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Fund Description
The product seeks to outperform the MSCI All Country Ex-U.S. Value Index over a full market cycle.
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Fund Advantages
- Markets typically over and under react to trends, events & emotions.
- High dividend yielding stocks with sustainable dividends produce strong total return prospects.
- High dividend yield portfolios require sector diversification and risk management guidelines.
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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
|
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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-13.98
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-13.96
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8.87
|
--
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--
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-10.80
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| |
Inception date: June 30, 2008
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C
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NAV
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-14.07
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-14.16
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8.20
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--
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--
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-11.37
|
| |
Inception date: June 30, 2008
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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
|
10 Years
or Life
of Fund
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|
A
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SEC (A)
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2.61
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--
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-13.39
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Inception date: June 30, 2008
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C
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SEC (C)
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8.20
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--
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-11.37
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Inception date: June 30, 2008
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(A) SEC Returns reflect performance at the maximum 5.75% sales charge applicable to Class A share investments as of 06/30/2010.
(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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Rank
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Fund
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Percentage of Portfolio
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The Fund's portfolio is actively managed and may change significantly over time.
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Sector
(Sector groups include many industries)
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Percentage of Portfolio
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The Fund's portfolio is actively managed and may change significantly over time.
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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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06-29-2010
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06-30-2010
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06-30-2010
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06-30-2010
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7.21
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.13600
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C
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06-29-2010
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06-30-2010
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06-30-2010
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06-30-2010
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7.18
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.12430
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F
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06-29-2010
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06-30-2010
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06-30-2010
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06-30-2010
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7.21
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.14040
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I
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06-29-2010
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06-30-2010
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06-30-2010
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06-30-2010
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7.22
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.14230
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R2
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06-29-2010
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06-30-2010
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06-30-2010
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06-30-2010
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7.30
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.13140
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R3
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06-29-2010
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06-30-2010
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06-30-2010
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06-30-2010
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7.26
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.13370
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Fund Status
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Open to New Investors
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Dividend Frequency
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Quarterly
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Number of Issues
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94
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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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June 23, 2008
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LIDAX
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543915391
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15,705,477
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C
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June 23, 2008
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LIDCX
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543915375
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1,362,912
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F
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June 23, 2008
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LIDFX
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543915367
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1,231,242
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I
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June 23, 2008
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LAIDX
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543915359
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30,790,146
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R2
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June 23, 2008
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LIDRX
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543915342
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1,088
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R3
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June 23, 2008
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LIRRX
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543915334
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12,502
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Investment Team
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Porfolio Commentary
As of June 30, 2010
Market Review
Last quarter, we highlighted the dominance of macroeconomic news on the direction of equity markets around the world. We concluded that when economic cycles evolve from one extreme to the other it is very common that there is a period of transition wherein economic signals are uneven, thus creating volatile highs and lows in equity prices. This quarter saw a stark continuation of that trend, exacerbated by a disturbing plunge in the U.S. stock market of close to 10% intraday at one point. Government finances continue to be the major focus of capital markets for good reason, but the second quarter saw the addition of political tension in both Korea and the Middle East. Despite this, equity markets began to claw their way back over the quarter from the extreme lows seen in May. Unfortunately, one of the byproducts of overseas turmoil is a retreat into the safety of the U.S. dollar.
Economic signals continue to be mixed and differ by region. While the Organization for Economic Co-operation and Development (OECD) leading indicators have peaked, Asian economies continue to grow, although somewhat slower than anticipated, and North American manufacturing is picking up solidly. The most negative expectations are embedded in European markets, although areas such as Scandinavia, Russia, Germany, and the Benelux (Belgium, Luxembourg, and the Netherlands) region seem to show the worst is past. From an investing viewpoint, we believe that it is far more important to look beyond the white noise of daily events and stock price gyrations to take advantage of market overreactions with an eye toward the longer term, where our view is that the world economy will be better off in 2011 and 2012 than it is now. As such, we have used the turmoil of early 2010 to position our portfolios in solid, growing, undervalued companies located in the appropriate countries of the world, knowing that there will be rolling stories of fiscal deficits, tax increases, higher unemployment, and missed expectations over the next few years of the recovery.
Fund Review
The Fund returned -13.98%, 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 MSCI All Country World Ex-U.S. Value Index with Net Dividends,1 returned -13.48% in 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 June 30, 2010, are: 1 Year: 2.61%, since inception (June 30, 2008): -13.39%. Expense ratio, gross: 1.63%, and net: 1.12%.
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.
