Lord Abbett Multi-Asset Balanced Opportunity Fund

 

For the fiscal year ended November 30, 2022, the Fund returned -12.00%, reflecting performance at the net asset value (“NAV”) of Class A shares, with all distributions reinvested, compared to its benchmark, the Russell 1000^® Index¹, which returned -10.66% over the same period.

U.S. markets faced many challenges throughout the twelve-month period ending November 30, 2022, including the spread of the Omicron variant of COVID-19, supply chain dislocations, labor shortages, inflationary pressures, tighter fiscal and monetary policy, and Russia’s invasion of Ukraine. The Dow Jones Industrial Average was up 2.48% and the S&P 500^® Index fell -9.21%, while the tech-heavy Nasdaq Composite lost

-25.59%. Value stocks² significantly outperformed growth stocks³ (1.95% vs -21.59%), while large cap stocks⁴ outperformed small cap stocks⁵ (-10.66% vs -13.01%).

Within fixed income, rates spiked across the U.S. yield curve, causing softness in U.S. Treasuries⁶, which returned -12.46%. Investment grade corporate bonds⁷ also exhibited poor performance, returning -12.32% over the period as a combination of wider spreads and rising rates were both headwinds for the asset class. Although several macro headwinds led to increased recessionary fears in the U.S. economy, lower quality assets outperformed their higher quality counterparts given their more limited sensitivity to rate volatility. High yield bonds⁸ and leveraged loans⁹ returned -8.82% and -0.79%, respectively, over the period, outperforming investment grade corporates.

In November 2021, just prior to the start of the period, the World Health Organization designated the newly discovered Omicron variant as a “variant of concern”, leading to one of the largest selloffs of U.S. risk assets since the start of the pandemic, amid fears that the world would succumb to a new wave of infections. U.S. cases hit the highest levels of the pandemic in December, rising above 580,000 new cases in the last week of the month, more than doubling the previous record high. Yet, negative sentiment quickly reversed as cases proved to be

generally less severe than prior strains. Market sentiment also increased after the Center for Disease Control shortened its suggested isolation policy for those infected from 10 days to five.

Inflationary concerns began to take focus towards the end of 2021 and became a dominant story throughout the period. Headline consumer price index (CPI) readings had hovered a little above 5% year-over-year for most of 2021, which led investors to question whether this period of rising prices would be more persistent than originally thought. This debate was intensified by November’s headline consumer price index rising 6.8% year-over-year, the fastest pace since 1982. The sharp increase in prices was generally due to supply and demand imbalances across multiple industries, led initially by energy, food, and used cars. Inflation readings continued to climb throughout the first half of 2022, peaking at 9.1% year-over-year in June.

Energy costs were the primary driver of inflation for the period, rising more than 30% year-over-year by the end of June. The energy sector, which had been subject to rising consumer demand as global economies reopened from lockdowns induced by COVID-19, faced added friction with Russia’s invasion of Ukraine. Investors were concerned about the secondary effects of the war, particularly from a commodity and supply chain standpoint. Russia has been a large exporter of oil and certain minerals, and the various sanctions

set on Russia from Western nations led to a surge in commodity prices, with crude oil reaching over $100 per barrel for the first time since 2014.

The surge in prices forced the U.S. Federal Reserve (Fed) into a more aggressive approach to combating inflation. After remaining mostly consistent in its messaging that price pressures would likely be transitory, elevated and more persistent inflation pressures caused the Fed to move the target federal funds rate into more restrictive territory. This resulted in a 25-basis point (bps) hike in the federal funds rate at the March Federal Open Market Committee meeting, the first hike in more than three years. Five additional rate hikes of 50 bps, 75 bps, 75 bps, 75 bps, and 75 bps, respectively, followed in the succeeding months as inflation prints continued to come in hotter than expected, resulting in a federal funds rate of 4.00% by November 2, 2022. Bond yields shot up in response to this aggressive policy, leading to a bearish curve flattening and ultimately a yield curve inversion, as shorter-term yields moved higher than longer-term yields.

Separately, global markets faced increased geopolitical tensions due to Russia’s invasion of Ukraine on February 23^rd. Tensions remained elevated for the remainder of the twelve-month period, as Russia continued to weaponize energy flows, annexed four Ukrainian regions, and ratcheted up its nuclear warnings. In addition, the rhetoric between the U.S. and China over Taiwan further heated up after

U.S. House of Representatives Speaker Nancy Pelosi visited Taiwan in August. China responded to the trip with large-scale military drills, which led to a pledge by U.S. President Joe Biden to defend the democratically governed island.

