<PAGE>
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 THE INTERNATIONAL
SERIES. BOTH SERIES OFFER THREE CLASSES OF SHARES: CLASS A, CLASS B AND CLASS C.
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 JUNE 1, 1997.
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.
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 15
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>
1 INVESTMENT OBJECTIVE
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.
2 FEE TABLE
A summary of the expenses of each Series is set forth in the table below. Actual
expenses may be greater or less than those shown.
<TABLE>
<CAPTION>
GROWTH & INCOME SERIES CLASS A CLASS B CLASS C
SHARES SHARES SHARES
<S> <C> <C> <C>
Shareholder Transaction Expenses(1)
(as a percentage of offering price)
Maximum Sales Load(2) on Purchases
(See "Purchases") 5.75% None None
Deferred Sales Load(2) (See "Purchases") None 5% if shares are redeemed 1% if shares
before 1st anniversary are redeemed
of purchase, declining before 1st anniversary
to 1% before 6th of purchase
anniversary and
eliminated on and
after 6th anniversary(3)
Annual Fund Operating Expenses(4)
(as a percentage of average net assets)
Management Fees (See "Our Management") 0.75% 0.75% 0.75%
12b-1 Fees (See "Purchases")(1)(2) 0.23% 1.00% 0.88%
Other Expenses (See "Our Management") 0.32% 0.32% 0.32%
Total Operating Expenses 1.30% 2.07% 1.95%
<CAPTION>
INTERNATIONAL SERIES CLASS A CLASS B CLASS C
SHARES SHARES SHARES
Shareholder Transaction Expenses(1)
(as a percentage of offering price)
Maximum Sales Load(2) on Purchases
(See "Purchases") 5.75% None None
Deferred Sales Load(2) (See "Purchases") None 5% if shares are redeemed 1% if shares
before 1st anniversary are redeemed
of purchase, declining before 1st anniversary
to 1% before 6th of purchase
anniversary and
eliminated on and
after 6th anniversary(3)
Annual Fund Operating Expenses(4)
(as a percentage of average net assets)
Management Fees (See "Our Management") 0.75% 0.75% 0.75%
12b-1 Fees (See "Purchases")(1)(2) 0.25% 1.00% 1.00%
Other Expenses (See "Our Management") 0.35% 0.35% 0.35%
Total Operating Expenses 1.35% 2.10% 2.10%
<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 pay the following total expenses
assuming redemption on the last day of each time period indicated.
<PAGE>
1 year 3 years 5 years 10 years
Growth & Income Series
Class A shares $70 $97 $125 $205
Class B shares(3) $70 $95 $131 $220
Class C shares $30 $61 $105 $228
International Series
Class A shares $70 $98 $127 $211
Class B shares(3) $71 $96 $133 $224
Class C shares $32 $66 $113 $243
You would pay the following expenses on the same investment, assuming no
redemption.
Growth & Income Series
Class A shares $70 $97 $125 $205
Class B shares(3) $21 $65 $111 $220
Class C shares $20 $61 $105 $228
International Series
Class A shares $70 $98 $127 $211
Class B shares(3) $21 $66 $113 $224
Class C shares $21 $66 $113 $243
(1) Although neither Series, with respect to Class B and Class C shares,
charges a front-end sales charge, investors should be aware that long-term
shareholders may pay, under the Rule 12b-1 Plan applicable to Class B and
Class C shares (both of which pay 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, investors should be aware that, over the 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.
(2) 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, Class B and Class C shares throughout this Prospectus.
(3) Class B shares will automatically convert to Class A shares on the eighth
anniversary of the purchase of Class B shares.
(4) The annual operating expenses for the Growth & Income Series have been
restated from October 31, 1996 fiscal year amounts, to reflect current
fees. The annual operating expenses for the International Series are based
on estimated expenses for the current fiscal year.
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>
3 FINANCIAL HIGHLIGHTS
The following financial highlights have been audited by Deloitte & Touche llp,
independent accountants, whose report thereon is incorporated by reference into
the Statement of Additional Information and may be obtained on request.
<TABLE>
<CAPTION>
GROWTH & INCOME SERIES For the Period
January 3, 1994
Year Ended October 31, (Commencement
Per Class C Share+ Operating of Operations) to
Performance: 1996 1995 October 31, 1994
<S> <C> <C> <C>
Net asset value, beginning of period $6.04 $5.07 $5.00
Income from investment operations
Net investment income .0949 .12 .089
Net realized and unrealized
gain on securities 1.0986 .97 .041
Total from investment operations 1.1935 1.09 .13
Distributions
Dividends from net investment income (.1035) (.12) (.06)
Distributions from net realized gain (.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 $.064 $.059 --
<FN>
* Total return does not consider the effects of front-end sales or contingent
deferred sales charges.
+ 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>
<TABLE>
<CAPTION>
GROWTH & INCOME SERIES For the Period
(July 15, 1996
Per Class A Share+ Operating (Commencement of Operations) to
Performance: October 31, 1996
<S> <C>
Net asset value, beginning of period $6.50
Income from investment operations
Net investment income .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 .39%++
Net investment income .40%++
Portfolio turnover rate 23.84%
Average commissions per share
paid on equity transactions $.064
<FN>
* Total return does not consider the effects of front-end sales or contingent
deferred sales charges.
+ 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>
4 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.
<PAGE>
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.
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.
<PAGE>
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.
Foreign 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. 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.
<PAGE>
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 depository 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.
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 each 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
than those for securities of U.S. issuers, may affect portfolio liquidity. These
different settlement practices may cause missed purchasing opportunities and/or
the loss of interest on money market and debt investments pending further equity
or long-term debt investments. In addition, foreign securities held by a Series
may be traded on days that the Series do not value their portfolio securities,
such as Saturdays and customary U.S. business holidays, and, accordingly, a
Series' net asset value may be significantly affected on days when shareholders
do not have access to the Series. Many of the emerging or developing countries
may have higher and more rapidly fluctuating inflation rates, a higher demand
for capital investment, a higher dependence on export markets for their major
industries, and a greater need to develop basic economic infrastructures than
more developed countries. Also, it may be more difficult to obtain a judgment in
a court outside the United States.
<PAGE>
Other Policies Common to Both Series
Illiquid Securities. Each Series may invest up to 15% of its net assets in
illiquid securities.
Borrowing. Each Series may borrow from banks (as defined in the Investment
Company Act of 1940, as amended (the "Act")) in amounts up to 33 1/3% of its
total assets (including the amount borrowed). Each Series may borrow up to an
additional 5% of its total assets for temporary purposes. Each Series may obtain
such short-term credit as may be necessary for the clearance of purchases and
sales of portfolio securities.
Diversification. Each Series intends to meet the diversification rules under
Subchapter M of the Internal Revenue Code. The Growth & Income Series met the
diversification rules under Subchapter M for its fiscal year ended October 31,
1996. Generally, this requires, at the end of each quarter of the taxable year,
that (a) not more than 25% of each Series' total assets be invested in any one
issuer and (b) with respect to 50% of each Series' total assets, no more than 5%
of such Series' total assets be invested in any one issuer except U.S.
Government securities.
Each Series, as a "diversified" investment company, is prohibited, with respect
to 75% of the value of its total assets, from investing more than 5% of its
total assets in securities of any one issuer other than U.S. Government
securities. For diversification purposes, the identification of an "issuer" for
the fixed-income portion of a Series' assets will be determined on the basis of
the source of assets and revenues committed to meeting interest and principal
payments of the securities. When the assets and revenues of a sovereign state's
political subdivision are separate from those of the sovereign state government
creating the subdivision, and the security is backed only by the assets and
revenues of the subdivision, then the subdivision would be considered the sole
issuer. Similarly, if a revenue bond is backed only by the assets and revenues
of a nongovernmental user, then such user would be considered the sole issuer.
When-Issued or Delayed Delivery Securities. Either Series may purchase
securities on a when-issued basis and, while awaiting delivery and before paying
for them ("settlement"), normally may invest in short-term securities. Each
Series does not start earning interest on these when-issued securities until
settlement and often they are sold prior to settlement. During the period
between purchase and settlement, the value of the securities will fluctuate and
assets consisting of cash and/or marketable securities marked to market daily in
an amount sufficient to make payment at settlement will be segregated at our
custodian in order to pay for the commitment. There is a risk that market yields
available at settlement may be higher than yields obtained on the purchase date,
which could result in depreciation of value. The other debt securities in which
each Series may invest include, but are not limited to, domestic and foreign
fixed- and floating-rate notes, bonds, debentures, convertibles, certificates,
warrants, commercial paper and principal and interest pass-through instruments
issued by governments, authorities, partnerships, corporations, trust companies,
banks and bank holding companies, and banker's acceptances, certificates of
deposit, time deposits and deposit notes issued by domestic and foreign banks.
It is currently intended that no more than 5% of each Series' net assets will be
at risk in the use of any one of the policies identified below.
Covered Call Options. Each Series may write call options on securities it owns,
provided that the securities we hold to cover such options do not represent more
than 5% of a Series' net assets. A call option on stock gives the purchaser of
the option, upon payment of a premium to the writer of the option, the right to
call upon the writer to deliver a specified number of shares of a stock on or
before a fixed date at a predetermined price.
Rights and Warrants. Each Series may invest in rights and warrants to purchase
securities provided that, at the time of the acquisition, its investment in
warrants, valued at the lower of cost or market, would not exceed 5% of the
Series' total assets. Warrants which are not listed on the New York or American
Stock Exchange or a major foreign exchange may not exceed 2% of a Series' total
assets.
Repurchase Agreements. Each Series may enter into repurchase agreements with
respect to a security. A repurchase agreement is a transaction by which a Series
acquires a security and simultaneously commits to resell that security to the
seller (a bank or securities dealer) at an agreed-upon price on an agreed-upon
date. Such repurchase agreement must, at all times, be collateralized by cash or
U.S. Government securities having a value equal to, or in excess of, the value
of the repurchase agreement.
<PAGE>
Closed-end Investment Companies. Each Series may invest in shares of closed-end
investment companies if bought in the primary or secondary market with a fee or
commission no greater than the customary broker's commission. Shares of such
investment companies sometimes trade at a discount or premium in relation to
their net asset value and there may be duplication of fees, for example, to the
extent that a Series and the closed-end investment company both charge a
management fee.
Lending of Portfolio Securities. Each Series may seek to earn income by lending
its portfolio securities if the loan is collateralized and its terms are in
accordance with regulatory requirements.
Portfolio Turnover. The portfolio turnover rate for the Growth & Income Series
for the fiscal year ended October 31, 1996 was 23.84%. It is anticipated that
the portfolio turnover rate for the International Series will not exceed 100%.
Change of Investment Objectives and Policies. Neither Series will change its
investment objective without shareholder approval. If a Series determines that
its objective can best be achieved by a change in investment policy or strategy,
it may make such change without shareholder approval by disclosing it in its
prospectus.
5 PURCHASES
ALTERNATIVE SALES ARRANGEMENTS
Classes of Shares. Each Series offers investors three different classes of
shares. The different classes of shares represent investments in the same
portfolio of securities but are subject to different expenses and are likely to
have different share prices. Investors should read this section carefully to
determine which class represents the best investment option for their particular
situation.
Class A Shares. If you buy Class A shares, you pay an initial sales charge on
investments of less than $1 million (or on investments for employer-sponsored
retirement plans under the Internal Revenue Code (hereinafter referred to as
"Retirement Plans") with less than 100 eligible employees). If you purchase
Class A shares as part of an investment of at least $1 million (or for
Retirement Plans with at least 100 eligible employees) in shares of one or more
Lord Abbett-sponsored funds, you will not pay an initial sales charge, but if
you redeem any of those shares within 24 months after the month in which you buy
them, you may pay to the Fund a contingent deferred sales charge ("CDSC") of 1%.
Class A shares are subject to service and distribution fees that are currently
estimated to total approximately 0.23 of 1% annually for the Growth & Income
Series and 0.25 of 1% for the International Series of the annual net asset value
of the Class A shares. The initial sales charge rates, the CDSC and the Rule
12b-1 Plan applicable to the Class A shares are described under "General" below.
Class B Shares. If you buy Class B shares, you pay no sales charge at the time
of purchase, but if you redeem your shares before the sixth anniversary of
buying them, you will normally pay a CDSC to Lord Abbett Distributor llc ("Lord
Abbett Distributor"). That CDSC varies depending on how long you own shares.
Class B shares are subject to service and distribution fees at an annual rate of
1% of the annual net asset value of the Class B shares. The CDSC and the Rule
12b-1 Plan applicable to the Class B shares are described under "General" below.
Class C Shares. If you buy Class C shares, you pay no sales charge at the time
of purchase, but if you redeem your shares before the first anniversary of
buying them, you will normally pay the Fund a CDSC of 1%. Class C shares are
subject to service and distribution fees at an annual rate of 1% of the annual
net asset value of the Class C shares. The CDSC and the Rule 12b-1 Plan
applicable to the C shares are described under "General" below.
Which Class of Shares Should You Choose? Once you decide that a Series is an
appropriate investment for you, the decision as to which class of shares is
better suited to your needs depends on a number of factors which you should
discuss with your financial adviser. Class-specific expenses and the effect of
the different types of sales charges on your investment will affect your
investment results over time. The most important factors are how much you plan
to invest and how long you plan to hold your investment. If your goals and
objectives change over time and you plan to purchase additional shares, you
should re-evaluate those factors to see if you should consider another class of
shares.
In the following discussion, to help provide you and your financial adviser with
a framework in which to choose a class, we have made some assumptions using a
hypothetical investment in a Series.
<PAGE>
We used the sales charge rates that apply to Class A, Class B and Class C, and
considered the effect of the higher distribution fees on Class B and Class C
expenses (which will affect your investment return). Of course, the actual
performance of your investment cannot be predicted and will vary, based on a
Series' actual investment returns, the operating expenses borne by each class of
shares, and the class of shares you purchase. The factors briefly discussed
below are not intended to be investment advice, guidelines or recommendations,
because each investor's financial considerations are different. The discussion
below of the factors to consider in purchasing a particular class of shares
assumes that you will purchase only one class of shares and not a combination of
shares of different classes.
How Long Do You Expect to Hold Your Investment? While future financial needs
cannot be predicted with certainty, knowing how long you expect to hold your
investment will assist you in selecting the appropriate class of shares. For
example, over time, the reduced sales charges available for larger purchases of
Class A shares may offset the effect of paying an initial sales charge on your
investment, compared to the effect over time of higher class-specific expenses
on Class B or Class C shares for which no initial sales charge is paid. Because
of the effect of class-based expenses, your choice should also depend on how
much you plan to invest.
Investing for the Short Term. If you have a short-term investment horizon (that
is, you plan to hold your shares for not more than six years), you should
probably consider purchasing Class A or Class C shares rather than Class B
shares. This is because of the effect of the Class B CDSC if you redeem before
the sixth anniversary of your purchase, as well as the effect of the Class B
distribution fee on the investment return for that class in the short term.
Class C shares might be the appropriate choice (especially for investments of
less than $100,000), because there is no initial sales charge on Class C shares,
and the CDSC does not apply to amounts you redeem after holding them one year.
However, if you plan to invest more than $100,000 for the short term, then the
more you invest and the more your investment horizon increases toward six years,
the more attractive the Class A share option may become. This is because the
annual distribution fee on Class C shares will have a greater impact on your
account over the longer term than the reduced front-end sales charge available
for larger purchases of Class A shares. For example, Class A might be more
appropriate than Class C for investments of more than $100,000 expected to be
held for 5 or 6 years (or more). For investments over $250,000 expected to be
held 4 to 6 years (or more), Class A shares may become more appropriate than
Class C. If you are investing $500,000 or more, Class A may become more
desirable as your investment horizon approaches 3 years or more. For most
investors who invest $1 million or more or for Retirement Plans with at least
100 eligible employees, in most cases Class A shares will be the most
advantageous choice, no matter how long you intend to hold your shares. For that
reason, Lord Abbett Distributor normally will not accept purchase orders (i) for
Class B shares of $500,000 or more and for Class C shares of $1,000,000 or more
from a single investor or (ii) for Class B or C shares for Retirement Plans with
at least 100 eligible employees.
Investing for the Longer Term. If you are investing for the longer term (for
example, to provide for future college expenses for your child) and do not
expect to need access to your money for seven years or more, Class B shares may
be an appropriate investment option, if you plan to invest less than $100,000.
If you plan to invest more than $100,000 over the long term, Class A shares will
likely be more advantageous than Class B shares or Class C shares, as discussed
above, because of the effect of the expected lower expenses for Class A shares
and the reduced initial sales charges available for larger investments in Class
A shares under the Fund's Rights of Accumulation.
Of course, these examples are based on approximations of the effect of current
sales charges and expenses on a hypothetical investment over time, and should
not be relied on as rigid guidelines.
Are There Differences in Account Features That Matter to You? Some account
features are available in whole or in part to Class A, Class B and Class C
shareholders. Other features (such as Systematic Withdrawal Plans) might not be
advisable in non-Retirement Plan accounts for Class B shareholders (because of
the effect of the CDSC on the entire amount of a withdrawal if it exceeds 12%
annually) and in any account for Class C shareholders during the first year of
share ownership (due to the CDSC on withdrawals during that year). See
"Systematic Withdrawal Plan" under "Shareholder Services" for more information
about the 12% annual waiver of the CDSC. You should carefully review how you
plan to use your investment account before deciding which class of shares you
buy. For example, the dividends payable to Class B and Class C shareholders will
be reduced by the expenses borne solely by each of these classes, such as the
higher distribution fee to which Class B and Class C shares are subject, as
described below.
