Lord Abbett Securities Trust
The General Motors Building
767 Fifth Avenue
New York, NY 10153-0203
800-426-1130
Lord Abbett Securities Trust ("we" or the "Fund") is a mutual fund currently
consisting of two series: the Growth & Income Series and a new series -- the
International Series. The Growth & Income Series offers two classes of shares:
Class A and Class C. The International Series offers one class of shares: Class
A shares. These classes provide investors different investment options in
purchasing shares of the Fund. See "Purchases" for a description of these
choices.
The Growth & Income Series seeks long-term growth of capital and income without
excessive fluctuations in market value. The International Series seeks long-term
capital appreciation. There can be no assurance that each Series will achieve
its objective. Within each Series, the freely transferable shares will have
equal rights with respect to dividends, assets, liquidation and voting.
This Prospectus sets forth concisely the information about the Fund and each
Series that a prospective investor should know before investing. Additional
information about the Fund and each Series has been filed with the Securities
and Exchange Commission. The Statement of Additional Information is incorporated
by reference into this Prospectus and may be obtained, without charge, by
writing to the Fund or by calling the Fund at 800-874-3733. Ask for "Part B of
the Prospectus -- The Statement of Additional Information".
The date of this Prospectus, and the date of the Statement of Additional
Information, is December 5, 1996.
PROSPECTUS
Investors should read and retain this Prospectus. Shareholder inquiries should
be made in writing to the Fund or by calling 800-821-5129. You can also make
inquiries through your broker-dealer.
Shares of the Series are not deposits or obligations of, or guaranteed or
endorsed by, any bank, and shares are not federally insured by the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other agency.
An investment in the Series involves risks, including the possible loss of
principal.
CONTENTS PAGE
1 Investment Objectives 2
2 Fee Table 2
3 Financial Highlights 3
4 How We Invest 4
5 Purchases 8
6 Shareholder Services 13
7 Our Management 14
8 Dividends, Capital Gains
Distributions and Taxes 15
9 Redemptions 16
10 Performance 16
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
The investment objective of the Growth & Income Series is long-term growth of
capital and income without excessive fluctuations in market value. The Growth &
Income Series normally invests in common stocks of large, seasoned companies in
sound financial condition which are expected to show above-average price
appreciation. The investment objective of the International Series is long-term
capital appreciation. The production of any current income is incidental to this
objective and the International Series also may invest in securities which do
not produce any income. The International Series normally invests primarily in
equity securities of non-U.S. issuers.
A summary of the expenses of each Series is set forth in the table below. Actual
expenses may be greater or less than shown.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
International Growth & Income
Series Series
Class A Class A Class C
Shares Shares Shares
Shareholder Transaction Expenses
(as a percentage of offering price)
Maximum Sales Load(1) on Purchases (See "Purchases") 5.75%(2)(3) 5.75%(2)(3) None(2)(3)
Redemption Fee (See "Purchases") None(2)(3) None(2)(3) 1% if shares are
redeemed before 1st
anniversary of purchase(2)(3)
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management Fees (See "Our Management") 0.75% 0.75% 0.75%(4)
12b-1 Fees (See "Purchases") 0.25%(2)(3)(5) 0.23%(2)(3)(5) 0.88%(2)(3)
Other Expenses (See "Our Management") 0.35%(5) 0.37%(5) 0.37%(4)(6)
Total Operating Expenses 1.35%(5) 1.35%(5) 2.00%(4)
<FN>
Example: Assume each Series' annual return is 5% and there is no change in the
level of expenses described above. For a $1,000 investment in each Series, with
reinvestment of all distributions, you would have paid the following total
expenses if you closed your account after the number of years indicated.
1 year 3 years 5 years 10 years
Growth & Income Series
Class A shares $70 $98 $127 $211
Class C shares $20 $63 $108 $233
International Series
Class A shares $70 $97
(1)Sales "load" is referred to as sales "charge" and "deferred sales load" is
referred to as "contingent deferred sales charge" (or "CDSC") and "12b-1 fees"
which consist of a "service fee" and a "distribution fee" are referred to by
either or both of these terms where appropriate with respect to Class A and
Class C shares throughout this Prospectus.
(2)See "Purchases" for descriptions of the Class A front-end sales charges, the
CDSC payable on certain redemptions of Class A and Class C shares and separate
Rule 12b-1 Plans applicable to each class of shares of the Growth & Income
Series and Class A shares of the International Series.
