Lord Abbett
Securities Trust
o Growth & Income Series
o International Series
1997 ANNUAL REPORT
[Graphic: camera with map]
Investment portfolios designed to help you
capture capital growth over the long term
[Logo](R)
<PAGE>
Report to Shareholders
For the Fiscal Year Ended October 31, 1997
[Photo: Robert S. Dow]
/s/ Robert S. Dow
- -----------------------
Robert S. Dow
Chairman
November 14, 1997
Table of Contents
Growth & Income Series
- --------------------------------------------------------------------------------
Fund Facts 1
Statement of Net Assets 3
International Series
- --------------------------------------------------------------------------------
When Searching the Globe 2
Statement of Net Assets 6
Data on Both Series
- --------------------------------------------------------------------------------
Statements of Operations 9
Statements of Changes
in Net Assets 10
Financial Highlights 11
Notes to Financial Statements 12
Lord Abbett Securities Trust - Growth & Income Series and International Series
completed its fiscal year on October 31, 1997. The International Series
commenced operations on December 13, 1996. Below is an overview of
class-specific data as of the close of the year.
Growth & Income Series
- ----------------------
Year Ended 10/31/97 6/5/97*-10/31/97 Year Ended 10/31/97
------------------- ---------------- -------------------
Class A Class B Class C
- --------------------------------------------------------------------------------
Net asset value $8.79 $8.80 $8.80
Dividends $0.099 -- $0.037
Capital gains $0.075 -- $0.075
Total return+ +26.8% +7.2%** +26.2%
International Series
- --------------------
12/13/96++-10/31/97 6/5/97*-10/31/97
------------------- ----------------------------
Class A Class B Class C
- --------------------------------------------------------------------------------
Net asset value $10.86 $10.83 $10.83
Total return+ +15.2%** +5.6%** +5.6%**
About the Growth & Income Series
Since our last letter to you, the U.S. stock market continued to turn in good
performance. This advance was fueled by a surprising combination of strong
economic growth and declining inflation. Subdued inflation allowed interest
rates to decline further and stock prices to rise.
The financial services sector (primarily bank holdings) provided the greatest
amount of portfolio return, closely followed by consumer noncyclical companies
(which are companies whose performance is not tied to economic conditions, such
as drug and healthcare products, gas and electric companies), where several
pharmaceutical companies were stellar performers. Looking ahead, healthcare and
packaged foods continue to look attractive to us.
In 1998, we expect the economy to grow at a rate of about 2 1/2% with inflation
averaging about 3%. Further into the year, we anticipate an economic slowdown
accompanied by corporate earnings deceleration, probably resulting in lower
returns than investors have received during the last three years. Our investment
process, however, is geared toward seeking out companies positioned to provide
opportunity for price appreciation at less-than-market risk in varied economic
climates.
About the International Series
The Series focuses its research efforts on identifying "best-of-breed" foreign
companies. In other words, our selection process tries to find companies that,
we believe, are the best at what they do as opposed to achieving any particular
country or industry weighting.
Your Series enjoyed strong performance over the period due in large part to
gains made by industrial companies which are domiciled in Germany and Canada.
One company that helped portfolio performance during the year manufactures "zero
emission" hydrogen powered fuel cells that produce water and oxygen as waste
materials. Another is the world's largest supplier of database software tools
used for information integration. These are some examples of what we believe are
industry leaders. In addition, due to our selective investment process, we had
minimal exposure to companies located in the emerging and Far Eastern markets
that fell sharply during the period.
We are confident that our disciplined, research-driven approach to investing
will prove rewarding to our investors over the long term. It is our pleasure to
know that you include the Growth & Income Series and/or the International Series
as part of your investment portfolio. Thank you for the confidence you have
placed in us.
* Commencement of offering class shares. + Total return is the percent change in
net asset value, assuming the reinvestment of all distributions. ++ Commencement
of operations. ** Not annualized.
<PAGE>
Fund Facts
The Sophisticated Shopper
When it comes to stock selection, the portfolio manager of the Growth & Income
Series tries to be a savvy buyer. We have an experienced team of financial
professionals whose approach includes elements similar to those taken by smart
shoppers.
When you think about how you shop, you realize that you like to find bargains.
Savvy shoppers often check out the sales racks to find items with a low price
tag. Of course, just because "the price is right" does not mean that a product
is worth buying. A smart shopper will carefully inspect the item, checking it
for defects and overall quality. Another important test required by the smart
shopper: usability and function. If the item is not in style, or is something
that would not likely be used, there is probably no point in buying it.
Quantitative Research:
Performed on a universe of the 1,000 largest U.S. and multinational companies to
identify those stocks that represent the best bargains: a "low price tag."
Fundamental Research:
Conducted to assess a company's operating environment, resources and strategic
plans and to determine its prospects for exceeding the earnings expectations
reflected in its stock price: "overall quality."
Business Cycle Analysis:
Used to assess the economic and interest-rate sensitivity of the Fund's
portfolio. This analysis helps the portfolio manager assess how adding or
eliminating stocks changes a portfolio's overall sensitivity to economic
activity and interest rates: "is it in style?"
Lord Abbett Securities Trust - Growth & Income Series -- A Strong Performer
Average Annual Class C Share Total Return(1) as of 10/31/97
[The following table was depicted as a bar chart in the printed material.]
<TABLE>
<CAPTION>
<S> <C>
1 Year 26.2%
3 Years 22.7%
Life of Series(2) 18.2%
<FN>
(1) Reflects the percent change in net asset value (for Class C shares) which
includes the reinvestment of all distributions. The Series issues
additional classes of shares with distinct pricing options. For a full
discussion of the differences in pricing alternatives, please call Lord
Abbett Distributor LL Cat 800-874-3733 and ask for the current prospectus.
(2) The Series commenced operations on 1/3/94. Formerly Lord Abbett Securities
Trust - Growth & Income Trust.
</FN>
</TABLE>
Growth & Income Series
SEC-required average annual total returns (for Class C shares) for the periods
ended 9/30/97, with all distributions reinvested:
[The following table was depicted as a bar chart in the printed material.]