How Does It Affect Payments to My Broker? A salesperson, such as a broker, or
any other person who is entitled to receive compensation for selling Fund shares
may receive different compensation for selling one class than for selling
another class. As discussed in more detail below, such compensation is primarily
paid at the time of sale in the case of Class A and B shares and is paid over
time, so long as shares remain outstanding, in the case of Class C shares. It is
important that investors understand that the primary purpose of the CDSC for the
Class B shares and the distribution fee for Class B and Class C shares is the
same as the purpose of the front-end sales charge on sales of Class A shares: to
compensate brokers and other persons selling such shares. The CDSC, if payable,
supplements the Class B distribution fee and reduces the Class C distribution
fee expenses for each Series and Class C shareholders.
<PAGE>
GENERAL
How Much Must You Invest? You may buy our shares through any independent
securities dealer having a sales agreement with Lord Abbett Distributor, our
exclusive selling agent. Place your order with your investment dealer or send it
to Lord Abbett Securities Trust (P.O. Box 419100, Kansas City, Missouri 64141).
The minimum initial investment for each Series is $1,000, except for
Invest-A-Matic and Div-Move ($250 initial and $50 subsequent minimum) and
Individual Retirement Accounts ($250 minimum). For Retirement Plans there is no
minimum initial investment required. See "Shareholder Services." For information
regarding the proper form of a purchase or redemption order, call the Fund at
800-821-5129. This offering may be suspended, changed or withdrawn. Lord Abbett
Distributor reserves the right to reject any order. The net asset value of our
shares is calculated every business day as of the close of the New York Stock
Exchange ("NYSE") by dividing net assets by the number of shares outstanding.
Securities are valued at their market value as more fully described in the
Statement of Additional Information.
Buying Shares Through Your Dealer. Orders for shares received by the Fund prior
to the close of the NYSE, or received by dealers prior to such close and
received by Lord Abbett Distributor prior to the close of its business day, will
be confirmed at the applicable public offering price effective at such NYSE
close. Orders received by dealers after the NYSE closes and received by Lord
Abbett Distributor in proper form prior to the close of its next business day
are executed at the applicable public offering price effective as of the close
of the NYSE on that next business day. The dealer is responsible for the timely
transmission of orders to Lord Abbett Distributor. A business day is a day on
which the NYSE is open for trading. Lord Abbett Distributor may, for specified
periods, allow dealers to retain the full sales charge for sales of shares
during such periods, or pay an additional concession to a dealer who, during a
specified period, sells a minimum dollar amount of our shares and/or shares of
other Lord Abbett-sponsored funds. In some instances, such additional
concessions will be offered only to certain dealers expected to sell significant
amounts of shares. Lord Abbett Distributor may, from time to time, implement
promotions under which Lord Abbett Distributor will pay a fee to dealers with
respect to certain purchases not involving imposition of a sales charge.
Additional payments may be paid from Lord Abbett Distributor's own resources and
will be made in the form of cash or, if permitted, non-cash payments. The
non-cash payments will include business seminars at resorts or other locations,
including meals and entertainment, or the receipt of merchandise. The cash
payments will include payment of various business expenses of the dealer. In
selecting dealers to execute portfolio transactions for the Fund's portfolio, if
two or more dealers are considered capable of obtaining best execution, we may
prefer the dealer who has sold our shares and/or shares of other Lord
Abbett-sponsored funds.
Buying Class A Shares. The offering price of Class A shares is based on the
per-share net asset value next computed after your order is accepted plus a
sales charge as follows.
SALES CHARGE AS A DEALER'S
PERCENTAGE OF: CONCESSION
AS A TO COMPUTE
NET PERCENTAGE OFFERING
OFFERING AMOUNT OF OFFERING PRICE, DIVIDE
SIZE OF INVESTMENT PRICE INVESTED PRICE NAV BY
- --------------------------------------------------------------------------------
Less than $50,000 5.75% 6.10% 5.00% .9425
- --------------------------------------------------------------------------------
$50,000 to $99,999 4.75% 4.99% 4.00% .9525
- --------------------------------------------------------------------------------
$100,000 to $249,999 3.75% 3.90% 3.25% .9625
- --------------------------------------------------------------------------------
$250,000 to $499,999 2.75% 2.83% 2.25% .9725
- --------------------------------------------------------------------------------
$500,000 to $999,999 2.00% 2.04% 1.75% .9800
- --------------------------------------------------------------------------------
$1,000,000 or more No sales charge 1.00%+ 1.0000
- --------------------------------------------------------------------------------
+AUTHORIZED INSTITUTIONS RECEIVE CONCESSIONS ON PURCHASES MADE BY A RETIREMENT
PLAN OR OTHER QUALIFIED PURCHASER WITHIN A 12-MONTH PERIOD (BEGINNING WITH THE
FIRST NET ASSET VALUE PURCHASE) AS FOLLOWS: 1.00% ON PURCHASES OF $5 MILLION,
0.55% OF THE NEXT $5 MILLION, 0.50% OF THE NEXT $40 MILLION AND 0.25% ON
PURCHASES OVER $50 MILLION. SEE "CLASS A RULE 12B-1 PLAN" BELOW.
Class A Share Volume Discounts. This section describes several ways to qualify
for a lower sales charge when purchasing Class A shares if you inform Lord
Abbett Distributor or the Fund that you are eligible at the time of purchase.
(1) Any purchaser (as described below) may aggregate a Class A share purchase in
the Fund with any share purchases of any other eligible Lord Abbett-sponsored
fund, together with the current value at maximum offering price of any shares in
the Fund and in any eligible Lord Abbett-sponsored funds held by the purchaser.
(Holdings in the following funds are not eligible for the above rights of
accumulation: Lord Abbett Equity Fund ("LAEF"), Lord Abbett Series Fund
("LASF"), any series of Lord Abbett Research Fund not offered to the general
public ("LARF") and Lord Abbett U.S. Government Securities Money Market Fund
("GSMMF"), except for holdings in GSMMF which are attributable to any shares
exchanged from a Lord Abbett-sponsored fund.) (2) A purchaser may sign a
non-binding 13-month statement of intention to invest $50,000 or more in any
shares of the Fund or in any of the above eligible funds. If the intended
purchases are completed during the period, the total amount of your intended
purchases of any shares will determine the reduced sales charge rate for the
Class A shares purchased during the period. If not completed, each Class A share
purchase will be at the sales charge for the aggregate of the actual share
purchases. Shares issued upon reinvestment of dividends or distributions are not
included in the statement of intention. The term "purchaser" includes (i) an
individual, (ii) an individual and his or her spouse and children under the age
of 21 and (iii) a trustee or other fiduciary purchasing shares for a single
trust estate or single fiduciary account (including a pension, profit-sharing,
or other employee benefit trust qualified under Section 401 of the Internal
Revenue Code -- more than one qualified employee benefit trust of a single
employer, including its consolidated subsidiaries, may be considered a single
trust, as may qualified plans of multiple employers registered in the name of a
single bank trustee as one account), although more than one beneficiary is
involved.
Class A Share Net Asset Value Purchases. Our Class A shares may be purchased at
net asset value by our directors, employees of Lord Abbett, employees of our
shareholder servicing agent and employees of any securities dealer having a
sales agreement with Lord Abbett Distributor who consents to such purchases or
by the trustee or custodian under any pension or profit-sharing plan or Payroll
Deduction IRA established for the benefit of such persons or for the benefit of
any national securities trade organization to which Lord Abbett or Lord Abbett
Distributor belongs or any company with an account(s) in excess of $10 million
managed by Lord Abbett on a private-advisory-account basis. For purposes of this
paragraph, the terms "directors" and "employees" include a director's or
employee's spouse (including the surviving spouse of a deceased director or
employee). The terms "directors" and "employees of Lord Abbett" also include
other family members and retired directors and employees. Our Class A shares
also may be purchased at net asset value (a) at $1 million or more, (b) with
dividends and distributions on Class A shares of other Lord Abbett-sponsored
funds, except for dividends and distributions on shares of LARF, LAEF and LASF,
(c) under the loan feature of the Lord Abbett-sponsored prototype 403(b) plan
for Class A share purchases representing the repayment of principal and
interest, (d) by certain authorized brokers, dealers, registered investment
advisers or other financial institutions who have entered into an agreement with
Lord Abbett Distributor in accordance with certain standards approved by Lord
Abbett Distributor, providing specifically for the use of our Class A shares in
particular investment products made available for a fee to clients of such
brokers, dealers, registered investment advisers and other financial
institutions ("mutual fund wrap fee programs"), (e) by employees, partners and
owners of unaffiliated consultants and advisers to Lord Abbett, Lord Abbett
Distributor or Lord Abbett-sponsored funds who consent to such purchase if such
persons provide services to Lord Abbett, Lord Abbett Distributor or such funds
on a continuing basis and are familiar with such fund and (f) through Retirement
Plans with at least 100 eligible employees.
Class A Rule 12b-1 Plan. The Fund has adopted a Class A share Rule 12b-1 Plan on
behalf of each Series (the "A Plans," each, an "A Plan") which authorizes the
payment of fees to authorized institutions (except as to certain accounts for
which tracking data is not available) in order to provide additional incentives
for them (a) to provide continuing information and investment services to their
Class A shareholder accounts and otherwise to encourage those accounts to remain
invested in the Series and (b) to sell Class A shares of the Series. Under each
A Plan, in order to save on the expense of shareholders' meetings and to provide
flexibility to the Board of Trustees, the Board, including a majority of the
outside directors who are not "interested persons" of each Series as defined in
the Act, is authorized to approve annual fee payments from a Series' Class A
assets of up to 0.50 of 1% of the average net of such assets consisting of
distribution and service fees, each at a maximum annual rate not exceeding 0.25
of 1% (the "Fee Ceiling").
Under the A Plans, the Board has approved payments by the Series to Lord Abbett
Distributor which uses or passes on to authorized institutions (1) an annual
service fee (payable quarterly) of .25% of the average daily net asset value of
the Class A shares serviced by authorized institutions and (2) a one-time
distribution fee of up to 1% (reduced according to the following schedule: 1% of
the first $5 million, .55% of the next $5 million, .50% of the next $40 million
and .25% over $50 million), payable at the time of sale on all Class A shares
sold during any 12-month period starting from the day of the first net asset
value sale (i) at the $1 million level by authorized institutions, including
sales qualifying at such level under the rights of accumulation and statement of
intention privileges or (ii) through Retirement Plans with at least 100 eligible
employees. In addition, the Board has approved for those authorized institutions
which qualify, a supplemental annual distribution fee equal to 0.10% of the
average daily net asset value of the Class A shares serviced by authorized
institutions which have a satisfactory program for the promotion of such shares
comprising a significant percentage of the Class A assets, with a lower than
average redemption rate. Institutions and persons permitted by law to receive
such fees are "authorized institutions."
Under the A Plans, Lord Abbett Distributor is permitted to use payments received
to provide continuing services to Class A shareholder accounts not serviced by
authorized institutions and, with Board approval, to finance any activity which
is primarily intended to result in the sale of Class A shares. Any such payments
are subject to the Fee Ceiling. Any payments under the Plans not used by Lord
Abbett Distributor in this manner are passed on to authorized institutions.
Holders of Class A shares on which the 1% sales distribution fee has been paid
may be required to pay to the Series on behalf of its Class A shares a CDSC of
1% of the original cost or the then net asset value, whichever is less, of all
Class A shares so purchased which are redeemed out of the Lord Abbett-sponsored
family of funds on or before the end of the twenty-fourth month after the month
in which the purchase occurred. (Exceptions are made for redemptions by
Retirement Plans due to any benefit payment such as plan loans, hardship
withdrawals, death, retirement or separation from service with respect to plan
participants or the distribution of any excess contributions. If the Class A
shares have been exchanged into another Lord Abbett-sponsored fund and are
thereafter redeemed out of the Lord Abbett family of funds on or before the end
of such twenty-fourth month, the charge will be collected for the Series' Class
A shares by the other fund. The Series will collect such a charge for other Lord
Abbett-sponsored funds in a similar situation.
Buying Class B Shares. Class B shares are sold at net asset value per share
without an initial sales charge. However, if Class B shares are redeemed for
cash before the sixth anniversary of their purchase, a CDSC may be deducted from
the redemption proceeds. That sales charge will not apply to shares purchased by
the reinvestment of dividends or capital gains distributions. The charge will be
assessed on the lesser of the net asset value of the shares at the time of
redemption or the original purchase price. The Class B CDSC is paid to Lord
Abbett Distributor to compensate it for its services rendered in connection with
the distribution of Class B shares, including the payment and financing of sales
commissions. See "Class B Rule 12b-1 Plan" below.
To determine whether the CDSC applies to a redemption, the Fund redeems shares
in the following order: (1) shares acquired by reinvestment of dividends and
capital gains distributions, (2) shares held until the sixth anniversary of
their purchase or later, and (3) shares held the longest before the sixth
anniversary of their purchase.
<PAGE>
The amount of the CDSC will depend on the number of years since you invested and
the dollar amount being redeemed, according to the following schedule.
ANNIVERSARY
OF THE DAY ON CONTINGENT DEFERRED
WHICH THE PURCHASE SALES CHARGE ON
ORDER WAS ACCEPTED REDEMPTIONS
(AS % OF AMOUNT
On Before SUBJECT TO CHARGE)
- --------------------------------------------------------------------------------
1st 5.0%
- --------------------------------------------------------------------------------
1st 2nd 4.0%
- --------------------------------------------------------------------------------
2nd 3rd 3.0%
- --------------------------------------------------------------------------------
3rd 4th 3.0%
- --------------------------------------------------------------------------------
4th 5th 2.0%
- --------------------------------------------------------------------------------
5th 6th 1.0%
- --------------------------------------------------------------------------------
on or after the None
6th anniversary
In the table, an "anniversary" is the 365th day subsequent to a purchase or a
prior anniversary. All purchases are considered to have been made on the
business day the purchase was made. See "Buying Shares Through Your Dealer"
above.
If Class B shares are exchanged into the same class of another Lord
Abbett-sponsored fund and the new shares are subsequently redeemed for cash
before the sixth anniversary of the original purchase, the CDSC will be payable
on the new shares on the basis of the time elapsed from the original purchase.
The Series will collect such a charge for other Lord Abbett-sponsored funds in a
similar situation.
Waiver of Class B Sales Charges. The Class B CDSC will not be applied to shares
purchased in certain types of transactions nor will it apply to shares redeemed
in certain circumstances as described below.
The Class B CDSC will be waived for redemptions of shares (i) in connection with
the Systematic Withdrawal Plan and Div-Move services, as described in more
detail under "Shareholder Services" below; (ii) by Retirement Plans due to any
benefit payment such as plan loans, hardship withdrawals, death, retirement or
separation from service with respect to plan participants or the distribution of
any excess contributions, (iii) in connection with mandatory distributions under
403(b) plans and individual retirement accounts and (iv) in connection with the
death of an individual shareholder (a natural person).
Class B Rule 12b-1 Plan. The Fund has adopted a Class B share Rule 12b-1 Plan on
behalf of each Series (the "B Plans," each a "B Plan") under which the Series
periodically pays (except as to certain accounts for which tracking data is not
available) Lord Abbett Distributor (i) an annual service fee of 0.25 of 1% of
the average daily net asset value of the Class B shares and (ii) an annual
distribution fee of 0.75 of 1% of the average daily net asset value of the Class
B shares that are outstanding for less than 8 years. Lord Abbett Distributor
uses the service fee to compensate authorized institutions for providing
personal services for accounts that hold Class B shares. Those services are
primarily similar to those provided under the A Plan, described above.
Lord Abbett Distributor pays an up-front payment to authorized institutions
totaling 4%, consisting of 0.25% for service and 3.75% for a sales commission as
described below.
Lord Abbett Distributor pays the 0.25% service fee to authorized institutions in
advance for the first year after Class B shares have been sold by the authorized
institutions. After the shares have been held for a year, Lord Abbett
Distributor pays the service fee on a quarterly basis. Lord Abbett Distributor
is entitled to retain such service fee payable under the B Plan with respect to
accounts for which there is no authorized institution of record or for which
such authorized institution did not qualify. Although not obligated to do so,
Lord Abbett Distributor may waive receipt from the Series or part or all of the
service fee payments.
The 0.75% annual distribution fee is paid to Lord Abbett Distributor to
compensate it for its services rendered in connection with the distribution of
Class B shares, including the payment and financing of sales commissions.
Although Class B shares are sold without a front-end sales charge, Lord Abbett
Distributor pays authorized institutions responsible for sales of Class B shares
a sales commission of 3.75% of the purchase price. This payment is made at the
time of sale from Lord Abbett Distributor's own resources. Lord Abbett has made
arrangements to finance these commission payments, which arrangements include
non-recourse assignments by Lord Abbett Distributor to the financing party of
such distribution and CDSC payments which are made to Lord Abbett Distributor by
shareholders who redeem their Class B shares within six years of their purchase.