Overall, sector allocation was stronger than stock selection for the quarter. Detracting from relative performance was stock selection within the telecommunication services and consumer discretionary sectors. Within the telecommunication services sector, shares of Partner Communications Company Ltd. (1.0% of portfolio weighting), an Israel-based mobile telephone network operator, suffered due to concerns that the Ministry of Communications could order the company to lower its cross-network fees, fees that operators charge to connect calls. If this happens, the company anticipates a drop in revenue. In addition, shares of Portugal Telecom SPSG S.A. (0.0% of portfolio weighting as sold before quarter end), a Portugal-based provider of telecommunications and multimedia services, fell due to Standard & Poor's announcement of a downgrade in Portugal's credit rating over concerns about the country's sovereign debt. Within the consumer discretionary sector, the portfolio's over-exposure to French and Italian consumers compared to the benchmark hurt performance which was exacerbated by a weak euro. Furthermore, investors' concerns about government debt caused Japanese consumer stocks, especially those with exposure to the European consumer, to fall.
Contributing to relative performance was stock selection within the energy and financials sectors. Within the energy sector, shares of Pembina Pipeline Income Fund (1.5% of portfolio weighting), a Canada-based pipeline and oil trust, benefited from the relative stability of its oil & gas pipeline operations. Additionally, shares of Nordic American Tank Shipping Limited (1.6% of portfolio weighting), a Bermuda-based international tanker company, rose due to a healthy balance sheet and low costs. The crude oil tanker sector has a promising outlook which is expected to provide further upside. Within the financials sector, shares of TISCO Bank Public Co., Ltd. (0.9% of portfolio weighting), a Thailand-based commercial bank, profited due to an increase in loan growth. This growth has come primarily from car dealerships looking to finance their rising inventories and the company expects this trend to continue over the next several months which should provide upside for the stock.
Outlook
We remain optimistic about the outlook for international high-dividend-yielding stocks. We believe that investors will continue to gravitate toward these companies, given the lack of visibility across large parts of the global economy. Many companies in our portfolio maintain dividend yields higher than both their respective corporate bond yields and their government bond yields. Unlike the synchronized global recovery of 2009, 2010 is not evolving in a consistent recovery around the world.
The current global recovery continues to be highly uneven. Leading economic indicators and purchasing managers' indices appear to have peaked around the world, but are running at levels consistent with solid economic growth. China is attempting to slow its economic growth rate down to a sustainable level, following 2009's massive stimulus program. The Euro area's peripheral economies are likely to continue to struggle, given their debt reduction/austerity measures. While their challenges are large, their economies are not, relative to the rest of the world. The core economies of Germany, France and the Benelux countries continue to grow at a healthy clip.
We believe the sharp correction in international equities and a number of currencies during the second quarter represent another buying opportunity for investors. Stock prices and valuations look attractive, despite the lowered growth expectations. History reminds us that there is no correlation between economic growth and equity prices, and that some of the best buying opportunities arise in the midst of a crisis. Unlike the environment only nine months ago, we are finding an abundance of low expectation investment situations.
1The MSCI All Country World Ex-U.S. Value with Net Dividends Index is an unmanaged index that reflects the stock markets of 22 developed and 25 emerging market country indices, with values expressed in U.S. dollars. The MSCI All Country World Ex-U.S. Value with Net Dividends Index approximates the minimum possible dividend reinvestment. The dividend is reinvested after deduction of withholding tax, applying the rate to nonresident individuals who do not benefit from double taxation treaties. MSCI uses withholding tax rates applicable to Luxembourg holding companies, as Luxembourg applies the highest rates.
Indexes are unmanaged, do not reflect the deductions of fees or expenses, and are not available for direct investment.
Instances of high double digit returns were achieved primarily during favorable market conditions and may not be sustainable over time.
The net expense ratio takes into account a contractual management fee waiver/expense reimbursement agreement that currently is scheduled to remain in place through February 28, 2011, without which performance would have been lower.
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.
A Note about Risk: The value of investments in equity securities will fluctuate in response to general economic conditions and changes in the prospects of particular companies and/or sectors in the economy. Foreign securities in which the fund primarily invests generally pose greater risk than domestic securities, including greater price fluctuations and higher transaction costs. Foreign investments also may be affected by changes in currency rates or currency controls. With respect to certain foreign countries, there is a possibility of nationalization, expropriation, or confiscatory taxation, imposition of withholding or other taxes, and political or social instability that could affect investments in those countries. These risks can be greater in the case of emerging country securities. The market may fail to recognize the intrinsic value of particular dividend paying stocks the Fund may hold. In addition to large company stocks the Fund may invest in mid- and small-sized stocks, which tend to be more volatile and may be less able to weather economic shifts or other adverse developments.
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, or 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, Lord Abbett Distributor LLC at (888) 522-2388 or visit us at www.lordabbett.com. Read the prospectus carefully before you invest.
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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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