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Fund Description
The Fund seeks long-term capital appreciation by investing in stocks of medium-sized companies believed to be undervalued in the marketplace.
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Fund Advantages
- The market consistently misprices stocks and groups of stocks.
- Fundamentals – company specific, industry and macro economic factors – are the primary long term drivers of stock prices
- A portfolio of companies with good prospects for increasing profitability from a low base combines the opportunity for capital appreciation with downside protection.
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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
|
1
Year
|
3
Year
|
5
Year
|
10 Years
or Life
of Fund
|
|
A
|
NAV
|
-9.29
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-2.66
|
22.95
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-12.30
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-2.22
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5.97
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| |
Inception date: June 28, 1983
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B
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NAV
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-9.51
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-3.05
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22.02
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-12.89
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-2.88
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5.42
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| |
Inception date: May 01, 1997
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C
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NAV
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-9.47
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-2.98
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22.11
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-12.87
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-2.87
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5.29
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| |
Inception date: May 01, 1997
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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
|
|
1
Year
|
5
Year
|
10 Years
or Life
of Fund
|
|
A
|
SEC (A)
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15.86
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-3.37
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5.34
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Inception date: June 28, 1983
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B
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SEC (B)
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18.02
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-3.01
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5.42
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|
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Inception date: May 01, 1997
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C
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SEC (C)
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22.11
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-2.87
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5.29
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Inception date: May 01, 1997
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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.
(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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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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CONSUMER DISCRETIONARY
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13.50
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INFORMATION TECHNOLOGY
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13.40
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TELECOMMUNICATION SERVICES
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1.40
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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
|
|
A
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12-17-2009
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12-18-2009
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12-18-2009
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12-18-2009
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12.94
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.07090
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B2
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12-17-2009
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12-18-2009
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12-18-2009
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12-18-2009
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12.84
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.06120
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B3
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12-17-2009
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12-18-2009
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12-18-2009
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12-18-2009
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12.87
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.07500
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BF
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12-17-2009
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12-18-2009
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12-18-2009
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12-18-2009
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12.85
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.10630
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C
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12-17-2009
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12-18-2009
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12-18-2009
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12-18-2009
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12.22
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.00020
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F
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12-17-2009
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12-18-2009
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12-18-2009
|
12-18-2009
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12.85
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.10630
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|
I
|
12-17-2009
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12-18-2009
|
12-18-2009
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12-18-2009
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12.85
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.11710
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R2
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12-17-2009
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12-18-2009
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12-18-2009
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12-18-2009
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12.84
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.06120
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R3
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12-17-2009
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12-18-2009
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12-18-2009
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12-18-2009
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12.87
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.07500
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Fund Status
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Open to New Investors
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Dividend Frequency
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Semi-Annually
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Number of Issues
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112
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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
|
June 28, 1983
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LAVLX
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543919104
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109,265,417
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B
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May 01, 1997
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LMCBX
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543919203
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10,978,089
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C
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May 01, 1997
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LMCCX
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543919302
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20,029,036
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F
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September 28, 2007
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LMCFX
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543919609
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2,496,124
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I
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May 03, 1999
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LMCYX
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543919500
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8,138,730
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R2
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March 31, 2008
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LMCQX
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543919708
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18,219
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R3
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March 31, 2008
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LMCRX
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543919807
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544,946
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Investment Team
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Porfolio Commentary
As of June 30, 2010
Market Review
Among the primary factors that influenced the market in the second quarter were the European sovereign debt crisis, slowing growth in China, and concerns about the strength of the U.S. economic recovery. In response to these, both domestic and foreign investors shifted away from stocks and toward assets perceived as less risky, such as U.S. Treasuries.1
After the economy posted 3% growth in the first quarter, the expansion showed signs of moderating. Consumer spending, for example, flattened in April after six consecutive months of improvement. In May, retail sales declined 1.7%. Inflation remained subdued, but the unemployment rate stayed between 9.5% and 10.0%. The Federal Reserve kept the fed funds target rate between 0% and 0.25%, explaining that conditions were likely to warrant low rates for an "extended period."
