Lord Abbett Affiliated Fund
PROSPECTUS
MARCH 1, 2025
CLASS
TICKER
CLASS
TICKER
A....................
LAFFX
R2 .................
LAFQX
C ...................
LAFCX
R3 .................
LAFRX
F....................
LAAFX
R4 .................
LAFSX
F3..................
LTFOX
R5 .................
LAFTX
I .....................
LAFYX
R6 .................
LAFVX
P....................
LAFPX
The U.S. Securities and Exchange Commission has not approved or disapproved of these securities or
determined whether this prospectus is accurate or complete. Any representation to the contrary is a
criminal offense.
INVESTMENT PRODUCTS: NOT FDIC INSURED–NO BANK GUARANTEE–MAY LOSE VALUE
TABLE OF CONTENTS
FUND SUMMARY
Investment Objective
2
Fees and Expenses
2
Principal Investment Strategies
4
Principal Risks
4
Performance
7
Management
9
Purchase and Sale of Fund Shares
10
Tax Information
11
Payments to Broker-Dealers and Other Financial Intermediaries
11
MORE INFORMATION ABOUT THE FUND
Investment Objective
12
Principal Investment Strategies
12
Principal Risks
14
Additional Information About Investment and Operational Risks
20
Disclosure of Portfolio Holdings
25
Management and Organization of the Fund
25
INFORMATION FOR MANAGING YOUR FUND ACCOUNT
Choosing a Share Class
27
Sales Charges
35
Sales Charge Reductions and Waivers
36
Financial Intermediary Compensation
41
Purchases
45
Exchanges
47
Redemptions
48
Account Services and Policies
51
Distributions and Taxes
59
FINANCIAL INFORMATION
Financial Highlights
61
APPENDIX A
Intermediary-Specific Sales Charge
Reductions and Waivers
A-1
PROSPECTUS – Affiliated Fund
2
FUND SUMMARY
INVESTMENT OBJECTIVE
The Fund’s investment objective is long-term growth of capital and income without
excessive fluctuations in market value.
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy, hold, and
sell shares of the Fund.
You may pay other fees, such as brokerage commissions
and other fees to financial intermediaries, which are not reflected in the tables
and examples below.
You may qualify for sales charge discounts if you and certain
members of your family invest, or agree to invest in the future, at least $50,000 in
the Lord Abbett Family of Funds. More information about these and other discounts
is available from your financial intermediary and in “Sales Charge Reductions and
Waivers” on page 36 of the prospectus, Appendix A to the prospectus, titled
“Intermediary-Specific Sales Charge Reductions and Waivers,” and “Purchases,
Redemptions, Pricing, and Payments to Dealers” on page 9-1 of Part II of the
statement of additional information (“SAI”).
Shareholder Fees
(1)
(Fees paid directly from your investment)
Class
A
C
F, F3, I, P, R2, R3, R4, R5, and R6
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price)
5.75%
None
None
Maximum Deferred Sales Charge (Load)
(as a percentage of offering price or redemption
proceeds, whichever is lower)
None
(2)
1.00%
(3)
None
Annual Fund Operating Expenses
(Expenses that you pay each year as a percentage of the value of your investment)
Class
A
C
F
F3
I
P
Management Fees
0.32%
0.32%
0.32%
0.32%
0.32%
0.32%
Distribution and Service (12b-1) Fees
0.25%
1.00%
0.10%
None
None
0.45%
Other Expenses
0.12%
0.12%
0.12%
0.07%
0.12%
0.12%
Total Annual Fund Operating Expenses
0.69%
1.44%
0.54%
0.39%
0.44%
0.89%
PROSPECTUS – Affiliated Fund
3
Annual Fund Operating Expenses
(continued)
(Expenses that you pay each year as a percentage of the value of your investment)
Class
R2
R3
R4
R5
R6
Management Fees
0.32%
0.32%
0.32%
0.32%
0.32%
Distribution and Service (12b-1) Fees
0.60%
0.50%
0.25%
None
None
Other Expenses
0.12%
0.12%
0.12%
0.12%
0.07%
Total Annual Fund Operating Expenses
1.04%
0.94%
0.69%
0.44%
0.39%
(1)
A shareholder transacting in share classes without a front-end sales charge may be required to pay a commission to its
financial intermediary. Please contact your financial intermediary for more information about whether such a commission
may apply to your transaction.
(2)
A contingent deferred sales charge (“CDSC”) of 1.00% may be assessed on certain Class A shares purchased or
acquired without a sales charge if they are redeemed before the first day of the month in which the one-year anniversary
of the purchase falls.
(3)
A CDSC of 1.00% may be assessed on Class C shares if they are redeemed before the first anniversary of their
purchase.
Example
This Example is intended to help you compare the cost of investing in the Fund with
the cost of investing in other mutual funds. The Example assumes that you invest
$10,000 in the Fund for the time periods indicated and then redeem all of your shares
at the end of those periods. The Example also assumes that your investment has a
5% return each year and that the Fund’s operating expenses remain the same. Class
C shares automatically convert to Class A shares after eight years. The expense
example for Class C shares for the ten-year period reflects the conversion to Class A
shares. Although your actual costs may be higher or lower, based on these
assumptions your costs would be:
Class
If Shares Are Redeemed
If Shares Are Not Redeemed
1 Year
3 Years
5 Years
10 Years
1 Year
3 Years
5 Years
10 Years
Class A Shares
$
641
$
783
$
937
$
1,384
$
641
$
783
$
937
$
1,384
Class C Shares
$
247
$
456
$
787
$
1,520
$
147
$
456
$
787
$
1,520
Class F Shares
$
55
$
173
$
302
$
677
$
55
$
173
$
302
$
677
Class F3 Shares
$
40
$
125
$
219
$
493
$
40
$
125
$
219
$
493
Class I Shares
$
45
$
141
$
246
$
555
$
45
$
141
$
246
$
555
Class P Shares
$
91
$
284
$
493
$
1,096
$
91
$
284
$
493
$
1,096
Class R2 Shares
$
106
$
331
$
574
$
1,271
$
106
$
331
$
574
$
1,271
Class R3 Shares
$
96
$
300
$
520
$
1,155
$
96
$
300
$
520
$
1,155
Class R4 Shares
$
70
$
221
$
384
$
859
$
70
$
221
$
384
$
859
Class R5 Shares
$
45
$
141
$
246
$
555
$
45
$
141
$
246
$
555
Class R6 Shares
$
40
$
125
$
219
$
493
$
40
$
125
$
219
$
493
Portfolio Turnover.
The Fund pays transaction costs, such as commissions, when it
buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover
rate may indicate higher transaction costs and may result in higher taxes when Fund
PROSPECTUS – Affiliated Fund
4
shares are held in a taxable account. These costs, which are not reflected in the
annual fund operating expenses or in the example, affect the Fund’s performance.
During the most recent fiscal year, the Fund’s portfolio turnover rate was 44% of the
average value of its portfolio.