1 Year 34.09%
Life of Series 19.70%
Past performance is not an indication of future results. The investment return
and principal value of an investment will fluctuate so that shares, on any given
day or when redeemed, may be worth more or less than their original cost.
1
<PAGE>
When Searching the Globe for the Best
Investment Opportunities ...
Rely On An Experienced Global Manager ...
Lord, Abbett & Co. is a minority owner of the International Series'
sub-adviser's parent company, Fuji Investment Management Co., Ltd. (FIMCO).
FIMCO is:
o An investment management affiliate of Fuji Bank, one of the world's
largest banks
o A money manager whose services, until now, had been available only to
large, institutional accounts
o An asset manager with offices in Tokyo and London serving the pension
investment needs of many premier international companies, including:
Bridgestone NISSAN
Hitachi SONY
MCI Canon Inc.
... And a Solid Investment Strategy
FIMCO's strategy is based on the timely purchase of undervalued foreign
companies which have focused on benefiting from the future changes within their
industries. Their disciplined research process involves:
o examining global trends to identify developments on an
industry-by-industry basis;
o using this information, along with our research and experience, to try to
define the ideal company within each industry; and
o assessing the companies in each industry to determine which are
"best-of-breed." In other words, determining which ones best match the
"ideal" company, based on a blend of both quantitative and fundamental
analysis.
The International Series' portfolio consists of 40-50 such companies, which meet
our goal of creating a portfolio where the performance of individual holdings is
not diluted across too many securities.
Lord Abbett Securities Trust - International Series -- Off to a Strong Start
Total Returns(1): 12/31/96-10/31/97
[The following table was depicted as a bar chart in the printed material.]
<TABLE>
<CAPTION>
<S> <C>
International
Series 14.7%
International
Fund Average(2) 5.4%
<FN>
(1) The Series commenced operations on 12/13/96. Figures are not annualized
and are at net asset value for Class A shares. The Series offers
additional classes of shares with distinct pricing options. For a full
discussion of the differences in pricing alternatives, please call Lord
Abbett Distributor LLC at 800-874-3733 and ask for the current prospectus.
(2) Source: Lipper Analytical Services.
</FN>
</TABLE>
International Series
SEC-required average annual total return for Class A shares at the maximum sales
charge of 5.75% for the period 12/13/96 (commencement of operations) through
9/30/97, with all distributions reinvested:
[The following table was depicted as a bar chart in the printed material.]
Life of Series 8.90%
Past performance is not an indication of future results. The investment return
and principal value of an investment will fluctuate so that shares, on any given
day or when redeemed, may be worth more or less than their original cost.
2
<PAGE>
Important Information
Results quoted herein reflect appropriate Rule 12b-1 Plan expenses from
commencement of the Plan. Tax consequences are not reflected. If used as sales
material after 12/31/97, this report must be accompanied by Lord Abbett's
Performance Quarterly for the most recently completed calendar quarter.
Foreign investment risk factors include the potential for less regulation and
liquidity and more volatility than U.S. markets; currency fluctuation;
potentially less publicly-available information about companies, banks and
governments than for U.S. counterparts; lack of uniform accounting standards
among countries, impairing comparisons; potentially higher transaction costs and
different securities settlement practices.
<TABLE>
<CAPTION>
Statement of Net Assets
GROWTH & INCOME SERIES October 31, 1997
Investments Shares Market Value
====================================================================================================================
Common Stocks 97.41%
====================================================================================================================
<S> <C> <C> <C>
Aerospace 1.31% Boeing Co.-World's leading commercial aircraft
manufacturer 27,800 $ 1,330,925
Raytheon Company-A leading factor in air-defense
missiles and military electronic products 10,000 542,500
Total 1,873,425
- --------------------------------------------------------------------------------------------------------============
Agricultural Products 2.65% Archer-Daniels-Midland Co.-Leading processor and
seller of agricultural commodities 108,500 2,414,125
Pioneer Hi-Bred International, Inc.-Leading U.S.
supplier of hybrid seed 15,000 1,374,375
Total 3,788,500
- --------------------------------------------------------------------------------------------------------============
Apparel 1.38% VF Corp.-Leading producer of blue jeans and other
apparel 22,100 1,975,188
- --------------------------------------------------------------------------------------------------------============
Auto Parts: After Market 1.19% Snap-on, Inc.-Manufacturer and distributor of hand
tools and diagnostic equipment for the automotive
industry 39,600 1,702,800
- --------------------------------------------------------------------------------------------------------============
Automobiles .92% General Motors Corp.-Worldwide auto producer 20,600 1,322,263
- --------------------------------------------------------------------------------------------------------============
Banks: Money Center 6.01% BankAmerica Corp.-Major money-center bank 36,800 2,631,200
Chase Manhattan Corp.-Major money-center bank
holding company 27,400 3,161,275
First Chicago NBD-Major midwest bank 22,000 1,600,500
NationsBank Corp.-Leading commercial bank located
in southeast North Carolina 20,000 1,197,500
Total 8,590,475
- --------------------------------------------------------------------------------------------------------============
Banks: Regional 9.29% BankBoston, N.A.-Leading New England regional bank 29,900 2,423,769
Comerica Inc.-Midwestern regional bank holding
company 28,100 2,221,656
First Union Corp.-Major east coast bank 48,400 2,374,625
KeyCorp-Multi-regional bank holding company serving
the northwest U.S.+ 37,000 2,263,937
Mellon Bank Corp.-Commercial bank located in
Pittsburgh, PA 50,000 2,578,125
Washington Mutual-A leading savings and loan company 20,700 1,416,655
Total 13,278,767
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</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
Statement of Net Assets
GROWTH & INCOME SERIES October 31, 1997
Investments Shares Market Value
====================================================================================================================
