Use this form to give us your feedback or report any problems you experienced finding information on our Website.
* Indicates Required Fields
Thank you for providing feedback.
U.S. equity markets advanced during the third quarter of 2013 amid indications of continued economic expansion. The market saw some choppiness during the quarter as investors anticipated that the U.S. Federal Reserve (the "Fed") would begin to withdraw monetary accommodation via reduced bond purchases, though the Fed held off on such a move at its policy meeting on September 18. The U.S. gains came against a generally positive global backdrop: the eurozone economy moved out of recession; Japan's stimulus program spurred renewed optimism that the country will see stronger growth; and China's economy recovered from a June 2013 credit squeeze.
The Fed noted that "national economic activity continued to expand at a modest to moderate pace" between early July and late August, based on reports from the 12 Fed districts. The Fed said manufacturing activity expanded modestly. Consumer spending rose in most Fed districts, reflecting, in part, strong demand for automobiles and housing-related goods.1 The third estimate for the second quarter of 2013 showed that the economy grew by an annualized rate of 2.5%, in line with the previous estimate. First-quarter 2013 growth was 1.1%.2
The S&P 500® Index3 rose 5.2% during the quarter, reaching an all-time closing high on September 18. Gains occurred in all of the 10 major sectors. The materials, industrial, consumer discretionary, health care, and information technology sectors outperformed the broader market. Growth stocks (as represented by the Russell 3000® Growth Index4) outperformed value stocks (as represented by the Russell 3000® Value Index5). Small cap stocks (as represented by the Russell 2000® Index6) outperformed large caps (as represented by the Russell 1000® Index7).
The Lord Abbett Fundamental Equity Fund returned 6.15%, reflecting the performance at the net asset value (NAV) of Class A shares with all distributions reinvested for the quarter ended September 30, 2013, compared to the Fund's benchmark, the Russell 3000® Value Index5, which returned 4.23% for the same period. 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 September 30, 2013, are: one year: 19.21%; five years: 9.25%; and 10 years: 8.55%. Expense ratio: 1.09%.
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 broad market trended higher during the third quarter despite geopolitical threats in Syria and concerns that the Fed may begin to reduce bond purchases under its quantitative easing program. Markets rallied as investors' fears subsided after the Fed announced, on September 18, that it will continue its pace for monthly bond purchases. An improving U.S. economy continues to be supported by advancing corporate earnings, strengthening in housing data, and improving employment trends.
Positive stock selection within the health care sector contributed to relative performance during the period. Shares of Onyx Pharmaceuticals Inc., a biopharmaceutical company engaged in developing therapies that target the molecular mechanisms that cause cancer, rallied after the company received an unsolicited takeover bid from Amgen Inc. Shares of Incyte Corp., a biopharmaceutical company whose pipeline is focused on oncology and inflammation, rose after reporting top-line results from a phase II drug trial for pancreatic cancer. In addition, stock selection and an overweight within the consumer discretionary sector also were contributors to performance. Shares of Starz, Corp., a cable media company, rose after reporting an increase in subscriber growth upon introduction of new proprietary programming.
Detracting from relative performance were stock selection and an underweight within the industrials sector. Shares of Hertz Global Holdings Inc., a United States-based car rental company, declined after guidance for earnings was reduced due to weaker volumes for the U.S. airport car rental market which is its biggest business. Stock selection within the telecommunication services sector and consumer staples also affected relative performance. Within the telecommunication services sector, shares of Verizon Communications Inc. declined after the company bid for the remainder of its wireless assets owned by Vodafone, which has created an arbitrage situation. Within the consumer staples sector, shares of Kraft Foods Group Inc., the fourth largest North American packaged food and beverage company, declined after reporting a sluggish quarter as well as investor concerns about increasing competition within the industry.
Please refer to www.lordabbett.com under the "Portfolio" tab for a complete list of holdings of the Fund, including the securities discussed above.
We continue to execute a time-tested, bottom-up investment process predicated on valuation analysis and independent fundamental research. Our expectation is that the U.S. economy will expand modestly in the coming year, supported by the improving U.S. housing market and strengthening consumer confidence. We remain aware of several risk factors, including geopolitical unrest, global economic conditions, actions by the U.S. central bank, and U.S. budget issues.
Health care remains the largest overweight relative to the Fund's benchmark. We continue to focus on biotechnology companies with unique products that address unmet needs and health care providers that are expected to benefit from the implementation of the Patient Protection and Affordable Care Act. The consumer discretionary sector is a large overweight, and we remain focused on companies leveraged toward an increase in household formation and "living well." Exposure to the multi-line retail industry was reduced during the period. The utilities sector remains a large underweight relative to the index, as we continue to find more compelling investment opportunities in other segments of the market. Although the financials sector is the largest absolute exposure it is now the largest underweight, primarily due to the lack of exposure to real estate investment trusts (REITs).
Performance data quoted is historical. Past performance is not indicative of future results. Current performance may be higher or lower than the performance 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 quarter-end, go to quarter ending performance on our Website or call Lord Abbett at (888) 522-2388.
1 The Fund’s dividend yield is shown without sales charges (at NAV) and with maximum sales charges (at MOP). The Fund’s dividend yield takes into account any fee waiver or expense limitation arrangements, if any. Without such fee waivers or expense limitation arrangements, the Fund’s dividend yield would have been lower. Information regarding any fee waivers or expense limitation arrangements applicable to the Fund is provided with the Fund’s expense ratio information.
2 The Fund’s unsubsidized dividend yield is shown without sales charges (at NAV) and with maximum sales charges (at MOP). The Fund’s unsubsidized dividend yield reflects what the yield would have been without the effect of fee waivers or expense limitation arrangements.