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Lord Abbett Securities Trust
Growth & Income Series International Series
World Bond-Debenture Series Alpha Series
SEMI-ANNUAL REPORT FOR THE SIX MONTHS ENDED APRIL 30, 1999
Revised as of August 12, 1999 This report replaces any previous
copies you may have received.
[LOGO]
Investment portfolios designed to help you
capture capital growth over the long term
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[PHOTO]
ROBERT S. DOW
CHAIRMAN
MAY 17, 1999
Table of Contents
Growth & Income Series
- -----------------------------------------
When We Shop for Stocks,
We Shop for Bargains 5
Statement of Net Assets 9
International Series
- -----------------------------------------
An Experienced Global Manager
Can Help Uncover Great
Companies Worldwide 6
Statement of Net Assets 12
World Bond-Debenture Series
- -----------------------------------------
The Flexibility You Need to Pursue
Outstanding Bond Performance
Worldwide 7
Statement of Net Assets 14
Alpha Series
- -----------------------------------------
Three Great Small-Cap Funds
Make One Great Core
Investment 8
Statement of Net Assets 17
Data on All Series
- -----------------------------------------
Statements of Operations 17
Statements of Changes
in Net Assets 18
Financial Highlights 20
Notes to Financial Statements 23
Report to Shareholders
For the Six Months Ended April 30, 1999
Lord Abbett Securities Trust completed the first half of its
fiscal year on April 30, 1999. The following is an overview of
some class-specific data for the period under review.
Growth & Income Series - Six Months Ended 4/30/99
Class A Class B Class C
- --------------------------------------------------------------------------------
Net asset value $10.62 $10.63 $10.59
Dividends $ 0.050 $ 0.010 $ 0.010
Capital gains $ 0.325 $ 0.325 $ 0.325
Total return* 20.81% 20.68% 20.50%
International Series - Six Months Ended 4/30/99
Class A Class B Class C Class Y Class P *
- --------------------------------------------------------------------------------
Net asset value $14.84 $14.74 $14.73 $14.92 $14.84
Dividends $ 0.085 $ 0.015 $ 0.015 $ 0.070 --
Capital Gains $ 0.023 $ 0.023 $ 0.023 $ 0.023 --
Total return* 20.81% 20.40% 20.40% 21.13% 16.85%
World Bond-Debenture Series - Six Months Ended 4/30/99
Class A Class B Class C
- --------------------------------------------------------------------------------
Net asset value $9.95 $9.95 $9.94
Dividends $0.425 $0.390 $0.390
Capital gains $0.180 $0.180 $0.180
Total return* 9.51% 9.24% 9.13%
Alpha Series - Six Months Ended 4/30/99
Class A Class B Class C
- --------------------------------------------------------------------------------
Net asset value $15.62 $15.49 $15.49
Dividends -- -- --
Capital gains -- -- --
Total return* 20.99% 20.54% 20.45%
About Growth & Income Series
Market Review
The Federal Reserve Board's decisive move to lower U.S. interest rates through a
series of autumn rate cuts helped the U.S. stock market turn in strong year-end
performance. The market volatility that characterized 1998 continued into early
1999. We believe this was due largely to investors' concern that economic
instability in Asia and South America would limit earnings growth for many
companies with global operations. Evidence of a possible global economic
recovery emerged early in the new year as governments in Japan and other Pacific
Rim countries addressed currency and economic policy concerns. Investors' fears
regarding diminished corporate earnings eased somewhat and depressed commodity
prices began to rise in anticipation of a possible global economic expansion in
2000.
* Total return, which is not annualized, is the percent change in value with
all dividends and distributions reinvested for the periods shown, using the
SEC-required uniform method to complete such returns.
+ International Series Class P shares commenced operations on 3/9/99.
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Report to Shareholders
Portfolio Review
Portfolio holdings in the consumer non-cyclicals sector (stocks that are not
heavily affected by economic changes), with an emphasis on pharmaceutical
stocks, generated strong gains toward the end of 1998. As 1999 began, the
Series' portfolio management team reduced exposure to non-cyclical stocks that
appeared to be overvalued in industries such as healthcare and pharmaceuticals.
Holdings in cyclical stocks, such as energy companies, were marginally increased
to enhance the Series' performance potential should strong signs of a global
economic expansion emerge.
Outlook
It now appears that we may be entering a phase of global economic expansion.
While this creates a favorable environment for corporate earnings, we must
remain watchful of global inflationary pressures, interest rates and valuations
in the U.S. equity market. Presently, we do not expect inflation to exceed our
earlier forecast of approximately 2-2 1 /2 % in 1999. We will continue to seek
out large-company stocks at attractive prices and expect that some of these
values may be found in energy companies and in the cyclical commodities sector,
which includes aluminum and paper companies. We believe the Series can uncover
meaningful investment opportunities, even in the event of interest rate and
inflationary increases.
RISK: Lord Abbett Securities Trust - Growth & Income Series may invest up to 10%
of net assets in foreign securities. Foreign securities markets may not be
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. Foreign investments may
also be subject to currency exposure.
About International Series
Market Review
Many of the world's financial markets experienced healthy recoveries during the
last months of 1998. These rebounds may be attributed, in part, to the Federal
Reserve Board's move to lower U.S. interest rates through a series of autumn
rate cuts. The abatement of the emerging markets and hedge fund scares were also
positive factors for international stocks during the period.
Many of the world's stock markets, particularly the U.S., Japan and Pacific Rim
emerging markets, rose significantly in early 1999. This recovery then later
spread to South America. Japan's impressive gains can be attributed to improved
investor sentiment after authorities there gave their financial support to the
banking sector. In contrast, European markets remained relatively subdued after
a strong start in the new year. Contributing factors to this performance lag may
have included (1) fears that European economies were slowing down more quickly
than had been expected, (2) ongoing differences between the German Finance
Minister and the head of the European Central Bank and (3) the global investment
community's redirection of investment cash flows into Japan.
Portfolio Review
The Series continued to focus on "Best of Breed" companies, often adding to the
portfolio's existing holdings. We maintained an overweighting in European and
Canadian companies that demonstrated superior corporate earnings, growth rates
and valuation levels relative to many companies in the Far East and emerging
markets. Strong gains were generated in positions such as Iwka and Preussag
(Germany), Net.B@nk (U.S.) and most of our U.K. holdings. We continue to have
very little exposure to companies based in Japan because, we believe, recently
announced corporate restructuring programs in Japan will have a negative impact
on corporate earnings for several years to come, diminishing the attractiveness
of the Japanese market.
1
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Report to Shareholders
Outlook
We expect European economic growth to average over 2% during the next year. We
also believe European corporate restructuring, and not economic expansion, will
continue to be the primary driver of earnings growth. We remain watchful of any
resurgence of emerging markets problems, which could hurt economic prospects
throughout many global economies.
We expect that investors' remaining fears over economic and corporate earnings
growth will abate during the second quarter, helping European markets to regain
their composure. We believe that investors in Japanese companies will soon
realize that, despite recent reform measures, Japan's near-term economy remains
in recession with little prospect of a turnaround. This, in turn, may limit
upside potential in the Japanese market.
RISK: Lord Abbett Securities Trust - International Series will invest at least
80% of net assets in foreign securities under normal market conditions. The
Series primarily invests in small-cap securities, which may be more volatile in
price, normally have fewer shares outstanding and trade less frequently than
large companies. Foreign securities markets may not be subject to the same
degree of regulations as and may be more volatile and less liquid than the major
U. S. markets.
The Series' portfolio is actively managed and is subject to change. On April 30,
1999, Iwka accounted for 1.64% of the portfolio's total net assets, Preussag
1.54% and Net. B@ nk 8.93%.
About World Bond-Debenture Series
Market Commentary
Investors' perception that varying levels of economic growth existed in the U.S.
and Europe was a primary driver of world bond markets at the outset of 1999. A
slowdown in American growth had been forecast for the first half of the New
Year. The January 1, 1999 introduction of Europe's new currency (the "euro") was
expected to spur Continental growth at an annualized first-quarter pace
exceeding that of the previous year. Neither occurred however, and the U.S.
remained the engine of global growth, firing on all cylinders. The response in
world markets was an increase in bond rates amid growing fears of accelerating
inflationary pressures, particularly from oil prices. After the turbulence of
the fourth quarter of 1998, during which "spread products" (in this case,
lower-rated debt securities), including high-yield and emerging markets bonds,
tended to underperform investment-grade assets, the start of the new year saw
strengthening price levels in these asset classes.
Portfolio Review
Lord Abbett Securities Trust - World Bond-Debenture Series was able to add value
during the first half of its fiscal year on a number of fronts. Among these
were:
o Increasing allocations to equity-related products in order to take
advantage of continued positive valuations in the U.S. stock market. Stock
performance also helped to create a positive climate for high-yield
fixed-income assets, particularly in the U.S. and Europe.
o Allocating to euro-denominated high-yield products and sterling-denominated
high-yield products as these sectors outperformed other high-yield sectors.
o Maintaining our inflation-linked structured-note exposure in Turkey, which
performed well as structural reforms led to progress on the inflation
front.
o Re-allocating assets to Asia, particularly to South Korean sovereign debt.
Recovery in the Asian economies, especially in the Philippines, South Korea
and Thailand, has served to differentiate this region from other emerging
markets. South Korea benefited substantially from Moody's and Standard &
Poor's credit upgrades during the period.
o The Series' regional concentration focused heavily on Latin America,
chiefly in Mexican corporate high-yield bonds, and in sovereign credits
from Panama, Peru and Colombia. The Series also avoided Brazilian and
Venezuelan investment, while limiting exposure to Argentina.
2
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Report to Shareholders
Outlook
Global high-yield bonds should continue to offer solid returns in the near
future as European corporate restructuring continues. Following the
long-anticipated ease by the European Central Bank of core European interest
rates, the euro should likely begin to stabilize around current levels.
Emerging markets debt has begun to find equilibrium - a trend that we expect to
continue in the near term, despite Russia's ongoing negotiations with the
International Monetary Fund ("IMF") for additional cash. We believe that the
more solid BB credits like Panama, Mexico and the Philippines continue to offer
good value, together with higher-rated countries like South Korea and Columbia.
A recovery in oil prices has begun to add support to these credits - a trend
that should also continue in the near term.
RISK: Lord Abbett Securities Trust - World Bond-Debenture Series has the ability
to invest substantially in high-yield securities. The risks of high-yield
securities include, but are not limited to, price volatility and the possibility
of default in the timely payment of interest and principal. In addition, the
Fund has the ability to invest substantially in foreign securities. Foreign
securities markets may not be 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. Foreign investments are subject to currency exposure.
The Series' portfolio is actively managed and is subject to change.
