Lord Abbett
Securities Trust
Growth & Income Series o International Series
World Bond-Debenture Series o Alpha Series
2000 Annual Report
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Investment protfolios designed to help you
capture capital growth over the long term.
[LOGO]
<PAGE>
Report to Shareholders
For the Fiscal Year Ended October 31, 2000
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/s/ Robert S. Dow
Robert S. Dow
Chairman
November 10, 2000
Table of Contents
Market Review 1
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Growth & Income Series 2
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Schedule of Investments 7
International Series 3
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Schedule of Investments 9
World Bond-Debenture Series 4
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Schedule of Investments 11
Alpha Series 5
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Schedule of Investments 13
Data on All Series
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Statements of Assets
and Liabilities 14
Statements of Operations 15
Statements of Changes
in Net Assets 16
Financial Highlights 18
Notes to Financial Statements 27
Lord Abbett Securities Trust completed its fiscal year
on October 31, 2000. The following is an overview of
some class-specific data for the period under review.
<TABLE>
<CAPTION>
Growth & Income Series - Fiscal Year Ended 10/31/00
Class A Class B Class C
---------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value $11.53 $11.43 $11.38
Dividends -- -- --
Capital gains $ 0.562 $ 0.562 $ 0.562
Total return* 11.44% 10.80% 10.74%
</TABLE>
<TABLE>
<CAPTION>
International Series - Fiscal Year Ended 10/31/00
Class A Class B Class C Class Y Class P
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value $14.48 $14.31 $14.30 $14.61 $14.51
Dividends $ 0.064 -- -- $ 0.104 $ 0.054
Capital gains $ 0.822 $ 0.822 $ 0.822 $ 0.822 $ 0.822
Total return* 10.97% 10.42% 10.35% 11.45% 11.03%
</TABLE>
<TABLE>
<CAPTION>
World Bond-Debenture Series - Fiscal Year Ended 10/31/00
Class A Class B Class C
---------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value $ 8.47 $ 8.48 $ 8.46
Dividends $ 0.933 $ 0.868 $ 0.868
Capital gains -- -- --
Total return* 1.47% 0.86% 0.87%
</TABLE>
<TABLE>
<CAPTION>
Alpha Series - Fiscal Year Ended 10/31/00
Class A Class B Class C
---------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value $17.46 $17.27 $17.25
Dividends $ 0.213 $ 0.120 $ 0.120
Capital gains $ 0.107 $ 0.107 $ 0.107
Total return* 17.10% 16.40% 16.34%
</TABLE>
*Total return is the percent change in value with all dividends and
distributions reinvested for the periods shown, using the SEC-required uniform
method to compute such returns.
DALBAR
Honors Commitment To
Investors
1999
--------------------------------------------------------------------------------
Lord, Abbett & Co. is proud to announce we have received a DALBAR award for
providing consistently good service to shareholders, the 1999 Key Honors Award
for Mutual Fund Service. DALBAR, Inc., an independent research firm and
evaluator of mutual fund service, presents the awards to financial services
firms that provide consistently solid service to clients.
--------------------------------------------------------------------------------
<PAGE>
Report to Shareholders
For the Fiscal Year Ended October 31, 2000
Market Review
The latter part of 2000 proved a good time to be a disciplined investor. The
obsession with technology stocks and well-known large-cap growth stocks faded
considerably, and investors once again sought companies with solid fundamentals
and attractive valuations. Erratic, day-to-day price swings in the stocks of
many companies further established the fact that volatility had made a home for
itself in the equity markets. Furthermore, while the Federal Reserve Board ("the
Fed") seemed comfortable with their interest rate policies for the time being, a
vibrant U.S. economy weighed heavily on the minds of inflation-wary investors.
In addition, earnings shortfalls and other disparaging company news releases
that brought down the stock prices of several large companies, once again proved
that careful, bottom-up company research was worth more than wide-sweeping
sector investing.
International equity markets had a tough run towards the end of our fiscal year.
After mixed performance early on, stocks of small international companies had
disappointing second and third quarter results. The stocks of small Japanese and
UK technology firms were especially hard hit. Unlike 1999 when all news from the
technology sector seemed to be good news, the stocks of technology companies
struggled, as jittery investors continued to react harshly to high valuations
and earnings disappointments.
The U.S. equity markets continued to broaden during the summer and autumn months
of 2000, much to the benefit of small-cap value investors. The mania for
technology stocks and well-known large-cap growth stocks appeared to have waned,
and many investors moved down the capitalization range in search of companies
with solid fundamentals and attractive valuations. As interest rates began to
stabilize, out-of-favor financial and industrial sectors had new life breathed
into them. Unfortunately, this environment did not bode as well for the U.S.
small company growth market, which continued to battle extreme volatility.
For global fixed-income investors, a mixture of economic and market factors
affected the debt markets. In the U.S., investors seemed more and more convinced
that the Fed had successfully slowed economic growth. This sentiment was largely
reflected in the yields of Treasury securities,(1) as the yields on shorter-term
maturities began to come down slightly while yields on longer-term issues
remained unchanged. In Europe, economies remained strong, slowing only slightly
relative to the second quarter of the year. Inflation remains contained there,
but the European Commission indicated in early September that it might raise its
inflation forecasts due to the high price of crude oil. In line with this
concern, the European Central Bank tightened monetary policy during the period.
In Japan, the third quarter brought positive but marginal economic growth and,
for the first time in roughly two to three years, the Japanese government
tightened monetary policy in an effort to signal a "return to normalcy," namely,
an end to zero percent interest rates and negative economic growth. As a result,
bond yields rose and, consequently, prices dropped slightly. This contrasts with
Europe, where a monetary tightening policy was enacted in an attempt to keep
inflation in check. Finally, oil-producing nations in the emerging markets
enjoyed favorable performance for their bonds during the period, particularly
Mexico, Venezuela and Russia.
(1) Unlike U.S. Treasury securities, an investment in the Fund is neither
insured nor guaranteed by the U.S. Government.
1
<PAGE>
Growth & Income Series Portfolio Review
Lord Abbett Securities Trust -- Growth & Income Series
Average Annual Class C Share Total Returns as of 10/31/00(1):
[GRAPH OMITTED]
10.7% 14.8% 18.0% 16.6%
1 Year 3 Years 5 Years Life of Series(2)
Growth & Income Series
SEC-required average annual total returns for Class C shares for the period
ended 9/30/00, with all distributions reinvested:
11.90% 17.13% 16.45%
1 Year 5 Years Life of Series(2)
(1) Reflects the percent change in net asset value for Class C shares and
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 llcat
800-874-3733 and ask for the current prospectus.
(2) The Series commenced operations on 1/3/94.
Past performance is no 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.
A number of factors contributed to the portfolio's strong performance during the
fiscal year. Performance was aided by our focus on companies in consumer
non-cyclical businesses, such as healthcare and consumer staples, that do not
necessarily require a strong economy to exhibit good earnings growth. At the
same time, limiting our exposure to the stocks of companies in economically
sensitive areas, such as consumer discretionary and information technology,
helped out greatly. However, it was our overweighted position in the stocks of
utility companies and financial services companies that worked the best. The
utilities sector was the strongest performer during the period, and our large
stake in companies that benefited from the strength in the electric power
markets helped portfolio performance. Meanwhile, the Fed's neutral stance on
interest rates allowed financial stocks, which had previously been poor
performers, to perform well.
While our below-average exposure to companies involved in communication services
helped out considerably, we were unable to avoid the poor performers in this
area entirely. This sector suffered significantly since the first quarter, and
some of our holdings dropped in value as they experienced earnings shortfalls
and lowered revenue growth expectations. Additionally, our modest overweighting
in basic materials proved to be a poor decision as many of our stocks in that
sector underperformed the averages.
We believe the market is in the final stages of adjusting to a slowing growth
rate for the U.S. economy over the next six to nine months. Interest rates are
down, and will likely move laterally over that same time period. Current
concerns about energy prices and dollar strength versus the euro should ebb as
our economy slows. That being said, many profit estimates for the fourth quarter
and 2001 seem too aggressive and, as a result, profit margin pressure in the
economy is likely to cause continuing earnings disappointments. The low economic
sensitivity and high interest rate sensitivity of our portfolio has served us
well throughout this year. As the U.S. economy slows over the next six months,
we will be looking to add to some of our favorite consumer cyclical stocks, as
well as to rebuild our positions in technology when we see the stocks of select
companies offer good value.
2
<PAGE>
International Series Portfolio Review
Lord Abbett Securities Trust -- International Series
Average Annual Class A Share Total Returns as of 10/31/00(1):
[GRAPH OMITTED]
11.0% 12.8% 13.8%
1 Year 3 Years Life of Series(2)
International Series
SEC-required average annual total return for Class A shares at the maximum sales
charge of 5.75% for the periods ended 9/30/00, with all distributions
reinvested:
13.00% 14.28%
1 Year Life of Series(2)
(1) Reflects the percent change in net asset value for Class A shares and
includes the reinvestment of all distributions. 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.
Past performance is no 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.
Despite a rocky investment environment, the portfolio was able to perform well,
outdistancing the performance of the MSCI World Ex US Index(1) on a year-to-date
basis due to strong gains from the portfolio's Canadian, French, German and
Australian holdings. Although we did experience some performance pressure from
losses in the stocks of UK and Japanese companies, careful stock selection and
lower exposure to poor performing emerging markets and peripheral European
regions helped the portfolio in comparison to the Index.
Takeover activity led the stocks of many capital equipment and aerospace
companies to rebound from their lows earlier this year, which helped contribute
to our performance during the period. We were also pleased with the performance
of the stocks of select computer hardware companies, where increased demand
helped boost earnings. In addition, as crude oil prices rose, our investments in
oil and gas companies were among our strongest performers.
Conversely, rising oil prices adversely affected the stocks of materials and
chemical companies, which performed poorly, as higher raw materials prices (such
as oil) hurt the prices of these stocks. Our exposure to steel companies also
hurt performance due to a combination of increasing competition and declining
demand, forcing the prices of the stocks of many of these companies lower. A
shortage in handset hardware and issues surrounding digital operating license
payments also affected the stock prices of many telecom companies, thus
detracting from overall performance.
We believe that European and Canadian stock markets will continue to be
supported by strong corporate profit growth resulting from an accelerated
economic expansion, corporate restructuring, and the continuous flow of funds
into the equity markets. We also believe that indications suggest that the euro
has reached its low and will likely begin to appreciate over the next year. We
remain cautious regarding the stocks of most Japanese and Far East companies
because they are, in our opinion, fully valued in terms of their economic and
corporate earnings growth prospects. Despite regional conditions, we will
continue building the portfolio on a stock-by-stock basis, focusing on companies
we consider the "best of the breed."