PRINCIPAL INVESTMENT STRATEGIES
Under normal conditions, the Fund invests at least 80% of its net assets, plus the
amount of any borrowings for investment purposes, in equity securities of large
companies. A large company is defined as a company having a market capitalization
at the time of purchase that falls within the market capitalization range of companies
in the Russell 1000
®
Index. In selecting investments, the portfolio management
team focuses on U.S. companies that pay dividends and seeks to identify companies
that it believes have the potential for capital appreciation.
Equity securities in which the Fund may invest include common stocks, preferred
stocks, equity interests in trusts (including real estate investment trusts and privately
offered trusts), partnerships, joint ventures, limited liability companies and vehicles
with similar legal structures, other instruments convertible or exercisable into the
foregoing, and other investments with similar economic characteristics.
The Fund may invest up to 20% of its net assets in securities of foreign companies,
including emerging market companies, American Depositary Receipts (“ADRs”),
and other similar depositary receipts. In addition to ADRs, the Fund generally
defines foreign companies as those whose securities are traded primarily on non-
U.S. securities exchanges.
The investment team may consider environmental, social, and governance (“ESG”)
factors in investment decisions. The Fund may sell a security when the Fund
believes the security is less likely to benefit from the current market and economic
environment, or shows signs of deteriorating fundamentals, among other reasons.
The Fund may deviate from the investment strategy described above for temporary
defensive purposes. The Fund may miss certain investment opportunities if
defensive strategies are used and thus may not achieve its investment objective.
PRINCIPAL RISKS
As with any investment in a mutual fund, investing in the Fund involves risk,
including the risk that you may receive little or no return on your investment. When
you redeem your shares, they may be worth more or less than what you paid for
them, which means that you may lose a portion or all of the money you invested in
the Fund. The principal risks of investing in the Fund, which could adversely affect
its performance, include:
•
Investment Strategy Risk:
If the Fund’s fundamental research and quantitative
analysis fail to produce the intended result, the Fund may suffer losses or
underperform its benchmark index or other funds with the same investment
objective or strategies, even in a favorable market. In addition, the Fund’s
strategy of focusing on dividend-paying companies means the Fund will be
PROSPECTUS – Affiliated Fund
5
more exposed to risks associated with that particular market segment than a fund
that invests more widely.
•
Market Risk:
The market values of securities will fluctuate, sometimes sharply
and unpredictably, based on overall economic conditions, governmental actions
or intervention, market disruptions caused by trade disputes or other factors,
political developments, and other factors. Prices of equity securities tend to rise
and fall more dramatically than those of debt securities.
•
Equity Securities Risk:
Equity securities, as well as equity-like securities such
as convertible debt securities, may experience significant volatility. Such
securities may fall sharply in response to adverse events affecting overall
markets, a particular industry or sector, or an individual company’s financial
condition.
•
Industry and Sector Risk:
Although the Fund does not employ an industry or
sector focus, its exposure to specific industries or sectors will increase from time
to time based on the portfolio management team’s perception of investment
opportunities. If the Fund is overweight in a single industry or sector relative to
its benchmark index, the Fund will face an increased risk that the value of its
portfolio will decrease because of events disproportionately affecting that
industry or sector. Furthermore, investments in particular industries or sectors
may be more volatile than the broader market as a whole.
•
Dividend Risk:
Securities of dividend-paying companies that meet the Fund’s
investment criteria may not be widely available, limiting the Fund’s ability to
produce current income and increasing the volatility of the Fund’s returns. At
times, the performance of dividend-paying companies may lag the performance
of other companies or the broader market as a whole. In addition, the dividend
payments of the Fund’s portfolio companies may vary over time, and there is no
guarantee that a company will pay a dividend at all.
•
Large Company Risk:
Larger, more established companies may be less able to
respond quickly to certain market developments. In addition, larger companies
may have slower rates of growth as compared to successful, but less well-
established, smaller companies.
•
Mid-Sized Company Risk:
Investments in mid-sized companies may involve
greater risks than investments in larger, more established companies. Securities
of mid-sized companies tend to be more sensitive to changing economic,
market, and industry conditions and tend to be more volatile and less liquid than
equity securities of larger companies, especially over the short term. The
securities of mid-sized companies tend to trade less frequently than those of
larger, more established companies, which can adversely affect the pricing of
these securities and the ability to sell these securities in the future.
•
Foreign and Emerging Market Company Risk:
Investments in foreign
companies and in U.S. companies with economic ties to foreign markets
PROSPECTUS – Affiliated Fund
6
generally involve special risks. These companies may be more vulnerable to
economic, political, and social instability and subject to less government
supervision, lack of transparency, inadequate regulatory and accounting
standards, and foreign taxes. Foreign company securities also include ADRs,
which may be less liquid than the underlying shares in their primary trading
market. Foreign securities also may subject the Fund’s investments to changes
in currency exchange rates. Emerging market securities generally are more
volatile than other foreign securities, and are subject to greater liquidity,
regulatory, and political risks. Investments in emerging markets may be
considered speculative and generally are riskier than investments in more
developed markets. Emerging markets are more likely to experience
hyperinflation and currency devaluations. Securities of emerging market
companies may have far lower trading volumes and less liquidity than securities
of issuers in developed markets. In certain emerging market countries,
governments participate to a significant degree in their respective economies.
Action by these governments could have a significant adverse effect on market
prices of securities and payment of dividends. Companies with economic ties to
emerging markets may be susceptible to the same risks as companies organized
in emerging markets.
•
Foreign Currency Risk:
Investments in securities that are denominated or
receiving revenues in foreign currencies are subject to the risk that those
currencies will decline in value relative to the U.S. dollar, or, in the case of
hedged positions, that the U.S. dollar will decline in value relative to the
currency being hedged. Foreign currency exchange rates may fluctuate
significantly over short periods of time.
•
Real Estate Risk:
An investment in a real estate investment trust (“REIT”)
generally is subject to the risks that impact the value of the underlying
properties or mortgages of the REIT. These risks include loss to casualty or
condemnation, and changes in supply and demand, interest rates, zoning laws,
regulatory limitations on rents, property taxes, and operating expenses. Other
factors that may adversely affect REITs include poor performance by
management of the REIT, changes to the tax laws, or failure by the REIT to
qualify for favorable tax treatment under the Internal Revenue Code of 1986, as
amended (the “Code”), and changes in local, regional, or general economic
conditions.
•
Liquidity/Redemption Risk:
The Fund may lose money when selling securities
at inopportune times to fulfill shareholder redemption requests. The risk of loss
may increase depending on the size and frequency of redemption requests,
whether the redemption requests occur in times of overall market turmoil or
declining prices, and whether the securities the Fund intends to sell have
decreased in value or are illiquid. The Fund may be less able to sell illiquid
securities at its desired time or price. It may be more difficult for the Fund to
value its investments in illiquid securities than more liquid securities.
PROSPECTUS – Affiliated Fund
7
An investment in the Fund is not a deposit of any bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. For more information on the principal risks of the Fund, please see the
“More Information About the Fund – Principal Risks” section in the prospectus.
PERFORMANCE
The bar chart and table below provide some indication of the risks of investing in the
Fund by illustrating the variability of the Fund’s returns. Each assumes reinvestment
of dividends and distributions. The Fund’s past performance, before and after taxes,
is not necessarily an indication of how the Fund will perform in the future.
