Diversified Equity Strategy Fund (LDSAX) - Class A

U.S. Equity markets climbed during the first quarter of 2013, as investors focused on solid growth in corporate earnings and continued monetary accommodation from the Federal Reserve. The gains came against a backdrop of continued uncertainty regarding the European sovereign debt crisis, and signs of improved economic growth in China and other key emerging markets.

The Fed noted that the U.S. economy "generally expanded at a modest to moderate pace" in January and early February, based on reports from the 12 Fed districts. The Fed said most districts reported expansion in consumer spending, although retail sales slowed in several districts. The manufacturing and service sectors showed improvement.¹ The third estimate for the fourth quarter of 2012 showed that the economy grew by an annualized rate of 0.4%, versus the previous estimate of an increase of 0.1%. Third-quarter 2012 growth was 3.1%.²

The S&P 500^® Index³ rose 10.6% during the quarter, reaching an all-time closing high on March 28. Gains occurred in all of the 10 major sectors. The consumer discretionary, consumer staples, financials, health care, industrials, and utilities sectors outperformed the broader market. Value stocks (as represented by the Russell 3000^® Value Index⁴) outperformed growth stocks (as measured by the Russell 3000^® Growth Index⁵). Small cap stocks (as represented by the Russell 2000^® Index⁶) outperformed large caps (as represented by the Russell 1000^® Index⁷).

The Lord Abbett Diversified Equity Strategy Fund returned 10.26%, reflecting the performance at the net asset value (NAV) of Class A shares, with all distributions reinvested, for the three-month period ended March 31 2013, compared to its benchmark, the 85% Russell 3000^® Index⁸/15% MSCI EAFE Index with Gross Dividends,⁹ which returned 10.19%. The Fund's average annual total returns, which reflect performance at the maximum 5.75% sales charge applicable to Class A share investments and include the reinvestment of all distributions, as of March 31, 2013, are: one year: 4.55%; five years: 3.71%; and since inception (June 30, 2006): 4.34%. Expense ratio: gross, 1.44%, and net, 1.07%.

Performance data quoted represent past performance, which does not guarantee future results. Current performance may be higher or lower than the performance data quoted. The investment return and principal value of an investment in the fund will fluctuate so that shares, on any given day or when redeemed, may be worth more or less than their original cost. To obtain performance data current to the most recent month-end, call Lord Abbett at 1-888-522-2388 or visit us at www.lordabbett.com.

The Fund's meaningful weighting in domestic large cap value equities contributed to relative performance, as domestic large cap value equities outperformed domestic large cap growth equities. The Fund's substantial weighting in international equities detracted from relative performance, as international equities struggled to keep pace with domestic equities.

The Fund's exposure to international small cap equities contributed to relative performance, as this strategy outperformed its index. Stock selection within the financials sector aided performance. Takara Leben Co. Ltd., a Japan-based real estate company, reported strong sales and profit for its third quarter fiscal year, noting substantial growth in condominium sales as the leading driver. In addition, the Fund's exposure to domestic multi cap value equities contributed to relative performance, as this investment strategy outperformed its index as well. Within this strategy, stock selection in the health care sector contributed to relative performance. Shares of Celgene Corp., a global biopharmaceutical company, rose after positive phase III test results for its pancreatic cancer drug.

The Fund's exposure to domestic large cap core and large cap value equities detracted from relative performance. Security selection within the information technology sector in domestic large cap core and large cap value equities detracted from relative performance. Within large cap core equities, shares of Apple, Inc. fell as it reported weaker than expected quarterly results and investors became increasingly concerned about gross margin pressures and intensifying competition. Within large cap value equities, shares of EMC Corp., a provider of virtual infrastructure technologies and data solutions for enterprise clients, dropped due to fears of weakening demand caused by a decrease in capital spending on technology.

Please refer to www.lordabbett.com under the "Portfolio" tab for a complete list of holdings of the Fund, including the securities discussed above.