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Fund Description
The Fund seeks current income and capital appreciation in both the equity and fixed-income markets.
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Fund Advantages
- The market consistently misprices securities and groups of securities.
- Macro-economic factors and company specific events influence the behavior of security prices.
- A disciplined process based on in-depth fundamental and proprietary research can successfully identify undervalued companies while reducing downside risk.
- A well-diversified portfolio of income producing securities (stocks, bonds, and convertible securities) can generate superior income and opportunity for capital appreciation.
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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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-8.15
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-3.76
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13.93
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-6.24
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0.94
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3.92
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| |
Inception date: December 27, 2001
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B
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NAV
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-8.38
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-4.11
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13.06
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-6.88
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0.27
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3.29
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| |
Inception date: December 27, 2001
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C
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NAV
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-8.36
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-4.10
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13.15
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-6.87
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0.28
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3.26
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| |
Inception date: December 27, 2001
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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
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SEC (A)
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7.39
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-0.25
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3.20
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Inception date: December 27, 2001
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B
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SEC (B)
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9.06
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0.11
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3.29
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Inception date: December 27, 2001
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C
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SEC (C)
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13.15
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0.28
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3.26
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Inception date: December 27, 2001
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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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CONVERTIBLE BONDS, COMMON AND PREFERRED STOCK
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69.41
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INVESTMENT GRADE STRAIGHT DEBT
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5.94
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CASH AND CASH EQUIVALENTS
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1.14
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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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9.99
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.07660
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B
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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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9.91
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.05870
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B2
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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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10.04
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.07020
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B3
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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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9.97
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.07430
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BF
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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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9.98
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.08330
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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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9.93
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.05920
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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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9.98
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.08330
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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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10.04
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.08610
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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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10.04
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.07020
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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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9.97
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.07430
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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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286
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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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December 27, 2001
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LAMAX
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543913859
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85,969,819
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B
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December 27, 2001
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LAMBX
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543913842
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4,702,834
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C
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December 27, 2001
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LAMCX
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543913834
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5,228,028
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F
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September 28, 2007
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LAMFX
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543913792
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546,409
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I
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December 27, 2001
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LAMYX
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543913818
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28,958,276
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R2
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September 28, 2007
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LAMQX
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543913784
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2,590
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R3
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September 28, 2007
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LAMRX
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543913776
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148,359
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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 -8.15%, 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 its benchmark, the S&P 500?Index, which returned -11.43%. 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: 7.39%, 5 years: -0.25%, and since inception (December 27, 2001): 3.20%. Expense ratio: gross, 1.37%, and net: 1.30%.
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.
As the market reacted to concerns around sovereign risks, financial regulatory reform, and a slowdown in the pace of economic recovery, investors shifted to relatively safer fixed-income securities. This flight to quality led Treasuries to outperform during the quarter, and higher-quality corporate bonds to outperform lower-rated credits. Thus, the Fund's high-yield bond preference within the fixed-income portion of the portfolio detracted from performance. The investment-grade corporate bond portion of the portfolio added to performance as high-grade corporates outperformed both lower-quality bonds and equities.
We maintained our equity and convertible allocation during the quarter, emphasizing certain cyclical industries and names with good operating leverage that are benefiting from the global economic recovery. The equity portion of the portfolio performed in line with the market, with foreign equities generally suffering more in the downturn. Sector selection within the capital goods and technology industries helped performance, with certain names benefiting from decent demand and good earnings. Selection within the utilities and healthcare holdings helped these sectors avoid the worst of the equity market decline.
Outlook
The economy has hit a soft patch, but we feel this is an expected, temporary setback. Although recent economic data point to a slowdown in the pace of the recovery, indicators still reflect growth. We are aware of the concerns surrounding European sovereign risks, strained fiscal finances, financial regulatory reform, and a slowing economic recovery. We expect moderate growth to continue and a gradual resolution of the issues surrounding European sovereign risk.
We feel that the market has overreacted to concerns and risks mentioned above. This has led to cheap valuations in the market and good opportunities. The Fund, which is positioned to be competitive in a full market cycle, while providing downside protection in a down market, continues to provide an attractive income stream for an equity-oriented portfolio. In our opinion, there is good value in the corporate market, but little value in Treasuries. The fundamental and technical underpinnings in the credit market remain favorable, as we continue to see healthy earnings, low default rates, and spread product provides an attractive alternative amid a shortage of yield.
Prior to July 1, 2009, the Lord Abbett Capital Structure Fund was known as Lord Abbett America's Value Fund.
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.
2 The 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.
An index is unmanaged, does not reflect the deduction of fees or expenses, and is 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 March 31, 2011, without which performance would have been lower. Please refer to the prospectus for more information on redemptions that may be subject to a CDSC.
Note: Lord Abbett Capital Structure Fund is not a balanced fund, and has the capability to adjust equity and fixed-income allocations based on relative value in the market and the investment team's proprietary fundamental research.
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.
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 'BB' and below are lower-rated securities (junk bonds). High-yielding, non-investment-grade bonds (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 equity and fixed-income securities. The value of equity securities will fluctuate in response to general economic conditions and to changes in the prospects of particular companies and/or sectors in the economy. The value of an investment in fixed-income securities will change as interest rates fluctuate and in response to market conditions. As 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.
The Fund may invest a significant portion of its assets in mid-sized companies, which tend to be more volatile and less liquid, and typically experience a higher risk of failure, than large cap company stocks. The Fund also may invest in high-yield 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. Because the Fund is not limited to investing in equity securities, the Fund may have smaller gains in a rising stock market than a fund investing solely in equities. 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, 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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