The distribution fee and CDSC payments described above allow investors to buy
Class B shares without a front-end sales charge while allowing Lord Abbett
Distributor to compensate authorized institutions that sell Class B shares. The
CDSC is intended to supplement Lord Abbett Distributor's reimbursement for the
commission payments it has made with respect to Class B shares and its related
distribution and financing costs. The distribution fee payments are at a fixed
rate and the CDSC payments are of a nature that, during any year, both forms of
payment may not be sufficient to reimburse Lord Abbett Distributor for its
actual expenses. The Series is not liable for any expenses incurred by Lord
Abbett Distributor in excess of (i) the amount of such distribution fee payments
to be received by Lord Abbett Distributor and (ii) unreimbursed distribution
expenses of Lord Abbett Distributor incurred in a prior plan year, subject to
the right of the Board of Trustees or shareholders to terminate the B Plan. Over
the long term, the expenses incurred by Lord Abbett Distributor are likely to be
greater than such distribution fee and CDSC payments. Nevertheless, there exists
a possibility that for a short-term period Lord Abbett Distributor may not have
sufficient expenses to warrant reimbursement by receipt of such distribution fee
payments. Although Lord Abbett Distributor undertakes not to make a profit under
the B Plan, the B Plan is considered a compensation plan (i.e., distribution
fees are paid regardless of expenses incurred) in order to avoid the possibility
of Lord Abbett Distributor not being able to receive distribution fees because
of a temporary timing difference between its incurring expenses and receipt of
such distribution fees.
<PAGE>
Automatic Conversion of Class B Shares. On the eighth anniversary of your
purchase of Class B shares, those shares will automatically convert to Class A
shares. This conversion relieves Class B shareholders of the higher annual
distribution fee that applies to Class B shares under the Class B Rule 12b-1
Plan. The conversion is based on the relative net asset values of the two
classes, and no sales charge or other charge is imposed. When Class B shares
convert, any other Class B shares that were acquired by the reinvestment of
dividends and distributions will also convert to Class A shares on a pro rata
basis. The conversion feature is subject to the continued availability of an
opinion of counsel or of a tax ruling described in "Purchases, Redemptions and
Shareholder Services" in the Statement of Additional Information.
Buying Class C Shares. Class C shares are sold at net asset value per share
without an initial sales charge. However, if Class C shares are redeemed for
cash before the first anniversary of their purchase, a CDSC of 1% will be
deducted from the redemption proceeds. That reimbursement charge will not apply
to shares purchased by the reinvestment of dividends or capital gains
distributions. The charge will be assessed on the lesser of the net asset value
of the shares at the time of redemption or the original purchase price. The
Class C CDSC is paid to the Series to reimburse it, in whole or in part, for the
service and distribution fee payments made by the Series at the time such shares
were sold, as described below.
To determine whether the CDSC applies to a redemption, the Series redeems shares
in the following order: (1) shares acquired by reinvestment of dividends and
capital gains distributions, (2) shares held for one year or more and (3) shares
held the longest before the first anniversary of their purchase. If Class C
shares are exchanged into the same class of another Lord Abbett-sponsored fund
and subsequently redeemed before the first anniversary of their original
purchase, the charge will be collected by the other fund on behalf of the
Series' Class C shares. The Series will collect such a charge for other Lord
Abbett-sponsored funds in a similar situation.
Class C Rule 12b-1 Plan. The Fund has adopted a Class C share Rule 12b-1 Plan on
behalf of each Series (the "C Plans", each a "C Plan") under which (except as to
certain accounts for which tracking data is not available) the Series pays
authorized institutions through Lord Abbett Distributor (1) a service fee and a
distribution fee, at the time shares are sold, not to exceed 0.25 and 0.75 of
1%, respectively, of the net asset value of such shares and (2) at each
quarter-end after the first anniversary of the sale of shares, fees for services
and distribution at annual rates not to exceed 0.25 and 0.75 of 1%,
respectively, of the average annual net asset value of such shares outstanding
(payments with respect to shares not outstanding during the full quarter to be
prorated). These service and distribution fees are for purposes similar to those
mentioned above with respect to the A Plan. Sales in clause (1) exclude shares
issued for reinvested dividends and distributions and shares outstanding in
clause (2) include shares issued for reinvested dividends and distributions
after the first anniversary of their issuance.
6 SHAREHOLDER SERVICES
We offer the following shareholder services:
Telephone Exchange Privilege: Shares of any class may be exchanged without a
service charge: (a) for shares of the same class of any other Lord
Abbett-sponsored fund except for (i) LAEF, LASF and LARF and (ii) certain
tax-free, single-state series where the exchanging shareholder is a resident of
a state in which such series is not offered for sale and (b) for shares of any
authorized institution's affiliated money market fund satisfying Lord Abbett
Distributor as to certain omnibus account and other criteria (together,
"Eligible Funds").
You or your representative with proper identification can instruct the Fund to
exchange uncertificated shares of a class (held by the transfer agent) by
telephone. Shareholders have this privilege unless they refuse it in writing.
The Fund will not be liable for following instructions communicated by telephone
that it reasonably believes to be genuine and will employ reasonable procedures
to confirm that instructions received are genuine, including requesting proper
identification and recording all telephone exchanges. Instructions must be
received by the Fund in Kansas City (800-821-5129) prior to the close of the
NYSE to obtain each fund's net asset value per class share on that day.
Expedited exchanges by telephone may be difficult to implement in times of
drastic economic or market change. The exchange privilege should not be used to
take advantage of short-term swings in the market. The Fund reserves the right
to terminate or limit the privilege of any shareholder who makes frequent
exchanges. The Fund can revoke the privilege for all shareholders upon 60 days'
prior written notice. A prospectus for the other Lord Abbett-sponsored fund
selected by you should be obtained and read before an exchange. Exercise of the
Exchange Privilege will be treated as a sale for federal income tax purposes
and, depending on the circumstances, a capital gain or loss may be recognized.
Systematic Withdrawal Plan ("SWP"): Except for Retirement Plans for which there
is no such minimum, if the maximum offering price value of your uncertificated
shares is at least $10,000, you may have periodic cash withdrawals automatically
paid to you in either fixed or variable amounts. With respect to Class B shares,
the CDSC will be waived on redemptions of up to 12% per year of the current net
asset value of your account at the time your SWP is established. For Class B
shares (over 12% per year) and C shares, redemption proceeds due to a SWP will
be derived from the following sources in the order listed: (1) shares acquired
by reinvestment of dividends and capital gains, (2) shares held for six years or
more (Class B) or one year or more (Class C); and (3) shares held the longest
before the sixth anniversary of their purchase (Class B) or before the first
anniversary of their purchase (Class C). For Class B share redemptions over 12%
per year, the CDSC will apply to the entire redemption. Therefore, please
contact the Fund for assistance in minimizing the CDSC in this situation.
Shareholders should be careful in establishing a SWP, especially to the extent
that such a withdrawal exceeds the annual total return for a class, in which
case, the shareholder's original principal will be invaded and, over time, may
be depleted.
Div-Move: You can invest the dividends paid on your account ($50 minimum
investment) into an existing account within the same class in any Eligible Fund.
The account must be either your account, a joint account for you and your
spouse, a single account for your spouse or a custodial account for your minor
child under the age of 21. Such dividends will not be subject to a CDSC. You
should read the prospectus of the other fund before investing.
Invest-A-Matic: You can make fixed, periodic investments ($50 minimum
investment) into the Series and/or any Eligible Fund by means of automatic money
transfers from your bank checking account. You should read the prospectus of the
other fund before investing.
Retirement Plans: Lord Abbett makes available the retirement plan forms and
custodial agreements for IRAs (Individual Retirement Accounts including Simple
IRAs, Simplified Employee Pensions), 403(b) plans and pension and profit-sharing
plans, including 401(k) plans.
Householding: A single copy of an annual or semi-annual report will be sent to
an address to which more than one registered shareholder of the Fund with the
same last name has indicated mail is to be delivered, unless additional reports
are specifically requested in writing or by telephone.
All correspondence should be directed to Lord Abbett Securities Trust (P.O. Box
419100, Kansas City, Missouri 64141; 800-821-5129).
<PAGE>
7 OUR MANAGEMENT
Our business is managed by our officers on a day-to-day basis under the overall
direction of our Board of Trustees with the advice of Lord Abbett ("Fund
Management"). We employ Lord Abbett as investment manager pursuant to a
Management Agreement. Lord Abbett has been an investment manager for over 67
years and currently manages approximately $22 billion in a family of mutual
funds and other advisory accounts. Under the Management Agreement, Lord Abbett
provides us with investment management services and personnel, pays the
remuneration of our officers and of our Trustees affiliated with Lord Abbett,
provides us with office space and pays for ordinary and necessary office and
clerical expenses relating to research, statistical work and supervision of our
portfolios and certain other costs. Lord Abbett provides similar services to
twelve other Lord Abbett-sponsored funds having various investment objectives
and also advises other investment clients. Lord Abbett Partner Robert G. Morris,
serves as Executive Vice President and portfolio manager for the Growth & Income
Series. Mr. Morris has been with Lord Abbett for over five years and has over
twenty-five years of investment experience. Christopher Taylor serves as
portfolio manager of the International Series. Mr. Taylor is Deputy Managing
Director of Fuji Investment Management Co. (Europe), Ltd. (the "Sub-Adviser").
He has been with the Sub-Adviser and its predecessor since 1987 and has 15 years
of investment experience.
Lord Abbett has entered into an agreement with the Sub-Adviser, under which the
Sub-Adviser provides Lord Abbett with advice with respect to the International
Series' assets. The Sub-Adviser is controlled by Fuji Investment Management Co.
(Tokyo). Fuji Bank Limited of Tokyo, Japan ("Fuji Bank") directly owns 40% of
the outstanding voting stock of the Sub-Adviser. Fuji Investment Management Co.
(Tokyo) is an affiliate of Fuji Bank. Lord Abbett indirectly owns a minor
percentage of such outstanding voting stock. As of June 1, 1997, the Sub-Adviser
manages approximately $577 million, which is invested globally. The Sub-Adviser
furnishes Lord Abbett with advice and recommendations with respect to the
International Series' assets, including advice about the allocation of
investments among foreign securities markets and foreign equity and debt
securities markets and foreign equity and debt securities and, subject to
consultation with Lord Abbett, advice as to cash holdings and what securities in
the portfolio should be purchased, held or disposed of. The Sub-Adviser also
gives advice with respect to foreign currency matters. Although, under normal
circumstances, the International Series will be invested at least 80% in equity
securities of non-U.S. issuers, subject to the direction of the Board of
Trustees, Lord Abbett, in consultation with the Sub-Adviser, will determine at
least quarterly, and more frequently as Lord Abbett determines, the percentage
of assets of the International Series that shall be allocated (the "Asset
Allocation") for investment in the United States and in foreign markets,
respectively. Under the Management Agreement, we are obligated to pay Lord
Abbett a monthly fee at the annual rate of 0.75 of 1% for each Series. With
respect to the International Series, Lord Abbett, when not waiving its
management fee, is obligated to pay the Sub-Adviser a monthly fee equal to
one-half of Lord Abbett's fee as described above. Regardless of such waiver,
Lord Abbett is free to pay the Sub-Adviser. For the year ended October 31, 1996,
Lord Abbett had waived $242,341 in management fees for the Growth & Income
Series. For the same period, the Class C share ratio of expenses, including
management fees, to average net assets was 1.55%. For the same period, had Lord
Abbett not waived its management fee and assumed certain expenses, the Class C
share expense ratio would have been 2.01%. As of July 12, 1996, Lord Abbett
discontinued its waiver of the Growth & Income Series' management fee.
We will not hold annual meetings and expect to hold meetings of shareholders
only when necessary under applicable law or the terms of the Fund's Declaration
of Trust. Under the Declaration of Trust, a shareholders' meeting may be called
at the request of the holders of one-quarter of the outstanding shares entitled
to vote. See the Statement of Additional Information for more details. The Fund.
The Fund was organized as a Delaware business trust on February 26, 1993. Its
Class A, B and C shares have equal rights as to voting, dividends and
distributions except for differences resulting from certain class-specific
expenses.
8 DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES
Dividends from net investment income are paid to shareholders of the Growth &
Income Series quarterly and International Series annually. Supplemental
dividends may be paid by each Series in December or January. Dividends from net
investment income may be taken in cash or reinvested in additional shares at net
asset value without a sales charge. If you elect a cash payment (i) a check will
be mailed to you as soon as possible after the monthly reinvestment date or (ii)
if you arrange for direct deposit, your payment will be wired directly to your
bank account within one day after the date on which the dividend is paid.
A long-term capital gains distribution is made by a Series when it has net
profits during the year from sales of securities which it has held more than one
year. If a Series realizes net short-term capital gains, they also will be
distributed. It is anticipated that capital gains will be distributed in
December or January. You may take them in cash or additional shares without a
sales charge. Dividends declared in October, November or December of any year to
shareholders of record as of a date in such a month will be treated for federal
income tax purposes as having been received by shareholders in that year if they
are paid before February 1 of the following year. Shareholders must report
dividends and capital gains distributions as taxable income. Distributions
derived from net long-term capital gains which are designated by a Series as
"capital gains distributions" will be taxable to shareholders as long-term
capital gains, whether received in cash or shares, regardless of how long a
taxpayer has held the shares. Under current law, net long-term capital gains are
taxed at the rates applicable to ordinary income, except that the maximum rate
for long-term capital gains for individuals is 28%. Recently, legislation has
been proposed that would have the effect of reducing the federal income tax rate
on capital gains.
Each Series may be subject to foreign withholding taxes which would reduce the
yield on their investments. Tax treaties between certain countries and the
United States may reduce or eliminate such taxes. See the Statement of
Additional Information for additional details.
Shareholders may be subject to a $50 penalty under the Internal Revenue Code and
we may be required to withhold and remit to the U.S. Treasury a portion (31%) of
any redemption or repurchase proceeds (including the value of shares exchanged
into another Lord Abbett-sponsored fund) and of any taxable dividend or
distribution on any account where the payee failed to provide a correct taxpayer
identification number or to make certain required certifications.
We will inform shareholders of the federal tax status of each dividend and
distribution after the end of each calendar year. Shareholders should consult
their tax advisers concerning applicable state and local taxes as well as the
tax consequences of gains or losses from the redemption or exchange of our
shares.
<PAGE>
9 REDEMPTIONS
To obtain the proceeds of an expedited redemption of $50,000 or less, you or
your representative with proper identification can telephone the Fund. The Fund
will not be liable for following instructions communicated by telephone that it
reasonably believes to be genuine and will employ reasonable procedures to
confirm that instructions received are genuine, including requesting proper
identification, recording all telephone redemptions and mailing the proceeds
only to the named shareholder at the address appearing on the account
registration.
If you do not qualify for the procedure above, send your written redemption
request to Lord Abbett Securities Trust (P.O. Box 419100, Kansas City, Missouri
64141) with signature(s) and any legal capacity of the signer(s) guaranteed by
an eligible guarantor accompanied by any certificates for shares to be redeemed
and other required documentation. Payment will be made within three business
days. The Fund may suspend the right to redeem shares for not more than three
days (or longer under unusual circumstances as permitted by Federal law). If you
have purchased Series' shares by check and subsequently submit a redemption
request, redemption proceeds will be paid upon clearance of your purchase check,
which may take up to 15 days. To avoid delays you may arrange for the bank upon
which a check was drawn to communicate to the Fund that the check has cleared.
Shares also may be redeemed by the Fund at net asset value through your
securities dealer who, as an unaffiliated dealer, may charge you a fee. If your
dealer receives your order prior to the close of the NYSE and communicates it to
Lord Abbett, as our agent, prior to the close of Lord Abbett's business day, you
will receive the net asset value of the shares being redeemed as of the close of
the NYSE on that day. If the dealer does not communicate such an order to Lord
Abbett until the next business day, you will receive the net asset value as of
the close of the NYSE on that next business day. Shareholders who have redeemed
their shares have a one-time right to reinvest, in another account having the
identical class and registration, in any of the Eligible Funds at the then
applicable net asset value without the payment of a front-end sales charge. Such
reinvestment must be made within 60 days of the redemption and is limited to no
more than the amount of the redemption proceeds.
Under certain circumstances and subject to prior written notice, our Board of
Trustees may authorize redemption of all of the shares in any account in which
there are fewer than 50 shares.
Tax-qualified Plans: For redemptions of $50,000 or less, follow normal
redemption procedures. Redemptions over $50,000 must be in writing from the
employer, broker or plan administrator stating the reason for the redemption.
The reason for the redemption must be received by the Fund prior to, or
concurrent with, the redemption request.
10 PERFORMANCE
Lord Abbett Securities Trust - Growth & Income Series closed fiscal 1996 on
October 31 with assets of $113,961,747. During the year, the Growth & Income
Series and the financial markets in general performed well. Following are some
of the factors that were relevant to the Series' performance over the past year,
including market conditions and investment strategies pursued by the Fund's
management.
Over the past year, the stock market remained near all- time highs against a
background of modest economic growth, low inflation and a volatile interest-rate
environment. We mainly identified investment opportunities based on the
characteristics of individual securities, as few areas (sectors) of the market
represented extraordinary value. One exception was the financial sector, where
we were heavily weighted. These holdings performed strongly and helped to offset
disappointments from our technology holdings.
Yield and Total Return. Yield and total return data may, from time to time, be
included in advertisements about each Series. Each class of shares calculates
its "yield" by dividing the annualized net investment income per share on the
portfolio during a 30-day period by the maximum offering price on the last day
of the period. The yield of each class will differ because of the different
expenses (including actual 12b-1 fees) of each class of shares. The yield data
represents a hypothetical investment return on the portfolio, and does not
measure an investment return based on dividends actually paid to shareholders.