(1) The MSCI World Ex US Index includes stocks traded in Europe, Australia, the
Far East, Canada and South Africa. The index is weighted by market
capitalization, is unmanaged and not available for direct investment.
3
<PAGE>
World Bond-Debenture Series Portfolio Review
Lord Abbett Securities Trust -- World Bond-Debenture Series
Average Annual Class A Share Total Returns as of 10/31/00(1):
[GRAPH OMITTED]
1.5% 3.0%
1 Year Life of Series (2)
World Bond-Debenture Series
SEC-required average annual total return for Class A shares at the maximum sales
charge of 4.75% for the periods ended 9/30/00, with all distributions
reinvested:
0.60% 2.18%
1 Year Life of Series(2)
(1) Reflects the percent change in net asset value for Class A shares and
includes the reinvestment of all distributions. 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 12/18/97.
Past performance is no 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.
Our positive performance for the fiscal year was largely due to the portfolio's
emerging market debt securities, which outperformed investment grade issues this
period. Our concentration in oil-producing countries further added to our
performance, due to the increase in the price of crude oil. In addition, because
the portfolio held only U.S.-dollar denominated debt securities during the
period, it avoided the negative impact that the weak euro had on many global
bond funds with foreign currency exposure. A few of the portfolio's non-U.S.
high-yield securities issued by companies in the telecommunications sector
underperformed during the period. However, we believe the underlying
fundamentals of these companies are intact, and we look forward to improved
performance from these bonds in the near future.
We expect positive growth to continue in Japan because the Japanese government
will likely continue its fiscal stimulus programs to encourage business
investment and consumer spending. In addition, we may also see an increase in
the supply of government bonds in Japan, as the government there steps up
efforts to finance government spending to further stimulate the economy. In
Europe, we expect to see continued efforts to keep inflation in check, due to
concerns about the high price of oil and the current weakness of the euro. We
believe high-yield bonds in general remain undervalued, and we expect these
securities to add to the portfolio's performance in the next few months. As
certain emerging market debt securities in the portfolio reach what we consider
a "peak" in value, we may reduce this position slightly and add more domestic
and foreign high-yield bonds. In general, we've positioned the portfolio to take
advantage of the currently attractive yields and potential for future price
appreciation in the high-yield market.
4
<PAGE>
Alpha Series Portfolio Review
Lord Abbett Securities Trust -- Alpha Series
Average Annual Class A Share Total Returns as of 10/31/00(1):
[GRAPH OMITTED]
17.1% 10.2%
1 Year Life of Series(2)
Alpha Series
SEC-required average annual total return for Class A shares at the maximum sales
charge of 5.75% for the periods ended 9/30/00, with all distributions
reinvested:
12.70% 9.11%
1 Year Life of Series(2)
(1) Reflects the percent change in net asset value for Class A shares and
includes the reinvestment of all distributions. 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 12/29/97.
Past performance is no 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.
(Alpha Series is a "fund of funds" which currently divides assets approximately
30%, 30% and 40% among Lord Abbett Developing Growth Fund, Lord Abbett Research
Fund -- Small-Cap Value Series and Lord Abbett Securities Trust -- International
Series, respectively.)
Developing Growth Fund
At the beginning of the year, we benefited most significantly from our holdings
in the stocks of technology and biotechnology companies, which continued to
benefit from both rapid multiple expansion and strong earnings growth. We were,
however, underweighted in technology and biotechnology companies relative to the
Russell 2000 Growth Index,(1) because we believed many of the stocks were
overvalued. During the market's down period in April and May, we took the
opportunity to make select additions across many industries in companies where
we believed the fundamentals and prices were attractive. Our performance kept
pace with the Index through May due to our limited exposure to faltering
technology issues. However, in June, the resurgence of investors' enthusiasm,
especially for the stocks of biotechnology companies, hurt performance, as our
exposure to these companies was minimal.
Heading into the third quarter, most market sectors began to contribute
positively to the portfolio's performance, with stocks of healthcare and energy
companies making the most significant contributions. In addition, as a result of
rising oil prices, the stocks of energy companies served the portfolio well, and
posted some of the strongest returns year-to-date. As in the first two quarters
of the year, technology stocks continued to be extremely volatile in the third
quarter of 2000. Jittery investors, unsure about the direction of interest rates
and the strength or weakness of the economy, reacted to negative earnings
reports by unpredictably jumping in and out of the market. Telecommunications
stocks also struggled during the quarter as a result of the uncertainty about
the continued growth potential in the cellular telephone industry.
As we move into 2001, we believe that the economy will begin to show lower
corporate earnings growth than we have seen in the recent past. Moreover, we
expect the volatility in the market to continue. We believe the best way to
garner long-term performance is to remain true to our investment discipline. We
will continue to seek to buy fundamentally sound companies with prospects for
long-term earnings growth and price appreciation, and sell stocks whose
fundamentals begin to deteriorate. At the same time, as market volatility
persists, we will strive to take advantage of opportunities to add to positions
at attractive prices.
5
<PAGE>
Research Fund -- Small-Cap Value Series
Our overweighting in stocks of technology companies and our underweighting in
stocks of financial services companies were the biggest contributors to the
Fund's positive performance at the beginning of 2000 -- a time when the
small-cap market was still being led by growth-oriented stocks. In response to
the wild gyrations of the stock market, we rotated in and out of stocks a bit
more than usual during this time. Positive returns by our holdings in companies
involved in healthcare helped counteract the poor performance of our retail and
household company stocks. Throughout the first half of the year, strong global
growth and rising oil prices created excellent opportunities for our stocks in
oil services and energy companies. Additionally, stock selection in materials
and processing, and producer durables was a large contributor to positive
performance. However, for the first time in several quarters, our technology
holdings -- especially those in the information technology and software areas --
held back performance considerably during the summer months. Additionally, we
began to see a resurgence in our stocks of financial services companies, due
largely to the Fed's decision to hold off on future interest rate hikes.
We continued to see strong performance from our holdings in the healthcare
sector during the third quarter. Meanwhile, the technology sector continued its
reversal of fortune from the highs seen in the first quarter. Although we have
cut our technology weighting virtually in half since then, our remaining
exposure continued to hurt us. During the year, we shifted assets from
technology to the materials and processing sector. In this sector (as well as in
producer durables), aerospace parts companies have performed well. They are
poised to reap the rewards of a pickup in commercial aviation, growth in their
industrial gas turbine business (which is sensitive to rising electricity
demand) and an increase in military contracts. For the first time this year,
stocks of energy companies, which have done well for the portfolio year-to-date,
slightly held back overall performance in the third quarter.
We believe that while momentum investing is fading, its players are likely to
continue to stir up the market. Regardless, value investing and stock picking
based on in-depth company research are regaining favor and are the hallmarks of
our investment discipline. We are poised to take advantage of the ongoing
shakeout in technology and other sectors, where we expect to see buying
opportunities in companies with solid fundamentals. Finally, the stabilization
of interest rates should cause investors to revisit companies in undervalued
industrial sectors.
Lord Abbett Securities Trust -- International Series
Please see portfolio information for Lord Abbett Securities Trust --
International Series on page 3 of this report.
(1) The Russell 2000(R) Growth Index measures the performance of those Russell
2000 companies with higher price-to-book ratios and higher forecasted growth
values. The index does not reflect fees or expenses and is not available for
direct investment.
Important Information
Results quoted herein reflect appropriate Rule 12b-1 Plan expenses from
commencement of the Plan. Tax consequences are not reflected. If used as sales
material after 12/31/2000, 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.
6
<PAGE>
<TABLE>
<CAPTION>
Schedule of Investments
Growth & Income Series October 31, 2000
Investments Shares Value
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<S> <C> <C> <C>
Common Stocks 93.98%
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Aerospace/Defense 2.85% Boeing Co. 111,800 $ 7,581,437
--------------------------------------------------------------------------------------------------------------------------------
Air Transportation 0.77% Southwest Airlines Co. 72,100 2,054,850
--------------------------------------------------------------------------------------------------------------------------------
Aluminum 1.59% Alcoa, Inc. 147,400 4,228,537
--------------------------------------------------------------------------------------------------------------------------------
Auto Parts: Original Equipment
0.12% Delphi Automotive Systems Corp. 21,037 330,018
--------------------------------------------------------------------------------------------------------------------------------
Automotive 0.43% General Motors Corp. 18,302 1,137,012
--------------------------------------------------------------------------------------------------------------------------------
Banks: Money Center 2.53% Bank of New York Co., Inc. 53,400 3,073,838
Chase Manhattan Corp. 80,700 3,671,850
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Total 6,745,688
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Banks: Regional 8.97% Bank One Corp. 115,840 4,228,160
Comerica, Inc. 47,250 2,849,766
First Tennessee National Corp. 102,500 2,357,500
Fleet Boston Financial Corp. 71,661 2,723,118
M&T Bank Corp. 51,000 2,560,200
Mellon Financial Corp. 100,000 4,825,000
Wells Fargo &Co. 93,800 4,344,112
----------
Total 23,887,856
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Beverages 0.25% Diageo plc ADR 17,600 662,200
--------------------------------------------------------------------------------------------------------------------------------
Brokers 1.46% Morgan Stanley Dean Witter &Co. 48,400 3,887,125
--------------------------------------------------------------------------------------------------------------------------------
Cable Services 1.99% Time Warner, Inc. 70,000 5,313,699
--------------------------------------------------------------------------------------------------------------------------------
Chemicals 1.97% Dow Chemical Co. 98,500 3,016,562
Rohm & Haas Co. 40,200 1,208,513
Union Carbide Corp. 24,100 1,036,300
----------
Total 5,261,375
--------------------------------------------------------------------------------------------------------------------------------
Computer Hardware 4.63% EMC Corp.* 62,800 5,593,125
International Business Machines Corp. 17,900 1,763,150
Solectron Corp.* 40,800 1,795,200
Sun Microsystems, Inc.* 28,700 3,182,113
----------
Total 12,333,588
--------------------------------------------------------------------------------------------------------------------------------
Computer Services 3.03% First Data Corp. 103,400 5,182,925
Unisys Corp.* 225,600 2,876,400
----------
Total 8,059,325
--------------------------------------------------------------------------------------------------------------------------------
Computer Software 1.01% Peoplesoft, Inc.* 61,700 2,692,625
--------------------------------------------------------------------------------------------------------------------------------
Conglomerates 2.15% Honeywell International, Inc. 52,500 2,825,156
Minnesota Mining & Manufacturing Co. 30,000 2,898,750
----------
Total 5,723,906
--------------------------------------------------------------------------------------------------------------------------------
Consumer Products 0.50% Fortune Brands, Inc. 45,600 1,342,350
--------------------------------------------------------------------------------------------------------------------------------
Drugs 6.73% American Home Products Corp. 105,000 6,667,500
Bristol-Myers Squibb Co. 51,500 3,138,281
Pharmacia Corp. 87,703 4,823,665
SmithKline Beecham plc ADR 50,700 3,305,006
----------
Total 17,934,452
--------------------------------------------------------------------------------------------------------------------------------
Electric Power 5.48% Dominion Resources, Inc. 63,600 3,788,175
Duke Energy Corp. 45,700 3,950,194
Exelon Corp. 57,050 3,430,131
</TABLE>
See Notes to Financial Statements.