The bar chart shows changes in the performance of the Fund’s Class A shares from
calendar year to calendar year. This chart does not reflect the sales charge applicable
to Class A shares. If the sales charge were reflected, returns would be lower.
Performance for the Fund’s other share classes will vary due to the different
expenses each class bears. Updated performance information is available at
www.lordabbett.com or by calling 888-522-2388.
Bar Chart (per calendar year) - Class A Shares
-
4
.
2
0
%
+
1
7
.
3
4
%
+
1
6
.
1
2
%
-
7
.
4
6
%
+
2
5
.
2
4
%
-
1
.
2
7
%
+
2
6
.
7
5
%
-
9
.
8
5
%
+
1
0
.
4
9
%
+
1
7
.
3
0
%
1
5
1
6
1
7
1
8
1
9
2
0
2
1
2
2
2
3
2
4
Best
Quarter
2nd
Q
2020
+15.58%
Worst
Quarter
1st
Q
2020
-27.92%
PROSPECTUS – Affiliated Fund
8
The table below shows how the Fund’s average annual total returns compare to the
returns of a securities market index with investment characteristics similar to those
of the Fund as well as to a broad-based securities market index.
1
The Fund’s average
annual total returns include applicable sales charges.
The after-tax returns of Class A shares included in the table below are calculated
using the historical highest individual federal marginal income tax rates and do not
reflect the impact of state and local taxes. In some cases, the return after taxes on
distributions and sale of Fund shares may exceed the return before taxes due to a tax
benefit resulting from realized losses on a sale of Fund shares at the end of the
period that is used to offset other gains. Actual after-tax returns depend on an
investor’s tax situation and may differ from those shown. The after-tax returns
shown are not relevant to investors who hold their Fund shares through tax-
advantaged arrangements such as 401(k) plans or Individual Retirement Accounts
(“IRAs”). After-tax returns for other share classes are not shown in the table and will
vary from those shown for Class A shares.
1
The Fund has adopted the S&P 500
®
Index as its broad-based securities market index.
PROSPECTUS – Affiliated Fund
9
Average Annual Total Returns
(for the periods ended December 31, 2024)
Class
1 Year
5 Years
10 Years
Life of Class
Inception
Date for
Performance
Class A Shares
Before Taxes
10.54%
6.63%
7.62%
-
After Taxes on Distributions
9.02%
5.56%
5.85%
-
After Taxes on Distributions and Sale of Fund Shares
7.41%
5.06%
5.58%
-
Class C Shares
(1)
15.33%
7.08%
7.45%
-
Class F Shares
17.39%
8.04%
8.42%
-
Class F3 Shares
17.61%
8.23%
-
8.92%
4/4/2017
Class I Shares
17.48%
8.15%
8.53%
-
Class P Shares
17.04%
7.67%
8.12%
-
Class R2 Shares
16.83%
7.50%
7.89%
-
Class R3 Shares
16.94%
7.61%
8.01%
-
Class R4 Shares
17.20%
7.88%
-
8.81%
6/30/2015
Class R5 Shares
17.53%
8.15%
-
9.08%
6/30/2015
Class R6 Shares
17.63%
8.24%
-
9.17%
6/30/2015
Index
Russell 1000
®
Value Index
9.02%
6/30/2015
(reflects no deduction for fees, expenses, or taxes)
14.37%
8.68%
8.49%
8.93%
4/4/2017
S&P 500
®
Index
13.68%
6/30/2015
(reflects no deduction for fees, expenses, or taxes)
25.02%
14.53%
13.10%
14.47%
4/4/2017
Lipper Average
Lipper Equity Income Funds Average
8.96%
6/30/2015
(reflects no deduction for sales charges or taxes)
14.16%
8.94%
8.17%
9.21%
4/4/2017
(1)
Class C shares convert to Class A shares eight years after purchase. Class C share performance does not reflect the
impact of such conversion to Class A shares.
MANAGEMENT
Investment Adviser.
The Fund’s investment adviser is Lord, Abbett & Co. LLC
(“Lord Abbett”).
PROSPECTUS – Affiliated Fund
10
Portfolio Managers
Portfolio Managers/Title
Member of
the Portfolio
Management
Team Since
Darnell C. Azeez, Partner and Portfolio Manager
2019
Ryan C. Howard, Portfolio Manager
2021
PURCHASE AND SALE OF FUND SHARES
The minimum initial and additional amounts shown below vary depending on the
class of shares you buy and the type of account. Certain financial intermediaries may
impose different restrictions than those described below. For Class I shares, the
minimum investment shown below applies to certain types of institutional investors,
but does not apply to registered investment advisers or retirement and benefit plans
otherwise eligible to invest in Class I shares. Class P shares are closed to
substantially all new investors. See “Choosing a Share Class – Investment
Minimums” in the prospectus for more information.
Investment Minimums — Initial/Additional Investments
Class
A
(1)
and C
F, F3, P, R2, R3, R4, R5, and R6
I
General and IRAs without Invest-A-
Matic Investments
Initial: $1,000
Additional: No minimum
N/A
Initial: $1 million
Additional: No minimum
Invest-A-Matic Accounts
(2)
Initial: $250
Additional: $50
N/A
N/A
IRAs, SIMPLE and SEP Accounts
with Payroll Deductions
No minimum
N/A
N/A
Fee-Based Advisory Programs and
Retirement and Benefit Plans
No minimum
No minimum
No minimum
(1)
There is no investment minimum for Class A shares purchased by investors maintaining an account with a financial
intermediary that has entered into an agreement with Lord Abbett Distributor LLC ("Lord Abbett Distributor") to offer
Class A shares through a load-waived network or platform, which may or may not charge transaction fees.
(2)
There is no minimum initial investment for Invest-A-Matic accounts held directly with the Fund, including IRAs.
You may sell (redeem) shares through your securities broker, financial professional
or financial intermediary on any business day the Fund calculates its net asset value
(“NAV”). If you have direct account access privileges, you may redeem your shares
by contacting the Fund in writing at Lord Abbett Funds Service Center, P.O. Box
534489, Pittsburgh, PA 15253-4489 (regular mail) or Attention: 534489, 500 Ross
Street 154-0520, Pittsburgh, PA 15262 (overnight mail), by calling 888-522-2388 or
by accessing your account online at www.lordabbett.com.
PROSPECTUS – Affiliated Fund
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TAX INFORMATION
The Fund’s distributions, if any, generally are taxable to you as ordinary income,
capital gains or a combination of the two, unless you are a tax-exempt investor or
investing through a tax-advantaged arrangement, such as a 401(k) plan or an IRA.
Any withdrawals from such a tax-advantaged arrangement may be taxable to you.
PAYMENTS TO BROKER-DEALERS AND OTHER FINANCIAL
INTERMEDIARIES
If you purchase Fund shares through a broker-dealer or other financial intermediary
(such as a bank), the Fund and the Fund’s distributor or its affiliates may pay the
intermediary for the sale of Fund shares and related services. These payments may
create a conflict of interest by influencing the broker-dealer or other financial
intermediary and your individual financial professional to recommend the Fund over
another investment. Ask your individual financial professional or visit your financial
intermediary’s website for more information.