About Alpha Series
Market Review
o U. S. Small-Cap Market. U.S. stocks staged a dramatic recovery towards the
end of fourth quarter 1998 but small-cap stocks did not participate as
aggressively in the upswing. Small-cap stock performance approached that of
the broader market indicies in January and March and exceeded them in
April.
o International Equity Markets. An easing of investors' fears about hedge
funds and stabilization in many emerging markets, along with central bank
intervention aimed at keeping interest rates and inflation levels low,
produced a positive environment for global equity markets during the first
half of the Series' fiscal year. Many of the world's stock markets,
particularly the U.S., Japan and the Far Eastern emerging markets, rose
significantly. Japan's impressive gains may be attributed to improved
investor sentiment. European markets remained subdued after a strong start
in the new year.
Portfolio Review
Details follow concerning the performance of Alpha Series' underlying funds
between 10/31/98 and 4/30/99.
o Lord Abbett Developing Growth Fund -- (Approximately 30% of Alpha Series'
portfolio). Strong performance from select holdings in technology helped
the Fund hold its own in what started out as a difficult small-cap market.
Several of the Fund's positions in the retail and energy sectors performed
well.
o Lord Abbett Research Fund -- Small-Cap Series (Approximately 30% of Alpha
Series' portfolio). Prompted by a deteriorating profit outlook for many
companies and a slowing world economy, this portfolio's exposure to
economically sensitive stocks was reduced. The portfolio decreased holdings
of capital goods stocks in favor of increasing investments in the
technology and consumer goods sectors. These management decisions helped to
add value for shareholders during what began as a difficult period for
small-cap stocks.
o Lord Abbett Securities Trust -- International Series (Approximately 40% of
Alpha Series' portfolio). The Series continued to focus on "Best of Breed"
companies, often adding to the portfolio's existing holdings during the
period under review. An overweighting in European and Canadian companies
that demonstrated superior corporate earnings, growth rates and valuation
levels relative to many companies in the Far East and emerging markets was
maintained. Strong gains were generated in positions such as Iwka and
Preussag (Germany), Net.B@nk (U.S.) and most of our U.K. holdings.
3
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Report to Shareholders
Outlook
o U.S. Small-Cap Market. We believe that a stable U.S. economy along with an
anticipated resurgence in global economies will provide a favorable
background for earnings growth among smaller companies. This generally
creates a good environment for small-cap stocks. We are closely watching
valuation and volatility levels and expect that bottom-up stock picking and
diversification will be keys to generating performance going forward.
o International Equity Markets. We expect that investors' fears over economic
and corporate earnings growth will subside going forward, helping European
markets to regain their composure. Ongoing corporate cost-cutting programs,
recent relative weakness in the euro (which makes European exports more
attractive), and an economic growth rate of over 2% for the region also may
help to support stronger performance in the European markets. We believe
that investors in Japanese companies will soon realize that Japan's
near-term economy remains in recession with little prospect of a
turnaround. This, in turn, may limit upside potential in the Japanese
market.
RISK: The underlying Funds in this Series are primarily invested in small-cap
securities (including U. S. and global), which may be more volatile in price,
normally have fewer shares outstanding and trade less frequently than large-cap
companies. In addition, the underlying funds have the ability to invest in
foreign securities, high-yield securities and derivatives. Foreign securities
markets may not be 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. Foreign
investments are subject to currency exposure. The risks of high-yield securities
include, but are not limited to, price volatility and the possibility of default
in the timely payment of interest and principal.
The Series' portfolio is actively managed and is subject to change.
We are pleased that you have chosen one or more of the portfolios in Lord Abbett
Securities Trust to play a role in your diversified investment portfolio. We
appreciate the trust you have placed in Lord Abbett and aim to reward your
confidence in us by helping you achieve your long-term financial goals.
4
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When We Shop for Stocks, We Shop for Bargains
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 we believe 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 Series'
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 4/30/99
6 Months 20.5%
3 Years 21.5%
Life of Series (2) 19.1%
[GRAPHIC OMITTED]
(1) Reflects the percent change at 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 LLC at 800-874-3733 and ask for the current prospectus.
(2) The Series commenced operations on 1/3/94.
Growth & Income Series
SEC-required average annual total returns (for Class C shares) for the periods
ended 3/31/99, with all distributions reinvested:
1 Year 6.75%
5 Years 20.00%
Life of Series 18.06%
[GRAPHIC OMITTED]
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.
5
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An Experienced Global Manager Can Help Uncover
Great Companies Worldwide
Lord, Abbett & Co. is a minority owner of the International Series' sub-adviser
Fuji-Lord Abbett International, Limited (Fuji-Lord Abbett).
Fuji-Lord Abbett 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 pension
investment needs for many premier international companies, including:
Bridgestone NISSAN
Hitachi SONY
MCI Canon Inc.
A Solid Investment Strategy
Fuji-Lord Abbett'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 currently consists of 57 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
Total Returns Through 4/30/99 (1) :
6 Months 20.8%
Life of Series (2) 21.5%
[GRAPHIC OMITTED]
(1) Performance is 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) The Series commenced operations on 12/13/96.
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
3/31/99, with all distributions reinvested:
- -12.10% +12.34%
1 Year Life of Series
[GRAPHIC OMITTED]
Past performance is not an indication of future results. The investment return
and principal value of an investment will fluctuate so 6 that shares, on any
given day or when redeemed, may be worth more or less than their original cost.
6
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The Flexibility You Need to Pursue
Outstanding Bond Performance Worldwide
Ask More from Your Fixed-Income Investments
Would you like to earn more current income while reducing overall risk in your
portfolio? Diversifying your current bond portfolio outside the United States
may potentially be an effective way to pursue both objectives.
Lord Abbett Securities Trust - World Bond-Debenture Series seeks high current
income and capital appreciation by participating in foreign debt markets.
Investing in these markets may provide substantial yield advantages as compared
with investing in U.S. bonds. The decision to diversify into non-U.S. bonds may
also make sense from a risk-diversification standpoint since the economies
underlying foreign markets are not necessarily synchronized with the U.S.
economy.
4-Way Portfolio Focus
The centerpiece of World Bond-Debenture Series is a strategic flexibility that
enables it to "go where the yield is" and pursue outstanding bond investment
opportunities worldwide.
As a preliminary step, the Series' experienced portfolio management team
conducts extensive research into economic, political and market factors to
uncover value among economic regions and individual countries. The team's
regional and country decisions are then supplemented by asset allocation
strategies for:
o High-Yield Corporate Debt: The Series' lower-rated debt holdings pay high
income and help to minimize the effects of interest-rate fluctuations.
Price appreciation may result if the credit rating of debt issuers is
upgraded.
o High-Grade Debt: High-quality corporate issues, U.S. Government and other
sovereign-backed securities pro- vide a dependable stream of current
income.
o Equity-Related Securities: Capital appreciation is sought by investing in
convertible bonds that may be exchanged for common stock. When the stock of
the underlying company rises, these equity-related issues generally
increase in value.
o Emerging Market Debt: Emerging-market debt securities provide attractive
high-income opportunities. Price appreciation may result from rating
upgrades of country debt.
Lord Abbett Securities Trust - World Bond-Debenture Series
Total Returns Through 4/30/99 (1) :
6 Months (1) 9.5%
Life of Series (2) 7.4%
[GRAPHIC OMITTED]
(1) Performance is 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 a current prospectus.
(2) The Series commenced operations on 12/18/97.
World Bond-Debenture Series
SEC-required average annual total return for Class A shares at the maximum sales
charge of 4.75% for the period 12/18/97 (commencement of operations) through
3/31/99, with all distributions reinvested:
1 Year -3.00%
Life of Series 2.17%
[GRAPHIC OMITTED]
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.
7
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Three Great Small-Cap Funds
Make One Great Core Investment
Don't Chase Past Small-Cap Performance
Investing in small companies that are industry leaders or offer breakthrough
products can be very rewarding. U.S. growth, U.S. value and international
small-cap markets, however, seldom move in the same direction at the same time.
This means investors who chase small-cap returns by investing in sectors with
the best recent results are often disappointed when the sector they choose fails
to produce the highest immediate returns.
Choose Lord Abbett's Unique "Fund-of-Funds" Approach
We believe Lord Abbett Securities Trust - Alpha Series is a smart way to tap the
potential of the small-cap arena and merits your consideration as a core
investment. The Series' "fund-of-funds" approach accesses three distinct
portfolios and management teams.
o For U.S. Small-Cap Growth Exposure: Lord Abbett Developing Growth Fund
invests in stocks of small growing companies, many of which are highly
specialized and in niche markets (approximately 30% of Alpha
Seriesportfolio).
o For U.S. Small-Cap Value Exposure: Lord Abbett Research Fund - Small-Cap
Value Seriesinvests in stocks of established undervalued small companies
(approximately 30% of Alpha Seriesportfolio).
o For International Small-Cap Exposure: Lord Abbett Securities Trust -
International Series invests mainly in stocks of small international
companies (approximately 40% of Alpha Seriesportfolio).
Please note that the Alpha Series portfolio is actively managed and that its
percentage allocations may change from time to time.
For Equity Unique "Fund-of-Funds" Benefits
o Provides potentially higher returns by diversifying globally among
small-cap markets.
o Potentially dampens portfolio risk by spreading investment decisions among
three distinct management teams.
o Eliminates the need to expensively reallocate your small-cap assets.
Lord Abbett Securities Trust - Alpha Series
Total Returns Through 4/30/99 (1) :
6 Months (1) 21.0%
Life of Series (2) 11.4%
[GRAPHIC OMITTED]
(1) Performance is 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 a current prospectus.
(2) The Series commenced operations on 12/29/97.
Alpha Series
SEC-required average annual total return for Class A shares at the maximum sales
charge of 5.75% for the period 12/29/97 (commencement of operations) through
3/31/99, with all distributions reinvested:
1 Year -15.90%
Life of Series -1.75%
[GRAPHIC OMITTED]
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.
8
<PAGE>
A Note About Year 2000 Matters
As you may know, there has been extensive media coverage about possible problems
that may arise as a result of uncertainties about the ability of computers to
"understand" dates using the year 2000. Potentially, these problems could
disrupt the services and systems that the Fund relies on in its daily
operations.
As a general matter, we believe the financial industry has taken a leadership
role addressing year 2000 (Y2K) issues and this should help to inspire
confidence among concerned investors. More specifically, Lord Abbett, Lord
Abbett Distributor LLC and the Fund's transfer agent, custodian and other
providers of services critical to the Fund have been actively working on
reviewing and replacing or updating computer systems and computer-to-computer
interfaces, as needed. Each has completed or is in the process of testing new or
revised systems and interfaces and generally expects that their systems, as well
as those of their key external service providers, will be ready to handle Y2K
without significant problems. Furthermore, the Fund has been routinely taking
each company's Y2K preparations into account when considering or reviewing
investments.
In summary, while the Y2K problem is unprecedented and we cannot completely
eliminate the possibility that the Fund could be affected in some way, we are
confident that all parties involved are taking appropriate steps to resolve Y2K
concerns.
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 6/30/99, 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.
