LORD ABBETT TAXABLE FIXED INCOME STRATEGIES

Income Generating Solutions for an Uncertain Economic Environment

When investing in taxable fixed income, its important to choose sectors that are best suited to the economic environment. By diversifying among different classes of fixed income with lower correlations, investors can take advantage of opportunities to potentially generate income and reduce volatility. Lord Abbetts suite of taxable fixed-income offerings allows you to create combinations based on your view of economic conditions.

The Benefits of Diversification

Different classes of fixed income may perform better in certain economic environments. When the economic outlook remains uncertain, combining fixed-income sectors with lower correlations may provide the best opportunity for generating income while reducing volatility of returns.

DOUBLE DIP RECESSION

MUDDLE THROUGH ECONOMY

IMPROVING AND INFLATIONARY ECONOMY

SLOWER ECONOMIC GROWTH

FASTER ECONOMIC GROWTH

Many Bonds Act Differently from Treasuries

CORRELATION WITH TREASURY BONDS1 TREASURY BONDS1 TIPS2 BAA CORPORATE BONDS3 HIGH-YIELD BONDS4 CORRELATION WITH TREASURY BONDS1 CONVERTIBLE BONDS5 FLOATING RATE LOANS6 CPI SWAPS7 S&P 5008

1.00 0.64 0.48 -0.15

-0.22 -0.35 -0.49 -0.25

Source: Zephyr; March 1997 to December 2012. The chart is for illustrative purposes and does not reflect the performance of any Lord Abbett fund. Correlation, measured on a scale of -1.0 to +1.0, is the extent to which the values of two investments move in tandem with one another. A perfect positive correlation of +1.0 between two investments implies that as one security moves, either up or down, the other security will move in the same direction. Alternatively, a perfect negative correlation of -1.0 between two investments implies that they will move in opposite directions. Investments with a correlation of 0 implies that the movements of the two investments are not related but completely random.

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It is important to note that not all fixed-income sectors react the same way to economic and interest-rate changes. Bonds are affected by interest-rate movements. Bond prices and, likewise, a bond funds share price generally move in the opposite direction of interest rates. As the prices of bonds in a fund adjust to a rise in interest rates, a funds share price may decline. Investors should be aware of the special risks involved with investments in high-yield bonds and floating-rate loan funds. High-yield bond and floating-rate funds invest in lower-rated, higher-yielding instruments, which are subject to increased risk of default and can potentially result in loss of principal. Mortgage-backed securities are susceptible to prepayment risk. Changes in the financial strength of a bond issuer or in a bonds credit rating may affect its value. For this reason, it is essential to make sure the fixed-income allocation of your portfolio is well diversified. Please remember, past performance does not guarantee future results and diversification does not ensure a profit or protect against a loss.
Barclays U.S. Government Index, 2 Barclays U.S. Treasury: U.S. TIPS Index, 3 Barclays U.S. Corp Baa Index, 4 BofA Merrill Lynch U.S. High Yield Cash Pay Index, BofA Merrill Lynch All Convertibles All Qualities Index, 6 Credit Suisse Leveraged Loan Index, 7 Deutsche Bank Breakeven 5-year CPI Swaps, 8 S&P 500 Index. Indexes are unmanaged, and one cannot invest directly in an index.

NOT FDIC INSUREDNO BANK GUARANTEEMAY LOSE VALUE

FOR BROKER/DEALER USE ONLY. NOT TO BE USED WITH THE PUBLIC IN ORAL OR WRITTEN FORM.

Fixed-Income Combinations
Because opinions on the economy vary, so will the combinations that are most appropriate for your clients. Here are a few economic scenario suggestions using solutions from Lord Abbetts suite of taxable fixed-income mutual funds. Weve started with three options in a base case muddle through economy. It is important that you work with your clients to determine which fixed-income allocations would be most appropriate for their situation, based on their investment goals, risk tolerance level, and investment horizon.

Muddle Through Economy

FOR CLIENTS WHO THINK THE ECONOMY WILL CONTINUE TO MUDDLE ALONG
SHORT DURATION INCOME FUND CLASS A SYMBOL DIVIDEND YIELD (%) EFFECTIVE DURATION (YEARS) 30-DAY STANDARDIZED YIELD (%) LALDX 3.74 1.84 2.41 INCOME FUND LAGVX 4.82
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HIGH YIELD FUND LHYAX 7.43 5.21

10

EQUAL BLEND 5.33 4.08

5.20 3.60

6.69

Result: A diversified blend of short- and intermediate-term investment-grade bonds and high-yield securities that seeks to provide attractive income and total return. This combination may benefit from slow but positive economic growth, which would lead to a continued healthy environment for corporate credit. TWO COMBINATIONS FOR CLIENTS WHO BELIEVE THE ECONOMY WILL CONTINUE TO MUDDLE ALONG BUT ARE CONCERNED ABOUT RISING INTEREST RATES
INCOME FUND CLASS A SYMBOL DIVIDEND YIELD (%) EFFECTIVE DURATION (YEARS) 30-DAY STANDARDIZED YIELD (%) LAGVX 4.82
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FLOATING RATE FUND LFRAX 5.61 0.25 5.39 FLOATING RATE FUND LFRAX 5.61 0.25 5.39

