362 | 5,620,079 | 39,042,700 | |||||||||||||||
Reinvestment of distributions | 21,004,281 | 126,926,705 | 34,387,494 | 244,159,569 | |||||||||||||||
Shares reacquired | (102,989,093 | ) | (619,079,031 | ) | (154,551,810 | ) | (1,073,192,933 | ) | |||||||||||
Increase (decrease) | 76,360,876 | $ | 466,652,633 | (4,897,922 | ) | $ | (45,647,443 | ) | |||||||||||
Class B Shares | |||||||||||||||||||
Shares sold | 12,342,081 | $ | 75,031,395 | 9,546,559 | $ | 66,698,400 | |||||||||||||
Reinvestment of distributions | 3,003,602 | 18,177,847 | 5,632,063 | 40,157,969 | |||||||||||||||
Shares reacquired | (10,612,340 | ) | (66,045,325 | ) | (30,703,071 | ) | (214,561,299 | ) | |||||||||||
Converted to Class A* | (8,989,865 | ) | (53,323,362 | ) | (5,607,787 | ) | (39,042,700 | ) | |||||||||||
Decrease | (4,256,522 | ) | $ | (26,159,445 | ) | (21,132,236 | ) | $ | (146,747,630 | ) | |||||||||
Class C Shares | |||||||||||||||||||
Shares sold | 76,469,247 | $ | 465,956,704 | 41,181,380 | $ | 280,863,445 | |||||||||||||
Reinvestment of distributions | 4,636,746 | 28,140,919 | 6,285,390 | 44,581,210 | |||||||||||||||
Shares reacquired | (15,892,895 | ) | (96,644,558 | ) | (40,652,545 | ) | (278,733,756 | ) | |||||||||||
Increase | 65,213,098 | $ | 397,453,065 | 6,814,225 | $ | 46,710,899 | |||||||||||||
Class F Shares | |||||||||||||||||||
Shares sold | 47,475,839 | $ | 282,381,413 | 6,645,169 | $ | 45,276,121 | |||||||||||||
Reinvestment of distributions | 458,970 | 2,799,460 | 117,800 | 771,173 | |||||||||||||||
Shares reacquired | (5,465,601 | ) | (33,564,535 | ) | (652,638 | ) | (4,232,437 | ) | |||||||||||
Increase | 42,469,208 | $ | 251,616,338 | 6,110,331 | $ | 41,814,857 | |||||||||||||
Class I Shares | |||||||||||||||||||
Shares sold | 9,891,045 | $ | 59,764,122 | 7,237,694 | $ | 49,857,855 | |||||||||||||
Reinvestment of distributions | 1,396,665 | 8,414,483 | 2,389,642 | 16,904,272 | |||||||||||||||
Shares reacquired | (7,906,432 | ) | (46,818,266 | ) | (7,973,146 | ) | (54,293,156 | ) | |||||||||||
Increase | 3,381,278 | $ | 21,360,339 | 1,654,190 | $ | 12,468,971 | |||||||||||||
Class P Shares | |||||||||||||||||||
Shares sold | 3,695,093 | $ | 22,729,962 | 4,875,884 | $ | 35,656,446 | |||||||||||||
Reinvestment of distributions | 686,605 | 4,228,724 | 1,095,307 | 7,883,180 | |||||||||||||||
Shares reacquired | (2,307,334 | ) | (14,248,892 | ) | (4,280,967 | ) | (30,336,847 | ) | |||||||||||
Increase | 2,074,364 | $ | 12,709,794 | 1,690,224 | $ | 13,202,779 | |||||||||||||
Class R2 Shares | |||||||||||||||||||
Shares sold | 28,829 | $ | 173,710 | 107,436 | $ | 795,121 | |||||||||||||
Reinvestment of distributions | 672 | 4,073 | 1,036 | 7,286 | |||||||||||||||
Shares reacquired | (2,977 | ) | (17,471 | ) | (56,651 | ) | (353,824 | ) | |||||||||||
Increase | 26,524 | $ | 160,312 | 51,821 | $ | 448,583 | |||||||||||||
Class R3 Shares | |||||||||||||||||||
Shares sold | 915,597 | $ | 5,599,665 | 1,021,770 | $ | 7,125,140 | |||||||||||||
Reinvestment of distributions | 43,011 | 260,389 | 28,521 | 188,400 | |||||||||||||||
Shares reacquired | (345,710 | ) | (2,081,793 | ) | (129,866 | ) | (836,911 | ) | |||||||||||
Increase | 612,898 | $ | 3,778,261 | 920,425 | $ | 6,476,629 |
* 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.
50
Notes to Financial Statements (unaudited)(concluded)
12. SUBSEQUENT EVENTS
In accordance with the provisions set forth in FASB Statement of Financial Accounting Standards No. 165, Subsequent Events, adopted by the Fund as of June 30, 2009, management has evaluated subsequent events existing in the Fund's financial statements through August 28, 2009. Management has determined that there were no material subsequent events that would require recognition or disclosure in the Fund's financial statements through this date.
51
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 each 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 (i) 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); (ii) sending your request and duplicating fee to the SEC's Public Reference Section, Washington, DC 20549-0102; or (iii) sending your request electronically, after paying a duplicating fee, to publicinfo@sec.gov.
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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-3-0609
(08/09)
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. | |
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| By: | /s/ Robert S. Dow |
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| Robert S. Dow |
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| Chief Executive Officer and Chairman |
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Date: August 25, 2009 |
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| By: | /s/ Joan A. Binstock |
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| Joan A. Binstock |
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| Chief Financial Officer and Vice President |
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Date: August 25, 2009 |
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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 |
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| Robert S. Dow |
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| Chief Executive Officer and Chairman |
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Date: August 25, 2009 |
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| By: | /s/ Joan A. Binstock |
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| Joan A. Binstock |
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| Chief Financial Officer and Vice President |
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Date: August 25, 2009 |
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