(3)Although the Growth & Income Series does not, with respect to Class C
shares, charge a front-end sales charge, investors should be aware that
long-term shareholders may pay, under the Rule 12b-1 Plan applicable to
Class C shares of the Series (which pays annual 0.25% service and 0.75%
distribution fees), more than the economic equivalent of the maximum front-end
sales charge as permitted by certain rules of the National Association of
Securities Dealers, Inc. Likewise, with respect to Class A shares of both
Series, investors should be aware that, long-term, such maximum may be exceeded
due to the Rule 12b-1 plan applicable to Class A shares which permits each
Series to pay up to 0.50% in total annual fees, half for service and the other
half for distribution.
(4)Although not obligated to, Lord Abbett may waive its management fee and/or
subsidize other expenses with respect to each Series. The Class C management fee
has been restated to reflect current fees as a result of the discontinuation of
the fee waiver by Lord Abbett with respect to the Growth & Income Series as of
July 12, 1996.
(5)Class A fees and expenses are estimated.
(6)The "other expenses" of the Growth & Income Series reflect an estimated
increase in various expenses expressed as a percentage of net assets, reflecting
the sale by the Fund of the assets of nine of its Series in July 1996.
The foregoing is provided to give investors a better understanding of the expenses
that are incurred by an investment in each Series.
</FN>
</TABLE>
<PAGE>
The following tables have been audited by Deloitte & Touche llp, independent
accountants, in connection with their annual audit of the Class A and C share
Financial Statements of the Growth & Income Series, whose report thereon is
incorporated by reference into the Statement of Additional Information and may
be obtained on request, and have been included herein in reliance upon their
authority as experts in auditing and accounting.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
GROWTH & INCOME SERIES For the Period
January 3, 1994
(Commencement
Per Class C Share+ Operating Year Ended October 31, of Operations) to
Performance: 1996 1995 October 31, 1994
Net asset value, beginning of period $6.04 $5.07 $5.00
Income from investment operation
Net investment income .0949 .12 .089++
Net realized and unrealize
gain on securities 1.0986 .97 .041
Total from investment operations 1.1935 1.09 .13
Distribution
Dividends from net investment income (.1035) (.12) (.06)
Distributions from net realized gain (0.04) -- --
Net asset value, end of period $7.09 $6.04 $5.07
Total Return* 20.02% 21.83% 2.62%++
Ratios/Supplemental Data:
Net assets, end of period (000) $66,685 $32,770 $9,160
Ratios to Average Net Assets:
Expenses, including waiver** 1.55% 1.16% .61%++
Expenses, excluding waiver 2.01% 1.91% 1.94%++
Net investment income 1.36% 2.06% 2.03%++
Portfolio turnover rate 23.84% 23.17% 31.95%
Average commissions per share
paid on equity transactions $0.064 $0.059 N/A
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
GROWTH & INCOME SERIES For the Period
July 15, 1996
Per Class A Share+ Operating (Commencement of Operations) to
Performance: October 31, 1996
Net asset value, beginning of period $6.50
Income from investment operations
Net investment income 0.028++
Net realized and unrealized
gain on securities .589
Total from investment operations .617
Distributions
Dividends from net investment income (.027)
Net asset value, end of period $7.09
Total Return* 12.10%++
Ratios/Supplemental Data:
Net assets, end of period (000) $47,277
Ratios to Average Net Assets:
Expenses, including waiver** .39%++
Expenses, excluding waiver .39%++
et investment income .40%++
Portfolio turnover rate 23.84%
Average commissions per share
paid on equity transactions *** $0.064
<FN>
*Total return does not consider the effects of sales charges.
**The Growth & Income Series is contingently obligated to repay its expenses
voluntarily assumed by Lord Abbett. At October 31, 1996, such expense subsidies
totalled $58,560. Such contingent obligations are not included in expenses. See
"Our Management" for the terms of such contingent obligations.
+Prior to July 12,1996, the Growth & Income Series had only one class of shares.
That class is now designated "Class C shares".
++Not annualized.
See Notes to Financial Statements.