To show that return, a dividend distribution rate may be calculated. The
dividend distribution rate is calculated by dividing the dividends of a class
derived from net investment income during a stated period by the maximum
offering price on the last day of the period. Yields and dividend distribution
rates for Class A shares reflect the deduction of the maximum initial sales
charge, but may also be shown based on a Series' net asset value per share.
Yields for Class C shares do not reflect the deduction of the CDSC.
"Total return" for the one-, five- and ten-year periods represents the average
annual compounded rate of return on an investment of $1,000 in each Series at
the maximum public offering price. When total return is quoted for Class A
shares, it includes the payment of the maximum initial sales charge. When total
return is shown for Class C shares, it reflects the effect of the applicable
CDSC. Total return also may be presented for other periods or based on
investments at reduced sales charge levels or net asset value. Any quotation of
total return not reflecting the maximum sales charge (front-end, level, or
back-end) would be reduced if such sales charge were used. Quotations of yield
or total return for any period when an expense limitation is in effect will be
greater than if the limitation had not been in effect. See "Past Performance" in
the Statement of Additional Information for a more detailed description.
See "Performance" in the Statement of Additional Information for a more detailed
discussion concerning the computation of each Series' total return and yield.
This Prospectus does not constitute an offering in any jurisdiction in which
such offer is not authorized or in which the person making such offer is not
qualified to do so or to anyone to whom it is unlawful to make such offer.
No person is authorized to give information or to make any representations not
contained in this Prospectus or in supplemental literature authorized by the
Fund, and no person is entitled to rely upon any information or representation
not contained herein or therein.
<PAGE>
Each Series' performance shown in the comparison below will be greater than or
less than the lines for Class A and B shares, in the case of the Growth & Income
Series, and Class B and C shares, in the case of the International Series, based
on the differences in sales charges and fees paid by shareholders investing in
the different classes.
Comparison of changes in value of a $10,000 investment in Class C shares of Lord
Abbett Securities Trust -- Growth & Income Series, assuming reinvestment of all
dividends and distributions, to such an investment in the unmanaged Standard &
Poor's 500
<TABLE>
<CAPTION>
<S> <C> <C>
DATE THE SERIES (CLASS C) S&P
AT NET ASSET VALUE 500
1-3-94 10,000 10,000
10-31-94 10,262 10,382
10-31-95 12,502 13,125
10-31-96 15,0006 16,275
4-30 97 16,131 17,618
Average Annual Total Return for Class C shares(2)
1 Year 3 Years Life of Series
(1/3/94-4/30/97)
14.60% 18.90% 15.88%
Total Return for Class A Shares(2)
Life of Growth & Income Series
(7/15/96-4/30/97)
13.90%
<FN>
(1)Performance numbers for the Standard & Poor's 500, which is unmanaged, do not
reflect transaction costs or management fees. An investor cannot invest directly
in this index.
(2)Total return is the percent change in value with all dividends and
distributions reinvested for the periods shown using the SEC-required uniform
method to compute such return.
</FN>
</TABLE>
Comparison of changes in value of a $10,000 investment in Class A shares of Lord
Abbett Securities Trust -- International Series, assuming reinvestment of all
dividends and distributions, to such an investment in the unmanaged Morgan
Stanley European, Asia and Far East Index
<TABLE>
<CAPTION>
International Series International Series Morgan Stanley
at Net Asset Value at maximum offering European, Asia
Date price and Far East Index(1)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
12/01/96 $10,000
12/13/96 $10,000 $ 9,426 --
12/31/96 10,047 9,470 9,874
01/31/97 10,174 9,590 9,530
02/28/97 10,609 10,000 9,689
04/30/97 10,673 10,060 9,726
Annual Total Return
for Class A Shares(2)
Life of International Series
(12/13/96-4/30/97)
.60%
<FN>
(3)Performance numbers for Morgan Stanley European, Asia and Far East Index
("EAFE"), which is unmanaged, do not reflect transaction costs or management
fees. An investor cannot invest directly in this index. Since EAFE only starts
on the first day of the month, in the case of the EAFE comparison to the
International Series, which commenced operations on 12/13/96, EAFE starts on
12/1/96.
(4)Total return is the percent change in value with all dividends and
distributions reinvested for the periods shown using the SEC-required uniform
method to compute such return.
</FN>
</TABLE>
<PAGE>
Investment Manager and Distributor
Lord, Abbett & Co. and Lord Abbett Distributor LLC
The General Motors Building
767 Fifth Avenue
New York, New York 10153-0203
212-848-1800
Custodian
The Bank of New York
48 Wall Street
New York, New York 10286
Transfer Agent and Dividend
Disbursing Agent
United Missouri Bank of Kansas City, N.A.
Tenth and Grand
Kansas City, Missouri 64141
Shareholder Servicing Agent
DST Systems, Inc.
P.O. Box 419100
Kansas City, Missouri 64141
800-821-5129
Auditors
Deloitte & Touche LLP
Counsel Debevoise & Plimpton
<PAGE>
LORD ABBETT
STATEMENT OF ADDITIONAL INFORMATION JUNE 1, 1997
LORD ABBETT SECURITIES TRUST
This Statement of Additional Information is not a Prospectus. A Prospectus may
be obtained from your securities dealer or from Lord Abbett Distributor LLC
("Lord Abbett Distributor") at The General Motors Building, 767 Fifth Avenue,
New York, New York 10153-0203. This Statement relates to, and should be read in
conjunction with, the Prospectus dated June 1, 1997.
Lord Abbett Securities Trust (referred to as "we" or the "Fund") was organized
as a Delaware business trust on February 26, 1993. The Fund has two series:
Growth & Income Series and the International Series (the "Series") each having
three classes of shares (A, B and C). All shares have equal noncumulative voting
rights and equal rights with respect to dividends, assets and liquidation,
except for certain class-specific expenses. They are fully paid and
nonassessable when issued and have no preemptive or conversion rights.
Rule 18f-2 under the Investment Company Act of 1940, as amended (the "Act")
provides that any matter required to be submitted, by the provisions of the Act
or applicable state law or otherwise, to the holders of the outstanding voting
securities of an investment company such as the Fund shall not be deemed to have
been effectively acted upon unless approved by the holders of a majority of the
outstanding shares of each class or series affected by such matter. Rule 18f-2
further provides that a class or series shall be deemed to be affected by a
matter unless the interests of each class or series in the matter are
substantially identical or the matter does not affect any interest of such class
or series. However, the Rule exempts the selection of independent public
accountants, the approval of principal distributing contracts and the election
of trustees from its separate voting requirements.
Shareholder inquiries should be made by writing directly to the Fund or by
calling 800-821-5129. In addition, you can make inquiries through your dealer.
TABLE OF CONTENTS Page
1. Investment Objective and Policies
2. Trustees and Officers 5
3. Investment Advisory and Other Services 8
4. Portfolio Transactions 9
5. Purchases, Redemptions and Shareholder Services 10
6. Past Performance 15
7. Taxes 16
8. Information About the Fund 16
9. Financial Statements 17
<PAGE>
1.
Investment Objective and Policies
FUNDAMENTAL INVESTMENT RESTRICTIONS
Both Series are subject to the following investment restrictions which cannot be
changed without approval of a majority of each Series' outstanding shares. Each
Series may not: (1) borrow money, except that (i) each Series may borrow from
banks (as defined in the Act ) in amounts up to 33 1/3% of its total assets
(including the amount borrowed), (ii) each Series may borrow up to an additional
5% of its total assets for temporary purposes, (iii) each Series may obtain such
short-term credit as may be necessary for the clearance of purchases and sales
of portfolio securities and (iv) each Series may purchase securities on margin
to the extent permitted by applicable law; (2) pledge its assets (other than to
secure borrowings, or to the extent permitted by each Series' investment
policies as permitted by applicable law); (3) engage in the underwriting of
securities, except pursuant to a merger or acquisition or to the extent that, in
connection with the disposition of its portfolio securities, it may be deemed to
be an underwriter under federal securities laws; (4) make loans to other
persons, except that the acquisition of bonds, debentures or other corporate
debt securities and investment in government obligations, commercial paper,
pass-through instruments, certificates of deposit, bankers acceptances,
repurchase agreements or any similar instruments shall not be subject to this
limitation, and except further that each Series may lend its portfolio
securities, provided that the lending of portfolio securities may be made only
in accordance with applicable law; (5) buy or sell real estate (except that each
Series may invest in securities directly or indirectly secured by real estate or
interests therein or issued by companies which invest in real estate or
interests therein), or commodities or commodity contracts (except to the extent
each Series may do so in accordance with applicable law and without registering
as a commodity pool operator under the Commodity Exchange Act as, for example,
with futures contracts); (6) with respect to 75% of its gross assets, buy
securities of one issuer representing more than (i) 5% of its gross assets,
except securities issued or guaranteed by the U.S. Government, its agencies or
instrumentalities or (ii) 10% of the voting securities of such issuer; (7)
invest more than 25% of its assets, taken at market value, in the securities of
issuers in any particular industry (excluding securities of the U.S. Government,
its agencies and instrumentalities); or (8) issue senior securities to the
extent such issuance would violate applicable law.
With respect to the restrictions mentioned herein, compliance therewith will not
be affected by changes in the market value of portfolio securities but will be
determined at the time of purchase or sale of such securities.
NON-FUNDAMENTAL INVESTMENT RESTRICTIONS. In addition to the investment
restrictions above which cannot be changed without shareholder approval, each
Series also is subject to the following non-fundamental investment policies
which may be changed by the Board of Trustees without shareholder approval. Each
Series may not: (1) borrow in excess of 5% of its gross assets taken at cost or
market value, whichever is lower at the time of borrowing, and then only as a
temporary measure for extraordinary or emergency purposes; (2) make short sales
of securities or maintain a short position except to the extent permitted by
applicable law; (3) invest knowingly more than 15% of its net assets (at the
time of investment) in illiquid securities, except for securities qualifying for
resale under Rule 144A of the Securities Act of 1933, deemed to be liquid by the
Board of Trustees; (4) invest in the securities of other investment companies
except as permitted by applicable law; (5) invest in securities of issuers
which, with their predecessors, have a record of less than three years'
continuous operations, if more than 5% of a Series' total assets would be
invested in such securities (this restriction shall not apply to
mortgaged-backed securities, asset-backed securities or obligations issued or
guaranteed by the U. S. government, its agencies or instrumentalities); (6) hold
securities of any issuer if more than 1/2 of 1% of the securities of such issuer
are owned beneficially by one or more officers or trustees of the Fund or by one
or more partners or members of the Fund's underwriter or investment adviser if
these owners in the aggregate own beneficially more than 5% of the securities of
such issuer; (7) invest in warrants if, at the time of the acquisition, its
investment in warrants, valued at the lower of cost or market, would exceed 5%
of a Series' total assets (included within such limitation, but not to exceed 2%
of a Series' total assets, are warrants which are not listed on the New York or
American Stock Exchange or a major foreign exchange); (8) invest in real estate
limited partnership interests or interests in oil, gas or other mineral leases,
or exploration or other development programs, except that each Series may invest
in securities issued by companies that engage in oil, gas or other mineral
exploration or other development activities; (9) write, purchase or sell puts,
calls, straddles, spreads or combinations thereof, except to the extent
permitted in each Series' prospectus and statement of additional information, as
they may be amended from time to time; or (10) buy from or sell to any of its
officers, trustees, employees, or its investment adviser or any of its officers,
trustees, partners or employees, any securities other than shares of beneficial
interest in each Series. LENDING PORTFOLIO SECURITIES
Each Series may lend portfolio securities to registered broker-dealers. These
loans, if and when made, may not exceed 30% of each Series' total assets. Each
Series loan of securities will be collateralized by cash or marketable
securities issued or guaranteed by the U.S. Government or its agencies ("U.S.
Government securities") or other permissible means at least equal to the market
value of the loaned securities. From time to time, each Series may pay a part of
the interest received with respect to the investment of collateral to a borrower
and/or a third party that is not affiliated with the Fund and is acting as a
"placing broker". No fee will be paid to affiliated persons of the Fund.
By lending portfolio securities, each Series can increase its income by
continuing to receive interest on the loaned securities as well as by either
investing the cash collateral in permissible investments, such as U.S.
Government securities or obtaining yield in the form of interest paid by the
borrower when U.S. Government securities or other forms of non-cash collateral
are received. Each Series will comply with the following conditions whenever it
loans securities: (i) each Series must receive at least 100% collateral from the
borrower; (ii) the borrower must increase the collateral whenever the market
value of the securities loaned rises above the level of the collateral; (iii)
each Series must be able to terminate the loan at any time; (iv) each Series
must receive reasonable compensation for the loan, as well as any dividends,
interest or other distributions on the loaned securities; (v) each Series may
pay only reasonable fees in connection with the loan and (vi) voting rights on
the loaned securities may pass to the borrower except that, if a material event
adversely affecting the investment in the loaned securities occurs, the Trustees
must terminate the loan and regain the right to vote the securities.
REPURCHASE AGREEMENTS
Each Series may enter into repurchase agreements with respect to a security. A
repurchase agreement is a transaction by which each Series acquires a security
and simultaneously commits to resell that security to the seller (a bank or
securities dealer) at an agreed upon price on an agreed upon date. The resale
price reflects the purchase price plus an agreed upon market rate of interest
which is unrelated to the coupon rate or date of maturity of the purchased
security. In this type of transaction, the securities purchased by each Series
have a total value in excess of the value of the repurchase agreement. Each
Series requires at all times that the repurchase agreement be collateralized by
cash or U.S. Government securities having a value equal to, or in excess of, the
value of the repurchase agreement. Such agreements permit each Series to keep
all of its assets at work while retaining flexibility in pursuit of investments
of a longer term nature.
The use of repurchase agreements involves certain risks. For example, if the
seller of the agreement defaults on its obligation to repurchase the underlying
securities at a time when the value of these securities has declined, each
Series may incur a loss upon disposition of them. If the seller of the agreement
becomes insolvent and subject to liquidation or reorganization under the
Bankruptcy Code or other laws, a bankruptcy court may determine that the
underlying securities are collateral not within the control of each Series and
are therefore subject to sale by the trustee in bankruptcy. Even though the
repurchase agreements may have maturities of seven days or less, they may lack
liquidity, especially if the issuer encounters financial difficulties. While
Fund management acknowledges these risks, it is expected that they can be
controlled through stringent selection criteria and careful monitoring
procedures. Fund management intends to limit repurchase agreements to
transactions with dealers and financial institutions believed by Fund management
to present minimal credit risks. Fund management will monitor creditworthiness
of the repurchase agreement sellers on an ongoing basis.
The Series will enter into repurchase agreements only with those primary
reporting dealers that report to the Federal Reserve Bank of New York and with
the 100 largest United States commercial banks and the underlying securities
purchased under the agreements will consist only of those securities in which
the Series otherwise may invest.
WARRANTS
Pursuant to Texas regulations, each Series will not invest more than 5% of its
assets in warrants and not more than 2% of such value in warrants not listed on
the New York or American Stock Exchanges, except when they form a unit with
other securities. As a matter of operating policy, we will not invest more than
5% of our net assets in rights. COVERED CALL OPTIONS
As stated in the Prospectus, each Series may write covered call options which
are traded on a national securities exchange with respect to securities in its
portfolio in an attempt to increase its income and to provide greater
flexibility in the disposition of its portfolio securities. A "call option" is a
contract sold for a price (the "premium") giving its holder the right to buy a
specific number of shares of stock at a specific price prior to a specified
date. A "covered call option" is a call option issued on securities already
owned by the writer of the call option for delivery to the holder upon the
exercise of the option. During the period of the option, each Series forgoes the
opportunity to profit from any increase in the market price of the underlying
security above the exercise price of the option (to the extent that the increase
exceeds its net premium). Each Series may enter into "closing purchase
transactions" in order to terminate its obligation to deliver the underlying
security (this may result in a short-term gain or loss). A closing purchase
transaction is the purchase of a call option (at a cost which may be more or
less than the premium received for writing the original call option) on the same
security, with the same exercise price and call period as the option previously
written. If a Series is unable to enter into a closing purchase transaction, it
may be required to hold a security that it might otherwise have sold to protect
against depreciation. Neither Series intends to write covered call options with
respect to securities with an aggregate market value of more than 5% of its
gross assets at the time an option is written. This percentage limitation will
not be increased without prior disclosure in the current Prospectus.
The Fund's custodian will segregate cash or liquid high-grade debt securities in
an amount not less than that required by Securities Exchange Commission ("SEC")
Release 10666 with respect to Series assets committed to written covered call
options. If the value of the segregated securities declines, additional cash or
debt 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 each Series'
commitments with respect to such written options.