Key macroeconomic indicators mostly trended lower throughout the period, with the U.S. reporting negative gross domestic product of -1.6% in the first quarter of 2022 and -0.9% in the second quarter before returning to growth in the third quarter. Worries among investors that a recession was pending continued to grow, leading to a decline in consumer sentiment to lower levels than during the height of the COVID-19 pandemic and the global financial crisis of 2008 as measured by the consumer confidence index.

Despite rising recessionary signs, select bright spots in the U.S. economy supported the idea that a potential recession would be shallow. For example, one positive development was the peak inflation narrative, which included a 99 day stretch of declines in U.S. gasoline prices and October CPI coming in better than expected on both the headline and core numbers. In addition, apartment rents fell for the first time in nearly two years in July, and lumber prices declined by more than 70% from their March peak late in the third quarter, falling back to pre-COVID levels. The second quarter of 2022 earnings season also generated a lot of “better-than-feared” takeaways, including a common theme of relatively stable demand and pricing power

protecting margins. Third-quarter earnings were slightly below expectations but provided evidence of healthy consumer spending. Capital return and capital expenditures were also mentioned as relative bright spots as companies flagged easing labor shortages and supply chain constraints. The U.S. labor market also remained strong over the period, with the national unemployment rate at 3.7% as of the end of November.

The Fund is a “fund of funds” that invests in affiliated mutual funds managed by Lord Abbett. Under normal conditions, through the underlying funds, the Fund indirectly invests in U.S. equity securities across all market capitalization ranges and all investment styles, fixed income securities of various types, and select foreign (including emerging market) securities. The Fund tactically allocates its assets among these asset classes in response to market conditions or to seek to capitalize on investment opportunities.

Over the 12-month period ending November 30, 2022, the Fund’s allocation to domestic mid- and large-cap growth stocks within the Lord Abbett Growth Leaders Fund and the Lord Abbett Growth Opportunities Fund was the largest detractor from relative performance over the period. As a result of supply chain dislocations, labor shortages, inflationary pressures, tighter fiscal and monetary policy, and the war in Ukraine, high innovation small and midcap companies,

particularly those aggressively reinvesting in research and development to drive future revenues and earnings, underperformed lower growth, lower valuation names within the index during the period as the market has largely expressed a technical preference for companies with positive earnings today, compared to larger growth potential in the future.

The Fund’s allocation to high quality fixed income securities within the Lord Abbett Core Fixed Income Fund was also a notable detractor from relative performance over the period as rising interest rates caused longer duration securities to struggle relative to large cap stocks.

The Fund’s weightings in domestic mid- and large-cap value stocks within the Lord Abbett Fundamental Equity Fund, the Lord Abbett Focused Large Cap Value Fund, and the Lord Abbett Mid Cap Stock Fund were the largest contributors to relative performance. As mentioned above, given the macro environment, investors largely expressed a technical preference for companies with positive earnings today – which served as a tailwind for value-oriented sectors of the U.S. equity market.

The Fund’s allocation to inflation-linked derivatives, bank loans, and other short maturity fixed income securities within the Lord Abbett Floating Rate Fund, the Lord Abbett Inflation Focused Fund, and the Lord Abbett Short Duration Income Fund was also a notable contributor to

relative performance as red-hot inflation readings, rising interest rates, and a hawkish Fed stance drove demand for inflation-protected securities and securities with floating rate coupons, as well as securities with shorter maturities.

 

Lord Abbett Multi-Asset Income Fund

 

For the fiscal year ended November 30, 2022, the Fund returned -11.23%, reflecting performance at the net asset value (“NAV”) of Class A shares with all distributions reinvested, compared to its benchmark, the Bloomberg U.S. Aggregate Bond Index¹⁰, which returned -12.84% over the same period.

U.S. markets faced many challenges throughout the twelve-month period ending November 30, 2022, including the spread of the Omicron variant of COVID-19, supply chain dislocations, labor shortages, inflationary pressures, tighter fiscal and monetary policy, and Russia’s invasion of Ukraine. The Dow Jones Industrial Average was up 2.48% and the S&P 500^® Index fell -9.21%, while the tech-heavy Nasdaq Composite lost -25.59%. Value stocks² significantly outperformed growth stocks³ (1.95% vs -21.59%), while large cap stocks⁴ outperformed small cap stocks⁵ (-10.66% vs -13.01%).

Within fixed income, rates spiked across the U.S. yield curve, causing softness in U.S. Treasuries⁶, which returned -12.46%. Investment grade

corporate bonds⁷ also exhibited poor performance, returning -12.32% over the period as a combination of wider spreads and rising rates were both headwinds for the asset class. Although several macro headwinds led to increased recessionary fears in the U.S. economy, lower quality assets outperformed their higher quality counterparts given their more limited sensitivity to rate volatility. High yield bonds⁸ and leveraged loans⁹ returned -8.82% and -0.79%, respectively, over the period, outperforming investment grade corporates.