Statement of Net Assets
GROWTH & INCOME SERIES April 30, 1999
<TABLE>
<CAPTION>
Investments Shares Value
----------- ------ -----
Common Stocks 97.21%
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Aerospace 2.53% Allied-Signal Inc.- Major producer of
aerospace components, automotive parts and engineered materials 39,600 $ 2,326,500
============
Raytheon Co. Class B- A leading factor in
air-defense missiles and military electronic products 10,000 702,500
Rockwell International Corp.- Leading producer
of space systems and electrical and electronic products including
defense, telecommunications and factory automation systems 40,700 2,101,137
Total 5,130,137
============
Aluminum 2.26% Alcoa Inc.- Largest U. S. aluminum producer 73,700 4,587,825
============
Apparel 1.12% VF Corp.- Leading producer of blue jeans and other apparel 44,200 2,276,300
============
Automobiles 2.27% Ford Motor Co.- World's second largest producer of cars and trucks 30,100 1,924,519
General Motors Corp.- Worldwide auto producer 30,100 2,677,019
Total 4,601,538
============
Banks: Money Center 5.59% Bank of America Corp.- Major money-center bank 41,642 2,998,224
Bank One Corp.- Leading bank holding company 65,640 3,872,760
Chase Manhattan Corp.- Major money-center bank holding company 53,800 4,451,950
Total 11,322,934
============
Banks: Regional 5.67% BankBoston Corp.- Leading New England regional bank 44,800 2,195,200
Comerica Inc.- Midwestern regional bank holding company 42,150 2,742,385
First Union Corp.- Major east coast bank 32,400 1,794,150
KeyCorp- Multi-regional bank holding company serving the northwest U. S. 34,000 1,051,875
</TABLE>
9
<PAGE>
Statement of Net Assets
GROWTH & INCOME SERIES April 30, 1999
<TABLE>
<CAPTION>
Investments Shares Value
----------- ------ -----
<S> <C> <C>
Mellon Bank Corp.- Commercial bank located in Pittsburgh, PA 50,000 $ 3,715,625
Total 11,499,235
============
Brokers 1.57% Morgan Stanley, Dean Witter, Discover & Co.- Major brokerage and credit
card company 32,000 3,174,000
============
Chemicals 1.70% Dow Chemical Co.- Leading global chemical producer 20,000 2,623,750
Union Carbide Corp.- Major U. S.-based producer of plastics and chemicals 15,700 814,437
Total 3,438,187
============
Communication Services 1.91% Qualcomm Inc.- Leading producer of communications technologies and products 19,300 3,860,000
============
Computer: Hardware & Services International Business Machines Corp.- World's largest computer manufacturer 27,800 5,815,412
5.47%
Unisys Corp.- Provides information services, technology, software and 167,800 5,275,212
customer support
Total 11,090,624
============
Computer: Peripherals 2.18% EMC Corp.- A supplier of high-performance storage devices and related services 40,500 4,411,969
============
Computer: Software 2.13% *Sun Microsystems Inc.- Supplier of network computer products including
workstations,servers, software, microprocessors, and a full range of services
and support 72,300 4,324,444
============
Drugs/Health Care Products American Home Products Corp.- Producer of drugs, food housewares and packaged
6.26% medicine and medical products 54,000 3,294,000
Bristol-Myers Squibb Co.- Major worldwide pharmaceutical concern with interests
innfant nutrition, non-prescription medications, medical devices and
toiletries 51,500 3,273,469
Pharmacia & Upjohn Inc.- Develops, makes and sells prescription pharmaceutical
& other related health care products 50,000 2,800,000
SmithKline Beecham plc ADR- Major U. K. based health-care company 50,700 3,330,356
Total 12,697,825
============
Electric Power 2.48% Cinergy Corp.- Supplier of electricity and natural gas in southwestern Ohio
and adjacentKentucky and Indiana territories 52,900 1,577,081
FirstEnergy Corp.- Major midwestern electric utility holding company 50,000 1,484,375
FPL Group- One of the nations premier electric utilities, serving about
7 million people in Florida's east, southeast and southwest coasts 35,000 1,973,125
Total 5,034,581
============
Electrical Equipment .88% Emerson Electric Co.- Diversified manufacturer of consumer and industrial
electrical components 27,600 1,780,200
============
Electronics:
Semiconductors 1.06% Texas Instruments, Inc.- Major producer of semiconductors and electronic
equipment 21,100 2,154,838
============
Financial: Miscellaneous .94% FNMA- America's largest supplier of conventional home mortgages 26,800 1,901,125
============
Food 4.70% Best Foods- Producer of diversified packaged foods 50,900 2,554,544
ConAgra Inc.- Major producer of agricultural and consumer products 53,940 1,341,758
Heinz H. J. Co.- Domestic packaged foods producer 97,900 4,570,706
Sara Lee Corp.- A diversified maker of branded food products, apparel and
household consumer products 48,000 1,068,000
Total 9,535,008
============
Health-Care Products 1.09% Baxter International Inc.- World's leading distributor and major manufacturer
of hospital supplies and related medical equipment 35,000 2,205,000
============
Information Processing
Services 2.40% First Data Corp.- Information supplier for credit card processing and related
services 114,500 4,859,094
============
Insurance: Life 1.91% American General Corporation- A leading provider of financial services,
including life/health insurance, annuities, consumer credit
and mortgage financing 52,300 3,870,200
============
Insurance: Property Ace Ltd.- Insurance holding company specializing in
and Casualty 3.61% property and casualty coverage 72,600 2,196,150
Chubb Corp.- Broad-based property and casualty insurance
organization 22,000 1,303,500
CIGNA Corp.- Multi-line insurance and medical services 43,800 3,818,812
Total 7,318,462
============
Machinery: Diversified .88% Deere & Co.- World's largest manufacturer of farm equipment 41,200 1,771,600
============
Miscellaneous .88% Pepsi Bottling Group- Leading distributor of carbonated and non-carbonated
beverages 84,800 1,786,100
============
Natural Gas Distribution 2.32% Columbia Energy Group- Utility holding company and natural gas distributor 45,000 2,162,812
</TABLE>
10
<PAGE>
Statement of Net Assets
GROWTH & INCOME SERIES April 30, 1999
<TABLE>
<CAPTION>
Shares or
Investments Principal Amount Value
----------- ---------------- -----
<S> <C> <C>
NICOR Inc.- Natural gas distributor in Illinois 70,000 $ 2,546,250
Total 4,709,062
============
Natural Gas Diversified 1.12% The Coastal Corporation- A diversified gas pipeline company 59,400 2,272,050
============
Oil Well Equipment/ Baker Hughes Inc.- Supplier of products, services and
Services 1.28% systems to the worldwide oil and gas industry 87,000 2,599,125
============
Oil: International BP Amoco plc ADR- Major integrated petroleum and natural
Integrated 7.54% gas company with sizeable interests in chemicals 37,434 4,237,061
Chevron Corp.- Worldwide petroleum company with important
interests in chemicals and minerals 23,600 2,354,100
Exxon Corp.- World's largest integrated oil company 48,000 3,987,000
Mobil Corp.- Large international oil company 45,000 4,713,750
Total 15,291,911
============
Paper and Forest Products 3.46% Georgia Pacific Corp.- Producer of paper and forest products 49,700 4,597,250
International Paper Co.- Producer of paper and forest products 45,400 2,420,387
Total 7,017,637
============
Pollution Control 1.95% Waste Management Inc.- A leading waste-management concern 70,000 3,955,000
============
Printing and Publishing 4.56% Gannett Co., Inc.- Major U. S. newspaper publisher 30,000 2,124,375
Time Warner Inc.- A major entertainment, communications,
printing and publishing firm 70,000 4,900,000
Tribune Co.- Major Chicago-based newsprint company 26,500 2,211,094
Total 9,235,469
============
Retail: Dept & Merchandise 2.15% Federated Department Stores Inc.- Leading department store retailer 100 4,669
May Department Stores Co.- Leading department store retailer 37,500 1,492,969
Wal-Mart Stores Inc.- Largest U. S. discount retailer 62,400 2,870,400
Total 4,368,038
============
Technology: Office Products 1.16% Xerox Corp.- World's leading duplication technology supplier 40,000 2,350,000
Telecom and Data Services 5.90% AT& T Corp.- Global telecommunications giant 100,500 5,075,250
*MCI WorldCom Inc.- Diversified telecommunications company 53,775 4,419,633
Sprint Corp. (FON Group)- Third largest long distance
telephone system 20,000 2,051,250
Sprint Corp. (PCS Group)- Wireless communications 10,000 423,750
Total 11,969,883
============
Telephone: Regional 4.28% Alltel Corp.- Regional telephone holding company 46,800 3,156,075
Bell Atlantic Corp.- Regional telephone company 33,600 1,936,200
BellSouth Corp.- Regional telephone company 28,800 1,288,800
SBC Communication Inc.- Regional telephone monopoly 41,000 2,296,000
Total 8,677,075
============
Total Investments in Common Stocks (Cost $124,862,416) 197,076,476
Other Assets, Less Liabilities 2.79%
- ------------------------------------------------------------------------------------------------------------------------------------
Short-term
Investments Koch Industries, Inc. 4.91% due 5/3/1999 (Cost $5,998,363) $6,000,000 5,998,363
============
Cash and Receivables, Net of Liabilities (342,004)
============
Total Other Assets, Less Liabilities 5,656,359
============
Net Assets 100.00% $202,732,835
============
Class A Shares- Net asset value
($ 91,777,052 / 8,642,271 shares outstanding) $10.62
Maximum offering price
(net asset value plus sales charge of 5.75% of the offering price) $11.27
Class B Shares- Net asset value ($ 6,766,198 / 636,518 shares outstanding) $10.63
Class C Shares- Net asset value ($ 104,189,585 / 9,839,851 shares outstanding) $10.59
</TABLE>
*Non-income producing security.
See Notes to Financial Statements.