OTHER INTERNATIONAL SERIES INVESTMENT POLICIES (WHICH CAN BE CHANGED WITHOUT
SHAREHOLDER APPROVAL)
FINANCIAL FUTURES CONTRACTS. The International Series may enter into contracts
for the future delivery of a financial instrument, such as a security or the
cash value of a securities index. This investment technique is designed
primarily to hedge (i.e., protect) against anticipated future changes in
interest rates or market conditions which otherwise might adversely affect the
value of securities which we hold or intend to purchase. A "sale" of a futures
contract means the undertaking of a contractual obligation to deliver the
securities or the cash value of an index called for by the contract at a
specified price during a specified delivery period. A "purchase" of a futures
contract means the undertaking of a contractual obligation to acquire the
securities or cash value of an index at a specified price during a specified
delivery period. At the time of delivery pursuant to the contract, adjustments
are made to recognize differences in value arising from the delivery of
securities which differ from those specified in the contract. In some cases,
securities called for by a futures contract may not have been issued at the time
the contract was written. The International Series will not enter into any
futures contracts or options on futures contracts if the aggregate of the market
value of the securities covered by its outstanding futures contracts and
securities covered by futures contracts subject to the outstanding options
written by it would exceed 50% of its total assets.
Although some financial futures contracts by their terms call for the actual
delivery or acquisition of securities, in most cases, a party will close out the
contractual commitment before delivery without having to make or take delivery
of the security by purchasing (or selling, as the case may be) on a commodities
exchange an identical futures contract calling for delivery in the same month.
Such a transaction, if effected through a member of an exchange, cancels the
obligation to make or take delivery of the securities. All transactions in the
futures market are made, offset or fulfilled through a clearing house associated
with the exchange on which the contracts are traded. The International Series
will incur brokerage fees when it purchases or sells contracts and will be
required to maintain margin deposits. At the time it enters into a futures
contract, it is required to deposit with its custodian, on behalf of the broker,
a specified amount of cash or eligible securities called "initial margin." The
initial margin required for a futures contract is set by the exchange on which
the contract is traded. Subsequent payments, called "variation margin," to and
from the broker are made on a daily basis as the market price of the futures
contract fluctuates. The costs incurred in connection with futures transactions
could reduce the Series' return. Futures contracts entail risks. If the
investment adviser's judgment about the general direction of interest rates or
markets is wrong, the overall performance may be poorer than if no such
contracts had been entered into. There may be an imperfect correlation between
movements in prices of futures contracts and portfolio securities being hedged.
The degree of difference in price movements between futures contracts and the
securities (or securities indices) being hedged depends upon such things as
variations in demand for futures contracts and securities underlying the
contracts and differences between the liquidity of the markets for such
contracts and the securities underlying them. In addition, the market prices of
futures contracts may be affected by certain factors not directly related to the
underlying securities. At any given time, the availability of futures contracts,
and hence their prices, are influenced by credit conditions and margin
requirements. Due to the possibility of price distortions in the futures market
and because of the imperfect correlation between movements in the prices of
securities and movements in the prices of futures contracts, a correct forecast
of market trends by the investment adviser may not result in a successful
hedging transaction.
OPTIONS ON FINANCIAL FUTURES CONTRACTS. The International Series may purchase
and write call and put options on financial futures contracts. An option on a
futures contract gives the purchaser the right, in return for the premium paid,
to assume a position in a futures contract at a specified exercise price at any
time during the period of the option. Upon exercise, the writer of the option
delivers the futures contract to the holder at the exercise price. The
International Series would be required to deposit with our custodian initial
margin and maintenance margin with respect to put and call options on futures
contracts written by us. Options on futures contracts involve risks similar to
the risks relating to transactions in financial futures contracts described
above. Generally speaking, a given dollar amount used to purchase an option on a
financial futures contract can hedge a much greater value of underlying
securities than if that amount were used to directly purchase the same financial
futures. Should the event that the International Series intends to hedge (or
protect) against not materialize, however, the option may expire worthless, in
which case we would lose the premium paid therefor.
SEGREGATED ACCOUNTS. To the extent required to comply with Securities and
Exchange Commission Release 10666 and any related SEC policies, when purchasing
a futures contract, or writing a put option, the International Series will
maintain in a segregated account at its custodian bank cash, U.S. Government and
other permitted securities to cover its position.
PORTFOLIO TURNOVER
For the fiscal year ended October 31, 1996 the portfolio turnover was 23.84% for
the Growth & Income Series.
2.
Trustees and Officers
The following trustee is a partner of Lord Abbett, The General Motors Building,
767 Fifth Avenue, New York, New York 10153-0203. He has been associated with
Lord Abbett for over five years and is also an officer and director or trustee
of the twelve other Lord Abbett-sponsored funds. He is an "interested person" as
defined in the Act, and as such, may be considered to have an indirect financial
interest in the Rule 12b-1 Plan described in the Prospectus.
Robert S. Dow, age 52, Chairman and President
The following outside directors are also directors or trustees of the twelve
other Lord Abbett-sponsored funds referred to above.
E. Thayer Bigelow
Courtroom Television Network
600 Third Avenue
New York, New York
Chief Executive Officer of Courtroom Television. Formerly President and Chief
Executive Officer of Time Warner Cable Programming, Inc. Age 55.
Stewart S. Dixon
Wildman, Harrold, Allen & Dixon
225 W. Wacker Drive (Suite 2800)
Chicago, Illinois
Partner in the law firm of Wildman, Harrold, Allen & Dixon. Age 66.
John C. Jansing
162 S. Beach Road
Hobe Sound, Florida
Retired. Former Chairman of Independent Election Corporation of America, a proxy
tabulating firm. Age 71.
C. Alan MacDonald
The Marketing Partnership, Inc.
27 Signal Road
Stamford, Connecticut
General Partner, The Marketing Partnership, Inc., a full service marketing
consulting firm. Formerly Chairman and Chief Executive Officer of Lincoln
Snacks, Inc., manufacturer of branded snack foods (1992-1994). Currently serves
as Director of Den West Restaurant Co., J. B. Williams, and Fountainhead Water
Company. Age 64.
Hansel B. Millican, Jr.
Rochester Button Company
1100 Noblin Avenue
South Boston, Virginia
President and Chief Executive Officer of Rochester Button Company. Age 68.
Thomas J. Neff
Spencer Stuart U.S.
277 Park Avenue
New York, New York
Chairman of Spencer Stuart U.S., an executive search consulting firm. Age 59.
The second column of the following table sets forth the compensation accrued for
the Fund's outside trustees. The third column sets forth information with
respect to the equity-based benefits accrued for outside directors/trustees by
the Lord Abbett-sponsored funds. The fourth column sets forth the total
compensation payable by such funds to the outside directors/trustees. No trustee
of the Fund associated with Lord Abbett and no officer of the Fund received any
compensation from the Fund for acting as a trustee or officer.
<TABLE>
<CAPTION>
FOR THE SIX-MONTHS ENDED APRIL 30, 1997
(1) (2) (3) (4)
For Year Ended
Equity-Based December 31, 1996
Benefits Accrued Total Compensation
Aggregate by the Fund andAccrued by the Fund and
Compensation Twelve Other Lord Twelve Other Lord
Accrued by Abbett-sponsored Abbett-sponsored
NAME OF DIRECTOR THE FUND(1) FUNDS(2) FUNDS(3)
- ------
<S> <C> <C> <C>
E. Thayer Bigelow $210 $11,563 $48,200
Stewart S. Dixon $206 $22,283 $46,700
John C. Jansing $206 $28,242 $46,700
C. Alan MacDonald $214 $29,942 $48,200
Hansel B. Millican, Jr. $210 $24,499 $49,600
Thomas J. Neff $208 $15,990 $46,900
<FN>
1. Outside trustees' fees, including attendance fees for board and committee
meetings, are allocated among all Lord Abbett-sponsored funds based on the
net assets of each fund. A portion of the fees payable by the Fund to its
outside trustees is being deferred under a plan that deems the deferred
amounts to be invested in shares of the Fund for later distribution to the
trustees. The amounts of the aggregate compensation payable by the Fund as of
April 30, 1997 deemed invested in Fund shares, including dividends reinvested
and changes in net asset value applicable to such deemed investments, were:
Mr. Bigelow, $621; Mr. Dixon, $19,146; Mr. Jansing, $19,639; Mr. MacDonald,
$8,452; Mr. Millican, $19,000 and Mr. Neff, $19,849. If the amounts deemed
invested in Fund shares were added to each director's actual holdings of Fund
shares as of April 30, 1997, each would own, the following: Mr. Bigelow, 79
shares; Mr. Dixon, 2,845 shares; Mr. Jansing, 6,564 shares; Mr. McDonald,
1,077 shares; Mr. Millican, 2,420 shares; and Mr. Neff, 2,925 shares.
2. Each Lord Abbett-sponsored fund has a retirement plan providing that outside
trustees may receive annual retirement benefits for life equal to 100% of
their final annual retainers following retirement at or after age 72 with at
least 10 years of service. Each plan also provides for a reduced benefit upon
early retirement under certain circumstances, a pre-retirement death benefit
and actuarially reduced joint-and-survivor spousal benefits. Such retirement
plans, and the deferred compensation plans referred to in footnote one, have
been amended recently to, among other things, enable outside trustees to
elect to convert their prospective benefits under the retirement plans to
equity-based benefits under the deferred compensation plans (renamed the
equity-based plans and hereinafter referred to as such). Five of the six
outside trustees made such an election. Mr. Jansing did not. The amounts
accrued in column 3 were accrued by the Lord Abbett-sponsored funds for the
twelve months ended October 31, 1996 with respect to the equity-based plans.
These accruals were based on the plans as in effect before the recent
amendments and on the fees payable to outside trustees of the Fund for the
twelve months ended October 31, 1996. Under the recent amendments, the annual
retainer was increased to $50,000 and the annual retirement benefits were
increased from 80% to 100% of a trustee's final annual retainer. Thus, if Mr.
Jansing were to retire at or after age 72 and the annual retainer payable by
the funds were the same as it today, he would receive annual retirement
benefits of $50,000.
3. This column shows aggregate compensation, including trustees fees and
attendance fees for board and committee meetings, of a nature referred to in
footnote one, accrued by the Lord Abbett-sponsored funds during the year
ended December 31, 1996.
</FN>
</TABLE>
Except where indicated, the following executive officers of the Fund have been
associated with Lord Abbett for over five years. Of the following, Messrs.
Allen, Brown, Carper, Cutler, Ms. Foster, Messrs. Morris, Noelke and Walsh are
partners of Lord Abbett; the others are employees: Robert G. Morris age 51,
Executive Vice President, Kenneth B. Cutler, age 64, Vice President and
Secretary; Stephen I. Allen, age 44; Zane E. Brown, age 46; Daniel E. Carper,
age 45; Daria L. Foster, age 42; Robert J. Noelke, age 40; Paul A. Hilstad, age
54 (with Lord Abbett since 1995; formerly Senior Vice President and General
Counsel of American Capital Management & Research, Inc.); Thomas F. Konop, age
55; A. Edward Oberhaus, age 36; Victor W. Pizzolato, age 64; John J. Walsh, age
61, Vice Presidents; and Keith F. O'Connor, age 41, Vice President and
Treasurer.
The Fund does not hold annual meetings of shareholders unless one or more
matters are required to be acted on by shareholders under the Act. Under the
Fund's Declaration of Trust, shareholder meetings may be called at any time by
certain officers of the Fund or by a majority of the trustees (i) for the
purpose of taking action upon any matter requiring the vote or authority of the
Fund's shareholders or upon other matters deemed to be necessary or desirable or
(ii) upon the written request of the holders of at least one-quarter of the
shares of the Fund outstanding and entitled to vote at the meeting.
As of October 31, 1996, our trustees and officers, as a group, owned less than
1% of our outstanding shares.
3.
Investment Advisory and Other Services
As described under "Our Management" in the Prospectus, Lord Abbett is the
investment manager for the Series. The ten general partners of Lord Abbett, all
of whom are officers and/or trustees of the Fund, are: Stephen I. Allen, Zane E.
Brown, Daniel E. Carper, Kenneth B. Cutler, Robert S. Dow, Daria L. Foster,
Robert G. Morris, Robert J. Noelke, E. Wayne Nordberg and John J. Walsh. The
address of each partner is The General Motors Building, 767 Fifth Avenue, New
York, New York 10153-0203.
The services performed by Lord Abbett are described under "Our Management" in
the Prospectus. Under the Management Agreement, each Series is obligated to pay
Lord Abbett a monthly fee, based on average daily net assets for each month, at
the annual rate of .75 of 1%. This fee is allocated among Class A and C based on
the classes' proportionate shares of such daily net assets, in the case of the
Growth & Income Series. For the year ended October 31, 1996 such fees amounted
to $161,248 attributable to Class A and $339,410 attributable to Class C shares
of the Growth & Income Series.
Although not obligated to do so, Lord Abbett has waived or may waive all or part
of its management fees and has assumed or may assume other expenses of each
Series. For the fiscal year ended October 31, 1996 Lord Abbett waived $242,341 ,
in management fees which were attributable to Class C shares, in the case of the
Growth & Income Series.
As discussed in the Prospectus under "Our Management," each Series is
contingently obligated to repay to Lord Abbett the amounts of such assumed other
expenses.
Each Series pays all expenses not expressly assumed by Lord Abbett, including,
without limitation, 12b-1 expenses, outside trustees' fees and expenses,
association membership dues, legal and auditing fees, taxes, transfer and
dividend disbursing agent fees, shareholder servicing costs, expenses relating
to shareholder meetings, expenses of preparing, printing and mailing stock
certificates and shareholder reports, expenses of registering our shares under
federal and state securities laws, expenses of preparing, printing and mailing
prospectuses to existing shareholders, insurance premiums, brokerage and other
expenses connected with executing portfolio transactions.
The Fund has agreed with the State of California to limit operating expenses
(including management fees but excluding taxes, interest, extraordinary expenses
and brokerage commissions) to 2 1/2% of average annual net assets up to
$30,000,000, 2% of the next $70,000,000 of such assets and 1 1/2% of such assets
in excess of $100,000,000. However, as described in the Prospectuses, the Fund
has adopted a Plan pursuant to Rule 12b-1 of the Act for each class of shares of
the Series. Annual Plan distribution expenses up to 1% of the Series' average
net assets during its fiscal year may be excluded from this expense limitation.
The expense limitation is a condition the registration of investment company
shares for sale in the State and applies so long as our shares are registered
for sale in that State.
Deloitte & Touche LLP, Two World Financial Center, New York, New York 10128, are
the independent public accountants of the Fund and must be approved at least
annually by our trustees to continue in such capacity. Deloitte & Touche LLP
perform audit services for the Fund including the examination of financial
statements included in our annual report to shareholders.
The Bank of New York ("BNY"), 48 Wall Street, New York, New York 10286, is the
Fund's custodian. Rules adopted by the Securities & Exchange Commission under
the Act permit the International Series to maintain its foreign assets in the
custody of certain eligible foreign banks and securities depositories. The
International Series' portfolio securities and cash, when invested in foreign
securities and not held by BNY or its foreign branches, are held by
sub-custodians of BNY approved by the Board of Trustees of the Fund in
accordance with such rules.
The Sub-Custodians of BNY are:
Euro-Clear (a transnational securities depository); Australia: ANZ Banking
Group; Austria: Creditanstalt-Bankverein; Canada: Canadian Imperial Bank of
Commerce; Chile: Citibank, N.A.; Czech Republic: Ceskoslovenska Obchodni Banka;
Denmark: Den Danske Bank; Finland: Union Bank of Finland; Germany: J.P. Morgan
GmbH; Greece: National Bank of Greece S.A.; Hong Kong, Indonesia, Philippines,
Taiwan and Thailand: Hong Kong & Shanghai Banking Corp.; Hungary: Citibank
Budapest Rt; India: Hong Kong and Shanghai Banking Corporation; Ireland: Allied
Irish Banks, PLC; Israel: Bank Leumi LE-Israel B.M.; Japan: The Fuji Bank, Ltd.;
Jordan: Citibank, N.A.; Korea: Bank of Seoul; Luxembourg: Banque Internationale
A Luxembourg, S.A.; Mexico: Citibank, N.A.; Morocco: Banque Commerciale du
Maroc; Netherlands: Bank van Haften Labouchere; New Zealand: Anz Banking Group
Ltd.; Norway: Den Norske Bank; Pakistan: Citibank, N.A.; Peru: Citibank, N.A.;
Poland: Bank Handlowy w Warszawie S.A.; Portugal: Banco Espirito Santo E
Comercial de Lisboa; Malaysia, Singapore: Development Bank of Singapore; South
Africa: The First National Bank of Southern Africa; Sri Lanka: Hong Kong and
Shanghai Banking Corporation; Sweden: Skandinaviska Enskilda Banken;
Switzerland: Bank Leu; Turkey: Citibank, N.A.; Venezuela: Citibank, N.A.
4.
Portfolio Transactions
Our policy is to obtain best execution on all our portfolio transactions, which
means that we seek to have purchases and sales of portfolio securities executed
at the most favorable prices, considering all costs of the transaction including
brokerage commissions and dealer markups and markdowns and taking into account
the full range and quality of the brokers' services. Consistent with obtaining
best execution, the Fund may pay, as described below, a higher commission than
some brokers might charge on the same transaction. This policy governs the
selection of brokers or dealers and the market in which the transaction is
executed. To the extent permitted by law, we may, if considered advantageous,
make a purchase from or sale to another Lord Abbett-sponsored fund without the
intervention of any broker-dealer.
Broker-dealers are selected on the basis of their professional capability and
the value and quality of their brokerage and research services. Normally, the
selection is made by traders who are officers of the Fund and also are employees
of Lord Abbett. These traders do the trading as well for other accounts --
investment companies (of which they are also officers) and other investment
clients -- managed by Lord Abbett. For foreign securities purchased or sold by
the International Series, the selection is made by the Sub-Adviser. The
Sub-Advisor are responsible for obtaining best execution.