EQUAL BLEND

5.22 2.73 EQUAL BLEND

5.20 3.60 SHORT DURATION INCOME FUND

CLASS A SYMBOL DIVIDEND YIELD (%) EFFECTIVE DURATION (YEARS) 30-DAY STANDARDIZED YIELD (%)

LALDX 3.74 1.84 2.41

4.68 1.05

Result: Two strategies that seek attractive current income and protection from rising interest rates by combining a portfolio focused on investment-grade bonds with a portfolio of floating-rate securities. This blend also benefits from a positive environment for corporate credit, while reducing the allocation to high-yield bonds and lowering overall portfolio duration risk.

Data reflect Class A shares at NAV as of 12/31/2012. For latest yield and performance information, visit our website at www.lordabbett.com. The Funds dividend yield is shown without sales charges (at NAV). The Funds dividend yield takes into account any fee waiver or expense limitation arrangements, if any. Without such fee waivers or expense limitation arrangements, the Funds dividend yield would have been lower. Information regarding any fee waivers or expense limitation arrangements applicable to the Fund is provided with the Funds expense ratio information. The Funds unsubsidized dividend yield without sales charges (at NAV) is 4.73% and reflects what the yield would have been without the effect of fee waivers or expense limitation arrangements. 10  Modified Duration is the change in the value of a fixed-income security that will result from a 1% change in market interest rates. Duration is expressed as a number of years, and generally, the larger a portfolios duration, the greater the interest-rate risk or reward for underlying bond prices. Where applicable, securities, such as common or preferred stock, convertible bonds and convertible preferred stock, ETFs, and ADRs and futures, are excluded from these calculations.
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NOT FDIC INSUREDNO BANK GUARANTEEMAY LOSE VALUE

FOR BROKER/DEALER USE ONLY. NOT TO BE USED WITH THE PUBLIC IN ORAL OR WRITTEN FORM.

Double Dip Recession

FOR CLIENTS WHO BELIEVE THE ECONOMY WILL SUFFER ANOTHER DOWNTURN, LEADING TO A RECESSION
SHORT DURATION INCOME FUND CLASS A SYMBOL DIVIDEND YIELD (%) EFFECTIVE DURATION (YEARS) 30-DAY STANDARDIZED YIELD (%) LALDX 3.74 1.84 2.41 CORE FIXED INCOME FUND LCRAX 2.18 5.09 1.24 EQUAL BLEND

2.96 3.47

Result: This combination pairs a high-quality intermediate-term bond portfolio, which should benefit from the flight to quality in a risk off environment generally experienced in a recession, with a short-term bond strategy to provide attractive income while reducing overall portfolio duration.

Improving and Inflationary Economy

FOR CLIENTS WHO THINK THERE WILL BE AN IMPROVING ECONOMY WITH THE POTENTIAL FOR RISING INTEREST RATES AND HIGHER INFLATION
SHORT DURATION INCOME FUND CLASS A SYMBOL DIVIDEND YIELD (%) EFFECTIVE DURATION (YEARS) 30-DAY STANDARDIZED YIELD (%) LALDX 3.74 1.84 2.41 FLOATING RATE FUND LFRAX 5.61 0.25 5.39 INFLATION FOCUSED FUND LIFAX 3.5311 1.85 2.20 EQUAL BLEND 4.29 1.31

Result: A low-duration strategy with three components: a short-term portfolio that seeks to provide income and stability, a floating-rate loan portfolio to benefit from rising interest rates, and an inflation-linked strategy that seeks to protect purchasing power in an inflationary environment.

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Data reflect Class A shares at NAV as of 12/31/2012. For latest yield and performance information, visit our website at www.lordabbett.com. The Funds dividend yield is shown without sales charges (at NAV). The Funds dividend yield takes into account any fee waiver or expense limitation arrangements, if any. Without such fee waivers or expense limitation arrangements, the Funds dividend yield would have been lower. Information regarding any fee waivers or expense limitation arrangements applicable to the Fund is provided with the Funds expense ratio information. The Funds unsubsidized dividend yield without sales charges (at NAV) is 3.26% and reflects what the yield would have been without the effect of fee waivers or expense limitation arrangements. Past performance is no guarantee of future results. For additional performance information, please see the last page.

NOT FDIC INSUREDNO BANK GUARANTEEMAY LOSE VALUE

FOR BROKER/DEALER USE ONLY. NOT TO BE USED WITH THE PUBLIC IN ORAL OR WRITTEN FORM.