11
<PAGE>
Statement of Net Assets
INTERNATIONAL SERIES April 30, 1999
<TABLE>
<CAPTION>
Shares or
Investments Principal Amount US$ Value
----------- ---------------- ---------
<S> <C> <C>
Investments in Securities 94.02%
Foreign 84.70%
Australia 1.04% *Novogen Limited- Biotechnology company specializing in plant sterol based OTC and
eventually ethical pharmaceutical products 1,250,000 $ 2,182,950
============
Canada 11.46% *Ballard Power Systems Inc.- Designs, manufactures and develops methanol-or
hydrogen-based fuel cells that are the only true zero emission power source for vehicles 443,000 16,859,701
*Descartes System Group Inc.- Supply chain automation & integration software supplier 443,100 2,780,200
Timberwest Forest Corp.- Forestry land block consolidator that also operates the assets
to produce timber & pulp 630,000 4,298,499
Total 23,938,400
============
Finland 4.46% Pohjola- Finland's largest general insurance company covering both the life and the
non-life sectors 100,000 4,746,924
Raisio Group plc- Producer of paper processing chemicals and foodstuffs including a
cholesterol-lowering margarine 500,000 4,577,580
Total 9,324,504
============
France 9.08% Alcatel- One of the world's largest full-line heavy electrical engineering firms 40,000 4,919,443
AXA- One of Europe's largest financial organizations 40,000 5,173,459
ECIA Equipment & Composants- Leading worldwide supplier of car seat and
exhaust pipe systems 9,500 1,182,444
*Guillemot Corp.- Designs, manufactures and distributes computer accessories 13,400 736,784
Thomson CSF- A major aerospace company 80,000 2,624,832
*TR Services- An information network service company specialized in both data network and
voice network technologies 66,200 749,707
*UBI Soft Entertainment SA- One of the largest producers, translators and distributors
of games software in Europe 23,100 3,300,620
UBI Soft Entertainment SA Conv. Debt 3.8% due 7/16/2005- One of the largest producers,
translators and distributors of games software in Europe $1,562,000 291,346
Total 18,978,635
============
Germany 28.63% CeWe Color Holding AG- Photo processing company 5,000 1,047,816
DaimlerChrysler AG- World's 3rd largest manufacturer of cars and trucks 40,000 3,956,299
Drillisch AG- Reseller of mobile phone and long distance telephone capacity in the
CAD/CAM/CAE integration industry 20,000 2,825,928
Eigner & Partner- A major software developer 9,979 2,185,401
Gehe AG- Europe's largest pharmacy chain 100,000 4,604,040
GEA AG-Ord- One of the world's top suppliers of food and pharmaceutical
processing equipment 90,000 2,381,400
IWKA AG- Multi-line engineering company making packaging, robot welding and
defense equipment 150,000 3,381,588
*LHS Group Inc.- Leading global provider of client/server, modular, customer care & billing
services to telecomm utilities 150,000 5,310,522
MobilCom AG- Provides mobil telephone service 15,000 3,778,488
MLP AG- Largest independent personal life insurance and investment consultancy services 10,000 5,609,520
Preussag AG- Provides a wide range of industrial and commercial products 60,000 3,162,499
SAI Automotive AG- Europe's largest supplier of specialist car interior modules- cockpits
& doors 245,000 1,944,810
SAP AG Non Vtg Pref Dem- World's
fourth-largest software firm, dominating the global
market for relational databases 500 187,866
SAP Ord- World's fourth-largest software firm, dominating the global market for
relational databases 10,000 3,206,952
SKW Trostberg AG- Specialist niche chemical firm producing additives, covering, adhesives
anti-corrosive paints and oil well drilling products 150,000 3,635,604
Viag AG- Diversified group with utility, aluminum, chemical, glass and packaging operatio 8,000 4,072,723
Vossloh AG- Manufacturer of elecrical lighting equipment as well as railway truck fasteners
and the related installation equipment 150,000 4,096,008
</TABLE>
12
<PAGE>
Statement of Net Assets
INTERNATIONAL SERIES April 30, 1999
<TABLE>
<CAPTION>
Shares or
Investments Principal Amount US$ Value
----------- ---------------- ---------
<S> <C> <C>
*W. E. T. Automotive Systems AG- Leading global supplier
of car seat heating systems 90,000 $ 4,429,404
Total 59,816,868
============
Netherlands 2.17% Hunter Douglas NV- Major global supplier of decorative building
fittings especially window blinds 30,000 1,158,948
Koninklijke Pakhoed NV- Largest chemical distributor worldwide 30,000 695,369
Stork NV- Engineering and service company focused on aircraft
parts, processing machinery and
food manufacturing equipment 125,000 2,672,460
Total 4,526,777
============
Switzerland 2.44% Baloise Holding Ltd.- Insurance group 3,750 3,073,286
Christ AG- Major global provider of water treatment
chemicals and purification equipment 700 225,703
Saurer AG- Textile machinery and auto component manufacturing firm 1,100 645,062
Stratec Holding AG- Healthcare company concentrating on
osteosynthesis and prosthetics 600 1,142,632
Total 5,086,683
============
United Kingdom 25.42% Ashtead Group plc- Major construction plant and machinery hire firm 1,800,000 6,561,115
DBS Management plc- Supplies independent financial
advisors with financial product
evaluation and administration software and services 1,000,000 2,357,625
First Technology plc- Designs and manufactures
equipment and systems for auto safety 944,500 5,525,142
General Electric Company plc- Electronics group 125,000 1,319,626
Jarvis plc- Specialist engineering and service company
focused on the installation and
maintenance of related track and signals 575,000 4,765,540
Johnson Matthey plc- Precision metal-based refinery,
alloy manufacturing and trading company 120,000 1,125,866
London Bridge Software Holdings plc- Develops software
solutions and provides consultancy
and related services for credit risk management 26,500 717,527
Mayflower Corp.- Specialist supplier of bus, coach and car bodies 2,750,000 9,205,196
NXT plc- Makes high quality loudspeakers and has developed the
first commercial flatbed
panel speaker 986,000 7,616,495
Pilkington plc- Manufactures and distributes glass for the
building and automotive markets 3,700,000 4,852,844
Precoat International plc- Processes and distributes
precoated steel in Europe and
North America 760,000 1,522,720
Regal Hotel Group plc- Owns and operates more
than 100 medium quality, medium sized
hotels and inns 5,000,000 2,132,322
Trifast plc- Distributes and manufactures industrial
fasteners, particularly for electronics and
electrical concerns 465,000 5,013,774
UTD Assurance Group- A major insurance provider 3,500,000 394,279
Total 53,110,071
============
Total Investments in Foreign Securities (Cost $175,844,495) 176,964,888
============
United States 9.32%
- ------------------------------------------------------------------------------------------------------------------------------------
*Cheap Tickets Inc.- Sells discount tickets for leisure air travel 15,000 577,500
*Net. B@ nk, Inc.- Provider of banking services over the internet 100,000 18,900,000
Total Investments in United States Securities (Cost $2, 148,411) 19,477,500
============
Total Investments in Common Stocks (Cost $177, 992,905) 196,442,388
============
Other Assets, Less Liabilities 5.98%
- ------------------------------------------------------------------------------------------------------------------------------------
Short-term
Investments Federal Home Loan Bank 4.80% due 5/3/1999 (Cost $17, 995,199) $18,000,000 17,995,199
============
Cash 175,694
============
Receivable for: Securities sold 20,486,986
Dividends and interest 998,165
Capital stock sold 841,832
Other 162,353
Total Other Assets 40,660,229
============
Payable for: Securities purchased 27,969,570
13
<PAGE>
Statement of Net Assets
INTERNATIONAL SERIES April 30, 1999
US$ Value
Capital stock reacquired $ 192,856
Total Liabilities 28,162,426
=============
Total Other Assets, Less Liabilities 12,497,803
=============
Net Assets 100.00% $208,940,191
====================================================================================================================================
Class A Shares- Net asset value ($ 103,662,194 / 6,986,251 shares outstanding) $14.84
Maximum offering price (net asset value plus sales charge of 5.75% of the offering price) $15.75
Class B Shares- Net asset value ($ 22,464,888 / 1,524,294 shares outstanding) $14.74
Class C Shares- Net asset value ($ 20,165,066 / 1, 369,396 shares outstanding) $14.73
Class P Shares- Net asset value ($ 1,280.43 / 86. 290 shares outstanding) $14.84
Class Y Shares- Net asset value ($ 62,646,763 / 4, 199,805 shares outstanding) $14.92
</TABLE>
*Non-income producing security.
See Notes to Financial Statements.
Statement of Net Assets
WORLD BOND-DEBENTURE SERIES April 30, 1999
<TABLE>
<CAPTION>
Shares or
Principal Amount
Investments (000) US$ Value
----------- ----- ---------
<S> <C> <C>
Investments in Securities 96.19%
- ------------------------------------------------------------------------------------------------------------------------
Foreign 56.58%
- ------------------------------------------------------------------------------------------------------------------------
Argentina 3.14% Argentina Zero coupon due 2023 $ 200 $ 150,380
Banco Hipotecario SA 13/2008 35 36,225
Banco Hipotecario SA 13/2008 * 200 207,000
Total 393,605
==============
Bermuda 1.46% Comcast UK Cable Part Zero coupon due 2007** 200 182,500
==============
Brazil 4.95% Republic of Brazil Zero coupon due 2024 200 132,580
Republic of Brazil 11 5 /8/2004 500 487,500
Total 620,080
==============
Bulgaria 2.15% Bulgaria Zero coupon due 2011 400 268,920
==============
Canada 5.18% Call-Net Enterprises Inc. Zero coupon due 2008 350 235,375
Canada Airlines Corp. 10/2005 200 146,000
Clearnet Communications Zero coupon due 2009 250 158,789
GST Telecommunications Inc.* 3,000 shs. 37,875
Rogers Communications Inc. 8 3 /4/2007 (a) 100 71,316
Total 649,355
==============
Costa Rica .66% Banco Central Costa Rica 6 1 /4/2010 100 83,000
==============
Croatia .37% Republic of Croatia 7/2002 * 50 46,500
==============
France 1.76% AXA SA 2 1 /2/2014 (a) 120 219,883
==============
Germany 4.03% Deutsche Bank-Allianz 2/2003 * (a) 200 224,910
Geberit International SA 10 1 /8/2007 (a) 150 93,348
Sirona Dental Systems 9 1 /8/2008 * (a) 325 185,987
Total 504,245
Greece 2.26% Hellenic Republic 6 1 /2/2014 55,000 188,681
Hellenic Republic 8.90/2003 27,000 94,905
Total 283,586
==============
14
<PAGE>
Statement of Net Assets
WORLD BOND-DEBENTURE SERIES April 30, 1999
Shares or
Principal Amount
Investments (000) US$ Value
----------- ----- ---------
Korea 1.75% Republic of Korea 8 7 /8/2008 $ 200 $ 218,900
==============
Mexico 11.26% Coca-Cola Femsa SA de CV 8.95/2006 100 101,250
Grupo Minero Mexico SA 8 1 /4/2008 250 217,500
Grupo Televisa, SA Zero coupon due 2008 350 300,125
Pepsi-Gemex SA de CV 9 3 /4/2004 * 250 253,125
TV Azteca SA de CV 10 1 /2/2007 200 174,000
United Mexican States 9 3 /4/2005 250 260,000
United Mexican States 9 7 /8/2007 100 105,156
Total 1,411,156
==============
Panama 2.27% Republic of Panama 8 7 /8/2027 300 284,625
==============
Peru 2.15% Peru- Past Due Interest Zero coupon due 2017 400 269,680
==============
Philippines 2.46% Republic of Philippines 8 7 /8/2008 300 308,250
==============
Poland 1.25% Poland- Reg'd -Par Zero coupon due 2024 100 64,290
Poland non-US Glb bearer Zero coupon due 2014 100 92,170
Total 156,460
==============
United Kingdom 9.48% Esprit Telecom Group plc 11/2008 (a) 350 207,870
Esprit Telecom Group plc 10 7 /8/2008 * 150 162,375
Orange plc 8 5 /8/2008 (a) 200 345,999
RSL Communications plc Zero coupon due 2008 300 104,713
Swiss Life Finance Ltd Conv. 2/2003 * 150 158,437
Telewest plc Zero coupon due 2009 * 300 207,750
Total 1,187,144
==============
Total Investments in Foreign Securities (Cost $7, 108,670) 7,087,889