In transactions on stock exchanges in the United States, commissions are
negotiated, whereas on many foreign stock exchanges commissions are fixed. In
the case of securities traded in the foreign and domestic over-the-counter
markets, there is generally no stated commission, but the price usually includes
an undisclosed commission or markup. Purchases from underwriters of newly-issued
securities for inclusion in the Fund's portfolios usually will include a
concession paid to the underwriter by the issuer and purchases from dealers
serving as market makers will include the spread between the bid and asked
prices. When commissions are negotiated, we pay a commission rate that we
believe is appropriate to give maximum assurance that our brokers will provide
us, on a continuing basis, the highest level of brokerage services available.
While we do not always seek the lowest possible commission on particular trades,
we pay a commission rate that we believe is appropriate to give maximum
assurance that our brokers will provide us, on a continuing basis, the highest
level of brokerage services available. While we do not always seek the lowest
possible commissions on particular trades, we believe that our commission rates
are in line with the rates that many other institutions pay. Our traders are
authorized to pay brokerage commissions in excess of those that other brokers
might accept on the same transactions in recognition of the value of the
services performed by the executing brokers, viewed in terms of either the
particular transaction or the overall responsibilities of Lord Abbett with
respect to us and the other accounts they manage. Such services include showing
us trading opportunities including blocks, a willingness and ability to take
positions in securities, knowledge of a particular security or market, proven
ability to handle a particular type of trade, confidential treatment, promptness
and reliability.
Some of our brokers also provide research services at least some of which are
useful to Lord Abbett in their overall responsibilities with respect to us and
the other accounts they manage. Research includes the furnishing of analyses and
reports concerning issuers, industries, securities, economic factors and trends,
portfolio strategy and the performance of accounts and trading equipment and
computer software packages, acquired from third-party suppliers, that enable
Lord Abbett to access various information bases. Such services may be used by
Lord Abbett in servicing all their accounts, and not all of such services will
necessarily be used by Lord Abbett in connection with their management of the
Fund; conversely, such services furnished in connection with brokerage on other
accounts managed by Lord Abbett may be used in connection with their management
of the Fund; and not all of such services will necessarily be used by Lord
Abbett in connection with their advisory services to such other accounts. We
have been advised by Lord Abbett that research services received from brokers
cannot be allocated to any particular account, are not a substitute for Lord
Abbett's services but are supplemental to their own research effort and, when
utilized, are subject to internal analysis before being incorporated by Lord
Abbett into their investment process. As a practical matter, it would not be
possible for Lord Abbett to generate all of the information presently provided
by brokers. While receipt of research services from brokerage firms has not
reduced Lord Abbett's normal research activities, the expenses of Lord Abbett
could be materially increased if it attempted to generate such additional
information through its own staff and purchased such equipment and software
packages directly from the suppliers.
No commitments are made regarding the allocation of brokerage business to or
among brokers, and trades are executed only when they are dictated by investment
decisions of the Fund to purchase or sell portfolio securities.
If two or more broker-dealers are considered capable of offering the equivalent
likelihood of best execution, the broker-dealer who has sold our shares and/or
shares of other Lord Abbett-sponsored funds may be preferred.
If other clients of Lord Abbett buy or sell the same security at the same time
as we do, transactions will, to the extent practicable, be allocated among all
participating accounts in proportion to the amount of each order and will be
executed daily until filled so that each account shares the average price and
commission cost of each day. Other clients who direct that their brokerage
business be placed with specific brokers or who invest through wrap accounts
introduced to Lord Abbett by certain brokers may not participate with us in the
buying and selling of the same securities as described above. If these clients
wish to buy or sell the same security as we do, they may have their transactions
executed at times different from our transactions and thus may not receive the
same price or incur the same commission cost as we do.
We will not seek "reciprocal" dealer business (for the purpose of applying
commissions in whole or in part for our benefit or otherwise) from dealers as
consideration for the direction to them of portfolio business.
For the period January 3, 1994 to October 31, 1994 and for the fiscal years
ended October 31, 1995 and 1996 we paid total commissions to independent
broker-dealers of $15,489, $58,435 and $85,334.
5.
Purchases, Redemptions
and Shareholder Services
Securities in the Fund's portfolios are valued at their market values as of the
close of the NYSE. Market value will be determined as follows: securities listed
or admitted to trading privileges on any national or foreign securities exchange
are valued at the last sales price on the principal securities exchange on which
such securities are traded, or, if there is no sale, at the mean between the
last bid and asked prices on such exchange, or, in the case of bonds, in the
over-the-counter market if, in the judgment of the Fund's officers, that market
more accurately reflects the market value of the bonds. Securities traded only
in the over-the-counter market are valued at the mean between the bid and asked
prices, except that securities admitted to trading on the NASDAQ National Market
System are valued at the last sales price. Securities for which market
quotations are not available are valued at fair value under procedures approved
by the Board of Trustees.
All assets and liabilities expressed in foreign currencies will be converted
into United States dollars at the mean between the buying and selling rates of
such currencies against United States dollars last quoted by any major bank. If
such quotations are not available, the rate of exchange will be determined in
accordance with policies established by the Fund's Board of Trustees. The Board
of Trustees will monitor, on an ongoing basis, the Fund's method of valuation.
Information concerning how we value our Shares for the purchase and redemption
of our Shares is described in the Prospectus under "Purchases" and
"Redemptions", respectively.
As disclosed in the Prospectus, we calculate our net asset values and are
otherwise open for business on each day that the NYSE is open for trading. The
NYSE is closed on Saturdays and Sundays and the following holidays -- New Year's
Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving and Christmas.
The net asset value per share for the Class A shares will be determined in the
same manner as for the Class B and C shares (net assets divided by shares
outstanding). Our Class A shares will be sold with a front-end sales charge of
5.75%.
The maximum offering prices of each Series' Class A shares on October 31, 1996
were computed as follows:
Growth & Income International
SERIES SERIES
Net asset value per share (net assets
divided by shares outstanding................$7.09 $9.425
Maximum offering price per
share (net asset value divided by
.9425 in both cases) .........................$7.52 $10.00
The offering price of Class C shares of the Growth & Income Series on October
31, 1996 was computed as follows:
Net asset value per share (net assets divided by
shares outstanding) . . . . . . . . . . . .$7.09 $9.425
The Fund has entered into a distribution agreement with Lord Abbett Distributor
LLC, a New York limited liability company ("Lord Abbett Distributor"), under
which Lord Abbett Distributor is obligated to use its best efforts to find
purchasers for the shares of the Fund, and to make reasonable efforts to sell
Fund shares so long as, in Lord Abbett Distributor's judgment, a substantial
distribution can be obtained by reasonable efforts.
Conversion of Class B Shares. The conversion of Class B shares on the eighth
anniversary of their purchase is subject to the continuing availability of a
private letter ruling from the Internal Revenue Service, or an opinion of
counsel or tax adviser, to the effect that the conversion of Class B shares does
not constitute a taxable event for the holder under Federal income tax law. If
such a revenue ruling or opinion is no longer available, the automatic
conversion feature may be suspended, in which event no further conversions of
Class B shares would occur while such suspension remained in effect. Although
Class B shares could then be exchanged for Class A shares on the basis of
relative net asset value of the two classes, without the imposition of a sales
charge or fee, such exchange could constitute a taxable event for the holder.
CLASS A, B AND C RULE 12B-1 PLANS. As described in the Prospectus, the Fund has
adopted a Distribution Plan and Agreement on behalf of each Series pursuant to
Rule 12b-1 of the Act for each class of shares available in the applicable
series: the "A Plan", the "B Plan" and the "C Plan", respectively. In adopting
each Plan and in approving its continuance, the Board of Trustees has concluded
that there is a reasonable likelihood that each Plan will benefit its respective
Class and such Class' shareholders. The expected benefits include greater sales
and lower redemptions of Class shares, which should allow each Class to maintain
a consistent cash flow, and a higher quality of service to shareholders by
authorized institutions than would otherwise be the case. During the last fiscal
year, the Growth & Income Series accrued or paid through Lord Abbett to
authorized institutions $28,799 under the A Plan and $490,573 under the C Plan.
The A Plan for the International Series became effective subsequent to the
Fund's last fiscal year. Lord Abbett used all amounts received under the A and C
Plans for the Growth & Income Series for payments to dealers for (i) providing
continuous services to the Class A shareholders, such as answering shareholder
inquiries, maintaining records, and assisting shareholders in making
redemptions, transfers, additional purchases and exchanges and (ii) their
assistance in distributing Class A shares of the Fund.
Each Plan requires the trustees to review, on a quarterly basis, written reports
of all amounts expended pursuant to the Plan and the purposes for which such
expenditures were made. Each Plan shall continue in effect only if its
continuance is specifically approved at least annually by vote of the trustees,
including a majority of the trustees who are not interested persons of the Fund
and who have no direct or indirect financial interest in the operation of the
Plan or in any agreements related to the Plan ("outside trustees"), cast in
person at a meeting called for the purpose of voting on the Plan. No Plan may be
amended to increase materially above the limits set forth therein the amount
spent for distribution expenses thereunder without approval by a majority of the
outstanding voting securities of the applicable class and the approval of a
majority of the trustees, including a majority of the outside trustees. Each
Plan may be terminated at any time by vote of a majority of the outside trustees
or by vote of a majority of its Class's outstanding voting securities.
CONTINGENT DEFERRED SALES CHARGES. A Contingent Deferred Sales Charge ("CDSC"),
applies upon early redemption of shares regardless of class, and (i) will be
assessed on the lesser of the net asset value of the shares at the time of
redemption or the original purchase price and (ii) will not be imposed on the
amount of your account value represented by the increase in net asset value over
the initial purchase price (including increases due to the reinvestment of
dividends and capital gains distributions) and upon early redemption of shares.
CLASS A SHARES. As stated in the Prospectus, a CDSC of 1% is imposed with
respect to those Class A shares (or Class A shares of another Lord
Abbett-sponsored fund or series acquired through exchange of such shares) on
which a Series has paid the one-time distribution fee of 1% if such shares are
redeemed out of the Lord Abbett-sponsored family of funds within a period of 24
months from the end of the month in which the original sale occurred.
CLASS B SHARES. As stated in the Prospectus, if Class B shares (or Class B
shares of another Lord Abbett-sponsored fund or series acquired through exchange
of such shares) are redeemed out of the Lord Abbett-sponsored family of funds
for cash before the sixth anniversary of their purchase, a CDSC will be deducted
from the redemption proceeds. The Class B CDSC is paid to Lord Abbett
Distributor to reimburse its expenses, in whole or in part, for providing
distribution-related service in connection with the sale of Class B shares.
To determine whether the CDSC applies to a redemption, the Series redeems shares
in the following order: (1) shares acquired by reinvestment of dividends and
capital gains distributions, (2) shares held on or after the sixth anniversary
of their purchase, and (3) shares held the longest before such sixth
anniversary.
The amount of the contingent deferred sales charge will depend on the number of
years since you invested and the dollar amount being redeemed, according to the
following schedule:
Anniversary of the Day on Contingent Deferred Sales Charge
Which the Purchase Order Was Accepted on Redemptions (As % of Amount
Subject to Charge)
Before the 1st.....................................................5.0%
On the 1st, before the 2nd.........................................4.0%
On the 2nd, before the 3rd.........................................3.0%
On the 3rd, before the 4th.........................................3.0%
On the 4th, before the 5th.........................................2.0%
On the 5th, before the 6th ........................................1.0%
On or after the 6th anniversary........................................None
In the table, an "anniversary" is the 365th day subsequent to the acceptance of
a purchase order or a prior anniversary. All purchases are considered to have
been made on the business day on which the purchase order was accepted.
CLASS C SHARES. As stated in the Prospectus, if Class C shares are redeemed for
cash before the first anniversary of their purchase, the redeeming shareholder
will be required to pay to the Series on behalf of Class C shares a CDSC of 1%
of the lower of cost or the then net asset value of Class C shares redeemed. If
such shares are exchanged into the same class of another Lord Abbett-sponsored
fund and subsequently redeemed before the first anniversary of their original
purchase, the charge will be collected by the other fund on behalf of this
Series' Class C shares.
GENERAL. Each percentage (1% in the case of Class A and C shares and 5% through
1% in the case of Class B shares) used to calculate CDSCs described above for
the Class A, Class B and Class C shares is sometimes hereinafter referred to as
the "Applicable Percentage".
With respect to Class A and Class B shares, no CDSC is payable on redemptions by
participants or beneficiaries from employer-sponsored retirement plans under the
Internal Revenue Code for benefit payments due to plan loans, hardship
withdrawals, death, retirement or separation from service and for returns of
excess contributions to retirement plan sponsors. In the case of Class A and
Class C shares, the CDSC is received by the applicable Series and is intended to
reimburse all or a portion of the amount paid by the Series if the shares are
redeemed before the Series has had an opportunity to realize the anticipated
benefits of having a long-term shareholder account in the Series. In the case of
Class B shares, the CDSC is received by Lord Abbett Distributor and is intended
to reimburse its expenses of providing distribution-related service to the
applicable Series (including recoupment of the commission payments made) in
connection with the sale of Class B shares before Lord Abbett Distributor has
had an opportunity to realize its anticipated reimbursement by having such a
long-term shareholder account subject to the B Plan distribution fee. The other
funds and series which participate in the Telephone Exchange Privilege (except
(a) Lord Abbett U.S. Government Securities Money Market Fund, Inc. ("GSMMF"),
(b) certain series of Lord Abbett Tax-Free Income Fund and Lord Abbett Tax-Free
Income Trust for which a Rule 12b-1 Plan is not yet in effect, and (c) any
authorized institution's affiliated money market fund satisfying Lord Abbett
Distributor as to certain omnibus account and other criteria, hereinafter
referred to as an "authorized money market fund" or "AMMF" (collectively, the
"Non-12b-1 Funds")) have instituted a CDSC for each class on the same terms and
conditions. No CDSC will be charged on an exchange of shares of the same class
between Lord Abbett funds or between such funds and AMMF. Upon redemption of
shares out of the Lord Abbett family of funds or out of AMMF, the CDSC will be
charged on behalf of and paid: (i) to the fund in which the original purchase
(subject to a CDSC) occurred, in the case of the Class A and Class C shares and
(ii) to Lord Abbett Distributor if the original purchase was subject to a CDSC,
in the case of the Class B shares. Thus, if shares of a Lord Abbett fund are
exchanged for shares of the same class of another such fund and the shares of
the same class tendered ("Exchanged Shares") are subject to a CDSC, the CDSC
will carry over to the shares of the same class being acquired, including GSMMF
and AMMF ("Acquired Shares"). Any CDSC that is carried over to Acquired Shares
is calculated as if the holder of the Acquired Shares had held those shares from
the date on which he or she became the holder of the Exchanged Shares. Although
the Non-12b-1 Funds will not pay a distribution fee on their own shares, and
will, therefore, not impose their own CDSC, the Non-12b-1 Funds will collect the
CDSC (a) on behalf of other Lord Abbett funds, in the case of the Class A and
Class C shares and (b) on behalf of Lord Abbett Distributor, in the case of the
Class B shares. Acquired Shares held in GSMMF and AMMF which are subject to a
CDSC will be credited with the time such shares are held in GSMMF but will not
be credited with the time such shares are held in AMMF. Therefore, if your
Acquired Shares held in AMMF qualified for no CDSC or a lower Applicable
Percentage at the time of exchange into AMMF, that Applicable Percentage will
apply to redemptions for cash from AMMF, regardless of the time you have held
Acquired Shares in AMMF.
In no event will the amount of the CDSC exceed the Applicable Percentage of the
lesser of (i) the net asset value of the shares redeemed or (ii) the original
cost of such shares (or of the Exchanged Shares for which such shares were
acquired). No CDSC will be imposed when the investor redeems (i) amounts derived
from increases in the value of the account above the total cost of shares being
redeemed due to increases in net asset value, (ii) shares with respect to which
no Lord Abbett fund paid a 12b-1 fee and, in the case of Class B shares, Lord
Abbett Distributor paid no sales charge or service fee (including shares
acquired through reinvestment of dividend income and capital gains
distributions) or (iii) shares which, together with Exchanged Shares, have been
held continuously for 24 months from the end of the month in which the original
sale occurred (in the case of Class A shares); for six years or more (in the
case of Class B shares) and for one year or more (in the case of Class C
shares). In determining whether a CDSC is payable, (a) shares not subject to the
CDSC will be redeemed before shares subject to the CDSC and (b) of the shares
subject to a CDSC, those held the longest will be the first to be redeemed.
EXCHANGES. The Prospectus briefly describes the Telephone Exchange Privilege.
You may exchange some or all of your shares of any class for those in the same
class of: (i) Lord Abbett-sponsored funds currently offered to the public with a
sales charge (front-end, back-end or level ), (ii) GSMMF or (iii) AMMF, to the
extent offers and sales may be made in your state. You should read the
prospectus of the other fund before exchanging. In establishing a new account by
exchange, shares of the Fund being exchanged must have a value equal to at least
the minimum initial investment required for the other fund into which the
exchange is made.
Shareholders in other Lord Abbett-sponsored funds and AMMF have the same right
to exchange their shares for the corresponding class of the Fund's shares.