In November 2021, just prior to the start of the period, the World Health Organization designated the newly discovered Omicron variant as a “variant of concern”, leading to one of the largest selloffs of U.S. risk assets since the start of the pandemic, amid fears that the world would succumb to a new wave of infections. U.S. cases hit the highest levels of the pandemic in December, rising above 580,000 new cases in the last week of the month, more than doubling the previous record high. Yet, negative sentiment quickly reversed as cases proved to be generally less severe than prior strains. Market sentiment also increased after the Center for Disease Control shortened its suggested isolation policy for those infected from 10 days to five.

Inflationary concerns began to take focus towards the end of 2021 and became a dominant story throughout the period.

Headline consumer price index (CPI) readings had hovered a little above 5% year-over-year for most of 2021, which led investors to question whether this period of rising prices would be more persistent than originally thought. This debate was intensified by November’s headline consumer price index rising 6.8% year-over-year, the fastest pace since 1982. The sharp increase in prices was generally due to supply and demand imbalances across multiple industries, led initially by energy, food, and used cars. Inflation readings continued to climb throughout the first half of 2022, peaking at 9.1% year-over-year in June.

Energy costs were the primary driver of inflation for the period, rising more than 30% year-over-year by the end of June. The energy sector, which had been subject to rising consumer demand as global economies reopened from lockdowns induced by COVID-19, faced added friction with Russia’s invasion of Ukraine. Investors were concerned about the secondary effects of the war, particularly from a commodity and supply chain standpoint. Russia has been a large exporter of oil and certain minerals, and the various sanctions set on Russia from Western nations led to a surge in commodity prices, with crude oil reaching over $100 per barrel for the first time since 2014.

The surge in prices forced the U.S. Federal Reserve (Fed) into a more aggressive approach to combating inflation. After remaining mostly consistent in its messaging that price pressures would likely

be transitory, elevated and more persistent inflation pressures caused the Fed to move the target federal funds rate into more restrictive territory. This resulted in a 25-basis point (bps) hike in the federal funds rate at the March Federal Open Market Committee meeting, the first hike in more than three years. Five additional rate hikes of 50 bps, 75 bps, 75 bps, 75 bps, and 75 bps, respectively, followed in the succeeding months as inflation prints continued to come in hotter than expected, resulting in a federal funds rate of 4.00% by November 2, 2022. Bond yields shot up in response to this aggressive policy, leading to a bearish curve flattening and ultimately a yield curve inversion, as shorter-term yields moved higher than longer-term yields.

Separately, global markets faced increased geopolitical tensions due to Russia’s invasion of Ukraine on February 23^rd. Tensions remained elevated for the remainder of the twelve-month period, as Russia continued to weaponize energy flows, annexed four Ukrainian regions, and ratcheted up its nuclear warnings. In addition, the rhetoric between the U.S. and China over Taiwan further heated up after U.S. House of Representatives Speaker Nancy Pelosi visited Taiwan in August. China responded to the trip with large-scale military drills, which led to a pledge by U.S. President Joe Biden to defend the democratically governed island.

Key macroeconomic indicators mostly trended lower throughout the period, with the U.S. reporting negative gross domestic product of -1.6% in the first quarter of 2022 and -0.9% in the second quarter before returning to growth in the third quarter. Worries among investors that a recession was pending continued to grow, leading to a decline in consumer sentiment to lower levels than during the height of the COVID-19 pandemic and the global financial crisis of 2008 as measured by the consumer confidence index.

Despite rising recessionary signs, select bright spots in the U.S. economy supported the idea that a potential recession would be shallow. For example, one positive development was the peak inflation narrative, which included a 99 day stretch of declines in U.S. gasoline prices and October CPI coming in better than expected on both the headline and core numbers. In addition, apartment rents fell for the first time in nearly two years in July, and lumber prices declined by more than 70% from their March peak late in the third quarter, falling back to pre-COVID levels. The second quarter of 2022 earnings season also generated a lot of “better-than-feared” takeaways, including a common theme of relatively stable demand and pricing power protecting margins. Third-quarter earnings were slightly below expectations but provided evidence of healthy consumer spending.

Capital return and capital expenditures were also mentioned as relative bright spots as companies flagged easing labor shortages and supply chain constraints. The U.S. labor market also remained strong over the period, with the national unemployment rate at 3.7% as of the end of November.