==============
Domestic 39.61%
- ------------------------------------------------------------------------------------------------------------------------------------
United States 39.61% Allbritton Communications Co. 9 3 /4/2007 119 127,925
America West Airlines 10 3 /4/2005 100 106,750
American Mobile Satellite Corp. Warrants expiring 4/1/2008 * 150 shs. 4,537
Arbor Software Corp. Conv. 4 1 /2/2005 * 125 86,308
Big Flower Press 8 7 /8/2007 150 153,750
Bresnan Communications 9 1 /4/2009 * 225 155,813
BE Aerospace Inc. 9 7 /8/2006 50 53,375
Chancellor Media Corp. 10 1 /2/2007 100 110,500
CHTT 8 7 /8/2008 200 202,500
Cumulus Media Inc. 10 3 /8/2008 150 163,125
Diamond Triumph Auto Glass, Inc. 9 1 /4/2008 * 150 152,250
DHI 10/2006 150 160,875
Fox/Liberty Networks LLC 8 7 /8/2007 200 219,000
General Electric Cap Corp. 8/1999 (a) 180 293,961
Global Crossing Holding Ltd. 9 5 /8/2008 150 168,000
Integrated Health Services Inc. 9 1 /2/2007 100 78,250
Iron Mountain Inc. 8 3 /4/2009 50 51,500
Iron Mountain Inc. 10 1 /8/2006 150 163,688
Jefferson-Pilot Corp. (NBX) $5.256 Conv. Pfd 1,000 shs. 120,000
Merrill Lynch & Co. Conv. 1 1 /2/2005 200 206,000
Monsanto Co. Conv. Pfd. 6.50% 2,000 shs. 92,125
Nortek Inc. 8 7 /8/2008 * 175 181,563
NTL Inc Zero Coupon due 2009 (a) 250 246,424
Orbital Imaging Corp. Warrants expiring 3/1/2005 * 150 shs. 6,000
</TABLE>
15
<PAGE>
Statement of Net Assets
WORLD BOND-DEBENTURE SERIES April 30, 1999
<TABLE>
<CAPTION>
Shares or
Principal Amount
Investments (000) US$ Value
----------- ----- ---------
<S> <C> <C>
Orbital Imaging Corp. 11 5 /8/2005 $ 150 $ 143,250
Owens-Illinois Inc Conv. Pfd. 4.750% 2,000 shs. 81,500
Pierce Leahy Corp. 11 1 /8/2006 200 224,000
Prime Succession Acquisition Corp. 10 3 /4/2004 150 110,250
Purina Mills Inc. 9/2010 100 88,000
Renaissance Media Group Zero Coupon due 2008 + 100 72,500
Roche Holdings Inc. Zero coupon Conv. due 2010 + 175 115,719
Saul B. F. Real Estate Investment Trust 9 3 /4/2008 150 143,250
Scotts Co. 8 5 /8/2009 * 200 208,250
Sinclair Broadcasting Group Inc. 10/2005 100 105,750
Splitrock Services Inc. Warrants expiring 7/15/2008* 50 shs. 4,250
Splitrock Services Inc. 11 3 /4/2008 50 51,000
Trump Atlantic City Associates Funding 11 1 /4/2006 100 87,500
Viatel Inc. 11 1 /4/2008 200 209,500
Viatel Inc. 14 1 /4/2011 (a) 10 13,636
Total Investments in United States Securities (Cost $4,950,540) 4,962,574
============
Total Investments in Securities (Cost $12,059,210) 12,050,463
============
Other Assets, Less Liabilities 3.81%
- --------------------------------------------------------------------------------------------------------------------
Cash 7,080
====================================================================================================================
Receivable for: Securities sold 934,791
Dividends and interest 271,294
Capital stock sold 262,300
Other 105,998
Total Other Assets 1,581,463
============
Payable for: Securities purchased 905,190
Capital stock reacquired 198,812
Total Liabilities 1,104,002
============
Total Other Assets, Less Liabilities 477,461
Net Assets 100.00% $12,527,924
====================================================================================================================
Class A Shares- Net asset value
($ 9,014,613 / 905,862 shares outstanding) $ 9.95
Maximum offering price
(net asset value plus sales charge of 4.75% of the offering price) $10.45
Class B Shares- Net asset value
($ 1, 707, 429 / 171, 661 shares outstanding) $ 9.95
Class C Shares- Net asset value
($ 1, 805,882 / 181, 642 shares outstanding) $ 9.94
</TABLE>
(a) Investments in non-U. S. dollar-denominated securities (15.19%). The
remaining securities (84.81%) are invested in U. S. dollar-denominated
securities.
* Non-income producing security.
** Deferred-interest debentures pay no interest for a stipulated number of
years, after which they pay a predetermined coupon rate.
+ Restricted security under Rule 144A. See Notes to Financial Statements.
16
<PAGE>
Statement of Net Assets
ALPHA SERIES April 30, 1999
<TABLE>
<CAPTION>
Shares or
Investments Principal Amount Value
----------- ---------------- -----
<S> <C> <C>
Investments in Securities 99.37%
- ------------------------------------------------------------------------------------------------------------------------------------
Lord Abbett Developing Growth Fund, Inc.- Class Y 2,666,874 $ 44,110,098
Lord Abbett Research Fund- Small-Cap Value Series- Class Y 2,950,930 44,795,118
Lord Abbett Securities Trust- International Series- Class Y 4,192,711 62,555,250
Total Investments in Securities (Cost $145,420, 131) 151,460,466
==============
Other Assets, Less Liabilities .63%
- ------------------------------------------------------------------------------------------------------------------------------------
Short-term
Investments Koch Industries, Inc. 4.91% due 5/3/1999 (Cost $224,939) $225,000 224,939
==============
Cash and Receivables, Net of Liabilities 735,390
==============
Total Other Assets, Less Liabilities 960,329
==============
Net Assets 100.00% $152,420,795
====================================================================================================================================
Class A Shares- Net asset value ($ 71,559,484 / 4,582,270 shares outstanding) $15.62
Maximum offering price (net asset value plus sales charge of 5.75% of the offering price) $16.57
Class B Shares- Net asset value ($ 49,697, 487 / 3,208, 143 shares outstanding) $15.49
Class C Shares- Net asset value ($ 31, 163,824 / 2,012, 146 shares outstanding) $15.49
See Notes to Financial Statements.
Statements of Operations
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended 4/30/99
---------------------------------------------------------------
Growth & World Bond
Income International Debenture Alpha
Investment Income Series Series Series Series
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Income Dividends $ 1,431,824 $ 1,618,857 $ 7,491 $ 1,134,889
Interest 176,961 360,494 662,050 2,806
Foreign taxes withheld - (75,747) (2,524) -
Total income 1,608,785 1,903,604 667,017 1,137,695
----------------------------------------------------------------------------------------------------------------------
Expenses Management fee 692,063 666,190 45,053 332,873
Management fee waived - - (45,053) (332,873)
12b-1 distribution plan- Class A 98,261 120,836 12,849 86,386
12b-1 distribution plan- Class B 22,342 92,788 8,078 216,184
12b-1 distribution plan- Class C 464,848 82,361 8,806 133,015
Shareholder servicing 157,711 253,636 6,924 194,070
Report to shareholders 14,519 18,902 1,222 10,460
Professional 17,882 26,214 5,758 12,914
Registration 19,317 25,481 13,084 16,454
Organization 1,828 1,691 2,046 3,585
Directors' fees 2,218 556 329 1,040
Other 11,674 10,756 4,775 11,215
----------------------------------------------------------------------------------------------------------------------
Total expenses before reductions and reimbursements 1,502,663 1,299,411 63,871 685,323
Expenses assumed by Lord Abbett - - (12,000) -
Expenses assumed by Underlying Funds - - - (248,869)
Expense reductions (7,118) (3,600) (84) (869)
----------------------------------------------------------------------------------------------------------------------
Net expenses 1,495,545 1,295,811 51,787 435,585
----------------------------------------------------------------------------------------------------------------------
Net investment income 113,240 607,793 615,230 702,110
----------------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss)
on Investments and Foreign Currency Transactions
====================================================================================================================================
Net realized gain (loss) from investment
and foreign currency transactions 11,553,160 8,018,238 (159,622) 476,707
====================================================================================================================================
Net change in unrealized appreciation
of investments and foreign currency holdings 22,639,304 27,229,713 579,945 23,526,804
====================================================================================================================================
Net realized and unrealized gain on
investments and foreign currency transactions 34,192,464 35,247,951 420,323 24,003,511
====================================================================================================================================
Net Increase in Net Assets Resulting from Operations $34,305,704 $35,855,744 $1,035,553 $24,705,621
====================================================================================================================================
</TABLE>
See Notes to Financial Statements.
17
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Six Months Ended 4/30/99
--------------------------------------------------------------
Growth & World Bond
Income International Debenture Alpha
Increase (Decrease) in Net Assets Series Series Series Series
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operations Net investment income $ 113,240 $ 607,793 $ 615,230 $ 702,110
Net realized gain (loss) from investment
and foreign currency transactions 11,553,160 8,018,238 (159,622) 476,707
Net change in unrealized appreciation of investments
and foreign currency holdings 22,639,304 27,229,713 579,945 23,526,804
Net increase in net assets resulting from operations 34,305,704 35,855,744 1,035,553 24,705,621
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders from net investment income:
Class A (401,032) (567,116) (369,088) -
Class B (3,850) (20,005) (62,667) -
Class C (97,485) (17,514) (69,714) -
Class Y - (257,274) - -
Total (502,367) (861,909) (501,469) -
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders from net
realized gain from investment and foreign
currency transactions:
Class A (2,606,705) (150,119) (146,447) -
Class B (125,113) (30,008) (26,529) -
Class C (3,168,272) (26,271) (29,786) -
Class Y - (82,695) - -
Total (5,900,090) (289,093) (202,762) -
---------------------------------------------------------------------------------------------------------------------
Total distributions (6,402,457) (1,151,002) (704,231) -
- ------------------------------------------------------------------------------------------------------------------------------------
Capital share transactions:
Net proceeds from sales of shares 20,550,788 62,173,618 3,144,203 42,356,235
Net asset value of shares issued in
reinvestment of dividends and distributions 5,996,380 1,128,075 483,607 -
Total 26,547,168 63,301,693 3,627,810 42,356,235
---------------------------------------------------------------------------------------------------------------------
Cost of shares reacquired (17,621,678) (42,098,749) (1,565,019) (20,919,829)
---------------------------------------------------------------------------------------------------------------------
Increase in net assets derived
from capital share transactions 8,925,490 21,202,944 2,062,791 21,436,406
---------------------------------------------------------------------------------------------------------------------
Increase in net assets 36,828,737 55,907,686 2,394,113 46,142,027
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets
Beginning of period 165,904,098 153,032,505 10,133,811 106,278,768
---------------------------------------------------------------------------------------------------------------------
End of the period + $202,732,835 $208,940,191 $12,527,924 $152,420,795
=====================================================================================================================
</TABLE>
+ Including undistributed net investment income of $1, 325,294, $467, 545,
$376,700 and $702, 110, respectively. See Notes to Financial Statements.