PROSPECTUS – Affiliated Fund
12
MORE INFORMATION ABOUT THE FUND
INVESTMENT OBJECTIVE
The Fund’s investment objective is long-term growth of capital and income without
excessive fluctuations in market value.
PRINCIPAL INVESTMENT STRATEGIES
Under normal conditions, the Fund invests at least 80% of its net assets, plus the
amount of any borrowings for investment purposes, in equity securities of large
companies. A large company is defined as a company having a market capitalization
at the time of purchase that falls within the market capitalization range of companies
in the Russell 1000
®
Index, a widely-used benchmark for U.S. large-cap stock
performance. The market capitalization range of the Russell 1000
®
Index as of June
30, 2024, following its most recent annual reconstitution, was approximately $360
million to $3.0 trillion. This range varies daily. In selecting investments, the
portfolio management team focuses on U.S. companies that pay dividends and seeks
to identify companies that it believes have the potential for capital appreciation.
Equity securities in which the Fund may invest include common stocks, preferred
stocks, equity interests in trusts (including REITs and privately offered trusts),
partnerships, joint ventures, limited liability companies and vehicles with similar
legal structures, and other instruments with similar economic characteristics. The
Fund also considers equity securities to include warrants, rights offerings,
convertible securities, and other investments that are convertible or exercisable into
the equity securities described above.
The Fund may invest up to 20% of its net assets in securities of foreign companies,
including emerging market companies, ADRs, Global Depositary Receipts
(“GDRs”), and other similar depositary receipts. The Fund generally defines foreign
companies as those whose securities are traded primarily on non-U.S. securities
exchanges. Because ADRs represent exposure to foreign companies, the Fund deems
them to be foreign investments even though they trade on U.S. exchanges. Foreign
securities may be denominated in the U.S. dollar or other currencies. The Fund may
invest without limitation in securities of companies that do not meet these criteria
but represent economic exposure to foreign markets, including securities of
companies that are organized or operated in a foreign country but primarily trade on
a U.S. securities exchange.
In selecting investments, the Fund’s portfolio management team considers the
following:
•
Dividend Payment.
Dividend-paying securities are securities issued by
companies that pay out a portion of their profits to shareholders instead of
reinvesting all their profits in their businesses. Although issuers of dividend-
paying securities may include fast growing companies, they more commonly are
PROSPECTUS – Affiliated Fund
13
“value” companies whose securities the portfolio management team believes
have the potential for investment return because they are underpriced or
undervalued according to certain financial measurements of intrinsic worth or
business prospects.
•
Fundamental Analysis.
The Fund’s investment process analyzes various
measures of a company’s financial condition. The Fund’s portfolio management
team considers consensus expectations as well as proprietary fundamental
analysis regarding near-term earnings, long-term normalized earnings, and
earnings growth rates. In addition, the portfolio management team may consider
other factors such as changes in economic and financial environment; new or
improved products or services; changes in management or structure of the
company; price increases for the company’s products or services; and improved
efficiencies resulting from new technologies or changes in distribution.
•
Quantitative Analysis.
The Fund’s portfolio management team employs
quantitative analysis, such as valuation and risk models and other quantitative
analytical tools. The portfolio management team may do so to analyze the
effects of various characteristics of the Fund’s overall portfolio and to assist in
individual stock selection. Based on the portfolio management team’s
assessment of these portfolio characteristics, the Fund may buy or sell securities
as it seeks to optimize overall portfolio performance.
The investment team may also consider the risks and return potential presented by
ESG factors in investment decisions.
The Fund may sell a security when the Fund believes the security is less likely to
benefit from the current market and economic environment, shows signs of
deteriorating fundamentals, no longer meets the Fund’s investment criteria, to
increase cash, or to satisfy redemption requests, among other reasons. In considering
whether to sell a security, the Fund may evaluate factors including, but not limited
to, the condition of the economy, changes in the issuer’s competitive position or
financial condition, changes in the outlook for the issuer’s industry, and the Fund’s
valuation target for the security.
Lord Abbett is registered with the U.S. Commodity Futures Trading Commission as
a commodity pool operator (“CPO”) under the Commodity Exchange Act (“CEA”).
However, with respect to the Fund, Lord Abbett has filed a claim of exclusion from
the definition of the term CPO and therefore, Lord Abbett is not subject to
registration or regulation as a pool operator under the CEA with respect to the Fund.
Temporary Defensive Strategies.
The Fund seeks to remain fully invested in
accordance with its investment objective. However, in an attempt to respond to
adverse market, economic, political, or other conditions, the Fund may take a
temporary defensive position that is inconsistent with its principal investment
strategies by holding some or all of its assets in short-term investments. These
investments include cash, commercial paper, money market instruments, repurchase
agreements, and U.S. Government securities. The Fund also may hold these types of
PROSPECTUS – Affiliated Fund
14
investments while looking for suitable investment opportunities or to manage
liquidity. Taking a temporary defensive position could prevent the Fund from
achieving its investment objective.
PRINCIPAL RISKS
As with any investment in a mutual fund, investing in the Fund involves risk,
including the risk that you may receive little or no return on your investment. When
you redeem your shares, they may be worth more or less than what you paid for
them, which means that you may lose a portion or all of the money you invested in
the Fund. Before you invest in the Fund, you should carefully evaluate the risks in
light of your investment goals. An investment in the Fund held for longer periods
over full market cycles typically provides more favorable results.
The principal risks you assume when investing in the Fund are described below. The
Fund attempts to manage these risks through careful security selection, portfolio
diversification, and continual portfolio review and analysis, but there can be no
assurance or guarantee that these strategies will be successful in reducing risk.
Please see the SAI for a further discussion of strategies employed by the Fund and
the risks associated with an investment in the Fund.
•
Investment Strategy Risk:
The strategies used and securities selected by the
Fund’s portfolio management team may fail to produce the intended result and
the Fund may not achieve its objective. Through the integration of fundamental
research and quantitative analysis, the Fund expects that stock selection is likely
to be a primary driver of the Fund’s performance relative to its benchmark
index. In addition, there is no guarantee that the Fund’s use of quantitative
analytic tools will be successful. Factors that affect a security’s value can
change over time and these changes may not be reflected in the Fund’s
quantitative models. Investments selected using these models may perform
differently than expected as a result of the factors used in the models, the weight
placed on each factor, changes from the factors’ historical trends, and technical
issues in the construction and implementation of the models. In addition, the
Fund’s performance will reflect, in part, the Fund’s portfolio management
team’s ability to make active qualitative decisions and timely adjust the
quantitative models, including the models’ underlying metrics and data. As a
result of the risks associated with the Fund’s investment strategies, the Fund
may underperform its benchmark or other funds with the same investment
objective and which invest in large companies, even in a favorable market. The
Fund’s strategy of focusing on dividend-paying companies means the Fund will
be more exposed to risks associated with that particular market segment than a
fund that invests more widely.