7
<PAGE>
<TABLE>
<CAPTION>
Schedule of Investments (continued)
Growth & Income Series October 31, 2000
Investments Shares Value
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NiSource, Inc. 136,986 $ 3,416,088
----------
Total 14,584,588
--------------------------------------------------------------------------------------------------------------------------------
Electrical Equipment 2.02% Emerson Electric Co. 39,600 2,908,125
Rockwell International Corp. 29,500 1,159,719
Xerox Corp. 155,200 1,309,500
----------
Total 5,377,344
--------------------------------------------------------------------------------------------------------------------------------
Electrical: Household 0.18% Energizer Holdings, Inc.* 24,000 474,000
--------------------------------------------------------------------------------------------------------------------------------
Electronics: Semiconductor Texas Instruments, Inc. 39,400 1,933,063
0.73%
--------------------------------------------------------------------------------------------------------------------------------
Energy Equipment & Services Schlumberger Ltd. 54,800 4,171,650
2.66% Transocean Sedco Forex, Inc. 54,918 2,910,654
----------
Total 7,082,304
--------------------------------------------------------------------------------------------------------------------------------
Financial Services 1.94% AON Corp. 51,875 2,149,570
MBNA Corp. 80,100 3,008,756
----------
Total 5,158,326
--------------------------------------------------------------------------------------------------------------------------------
Financial: Miscellaneous 0.72% Fannie Mae 25,000 1,925,000
--------------------------------------------------------------------------------------------------------------------------------
Food 3.68% General Mills, Inc. 69,100 2,884,925
H.J. Heinz Co. 67,400 2,826,588
Hershey Foods Corp. 2,100 114,056
Ralston Purina Group 72,000 1,746,000
Sara Lee Corp. 103,500 2,231,719
----------
Total 9,803,288
--------------------------------------------------------------------------------------------------------------------------------
Health Care Services 4.23% CIGNA Corp. 37,500 4,573,125
McKesson HBOC, Inc. 57,200 1,605,175
UnitedHealth Group, Inc. 46,600 5,096,875
----------
Total 11,275,175
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Hospital Supplies 1.59% Baxter International, Inc. 51,400 4,224,438
--------------------------------------------------------------------------------------------------------------------------------
Household Equipment/Products
0.54% Maytag Corp. 50,000 1,431,250
--------------------------------------------------------------------------------------------------------------------------------
Insurance 7.19% ACE Ltd. 237,900 9,337,574
American General Corp. 33,600 2,704,800
MetLife, Inc.* 256,800 7,094,100
----------
Total 19,136,474
--------------------------------------------------------------------------------------------------------------------------------
Machinery: Agriculture 0.32% Deere & Co. 22,800 839,325
--------------------------------------------------------------------------------------------------------------------------------
Milling: Fruits/Grain 1.01% Archer-Daniels-Midland Co. 244,100 2,685,100
--------------------------------------------------------------------------------------------------------------------------------
Natural Gas 2.92% NICOR, Inc. 70,000 2,471,875
The Coastal Corp. 70,400 5,310,800
----------
Total 7,782,675
--------------------------------------------------------------------------------------------------------------------------------
Oil: Integrated BP Amoco plc ADR 74,868 3,813,589
International 7.04% Chevron Corp. 23,600 1,938,150
Exxon Mobil Corp. 145,606 12,986,235
----------
Total 18,737,974
--------------------------------------------------------------------------------------------------------------------------------
Paper and Forest Bowater, Inc. 52,700 2,852,388
Products 2.26% International Paper Co. 86,064 3,152,094
----------
Total 6,004,482
--------------------------------------------------------------------------------------------------------------------------------
Pollution Control 1.01% Waste Management, Inc. 134,700 2,694,000
--------------------------------------------------------------------------------------------------------------------------------
Retail 0.66% Wal-Mart Stores, Inc. 38,500 1,746,938
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
8
<PAGE>
<TABLE>
<CAPTION>
Schedule of Investments (continued)
Growth & Income Series October 31, 2000
Investments Shares Value
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Telecommunications 5.38% Alltel Corp. 48,200 $ 3,105,888
BellSouth Corp. 28,800 1,391,400
SBC Communications, Inc. 58,100 3,351,644
Sprint Corp. (PCSGroup)* 20,000 762,500
Verizon Communications 33,600 1,942,500
WorldCom, Inc.* 158,962 3,775,347
----------
Total 14,329,279
--------------------------------------------------------------------------------------------------------------------------------
Transportation: Miscellaneous
1.44% United Parcel Service, Inc. Class B 63,100 3,833,325
Total Common Stocks (Cost $168,111,924) 250,234,391
--------------------------------------------------------------------------------------------------------------------------------
Short-Term Investments 4.45% Principal Amount
--------------------------------------------------------------------------------------------------------------------------------
American Express Credit 6.65% due 11/1/2000 $ 330,000 330,000
Prudential Funding Corp. 6.62% due 11/1/2000 11,520,000 11,520,000
--------------------------------------------------------------------------------------------------------------------------------
Total Short-Term Investments (Cost $11,850,000) 11,850,000
Total Investments 98.43% (Cost $179,961,924) $262,084,391
--------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Schedule of Investments
International Series October 31, 2000
Investments Shares US$ Value
--------------------------------------------------------------------------------------------------------------------------------
Common Stocks and Warrants 96.19%
--------------------------------------------------------------------------------------------------------------------------------
Australia 2.42% Novogen Ltd. 3,500,000 $ 6,634,940
--------------------------------------------------------------------------------------------------------------------------------
Canada 13.21% Ballard Power Systems, Inc.* 250,000 26,850,036
Burntsand, Inc.* 1,000,000 3,765,554
NAME, Inc.* 3,120,000 1,205,501
Timberwest Forest Corp. 486,500 3,361,215
Turbo Genset, Inc. Class A* 32,250 1,034,872
----------
Total 36,217,178
--------------------------------------------------------------------------------------------------------------------------------
France 13.52% Alcatel 200,000 12,205,025
Cap Gemini SA 37,500 5,983,687
Guillemot Corp.* 178,500 7,726,596
UBI Soft Entertaiment SA* 242,375 10,450,362
UBI Soft Entertainment SA Warrants* 13,475 697,651
----------
Total 37,063,321
--------------------------------------------------------------------------------------------------------------------------------
Germany 17.93% CeWe Color Holding AG 350,000 5,763,012
Eigner & Partner*(d) 9,979 3,013,658
MLPAG 120,000 16,194,150
MobilCom AG 45,000 2,940,919
SAI Automotive AG 60,000 734,848
SAP AG 50,000 8,186,194
SKW Trostberg AG 390,000 2,366,739
Vectron Systems AG* 140,000 4,586,645
Vossloh AG 200,000 2,936,675
W.E.T. Automotive Systems AG* 90,000 2,429,122
----------
Total 49,151,962
--------------------------------------------------------------------------------------------------------------------------------
Japan 20.33% Asahi Chemical Industry Co. Ltd. 1,200,000 7,435,040
Colin Corp. 39,000 2,144,722
Honda Tsushin Kogyo Co. Ltd. 134,375 6,281,220
</TABLE>
See Notes to Financial Statements.