<S> <C> <C> <C>
Brokers 1.10% Morgan Stanley, Dean Witter, Discover & Co.-Major
brokerage and credit card company 32,000 $ 1,568,000
- --------------------------------------------------------------------------------------------------------============
Chemicals 3.94% Air Products & Chemicals Inc.-Industrial gas producer 20,000 1,520,000
Dow Chemical Co.-Leading global chemical producer 10,500 952,875
Hanna, M.A. Co.-Leading producer and distributor of
plastic compounds, resins and additives 37,500 965,625
Morton International Inc.-Producer of specialty
chemicals, salt and airbags 45,000 1,485,000
Union Carbide Corp.-Major U.S.-based producer of
plastics and chemicals 15,700 717,294
Total 5,640,794
- --------------------------------------------------------------------------------------------------------============
Communications Equipment Harris Corp.-Manufacturer of advanced electronic
1.93% systems and communications equipment 49,200 2,146,350
Motorola Inc.-Leading producer of cellular phones
and message pagers 10,000 617,500
Total 2,763,850
- --------------------------------------------------------------------------------------------------------============
Computer: Hardware 4.88% *Digital Equipment Corp.-Manufacturer of data processing
equipment 31,000 1,551,938
Hewlett-Packard Co.-Leading manufacturer of computer
products including printers, servers, workstations
and PCs 37,400 2,307,113
International Business Machines Corp.-Largest computer
manufacturer 31,800 3,118,388
Total 6,977,439
- --------------------------------------------------------------------------------------------------------============
Computer: Peripherals .38% *Seagate Technology Inc.-Manufacturer of computer disk
drive equipment 20,000 542,500
- --------------------------------------------------------------------------------------------------------============
Computer: Software 1.08% *Sun Microsystems Inc.-Supplier of network computer
products including workstations, servers, software,
microprocessors and a full range of services and
support 45,000 1,541,250
- --------------------------------------------------------------------------------------------------------============
Containers 1.97% Crown Cork & Seal Inc.-Major producer of a wide
variety of three-piece and two steel aluminum
containers for the food industry 40,000 1,802,500
Sonoco Products Co.-A leading U.S. producer of
specialty paper and plastic packaging components 31,500 1,013,905
Total 2,816,405
- --------------------------------------------------------------------------------------------------------============
Cosmetics 1.01% International Flavor & Fragrance-Creator and marketer
of flavors and fragrances used by a wide variety of
consumer products 30,000 1,451,250
- --------------------------------------------------------------------------------------------------------============
Drugs/Health Care Products American Home Products Corp.-Producer of drugs, food
6.11% housewares and packaged medicine and medical products 24,000 1,779,000
Bristol-Myers Squibb Company-Major worldwide
pharmaceutical concern with other interests in infant
nutrition, non-prescription medications, medical
devices and toiletries 32,000 2,808,000
SmithKline Beecham plc ADS-United Kingdom-based health
care company providing prescription and over-the-
counter drugs and clinical laboratory services 57,000 2,714,625
Warner-Lambert Co.-Drugs and consumer products
manufacturer 10,000 1,431,875
Total 8,733,500
- --------------------------------------------------------------------------------------------------------============
Electric Power 4.60% Baltimore Gas & Electric Co.-Regional electric utility 32,500 891,719
Carolina Power & Light Co.-Electric utility company
serving North and South Carolina 25,000 893,750
CINergy Corp.-Supplier of electricity and natural
gas in southwestern Ohio and adjacent Kentucky and
Indiana territories 52,900 1,745,700
FPL Group-One of the nation's premier electric
utilities, serving about 7 million people in Florida's
east, southeast and southwest coasts 35,000 1,809,063
Ohio Edison Co.-Electric utility covering 2.9 million
people in some of the most highly industrialized cities
and agriculturally productive regions in Ohio and
Pennsylvania 50,000 1,237,500
Total 6,577,732
- --------------------------------------------------------------------------------------------------------============
Electrical Equipment 1.75% Emerson Electric Co.-Diversified manufacturer of
consumer and industrial electrical components 47,600 2,496,025
- --------------------------------------------------------------------------------------------------------============
Financial: Miscellaneous 1.52% Federal National Mortgage-America's largest supplier
of conventional home mortgages 45,000 2,179,687
- --------------------------------------------------------------------------------------------------------============
Food 6.61% ConAgra Inc.-Major producer of agricultural and
consumer products 82,940 2,498,567
CPC International Inc.-Producer of diversified
packaged foods 29,000 2,871,000
Heinz H.J. Co.-Domestic packaged foods producer 61,400 2,851,263
Sara Lee Corp.-A diversified maker of branded food
products, apparel and household consumer products 24,000 1,227,000
Total 9,447,830
-----------------------------------------------------------------------============
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Statement of Net Assets
GROWTH & INCOME SERIES October 31, 1997
Investments Shares Market Value
====================================================================================================================
<S> <C> <C> <C>
Health Care Products .57% Baxter International Inc.-World's leading
distributor and major manufacturer of hospital
supplies and related medical equipment 17,500 $ 809,375
- --------------------------------------------------------------------------------------------------------============
Health Care Services 2.46% Aetna Inc.-Provider of managed health plans 25,650 1,822,753
*Humana Inc.-Major U.S. provider of managed health
plans 65,000 1,365,000
United Healthcare Corp.-Offers health care coverage
and related services in all 50 states 7,000 324,188
Total 3,511,941
- --------------------------------------------------------------------------------------------------------============
Household Products 3.57% Fort James Corp.-Producer of paper-based consumer
products, packaging and communication papers 64,100 2,543,969
Kimberly Clark Corp.-Major producer of consumer and
personal care products 49,180 2,554,286
Total 5,098,255
- --------------------------------------------------------------------------------------------------------============