•
Market Risk:
The market values of securities will fluctuate, sometimes sharply
and unpredictably, based on overall economic conditions, governmental actions
or intervention, market disruptions caused by trade disputes or other factors,
political developments, and other factors. Changes in the financial condition of a
PROSPECTUS – Affiliated Fund
15
single issuer can impact a market as a whole. For many fixed income securities,
market risk is significantly, but not necessarily exclusively, influenced by
changes in interest rates. A rise in interest rates typically causes a decrease in
the value of investments in bonds and other debt securities, while a fall in rates
typically causes an increase in value. Equity securities have experienced
significantly more volatility in returns than fixed income securities over the long
term, although under certain market conditions fixed income securities may
have comparable or greater price volatility. In addition, data imprecision,
technology malfunctions, operational errors, and similar factors may adversely
affect a single issuer, a group of issuers, an industry, or the market as a whole. A
slower-growth or recessionary economic environment could have an adverse
effect on the prices of the various securities held by the Fund. Economies and
financial markets throughout the world are becoming increasingly
interconnected, which raises the likelihood that events or conditions in one
country or region will adversely affect markets or issuers in other countries or
regions.
•
Equity Securities Risk:
Investments in equity securities represent ownership in
a company that fluctuates in value with changes in the company’s financial
condition. Equity markets may experience significant volatility at times and may
fall sharply in response to adverse events. Certain segments of the equity market
may react differently than other segments and U.S. markets may react
differently than foreign markets. Individual equity prices also may experience
dramatic movements in price. Price movements may result from factors
affecting individual companies, sectors, or industries selected for the Fund’s
portfolio or the securities market as a whole, including periods of slower growth
or recessionary economic conditions, future expectations of poor economic
conditions, changes in political or social conditions, and lack of investor
confidence. In addition, individual equity interests may be adversely affected by
factors such as reduced sales, increased costs, or a negative outlook for the
future performance of the company. Equity securities have experienced
significantly more volatility in returns than fixed income securities over the long
term, although under certain market conditions fixed income securities may
have comparable or greater price volatility. As compared with preferred stock
and debt, common stock generally involves greater risk and has lower priority
when liquidation, bankruptcy, and dividend payments are made. Preferred stock
may be subordinated to bonds or other debt instruments in a company’s capital
structure and is typically less liquid than common stock. Because convertible
securities have certain features that are common to fixed-income securities and
may be exchanged for common stock, they are subject to the risks affecting both
equity and fixed income securities, including market, credit and interest rate
risk.
•
Industry and Sector Risk:
Although the Fund does not employ an industry or
sector focus, the percentage of the Fund’s assets invested in specific industries
or sectors will increase from time to time based on the portfolio management
PROSPECTUS – Affiliated Fund
16
team’s perception of investment opportunities. The Fund may be overweight in
certain industries and sectors at various times relative to its benchmark index. If
the Fund invests a significant portion of its assets in a particular industry or
sector, the Fund is subject to the risk that companies in the same industry or
sector are likely to react similarly to legislative or regulatory changes, adverse
market conditions, increased competition, or other factors generally affecting
that market segment. In such cases, the Fund would be exposed to an increased
risk that the value of its overall portfolio will decrease because of events that
disproportionately affect certain industries and/or sectors. The industries and
sectors in which the Fund may be overweighted will vary. Furthermore,
investments in particular industries or sectors may be more volatile than the
broader market as a whole, and the Fund’s investments in these industries and
sectors may be disproportionately susceptible to losses even if not
overweighted.
•
Dividend Risk:
Depending on market conditions, securities of dividend-paying
companies that meet the Fund’s investment criteria may not be widely available.
At times, the performance of dividend-paying companies may lag the
performance of other companies or the broader market as a whole. In addition,
the dividend payments of the Fund’s portfolio companies may vary over time,
and there is no guarantee that a company will pay a dividend at all. The
reduction or elimination of dividends in the stock market as a whole may limit
the Fund’s ability to produce current income. If dividend-paying companies are
highly concentrated in only a few market sectors, then the Fund’s portfolio may
become less diversified, and the Fund’s return may become more volatile.
•
Large Company Risk:
Larger, more established companies may be less able to
respond quickly to certain market developments. In addition, larger companies
may have slower rates of growth as compared to successful, but less well-
established, smaller companies, especially during market cycles corresponding
to periods of economic expansion. Large companies also may fall out of favor
relative to smaller companies in certain market cycles, causing the Fund to incur
losses or underperform.
•
Mid-Sized Company Risk:
Investments in mid-sized companies may involve
greater risks than investments in larger, more established companies. As
compared to larger companies, mid-sized companies may have limited
management experience or depth, limited ability to generate or borrow capital
needed for growth, and limited products or services, or operate in less
established markets. Accordingly, securities of mid-sized companies tend to be
more sensitive to changing economic, market, and industry conditions and tend
to be more volatile and less liquid than equity securities of larger companies,
especially over the short term. The securities of mid-sized companies tend to
trade less frequently than those of larger, more established companies, which
can adversely affect the pricing of these securities and the ability to sell these
securities in the future. Mid-sized companies also may fall out of favor relative
PROSPECTUS – Affiliated Fund
17
to larger companies in certain market cycles, causing the Fund to incur losses or
underperform.
•
Foreign and Emerging Market Company Risk:
Investments in foreign
(including emerging market) companies and in U.S. companies with economic
ties to foreign markets generally involve special risks that can increase the
likelihood that the Fund will lose money. For example, as compared with
companies organized and operated in the U.S., these companies may be more
vulnerable to economic, political, and social instability and subject to less
government supervision, lack of transparency, inadequate regulatory and
accounting standards, and foreign taxes. In addition, the securities of foreign
companies also may be subject to inadequate exchange control regulations
(including limitations on currency movements and exchanges), the imposition of
economic sanctions or threat thereof or other government restrictions, higher
transaction and other costs, and delays in settlement to the extent they are traded
on non-U.S. exchanges or markets. Investments in foreign companies also may
be adversely affected by governmental actions such as the nationalization of
companies or industries, expropriation of assets, or confiscatory taxation.
Foreign company securities also include ADRs, GDRs, and other similar
depositary receipts. ADRs, GDRs, and other similar depositary receipts may be
less liquid than the underlying shares in their primary trading market.
Foreign company securities also may be subject to thin trading volumes and
reduced liquidity, which may lead to greater price fluctuation. A change in the
value of a foreign currency relative to the U.S. dollar will change the value of
securities held by the Fund that are denominated in that foreign currency,
including the value of any income distributions payable to the Fund as a holder
of such securities. Currency exchange rates may fluctuate significantly over
short periods of time for a number of reasons, including changes in interest rates
and the overall economic health of the issuer. Devaluation of a currency by a
country’s government or banking authority also will have an adverse impact on
the U.S. dollar value of any investments denominated in that currency. These
and other factors can materially adversely affect the prices of securities the Fund
holds, impair the Fund’s ability to buy or sell securities at their desired price or
time, or otherwise adversely affect the Fund’s operations. The Fund may invest
in securities of issuers, including emerging market issuers, whose economic
fortunes are linked to non-U.S. markets, but which principally are traded on a
U.S. securities market or exchange and denominated in U.S. dollars. To the
extent the Fund invests in this manner, the percentage of the Fund’s assets that
is exposed to the risks associated with foreign companies may exceed the
percentage of the Fund’s assets that is invested in foreign securities that are
principally traded outside of the U.S.