9
<PAGE>
<TABLE>
<CAPTION>
Schedule of Investments (continued)
International Series October 31, 2000
Investments Shares Value
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Japan Asia Investment Co. Ltd. 750,000 $ 2,454,058
Katokichi Co. Ltd. 312,000 9,007,837
Nomura Securities Co. Ltd. 320,000 6,789,790
Omron Corp. 270,800 6,676,614
Park24 Co. Ltd. 97,500 8,230,375
Toyoda Gosei Co. Ltd. 110,000 6,734,797
----------
Total 55,754,453
----------------------------------------------------------------------------------------------------------------------------------
Netherlands 2.05% Getronics NV 500,000 5,622,969
----------------------------------------------------------------------------------------------------------------------------------
United Kingdom 26.73% Ashtead Group plc 2,000,000 3,425,068
DBS Management plc 1,665,319 2,851,915
First Technology plc 944,500 8,443,838
Gameplay plc* 997,000 2,749,198
Hays plc 1,650,000 9,009,852
Jarvis plc* 2,750,000 7,523,176
London Bridge Software Holdings plc 396,500 3,671,310
Mayflower Corp. 2,750,000 3,931,209
NXT plc* 700,000 9,397,168
Pilkington plc 4,225,224 6,024,756
Precoat International plc 760,000 1,080,928
Sema Group plc 390,000 4,924,261
Trifast plc 2,000,000 8,344,975
Turbo Genset, Inc. Class A* 59,375 1,930,229
----------
Total 73,307,883
----------------------------------------------------------------------------------------------------------------------------------
Total Common Stocks and Warrants (Cost $247,340,422) 263,752,706
----------------------------------------------------------------------------------------------------------------------------------
Short-Term Investment 3.20% Principal Amount
----------------------------------------------------------------------------------------------------------------------------------
Freddie Mac Discount Note 6.45% due 11/1/2000 (Cost $8,780,000) $8,780,000 8,780,000
Total Investments 99.39% (Cost $256,120,422) $272,532,706
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
10
<PAGE>
<TABLE>
<CAPTION>
Schedule of Investments
World Bond-Debenture Series October 31, 2000
Principal
Amount
in Local
Coupon Maturity Currency US$
Investments Rate Date (000) Value
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Foreign Bonds 64.67%
------------------------------------------------------------------------------------------------------------------------------------
Argentina 1.93% Republic of Argentina Zero Coupon 4/15/2001 USD 225 $ 218,362
------------------------------------------------------------------------------------------------------------------------------------
Brazil 4.59% Republic of Brazil(b) 7.625% 4/15/2024 USD 200 152,407
Republic of Brazil 8.00% 4/15/2014 USD 493 366,812
----------
Total 519,219
------------------------------------------------------------------------------------------------------------------------------------
Bulgaria 2.65% Bulgaria(b) 7.75% 7/28/2011 USD 400 299,475
------------------------------------------------------------------------------------------------------------------------------------
Canada 5.93% Abitibi-Consolidated, Inc. 8.55% 8/1/2010 USD 250 248,627
Clearnet Communications(c) 0.00/10.125% 5/1/2004/2009 USD 250 202,500
Gulf Canada Resources Ltd. 8.35% 8/1/2006 USD 150 153,375
Rogers Communications, Inc.(a) 8.75% 7/15/2007 CAD 100 66,388
----------
Total 670,890
------------------------------------------------------------------------------------------------------------------------------------
Colombia 0.77% Republic of Colombia 9.75% 4/23/2009 USD 100 87,625
------------------------------------------------------------------------------------------------------------------------------------
Costa Rica 0.81% Banco Central Costa Rica 6.25% 5/21/2010 USD 100 91,750
------------------------------------------------------------------------------------------------------------------------------------
Ecuador 0.21% Republic of Ecuador+ 12.00% 11/15/2012 USD 35 23,800
------------------------------------------------------------------------------------------------------------------------------------
Europe-Other 1.82% Merrill Lynch & Co., Inc. 1.50% 12/15/2005 USD 200 205,750
------------------------------------------------------------------------------------------------------------------------------------
France 1.62% AXA SA(a) 2.50% 1/1/2014 EUR 120 182,821
------------------------------------------------------------------------------------------------------------------------------------
Greece 1.88% Hellenic Republic(a) 6.50% 1/11/2014 GRD55,000 140,962
Hellenic Republic(a) 8.90% 4/1/2003 GRD27,000 72,207
----------
Total 213,169
------------------------------------------------------------------------------------------------------------------------------------
Indonesia 0.98% Indah Kiat International Finance Co. 12.50% 6/15/2006 USD 200 110,500
------------------------------------------------------------------------------------------------------------------------------------
Ireland 1.85% Esat Telecom Group plc(a) 11.875% 11/1/2009 EUR 200 209,312
------------------------------------------------------------------------------------------------------------------------------------
Israel 0.36% Partner Communications Co. Ltd. 13.00% 8/15/2010 USD 50 41,125
------------------------------------------------------------------------------------------------------------------------------------
Kazakhstan 2.52% Republic of Kazakhstan+ 13.625% 10/18/2004 USD 250 285,625
------------------------------------------------------------------------------------------------------------------------------------
Korea 1.85% Republic of Korea 8.875% 4/15/2008 USD 200 209,300
------------------------------------------------------------------------------------------------------------------------------------
Malaysia 1.38% Malaysia 8.75% 6/1/2009 USD 150 156,651
------------------------------------------------------------------------------------------------------------------------------------
Mexico 3.83% Coca-Cola Femsa SA de CV 8.95% 11/1/2006 USD 250 250,625
TV Azteca SA de CV 10.50% 2/15/2007 USD 200 182,500
----------
Total 433,125
------------------------------------------------------------------------------------------------------------------------------------
Netherlands 6.32% ASM Lithography Holding CV+ 4.25% 11/30/2004 USD 100 101,500
KPNQwest NV(a) 7.125% 6/1/2009 EUR 225 171,210
Slovak Wireless Financial Co.(a) 11.25% 3/30/2007 EUR 150 118,401
United Pan-Europe Communications NV(c) 0.00/12.50% 8/1/2004/2009 USD 150 59,250
United Pan-Europe Communications NV 11.25% 11/1/2009 USD 350 264,250
----------
Total 714,611
------------------------------------------------------------------------------------------------------------------------------------
Panama 1.75% Republic of Panama(b) 4.50% 7/17/2014 USD 250 198,438
------------------------------------------------------------------------------------------------------------------------------------
Peru 1.07% Republic of Peru(b)+ 4.50% 3/7/2017 USD 200 120,750
------------------------------------------------------------------------------------------------------------------------------------
Philippines 1.98% Republic of Philippines 9.875% 1/15/2019 USD 300 224,250
------------------------------------------------------------------------------------------------------------------------------------
Qatar 1.25% State of Qatar+ 9.75% 6/15/2030 USD 145 141,229
------------------------------------------------------------------------------------------------------------------------------------
Russia 2.43% Russia 12.75% 6/24/2028 USD 325 275,031
------------------------------------------------------------------------------------------------------------------------------------
Switzerland 1.59% Roche Holdings AG+ Zero Coupon 1/19/2015 USD 200 180,500
------------------------------------------------------------------------------------------------------------------------------------
Turkey 2.23% Republic of Turkey 12.375% 6/15/2009 USD 250 251,875
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
11
<PAGE>
<TABLE>
<CAPTION>
Schedule of Investments (continued)
World Bond-Debenture Series October 31, 2000
Principal
Amount
in Local
Coupon Maturity Currency US$
Investments Rate Date (000) Value
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
United Kingdom 8.29% Colt Telecom Group plc CV(a)+ 2.00% 4/3/2007 GBP 150 $ 101,850
Comcast UK Cable Partners Ltd.(c) 0.00/11.20% 11/15/2000/2007 USD 200 183,000
Esprit Telecom Group plc 10.875% 6/15/2008 USD 150 30,750
Huntsman ICI Chemicals llc(a) 10.125% 7/1/2009 EUR 200 164,657
JMH Financial Ltd.+ 4.75% 9/6/2007 USD 75 76,406
NTL Communications Corp.(c) 0.00/12.375% 10/1/2003/2008 USD 300 177,000
Telewest Communications plc(c) 0.00/9.25% 4/15/2004/2009 USD 300 135,750
Viatel, Inc.(a) 11.50% 3/15/2009 EUR 150 67,476
----------
Total 936,889
------------------------------------------------------------------------------------------------------------------------------------
Venezuela 2.78% Republic of Venezuela 9.25% 9/15/2027 USD 250 165,313
Republic of Venezuela(b) 7.875% 12/18/2007 USD 179 149,531
----------
Total 314,844
------------------------------------------------------------------------------------------------------------------------------------
Total Foreign Bonds (Cost $7,932,337) 7,316,916
------------------------------------------------------------------------------------------------------------------------------------
United States Bonds 27.68%
------------------------------------------------------------------------------------------------------------------------------------
AES Corp. 10.25% 7/15/2006 USD 50 51,125
Allbritton Communications Co. 9.75% 11/30/2007 USD 125 120,313
Allied Waste North America, Inc. 7.875% 1/1/2009 USD 150 130,125
America West Airlines, Inc. 10.75% 9/1/2005 USD 100 96,500
American Standard, Inc. 8.25% 6/1/2009 USD 100 98,500
Arbor Software Corp. 4.50% 3/15/2005 USD 125 90,625
CBS, Inc. 8.875% 6/1/2022 USD 35 36,270
Calpine Corp. 7.875% 4/1/2008 USD 200 190,524
Charter Communication Holdings 10.00% 4/1/2009 USD 140 137,900
Crown Castle International Corp. 10.75% 8/1/2011 USD 75 77,250
Exodus Communications, Inc.(a)+ 11.375% 7/15/2008 EUR 200 157,398
Flextronics International Ltd.+ 9.875% 7/1/2010 USD 100 101,500
Fox/Liberty Networks llc 8.875% 8/15/2007 USD 200 202,000
Global Crossing Holdings Ltd. 9.625% 5/15/2008 USD 150 144,000
HEALTHSOUTH Corp.+ 10.75% 10/1/2008 USD 75 75,617
Iron Mountain, Inc. 10.125% 10/1/2006 USD 150 152,625
LSI Logic Corp. 4.00% 2/15/2005 USD 75 63,563
Metromedia Fiber Network, Inc. 10.00% 12/15/2009 USD 150 133,875
Nextel Communications, Inc. 12.00% 11/1/2008 USD 150 160,875
Nortek, Inc. 8.875% 8/1/2008 USD 175 153,125
Pierce Leahy Corp. 11.125% 7/15/2006 USD 200 208,749
Renaissance Media Group(c) 0.00/10.00% 4/15/2003/2008 USD 100 70,500
Sinclair Broadcasting Group, Inc. 10.00% 9/30/2005 USD 100 95,250
TeleCorp PCS, Inc. 10.625% 7/15/2008 USD 150 150,375
Teva Pharmaceutical Industries Ltd.+ 1.50% 10/15/2005 USD 100 99,625
Williams Communications Group, Inc.+ 11.875% 8/1/2010 USD 150 133,875
------------------------------------------------------------------------------------------------------------------------------------
Total United States Bonds (Cost $3,298,781) 3,132,084
------------------------------------------------------------------------------------------------------------------------------------
Common Stocks and Warrants 0.12% Shares
------------------------------------------------------------------------------------------------------------------------------------
GST Telecommunications, Inc. 3,000 60
Orbital Imaging Corp. Warrants expiring 3/1/2005* 150 769
Splitrock Services, Inc. Warrants expiring 7/15/2008* 50 8,838
Viatel, Inc. 454 4,370
------------------------------------------------------------------------------------------------------------------------------------
Total Common Stocks and Warrants (Cost $38,630) 14,037
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
12
<PAGE>
<TABLE>
<CAPTION>
Schedule of Investments (continued)
World Bond-Debenture Series October 31, 2000
Principal
Amount
Investments (000) Value
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Short-Term Investment 3.19%
------------------------------------------------------------------------------------------------------------------------------------
Prudential Funding Corp. 6.62% due 11/01/2000 (Cost $361,000) $361,000 $ 361,000
------------------------------------------------------------------------------------------------------------------------------------
Total Investments 95.66% (Cost $11,630,748) $10,824,037
------------------------------------------------------------------------------------------------------------------------------------
Schedule of Investments
Alpha Series October 31, 2000
Investments Shares Value
------------------------------------------------------------------------------------------------------------------------------------
Investments in Underlying Funds 98.87%
------------------------------------------------------------------------------------------------------------------------------------
Lord Abbett Developing Growth Fund, Inc.-Class Y 3,445,835 $ 59,578,595
Lord Abbett Research Fund-Small-Cap Value Series-Class Y 3,527,392 71,005,111
Lord Abbett Securities Trust-International Series-Class Y 5,404,623 78,961,549
------------------------------------------------------------------------------------------------------------------------------------
Total Investments in Underlying Funds (Cost $188,739,696) 209,545,255
------------------------------------------------------------------------------------------------------------------------------------
Short-Term Investment 0.80% Principal Amount
------------------------------------------------------------------------------------------------------------------------------------
Prudential Funding Corp. 6.03% due 11/1/2000 (Cost $1,690,000) $1,690,000 1,690,000
------------------------------------------------------------------------------------------------------------------------------------
Total Investments 99.67% (Cost $190,429,696) $211,235,255
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Investments in non-U.S. dollar-denominated securities
(13.42%). The remaining securities (86.58%) are
invested in U.S. dollar-denominated securities.