Housewares .85% Fortune Brands Inc.-Consumer products conglomerate 36,900 1,220,006
- --------------------------------------------------------------------------------------------------------============
Insurance: Property and Chubb Corp.-Broad-based property and casualty
Casualty 3.31% insurance organization 22,000 1,457,500
CIGNA Corp.-Multi-line insurance and medical services
provider 7,600 1,179,900
CMAC Investment Corp.-Major private mortgage insurance
provider 15,200 831,250
The Progressive Corporation-Insurance holding company
specializing in non-standard auto insurance 12,200 1,271,850
Total 4,740,500
- --------------------------------------------------------------------------------------------------------============
Machinery: Diversified 1.24% Deere & Co.-World's largest manufacturer of farm
equipment 33,800 1,778,725
- --------------------------------------------------------------------------------------------------------============
Miscellaneous 2.88% Minnesota Mining & Manufacturing Co.-Diversified global
manufacturer of value-added industrial, consumer and
medical products 26,000 2,379,000
National Service Industries, Inc.-Diversified
manufacturer of lighting equipment, rental uniforms
and specialty chemicals 39,400 1,743,450
Total 4,122,450
- --------------------------------------------------------------------------------------------------------============
Natural Gas: Pipelines 2.50% Columbia Gas Systems Inc.-Utility holding company 30,000 2,167,500
Consolidated Natural Gas Co.-Producer of integrated
natural gas systems 26,000 1,405,625
Total 3,573,125
- --------------------------------------------------------------------------------------------------------============
Natural Gas: Distribution 2.16% Nicor Inc.-Natural gas distributor in Illinois 80,000 3,085,000
- --------------------------------------------------------------------------------------------------------============
Natural Gas: Diversified .92% The Coastal Corporation-A diversified gas pipeline
company 21,800 1,310,725
- --------------------------------------------------------------------------------------------------------============
Oil: International Integrated Amoco Corp.-Major integrated petroleum and natural
4.77% gas company with sizable interests in chemicals 19,900 1,824,581
Chevron Corp.-Worldwide petroleum company with
important interests in chemicals and minerals 23,600 1,957,325
Exxon Corp.-World's largest integrated oil company 19,800 1,216,463
Mobil Corp.-Large international oil company 25,000 1,820,313
Total 6,818,682
- --------------------------------------------------------------------------------------------------------============
Paper and Forest Products .97% International Paper Co.-Producer of paper and forest
products 11,750 528,750
Temple-Inland, Inc.-Leading manufacturer of corrugated
boxes, bleached paperboard, pulp and building materials 15,000 860,625
Total 1,389,375
- --------------------------------------------------------------------------------------------------------============
Printing and Publishing .56% Gannet Co., Inc.-Major U.S. newspaper publisher 15,200 798,950
- --------------------------------------------------------------------------------------------------------============
Railroads .24% Canadian National Railway (Partially Paid)-Major
Canadian-based railroad operator 6,300 339,806
- --------------------------------------------------------------------------------------------------------============
Retail: Specialty 1.33% *Toys R Us Inc.-Discount toy supermarts; department
stores 56,000 1,907,500
- --------------------------------------------------------------------------------------------------------============
Retail: Department and
Merchandise .94% May Department Stores Company-Leading department store
retailer 25,000 1,346,875
- --------------------------------------------------------------------------------------------------------============
Telephone: Local 2.33% Bell Atlantic Corp.-Regional telephone company 16,800 1,341,900
BellSouth Corp.-Regional telephone company 14,400 681,300
SBC Communication Inc.-Mexican telephone monopoly 20,500 1,304,312
Total 3,327,512
-----------------------------------------------------------------------============
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
Statement of Net Assets
GROWTH & INCOME SERIES October 31, 1997
Investments Shares Market Value
====================================================================================================================
<S> <C> <C> <C>
Telephone: Long Distance 3.18% AT&T Corp.-Global telecommunications giant 57,000 $ 2,789,437
MCI Communications Corp.-Long distance
telecommunications provider 49,700 1,764,350
Total 4,553,787
- --------------------------------------------------------------------------------------------------------============
Tobacco 3.00% Gallaher Group plc ADS-England's largest tobacco
producer 36,900 708,019
Philip Morris Inc.-Leading tobacco company 48,000 1,902,000
RJR Nabisco-Diversified food and tobacco producer 53,000 1,679,438
Total 4,289,457
-----------------------------------------------------------------------============
Total Investments in Common Stocks (Cost $99,138,169) 139,289,726
====================================================================================================================
Other Assets, Less Liabilities 2.59%
====================================================================================================================
Corporate
Obligations, Ford Motor Credit Co.
at Cost 5.58% due 11/3/1997 4,375,000
- --------------------------------------------------------------------------------------------------------------------
Cash and Receivables,
Net of Liabilities (673,051)
- --------------------------------------------------------------------------------------------------------============
Total Other Assets, Less Liabilities 3,701,949
====================================================================================================================
Net Assets 100.00% $142,991,675
====================================================================================================================
Class A Shares-Net asset value ($58,910,753 / 6,698,803
shares outstanding) $8.79
Class B Shares-Net asset value ($332,068 / 37,720 shares
outstanding) $8.80
Class C Shares-Net asset value ($83,748,854 / 9,521,881
shares outstanding) $8.80
*Non-income producing.
+Security is held in connection with an open option written.
The descriptions of the companies shown in the portfolio, which were
obtained from published reports and other sources believed to be
reliable, are supplemental and unaudited.
See Notes to Financial Statements.