The S&P 500® Index2 reached a 2010 high of 1,217.28 on April 26, but then fell more than 100 points in May, largely due to concerns that the debt crisis in Greece could spread to the rest of Europe and threaten the monetary union. For the quarter, the index lost 11.4%. Declines occurred across all 10 major sectors, but defensive sectors, including telecommunication services and utilities, outperformed the broader market. Value stocks slightly outperformed growth stocks during the period, and small caps outperformed large caps.
Fund Review
The Fund returned -9.29%, reflecting the performance at the net asset value (NAV) of Class A shares with all distributions reinvested for the quarter ended June 30, 2010, compared to the Russell Midcap® Value Index,3 which returned -9.57%, and the S&P MidCap 400 Value Index,4 which returned -9.90%. 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: 15.86%, 5 years: -3.37%, and 10 years: 5.34%. Expense ratio: 1.16%.
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.
The portfolio benefited from positive stock selection within the industrials sector during the quarter. Wabco Holdings Inc. (2.3% portfolio weighting), a commercial vehicle parts manufacturer, benefited from a recovery in European truck production levels, as well as from higher sales and profits in emerging markets. Railroad operator Kansas City Southern (1.2% portfolio weighting) saw strong financial performance driven by a recovery in the U.S. economy, rapid growth in its Mexico subsidiary, and returns from successful capital investments made over the past several quarters. Stock selection within the consumer discretionary sector also helped performance. Shares of NutriSystem, Inc. (1.3% portfolio weighting), a weight loss program and diet food provider, rose after the company announced better than expected earnings and a near-term positive outlook for new subscriber growth, partially driven by its new product that targets the diabetic population. Within the health care sector, our positive stock selection also aided relative performance.
During the quarter, the largest detractor from performance was an underweight within the relatively stronger performing utilities sector. The portfolio also was negatively affected by stock selection within the energy sector. Natural gas company Williams Companies, Inc. (1.7% portfolio weighting) dropped after announcing a bigger than expected first quarter loss from restructuring charges related to its pipeline and gas processing assets. Halliburton Co. (1.2% portfolio weighting), an oilfield services company, saw its shares dip in response to the potential ramifications of the oil spill in the Gulf of Mexico and the Obama administration's moratorium on oil and gas drilling in the Gulf. A large underweight within the defensive consumer staples sector also hampered performance.
Outlook
We continue to seek out high-quality companies with positive fundamental changes in this healing economic environment. Health care remains the largest overweight, with a focus on companies that likely would benefit from the stronger economic environment; however, we slightly reduced the portfolio's exposure from last quarter's level following profit taking in managed care names due to concerns over the impact of health care reform. Information technology continues to be a large overweight, particularly within the software and IT services segments. We increased the relative underweight within the financials sector by adding exposure to commercial banks and insurance. The utilities sector remains a significant underweight, and we have minimal representation in the consumer staples industry, as we continue to have difficulty finding names that meet our investment criteria.
1Treasuries 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.
2The S&P 500® Index is widely regarded as the standard for measuring large cap U.S. stock market performance and includes a representative sample of leading companies in leading industries.
3The Russell Midcap® Value Index measures the performance of those Russell Midcap companies with lower price-to-book ratios and lower forecasted growth values. The stocks are also members of the Russell 1000 Growth index.
4The S&P MidCap 400 Value Index is a market capitalization-weighted index of the stocks in the S&P MidCap 400® Index having the lowest price-to-book ratios.
Indexes are unmanaged, do not reflect the deduction 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 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 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 standardized average annual total returns. If these charges were included performance would be lower. Please refer to the prospectus for more information on redemptions that may be subject to a CDSC.
A Note about Risk: The Fund invests primarily in mid cap company stocks, which tend to be more volatile and less liquid than large cap company stocks. Mid cap companies typically experience a higher risk of failure than large cap companies. 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, 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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