Market Review as of 03/31/2015

The U.S. equity market (as represented by the S&P 500® Index1) barely edged up during the first quarter of 2015, amid a moderating economy and the prospect of a hike in interest rates. Hindered by harsh weather, a strong dollar, and slow global growth, U.S. real gross domestic product (GDP) expanded by 2.2% in the fourth quarter (according to the third estimate by the U.S. Bureau of Economic Analysis), down from 5.0% in the previous quarter.2 Exports, spending by state and local governments, and personal consumption expenditures bolstered growth, though spending on durable goods weakened.  

The Federal Reserve (the “Fed”) noted that U.S. economic activity expanded around the country, with most districts reporting increased home sales and improvement in employment, though wage pressures remained moderate. Manufacturing, construction, and real estate activity was mixed, while banking conditions were mostly positive.3

Elsewhere, the eurozone showed improvement, primarily as a result of strengthening in Germany. In Japan, fourth-quarter 2014 economic activity bounced back from a contraction in the third quarter. In China, the economy continued to slow, prompting the People’s Bank of China to cut its official interest rate in February, the second reduction in three months.  

The S&P 500 rose 0.95% during the quarter, with gains occurring in six of 10 major sectors. The consumer staples, consumer discretionary, telecom services, and healthcare sectors outperformed the broader market. Growth stocks (as represented by the Russell 3000® Growth Index4) outperformed value stocks (as represented by the Russell 3000® Value Index5). Small caps (as represented by the Russell 2000® Index6) outperformed large cap stocks (as represented by the Russell 1000® Index7). 

Fund Review as of 03/31/2015

The Fund returned 0.35%, reflecting the performance at the net asset value (NAV) of Class A shares, with all distributions reinvested for the period ended March 31, 2015, compared to its benchmark, the Russell 1000® Value Index,8 which returned -0.72%.  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 March 31, 2015, are: one year: 3.60%; five years: 9.90%; and 10 years: 5.20%. 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 outperformance during the three-month period. Shares of Valero Energy Corp., an independent petroleum refining and marketing company, rose steadily during the quarter. The company’s share price benefited from an announcement that the company’s dividend would increase, which reinforced management’s commitment to returning capital to shareholders. Another contributor to relative performance was the Fund’s out-of-benchmark position in semiconductor company Avago Technologies Ltd. The company has attained above-industry revenue growth through its wireless and networking businesses. Last, the Fund’s out-of-benchmark investment in Apple, Inc., a technology company, contributed to relative performance. Shares of Apple rose last quarter as the result of continued strength in sales and expectations that management will continue to return capital to shareholders.

The Fund’s overweight position in Caterpillar Inc., a manufacturer of construction and mining equipment, detracted from relative performance during the quarter.  Shares of Caterpillar slumped as lower oil prices signaled weakening demand from energy companies. The Fund’s overweight position in Freeport-McMoRan Inc., a natural resources company, also detracted from relative performance.  Freeport-McMoRan shares continued to be affected by weakness in the global commodity markets. Last, the Fund’s overweight position in National-Oilwell Varco Inc., a provider of equipment used in oil and gas operations, detracted from relative performance, as orders declined amid slowing global growth and declining oil prices.

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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