</FN>
</TABLE>
<PAGE>
HOW WE INVEST
THE GROWTH & INCOME SERIES. The Series is intended for long-term investors who
purchase and redeem shares to meet their own financial requirements rather than
to take advantage of price fluctuations.The needs of such investors will be best
served by an investment whose growth is characterized by low fluctuations in
market value. For this reason, the Series tries to keep its assets invested in
securities which are selling at reasonable prices in relation to value and,
thus, is willing to forgo some opportunities for gains when, in the judgment of
Fund management, they carry excessive risk. Fund management tries to anticipate
major changes in the economy and select stocks which it believes will benefit
most from these changes. The Growth & Income Series normally invests in common
stocks (including securities convertible into common stocks) of large, seasoned
companies which are expected to show above-average growth in value and which are
in sound financial condition. Although the prices of common stocks fluctuate and
their dividends vary, historically, common stocks have appreciated in value and
their dividends have increased when the companies they represent have prospered
and grown.
The Growth & Income Series is constantly balancing the opportunity for profit
against the risk of loss. In the past, very few industries have continuously
provided the best investment opportunities. Fund management believes it is
important to take a flexible approach and adjust the portfolio to reflect
changes in the opportunities for sound investments relative to the risks
assumed; therefore, it sells securities that it judges to be overpriced and
reinvests the proceeds in other securities which it believes offer better
values.
The Series may invest up to 10% of its net assets (at the time of investment) in
each of the following: (a) covered call options traded on a national securities
exchange for portfolio securities and (b) foreign securities. These foreign
securities will be the kind described in this Prospectus for the Series'
domestic investment. It is the present intention of Fund management that these
securities be primarily traded in the United Kingdom, Western Europe, Australia,
Canada, the Far East, Latin America, and other developed countries as may be
determined from time to time. The Series also may invest in straight bonds and
other debt securities, including lower-rated, high-yield bonds, sometimes
referred to as "junk bonds" with a limit of 5% of its net assets (at the time of
investment) in such lower rated (BB/Ba or lower), high-yield bonds.
The Series does not purchase securities for trading purposes. To create reserve
purchasing power and also for temporary defensive purposes, it may invest in
short-term debt and other high-quality, fixed-income securities.
RISK FACTORS -- GROWTH & INCOME SERIES
High-Yield Bonds. The Series may invest up to 5% of its net assets (at the time
of investment), in lower-rated bonds for their higher yields. In general, the
market for lower-rated bonds is more limited than that for higher rated bonds
and, therefore, may be less liquid. The market prices of such lower-rated bonds
may fluctuate more than those of higher rated bonds, particularly in times of
economic change and stress. In addition, because the market for lower-rated
corporate debt securities has experienced wide fluctuations in the values of
certain of these securities, past experience may not provide an accurate
indication of the future performance of that market or of the frequency of
default, especially during periods of recession. Objective pricing data for
lower-rated bonds may be more limited and valuation of such securities may be
more difficult and require greater reliance upon judgment when compared to
higher rated bonds.
While the market for lower rated bonds may be less sensitive to interest rate
changes than that for higher rated bonds, the market prices of these lower rated
bonds structured as zero coupon or pay-in-kind securities may be affected to a
greater extent by such interest rate changes and thus may be more volatile than
prices of lower-rated securities periodically paying interest in cash. When
compared to higher rated bonds, lower-rated bonds that include redemption prior
to maturity or call provisions may be more susceptible to refunding during
periods of falling interest rates, requiring replacement by lower yielding
securities.
Since the risk of default generally is higher among lower-rated bonds, the
research and analysis of Lord Abbett are especially important in the selection
of such bonds which, if rated BB/Ba or lower, are often described as "high-yield
bonds" because of their generally higher yields and referred to as "junk bonds"
because of their greater risks. In selecting lower-rated bonds for our
investment, Lord Abbett does not rely upon ratings which, in any event, evaluate
only the safety of principal and interest, not market value risk and which,
furthermore, may not accurately reflect an issuer's current financial condition.
There are no minimum rating criteria for investments in these bonds and some may
default as to principal and/or interest payments subsequent to their purchase.
Through portfolio diversification, credit analysis and attention to current
developments and trends in interest rates and economic conditions, investment
risk can be reduced, although there is no assurance that losses will not occur.
<PAGE>
THE INTERNATIONAL SERIES. Portfolio Investments for the International Series
will be made in equity securities of companies domiciled in developed countries,
but investments also may be made in the securities of companies domiciled in
developing countries. Equity securities include common and preferred stocks,
convertible securities, and rights and warrants to purchase common stocks. Under
normal circumstances, at least 80% of the total assets of the Series will be
invested in such equity securities of companies which are domiciled in at least
three different countries outside the United States. The Series currently
intends to diversify investments among countries to reduce currency risk.
