2. Good news during a recession:
stocks are on sale.
Recession—the very word causes confusion and uncertainty among
investors. Yet, since the 1950s, the market has weathered nine recessions,
but historically has recovered quickly, and has continued to grow over time.
So it’s important to keep recessions in historical perspective. Consider:
• What does it mean to be in a recession? A recession is generally
defined as a decline in gross domestic product (GDP) for two or more
consecutive quarters.
• How often do recessions occur? Since the 1950s, the U.S. has experienced
nine recessions, each lasting from six to 16 months.
• When will I know if we are in a recession? A recession is usually
announced months after it has already happened because economic
numbers take time to compile. The last recession in 2001 wasn’t announced
until six months after the market reached bottom.
• What should I do as an investor? Typically, recessions have generated
buying opportunities for investors. Often, this means investing when
prices have fallen—buying low is not easy, but can potentially be
very rewarding. We strongly recommend you consult your financial
advisor on the best strategy for you.
What follows is the performance of one of our
oldest mutual funds through nine recessions.
Investing involves risk, including the possible loss of principal. This material is provided for general and
educational purposes only, is not intended to provide legal, tax, or investment advice, and does not
account for individual investor circumstances. Investment decisions should always be made based on
an investor’s specific financial needs, objectives, goals, time horizon, and risk tolerance. Consult with
your financial advisor before making any investment decisions.
NOT FDIC INSURED–NO BANK GUARANTEE–MAY LOSE VALUE
3. Lord Abbett Affiliated Fund—
Performance through Nine Recessions *
As one of the oldest mutual funds in the United States, Lord Abbett Affiliated Fund has weathered every market cycle since 1934,
posting one-year double-digit gains on the heels of eight of the past nine recessions. Investors who stayed invested in the Fund
through these challenging market conditions were positioned to take advantage of the gains when the market recovered.
$10,000,000
$5,000,000
$1,000,000
$500,000
Recession start: April 1960
1960
$100,000
Duration: 8 months
Recession start: Aug. 1957
1957 Market bottom: Oct. 1960
Recession start: July 1953 Duration: 8 months
1953
Duration: 10 months Market bottom: Oct. 1957
$50,000
Returns from market bottom:
Market bottom: Sept. 1953
After 1 year: 34.20%
Returns from market bottom:
$10,000 investment after 10 years: $21,619
Returns from market bottom: After 1 year: 36.21%
Average annual return for 10-year period: 8.01%
$10,000 investment after 10 years: $35,161
After 1 year: 27.28%
Average annual return for 10-year period: 13.40%
$10,000 investment after 10 years: $37,983
Average annual return for 10-year period: 14.28%
$10,000
$5,000
’50 ’51 ’52 ’53 ’54 ’55 ’56 ’57 ’58 ’59 ’60 ’61 ’62 ’63 ’64 ’65 ’66
01/01/50 Inception1
Calendar year ended Dec. 31
DIVIDENDS
579 646 708 728 808 887 970 1,053 1,137 1,164 1,374 1,420 1,586 1,714 1,989 2,299 2,284
TOTAL VALUE
REINVEST ED
VA L U E AT 2
12,281 14,404 16,396 16,710 22,072 24,825 26,114 26,054 37,466 42,301 44,773 56,263 51,758 61,631 71,901 80,842 75,901
YEA R-END
TOTAL
22.87% 17.29% 13.84% 1.91% 32.09% 12.47% 5.19% -0.23% 43.80% 12.90% 5.84% 25.66% -8.01% 19.08% 16.66% 12.44% -6.11%
RET U RNS
* Performance of the Lord Abbett Affiliated Fund is measured beginning with the first trading day of the month following the market low.
All performance is calculated at net asset value and includes reinvestment of all distributions.
Peak and trough dates are from NBER (National Bureau of Economic Research) Website.
Market bottom dates are from Ned Davis Research.
LORD ABBETT AFFILIATED FUND
AVERAGE ANNUAL TOTAL RETURNS OF CLASS A SHARES WITH 5.75% MAXIMUM SALES
CHARGE AS OF 09/30/08 AND INCLUDING THE REINVESTMENT OF ALL DISTRIBUTIONS:
1 YEAR: -28.06% 5 YEARS: 3.78% 10 YEARS: 5.03%
EXPENSE RATIO: 0.81% (GROSS); N/A (NET)
Sharp market fluctuations can materially change the character of a mutual fund’s track record.
4. In any period of market volatility, when peaks and valleys are $10,000 investment (with dividends reinvested) in the
evident, investors must evaluate their circumstances and risk Lord Abbett Affiliated Fund during various market cycles
tolerance. While investors can enjoy the benefits of gains in from 01/01/50–12/31/07.
their portfolios, they must also understand that they can suffer Of course, past performance is no guarantee of future results,
losses when the market goes the other way. and there is no guarantee that the Fund will perform in a similar
The chart below shows the results of a hypothetical manner under similar circumstances in the future.