(b) Variable rate security. The stated rate represents the
rate at October 31, 2000.
(c) Deferred-interest debentures pay no interest for a
stipulated number of years, after which they pay a
predetermined coupon rate.
(d) Security valued at fair value-see Note 2.
* Non-income producing security.
+ Restricted security under Rule 144A.
ADR-American Depository Receipt.
See Notes to Financial Statements.
13
<PAGE>
<TABLE>
<CAPTION>
Statements of Assets and Liabilities
October 31, 2000
Growth & World Bond-
Income International Debenture Alpha
Series Series Series Series
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS:
Investments in securities, at cost $179,961,924 $256,120,422 $11,630,748 $190,429,696
-----------------------------------------------------------------------------------------------------------------------------------
Investments in securities, at value $262,084,391 $272,532,706 $10,824,037 $211,235,255
Cash 109,243 105,197 100,005 103,760
Receivables:
Investment securities sold 9,777,269 708,198 -- --
Capital shares sold 366,312 1,377,014 6,966 247,912
Interest and dividends 234,824 380,344 327,364 311
From advisor -- -- 5,063 --
From Underlying Funds -- -- -- 894,684
Forward foreign currency exchange contracts -- -- 61,055 --
Deferred organization expense -- 6,690 18,326 18,872
Prepaid expenses 373 -- 3,488 --
-----------------------------------------------------------------------------------------------------------------------------------
Total assets 272,572,412 275,110,149 11,346,304 212,500,794
-----------------------------------------------------------------------------------------------------------------------------------
LIABILITIES:
Payables:
Investment securities purchased 5,043,475 -- 9,616 --
Capital shares reacquired 490,961 220,683 8,000 267,146
12b-1 distribution fees 326,326 102,960 10,864 186,767
Management fees 157,591 175,365 -- --
Trustees' fees 171,832 9,980 460 4,982
Accrued expenses and other liabilities 115,325 395,950 2,221 113,076
-----------------------------------------------------------------------------------------------------------------------------------
Total liabilities 6,305,510 904,938 31,161 571,971
===================================================================================================================================
NET ASSETS $266,266,902 $274,205,211 $11,315,143 $211,928,823
===================================================================================================================================
COMPOSITION OF NET ASSETS:
Paid-in capital 163,449,701 256,243,066 13,444,281 186,202,438
Undistributed (distributions in excess of) net investment income 240,254 (9,482) (66,710) 952,127
Undistributed net realized gain (loss) on investments and foreign
currency related transactions 20,454,480 1,559,343 (1,316,772) 3,968,699
Net unrealized appreciation (depreciation) on investments and
translation of assets and liabilities denominated in foreign
currencies 82,122,467 16,412,284 (745,656) 20,805,559
-----------------------------------------------------------------------------------------------------------------------------------
Net assets $266,266,902 $274,205,211 $11,315,143 $211,928,823
===================================================================================================================================
Net assets by class:
Class A Shares $136,038,315 $135,701,086 $7,786,591 $96,651,654
Class B Shares $ 17,452,977 $ 33,123,834 $1,935,508 $70,299,850
Class C Shares $112,775,610 $ 25,545,629 $1,593,044 $44,977,319
Class P Shares -- $ 1,399 -- --
Class Y Shares -- $ 79,833,263 -- --
Outstanding shares by class:
Class A Shares 11,801,953 9,373,426 919,272 5,535,065
Class B Shares 1,527,877 2,315,500 228,376 4,071,523
Class C Shares 9,911,287 1,786,755 188,360 2,607,043
Class P Shares -- 96,442 -- --
Class Y Shares -- 5,462,840 -- --
Net asset value, offering and redemption price per share
(net assets divided by outstanding shares):
Class A Shares-Net asset value $11.53 $14.48 $8.47 $17.46
Class A Shares-Maximum offering price
(Net asset value plus sales charge of 5.75%, 5.75%, 4.75% and
5.75%, (respectively) $12.23 $15.36 $8.89 $18.53
Class B Shares-Net asset value $11.42 $14.31 $8.48 $17.27
Class C Shares-Net asset value $11.38 $14.30 $8.46 $17.25
Class P Shares-Net asset value -- $14.51 -- --
Class Y Shares-Net asset value -- $14.61 -- --
===================================================================================================================================
</TABLE>
See Notes to Financial Statement.
14
<PAGE>
Statements of Operations
For the Year Ended October 31, 2000
<TABLE>
Growth & World Bond-
Income International Debenture Alpha
Series Series Series Series
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment Income:
Dividends $ 3,638,715 $ 3,069,574 $ 3,912 $ 480,787
Interest 819,061 918,441 1,065,280 36,642
Foreign withholding tax (2,362) (396,557) (958) --
------------------------------------------------------------------------------------------------------------------------------------
Total investment income 4,455,414 3,591,458 1,068,234 517,429
-----------------------------------------------------------------------------------------------------------------------------------
Expenses:
Management fee 1,792,139 2,127,038 87,774 1,040,754
12b-1 distribution plan-Class A 467,476 637,792 28,793 378,723
12b-1 distribution plan-Class B 139,333 326,596 18,657 679,259
12b-1 distribution plan-Class C 1,019,637 263,821 16,108 440,087
12b-1 distribution plan-Class P - 7 - -
Shareholder servicing 415,697 801,580 22,718 639,034
Reports to shareholders 76,854 100,491 4,001 72,915
Registration 74,099 123,139 44,750 76,000
Professional 53,678 66,302 23,552 77,888
Trustees' 38,265 8,643 588 6,293
Organization - 6,800 7,670 8,372
Custody 12,034 98,382 13,981 2,740
Other 12,744 515,583 5,329 22,762
------------------------------------------------------------------------------------------------------------------------------------
Gross expenses 4,101,956 5,076,174 273,921 3,444,827
Expense reductions (28,969) (25,070) (4,272) (11,318)
Expenses assumed by Lord Abbett - - (29,754) -
Expenses assumed by Underlying Funds - - - (894,685)
Management fee waived - - (87,774) (1,040,754)
Net expenses 4,072,987 5,051,104 152,121 1,498,070
------------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) 382,427 (1,459,646) 916,113 (980,641)
------------------------------------------------------------------------------------------------------------------------------------
Realized and unrealized gain (loss):
Capital gains received from Underlying Funds - - - 7,162,641
Net realized gain (loss) from investment transactions and
foreign currency related transactions 20,552,193 2,307,685 (568,488) 732,415
Net change in unrealized appreciation (depreciation)
on investments and translation of
assets and liabilities denominated in foreign currencies 5,032,015 16,158,600 (178,011) 18,724,921
===================================================================================================================================
Net realized and unrealized gain (loss) 25,584,208 18,466,285 (746,499) 26,619,977
===================================================================================================================================
Net Increase in Net Assets Resulting From Operations $25,966,635 $17,006,639 $ 169,614 $25,639,336
===================================================================================================================================
</TABLE>
See Notes to Financial Statements.
15
<PAGE>
Statements of Changes in Net Assets
Year Ended October 31, 2000
<TABLE>
<CAPTION>
Growth & World Bond-
Income International Debenture Alpha
Operations:(DECREASE) IN NET ASSETS Series Series Series Series
<S> <C> <C> <C> <C>
Net investment income (loss) $ 382,427 $ (1,459,646) $ 916,113 $ (980,641)
Capital gains received from Underlying Funds -- -- -- 7,162,641
Net realized gain (loss) from investment transactions and
foreign currency related transactions 20,552,193 2,307,685 (568,488) 732,415
Net change in unrealized appreciation (depreciation) on
nvestments and translation of
assets and liabilities denominated in foreign currencies 5,032,015 16,158,600 (178,011) 18,724,921
----------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 25,966,635 17,006,639 169,614 25,639,336
==================================================================================================================================
Distributions to shareholders from:
Net investment income
Class A -- (478,361) (840,439) (1,048,834)
Class B -- (44) (174,767) (421,544)
Class C -- (34) (151,889) (277,904)
Class P -- (4) -- --
Class Y -- (481,609) -- --
Net realized gain
Class A (5,343,824) (6,142,224) -- (526,884)
Class B (517,534) (1,364,987) -- (375,862)
Class C (5,448,637) (1,200,131) -- (247,787)
Class P -- (71) -- --
Class Y -- (3,806,053) -- --
----------------------------------------------------------------------------------------------------------------------------------
Total distributions to shareholders (11,309,995) (13,473,518) (1,167,095) (2,898,815)
==================================================================================================================================
Capital share transactions:
Net proceeds from sales of shares 67,457,935 179,799,929 2,537,614 64,978,392
Reinvestment of distributions 10,644,282 13,199,982 811,812 2,781,337
Cost of shares reacquired (43,289,256) (135,414,413) (2,748,692) (40,691,009)
Net increase in net assets resulting from
capital share transactions 34,812,961 57,585,498 600,734 27,068,720
==================================================================================================================================
Net increase (decrease) in net assets 49,469,601 61,118,619 (396,747) 49,809,241
==================================================================================================================================
NET ASSETS:
Beginning of year 216,797,301 213,086,592 11,711,890 162,119,582
----------------------------------------------------------------------------------------------------------------------------------
End of year $ 266,266,902 $ 274,205,211 $ 11,315,143 $ 211,928,823
==================================================================================================================================
Undistributed (distributions in excess of)
net investment income $ 240,254 $ (9,482) $ (66,710) $ 952,127
==================================================================================================================================
</TABLE>
See Notes to Financial Statements.
