Market Review as of 06/30/2015

The U.S. equity market (as represented by the S&P 500® Index1) advanced slightly during the second quarter of 2015, supported by a generally supportive earnings season and signs of strength in the domestic labor and housing markets. The quarter was not without some bouts of volatility, however, with questions surrounding the timing and magnitude of the Federal Reserve’s (“the Fed”) first rate hike, political headwinds related to Greek solvency, and fears of a slowing Chinese economy all contributing to investor concerns during the period. In addition, U.S. real gross domestic product (GDP) in the first quarter contracted 0.2% (according to the third estimate by the U.S. Bureau of Economic Analysis2), with declines in exports and state and local government spending among the primary detractors.  

The Fed noted that U.S. economic activity, as a whole, likely expanded around the country between early April and late May, with most districts reporting slight gains in employment and wages along with advances in consumer spending. Construction, real estate activity, and home prices also rose across most districts during the period, while manufacturing was primarily flat, with more than half of the districts reporting tempered manufacturing growth due to the downturn in the oil and gas industry.3

Elsewhere in the world, the European Central Bank’s continued quantitative easing was not enough to overcome the political risk related to Greece’s status in the eurozone, sending European markets generally lower. Chinese markets fluctuated during the quarter, as the supportive decision by the People’s Bank of China to cut its lending rate for the fourth time since November 2014 was offset by uncertainty surrounding the economy’s overall strength. Japanese equities continued to rise in the second quarter, buoyed by the continuation of aggressive monetary easing policies from the Bank of Japan, leading the U.S. dollar to reach a 13-year high relative to the Japanese yen in June.

The S&P 500 advanced 0.28% during the three-month period, but remained below new highs set earlier in the quarter. Gains occurred in five of 10 major sectors. The consumer staples, energy, industrials, materials, and utilities sectors underperformed the broader market. Value stocks (as represented by the Russell 3000® Value Index4) underperformed growth stocks (as represented by the Russell 3000® Growth Index5), while large cap stocks (as represented by the Russell 1000® Index6) trailed small cap stocks (as represented by the Russell 2000® Index7). 

Fund Review as of 06/30/2015

The Fund returned -1.23%, reflecting the performance at the net asset value (NAV) of Class A shares, with all distributions reinvested for the period ended June 30, 2015, compared to its benchmark, the Russell 1000® Value Index,8 which returned 0.11%.  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, 2015, are: one year: -1.57%; five years: 13.07%; and 10 years: 5.12%. Expense ratio: 0.74%.

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

The performance of select overweight positions led to underperformance during the three-month period. The Fund’s overweight in Union Pacific Corp., a rail transportation company, detracted from relative performance during the quarter.  Shares of Union Pacific traded lower on a challenging outlook for coal, crude oil, and industrial product volumes. The Fund’s overweight position in Whirlpool Corp., a home appliances manufacturer, also detracted from relative performance.  Shares of Whirlpool were affected by weaker demand in Latin America. Last, the Fund’s overweight position in Chevron Corp., an integrated oil company, detracted from relative performance, as industry conditions remain challenged.

The Fund’s overweight position in Eli Lilly & Co., a pharmaceutical company, contributed to relative performance. The company’s share price benefited from the launch of new products in core therapy areas, including diabetes and oncology. Another contributor to relative performance was the Fund’s overweight position to JPMorgan Chase & Co. The company reported a strong quarter, driven by investment banking and trading revenues. Last, the Fund’s investment in LyondellBasell Industries NV, a petrochemical company, contributed to relative performance. Shares of LyondellBasell benefited from lower natural gas prices and the expectation that management will continue utilizing capital to buy back shares.

Please refer to under the “Portfolio” tab for a complete list of holdings of the Fund, including the securities discussed above.

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