AVERAGE ANNUAL TOTAL RETURNS AT THE MAXIMUM 2.25% SALES CHARGE APPLICABLE TO CLASS A SHARE INVESTMENTS, AS OF 12/31/2012, INCLUDING THE REINVESTMENT OF ALL DISTRIBUTIONS:
EXPENSE RATIO 1 YEAR CORE FIXED INCOME FUND INFLATION FOCUSED FUND* FLOATING RATE FUND INCOME FUND HIGH YIELD FUND SHORT DURATION INCOME FUND 5 YEARS 10 YEARS GROSS NET

3.50% 7.43% 7.61% 9.81% 13.88% 4.34%

6.19% 4.22% 8.73% 9.12% 5.76%

5.07% 6.07% 8.99% 4.18%

0.86% 0.76% 0.81% 0.87% 0.96% 0.59%

N/A 0.75% N/A 0.78% N/A N/A

* Since inception (04/29/2011) average annual total return: 2.16%. Performance data quoted above are historical. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance data quoted. The investment return and principal value of an investment in a fund 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. High Yield Fund: The expense ratio takes into account a contractual management fee waiver/expense reimbursement agreement that is currently scheduled to remain in place through 03/31/2013. For periods when gross expenses exceeded the cap, the Fund benefited by not bearing certain expenses. Without such cap, performance would have been lower. Income Fund: The net expense ratio takes into account a contractual management fee waiver/expense reimbursement agreement that is currently scheduled to remain in place through 03/31/2013. For periods when gross expenses exceeded the cap, the Fund benefited by not bearing certain expenses. Without such cap, performance would have been lower. Inflation Focused Fund: The net expense ratio takes into account a contractual management fee waiver/expense reimbursement agreement that is currently scheduled to remain in place through 03/31/2013. For periods when gross expenses exceeded the cap, the Fund benefited by not bearing certain expenses. Without such cap, performance would have been lower. Class A shares purchased with 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 1% if the shares are redeemed before the first day of the month in which the one-year anniversary of the purchase falls. Please see the prospectus for more information on redemptions that may be subject to a CDSC. The CDSC is not reflected in the average annual total returns. If the CDSC was included, returns would have been lower. A Note about Risk: The value of investments in debt securities will fluctuate in response to market movements. When interest rates rise, the prices of debt securities are likely to decline, and when interest rates fall, the prices of debt securities tend to rise. Investments in high-yield securities, sometimes called junk bonds, carry increased risks of price volatility, illiquidity, and the possibility of default in the timely payment of interest and principal. Lower-rated investments may be subject to greater price volatility than higher-rated investments. Moreover, the specific collateral used to secure a loan may decline in value or become illiquid, which would adversely affect the loans value. Investments in foreign securities may present increased market, liquidity, currency, political, information, and other risks. These risks can be greater in the case of emerging country securities. Certain derivative transactions may give rise to leverage risk. Leverage, including borrowing for investment purposes, may increase volatility in a fund by magnifying the effect of changes in the value of the funds holdings. The use of leverage may cause investors in a fund to lose more money in adverse environments than would have been the case in the absence of leverage. 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 investors specific financial needs, objectives, goals, time horizon, and risk tolerance. The 30-Day Standardized Yield is an estimate of a mutual funds net investment income measured over a 30-day period. It is expressed as an annual percentage rate using a method of calculation adopted by the Securities and Exchange Commission (SEC). In absence of the fee waiver, 30-Day Standardized Yield would have been lower. Yields for other share classes will vary. Dividend yield is a financial ratio that shows how much a mutual fund pays out in dividends each year relative to its net asset value (NAV). The dividend yield is calculated by annualizing the last dividend and dividing it by a funds NAV. In absence of the fee waiver, dividend yield would have been lower. Yields for other share classes will vary. Effective duration is the change in the value of a fixed-income security that will result from a 1% change in market interest rates, taking into account anticipated cash-flow fluctuations from mortgage prepayments, puts, adjustable coupons, and potential call dates, if applicable. Duration is expressed as a number of years, and generally, the larger a duration, the greater the interest-rate risk or reward for a portfolios underlying bond prices. Where applicable, securities such as common or preferred stock, convertible bonds and convertible preferred stock, ETFs, and ADRs are excluded from these calculations. Ratings provided by Standard & Poors, Moodys, and Fitch. Ratings range from AAA (highest) to D (lowest). Bonds rated BBB or above are considered investment grade. Credit ratings BB and below are lower-rated securities (junk bonds). High-yielding, non-investment-grade bonds (junk bonds) involve higher risks than investment-grade bonds. Adverse conditions may affect the issuers ability to pay interest and principal on these securities. Copyright 2013 by Lord Abbett Distributor LLC. All rights reserved. Carefully consider the investment objectives, risks, charges, and expenses of the Lord Abbett funds. This and other important information is contained in each funds summary prospectus and/or prospectus. To obtain a prospectus or summary prospectus on any Lord Abbett mutual fund, contact Lord Abbett Distributor LLC at 888-522-2388, or visit us at www.lordabbett.com.

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Lord Abbett mutual fund shares are distributed by LORD ABBETT DISTRIBUTOR LLC, 90 Hudson Street, Jersey City, NJ 07302-3973 TAXCOMBOFLYR (02/13)

NOT FDIC INSUREDNO BANK GUARANTEEMAY LOSE VALUE

FOR BROKER/DEALER USE ONLY. NOT TO BE USED WITH THE PUBLIC IN ORAL OR WRITTEN FORM.