16
<PAGE>
Statements of Changes in Net Assets
Year Ended October 31, 1999
<TABLE>
<CAPTION>
Growth & World Bond-
Income International Debenture Alpha
Operations: NET ASSETS Series Series Series Series
<S> <C> <C> <C> <C>
Net investment income (loss) $ (20,389) $ 941,718 $ 1,018,911 $ (756,619)
Capital gains received from Underlying Funds -- -- -- 960,345
Net realized gain (loss) from investment transactions and
foreign currency related transactions 11,377,605 12,524,692 (372,840) 394,029
Net change in unrealized appreciation on investments
and translation of assets and liabilities
denominated in foreign currencies 27,515,696 9,033,914 8,453 19,567,107
===================================================================================================================================
Net increase in net assets resulting from operations 38,872,912 22,500,324 654,524 20,164,862
===================================================================================================================================
Distributions to shareholders from:
Net investment income
Class A (401,032) (567,116) (756,894) --
Class B (3,850) (20,005) (134,119) --
Class C (97,485) (17,514) (135,827) --
Class Y -- (257,274) -- --
Net realized gain
Class A (2,606,705) (150,119) (146,447) --
Class B (125,113) (30,008) (26,529) --
Class C (3,168,272) (26,271) (29,787) --
Class Y -- (82,695) -- --
-----------------------------------------------------------------------------------------------------------------------------------
Total distributions to shareholders (6,402,457) (1,151,002) (1,229,603) --
===================================================================================================================================
Capital share transactions:
Net proceeds from sales of shares 44,193,808 145,270,193 4,346,397 75,343,568
Reinvestment of distributions 5,996,380 1,166,493 854,916 --
Cost of shares reacquired (31,767,440) (107,731,921) (3,048,155) (39,667,616)
-----------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from
capital share transactions 18,422,748 38,704,765 2,153,158 35,675,952
===================================================================================================================================
Net increase in net assets 50,893,203 60,054,087 1,578,079 55,840,814
===================================================================================================================================
NET ASSETS:
Beginning of year 165,904,098 153,032,505 10,133,811 106,278,768
-----------------------------------------------------------------------------------------------------------------------------------
End of year $ 216,797,301 $ 213,086,592 $ 11,711,890 $ 162,119,582
===================================================================================================================================
Undistributed (distributions in excess of)
net investment income $ (224,981) $ 801,470 $ 103,543 --
===================================================================================================================================
</TABLE>
See Notes to Financial Statements.
17
<PAGE>
Financial Highlights
GROWTH & INCOME SERIES
<TABLE>
<CAPTION>
Year Ended 10/31, 7/15/1996(a)
------------------------------------------------ to
Per Share Operating Performance (Class A Shares) 2000 1999 1998 1997 10/31/1996
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 10.87 $ 9.15 $ 8.79 $ 7.09 $ 6.50
================================================================
Investment operations
Net investment income .05(b) .04(b) .06 .09 .03
Net realized and unrealized gain on investments 1.17 2.06 .93 1.78
.59
----------------------------------------------------------------
Total from investment operations 1.22 2.10 .99 1.87 .62
----------------------------------------------------------------
Distributions to shareholders from:
Net investment income - (.05) (.04) (.10) (.03)
Net realized gain (.56) (.33) (.59) (.07) -
----------------------------------------------------------------
Total distributions (.56) (.38) (.63) (.17) (.03)
----------------------------------------------------------------
Net asset value, end of period $ 11.53 $ 10.87 $ 9.15 $ 8.79 $ 7.09
================================================================
Total Return(d) 11.44% 23.77% 11.97% 26.78% 12.10%(e)
Ratios to Average Net Assets
Expenses, including expense reductions 1.35%(f) 1.30%(f) 1.22% 1.29% .39%(e)
Expenses, excluding expense reductions 1.36% 1.30%(f) 1.22% 1.29% .39%(e)
Net investment income .48% .36% .88% 1.15% .40%(e)
</TABLE>
<TABLE>
<CAPTION>
Year Ended 10/31, 6/5/1997(a)
--------------------------------------- to
Per Share Operating Performance (Class B Shares) 2000 1999 1998 10/31/1997
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 10.85 $ 9.13 $ 8.80 $ 8.20
====================================================
Investment operations
Net investment income (loss) (.02)(b) (.04)(b) .00(c) .00(c)
Net realized and unrealized gain on investments 1.15 2.10 .92 .60
----------------------------------------------------
Total from investment operations 1.13 2.06 .92 .60
====================================================
Distributions to shareholders from:
Net investment income - (.01) - -
Net realized gain (.56) (.33) (.59) -
----------------------------------------------------
Total distributions (.56) (.34) (.59) -
----------------------------------------------------
Net asset value, end of period $ 11.42 $ 10.85 $ 9.13 $ 8.80
====================================================
Total Return(d) 10.80% 23.17% 11.17% 7.19%(e)
Ratios to Average Net Assets
Expenses, including expense reductions 2.00%(f) 1.98%(f) 1.98% .86%(e)
Expenses, excluding expense reductions 2.01% 1.98%(f) 1.98% .86%(e)
Net investment income (loss) (.17)% (.38)% .09% .01%(e)
</TABLE>
See Notes to Financial Statements.
18
<PAGE>
Financial Highlights (continued)
GROWTH & INCOME SERIES
<TABLE>
<CAPTION>
Year Ended 10/31,
------------------------------------------------------------
2000 1999 1998 1997 1996
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance (Class C Shares)
Net asset value, beginning of year $ 10.81 $ 9.11 $ 8.80 $ 7.09 $ 6.04
============================================================
Investment operations
Net investment income (loss) (.02)(b) (.03)(b) .01 .03 .09
Net realized and unrealized gain on investments 1.15 2.07 .89 1.79 1.10
------------------------------------------------------------
Total from investment operations 1.13 2.04 .90 1.82 1.19
------------------------------------------------------------
Distributions to shareholders from:
Net investment income - (.01) - (.04) (.10)
Net realized gain (.56) (.33) (.59) (.07) (.04)
------------------------------------------------------------
Total distributions (.56) (.34) (.59) (.11) (.14)
------------------------------------------------------------
Net asset value, end of year $ 11.38 $ 10.81 $ 9.11 $ 8.80 $ 7.09
============================================================
Total Return(d) 10.74% 23.00% 10.94% 26.24% 20.02%
Ratios to Average Net Assets
Expenses, including expense reductions 2.00%(f) 1.98%(f) 1.98% 2.05% 1.55%
Expenses, excluding expense reductions 2.01% 1.98%(f) 1.98% 2.05% 1.55%
Net investment income (loss) (.17)% (.31)% .12% .39% 1.36%
</TABLE>
<TABLE>
<CAPTION>
Year Ended 10/31,
-------------------------------------------------------------------------------------------------------------
Supplemental Data for All Classes: 2000 1999 1998 1997 1996
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net assets, end of year (000) $266,267 $216,797 $165,904 $142,992 $113,962
Portfolio turnover rate 65.06% 37.68% 45.83% 36.37% 23.84%
-------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Commencement of offering of class shares.
(b) Calculated using average shares outstanding during the year.
(c) Amount represents less than $.01.
(d) Total return does not consider the effects of sales loads and assumes the
reinvestment of all distributions.
(e) Not annualized.
(f) The ratio includes expenses paid through an expense offset arrangement.
See Notes to Financial Statements.
19
<PAGE>
Financial Highlights
INTERNATIONAL SERIES
<TABLE>
<CAPTION>
Year Ended 10/31, 12/13/1996(a)
--------------------------------------- to
2000 1999 1998 10/31/1997
<S> <C> <C> <C> <C>
Per Share Operating Performance (Class A Shares)
Net asset value, beginning of period $13.90 $12.39 $10.86 $9.42
=================================================
Investment operations
Net investment income (loss) (.08)(b) .07(b) .11(b) .07
Net realized and unrealized gain on investments and
foreign currency related transactions 1.54 1.55 1.45 1.37
-------------------------------------------------
Total from investment operations 1.46 1.62 1.56 1.44
-------------------------------------------------
Distributions to shareholders from:
Net investment income (.06) (.09) (.03) -
Net realized gain (.82) (.02) - -
-------------------------------------------------
Total distributions (.88) (.11) (.03) -
-------------------------------------------------
Net asset value, end of period $14.48 $13.90 $12.39 $10.86
=================================================
Total Return(c) 10.97% 13.16% 14.36% 15.21%(d)
Ratios to Average Net Assets
Expenses, including expense reductions 1.80%(e) 1.51%(e) 1.31% 1.23%(d)
Expenses, excluding expense reductions 1.80% 1.51%(e) 1.31% 1.23%(d)
Net investment income (loss) (.53)% .52% .80% .41%(d)
</TABLE>
<TABLE>
<CAPTION>
Year Ended 10/31, 6/2/1997(a)
------------------------------------ to
2000 1999 1998 10/31/1997
<S> <C> <C> <C> <C>
Per Share Operating Performance (Class B Shares)
Net asset value, beginning of period $13.75 $12.28 $10.83 $10.26
=================================================
Investment operations
Net investment income (loss) (.17)(b) (.02)(b) .02(b) (.03)
Net realized and unrealized gain on investments and
foreign currency related transactions 1.55 1.53 1.43 .60
-------------------------------------------------
Total from investment operations 1.38 1.51 1.45 .57
-------------------------------------------------
Distributions to shareholders from:
Net investment income (.00)(g) (.02) - -
Net realized gain (.82) (.02) - -
-------------------------------------------------
Total distributions (.82) (.04) - -
-------------------------------------------------
Net asset value, end of period $14.31 $13.75 $12.28 $10.83
=================================================
Total Return(c) 10.42% 12.31% 13.39% 5.56%(d)
Ratios to Average Net Assets
Expenses, including expense reductions 2.35%(e) 2.19%(e) 2.03% .87%(d)
Expenses, excluding expense reductions 2.36% 2.19%(e) 2.03% .87%(d)
Net investment income (loss) (1.09)% (.16)% .18% (.46)%(d)
</TABLE>
See Notes to Financial Statements.