The Fund’s investments in emerging market companies generally are subject to
heightened risks compared to its investments in developed market companies.
Investments with economic exposure to emerging markets may be considered
speculative and generally are riskier than investments in more developed
PROSPECTUS – Affiliated Fund
18
markets because such markets tend to develop unevenly and may never fully
develop. Emerging markets are more likely to experience hyperinflation and
currency devaluations. Securities of emerging market companies may have far
lower trading volumes, tend to be less liquid, be subject to greater price
volatility, have a smaller market capitalization, have less government regulation
and may not be subject to as extensive and frequent accounting, financial and
other reporting requirements as securities issued in more developed countries.
Further, investing in the securities of issuers with economic exposure to
emerging countries may present a greater risk of loss resulting from problems in
security registration and custody, substantial economic or political disruptions,
terrorism, armed conflicts and other geopolitical events, and the impact of tariffs
and other restrictions on trade or economic sanctions. Geopolitical events such
as nationalization or expropriation could even cause the loss of the Fund’s entire
investment in one or more country. In addition, infectious illness outbreaks,
epidemics or pandemics may exacerbate pre-existing problems in emerging
market countries with less established health care systems. In certain emerging
market countries, governments participate to a significant degree, through
ownership or regulation, in their respective economies. Action by these
governments could have a significant adverse effect on market prices of
securities and payment of dividends. The Fund may invest in securities of
companies whose economic fortunes are linked to emerging markets but which
principally are traded on a non-emerging market exchange. Such investments do
not meet the Fund’s definition of an emerging market security. To the extent the
Fund invests in this manner, the percentage of the Fund’s portfolio that is
exposed to emerging market risks may be greater than the percentage of the
Fund’s assets that the Fund defines as representing emerging market securities.
•
Foreign Currency Risk:
Investments in securities that are denominated or
receiving revenues in foreign currencies are subject to the risk that those
currencies will decline in value relative to the U.S. dollar, or, in the case of
hedged positions, that the U.S. dollar will decline in value relative to the
currency being hedged. Foreign currency exchange rates may fluctuate
significantly over short periods of time. A decline in the value of foreign
currencies relative to the U.S. dollar will reduce the value of securities that are
denominated in those currencies. The Fund may engage in foreign currency
hedging transactions to attempt to protect the Fund from adverse currency
movements. Such transactions include the risk that Lord Abbett will not
accurately predict currency movements. As a result, the Fund may experience
significant losses or see its return reduced. Also, it may be difficult or
impractical to hedge currency risk in many developing or emerging markets.
The risks associated with exposure to emerging market currencies may be
heightened in comparison to those associated with exposure to developed
market currencies.
•
Real Estate Risk:
An investment in a REIT generally is subject to the risks that
impact the value of the underlying properties or mortgages of the REIT. These
PROSPECTUS – Affiliated Fund
19
risks include loss to casualty or condemnation, and changes in supply and
demand, interest rates, zoning laws, regulatory limitations on rents, property
taxes and operating expenses. Other factors that may adversely affect REITs
include poor performance by management of the REIT, extended vacancies,
failure to collect rents, the ability of the company to finance property purchases
and renovations, changes to the tax laws, failure by the REIT to qualify for
favorable tax treatment under the Code, and changes in local, regional, or
general economic conditions. REITs also are subject to default or prepayments
by borrowers and self-liquidation, and are heavily dependent on cash flow.
Some REITs lack diversification because they invest in a limited number of
properties, a narrow geographic area, or a single type of property. Mortgage
REITs may be impacted by the quality of the credit extended. REITs may be
more volatile and/or more illiquid than other types of equity securities. In
addition, the Fund’s shareholders will indirectly bear their proportionate share
of the REIT’s fees and expenses, as well as their proportionate share of the
Fund’s fees and expenses.
•
Liquidity/Redemption Risk:
The Fund may lose money when selling securities
at inopportune times to fulfill shareholder redemption requests. The risk of loss
may increase depending on the size and frequency of redemption requests,
whether the redemption requests occur in times of overall market turmoil or
declining prices, and whether the securities the Fund intends to sell have
decreased in value or are illiquid. The Fund may be less able to sell illiquid
securities at its desired time or price. It may be more difficult for the Fund to
value its investments in illiquid securities than more liquid securities. Illiquidity
can occur quickly and be caused by a variety of factors, including economic
conditions, market events, events relating to the issuer of the securities, a drop in
overall market trading volume, an inability to find a ready buyer, or legal
restrictions on the securities’ resale. Certain securities that are liquid when
purchased may later become illiquid, particularly in times of overall economic
distress or due to geopolitical events such as sanctions, trading halts, or wars.
Liquidity risk may be magnified in circumstances where investor redemptions
from the mutual funds may be higher than normal, causing increased supply in
the market due to selling activity. In 2022, the SEC proposed amendments to
Rule 22e-4 under the Investment Company Act of 1940, as amended (the “1940
Act”) and Rule 22c-1 under the 1940 Act, that, if adopted, would, among other
things, cause more investments to be treated as illiquid, and could prevent the
Fund from investing in securities that Lord Abbett believes are appropriate or
desirable.
•
Inflation/Deflation Risk:
Inflation risk is the risk that the value of assets or
income from investments will be worth less in the future. Inflation rates may
change frequently and drastically as a result of various factors and the Fund’s
investments may not keep pace with inflation, which may result in losses to
Fund investors or adversely affect the real value of shareholders’ investments in
the Fund. During periods of inflation, fixed income securities markets may
PROSPECTUS – Affiliated Fund
20
experience heightened levels of interest rate volatility and liquidity risk.
Deflation risk is the risk that the prices of goods or services throughout the
economy decline over time - the opposite of inflation. Deflation may have an
adverse effect on the creditworthiness of issuers and may make issuer default
more likely, which may result in a decline in the value of the Fund’s portfolio.
ADDITIONAL INFORMATION ABOUT INVESTMENT AND
OPERATIONAL RISKS
In addition to the principal investment risks described above, the Fund may also be
subject to other investment and operational risks, including:
•
Cyber Security Risk:
As the use of technology has become more prevalent in
the course of business, Lord Abbett and other service providers have become
more susceptible to operational and information security risks. Cyber incidents
can result from deliberate attacks or unintentional events and include, but are
not limited to, gaining unauthorized access to electronic systems for purposes of
misappropriating assets, personally identifiable information (“PII”) or
proprietary information (
e.g.
, trading models and algorithms), corrupting data,
or causing operational disruption, for example, by compromising trading
systems or accounting platforms. Other ways in which the business operations
of Lord Abbett, other service providers, or issuers of securities in which Lord
Abbett invests a shareholder’s assets may be impacted include interference with
a shareholder’s ability to value its portfolio, the unauthorized release of PII or
confidential information, and violations of applicable privacy, recordkeeping
and other laws. A shareholder and/or its account could be negatively impacted
as a result.