Although the Series will typically hold a number of diversified securities, it
does entail above-average investment risk in comparison to the U.S. stock
market.
Although the International Series intends to invest primarily in equity
securities of companies with market capitalization of less than $1 billion
listed on stock exchanges, it may also invest in equity securities of such
companies traded in over-the-counter markets, as well as large and middle
capitalization securities. Small capitalization securities involve greater risk
and the markets for such securities may be more volatile and less liquid than
those of larger securities. Securities of companies in developing countries may
pose liquidity risks. For a description of special considerations and certain
risks associated with investments in foreign issuers, see "Risk Factors -- Both
Series" below. The Series may temporarily reduce its equity holdings for
defensive purposes in response to adverse market conditions and invest in
domestic, Eurodollar and foreign short-term money market instruments. See
"Investment Objectives and Policies" in the Statement of Additional
Information.
Although the International Series will not invest for short-term trading
purposes, investment securities may be sold from time to time without regard to
the length of time they have been held. It is anticipated that the annual
turnover rate of the Series will not exceed 100% under normal circumstances.
Any remaining assets of the Series not invested as described above may be
invested in certain securities or obligations as set forth in "Other Policies
Common to Both Series" below.
FORIEGN CURRENCY HEDGING TECHNIQUES. The International Series may utilize
various foreign currency hedging techniques described below.
A forward foreign currency contract involves an obligation to purchase or sell a
specific amount of a currency at a set price on a future date. The Series may
enter into forward foreign currency contracts (but not in excess of the amount
the Series has invested in non-U.S. dollar-denominated securities at the time
any such contract is entered into) in primarily two circumstances. First, when
the Series enters into a contract for the purchase or sale of a security
denominated in a foreign currency, the Series may desire to "lock in" the U.S.
dollar price of the security. By entering into a forward contract for the
purchase or sale of the amount of foreign currency involved in the underlying
security transaction, the Series will be able to protect against a possible loss
resulting from an adverse change in the relationship between the U.S. dollar and
the subject foreign currency during the period between the date of purchase or
sale and the date of settlement.
Second, when Fund management believes that the currency of a particular foreign
country may suffer a decline against the U.S. dollar, the International Series
may enter into a forward contract to sell the amount of foreign currency
approximating the value of some or all of the Series' portfolio securities
denominated in such foreign currency or, in the alternative, the Series may use
a cross-currency-hedging technique whereby it enters into such a forward
contract to sell another currency (obtained in exchange for the currency in
which the portfolio securities are denominated if such securities are sold)
which it expects to decline in a similar manner but which has a lower
transaction cost. Precise matching of the forward contract and the value of the
securities involved will generally not be possible since the future value of
such securities denominated in foreign currencies will change as a consequence
of market movements in the value of those securities between the date the
forward contract is entered into and the date the contract matures. The Series
intends to enter into such forward contracts under this second circumstance
periodically.
The Series also may purchase foreign currency put options and write foreign
currency call options on U.S. exchanges or U.S. over-the-counter markets. A put
option gives the Series, upon payment of a premium, the right to sell a currency
at the exercise price until the expiration of the option and serves to insure
against adverse currency price movements in the underlying portfolio assets
denominated in that currency. The premiums paid for such foreign currency put
options will not exceed 5% of the net assets of the Series.
<PAGE>
Exchange-listed options markets in the United States include several major
currencies, and trading may be thin and illiquid. A number of major investment
firms trade unlisted options which are more flexible than exchange-listed
options with respect to strike price and maturity date. These unlisted options
generally are available on a wider range of currencies, including those of most
of the developed countries mentioned above. Unlisted foreign-currency options
generally are less liquid than listed options and involve the credit risk
associated with the individual issuer.
Unlisted options together with other illiquid securities may comprise no more
than 15% of the Series' net assets.
A foreign currency call option written by the Series gives the purchaser, upon
payment of a premium, the right to purchase from the Series a currency at the
exercise price until the expiration of the option. The Series may write a call
option on a foreign currency only in conjunction with a purchase of a put option
on that currency. Such a strategy is designed to reduce the cost of downside
currency protection by limiting currency appreciation potential. The face value
of such writing or cross-hedging (described above) may not exceed 90% of the
value of the securities denominated in such currency (a) invested in by the
Series to cover such call writing or (b) to be crossed.
Limitations imposed by the Internal Revenue Code on regulated investment
companies may restrict the Series' ability to engage in transactions in options,
forward contracts and cross hedges.