20
<PAGE>
Financial Highlights (continued)
INTERNATIONAL SERIES
<TABLE>
<CAPTION>
Year Ended 10/31, 6/2/1997(a)
----------------------------------- to
2000 1999 1998 10/31/1997
<S> <C> <C> <C> <C>
Per Share Operating Performance (Class C Shares)
Net asset value, beginning of period $13.75 $12.28 $10.83 $10.26
=================================================
Investment operations
Net investment income (loss) (.17)(b) (.02)(b) .02(b) (.03)
Net realized and unrealized gain on investments and
foreign currency related transactions 1.54 1.53 1.43 .60
-------------------------------------------------
Total from investment operations 1.37 1.51 1.45 .57
-------------------------------------------------
Distributions to shareholders from:
Net investment income (.00)(g) (.02) - -
Net realized gain (.82) (.02) - -
-------------------------------------------------
Total distributions (.82) (.04) - -
-------------------------------------------------
Net asset value, end of period $14.30 $13.75 $12.28 $10.83
=================================================
Total Return(c) 10.35% 12.31% 13.39% 5.56%(d)
Ratios to Average Net Assets
Expenses, including expense reductions 2.35%(e) 2.19%(e) 2.05% .87%(d)
Expenses, excluding expense reductions 2.36% 2.19%(e) 2.05% .87%(d)
Net investment income (loss) (1.10)% (.15)% .12% (.46)%(d)
</TABLE>
<TABLE>
<CAPTION>
3/9/1999(a)
Year Ended to
10/31/2000 10/31/1999
<S> <C> <C>
Per Share Operating Performance (Class P Shares)
Net asset value, beginning of period $13.91 $12.70
===========================
Investment operations
Net investment income (loss) (.08)(b) .08(b)
Net realized and unrealized gain on investments and
foreign currency related transactions 1.55 1.13
---------------------------
Total from investment operations 1.47 1.21
---------------------------
Distributions to shareholders from:
Net investment income (.05) -
Net realized gain (.82) -
---------------------------
Total distributions (.87) -
---------------------------
Net asset value, end of period $14.51 $13.91
===========================
Total Return(c) 11.03% 9.53%(d)
Ratios to Average Net Assets
Expenses, including expense reductions 1.80%(e) .98%(d)(e)
Expenses, excluding expense reductions 1.80% .98%(d)(e)
Net investment income (loss) (.51)% .60%(d)
</TABLE>
See Notes to Financial Statements.
21
<PAGE>
Financial Highlights (continued)
INTERNATIONAL SERIES
<TABLE>
<CAPTION>
Year Ended 10/31, 12/30/1997(a)
--------------------- to
2000 1999 10/31/1998
<S> <C> <C> <C>
Per Share Operating Performance (Class Y Shares)
Net asset value, beginning of period $14.00 $12.41 $11.28
====================================
Investment operations
Net investment income (loss) (.01)(b) .12(b) .15(b)
Net realized and unrealized gain on investments and
foreign currency related transactions 1.54 1.56 .98
------------------------------------
Total from investment operations 1.53 1.68 1.13
------------------------------------
Distributions to shareholders from:
Net investment income (.10) (.07) -
Net realized gain (.82) (.02) -
------------------------------------
Total distributions (.92) (.09) -
------------------------------------
</TABLE>
See Notes to Financial Statements.
22
<PAGE>
Financial Highlights
WORLD BOND-DEBENTURE SERIES
<TABLE>
<CAPTION>
Year Ended 10/31, 12/18/1997(a)
--------------------- to
2000 1999 10/31/1998
<S> <C> <C> <C>
Per Share Operating Performance (Class A Shares)
Net asset value, beginning of period $9.24 $9.66 $10.00
====================================
Investment operations
Net investment income .73(b) .83(b) .51
Net realized and unrealized loss on investments and
foreign currency related transactions (.57) (.22) (.42)
------------------------------------
Total from investment operations .16 .61 .09
------------------------------------
Distributions to shareholders from:
Net investment income (.93) (.85) (.43)
Net realized gain - (.18) -
------------------------------------
Total distributions (.93) (1.03) (.43)
------------------------------------
Net asset value, end of period $8.47 $9.24 $9.66
====================================
Total Return(c) 1.47% 6.33% .75%(d)
Ratios to Average Net Assets
Expenses, including waiver and expense reductions(e) 1.11% .89% .55%(d)
Expenses, excluding waiver and expense reductions 2.15% 1.84% 1.20%(d)
Net investment income 8.02% 8.64% 7.08%(d)
</TABLE>
<TABLE>
<CAPTION>
Year Ended 10/31, 12/19/1997(a)
-------------------------------------------------------------------------------- to
2000 1999 10/31/1998
<S> <C> <C> <C>
Per Share Operating Performance (Class B Shares)
Net asset value, beginning of period $9.24 $9.65 $10.00
====================================
Investment operations
Net investment income .67(b) .76(b) .40
Net realized and unrealized loss on investments and
foreign currency related transactions (.56) (.21) (.37)
------------------------------------
Total from investment operations .11 .55 .03
------------------------------------
Distributions to shareholders from:
Net investment income (.87) (.78) (.38)
Net realized gain - (.18) -
------------------------------------
Total distributions (.87) (.96) (.38)
------------------------------------
Net asset value, end of period $8.48 $9.24 $9.65
====================================
Total Return(c) .86% 5.73% .24%(d)
Ratios to Average Net Assets
Expenses, including waiver and expense reductions(e) 1.75% 1.56% 1.28%(d)
Expenses, excluding waiver and expense reductions 2.79% 2.51% 1.93%(d)
Net investment income 7.39% 7.91% 6.67%(d)
</TABLE>
See Notes to Financial Statements.
23
<PAGE>
Financial Highlights (continued)
WORLD BOND-DEBENTURE SERIES
<TABLE>
<CAPTION>
Year Ended 10/31, 12/19/1997(a)
-------------------- to
2000 1999 10/31/1998
<S> <C> <C> <C>
Per Share Operating Performance (Class C Shares)
Net asset value, beginning of period $9.22 $9.65 $10.00
================================
Investment operations
Net investment income .67(b) .78(b) .39
Net realized and unrealized loss on investments and
foreign currency related transactions (.56) (.25) (.36)
--------------------------------
Total from investment operations .11 .53 .03
--------------------------------
Distributions to shareholders from:
Net investment income (.87) (.78) (.38)
Net realized gain - (.18) -
--------------------------------
Total distributions (.87) (.96) (.38)
--------------------------------
Net asset value, end of period $8.46 $9.22 $9.65
================================
Total Return(c) .87% 5.50% .24%(d)
Ratios to Average Net Assets
Expenses, including waiver and expense reductions(e) 1.76% 1.56% 1.28%(d)
Expenses, excluding waiver and expense reductions 2.80% 2.51% 1.93%(d)
Net investment income 7.37% 8.16% 6.62%(d)
</TABLE>
Year Ended 10/31, 12/18/1997(f)
------------------------------------------------------------- to
Supplemental Data for All Classes: 2000 1999 10/31/1998
--------------------------------------------------------------------------------
Net assets, end of period (000) $11,315 $11,712 $10,134
Portfolio turnover rate 104.02% 74.80% 159.14%
--------------------------------------------------------------------------------
(a) Commencement of offering of class shares.
(b) Calculated using average shares outstanding during the year.
(c) Total return does not consider the effects of sales loads and assumes the
reinvestment of all distributions.
(d) Not annualized.
(e) The ratio includes expenses paid through an expense offset arrangement.
(f) Commencement of operations.
See Notes to Financial Statements.
24
<PAGE>
Financial Highlights
ALPHA SERIES
<TABLE>
<CAPTION>
Year Ended 10/31, 12/29/1997(a)
---------------------------------------------------------------------------------- to
2000 1999 10/31/1998
<S> <C> <C> <C>
Per Share Operating Performance (Class A Shares)
Net asset value, beginning of period $15.21 $12.91 $13.52
=============================
Investment operations
Net investment income (loss)(b) (.03) .07 (.03)
Net realized and unrealized gain (loss) on investments 2.60 2.23 (.58)
-----------------------------
Total from investment operations 2.57 2.30 (.61)
-----------------------------
Distributions to shareholders from:
Net investment income (.21) - -
Net realized gain (.11) - -
-----------------------------
Total distributions (.32) - -
-----------------------------
Net asset value, end of period $17.46 $15.21 $12.91
=============================
Total Return(c) 17.10% 17.82% (4.51)%(d)
Ratios to Average Net Assets
Expenses, including waiver and expense reductions(e) .40% .33% .21%(d)
Expenses, excluding waiver and expense reductions 1.33% .83% .63%(d)
Net investment income (loss) (.16)% .15%(.18)%(d)
</TABLE>
<TABLE>
<CAPTION>
Year Ended 10/31, 12/29/1997(a)
-------------------- to
2000 1999 10/31/1998
<S> <C> <C> <C>
Per Share Operating Performance (Class B Shares)
Net asset value, beginning of period $15.05 $12.85 $13.52
==============================
Investment operations
Net investment loss(b) (.13) (.03) (.11)
Net realized and unrealized gain (loss) on investments 2.58 2.23 (.56)
------------------------------
Total from investment operations 2.45 2.20 (.67)
------------------------------
Distributions to shareholders from:
Net investment income (.12) - -
Net realized gain (.11) - -
------------------------------
Total distributions (0.23) - -
------------------------------
Net asset value, end of period $17.27 $15.05 $12.85
==============================
Total Return(c) 16.40% 17.12% (4.96)%(d)
Ratios to Average Net Assets
Expenses, including waiver and expense reductions(e) 1.00% 1.00% .83%(d)
Expenses, excluding waiver and expense reductions 1.93% 1.50% 1.26%(d)
Net investment loss (.75)% (.83)% (.81)%(d)
</TABLE>
See Notes to Financial Statements.
25
<PAGE>
Financial Highlights (continued)
ALPHA SERIES
<TABLE>
<CAPTION>
Year Ended 10/31, 12/29/1997(a)
-------------------- to
2000 1999 10/31/1998
<S> <C> <C> <C>
Per Share Operating Performance (Class C Shares)
Net asset value, beginning of period $15.04 $12.86 $13.52
===============================
Investment operations
Net investment loss(b) (.12) (.04) (.11)
Net realized and unrealized gain (loss) on investments 2.56 2.22 (.55)
-------------------------------
Total from investment operations 2.44 2.18 (.66)
-------------------------------
Distributions to shareholders from:
Net investment income (.12) - -
Net realized gain (.11) - -
-------------------------------
Total distributions (.23) - -
-------------------------------
Net asset value, end of period $17.25 $15.04 $12.86
===============================
Total Return(c) 16.34% 16.95% (4.88)%(d)
Ratios to Average Net Assets
Expenses, including waiver and expense reductions(e) 1.00% 1.00% .82%(d)
Expenses, excluding waiver and expense reductions 1.93% 1.50% 1.24%(d)
Net investment loss (.70)% (.84)% (.82)%(d)
</TABLE>
Year Ended 10/31, 12/29/1997(f)
--------------------------------------------------------------- to
Supplemental Data for All Classes: 2000 1999 10/31/1998
--------------------------------------------------------------------------------
Net assets, end of period (000) $211,929 $162,120 $106,279
Portfolio turnover rate 1.54% 1.67% 0.01%
--------------------------------------------------------------------------------
(a) Commencement of offering of class shares.