While Lord Abbett has established internal risk management security protocols
designed to identify, protect against, detect, respond to and recover from cyber
security incidents, there are inherent limitations in such protocols including the
possibility that certain threats and vulnerabilities have not been identified or
made public due to the evolving nature of cyber security threats. Furthermore,
Lord Abbett cannot control the cyber security systems of third-party service
providers or issuers. Any problems relating to the performance and effectiveness
of security procedures used by the Fund or its service providers to protect the
Fund’s assets, such as algorithms, codes, passwords, multiple signature systems,
encryption and telephone call-backs, may have an adverse impact on the Fund
or its investors. Furthermore, as the Fund’s assets grow, it may become a more
appealing target for cybersecurity threats such as hackers and malware.
Geopolitical tensions could increase the scale and sophistication of deliberate
cybersecurity attacks, particularly those from nation-states or from entities with
nation-state backing. There currently is no insurance policy available to cover
all of the potential risks associated with cyber incidents. Unless specifically
agreed by Lord Abbett separately or required by law, Lord Abbett is not a
guarantor against, or obligor for, any damages resulting from a cyber security-
related incident.
PROSPECTUS – Affiliated Fund
21
•
Artificial Intelligence Risk:
Lord Abbett may utilize AI in its business
operations, and the challenges with properly managing its use could result in
reputational harm, competitive harm, and legal liability, and/or an adverse effect
on Lord Abbett’s business operations. If the content, analyses, or
recommendations that AI applications assist Lord Abbett in producing are or are
alleged to be deficient, inaccurate, or biased, the Fund may be adversely
affected. Additionally, AI tools used by Lord Abbett may produce inaccurate,
misleading or incomplete responses that could lead to errors in Lord Abbett’s
and its employees’ decision-making, portfolio management or other business
activities, which could have a negative impact on the performance of the Fund.
Such AI tools could also be used against Lord Abbett or the Fund and its
investments in criminal or negligent ways. Lord Abbett’s competitors or other
third parties could incorporate AI into their products more quickly or more
successfully, which could impair Lord Abbett’s ability to compete effectively.
Legal and regulatory changes, particularly related to information privacy and
data protection, may have an impact on AI, and may additionally impact Lord
Abbett and the Fund.
•
Large Shareholder Risk:
To the extent a large number of shares of the Fund is
held by a single shareholder or group of related shareholders (
e.g.
, an
institutional investor, another Lord Abbett Fund or multiple accounts advised by
a common adviser) or a group of shareholders with a common investment
strategy, the Fund is subject to the risk that a redemption by those shareholders
of all or a large portion of their Fund shares will adversely affect the Fund’s
performance by forcing the Fund to sell portfolio securities, potentially at
disadvantageous prices, to raise the cash needed to satisfy the redemption
request. In addition, the funds and other accounts over which Lord Abbett has
investment discretion that invest in the Fund may not be limited in how often
they may purchase or sell Fund shares. Certain Lord Abbett Funds or accounts
may hold substantial percentages of the shares of the Fund, and asset allocation
decisions by Lord Abbett may result in substantial redemptions from (or
investments in) the Fund. These transactions may adversely affect the Fund’s
performance to the extent that the Fund is required to sell investments (or invest
cash) when it would not otherwise do so. Redemptions of a large number of
shares also may increase transaction costs or, by necessitating a sale of portfolio
securities, have adverse tax consequences for Fund shareholders. Additionally,
redemptions by a large shareholder also potentially limit the use of any capital
loss carryforwards and other losses to offset future realized capital gains (if any)
and may limit or prevent the Fund’s use of tax equalization.
•
Operational Risk:
The Fund also is subject to the risk of loss as a result of
other services provided by Lord Abbett and other service providers, including
pricing, administrative, accounting, tax, legal, custody, transfer agency, and
other services. Operational risk includes the possibility of loss caused by
inadequate procedures and controls, human error, and system failures by a
service provider, each of which may negatively affect the Fund’s performance.
PROSPECTUS – Affiliated Fund
22
For example, trading delays or errors could prevent the Fund from benefiting
from potential investment gains or avoiding losses. In addition, a service
provider may be unable to provide an NAV for the Fund or share class on a
timely basis. Similar types of operational risks also are present for issuers of
securities in which the Fund invests, which could result in material adverse
consequences for such issuers, and may cause the Fund’s investment in such
securities to lose value.
•
Business Continuity Risk:
Lord Abbett has developed a Business Continuity
Program (the “Program”) that is designed to minimize the disruption of normal
business operations in the event of an adverse incident impacting Lord Abbett,
its affiliates, or the Fund. While Lord Abbett believes that the Program should
enable it to reestablish normal business operations in a timely manner in the
event of an adverse incident, there are inherent limitations in such programs
(including the possibility that contingencies have not been anticipated and
procedures do not work as intended) and, under some circumstances, Lord
Abbett, its affiliates, and any vendors used by Lord Abbett, its affiliates, or the
Fund could be prevented or hindered from providing services to the Fund for
extended periods of time. These circumstances may include, without limitation,
acts of God, acts of governments, any act of declared or undeclared war or of a
public enemy (including acts of terrorism), power shortages or failures, utility or
communication failure or delays, labor disputes, strikes, shortages, supply
shortages, system failures or malfunctions. The Fund’s ability to recover any
losses or expenses it incurs as a result of a disruption of business operations may
be limited by the liability, standard of care, and related provisions in its
contractual arrangements with Lord Abbett and other service providers.
•
Market Disruption and Geopolitical Risk:
Geopolitical and other events (e.g.,
wars, terrorism, natural disasters, infectious illness outbreaks, epidemics or
pandemics) may disrupt securities markets and adversely affect global
economies and markets, thereby decreasing the value of the Fund’s investments.
Sudden or significant changes in the supply or prices of commodities or other
economic inputs may have material and unexpected effects on both global
securities markets and individual countries, regions, sectors, companies, or
industries, which could significantly reduce the value of the Fund’s investments.
Wars, terrorist attacks, natural disasters, infectious illness outbreaks, epidemics
or pandemics could result in unplanned or significant securities market closures
or declines. Securities markets also may be susceptible to market manipulation
or other fraudulent trading practices, which could disrupt the orderly functioning
of markets, increase overall market volatility, or reduce the value of investments
traded in them, including investments of the Fund. Instances of fraud and other
deceptive practices committed by senior management of certain companies in
which the Fund invests may undermine Lord Abbett’s due diligence efforts with
respect to such companies, and if such fraud is discovered, negatively affect the
value of the Fund’s investments. Financial fraud also may impact the rates or
indices underlying the Fund’s investments.
PROSPECTUS – Affiliated Fund
23
Raising the U.S. Government debt ceiling has become increasingly politicized.
Any failure to increase the total amount that the U.S. Government is authorized
to borrow could lead to a default on U.S. Government obligations. A default by
the U.S. Government would be highly disruptive to the U.S. and global
securities markets and could significantly reduce the value of the Fund’s
investments. Similarly, political events within the United States at times have
resulted, and may in the future result, in a shutdown of government services,
which could adversely affect the U.S. economy, decrease the value of many
Fund investments, and increase uncertainty in or impair the operation of the
U.S. or other securities markets.