<CAPTION>
Statement of Net Assets
INTERNATIONAL SERIES October 31, 1997
Investments Shares Market Value
====================================================================================================================
Investments in Securities 93.06%
====================================================================================================================
Foreign 92.32%
====================================================================================================================
<S> <C> <C> <C>
Australia 3.44% *Biota Holdings Ltd.-Biotechnology firm part owned
by Glaxo of the UK who will get FDA approval for its
anti-influenza vaccine 200,000 $ 468,400
*Lihir Gold-One of the world's lowest cost gold
producers located in Papua, New Guinea 600,000 816,180
*Nil Paid Rights-Biota Holdings Ltd. 20,000 560
Total 1,285,140
- --------------------------------------------------------------------------------------------------------============
Canada 15.21% *Ballard Power Systems-Designs, manufactures and
develops methanol or hydrogen-based fuel cells that
are the only true zero emission power source for
vehicles 64,400 3,658,570
Cameco Corporation-World's largest and lowest cost
producer of uranium for use in nuclear power stations 7,500 279,612
*Lava Systems Inc.-The sole company to provide a fully
integrated computer based document management system 150,000 191,730
Magna Class A-Major supplier of components and
subassemblies to the world's auto firms 10 660
*Meridian Tech Inc.-Global leader in the production
of complex magnesium and aluminum casting for auto
engines 73,000 414,713
*Methanex Corp.-World's largest and lowest cost
supplier of methanol 82,400 722,656
*Ventra Group-Dominant manufacturer of vehicle jacks
to North American vehicle assemblers 150,000 410,100
Total 5,678,041
- --------------------------------------------------------------------------------------------------------============
Denmark 5.08% BG Bank Dkk-Domestic retail bank focused on low cost
delivery of standard products 7,000 449,625
Jyske Bank-Bank specializing in international private
and commercial banking 5,000 514,930
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
Statement of Net Assets
INTERNATIONAL SERIES October 31, 1997
Investments Shares Market Value
====================================================================================================================
<S> <C> <C> <C>
Syd-Sonderhill-Regional, mortgage and personal
banking firm 8,250 $ 427,331
Unidanmark-One of Denmark's largest full service
banking groups 7,500 506,170
Total 1,898,056
- --------------------------------------------------------------------------------------------------------============
Finland 4.95% Pohjola-Finland's largest general insurance company
covering both the life and the non-life sectors 20,000 765,054
Raisio Yhtyma Oyj-Producer of paper processing
chemical and foodstuffs including a cholesterol-
lowering margarine 10,000 1,081,895
Total 1,846,949
- --------------------------------------------------------------------------------------------------------============
France 6.47% Alcatel Alsthom-One of the world's largest full
line heavy electrical engineering firms 7,500 903,505
AXA-Recently merged with UAP to form one of
Europe's largest financial organizations 10,000 683,687
*Ubi Soft Entertainment-One of the largest producers,
translators and distributors of games software in
Europe 10,000 827,347
Total 2,414,539
- --------------------------------------------------------------------------------------------------------============
Germany 24.65% Daimler-Benz-World's largest manufacturer of luxury
cars, buses and class eight trucks 10,000 669,294
*DLW-Major producer of linoleum and carpet floor
coverings as well as office furniture 6,000 591,065
Gea Ag Dem-One of the world's top suppliers of food
and pharmaceutical processing equipment 1,000 324,506
Gehe-Europe's largest pharmacy chain 15,000 782,292
HIS Sport Wear-Designs and retails sports and
leisurewear 45,000 834,444
Iwka-Multi-line engineering company making packaging,
robot welding and defense equipment 2,500 621,487
Marschollek Lauten & Partners-Largest independent
personal life insurance and investment consultancy
services 3,400 778,235
Preussag-Diversified firm with activities from oil
extraction through metal processing to freight-car and
helicopter leasing 2,000 518,051
SAP Ord-World's fourth largest software firm dominating
the global market for relational database management
tools 5,000 1,432,752
Schering-Pharmaceutical firm with strong market share
in contrast media and birth control products 6,000 580,982
SKW Trostberg-Specialist niche chemical firm producing
additives, flavoring, adhesives, anti-corrosive paints
and oil-well drilling products 18,000 617,488
Viag-Diversified group with utility, aluminum, chemical,
glass and packaging operations 1,500 695,805
Vossloh-Manufacturer of electrical lighting equipment
as well as railway track fastners and the related
installation equipment 15,000 757,953
Total 9,204,354
- --------------------------------------------------------------------------------------------------------============
Japan 2.24% Keyence Corp.-Manufacturers of specialist optical and
magnetic sensors, as well as detection items using
such items 2,000 299,077
Nippon Express-Japan's second largest parcel delivery
firm 100,000 538,340
Total 837,417
- --------------------------------------------------------------------------------------------------------============
Netherlands 7.09% Hunter Douglas-Major global supplier of decorative
building fittings especially window blinds 14,000 575,984
Kon Pakhoed-Largest chemical distributor worldwide 16,000 523,322
Koninklijke KNP-Europe's largest specialist paper,
packaging, office supply and related distribution
group 30,000 681,924
Vmf Stork-Engineering and service company focused on
aircraft parts, processing machinery and food
manufacturing equipment 20,000 863,976
Total 2,645,206
- --------------------------------------------------------------------------------------------------------============
Switzerland 10.32% Baloise Holdings-Mid-sized insurance group active in
life and non-life sectors 600 1,080,772
Christ-Major global provider of water treatment
chemicals and purification equipment 700 525,375
*Saurer Ag Arbon Chf-Textile machinery and auto
component manufacturing firm 1,100 728,092
Stratec Holding-Healthcare company concentrating on
osteosynthesis and prosthetics 600 840,600
Swiss Life-Major life insurance company with operations
all over Europe 1,000 677,627
Total 3,852,466
- --------------------------------------------------------------------------------------------------------============
United Kingdom 12.87% Capita-Dedicated provider of property-related
consultancy, MIS outsourcing, architectural and
training services 20,000 103,528
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
Statement of Net Assets
INTERNATIONAL SERIES October 31, 1997
Shares or
Principal
Investments Amount Market Value
====================================================================================================================
<S> <C> <C> <C>
DBS Management-Supplies independent financial
advisors with financial product evaluation and
administration software and services 200,000 $ 561,200
Delphi Group-Provider of temporary, contract and
permanent IT staff to corporations in the U.S. and
the U.K. 50,180 582,545
Halma-Manufactures environmental control, fire
detection, gas monitoring, safety and security
equipment 120,000 239,220
Jarvis Ord-Specialist engineering and service company
focused on the installation of railway track and
signals 166,700 907,581
Johnson Matthey-Precious metal refinery, alloy
manufacturing and trading company 60,000 589,002
Powerscreen International-Leading global screening,
crushing, recycling and material handling equipment
supplier 15,168 177,231
Regal Hotel-Owns and operates more than 100 medium-
quality, medium-size hotels and inns 1,000,000 703,600
Verity Group-Makes high-quality loudspeakers and has
developed the first commercial flat panel speaker 850,000 939,760
Total 4,803,667
- --------------------------------------------------------------------------------------------------------============
Total Investments in Foreign Securities (Cost
$31,755,557) 34,465,835
====================================================================================================================
United States .74%
====================================================================================================================
*Net Bank, Inc.-Provider of banking services over the
Internet (Cost $300,000) 25,000 275,000
- --------------------------------------------------------------------------------------------------------============
Total Investments in Common Stocks (Cost $32,055,557) 34,740,835
====================================================================================================================
Other Assets, Less Liabilities 6.94%
====================================================================================================================
Short-Term
Investments, Federal Home Loan Bank
at Cost 5.50% due 11/3/1997 2,425M 2,423,878
====================================================================================================================
Cash and Receivables, Net of Liabilities 169,786
- --------------------------------------------------------------------------------------------------------============
Total Other Assets, Less Liabilities 2,593,664
====================================================================================================================
Net Assets 100.00% $ 37,334,499
====================================================================================================================
Class A Shares-Net asset value ($32,755,368 / 3,015,007
shares outstanding) $10.86
Class B Shares-Net asset value ($1,650,249 / 152,446
shares outstanding) $10.83
Class C Shares-Net asset value ($2,928,882 / 270,455
shares outstanding) $10.83
*Non-income producing.
