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 3.13%, 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 Midcap® Value Index,8 which returned 2.42% for the same period. Average 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: 7.82%; and since inception (December 29, 2011):  19.10%.  Expense ratio: gross: 1.09%, and net: 0.85%.

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

Consistent with our Calibrated investment approach that seeks excess returns exclusively through security selection, individual stock positions drove relative performance during the quarter. The Fund’s overweight position in Kohl’s Corp., an operator of department stores, was a top contributor to relative performance. Shares advanced after the company reported strong fourth-quarter results, including same-store sales that were meaningfully better than expected. The Fund’s overweight position in Mallinckrodt plc, a specialty pharmaceutical company, also contributed to relative performance. The specialty pharmaceutical company continued to benefit from good performance in its base pharmaceutical business as well as acquisitions completed in 2014.  In addition, during the quarter, the company announced an attractive acquisition that expands its footprint in products aimed at the hospital market.  Another contributor to relative performance was the Fund’s overweight position in PBF Energy Inc., an independent petroleum refiner and supplier. The firm’s shares continued to receive support from high oil supplies, which are helping to improve margins.  Management at PBF Energy also remained committed to returning capital to shareholders in the form of share buybacks.

The Fund’s overweight position to Rowan Companies plc, a global drilling services company, detracted from relative performance. Although Rowan continued to be a relative outperformer among the offshore drillers, shares declined due to continued volatility in energy prices. Bunge Ltd., a global agribusiness and food company, also detracted from first-quarter relative performance. Bunge’s fourth-quarter earnings failed to meet expectations, as continued weakness in the commodities markets weighed on profits.  Finally, the Fund’s overweight position to SCANA Corp., an electric and natural gas utility company, detracted from relative performance. SCANA’s share price fell after fourth-quarter adjusted earnings fell short of analyst expectations.

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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