18
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
12/18/97 12/29/97
(Commencement (Commencement
of Operations) of Operations)
Year Ended 10/31/98 to 10/31/98 to 10/31/98
--------------------------------------------------------------------
Growth & World Bond
Income International Debenture Alpha
Increase (Decrease) in Net Assets Series Series Series Series
- ---------------------------------------------------------------------------------------------- ----------------------------------
<S> <C> <C> <C> <C>
Operations Net investment income $ 716,975 $ 734,578 $ 419,904 $ (255,720)
Net realized gain (loss) from investment
and foreign currency transactions 5,911,754 772,716 (256,978) (164,572)
Net change in unrealized appreciation
of investments and foreign currency holdings 9,416,949 (11,465,508) (573,481) (17,486,469)
Net increase (decrease) in net assets
resulting from operations 16,045,678 (9,958,214) (410,555) (17,906,761)
- ---------------------------------------------------------------------------------------------- ----------------------------------
Distributions to shareholders from net investment income:
Class A (260,319) (75,253) (273,961) -
Class B - - (31,624) -
Class C - - (44,552) -
Class Y - - - -
Total (260,319) (75,253) (350,137) -
------------------------------------------------------------------------------- ----------------------------------
Distributions to shareholders from net
realized gain from investment and foreign
currency transactions:
Class A (3,955,825) - - -
Class B (22,589) - - -
Class C (5,643,683) - - -
Class Y - - - -
Total (9,622,097) - - -
------------------------------------------------------------------------------- ----------------------------------
Total distributions (9,882,416) (75,253) (350,137) -
- ------------------------------------------------------------------------------------------------------------------------------------
Share transactions:
Net proceeds from sales of shares 31,813,070 152,668,725 12,071,035 131,488,957
Net asset value of shares issued to
shareholders in reinvestment of dividends
and distributions 9,259,717 71,968 256,482 -
Total 41,072,787 152,740,693 12,327,517 131,488,957
------------------------------------------------------------------------------- ----------------------------------
Cost of shares reacquired (24,323,626) (27,009,220) (2,433,514) (7,313,428)
------------------------------------------------------------------------------- ----------------------------------
Increase in net assets derived from
capital share transactions 16,749,161 125,731,473 9,894,003 124,175,529
------------------------------------------------------------------------------- ----------------------------------
Increase in net assets 22,912,423 115,698,006 9,133,311 106,268,768
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets
Beginning of period 142,991,675 37,334,499 1,000,500 10,000
------------------------------------------------------------------------------- ----------------------------------
End of period + $165,904,098 $153,032,505 $10,133,811 $106,278,768
=============================================================================== ==================================
</TABLE>
+ Including undistributed net investment income of $297, 775, $721, 661,
$262,939 and $0, respectively. See Notes to Financial Statements.
19
<PAGE>
Financial Highlights
GROWTH & INCOME SERIES
<TABLE>
<CAPTION>
Class A Shares Class B Shares
------------------------------------------------------- --------------------------------------------
Six Months Ended Year Ended Six Months Ended Year Ended
4/30, 10/31, 7/15/96(a) 4/30, 10/31, 6/5/97(a)
Per Share Operating Performance: 1999 1998 1997 to 10/31/96 1999 1998 to 10/31/97
- --------------------------------------------------------------------------------------- --------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 9.15 $ 8.79 $ 7.09 $ 6.50 $9.13 $ 8.80 $ 8.20
Income from investment operations
Net investment income (loss) .03(e) .057 .093 .028 (.01)(e) -(d) -(d)
Net realized and unrealized gain on
investments 1.82 .928 1.781 .589 1.85 .92 .60
Total from investment operations 1.85 .985 1.874 .617 1.84 .92 .60
---------------------------------------------------------------------------------- -------------------------------------------
Distributions
Dividends from net investment income (.05) (.035) (.099) (.027) (.01) - -
Distributions from net realized gain (.33) (.590) (.075) - (.33) (.590) -
Total distributions (.38) (.625) (.174) (.027) (.34) (.590) -
---------------------------------------------------------------------------------- ------------------------------------------
Net asset value, end of period $10.62 $ 9.15 $ 8.79 $ 7.09 $10.63 $ 9.13 $ 8.80
- --------------------------------------------------------------------------------------- --------------------------------------------
Total Return(b) 20.81%(c) 11.97% 26.78% 12.10%(c) 20.68%(c) 11.17% 7.19%(c)
====================================================================================================================================
Ratios to Average Net Assets:
Expenses, including waiver .61%(c)(f) 1.22% 1.29% .39%(c) .97%(c)(f) 1.98% .86%(c)
Expenses, excluding waiver .61%(c) 1.22% 1.29% .39%(c) .97%(c) 1.98% .86%(c)
Net investment income (loss) .26%(c) .88% 1.15% .40%(c) (.13)%(c) .09% .01%(c)
==============================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended Class C Shares
---------------------------------------------------------------------------------------
4/30, Year Ended 10/31, 1/3/94(g)
Per Share Operating Performance: 1999 1998 1997 1996 1995 to 10/31/94
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $9.11 $8.80 $7.09 $6.04 $5.07 $5.00
- ------------------------------------------------------------------------------------------------------------------------------------
Income from investment operations
Net investment income (loss) (.01)(e) .011 .032 .0949 .12 .089
Net realized and unrealized gain on investments 1.83 .889 1.790 1.0986 .97 .041
Total from investment operations 1.82 .900 1.822 1.1935 1.09 .130
------------------------------------------------------------------------------------------------------------------------------
Distributions
Dividends from net investment income (.01) -- (.037) (.1035) (.12) (.06)
Distributions from net realized gain (.33) (.590) (.075) (.04) -- --
Total distributions (.34) (.590) (.112) (.144) (.12) (.06)
------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.59 $9.11 $8.80 $7.09 $6.04 $5.07
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return(b) 20.50%(c) 10.94%(d) 26.24% 20.02% 21.83% 2.62%(c)
====================================================================================================================================
Ratios to Average Net Assets:
Expenses, including waiver .97%(c)(f) 1.98% 2.05% 1.55% 1.16% .61%(c)
Expenses, excluding waiver .97%(c) 1.98% 2.05% 2.01% 1.91% 1.94%(c)
Net investment income (loss) (.10)%(c) .12% .39% 1.36% 2.06% 2.03%(c)
==============================================================================================================================
Six Months Ended
4/30, Year Ended 10/31, 1/3/94(g)
Supplemental Data for All Classes: 1999 1998 1997 1996 1995 to 10/31/94
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000) $202,733 $165,904 $142,992 $ 113,962 $32,770 $ 9,160
Portfolio turnover rate 24.15% 45.83% 36.37% 23.84% 23.17% 31.95%
==============================================================================================================================
</TABLE>
(a) Commencement of offering respective class shares.
(b) Total return does not consider the effects of sales loads and assumes the
reinvestment of all distributions.
(c) Not annualized.
(d) Amount less than $.01.
(e) Calculated using average shares outstanding during the period.
(f) The ratio includes expenses paid through an expense offset arrangement.
(g) Commencement of operations.
See Notes to Financial Statements.
20
<PAGE>
Financial Highlights
INTERNATIONAL SERIES
<TABLE>
<CAPTION>
Class A Shares Class B Shares
------------------------------------------ -----------------------------------------------
Six Months Year Ended Six Months Year Ended
Ended 10/31, 12/13/96(a) Ended 10/31, 6/2/97(b)
Per Share Operating Performance: 4/30/99 1998 to 10/31/97 4/30/99 1998 to 10/31/97
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $12.39 $10.86 $ 9.42 $12.28 $10.83 $10.26
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations
Net investment income (loss) .05(e) .11(e) .07 -(e) .02(e) (.03)
Net realized and unrealized gain
on investments and foreign
currency holdings 2.51 1.45 1.37 2.50 1.43 .60
Total from investment operations 2.56 1.56 1.44 2.50 1.45 .57
-----------------------------------------------------------------------------------------------------------------------------
Distributions
Dividends from net investment income (.09) (.03) - (.02) - -
Distributions from net realized gain (.02) - - (.02) - -
Total distributions (.11) (.03) - (.04) - -
-----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $14.84 $12.39 $10.86 $14.74 $12.28 $10.83
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return(c) 20.81% 14.36% 15.21%((d) 20.40%(d) 13.39%(d) 5.56%(d)
====================================================================================================================================
Ratios to Average Net Assets:
Expenses .70%(d)(f ) 1.31% 1.23%(d) 1.05%(d)(f) 2.03% .87%(d)
Net investment income (loss) .36%(d) .80% .41%(d) .01%(d) .18% (0.46)%(d)
=============================================================================================================================
Class C Shares Class P Shares Class Y Shares
------------------------------------------ ---------------- ------------------------------
Six Months Year Ended Six Months
Ended 10/31, 6/2/97(b) 3/9/99(b) Ended 12/30/97(b)
Per Share Operating Performance: 4/30/99 1998 to 10/31/97 to 4/30/99 4/30/99 to 10/31/98
- ------------------------------------------------------------------------------------ ---------------- ------------------------------
Net asset value, beginning of period $12.28 $10.83 $10.26 $12.70 $12.41 $11.28
Income (loss) from investment operations
Net investment income (loss) .01(e) .02(e) (.03) .08(e) .07(e) .15(e)
Net realized and unrealized gain on
investments and foreign currency
holdings 2.48 1.43 .60 2.06 2.53 .98
Total from investment operations 2.49 1.45 .57 2.14 2.60 1.13
----------------------------------------------------------------------------- ---------------- ------------------------------
Distributions
Dividends from net investment income (.02) - - - (.07) -
Distributions from net realized gain (.02) - - - (.02) -
Total distributions (.04) - - - (.09) -
----------------------------------------------------------------------------- ---------------- ------------------------------
Net asset value, end of period $14.73 $12.28 $10.83 $14.84 $14.92 $12.41
- ------------------------------------------------------------------------------------ ---------------- ------------------------------
Total Return (c) 20.40%(d) 13.39%(d) 5.56%(d) 16.85%(d) 21.13%(d) 10.02%(d)
====================================================================================================================================
Ratios to Average Net Assets:
Expenses 1.06%(d)(f) 2.05% .87%(d) .16%(d)(f) .56%(d)(f) .84%(d)
Net investment income (loss) .05%(d) .12% (0.46)%(d) .55%(d) .52%(d) 1.11%(d)
=============================================================================================================================
Six Months Ended Year Ended
4/30, 10/31, 12/13/96(a)
Supplemental Data for All Classes: 1999 1998 to 10/31/97
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000) $208,940 $153,033 $37,334
Portfolio turnover rate 63.70% 20.52% 29.72%
=============================================================================================================================
</TABLE>
(a) Commencement of operations.