The Series' custodian will segregate cash or permitted securities belonging to
the Series with respect to its assets committed to (a) writing options, (b)
forward foreign currency contracts and (c) cross hedges entered into by the
Series. If the value of the securities segregated declines, additional cash or
permitted securities will be added on a daily basis (i.e., marked to market), so
that the segregated amount will not be less than the amount of the Series'
commitments with respect to such written options, forward foreign currency
contracts and cross hedges.
FINANCIAL FUTURES AND OPTIONS THEREON. The International Series may deal in
financial futures transactions with respect to the type of securities described
in this Prospectus, including indices of such securities and options on such
financial futures and indices. The Series will not enter into any futures
contracts, or options thereon, if the aggregate market value of the securities
covered by futures contracts plus options on such financial futures exceeds 50%
of the Series' total assets.
INVESTMENT FUNDS. Some emerging countries have laws and regulations that
currently preclude direct foreign investment in the securities of their
companies. However, indirect foreign investment in the securities of such
countries is permitted through investment funds which have been specifically
authorized. The International Series may invest (normally not more than 5% of
the Series' total assets) in these investment funds subject to the provisions of
the Investment Company Act of 1940, as amended, and other applicable
restrictions as discussed herein or in the Statement of Additional Information.
If the Series invests in such investment funds, the Series' shareholders will
bear not only their proportionate share of the expenses of the Series (including
operating expenses and the fees of Lord Abbett), but also will indirectly bear
similar expenses of the underlying investment funds.
DEPOSITORY RECEIPTS. The International Series may invest in American Depository
Receipts ("ADRs"), Global Depository Receipts ("GDRs"), European Depository
Receipts ("EDRs") and other Depository Receipts (which, together with ADRs, GDRs
and EDRs, are hereinafter collectively referred to as "Depository Receipts"), to
the extent that such Depository Receipts become available. ADRs are securities,
typically issued by a U.S. financial institution (a "depository"), that evidence
ownership interests in a security or a pool of securities issued by a foreign
issuer (the "underlying issuer") and deposited with the depository. ADRs may be
established by a depositary without participation by the underlying issuer.
GDRs, EDRs and other types of Depository Receipts are typically issued by
foreign depositories, although they may also be issued by U.S. depositories, and
evidence ownership interests in a security or pool of securities issued by
either a foreign or a U.S. corporation. Generally, Depository Receipts in
registered form are designed for use in the U.S. securities market and
Depository Receipts in bearer form are designed for use in securities markets
outside the United States. The Series may invest in sponsored and unsponsored
Depository Receipts. For purposes of the International Series' investment
policies, the Series' investments in Depository Receipts will be deemed to be
investments in the underlying securities.
<PAGE>
RISK FACTORS -- BOTH SERIES
SIZE. If either Series remains small, there is risk that redemptions of a
Series' shares may (a) cause portfolio securities of that Series to be sold
prematurely (at a loss or gain, depending upon the circumstances) or (b) hamper
or prevent a contemplated portfolio security purchase by that Series.
FOREIGN INVESTMENTS. Investment in either Series requires consideration of
certain factors that are not normally involved in investments in U.S.
securities. Generally, at least 80% of the assets of the International Series
and up to 10% of the net assets of the Growth & Income Series will be
denominated or traded in foreign currencies. Accordingly, a change in the value
of any foreign currency relative to the U.S. dollar will result in a
corresponding change in the U.S. dollar value of a Series' assets denominated or
traded in that currency. The performance of each Series will be measured in U.S.
dollars, the base currency of the Series. Securities markets of foreign
countries in which a Series may invest generally are not subject to the same
degree of regulation as the U.S. markets and may be more volatile and less
liquid than the major U.S. markets. Lack of liquidity may affect a Series'
ability to purchase or sell large blocks of securities and thus obtain the best
price. There may be less publicly-available information on publicly-traded
companies, banks and governments in foreign countries than is generally the case
for such entities in the United States. The lack of uniform accounting standards
and practices among countries impairs the validity of direct comparisons of
valuation measures (such as price/earnings ratios) for securities in different
countries. In addition, a Series may incur costs associated with currency
hedging and the conversion of foreign currency into U.S. dollars and may be
adversely affected by restrictions on the conversion or transfer of foreign
currency. Other considerations include political and social instability,
expropriation, higher transaction costs and different securities settlement
practices. Settlement periods for foreign securities, which are sometimes longer
