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Fund Description
Current income generation and the opportunity for capital appreciation through investing in a wide range of fixed-income securities with an emphasis on corporate bonds.
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Fund Advantages
- Focuses on U.S. BBB corporate bonds, with select exposure to government, mortgage backed, high-yield, and emerging markets securities.
- Invests primarily in U.S. bonds.
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Fund Returns
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As of August 31, 2010
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All returns in percentages
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| Class |
Last
Quarter
06/30/2010
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Year
to Date
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1
Year
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3
Year
|
5
Year
|
10 Years
or Life
of Fund
|
|
A
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NAV
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1.82
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5.25
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17.86
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9.24
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6.17
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6.29
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| |
Inception date: September 19, 1932
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B
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NAV
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1.62
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4.85
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17.06
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8.50
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5.44
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5.75
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| |
Inception date: August 01, 1996
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C
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NAV
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1.64
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4.88
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17.09
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8.52
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5.46
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5.60
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| |
Inception date: July 15, 1996
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Past performance is no guarantee of future results. Investment returns and principal will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. All returns assume the reinvestment of all distributions.
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SEC Returns
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As of June 30, 2010
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All returns in percentages
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|
Class
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|
1
Year
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5
Year
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10 Years
or Life
of Fund
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|
A
|
SEC (A)
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15.09
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5.69
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6.03
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Inception date: September 19, 1932
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B
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SEC (B)
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13.06
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5.28
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5.75
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Inception date: August 01, 1996
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C
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SEC (C)
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17.09
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5.46
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5.60
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Inception date: July 15, 1996
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(A) SEC Returns reflect performance at the maximum 2.25% sales charge applicable to Class A share investments as of 06/30/2010.
(B) A maximum Contingent Deferred Sales Charge (CDSC) of 5% is applied to shares sold prior to the 6th anniversary of purchase. There are also ongoing 12b-1 service and distribution fees. Class B shares automatically convert to class A shares after 8 years.
(C) Class C shares are subject to ongoing 12b-1 service and distribution fees as well as a maximum Contingent Deferred Sales Charge (CDSC) of 1% if you redeem your shares before the first anniversary of your original purchase.
Past performance is no guarantee of future results. Investment returns and principal will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. All returns assume the reinvestment of all distributions.
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Average Current Yield
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6.35
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Average Yield To Maturity
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5.38
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Class
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Record
Date
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Ex Div
Date
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Invest
Date
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Payable
Date
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Reinvest
Price
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Dividend
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|
A
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08-01-2010
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08-31-2010
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08-31-2010
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08-31-2010
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2.86
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.01304
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B
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08-01-2010
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08-31-2010
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08-31-2010
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08-31-2010
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2.86
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.01114
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B2
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08-01-2010
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08-31-2010
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08-31-2010
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08-31-2010
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2.88
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.01223
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B3
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08-01-2010
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08-31-2010
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08-31-2010
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08-31-2010
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2.87
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.01238
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BF
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08-01-2010
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08-31-2010
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08-31-2010
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08-31-2010
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2.86
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.01321
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C
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08-01-2010
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08-31-2010
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08-31-2010
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08-31-2010
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2.87
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.01138
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F
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08-01-2010
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08-31-2010
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08-31-2010
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08-31-2010
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2.86
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.01321
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I
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08-01-2010
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08-31-2010
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08-31-2010
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08-31-2010
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2.86
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.01350
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R2
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08-01-2010
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08-31-2010
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08-31-2010
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08-31-2010
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2.88
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.01223
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R3
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08-01-2010
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08-31-2010
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08-31-2010
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08-31-2010
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2.87
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.01238
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Fund Status
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Open to New Investors
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Dividend Frequency
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Monthly
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Number of Issues
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516
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Class
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Inception
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Quotron
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CUSIP
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Outstanding
Shares
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A
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September 19, 1932
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LAGVX
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543916308
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232,008,847
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B
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August 01, 1996
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LAVBX
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543916407
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8,615,417
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C
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July 15, 1996
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LAUSX
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543916506
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51,311,345
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F
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September 28, 2007
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LAUFX
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543916365
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24,748,052
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I
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October 19, 2004
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LAUYX
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543916670
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7,834,174
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R2
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July 02, 2008
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LAUQX
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543916357
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4,365
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R3
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July 02, 2008
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LAURX
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543916340
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113,006
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Investment Team
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Porfolio Commentary
As of June 30, 2010
Market Review
The European debt crisis, combined with disappointing economic data, led investors to question the strength of the U.S. recovery. This contributed to a flight to quality, which reduced yields on Treasuries and agency-related securities. As investors shifted to these safer assets, spreads widened in many other sectors of the fixed-income market.