Recession start: Jan. 1980
1980
Duration: 6 months
1974
Recession start: Nov. 1973
Market bottom: March 1980
Duration: 16 months
1970
Recession start: Dec. 1969
Market bottom: Oct. 1974
Duration: 11 months Returns from market bottom:
Market bottom: May 1970
Returns from market bottom: After 1 year: 40.18%
$10,000 investment after 10 years: $48,437
Returns from market bottom: After 1 year: 29.92%
Average annual return for 10-year period: 17.09%
$10,000 investment after 10 years: $44,716
After 1 year: 33.44%
Average annual return for 10-year period: 16.16%
$10,000 investment after 10 years: $28,882
Average annual return for 10-year period: 11.19%
’67 ’68 ’69 ’70 ’71 ’72 ’73 ’74 ’75 ’76 ’77 ’78 ’79 ’80 ’81 ’82 ’83 ’84 ’85 ’86 ’87
3,133 3,509 3,910 4,156 4,304 4,494 4,983 5,701 6,446 6,878 8,036 9,083 11,564 14,691 18,464 21,076 21,715 25,416 30,037 33,806 42,050
93,979 111,491 95,009 97,629 106,392 119,793 112,926 94,887 134,573 181,223 169,146 175,437 226,956 282,491 283,420 351,358 441,070 471,204 597,816 734,990 758,454
23.82% 18.63% -14.78% 2.76% 8.98% 12.60% -5.73% -15.97% 41.83% 34.66% -6.66% 3.72% 29.37% 24.47% 0.33% 23.97% 25.53% 6.83% 26.87% 22.95% 3.19%
Performance data quoted above are historical. Past performance is no guarantee Initial investment of $10,000 occurred on 01/01/50 when Affiliated Fund adopted its current investment
1
philosophy. The Fund commenced operations on 05/14/34.
of future results. Current performance may be higher or lower than the performance
Total value figure represents total account value, assuming the reinvestment of dividends and capital
2
data quoted. The investment return and principal value of an investment in the
gains distributions.
Fund will fluctuate so that shares, on any given day or when redeemed, may be Time magazine illustrations used with permission.
worth more or less than their original cost. You can obtain performance data
A Note about Risk: The value of investments in equity securities will
current to the most recent month-end by calling Lord Abbett at 888-522-2388 or
fluctuate in response to general economic conditions and to changes in
referring to our Website at www.lordabbett.com.
the prospects of particular companies and/or sectors in the economy.
These factors can affect Fund performance.
5. $6,848,868
Recession start: March 2001
2001
Duration: 8 months
Market bottom: Sept. 2001
Recession start: July 1990
1990
Duration: 8 months Returns from market bottom:
Recession start: July 1981
1982 Market bottom: Oct. 1990
After 1 year: -17.28%
Duration: 16 months
$10,000 investment worth today: $16,916**
Returns from market bottom:
Market bottom: Aug. 1982
Average annual return: 8.78%**
After 1 year: 28.00%
Returns from market bottom: $10,000 investment after 10 years: $50,774 ** 09/30/01–12/31/07.
Average annual return for 10-year period: 17.64%
After 1 year: 41.67%
$10,000 investment after 10 years: $43,433
Average annual return for 10-year period: 15.82%
’88 ’89 ’90 ’91 ’92 ’93 ’94 ’95 ’96 ’97 ’98 ’99 ’00 ’01 ’02 ’03 ’04 ‘05 ’06 ’07
41,821 44,714 44,394 45,695 48,171 44,997 46,911 49,807 56,292 62,380 55,828 60,886 68,835 76,021 68,771 70,562 71,838 74,639 81,071 91,035
855,621 1,056,961 1,001,679 1,222,061 1,373,511 1,554,986 1,618,110 2,131,046 2,558,324 3,202,027 3,663,632 4,282,020 4,934,626 4,542,668 3,688,985 4,828,520 5,436,783 5,617,857 6,606,904 6,848,868
12.81% 23.53% -5.23% 22.00% 12.39% 13.21% 4.06% 31.70% 20.05% 25.16% 14.42% 16.88% 15.24% -7.94% -18.79% 30.89% 12.60% 3.33% 17.61% 3.66%
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 AVERAGE ANNUAL TOTAL RETURN AT NET ASSET
1% if the shares are redeemed before the first day of the month in which the one-year anniversary of the purchase
VALUE OVER THIS PERIOD: 11.92%
falls. Please see the prospectus for more information on redemptions that may be subject to a CDSC. The CDSC is
Average annual total return reflects the percent change in
not reflected in the average annual total returns. If the CDSC was included, returns would have been lower.
net asset value (NAV) of Class A shares and includes the
Sources: Lipper, Inc. and Ibbotson.
reinvestment of all distributions.