The descriptions of the companies shown in the portfolio, which were
obtained from published reports and other sources believed to be
reliable, are supplemental and unaudited.
See Notes to Financial Statements.
</TABLE>
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 each
Series' 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.
8
<PAGE>
Statements of Operations
<TABLE>
<CAPTION>
12/13/96
(Commencement
Year Ended of Operations)
10/31/97 to 10/31/97
Growth & Income International
Investment Income Series Series
============================================================================================== ==============
<S> <C> <C>
Income Dividends $ 3,073,616 $ 197,112
Interest 181,359 106,947
Total income 3,254,975 304,059
------------------------------------------------------------------------------------- --------------
Expenses Management fee 999,092 127,715
12b-1 distribution plan-Class A 135,432 41,058
12b-1 distribution plan-Class B 602 3,180
12b-1 distribution plan-Class C 785,927 6,653
Shareholder servicing 184,263 7,002
Report to shareholders 67,900 6,083
Audit and tax 33,322 15,358
Registration 77,222 25,300
Legal 8,450 600
Organization 7,292 6,215
Other 15,956 2,559
Net expenses 2,315,458 241,723
------------------------------------------------------------------------------------- --------------
Net investment income 939,517 62,336
------------------------------------------------------------------------------------- --------------
Realized and Unrealized Gain on Investments and Foreign Currency Transactions
===============================================================================================================
Net realized gain (loss) from investment and foreign currency transactions
Proceeds from sales 46,816,457 5,236,847
Cost of investments sold 37,293,121 5,735,701
Net realized gain (loss) 9,523,336 (498,854)
------------------------------------------------------------------------------------- --------------
Unrealized appreciation of investments and foreign currency holdings 19,515,134 2,685,278
- ---------------------------------------------------------------------------------------------- --------------
Net realized and unrealized gain on investments and foreign currency transactions 29,038,470 2,186,424
- ---------------------------------------------------------------------------------------------- --------------
Net Increase in Net Assets Resulting from Operations $29,977,987 $2,248,760
===============================================================================================================
</TABLE>
See Notes to Financial Statements.
9
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
12/13/96
(Commencement
Year Ended of Operations) Year Ended
10/31/97 to 10/31/97 10/31/96
---------- -------------- ------------
Growth & Growth &
Income International Income
Increase (Decrease) in Net Assets Series Series Series
===================================================================================================== ============== ============
<S> <C> <C> <C>
Operations Net investment income $ 939,517 $ 62,336 $ 902,100
Net realized gain (loss) from investment and foreign currency transactions 9,523,336 (498,854) 1,220,288
Net unrealized appreciation of investments and foreign currency holdings 19,515,134 2,685,278 10,781,503
Net increase in net assets resulting from operations 29,977,987 2,248,760 12,903,891
- ----------------------------------------------------------------------------------------------------- -------------- ------------
Undistributed (overdistributed) net investment income included in price of share
transactions (7,673) 143,734 91,590
- ----------------------------------------------------------------------------------------------------- -------------- ------------
Distributions to shareholders from net investment income:
Class A (660,996) -- (181,341)
Class B -- -- --
Class C (351,430) -- (763,298)
Total (1,012,426) -- (944,639)
--------------------------------------------------------------------------------------- -------------- ------------
Distributions to shareholders from net realized gain from investment and foreign
currency transactions:
Class A (501,039) -- --
Class B -- -- --
Class C (701,709) -- (220,851)
Total (1,202,748) -- (220,851)
--------------------------------------------------------------------------------------- -------------- ------------
Total distributions (2,215,174) -- (1,165,490)
- ----------------------------------------------------------------------------------------------------- -------------- ------------
Share transactions:
Net proceeds from sales of shares 21,789,630 36,170,176 35,645,785
Net asset value of shares issued to shareholders in reinvestment of
net investment income and realized gain from investment transactions 2,029,420 -- 1,078,899
Net asset value of shares issued in exchange for assets acquired in
tax-free acquisition -- -- 43,649,766
Total 23,819,050 36,170,176 80,374,450
--------------------------------------------------------------------------------------- -------------- ------------
Cost of shares reacquired (22,544,262) (3,228,171) (11,012,618)
--------------------------------------------------------------------------------------- -------------- ------------
Increase in net assets derived from share transactions 1,274,788 32,942,005 69,361,832
--------------------------------------------------------------------------------------- -------------- ------------
Increase in net assets 29,029,928 35,334,499 81,191,823
- ----------------------------------------------------------------------------------------------------- -------------- ------------
Net Assets
Beginning of period 113,961,747 2,000,000 32,769,924
--------------------------------------------------------------------------------------- -------------- ------------
End of period+ $142,991,675 $ 37,334,499 $113,961,747
=====================================================================================================================
</TABLE>
+Including undistributed net investment income of $153,968 and
$206,070, respectively, as of October 31, 1997 and undistributed
net investment income of $234,550 as of October 31, 1996.
See Notes to Financial Statements.