After the economy expanded in the first quarter, the expansion showed signs of moderating. Consumer spending, for example, remained flat in April after six consecutive months of improvement, and in May, retail sales fell 1.7%. The Conference Board's Index of Economic Indicators posted its first decline in more than a year, but the manufacturing sector continued to rebound, and the Federal Reserve's Beige Book indicated that economic activity was expanding in all 12 of the central bank's districts.
Despite the unprecedented fiscal and monetary stimulus of the past two years, inflation remained subdued. The 12-month change in the Consumer Price Index (CPI) stood at 2.2% as of April 2010, down from 2.7% in January 2010. The economy continued to add jobs in the second quarter, but an employment report in May indicated that the pace of job growth in the private sector had declined. Unemployment remained between 9.5% and 10.0%.
Citing the tentative nature of the recovery, the Fed kept the fed funds target rate between 0% and 0.25% during the quarter. The central bank explained that low inflation and low rates of resource utilization were likely to warrant low rates for an "extended period."
Fund Review
The Fund returned 1.82%, reflecting performance at the net asset value (NAV) of Class A shares, with all distributions reinvested, for the quarter ended June 30, 2010. The Fund's benchmark, the Barclays Capital U.S. Aggregate Bond Index,1 returned 3.49% in the same period. Average annual total returns, which reflect performance at the maximum 2.25% sales charge applicable to Class A share investments and include the reinvestment of all distributions, as of June 30, 2010, are: 1 year: 15.09%, 5 years: 5.69%, and 10 years: 6.03%. Expense ratio: 0.92%.
Performance data quoted represent past performance, which is no guarantee of 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 888-522-2388 or visit us at www.lordabbett.com.
Our overweight position in spread product detracted from performance, as the European debt crisis sparked a flight to quality and a rally in U.S. Treasuries during the quarter. The biggest detractor from relative performance for the quarter was our overweight in investment-grade corporate bonds. Strong earnings had contributed to a rise in prices and a narrowing of spreads over the past year, providing many companies with an opportunity to issue new debt near record-low interest rates. Late in April, yields began to rise again as investors reacted to downgrades of debt issued by Greece, Spain, and Portugal. Some investors shifted out of corporate securities on fears that Europe's debt problems could stall the U.S. economic recovery.
While our positioning in high-yield corporates hurt our relative performance, our security selection within the high-yield sector and bias toward higher-quality issues helped as 'BB' and 'B' rated issues outperformed 'CCC'‘ issues during the quarter.
Our overweight position in taxable municipal bonds also detracted from relative performance during the quarter. Build America Bonds (BABs) make up the majority of our holdings in the sector, and recently we reduced our exposure in favor of more attractively valued areas of the market.
Outlook
While most readings on the U.S. economy continue to be positive, there have been some disappointing signs of sluggishness in terms of the labor and housing markets, which have kept investors on edge and have raised the specter of a "double-dip" return to economic stagnation or contraction. Moreover, the European debt crisis has raised the levels of volatility in the financial markets. We do not, however, expect events in Europe to have a significant impact on the U.S. economy, but the uncertainty has caused a general sense of unease with global economic prospects. There continues to be ample slack in productive and labor capacity in the United States, leading us to conclude that inflation will remain tame throughout the next several quarters, which in turn will likely keep the Fed on hold. The government has been withdrawing many of the quantitative easing measures it adopted in late 2008 and early 2009 to deal with the recession and financial markets crisis. This includes the agency mortgage-backed securities (MBS) purchase program, which expired at the end of March. Credit spreads reached their recent narrowest levels relative to Treasuries in late April, and have widened back out since then, largely in reaction to the European debt crisis. An opportunity might present itself to add to corporate bonds and asset-backed securities (ABS) at more attractive levels.