The Fund is a “fund of funds” that invests in affiliated mutual funds managed by Lord Abbett. Under normal conditions, through the underlying funds, the Fund indirectly invests in fixed income securities of various types, select U.S. equity securities across all market capitalization ranges and all investment styles, and foreign (including emerging market) securities. The Fund tactically allocates its assets among these asset classes in response to market conditions or to seek to capitalize on investment opportunities.

Over the 12-month period ending November 30, 2022, the Fund’s weightings in domestic mid- and large-cap value stocks within the Lord Abbett Fundamental Equity Fund, the Lord Abbett Focused Large Cap Value Fund, and the Lord Abbett Mid Cap Stock Fund were the largest contributors to relative performance, as value-oriented stocks were largely more resilient than longer-duration, high quality fixed income securities amid the rising interest rate environment.

The Fund’s allocation to inflation-linked derivatives and other short maturity fixed income securities within the Lord Abbett Inflation Focused Fund and the Lord Abbett Ultra Short Bond Fund was also a notable contributor to relative performance as red-hot inflation readings, rising interest rates, and a hawkish Fed stance drove demand for inflation-protected securities and shorter maturity securities.

The Fund’s allocation to U.S. mid- and large-cap growth stocks within the Lord Abbett Growth Leaders Fund and the Lord Abbett Growth Opportunities Fund was the largest detractor from

relative performance over the period. As a result of supply chain dislocations, labor shortages, inflationary pressures, less accommodative fiscal and monetary policy, and geopolitical tensions, growth-oriented sectors of the U.S. equity market largely underperformed high quality fixed income sectors during the period.

Each Fund’s portfolio is actively managed and, therefore, holdings and the weightings of a particular issuer or particular sector as a percentage of portfolio assets are subject to change. Sectors may include many industries.

¹  The Russell 1000^® Index measures the performance of the 1,000 largest companies in the Russell 3000^® Index, which represents approximately 92% of the total market capitalization of the Russell 3000^® Index.

²   As represented by the Russell 3000^® Value Index as of 11/30/2022.

³   As represented by the Russell 3000^® Growth Index as of 11/30/2022.

⁴   As represented by the Russell 1000^® Index as of 11/30/2022.

⁵   As represented by the Russell 2000^® Index as of 11/30/2022.

⁶  As represented by the U.S. Treasury component of the Bloomberg U.S. Government Index as of 11/30/2022.

⁷   As represented by the Bloomberg US Corp Investment Grade Index as of 11/30/2022.

⁸   As represented by the ICE BofA U.S. High Yield Constrained Index as of 11/30/2022.

⁹ As represented by the Credit Suisse Leveraged Loan Index as of 11/30/2022.

¹⁰ The Bloomberg U.S. Aggregate Bond Index is an index of U.S dollar-denominated, investment-grade U.S. government and corporate securities, and mortgage pass-through securities, and asset-backed securities. Indexes are unmanaged, do not reflect the

deduction of fees or expenses, and an investor cannot invest directly in an index.

 

Unless otherwise specified, indexes reflect total return, with all dividends reinvested. Indexes are unmanaged, do not reflect the deduction of fees or expenses, and are not available for direct investment.

 

Important Performance and Other Information

Performance data quoted in the following pages reflect past performance and are no guarantee of future results. Current performance may be higher or lower than the performance quoted. The investment return and principal value of an investment in the Funds will fluctuate so that shares, on any given day or when redeemed, may be worth more or less than their original cost. You can obtain performance data current to the most recent month end by calling Lord Abbett at 888-522-2388 or referring to www.lordabbett.com.

 

Except where noted, comparative Fund performance does not account for the deduction of sales charges and would be different if sales charges were included. Each Fund offers classes of shares with distinct pricing options. For a full description of the differences in pricing alternatives, please see each Fund’s prospectus.

During certain periods shown, expense waivers and reimbursements were in place. Without such waivers and expense reimbursements, the Funds’ returns would have been lower.

 

The annual commentary above discusses the views of the Funds’ management and various portfolio holdings of the Funds as of November 30, 2022. These views and portfolio holdings may have changed after this date. Information provided in the commentary is not a recommendation to buy or sell securities. Because the Funds’ portfolios are actively managed and may change significantly, the Funds may no longer own the securities described above or may

have otherwise changed their positions in the securities. For more recent information about the Funds’ portfolio holdings, please visit www.lordabbett.com.

 

A Note about Risk: See Notes to Financial Statements for a discussion of investment risks. For a more detailed discussion of the risks associated with each Fund, please see each Fund’s prospectus.

 

Mutual funds are not insured by the FDIC, are not deposits or other obligations of, or guaranteed by, banks, and are subject to investment risks including possible loss of principal amount invested.