10
<PAGE>
Financial Highlights
GROWTH & INCOME SERIES
<TABLE>
<CAPTION>
Class A Shares Class B Shares Class C Shares
------------------------------ ------------------ ----------------------------------------
Year Ended
10/31, 7/15/96(a) 6/5/97(a) Year Ended 10/31, 1/3/94(b)
Per Share Operating Performance: 1997 to 10/31/96 to 10/31/97 1997 1996 1995 to 10/31/94
=================================================== ================= ================== ============================ ===========
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 7.09 $ 6.50 $ 8.20 $ 7.09 $ 6.04 $ 5.07 $ 5.00
- --------------------------------------------------- ----------------- ------------------ ---------------------------- -----------
Income from investment operations
Net investment income .093 .028 -- .032 .0949 .12 .089
Net realized and unrealized gain on
investments 1.781 .589 .60 1.790 1.0986 .97 .041
Total from investment operations 1.874 .617 .60 1.822 1.1935 1.09 .130
----------------------------------------------- ----------------- ------------------ ---------------------------- -----------
Distributions
Dividends from net investment income (.099) (.027) -- (.037) (.1035) (.12) (.06)
Distributions from net realized gain (.075) -- -- (.075) (.04) -- --
----------------------------------------------- ----------------- ------------------ ---------------------------- -----------
Net asset value, end of period $ 8.79 $ 7.09 $ 8.80 $ 8.80 $ 7.09 $ 6.04 $ 5.07
- --------------------------------------------------- ----------------- ------------------ ---------------------------- -----------
Total Return(c) 26.78% 12.10%(d) 7.19%(d) 26.24% 20.02% 21.83% 2.62%(d)
=================================================== ================= ================== ============================ ===========
Ratios to Average Net Assets:
Expenses, including waiver 1.29% .39%(d) .86%(d) 2.05% 1.55% 1.16% .61%(d)
Expenses, excluding waiver 1.29% .39%(d) .86%(d) 2.05% 2.01% 1.91% 1.94%(d)
Net investment income 1.15% .40%(d) .01%(d) 0.39% 1.36% 2.06% 2.03%(d)
================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Year Ended 10/31, 1/3/94(b)
Supplemental Data for All Classes: 1997 1996 1995 to 10/31/94
============================================================================================================== ===========
<S> <C> <C> <C> <C>
Net assets, end of period (000) $142,992 $113,962 $32,770 $ 9,160
Portfolio turnover rate 36.37% 23.84% 23.17% 31.95%
Average commission rate per share paid on equity transactions $ .065 $ .064 $ .059 n/a
=========================================================================================================================
(a) Commencement of offering respective Class shares.
(b) Commencement of operations.
(c) Total return does not consider the effects of sales loads.
(d) Not annualized.
See Notes to Financial Statements.
</TABLE>
Financial Highlights
INTERNATIONAL SERIES
<TABLE>
<CAPTION>
Class A Shares Class B Shares Class C Shares
------------------ ------------------ --------------
12/13/96(a) 6/2/97(b) 6/2/97(b)
Per Share Operating Performance: to 10/31/97 to 10/31/97 to 10/31/97
=============================================================================================== ================== ==============
<S> <C> <C> <C>
Net asset value, beginning of period $ 9.42 $ 10.26 $ 10.26
- ----------------------------------------------------------------------------------------------- ------------------ --------------
Income from investment operations
Net investment income (loss) .07 (.03) (.03)
Net realized and unrealized gain on investments and foreign
currency holdings 1.37 .60 .60
Total from investment operations 1.44 .57 .57
------------------------------------------------------------------------------------------- ------------------ --------------
Net asset value, end of period $ 10.86 $ 10.83 $ 10.83
- ----------------------------------------------------------------------------------------------- ------------------ --------------
Total Return(c) 15.21%(d) 5.56%(d) 5.56%(d)
=============================================================================================== ================== ==============
Ratios to Average Net Assets:(d)
Expenses, including waiver 1.23% .87% .87%
Expenses, excluding waiver 1.23% .87% .87%
Net investment income (loss) 0.41% (0.46)% (0.46)%
================================================================================================================================
12/13/96(a)
Supplemental Data for All Classes: to 10/31/97
====================================================================================================================================
Net assets, end of period (000) $37,334
Portfolio turnover rate 29.72%
Average commission rate per share paid on equity transactions $ .024
================================================================================================================================
</TABLE>
(a) Commencement of operations.
(b) Commencement of offering respective Class shares.
(C) Total return does not consider the effects of sales loads.
(d) Not annualized.
See Notes to Financial Statements.
11
<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"). 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 valued 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) The Trust may write call options on
securities it owns. Premiums received by the Trust upon writing covered call
options are included in the Trust's statement of net assets as an asset and an
equivalent liability. The liability is adjusted daily to the market value of the
options written. If an option expires, or if the Trust enters into a closing
purchase transaction, the Trust realizes a gain or, if the cost of a closing
purchase transaction exceeds the premium originally received, a loss, and the
liability related to the option is extinguished. If an option is exercised, the
proceeds of the sale of the underlying security are increased by the premium
originally received when the option was written. (d) 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.
(e) Security transactions are recorded 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. (f) 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. (g) 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 0.75% per annum. Lord Abbett may waive its management fee and reimburse the
Trust for certain of its other expenses. 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, Class B 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, (2) a one-time distribution fee of up to 1% on certain
qualifying purchases and (3) 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 B Plan, each Series pays Distributor an
annual service and distribution fee of 0.25% and 0.75%, respectively, of the
average daily net asset value of the Class B shares. Pursuant to the Class C
Plan, each 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.
Lord Abbett received the following commissions for the year ended October 31,
1997 on sales of shares of the Trust after concessions were paid to authorized
distributors:
Lord Abbett Dealers'
Series Commissions Concessions
- --------------------------------------------------------------------------------
Growth & Income $19,397 $119,275
- --------------------------------------------------------------------------------
International $71,760 $486,253
- --------------------------------------------------------------------------------
3. Distributions
Dividends from net investment income, if any, 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 October 31, 1997, the accumulated undistributed net
realized gain (loss) for financial reporting purposes, aggregated $9,550,322 for
the Growth & Income Series and $(498,854) for the International Series.
Distributions declared on November 12, 1997 were as follows:
Rate Aggregate
Per Share Amount
- --------------------------------------------------------------------------------
Growth & Income Series-Capital Gains-Class A $ .59 $3,955,816
- --------------------------------------------------------------------------------
Growth & Income Series-Capital Gains-Class C $ .59 $5,643,673
- --------------------------------------------------------------------------------
International Series-Investment Income-Class A $.025 $ 75,249
- --------------------------------------------------------------------------------
12
<PAGE>
Notes to Financial Statements
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.