Exchanges are based on relative net asset values on the day instructions are
received by the Fund in Kansas City if the instructions are received prior to
the close of the NYSE in proper form. No sales charges are imposed except in the
case of exchanges out of GSMMF or AMMF (unless a sales charge (front-end,
back-end or level) was paid on the initial investment in a Lord Abbett-sponsored
fund). Exercise of the exchange privilege will be treated as a sale for federal
income tax purposes, and, depending on the circumstances, a gain or loss may be
recognized. In the case of an exchange of shares that have been held for 90 days
or less where no sales charge is payable on the exchange, the original sales
charge incurred with respect to the exchanged shares will be taken into account
in determining gain or loss on the exchange only to the extent such charge
exceeds the sales charge that would have been payable on the acquired shares had
they been acquired for cash rather than by exchange. The portion of the original
sales charge not so taken into account will increase the basis of the acquired
shares.
Shareholders have the exchange privilege unless they refuse it in writing. You
should not view the exchange privilege as a means for taking advantage of
short-term swings in the market, and we reserve the right to terminate or limit
the privilege of any shareholder who makes frequent exchanges. We can revoke or
modify the privilege for all shareholders upon 60 days' prior notice. "Eligible
Funds" are AMMF and other Lord Abbett-sponsored funds which are eligible for the
exchange privilege, except Lord Abbett Series Fund ("LASF") which offers its
shares only in connection with certain variable annuity contracts, Lord Abbett
Equity Fund ("LAEF") which is not issuing shares, and series of Lord Abbett
Research Fund not offered to the general public ("LARF").
STATEMENT OF INTENTION. Under the terms of the Statement of Intention to invest
$50,000 or more over a 13-month period as described in the Prospectus, shares of
a Lord Abbett-sponsored fund (other than shares of LAEF, LASF, LARF, GSMMF and
AMMF, unless holdings in GSMMF and AMMF are attributable to shares exchanged
from a Lord Abbett-sponsored fund offered with a front-end, back-end or level
sales charge) currently owned by you are credited as purchases (at their current
offering prices on the date the Statement is signed) toward achieving the stated
investment and reduced initial sales charge for Class A shares. Class A shares
valued at 5% of the amount of intended purchases are escrowed and may be
redeemed to cover the additional sales charge payable if the Statement is not
completed. The Statement of Intention is neither a binding obligation on you to
buy, nor on the Fund to sell, the full amount indicated.
RIGHTS OF ACCUMULATION. As stated in the Prospectus, purchasers (as defined in
the Prospectus) may accumulate their investment in Lord Abbett-sponsored funds
(other than LAEF, LARF, LASF, GSMMF, and AMMF unless holdings in GSMMF or AMMF
are attributable to shares exchanged from a Lord Abbett-sponsored fund offered
with a front-end, back-end or level sales charge) so that a current investment,
plus the purchaser's holdings valued at the current maximum offering price,
reach a level eligible for a discounted sales charge for Class A shares.
NET ASSET VALUE PURCHASES OF CLASS A SHARES. As stated in the Prospectus, our
Class A shares may be purchased at net asset value by our directors, employees
of Lord Abbett, employees of our shareholder servicing agent and employees of
any securities dealer having a sales agreement with Lord Abbett who consents to
such purchases or by the director or custodian under any pension or
profit-sharing plan or Payroll Deduction IRA established for the benefit of such
persons or for the benefit of employees of any national securities trade
organization to which Lord Abbett belongs or any company with an account(s) in
excess of $10 million managed by Lord Abbett on a private-advisory-account
basis. For purposes of this paragraph, the terms "directors" and "employees"
include a director's or employee's spouse (including the surviving spouse of a
deceased director or employee). The terms "our directors" and "employees of Lord
Abbett" also include retired directors and employees and other family members
thereof.
Our Class A shares also may be purchased at net asset value (a) at $1 million or
more, (b) with dividends and distributions from Class A shares of other Lord
Abbett-sponsored funds, except for LARF, LAEF and LASF, (c) under the loan
feature of the Lord Abbett-sponsored prototype 403(b) plan for share purchases
representing the repayment of principal and interest, (d) by certain authorized
brokers, dealers, registered investment advisers or other financial institutions
who have entered into an agreement with Lord Abbett Distributor in accordance
with certain standards approved by Lord Abbett Distributor, providing
specifically for the use of our shares in particular investment products made
available for a fee to clients of such brokers, dealers, registered investment
advisers and other financial institutions, ("mutual fund wrap fee program"), (e)
by employees, partners and owners of unaffiliated consultants and advisors to
Lord Abbett, Lord Abbett Distributor or Lord Abbett-sponsored funds who consent
to such purchase if such persons provide service to Lord Abbett, Lord Abbett
Distributor or such funds on a continuing basis and are familiar with such funds
and (f) through Retirement Plans with at least 100 eligible employees.
REDEMPTIONS. A redemption order is in proper form when it contains all of the
information and documentation required by the order form or supplementally by
Lord Abbett Distributor or the Fund to carry out the order. The signature(s) and
any legal capacity of the signer(s) must be guaranteed by an eligible guarantor.
See the Prospectus for expedited redemption procedures.
The right to redeem and receive payment, as described in the Prospectus, may be
suspended if the NYSE is closed (except for weekends or customary holidays),
trading on the NYSE is restricted or the Securities and Exchange Commission
deems an emergency to exist.
Our Board of Trustees may authorize redemption of all of the shares in any
account in which there are fewer than 60 shares. Before authorizing such
redemption, the Board must determine that it is in our economic best interest or
necessary to reduce disproportionately burdensome expenses in servicing
shareholder accounts. At least 6 months prior written notice will be given
before any such redemption, during which time shareholders may avoid redemption
by bringing their accounts up to the minimum set by the Board.
DIV-MOVE. Under the Div-Move service described in the Prospectus, you can invest
the dividends paid on your account of any class into an existing account of the
same class in any other Eligible Fund. The account must be either your account,
a joint account for you and your spouse, a single account for your spouse, or a
custodial account for your minor child under the age of 21. You should read the
prospectus of the other fund before investing.
INVEST-A-MATIC. The Invest-A-Matic method of investing in the Fund and/or any
other Eligible Fund is described in the Prospectus. To avail yourself of this
method you must complete the application form, selecting the time and amount of
your bank checking account withdrawals and the funds for investment, include a
voided, unsigned check and complete the bank authorization.
SYSTEMATIC WITHDRAWAL PLANS. The Systematic Withdrawal Plan ("SWP") also is
described in the Prospectus. You may establish a SWP if you own or purchase
uncertificated shares having a current offering price value of at least $10,000.
Lord Abbett prototype retirement plans have no such minimum. With respect to a
SWP for Class B shares, on redemptions over 12% per year, the CDSC will apply to
the entire redemption. Therefore, please contact the Fund for assistance in
minimizing the CDSC in this situation. With respect to Class C shares, the CDSC
will be waived on and after the first anniversary of their purchase. The SWP
involves the planned redemption of shares on a periodic basis by receiving
either fixed or variable amounts at periodic intervals. Since the value of
shares redeemed may be more or less than their cost, gain or loss may be
recognized for income tax purposes on each periodic payment. Normally, you may
not make regular investments at the same time you are receiving systematic
withdrawal payments because it is not in your interest to pay a sales charge on
new investments when in effect a portion of that new investment is soon
withdrawn. The minimum investment accepted while a withdrawal plan is in effect
is $1,000. The SWP may be terminated by you or by us at any time by written
notice.
RETIREMENT PLANS. The Prospectus indicates the types of retirement plans for
which Lord Abbett provides forms and explanations. Lord Abbett makes available
the retirement plan forms and custodial agreements for IRAs (Individual
Retirement Accounts, including Simple IRAs and Simplified Employee Pensions),
403(b) plans and qualified pension and profit-sharing plans, including 401(k)
plans. The forms name Investors Fiduciary Trust Company as custodian and contain
specific information about the plans. Explanations of the eligibility
requirements, annual custodial fees and allowable tax advantages and penalties
are set forth in the relevant plan documents. Adoption of any of these plans
should be on the advice of your legal counsel or qualified tax adviser.
6.
Past Performance
Each Series computes the average annual compounded rate of total return for each
Class during specified periods that would equate the initial amount invested to
the ending redeemable value of such investment by adding one to the computed
average annual total return, raising the sum to a power equal to the number of
years covered by the computation and multiplying the result by $1,000, which
represents a hypothetical initial investment. The calculation assumes deduction
of the maximum sales charge (as described in the next paragraph) from the amount
invested and reinvestment of all income dividends and capital gains
distributions on the reinvestment dates at net asset value. The ending
redeemable value is determined by assuming a complete redemption at the end of
the period(s) covered by the average annual total return computation.
In calculating total returns for Class A shares, the current maximum sales
charge of 5.75% (as a percentage of the offering price) is deducted from the
initial investment (unless the return is shown at net asset value). For Class B
shares, the payment of the applicable CDSC (5.0% prior to the first anniversary
of purchase, 4.0% prior to the second anniversary of purchase, 3.0% prior to the
third and fourth anniversaries of purchase, 2.0% prior to the fifth anniversary
of purchase, 1.0% prior to the sixth anniversary of purchase and no CDSC on and
after the sixth anniversary of purchase) is applied to the Series' investment
result for that class for the time period shown (unless the total return is
shown at net asset value). For Class C shares, the 1.0% CDSC is applied to the
applicable Series' investment result for that class for the time period shown
prior to the first anniversary of purchase (unless the total return is shown at
net asset value). Total returns also assume that all dividends and capital gains
distributions during the period are reinvested at net asset value per share, and
that the investment is redeemed at the end of the period.
Using the method described above for the period beginning July 15, 1996
(commencement date of Class A shares) to October 31, 1996 the rate for total
return for the Growth & Income Series was 5.60 % (not annualized) for the Class
A shares and for the fiscal-year ending on October 31, 1996 was 20.10% the Class
C shares.
Each Series' yield quotation for each class is based on a 30-day period ended on
a specified date, computed by dividing such Series' net investment income per
share earned during the period by such Series' maximum offering price per share
on the last day of the period. This is determined by finding the following
quotient: take the Class' dividends and interest earned during the period minus
its expenses accrued for the period and divide by the product of (i) the average
daily number of Class shares outstanding during the period that were entitled to
receive dividends and (ii) the Series' maximum offering price per share on the
last day of the period. To this quotient add one. This sum is multiplied by
itself five times. Then one is subtracted from the product of this
multiplication and the remainder is multiplied by two. Yield for the Class A
shares reflects the deduction of the maximum initial sales charge, but may also
be shown based on the Series' net asset value per share. Yields for Class B and
Class C shares do not reflect the deduction of the CDSC.
These figures represent past performance, and an investor should be aware that
the investment return and principal value of a Fund investment will fluctuate so
that an investor's shares, when redeemed, may be worth more or less than their
original cost. Therefore, there is no assurance that this performance will be
repeated in the future.
7.
Taxes
The value of any shares redeemed by the Fund or repurchased or otherwise sold
may be more or less than your tax basis in the shares at the time the
redemption, repurchase or sale is made. Any gain or loss will generally be
taxable for federal income tax purposes. Any loss realized on the sale,
redemption or repurchase of Fund shares which you have held for six months or
less will be treated for tax purposes as a long-term capital loss to the extent
of any capital gains distributions which you received with respect to such
shares. Losses on the sale of stock or securities are not deductible if, within
a period beginning 30 days before the date of the sale and ending 30 days after
the date of the sale, the taxpayer acquires stock or securities that are
substantially identical.
The writing of call options and other investment techniques and practices which
the Fund may utilize, as described above under "Investment Objectives and
Policies," may create "straddles" for United States federal income tax purposes
and may affect the character and timing of the recognition of gains and losses
by the Fund. Such transactions may increase the amount of short-term capital
gain realized by the Fund, which is taxed as ordinary income when distributed to
shareholders. Limitations imposed by the Internal Revenue Code on regulated
investment companies may restrict the Fund's ability to engage in transactions
in options.
The Fund will be subject to a 4% non-deductible excise tax on certain amounts
not distributed (and not treated as having been distributed) on a timely basis
in accordance with a calendar-year distribution requirement. The Fund intends to
distribute to shareholders each year an amount adequate to avoid the imposition
of such excise tax. Dividends paid by the Fund will qualify for the
dividends-received deduction for corporations to the extent they are derived
from dividends paid by domestic corporations.
The foregoing discussion relates solely to U.S. federal income tax law as
applicable to United States persons (United States citizens or residents and
United States domestic corporations, partnerships, trusts and estates.) Each
shareholder who is not a United States person should consult his tax adviser
regarding the U.S. and foreign tax consequences of the ownership of shares of
the Fund, including a 30% (or lower treaty rate) United States withholding tax
on dividends representing ordinary income and net short-term capital gains, and
the applicability of United States gift and estate taxes to non-United States
persons who own Fund shares.
8.
Information About the Fund
Shareholder Liability. Delaware law provides that Fund shareholders shall be
entitled to the same limitations of personal liability extended to stockholders
of private corporations for profit. The courts of some states, however, may
decline to apply Delaware law on this point. The Fund's Declaration of Trust
contains an express disclaimer of shareholder liability for the acts,
obligations, or affairs of the Fund and requires that a disclaimer be given in
each contract entered into or executed by the Fund. The Declaration provides for
indemnification out of the Fund's property of any shareholder or former
shareholder held personally liable for the obligations of the Fund. Thus, the
risk of a shareholder incurring financial loss on account of shareholder
liability is limited to circumstances in which Delaware law does not apply, no
contractual limitation of liability was in effect and the portfolio is unable to
meet its obligations. Lord Abbett believes that, in view of the above, the risk
of personal liability to shareholders is extremely remote.
Under The Fund's Declaration of Trust, the trustees may, without shareholder
vote, cause the Fund to merge or consolidate into, or sell and convey all or
substantially all of, the assets of the Fund to one or more trusts, partnerships
or corporations, so long as the surviving entity is an open-end management
investment company that will succeed to or assume the Fund's registration
statement. In addition, the trustees may, without shareholder vote, cause the
Fund to be incorporated under Delaware law.
Derivative actions on behalf of the Fund may be brought only by shareholders
owning not less than 50% of the then outstanding shares of the Fund.
The directors, trustees and officers of Lord Abbett-sponsored mutual funds,
together with the partners and employees of Lord Abbett, are permitted to
purchase and sell securities for their personal investment account. In engaging
in personal securities transactions, however, such persons are subject to
requirements and restrictions contained in the Trust's Code of Ethics which
complies, in substance, with each of the recommendations of the Investment
Company Institute's Advisory Group on Personal Investing. Among other things,
the Code requires that Lord Abbett partners and employees obtain advance
approval before buying or selling securities, submit confirmations and quarterly
transaction reports, and obtain approval before becoming a director of any
company; and it prohibits such persons from investing in a security seven days
before or after any Lord Abbett-sponsored fund trades in such security,
profiting from trades of the same security within 60 days and trading on
material non-public information. The Code imposes similar requirements and
restrictions on the independent trustees of the Trust to the extent contemplated
by the recommendations of such Advisory Group.
9.
Financial Statements
The audited financial statements for the fiscal year ended October 31, 1996 and
the unaudited financial statements of the International Series for the
six-months ended April 30, 1997 and the report of Deloitte & Touche LLP,
independent accountants, on such annual and financial statements contained in
the 1996 Annual Report to Shareholders of Lord Abbett Securities Trust are
incorporated herein by reference to such financial statements and report in
reliance upon the authority of Deloitte & Touche LLP as experts in auditing and
accounting. The International Series commenced operations subsequent to October
31, 1996.