On January 31, 2020, the United Kingdom (“UK”) left the European Union
(“EU”) (commonly known as “Brexit”). An agreement between the UK and the
EU governing their future trade relationship became effective on January 1,
2021, but critical aspects of the relationship remain unresolved and subject to
further negotiation and agreement. Brexit has resulted in volatility in European
and global markets and could have negative long-term impacts on financial
markets in the UK and throughout Europe. There is still considerable
uncertainty relating to the potential consequences of the exit, how the
negotiations for new trade agreements will be conducted, and whether the UK’s
exit will increase the likelihood of other countries also departing the EU. Any
further exits from the EU, or the possibility of such exits, or the abandonment of
the euro, the common currency of the EU, may cause additional market
disruption globally and introduce new legal and regulatory uncertainties.
Substantial government interventions (e.g., currency controls) also could
adversely affect the Fund. War, terrorism, economic uncertainty, and related
geopolitical events have led, and in the future may lead, to increased short-term
market volatility and may have adverse long-term effects on U.S. and world
economies and markets generally. Likewise, sanctions threatened or imposed by
jurisdictions, including the United States, against a country or entities or
individuals in another country (such as sanctions imposed against Russia,
Russian entities and Russian individuals in connection with Russia’s invasion of
Ukraine in 2022) may impair the value and liquidity of securities issued by
issuers in such country and may result in the Fund using fair valuation
procedures to value such securities. Even if the Fund does not have significant
investments in securities affected by sanctions, sanctions, or the threat of
sanctions (including any retaliatory responses to such sanctions), may cause
volatility in regional and global markets and may negatively impact the
performance of various sectors and industries, as well as companies in other
countries, including through global supply chain disruptions, increased
inflationary pressures and reduced economic activity, which could have a
negative effect on the performance of the Fund. Furthermore, if after investing
in the Fund an investor is included on a sanctions list, the Fund may be required
to cease any further dealings with the investor’s interest in the Fund until such
sanctions are lifted or a license is sought under applicable law to continue
PROSPECTUS – Affiliated Fund
24
dealings. Although Lord Abbett expends significant effort to comply with the
sanctions regimes in the countries where it operates, one of these rules could be
violated by Lord Abbett’s or the Fund's activities or investors, which would
adversely affect the Fund.
In addition, natural and environmental disasters, (e.g., earthquakes, tsunamis,
hurricanes), infectious illness outbreaks, epidemics or pandemics, and systemic
market dislocations such as those occurring in connection with the 2008 Global
Financial Crisis, have been highly disruptive to economies and markets,
adversely affecting individual companies and industries, securities markets,
interest rates, credit ratings, inflation, investor sentiment, and other factors
affecting the value of the Fund’s investments. During such market disruptions,
the Fund’s exposure to the risks described elsewhere in the “Principal Risks”
section of the prospectus will likely increase. Market disruptions and sudden
government interventions can also prevent the Fund from implementing its
investment strategies and achieving its investment objective. To the extent the
Fund has focused its investments in the stock index of a particular region,
adverse geopolitical and other events in that region could have a
disproportionate impact on the Fund.
Adverse developments that affect financial institutions or the financial services
industry generally, or concerns or rumors about any events of these kinds or
other similar risks, may reduce liquidity in the market generally or have other
adverse effects on the economy, the Fund or issuers in which the Fund invests.
In addition, issuers in which the Fund invests and the Fund may not be able to
identify all potential solvency or stress concerns with respect to a financial
institution or to transfer assets from one bank or financial institution to another
in a timely manner in the event such bank or financial institution comes under
stress or fails.
The impacts and effects of infectious illness outbreaks, epidemics or pandemics
(such as the COVID-19 outbreak), may be short term or may continue for an
extended period of time. For example, a global pandemic or other widespread
health crises could negatively affect the global economy, the economies of
individual countries, and the financial performance of individual issuers, sectors,
industries, asset classes, and markets in significant and unforeseen ways. Health
crises caused by outbreaks of disease may also exacerbate other pre-existing
political, social, and economic risks in certain countries or globally. The
foregoing could disrupt the operations of the Fund and its service providers,
adversely affect the value and liquidity of the Fund’s investments, and
negatively impact the Fund’s performance and your investment in the Fund.
Advancements in technology may also adversely impact markets and the overall
performance of the Fund. For instance, the economy may be significantly
impacted by the advanced development and increased regulation of technology.
As the use of technology grows, liquidity and market movements may be
affected. As technology is used more widely in the asset management industry,
PROSPECTUS – Affiliated Fund
25
the profitability and growth of Fund holdings may be impacted, which could
significantly impact the overall performance of the Fund.
•
Valuation Risk:
The valuation of the Fund’s investments involves subjective
judgment. There can be no assurance that the Fund will value its investments in
a manner that accurately reflects their current market values or that the Fund
will be able to sell any investment at a price equal to the valuation ascribed to
that investment for purposes of calculating the Fund’s NAV. Incorrect
valuations of the Fund’s portfolio holdings could result in the Fund’s
shareholder transactions being effected at an NAV that does not accurately
reflect the underlying value of the Fund’s portfolio, resulting in the dilution of
shareholder interests.
•
Sustainability Risk:
Sustainability risk refers to the impact that environmental,
social, and governance factors can have on the Fund’s performance. This impact
can vary in materiality, severity, and time horizon, potentially resulting in losses
to the Fund. The Fund may evaluate relevant sustainability factors alongside
other fundamental research inputs to attempt to gain a more complete
understanding of an issuer’s potential risk and return profile. Sustainability
factors may not be considered for every investment decision, and there is no
guarantee that consideration of these factors will enhance performance. To the
extent that sustainability factors are incorporated into the investment process,
the weight they are given will depend on the investment team’s assessment of
their financial materiality and relevance to the investment decision. The Fund
may hold investments with financially material sustainability risk. In evaluating
an investment, Lord Abbett may rely on information and data obtained through
voluntary or third-party reporting that may be incomplete, inaccurate or
unavailable, which could cause Lord Abbett to incorrectly assess sustainability
risks associated with an investment. As norms differ by industry and region and
the regulatory environment continues to evolve, an issuer’s sustainability
policies and Lord Abbett's assessment of them may change over time.
DISCLOSURE OF PORTFOLIO HOLDINGS
A description of the Fund's policies and procedures regarding the disclosure of the
Fund's portfolio holdings is available in the SAI. Further information is available at
www.lordabbett.com.
MANAGEMENT AND ORGANIZATION OF THE FUND
Board of Directors.
The Board oversees the management of the business and affairs
of the Fund. The Board appoints officers who are responsible for the day-to-day
operations of the Fund and who execute policies authorized by the Board. At least 75
percent of the Board members are not “interested persons” (as defined in the 1940
Act) of the Fund.
Investment Adviser.
Lord Abbett, which is located at 30 Hudson Street, Jersey
City, NJ 07302-4804, manages $221.5 billion in assets as of January 31, 2025. Lord