4. Capital
Transactions in shares of beneficial interest for the Growth & Income Series
were as follows:
July 15, 1996
(Commencement of
Year Ended offering Class A shares)
October 31, 1997 to October 31, 1996
------------------------- -------------------------
Class A Shares Amount Shares Amount
- ------------------------------------------------- -------------------------
Sales of shares 962,023 $ 7,725,077 294,449 $ 1,974,458
Shares issued to
shareholders in
reinvestment of net
investment income
and realized gain
from investment
transactions 134,345 1,035,066 24,116 160,559
Shares issued to
shareholders in
exchange for assets
acquired in tax-free
acquisition -- -- 6,718,449 43,649,766
Total 1,096,368 8,760,143 7,037,014 45,784,783
- ------------------------------------------------- -------------------------
Shares reacquired (1,067,517) (8,524,014) (367,062) (2,474,054)
Increase in shares 28,851 $ 236,129 6,669,952 $ 43,310,729
- --------------------------------------------------------------------------------
6/5/97 to
October 31, 1997
---------------------------
Class B Shares Amount
- --------------------------------------------------------------------------------
Sales of shares 38,206 $ 339,259
- --------------------------------------------------------------------------------
Shares reacquired (486) (4,369)
- --------------------------------------------------------------------------------
Increase in shares 37,720 $ 334,890
- --------------------------------------------------------------------------------
Year Ended Year Ended
October 31, 1997 October 31, 1996
------------------------ -------------------------
Class C Shares Amount Shares Amount
- ------------------------------------------------- -------------------------
Sales of shares 1,695,886 $ 13,725,294 5,117,940 $ 33,671,327
Shares issued to
shareholders in
reinvestment of net
investment income
and realized gain
from investment
transactions 130,943 994,354 142,172 918,340
Total 1,826,829 14,719,648 5,260,112 34,589,667
- --------------------------------------------------------------------------------
Shares reacquired (1,713,554) (14,015,879) (1,279,728) (8,538,564)
Increase in shares 113,275 $ 703,769 3,980,384 $ 26,051,103
- --------------------------------------------------------------------------------
Transactions in shares of beneficial interest for the International Series were
as follows:
12/13/96 to
October 31, 1997
-------------------------------
Class A Shares Amount
- --------------------------------------------------------------------------------
Sales of shares 3,074,958 $ 31,360,535
- --------------------------------------------------------------------------------
Shares reacquired (272,153) (2,887,954)
- --------------------------------------------------------------------------------
Increase in shares 2,802,805 $ 28,472,581
- --------------------------------------------------------------------------------
6/2/97 to
October 31, 1997
-----------------------------
Class B Shares Amount
- --------------------------------------------------------------------------------
Sales of shares 159,588 $ 1,691,357
- --------------------------------------------------------------------------------
Shares reacquired (7,142) (77,972)
- --------------------------------------------------------------------------------
Increase in shares 152,446 $ 1,613,385
- --------------------------------------------------------------------------------
6/2/97 to
October 31, 1997
- --------------------------------------------------------------------------------
Class C Shares Amount
- --------------------------------------------------------------------------------
Sales of shares 295,740 $ 3,118,284
- --------------------------------------------------------------------------------
Shares reacquired (25,285) (262,245)
- --------------------------------------------------------------------------------
Increase in shares 270,455 $ 2,856,039
- --------------------------------------------------------------------------------
As of October 31, 1997, paid in capital for each Series was as follows:
$93,129,578 for the Growth & Income Series and $34,942,005 for the International
Series. The Trust has an unlimited number of shares outstanding.
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 $47,447,721 $46,816,457
- --------------------------------------------------------------------------------
International $37,791,257 $ 5,236,847
- --------------------------------------------------------------------------------
As of October 31, 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 $40,151,557 $40,765,746 $ (614,189)
- --------------------------------------------------------------------------------
International $ 2,685,278 $ 4,304,630 $(1,619,352)
- --------------------------------------------------------------------------------
The cost of investments for federal income tax purposes is the same as that used
for financial reporting purposes.
At October 31, 1997, the Growth & Income Series had outstanding covered written
call option contracts as follows:
Contract
Underlying Expiration Premium
Investment Shares Date Received Value Appreciation
- --------------------------------------------------------------------------------
KeyCorp 20,000 12/20/97 $40,000 $33,750 $6,250
- --------------------------------------------------------------------------------
Transactions in call options written during the year ended October 31, 1997 were
as follows:
Number Premiums
of Contracts Received
- --------------------------------------------------------------------------------
Options written 200 $40,000
- --------------------------------------------------------------------------------
Options expired -- $ --
- --------------------------------------------------------------------------------
Options outstanding at
October 31, 1997 200 $40,000
- --------------------------------------------------------------------------------
<PAGE>
Notes to Financial Statements
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. Trustees' fees payable at October
31, 1997 under a deferred compensation plan were $117,480.
7. Commitments
As of October 31, 1997, under the terms of a subscription agreement, the
International Series has agreed to purchase 3,394 shares of Eigner and Partners
with a value of $950,320.
8. Acquisition
On July 12, 1996, the Growth &Income Series 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 of the Growth &Income Series, 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 Growth &Income Series, 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.
Independent Auditors' Report
The Board of Trustees and Shareholders,
Lord Abbett Securities Trust:
We have audited the accompanying statements of net assets of Lord Abbett
Securities Trust-Growth & Income Series and International Series as of October
31, 1997, the related statements of operations and of changes in net assets and
the financial highlights for each of the periods presented. These financial
statements and the financial highlights are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and the financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned at October
31, 1997 by correspondence with the custodian and brokers; where replies were
not received from brokers, we performed other auditing procedures. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Lord Abbett
Securities Trust-Growth & Income Series and International Series at October 31,
1997, the results of its operations, the changes in its net assets and the
financial highlights for each of the periods presented, in conformity with
generally accepted accounting principles.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
New York, New York
December 2, 1997
[LOGO](R) LORD, ABBETT & CO. ---------------
Investment Management BULK RATE
U.S. POSTAGE
A Tradition of Performance Through Disciplined Investing PAID
PERMIT NO. 2405
NEW YORK, N.Y.
---------------
LORD ABBETT DISTRIBUTOR LLC
- ---------------------------------------------------------------------------
The GM Building o 767 Fifth Avenue o New York, NY 10153-0203 o 800-426-1130
LST-2-1097
(12/97)