<PAGE>
<TABLE>
<CAPTION>
Statement of Net Assets
INTERNATIONAL SERIES April 30, 1997
Market
Investments Shares Value
====================================================================================================================================
<S> <C> <C>
Common Stocks 82.11%
====================================================================================================================================
FDA approval for its anti-influenza vaccine 60,000 $ 196,740
ERG Ltd.-Leading supplier of fully automated mass transit, road toll or
ticketing systems 150,000 196,650
Total 393,390
- ---------------------------------------------------------------------------------------------------------------------------=========
Canada 12.54% *Ballard Power Systems-Designs, manufactures and develops methanol-
or hydrogen-based fuel cells that are the only true zero emission
power source for vehicles 15,000 408,195
Fulcrum Technologies Co.-One of two companies dominating the data
search and retrievalsoftware industry 30,000 116,010
Lava Systems Inc.-The only company to provide a fully integrated
computer-based document management system 80,000 171,840
Magna Class A-Major supplier of components and sub-assemblies to
the world's automobile firms 3,000 155,757
Meridian Tech Inc.-Global leader in the production of complex
magnesium and aluminum casting for automobile engines 73,000 359,379
Methanex Corp.-World's largest and lowest-cost supplier of methanol 30,000 281,430
Ventra Group-Dominant manufacturer of vehicle jacks to North American
vehicle assemblers 80,000 171,840
Total 1,664,451
- ---------------------------------------------------------------------------------------------------------------------------=========
Denmark 5.79% BG Bank Dkk-Domestic retail bank focused on low-cost delivery of
standard products 4,750 208,497
Jyske Bank-Bank specializing in international private and commercial banking 2,500 198,205
Syd-Sonderhill-Regional, mortgage and personal banking firm 3,750 175,421
Unidanmark-One of Denmark's largest full-service banking groups 3,750 185,674
Total 767,797
--------------------------------------------------------------------------------------------=========
</TABLE>
1
<PAGE>
<TABLE>
<CAPTION>
Statement of Net Assets
INTERNATIONAL SERIES April 30, 1997
Market
Investments Shares Value
====================================================================================================================================
<S> <C> <C>
Finland 1.88% Raision Tehtaat Oy-Producer of paper processing chemicals and foodstuffs
including a cholesterol lowering margarine 3,000 $ 248,865
- ---------------------------------------------------------------------------------------------------------------------------=========
France 10.93% Alcatel Alsthom-One of the world's largest full-line heavy electrical
engineering firms 3,000 333,990
AXA-Recently merged with UAP to form one of Europe's largest financial
organizations 5,000 308,000
Comptoir Modernes Ord-France's leading discount supermarket chain expanding
into Spain and Italy 300 140,235
Degremont (soc Gen)-Engineering and construction firm specializing in water
treatment facilities 2,500 195,128
Ubi Soft Entertain-One of the largest producers, translators and distributors
of games software in Europe 5,000 370,530
Vallourec-Major supplier of carbon alloys, stainless and non-ferrous pipes
to the automobile,chemical and power utility sectors 1,750 102,667
Total 1,450,550
- ---------------------------------------------------------------------------------------------------------------------------=========
Germany 15.37% Gea Ag Dem-One of the world's top suppliers of food and pharmaceutical
processing equipment 500 176,352
His Sport Wear-Designs and retails sports and leisurewear 8,000 196,592
Iwka-Multi-line engineering company making packaging, robot welding and
defense equipment 1,000 263,949
Preussag-Diversified firm with activities from oil extraction through metal
processing to freight car and helicopter leasing 1,000 257,011
SAP Ord-World's fourth largest software firm dominating the global market for
relational database management tools 3,000 546,921
Schering-Pharmaceutical firm with strong market share in contrast media and
birth control products 3,000 287,943
Viag-Diversified group with utility, aluminum, chemical, glass and packaging
operations 700 311,651
Total 2,040,419
- ---------------------------------------------------------------------------------------------------------------------------=========
Netherlands 7.94% Hunter Douglas-Major global supplier of decorative building fittings
especially window blinds and the equipment to make them 4,000 326,892
Koninklijke Knp-Makes and distributes paper and packaging products as
well as office supplies and systems 15,000 296,055
Vmf Stork-Specializes in providing industrial systems, components and services 10,263 431,230
Total 1,054,177
- ---------------------------------------------------------------------------------------------------------------------------=========
Norway .74% Fokusbank-Regional bank specializing in investment and private banking services 10,000 97,700
- ---------------------------------------------------------------------------------------------------------------------------=========
Switzerland 7.87% Christ-Major global provider of water treatment chemicals and purification
equipment 350 205,812
Nestle-One of the world's top 2 food manufacturing companies 150 182,529
Saurer Ag Arbon Chf-Textile machinery and auto component manufacturing firm 400 209,925
SGS Holding-Dominates the inspection, audit and monitoring of goods and their
transport across borders 105 217,709
Stratec Holding-Healthcare company concentrating on osteosynthesis and prosthetics 150 228,416
Total 1,044,391
- ---------------------------------------------------------------------------------------------------------------------------=========
United Kingdom 16.09% Ashtead-Major construction plant and machinery hire firm 36,000 161,100
Capita-Dedicated provider of property-related consultancy, MIS outsourcing,
architectural and training services 54,000 209,196
Cobham-Designs and manufactures proprietary components for the
aerospace, defense and telecommunications industries 14,000 144,284
Fairey Group-Engineering firm focused on specialist electronic, ceramic
and filtration products 15,000 126,570
Halma-Manufactures environment control, fire detection, gas monitoring,
safety and security equipment and systems 45,000 129,735
Powerscreen International-Leading global screening, crushing, recycling
and material equipment supplier 15,000 148,020
Regal Hotel-Owns and operates more than 100 medium-sized hotels and
inns across the U.K. 395,000 355,895
Vardy-Leading multiple franchise vehicle distribution chain in the U.K.
for new and used cars 30,000 161,550
Verity Group-Makes high-quality loud speakers and has developed the
first commercial flat panel speaker to reach mass production 500,000 430,500
Volex-Supplies electrical connectors, systems and wiring harnesses to all
major consumer durable sectors 18,000 123,965
2
<PAGE>
Statement of Net Assets
INTERNATIONAL SERIES April 30, 1997
Market
Investments Shares Value
====================================================================================================================================
<S> <C> <C>
Wolseley-Leading distributor of plumbing and bathroom products
in the U.K., France, the U.S. and Austria 18,000 $ 144,864
Total 2,135,679
- ---------------------------------------------------------------------------------------------------------------------------=========
Total Investments in Common Stocks (Cost $10,368,165) 10,897,419
====================================================================================================================================
Other Assets, Less Liabilities 17.89%
====================================================================================================================================
Short-Term Student Loan Marketing Association
Investments, 5.30% due 5/1/1997 2,300M 2,299,661
at Cost
====================================================================================================================================
Cash and Receivables, Net of Liabilities 74,067
- ---------------------------------------------------------------------------------------------------------------------------=========
Total Other Assets, Less Liabilities 2,373,728
====================================================================================================================================
Net Assets 100.00% $13,271,147
====================================================================================================================================
Net asset value ($13,271,147 / 1,320,986 shares outstanding) $10.05
*Non-income producing.
See Notes to Financial Statements.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
Financial Highlights
INTERNATIONAL SERIES
12/10/96(a)
Per Share Operating Performance: to 4/30/97
====================================================================================================================================
<S> <C>
Net asset value, beginning of period $ 9.42
- ------------------------------------------------------------------------------------------------------------------------------------
Income from investment operations
Net investment income .05
Net realized and unrealized gain on investments and foreign currency holdings .58
Total from investment operations .63
------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 10.05
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return(b) (c)
====================================================================================================================================
Ratios/Supplemental Data:
Net assets, end of period (000) $13,271
------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses .51%(c)
Net investment income . .59%(c)
Portfolio turnover rate 10.15%
Average commission rate per share paid on equity transactions $ .018
====================================================================================================================================
(a) Commencement of operations.
(b) Total return does not consider the effects of sales loads.
(c) Not annualized.
See Notes to Financial Statements.
</TABLE>
4
<PAGE>
Notes to Financial Statements
1. Significant Accounting Policies
Lord Abbett Securities Trust (the "Trust") is an open-end management investment
company, organized as a Delaware business trust on February 26, 1993. The Trust
currently consists of two separate portfolios ("Series")-Lord Abbett Growth &
Income Series ("Growth & Income") and Lord Abbett International Series
("International"). Effective December 10, 1996, The International Series was
added on December 10, 1996 at which time the Trust received a capital
contribution of $2,000,000 and issued 212,202 shares of the International Series
to the partners of Lord, Abbett & Co. ("Lord Abbett"). Each Series is
diversified as defined under the Investment Company Act of 1940. The financial
statements have been prepared in conformity with generally accepted accounting
principles which permit management to make certain estimates and assumptions at
the date of the financial statements. The following summarizes the significant
accounting policies of the Trust: (a) Market value is determined as follows:
Securities listed or admitted to trading privileges on any national securities
exchange are valued at the last sales price on the principal securities exchange
on which such securities are traded, or, if there is no sale, at the mean
between the last bid and asked prices on such exchange. Securities traded in the
over-the-counter market are valued at the mean between the last bid and asked
prices in such market, except that securities admitted to trading on the NASDAQ
National Market System are valued at the last sales price if it is determined
that such price more accurately reflects the value of such securities.
Short-term securities are carried at cost which approximates market. Securities
for which market quotations are not available are valued at fair value under
procedures approved by the Board of Trustees. (b) Transactions denominated in
foreign currencies are recorded in the Company's records at the rate prevailing
when earned or incurred. Asset and liability accounts that are denominated in
foreign currencies are adjusted to reflect current exchange rates. (c) It is the
policy of the Trust to meet the requirements of the Internal Revenue Code
applicable to regulated investment companies and to distribute all of its
taxable income in taxable distributions. Therefore, no federal income tax
provision is required. (d) Security transactions are accounted for on the date
that the securities are purchased or sold (trade date). Realized gains and
losses from investment transactions are calculated on the identified cost basis.
Dividend income and distributions to shareholders are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. Net
investment income (other than distribution and service fees) and realized and
unrealized gains or losses are allocated to each class of shares based upon the
relative proportion of net assets at the beginning of the day. (e) A portion of
the proceeds from sales and cost of repurchases of shares, equivalent to the
amount of distributable net investment income on the date of the transaction, is
credited or charged to undistributed income. Undistributed net investment income
per share thus is unaffected by sales or repurchases of shares. (f) The
organization expenses are amortized evenly over a period of five years.
2. Management Fee and Other Transactions with Affiliates
The Trust has a management agreement with Lord Abbett pursuant to which Lord
Abbett supplies the Trust with investment management services and executive and
other personnel, pays the remuneration of officers, provides office space and
pays for ordinary and necessary office and clerical expenses relating to
research and statistical work and supervision of the Trust's investment
portfolios. The management fee is based on average daily net assets at the rate
of .75% per annum. Lord Abbett may waive its management fee and reimburse the
Trust for certain of its other expenses. Any such other expenses paid are
subject to repayment by the Trust, pursuant to a formula based on the asset size
and expense ratio of each Series. Each Series shall not be obligated to repay
Lord Abbett after five full fiscal years of operation or the termination of the
management agreement, whichever is earlier. Lord Abbett has entered into a sub-
advisory agreement with Fuji Investment Management Co. (Europe), Ltd.
("sub-adviser"). The sub-adviser furnishes investment advisory services in
connection with the management of the International Series. Lord Abbett pays for
the cost of the sub-adviser's services.
Each Series of the Trust has Rule 12b-1 plans and agreements with respect to one
or more classes of shares as described below (the "Class A and Class C Plans")
with Lord Abbett Distributor LLC ("Distributor"), an affiliate of Lord Abbett.
Each Series makes payments to Distributor which uses or passes on such payments
to authorized institutions. Pursuant to the Class A Plan, each Series pays
Distributor (1) an annual service fee of 0.25% of the average daily net assets
of Class A shares and (2) a one-time distribution fee of up to 1% on certain
qualifying purchases and a supplemental annual distribution fee of 0.10% of the
average daily net assets of Class A shares serviced by certain qualifying
institutions. Pursuant to the Class C Plan of the Growth & Income Series, the
Series pays Distributor (1) a service fee and a distribution fee, at the time
such shares are sold, not to exceed 0.25% and 0.75%, respectively, of the net
asset value of such shares sold and (2) at each quarter-end after the first
anniversary of the sale of such shares, a service fee and a distribution fee at
an annual rate not to exceed 0.25% and 0.75%, respectively, of the average
annual net asset value of such shares outstanding.
12b-1 distribution plan expenses for the Growth & Income Series' multiple class
shares were as follows:
- --------------------------------------------------------------------------------
Class A $ 51,488
- --------------------------------------------------------------------------------
Class C 350,577
- --------------------------------------------------------------------------------
Lord Abbett received the following commissions on sales of shares of the Trust
after concessions were paid to authorized distributors:
Lord Abbett Distributors'
Series Commissions Concessions
- --------------------------------------------------------------------------------
Growth & Income $7,700 $49,040
- --------------------------------------------------------------------------------
International $8,772 $85,737
- --------------------------------------------------------------------------------
3. Distributions
Dividends from net investment income are declared and paid quarterly for the
Growth & Income Series and annually for the International Series. Net realized
gains from investment transactions, if any, are distributed to shareholders
annually. At April 30, 1997, the accumulated undistributed net realized gain
(loss) for financial reporting purposes, aggregated $3,866,568 for the Growth &
Income Series and $(100,838) for the International Series. Distributions
declared for the Growth & Income Series on May 7, 1997 were as follows:
Rate Aggregate
Per Share Amount
- --------------------------------------------------------------------------------
Class A-Investment Income $.025 $166,017
- --------------------------------------------------------------------------------
Class C-Investment Income $.010 $ 95,957
- --------------------------------------------------------------------------------
Income and capital gains distributions are determined in accordance with income
tax regulations which may differ from methods used to determine the
corresponding income and capital gains amounts in accordance with generally
accepted accounting principles.
5
<PAGE>
Notes to Financial Statements
For the six months ended April 30, 1997, distributions declared by Class for the
Growth & Income Series were as follows:
- --------------------------------------------------------------------------------
Class A-Investment Income $ 361,142
- --------------------------------------------------------------------------------
Class C-Investment Income $ 255,473
- --------------------------------------------------------------------------------
Class A-Capital Gain $ 501,039
- --------------------------------------------------------------------------------
Class C-Capital Gain $ 701,709
- --------------------------------------------------------------------------------
4. Capital
Transactions in shares of beneficial interest were as follows:
July 15, 1996
Six Months (Commencement of
Ended offering Class A shares)
April 30, 1997 to October 31, 1996
--------------------------------------------------------
Class A Shares Amount Shares Amount
- ------------------------------------------------ -----------------------------
Sales of shares 514,196 $ 3,874,480 294,449 $ 1,974,458
Shares issued to
shareholders in
reinvestment of net
investment income 102,448 773,693 24,116 160,559
Shares issued to
shareholders in
exchange for assets
acquired in tax-free
acquisition -- -- 6,718,449 43,649,766
Total 616,644 4,648,173 7,037,014 45,784,783
- ------------------------------------------------ -----------------------------
Shares reacquired (638,925) (4,816,139) (367,062) (2,474,054)
Increase (decrease)
in shares (22,281) $ (167,966) 6,669,952 $43,310,729
- ------------------------------------------------ -----------------------------
Six Months Ended Year Ended
April 30, 1997 October 31, 1996
---------------------------------------------------------
Class C Shares Amount Shares Amount
- ------------------------------------------------ -----------------------------
Sales of shares 886,842 $ 6,721,819 5,117,940 $33,671,327
Shares issued to
shareholders in
reinvestment of net
investment income
and capital gains 119,899 905,990 142,172 918,340
Total 1,006,741 7,627,809 5,260,112 34,589,667
- ------------------------------------------------ -----------------------------
Shares reacquired (807,827) (6,094,377) (1,279,728) (8,538,564)
Increase in shares 198,914 $ 1,533,432 3,980,384 $26,051,103
- ------------------------------------------------ -----------------------------
Transactions in shares of beneficial interest were as follows:
12/10/96 to
April 30, 1997
-----------------------
Shares Amount
- --------------------------------------------------------------------------------
Sales of shares 1,125,210 $10,936,299
- --------------------------------------------------------------------------------
Shares reacquired (16,426) (160,510)
Increase in shares 1,108,784 $10,775,789
- --------------------------------------------------------------------------------
As of April 30, 1997, paid in capital for each Series was as follows:
$93,220,256 for the Growth & Income Series and $12,775,790 for the International
Series.
5. Purchases and Sales of Securities
Purchases and sales of investment securities (other than short-term investments)
were as follows:
Series Purchases Sales
- --------------------------------------------------------------------------------
Growth & Income $18,925,789 $20,926,869
- --------------------------------------------------------------------------------
International $11,278,083 $ 809,081
- --------------------------------------------------------------------------------
As of April 30, 1997, net unrealized appreciation, unrealized appreciation and
unrealized depreciation of investments based on cost for federal income tax
purposes were as follows:
Net Unrealized Unrealized Unrealized
Series Appreciation Appreciation Depreciation
- --------------------------------------------------------------------------------
Growth & Income $30,267,991 $30,924,438 $656,447
- --------------------------------------------------------------------------------
International $ 529,254 $ 807,137 $277,883
- --------------------------------------------------------------------------------
The cost of investments for federal income tax purposes is the same as that used
for financial reporting purposes.
6. Trustees' Remuneration
The Trustees of the Trust associated with Lord Abbett and all officers of the
Trust receive no compensation from the Trust for acting as such. Outside
Trustees' fees and retirement costs are allocated among all funds in the Lord
Abbett group based on net assets of each fund. A portion of the Trustees' fees
accrued during the period has been deemed invested in shares of the Trust under
a deferred compensation plan contemplating future payment of the value of those
shares. As of April 30, 1997, the aggregate amount in Trustees' accounts
maintained under the plan was $103,355.
7. Acquisition
On July 12, 1996, the Trust acquired the net assets of Lord Abbett Fundamental
Value Fund, Inc. ("Fundamental Value") pursuant to a plan of reorganization
approved by Fundamental Value's shareholders on June 19, 1996. The acquisition
was accomplished by a tax-free exchange of 6,718,449 shares of newly issued
Class A shares for 3,251,614 shares of Fundamental Value valued at $43,649,766
in the aggregate on July 12, 1996. The aggregate net assets of the Trust and
Fundamental Value immediately before the acquisition were $59,420,311 and
$43,649,766 (including $6,568,304 of net unrealized appreciation and $29,561 of
accumulated net realized gains), respectively.
Copyright (C) 1997 by Lord Abbett Securities Trust, 767 Fifth Avenue, New York,
NY 10153-0203
This publication, when not used for the general information of shareholders of
Lord Abbett Securities Trust, is to be distributed only if preceded or
accompanied by a current prospectus which includes information concerning the
Trust's investment objective and policies, sales charges and other matters.
There is no guarantee that the forecasts contained within this publication will
come to pass.
All rights reserved. Printed in the U.S.A.