(b) Commencement of offering respective class shares.
(c) Total return does not consider the effects of sales loads and assumes the
reinvestment of all distributions.
(d) Not annualized.
(e) Calculated using average shares outstanding during the period.
(f) The ratio includes expenses paid through an expense offset arrangement.
See Notes to Financial Statements.
21
<PAGE>
Financial Highlights
WORLD BOND-DEBENTURE SERIES
<TABLE>
<CAPTION>
Class A Shares Class B Shares Class C Shares
--------------------------------- --------------------------- ----------------------------------
Six Months Ended Six Months Ended Six Months Ended
4/30, 12/18/97(a) 4/30, 12/19/97(b) 4/30, 12/19/97(b)
Per Share Operating Performance: 1999 to 10/31/98 1999 to 10/31/98 1999 to 10/31/98
- --------------------------------------------------------------------- --------------------------- ----------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $9.66 $10.00 $9.65 $10.00 $9.65 $10.00
Income (loss) from investment operations
Net investment income .52(e) .511 .47(e) .406 .48(e) .395
Net realized and unrealized gain
(loss) on investments and foreign
currency holdings .38 (.425) .40 (.372) .38 (.361)
Total from investment operations .90 .086 .87 .034 .86 .034
--------------------------------------------------------------- ---------------------------- ---------------------------------
Distributions
Dividends from net investment income (.43) (.426) (.39) (.384) (.39) (.384)
Distributions from net realized gain (.18) - (.18) - (.18) -
Total distributions (.61) (.426) (.57) (.384) (.57) (.384)
------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $9.95 $ 9.66 $9.95 $ 9.65 $9.94 $ 9.65
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return(c)(d) 9.51% .75% 9.24% .24% 9.13% .24%
====================================================================================================================================
Ratios to Average Net Assets (d) :
Expenses, including waiver .33%(f) .55% .69%(f) 1.28% .68%(f) 1.28%
Expenses, excluding waiver .81% 1.20% 1.17% 1.93% 1.16% 1.93%
Net investment income 5.23% 7.08% 4.82% 6.67% 4.90% 6.62%
==============================================================================================================================
Six Months Ended
4/30, 12/18/97(a)
Supplemental Data for All Classes: 1999 to 10/31/98
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000) $12,528 $10,134
Portfolio turnover rate 50.09% 159.14%
==============================================================================================================================
</TABLE>
(a) Commencement of operations.
(b) Commencement of offering respective class shares.
(c) Total return does not consider the effects of sales loads and assumes the
reinvestment of all distributions.
(d) Not annualized.
(e) Calculated using average shares outstanding during the period.
(f) The ratio includes expenses paid through an expense offset arrangement.
See Notes to Financial Statements.
Financial Highlights
ALPHA SERIES
<TABLE>
<CAPTION>
Class A Shares Class B Shares Class C Shares
--------------------------------- --------------------------- ----------------------------------
Six Months Ended Six Months Ended Six Months Ended
4/30, 12/29/97(a) 4/30, 12/29/97(a) 4/30, 12/29/97(a)
Per Share Operating Performance: 1999 to 10/31/98 1999 to 10/31/98 1999 to 10/31/98
- --------------------------------------------------------------------- ---------------------------- ---------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $12.91 $13.52 $12.85 $13.52 $12.86 $13.52
- --------------------------------------------------------------------- ---------------------------- ---------------------------------
Income (loss) from investment operations
Net investment income (loss)(d) .10 (.03) .05 (.11) .05 (.11)
Net realized and unrealized loss on
investments 2.61 (.58) 2.59 (.56) 2.58 (.55)
Total from investment operations 2.71 (.61) 2.64 (.67) 2.63 (.66)
--------------------------------------------------------------- ---------------------------- ---------------------------------
Net asset value, end of period $15.62 $12.91 $15.49 $12.85 $15.49 $12.86
- --------------------------------------------------------------------- ---------------------------- ---------------------------------
Total Return(b)(c) 20.99% (4.51)%(d) 20.54% (4.96)%(d) 20.45% (4.88)%
====================================================================================================================================
Ratios to Average Net Assets(c):
Expenses, including waiver .14%(e) .21% .49%(e) .83% .49%(e) .82%
Expenses, excluding waiver .39% .63% .74% 1.26% .74% 1.24%
Net investment income (loss) .72% (.18)% .37% (.81)% .36% (.82)%
==============================================================================================================================
Six Months Ended
4/30, 12/29/97(a)
Supplemental Data for All Classes: 1999 to 10/31/98
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000) $152,421 $106,279
Portfolio turnover rate 1.85% 0.01%
==============================================================================================================================
</TABLE>
(a) Commencement of operations.
(b) Total return does not consider the effects of sales loads and assumes the
reinvestment of all distributions.
(c) Not annualized.
(d) Calculated using average shares outstanding during the period.
(e) The ratio includes expenses paid through an expense offset arrangement.
See Notes to Financial Statements.
22
<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. The Trust currently consists of
four separate portfolios (" Series")- Lord Abbett Growth & Income Series ("
Growth & Income"), Lord Abbett International Series (" International "), Lord
Abbett World Bond-Debenture Series (" World Bond- Debenture") and Lord Abbett
Alpha Series (" Alpha"). Effective December 18, 1997, the World Bond-Debenture
Series was added, and the Trust received a capital contribution of $1, 000,500
and issued 100,050 shares to the partners of Lord Abbett & Co. (" Lord Abbett").
The Alpha Series was added on December 29, 1997 at which time the Trust received
a capital contribution of $10,000 and issued 740 shares of the Alpha Series to
the partners of Lord Abbett. The Alpha Series invests in other funds managed by
Lord Abbett (" Underlying Funds"). 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)
Security valuation is determined as follows: Portfolio 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 ask prices on such exchange. Securities traded in the over-thecounter market
are valued at the mean between the last bid and ask 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. Investments in the Underlying
Funds are valued at the closing net asset value per share of each Underlying
Fund on the day of valuation. Short-term securities maturing in 60 days or less
are valued at amortized cost which approximates market value. 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 Trust'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. 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) 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 for International and World Bond-Debenture Series and 0.50%
per annum for the Alpha Series. The management fee for Growth & Income Series is
based on average daily net assets at the following annual rates: 0.75% on the
first $200 million; 0.65% on the next $300 million; and 0.50% on the excess over
$500 million. Lord Abbett waived its fee for the World Bond-Debenture and Alpha
Series for the six months ended April 30, 1999. Lord Abbett has entered into a
sub-advisory agreement with Fuji-Lord Abbett International, Ltd. ("
sub-adviser"). Lord Abbett is a minority owner of the sub-advisor. 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. Pursuant to the Class
P Plan, the Trust pays Distributor an annual service and distribution fee of
0.20% and 0.25%, respectively, of the average daily net assets of the Class P
shares. Class Y does not have a Rule 12b-1 plan. The Class A Plan for the World
Bond-Debenture Series became operative May 1, 1998.
The Alpha Series has entered into a Servicing Arrangement with the Underlying
Funds pursuant to which each Underlying Fund will pay a portion of the expenses
(excluding management fee, distribution and service fees) of the Alpha Series in
proportion to the average daily value of shares owned by the Alpha Series.
Distributor received the following commissions for the six months ended April
30, 1999 on sales of shares of the Trust after concessions were paid to
authorized distributors:
Lord Abbett Dealers'
Series Commissions Concessions
- --------------------------------------------------------------------------------
Growth & Income $39,201 $231,450
- --------------------------------------------------------------------------------
International 68,528 418,447
- --------------------------------------------------------------------------------
World Bond-Debenture 6,600 42,398
- --------------------------------------------------------------------------------
Alpha 80,523 508,373
- --------------------------------------------------------------------------------
23
<PAGE>
Notes to Financial Statements
3. Distributions
Dividendsfrom net investment income, if any, are declared and paid semiannually
for the Growth & Income Series, annually for the International and Alpha Series,
and monthly for the World Bond-Debenture Series. Net realized gains from
investment transactions, if any, are distributed to shareholders at least
annually. At April 30,1999, the accumulated undistributed net realized gain
(loss) for financial reporting purposes, aggregated $11, 498,072 for the Growth
& Income Series, $8,003,007 for the International Series, $(812,534) for the
World Bond-Debenture Series and $312,135 for the Alpha Series. Distributions
declared on March 17, 1999 and payable on May 13, 1999 to shareholders of record
on May 5, 1999 were as follows:
Rate Aggregate
Per Share Amount
- --------------------------------------------------------------------------------
World Bond-Debenture Series-
Net Investment Income-Class A $ 0.070 $64,199
- --------------------------------------------------------------------------------
World Bond-Debenture Series-
Net Investment Income-Class B $ 0.065 $11,317
- --------------------------------------------------------------------------------
World Bond-Debenture Series-
Net Investment Income-Class C $ 0.065 $11,872
- --------------------------------------------------------------------------------
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:
Six Months Ended Year Ended
April 30, 1999 October 31, 1998
Class A Shares Amount Shares Amount
- --------------------------------------------------------------------------------
Sales of shares 1,322,708 $12,960,570 1,916,824 $17,374,528
Shares issued to
shareholders in
reinvestment of
dividends and
distributions 301,078 2,760,884 470,043 3,900,320
Total 1,623,786 15,721,454 2,386,867 21,274,848
- --------------------------------------------------------------------------------
Shares reacquired (947,485) (9,236,305) (1,119,700) (9,997,500)
Increase 676,301 $ 6,485,149) 1,267,167 $11,277,348
- --------------------------------------------------------------------------------
Six Months Ended Year Ended
April 30, 1999 October 31, 1998
-----------------------------------------------------------
Class B Shares Amount Shares Amount
- --------------------------------------------------------------------------------
Sales of shares 289,055 $2,871,086 351,815 $3,196,791
Shares issued to
shareholders in
reinvestment of
dividends and
distributions 13,394 123,096 2,736 22,576
Total 302,449 2,994,182 354,551 3,219,367
- --------------------------------------------------------------------------------
Shares reacquired (38,674) (378,485) (19,528) (175,415)
Increase 263,775 $2,615,697 335,023 $3,043,952
- --------------------------------------------------------------------------------
Six Months Ended Year Ended
April 30, 1999 October 31, 1998
----------------------------------------------------------
Class C Shares Amount Shares Amount
- --------------------------------------------------------------------------------
Sales of shares 481,630 $4,719,132 1,238,147 $ 11,241,751
Shares issued to
shareholders in
reinvestment of
dividends and
distributions 339,411 3,112,400 648,459 5,336,821
Total 821,041 7,831,532 1,886,606 16,578,572
- --------------------------------------------------------------------------------
Shares reacquired (819,063) (8,006,888) (1,570,614) (14,150,711)