1The Barclays Capital U.S. Aggregate Bond Index represents securities that are U.S. domestic, taxable, non-convertible, and dollar-denominated. The index covers the investment-grade fixed-rate bond market, with index components for government and corporate securities, mortgage pass-through securities, and asset-backed securities.
Treasuries are debt securities issued by the U.S. government and secured by its full faith and credit. Income from Treasury securities is exempt from state and local taxes. Although U.S. government securities are guaranteed as to payments of interest and principal, their market prices are not guaranteed and will fluctuate in response to market movements.
Indexes are unmanaged, do not reflect the deduction of fees or expenses, and are not available for direct investment.
Effective December 14, 2007, the Fund transitioned its investment approach from a U.S. government and government-sponsored enterprises strategy to a corporate bond-oriented fixed-income strategy. The historical performance shown of the Fund prior to December 14, 2007, reflects periods when the Fund pursued its previous investment strategy.
The Fund's portfolio is actively managed and, therefore, its holdings and the weightings of a particular issuer or particular sector as a percentage of portfolio assets may change significantly over time. Sectors may include many industries. The mention of specific portfolio holdings is for information only. It does not constitute a recommendation or an offer for a particular security or fund, nor should it be taken as a solicitation or recommendation to buy or sell securities or other investments.
Note: Class A shares purchased subject to a front-end sales charge have no contingent deferred sales charge (CDSC). However, certain purchases of Class A shares made without a front-end sales charge may be subject to a CDSC of 1% if the shares are redeemed before the first day of the month in which the one-year anniversary of the purchase falls. Please refer to the prospectus for more information on redemptions that may be subject to a CDSC. The CDSC is not reflected in the average annual total returns. If these charges were included, performance would be lower.
Instances of high double-digit returns were achieved primarily during favorable market conditions and may not be sustainable over time.
The credit quality of the securities in the portfolio is generally calculated by a national rating organization, such as Standard & Poor's, Moody's, or Fitch. Credit ratings of A or better are considered to be high credit quality; credit ratings of BBB are good credit quality and the lowest category of investment grade; credit ratings of BB and below are lower-rated securities (junk bonds). High-yielding, non-investment-grade (junk bonds) involve higher risk than investment-grade bonds. Adverse conditions may affect the issuer's ability to pay interest and principal on these securities. The credit quality of the investment in the portfolio does not apply to the stability or safety of the fund.
A Note about Risk: 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 fall, the prices of debt securities tend to rise, and when interest rates rise, the prices of debt securities are likely to decline. Debt securities are subject to credit risk, which is the risk that the issuer will fail to make timely payments of interest and principal to the Fund. The Fund may invest in lower-rated debt securities, sometimes called junk bonds. These securities carry increased risks of price volatility, illiquidity, and the possibility of default in the timely payment of interest and principal. Foreign investments in which the Fund may invest present increased market, liquidity, currency, political, information, and other risks. These risks may be greater in the case of emerging country securities. The Fund may also invest in senior loans, which are subject to increased credit and liquidity risks. These factors can affect Fund performance.
The views and information discussed in this commentary are as of June 30, 2010, are subject to change, and may not reflect the views of the firm as a whole. The views expressed in market commentaries are at a specific point in time, are opinions only, and should not be relied upon as a forecast, research, or investment advice regarding a particular investment or the markets in general. Information discussed should not be considered a recommendation to purchase or sell securities.
Investors should carefully consider the investment objectives, risks charges and expenses of the Lord Abbett Funds. This and other important information is contained in the fund's summary prospectus and/or prospectus. To obtain a prospectus or summary prospectus on any Lord Abbett mutual fund, contact your investment professional or Lord Abbett Distributor LLC at (888) 522-2388, or visit us at www.lordabbett.com. Read the prospectus carefully before investing.
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Prospectus
You agree to receive the following
prospectus electronically and to read and agree to its terms before investing or sending money. It contains detailed information about the fund's investment policies, risks, charges and expenses. If you would like a reprinted copy of the prospectus, please contact your local Edward Jones investment representative.
The following prospectus is not an offer to sell, or a solicitation of an offer to buy shares in the fund nor shall any such shares be offered or sold to any person in any jurisdiction in which such offer, solicitation, purchase, or sale would be unlawful under the securities laws of such jurisdiction.
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