Increase (decrease) 1,978 $ (175,356) 315,992 $ 2,427,861
- --------------------------------------------------------------------------------
Transactions in shares of beneficial interest for the International Series
were as follows:
Six Months Ended Year Ended
April 30, 1999 October 31, 1998
---------------------------------------------------------
Class A Shares Amount Shares Amount
- --------------------------------------------------------------------------------
Sales of shares 1,787,298 $ 23,376,429 4,503,630 $ 61,680,518
Shares issued to
shareholders in
reinvestment of
dividends and
distributions 56,456 698,356 6,701 71,968
Total 1,843,754 24,074,785 4,510,331 61,752,486
- --------------------------------------------------------------------------------
Shares reacquired (1,365,645) (18,283,120) (1,017,196) (13,021,404)
Increase 478,109 $ 5,791,665) 3,493,135 $ 48,731,082
- --------------------------------------------------------------------------------
Six Months Ended Year Ended
April 30, 1999 October 31, 1998
---------------------------------------------------------
Class B Shares Amount Shares Amount
- --------------------------------------------------------------------------------
Sales of shares 435,727 $ 5,581,417 1,222,629 $16,942,824
Shares issued to
shareholders in
reinvestment of
dividends and
distributions 3,886 47,879 - -
Total 439,613 5,629,296 1,222,629 16,942,824
- --------------------------------------------------------------------------------
Shares reacquired (212,707) (2,756,114) (77,687) (962,598)
Increase 226,906 $ 2,873,182 1,144,942 $15,980,226
- --------------------------------------------------------------------------------
Six Months Ended Year Ended
April 30, 1999 October 31, 1998
-----------------------------------------------------------
Class C Shares Amount Shares Amount
- --------------------------------------------------------------------------------
Sales of shares 1,829,885 $ 23,519,710 1,839,301 $ 24,518,535
Shares issued to
shareholders in
reinvestment of
dividends and
distributions 3,396 41,871 - -
Total 1,833,281 23,561,581 1,839,301 24,518,535
- --------------------------------------------------------------------------------
Shares reacquired (1,581,385) (20,659,515) (992,256) (12,825,218)
Increase 251,896 $ 2,902,066 847,045 $ 11,693,317
- --------------------------------------------------------------------------------
3/9/99 to
April 30, 1999
--------------------------
Class P Shares Amount
- --------------------------------------------------------------------------------
Sales of shares 86 $1,127
- --------------------------------------------------------------------------------
Shares reacquired - -
- --------------------------------------------------------------------------------
Increase 86 $1,127
- --------------------------------------------------------------------------------
24
<PAGE>
Notes to Financial Statements
Six Months Ended 12/30/97 to
April 30, 1999 October 31, 1998
----------------------------------------------------------
Class Y Shares Amount Shares Amount
- --------------------------------------------------------------------------------
Sales of shares 753,884 $ 9,694,935 3,464,016 $49,526,848
Shares issued to
shareholders in
reinvestment of
dividends and
distributions 27,395 339,969 - -
Total 781,279 10,034,904 3,464,016 49,526,848
- --------------------------------------------------------------------------------
Shares reacquired (28,090) (400,000) (17,400) (200,000)
Increase 753,189 $ 9,634,904 3,446,616 $49,326,848
- --------------------------------------------------------------------------------
Transactions in shares of beneficial interest for the World Bond-Debenture
Series were as follows:
Six Months Ended 12/18/97 to
April 30, 1999 October 31, 1998
----------------------------------------------------------
Class A Shares Amount Shares Amount
- --------------------------------------------------------------------------------
Sales of shares 206,826 $2,042,155 872,491 $ 9,065,643
Shares issued to
shareholders in
reinvestment of
dividends and
distributions 37,005 363,425 20,089 201,411
Total 243,831 2,405,580 892,580 9,267,054
- --------------------------------------------------------------------------------
Shares reacquired (104,711) (1,031,433) (225,888) (2,331,174)
Increase 139,120 $1,374,147 666,692 $ 6,935,880
- --------------------------------------------------------------------------------
Six Months Ended 12/19/97 to
April 30, 1999 October 31, 1998
----------------------------------------------------------
Class B Shares Amount Shares Amount
- --------------------------------------------------------------------------------
Sales of shares 73,556 $ 722,817 120,952 $1,264,229
Shares issued to
shareholders in
reinvestment of
dividends and
distributions 4,608 45,248 2,061 20,483
Total 78,164 768,065 123,013 1,284,712
- --------------------------------------------------------------------------------
Shares reacquired (24,787) (244,112) (4,729) (48,478)
Increase 53,377 $ 523,953 118,284 $1,236,234
- --------------------------------------------------------------------------------
Six Months Ended 12/19/97 to
April 30, 1999 October 31, 1998
----------------------------------------------------------
Class C Shares Amount Shares Amount
- --------------------------------------------------------------------------------
Sales of shares 38,542 $ 379,231 166,740 $1,741,163
Shares issued to
shareholders in
reinvestment of
dividends and
distributions 7,633 74,934 3,490 34,588
Total 46,175 454,165 170,230 1,775,751
- --------------------------------------------------------------------------------
Shares reacquired (29,287) (289,474) (5,476) (53,862)
Increase 16,888 $ 164,691 164,754 $1,721,889
- --------------------------------------------------------------------------------
Transactions in shares of beneficial interest for the Alpha Series were as
follows:
Six Months Ended 12/29/97 to
April 30, 1999 October 31, 1998
----------------------------------------------------------
Class A Shares Amount Shares Amount
- --------------------------------------------------------------------------------
Sales of shares 1,430,808 $20,024,470 4,111,581 $60,901,622
- --------------------------------------------------------------------------------
Shares reacquired (688,446) (9,741,648) (272,413) (3,501,712)
- --------------------------------------------------------------------------------
Increase 742,362 $10,282,822 3,839,168 $57,399,910
- --------------------------------------------------------------------------------
Six Months Ended 12/29/97 to
April 30, 1999 October 31, 1998
--------------------------------------------------------------
Class B Shares Amount Shares Amount
- --------------------------------------------------------------------------------
Sales of shares 842,815 $11,749,156 2,961,179 $44,641,341
- --------------------------------------------------------------------------------
Shares reacquired (451,097) (6,335,875) (144,754) (1,903,606)
- --------------------------------------------------------------------------------
Increase 391,718 $ 5,413,281 2,816,425 $42,737,735
- --------------------------------------------------------------------------------
Six Months Ended 12/29/97 to
April 30, 1999 October 31, 1998
--------------------------------------------------------------
Class C Shares Amount Shares Amount
- --------------------------------------------------------------------------------
Sales of shares 761,713 $10,582,609 1,743,733 $25,945,994
- --------------------------------------------------------------------------------
Shares reacquired (343,367) (4,842,306) (149,933) (1,908,110)
- --------------------------------------------------------------------------------
Increase 418,346 $ 5,740,303 1,593,800 $24,037,884
- --------------------------------------------------------------------------------
As of April 30, 1999, paid in capital for each Series was as follows:
Series
- --------------------------------------------------------------------------------
Growth & Income $117,695,409
- --------------------------------------------------------------------------------
International $182,020,156
- --------------------------------------------------------------------------------
World Bond-Debenture $ 12,959,911
- --------------------------------------------------------------------------------
Alpha $145,366,215
- --------------------------------------------------------------------------------
5. Purchases and Sales of Securities
Purchases and sales of investment securities (other than U. S. Government
obligations, short-term investments and foreign currency transactions) were as
follows:
Series Purchases Sales
- --------------------------------------------------------------------------------
Growth & Income $ 48,425,270 $ 43,892,307
- --------------------------------------------------------------------------------
International $138,572,463 $108,696,528
- --------------------------------------------------------------------------------
World Bond-Debenture $ 7,851,389 $ 5,729,423
- --------------------------------------------------------------------------------
Alpha $ 24,323,880 $ 2,450,000
- --------------------------------------------------------------------------------
As of April 30, 1999, net unrealized appreciation, unrealized appreciation and
unrealized depreciation of investments based on cost for federal income tax
purposes were as follows:
Net Unrealized
Appreciation Unrealized Unrealized
Series (Depreciation) Appreciation (Depreciation)
- --------------------------------------------------------------------------------
Growth & Income $72,214,060 $72,378,360 $ (164,300)
- --------------------------------------------------------------------------------
International $18,449,483 $40,166,081 $(21,716,598)
- --------------------------------------------------------------------------------
World Bond-Debenture $ (8,747) $ 351,044 $ (359,791)
- --------------------------------------------------------------------------------
Alpha $ 6,040,335 $ 7,904,131 $ (1,863,796)
- --------------------------------------------------------------------------------
The cost of investments for federal income tax purposes is the same as that used
for financial reporting purposes.
At April 30, 1999, the World Bond-Debenture Series had outstanding forward
currency contracts to sell foreign currencies as follows:
Value at
Foreign Currency Settlement Date Current Unrealized
Sell Contracts Receivable Value Appreciation
- --------------------------------------------------------------------------------
British Pounds Sterling,
expiring 9/16/99 $136,774 $134,849 $ 1,925
- --------------------------------------------------------------------------------
Japanese Yen,
expiring 9/24/99 $512,351 $501,682 $10,669
- --------------------------------------------------------------------------------
Total $649,125 $636,531 $12,594
- --------------------------------------------------------------------------------
(Notes to Financial Statements
continued on back cover)
<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 April
30, 1999, under a deferred compensation plan were $147, 673.
7. Expense Reduction
The Trust has entered into an arrangement with its transfer agent whereby
credits realized as a result of uninvested cash balances were used to reduce a
portion of the Trust's expenses.
8. Line of Credit
The Growth & Income and International Series, respectively with certain other
funds managed by Lord Abbett, have available a $200,000,000 unsecured revolving
credit facility (" Facility"), from a consortium of banks, to be used for
temporary or emergency purposes as an additional source of liquidity to fund
redemptions of investor shares. Any borrowings under this Facility will bear
interest at current market rates as defined in the agreement. The fee for this
Facility is 0.06% per annum. There were no loans outstanding pursuant to this
Facility at April 30, 1999, nor was the Facility utilized at any time during the
year.
Copyright (C) 1999 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.
Numbers to Keep Handy Revised as of August 12, 1999
For Shareholder Account or Statement This report replaces any previous
Inquiries: 800-821-5129 copies you may have received.
For Literature Only: 800-874-3733
24-Hour Automated Shareholder
Service Line: 800-865-7582
Visit Our Web Site:
http://www.lordabbett.com
[LOGO]
Lord Abbett mutual fund shares are distributed by:
LORD ABBETT DISTRIBUTOR LLC
- --------------------------------------------------------
The GM Building 767 Fifth Avenue New York, NY 10153-0203
LST-3-499
(8/99)