(b) Calculated using average shares outstanding during the period.
(c) Total return does not consider the effects of sales loads and assumes the
reinvestment of all distributions.
(d) Not annualized.
(e) The ratio includes expenses paid through an expense offset arrangement.
(f) Commencement of operations.
See Notes to Financial Statements.
26
<PAGE>
Notes to Financial Statements
1. Organization
Lord Abbett Securities Trust (the "Trust") is an open-end management investment
company, organized as a Delaware business trust. The Trust currently con sists
of six portfolios ("Series"). This report covers the following four Series: Lord
Abbett Growth & Income Series ("Growth & Income Series"), Lord Abbett
International Series ("International Series"), Lord Abbett World Bond-Debenture
Series ("World Bond-Debenture Series") and Lord Abbett Alpha Series ("Alpha
Series"). The Alpha Series invests in other funds ("Underlying Funds") managed
by Lord, Abbett & Co.
("Lord Abbett"). Each Series is diversified under the Investment Company Act of
1940 (the "Act"). The financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America, which
permit management to make certain estimates and assumptions that affect the
reported amounts and disclosures at the date of the financial statements. Actual
results could differ from those estimates.
2. Significant Accounting Practices
(a) Investment Valuation-Securities traded on national or foreign securities
exchanges are valued at the last quoted sales price, or if no sales price
is available, at the mean between the latest bid and ask prices on such
exchange, or, in the case of bonds, in the over-the-counter market if, in
the judgement of the Company's officers, that market more accurately
reflects the market value of the bonds. Securities traded only in the
over-the-counter market are valued at the mean between the latest bid and
ask prices, 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. Securities for which market quotations are not readily
available are valued at fair value as determined by management and approved
in good faith by the Board of Trustees. Short-term securities with 60 days
or less remaining to maturity are valued using the amortized cost method,
which approximates current market value. Investments in the Underlying
Funds are valued at the closing net asset value per share of each
Underlying Fund on the day of valuation.
(b) Security Transactions and Investment Income-Security transactions are
recorded as of the date that the securities are purchased or sold (trade
date). Realized gains and losses on sales of portfolio securities are
calculated using the identified-cost method. Dividend income and
distributions to shareholders are recorded on the ex-dividend date.
Interest income is recorded on the accrual basis. Net investment income 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.
(c) Federal Taxes-It is the policy of the Trust to meet the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all of their taxable net investment income and
capital gains to their shareholders. Therefore, no federal income tax
provision is required.
(d) Deferred Organization Expenses-Organization expenses are amortized evenly
over a period of five years.
(e) Expenses-Expenses incurred by the Trust that do not specifically relate to
an individual Series' are allocated to the Series on a pro rata basis.
Class A, Class B, Class C and Class P shares bear all expenses and fees
relating to their respective 12b-1 Distribution Plans.
(f) Foreign Transactions-Transactions denominated in foreign currencies are
recorded in the Trust's records at the rate prevailing when earned or
recorded. Asset and liability accounts that are denominated in foreign
currencies are adjusted to reflect current exchange rates.
(g) Forward Foreign Currency Exchange Contracts-The International Series and
World Bond-Debenture Series may enter into forward foreign currency
exchange contracts in order to reduce their exposure to changes in foreign
currency exchange rates on their foreign portfolio holdings and to lock in
the U.S. dollar cost of firm purchase and sale commitments for securities
denominated in foreign currencies. A forward currency contract is a
commitment to purchase or sell a foreign currency at a future date at a
negotiated rate. The contracts are valued daily at forward exchange rates
or market values and any unrealized gain or loss is included in net
unrealized appreciation or depreciation of investments and foreign currency
holdings. The gain or loss arising from the difference between the U.S.
dollar cost of the original contract and the value of the foreign currency
in U.S. dollars upon closing of such contracts is included in net realized
gain or loss on foreign currency related transactions.
(h) Lord Abbett Securities Trust will adopt the provisions of the AICPAAudit
and Accounting Guide for Investment Companies, as revised, effective for
fiscal years beginning after December 15, 2000. As required, the Trust will
begin amortizing premiums and discounts on debt securities effective
November 1, 2000. Prior to this date, the Trust did not amortize premiums
or discounts on debt securities. The cumulative effect of this accounting
change will have no impact on the total net assets to the World
Bond-Debenture Series and International Series, but will result in
immaterial adjustments to cost of securities and corresponding adjustments
to net unrealized appreciation, based on securities held as of October 31,
2000.
27
<PAGE>
Notes to Financial Statements (continued)
3. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Management Fees
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
following annual rates.
Management Fee Waiver
--------------------------------------------------------------------------------
Growth & Income Series .75%(1) -
International Series .75% -
World Bond-Debenture Series .75% .75%
Alpha Series .50% .50%
(1) The management fee for Growth & Income Series is based on average daily net
assets at the following annual rates:
--------------------------------------------------------------------------------
First $200 million . 75%
Next $300 million . 65%
Over $500 million . 50%
For the year ended October 31, 2000, Lord Abbett voluntarily waived its
management fees for the World Bond-Debenture Series and Alpha Series. Lord
Abbett has entered into a sub-advisory agreement with Fuji-Lord Abbett
International, Ltd. (the "sub-adviser"). Lord Abbett is a minority owner of the
sub-adviser. The sub-adviser furnishes investment advisory services in
connection with the management of the International Series. Lord Abbett pays for
the cost of the sub-advisers services. Effective December 18, 2000, Lord Abbett
will be withdrawing it's 25% ownership stake in the sub-advisor. Lord Abbett has
held a 25% ownership stake since September 1998.
12b-1 Plans
Each of the Series has adopted a distribution plan (the "Plan") with respect to
one or more classes of shares pursuant to Rule 12b-1 of the Act, which provides
for the payment of ongoing account maintenance and distribution fees to Lord
Abbett Distributor LLC ("Distributor"), an affiliate of Lord Abbett. The fees
are accrued daily at annual rates based upon average daily net assets as
follows:
Fee Class A(1) Class B Class C Class P(4)
--------------------------------------------------------------------------------
Service .25% .25% up to .25%(2) .20%
Distribution .10% .75% up to .75%(2) .25%
Quarterly service fee - - up to .25%(3) -
Quarterly distribution fee - - up to .75%(3) -
(1) In addition, each Series pays a one-time distribution fee of up to 1% on
certain qualifying purchases, which is generally amortized over a one-year
period.
(2) Paid at the time such shares are sold, which is generally amortized over a
one-year period.
(3) Paid at each quarter-end after the first anniversary of the sale of such
shares. (4) International Series only.
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. Other
expenses of International Series include $235,768 accrued pursuant to this
Servicing Arrangement.
Commissions
Distributor received the following commissions on sales of shares of the Trust
after concessions were paid to authorized distributors:
Year Ended October 31, 2000
--------------------------------------------------------------------------------
Distributor Dealer
Commissions Concessions
--------------------------------------------------------------------------------
Growth & Income Series $152,818 $808,834
International Series 165,854 914,822
World Bond-Debenture Series 3,966 20,052
Alpha Series 121,353 696,338
28
<PAGE>
Notes to Financial Statements (continued)
4. DISTRIBUTIONS
Dividends from net investment income, if any, are declared and paid
semi-annually for Growth & Income Series, annually for International and Alpha
Series, and monthly for World Bond-Debenture Series. Taxable net realized gains
from securities transactions, reduced by capital loss carry-forwards, if any,
are distributed to shareholders annually. The capital loss carryforward amount
is available to offset future net capital gains.
At October 31, 2000, the capital loss carryforwards along with the related
expiration dates are as follows:
2006 2007 2008 Total
--------------------------------------------------------------------------------
World Bond-Debenture Series $450,150 $424,136 $442,486 $1,316,772
5. PORTFOLIO SECURITIES TRANSACTIONS
Purchases and sales of investment securities (other than short-term investments)
are as follows:
Year Ended October 31, 2000
--------------------------------------------------
Purchases Sales
--------------------------------------------------
Growth & Income Series $165,472,083 $150,264,678
International Series 135,505,867 93,343,379
World Bond-Debenture Series 11,472,712 11,888,881
Alpha Series 31,623,683 3,189,000
As of October 31, 2000, the aggregate cost of investments, gross unrealized
appreciation, gross unrealized depreciation and net unrealized appreciation
(depreciation) of investments based on cost for federal income tax purposes are
as follows:
<TABLE>
<CAPTION>
Net
Gross Gross Unrealized
Unrealized Unrealized Appreciation
Tax Cost Appreciation Depreciation (Depreciation)
-----------------------------------------------------------------
<S> <C> <C> <C> <C>
Growth & Income Series $179,961,924 $84,592,004 $ (2,469,537) $82,122,467
International Series 256,120,422 70,100,555 (53,688,271) 16,412,284
World Bond-Debenture Series 11,630,748 245,219 (1,051,930) (806,711)
Alpha Series 190,432,774 20,802,481 - 20,802,481
</TABLE>
The cost of investments for federal income tax purposes differs from that used
for financial reporting purposes. These differences are due to differing
treatments for items such as deferral of wash sales.
World Bond-Debenture Series had the following forward foreign currency contract
outstanding at October 31, 2000:
<TABLE>
<CAPTION>
Value at
Settlement Date
Settlement --------------------------------- Current Unrealized
Currency Type Date Local Currency U.S. Dollars Value Appreciation
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Euro Sell 12/11/2000 500,000 $486,250 $425,195 $61,055
</TABLE>
29
<PAGE>
Notes to Financial Statements (continued)
6. CERTAIN RECLASSIFICATIONS
Net investment income distributions and capital gains distributions are
determined in accordance with income tax regulations, which may differ from
accounting principles generally accepted in the United States of America. These
differences are either considered temporary or permanent in nature. Permanent
items identified during the year ended October 31, 2000, have been reclassified
among the components of net assets based on their tax basis treatment as
follows:
<TABLE>
<CAPTION>
Undistributed Net
Investment Income
(Distributions in
Undistributed
Excess of) Net Net Realized
Investment Income Gain and Loss Paid-In Capital
Increase (Decrease) Increase (Decrease) Increase (Decrease)
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Growth & Income Series $ 82,808 $ (82,821) $ 13
International Series 1,608,746 (744,337) (864,409)
World Bond-Debenture Series 80,729 126,002 (206,731)
Alpha Series 3,681,050 (3,681,050) -
</TABLE>
7. TRUSTEES' REMUNERATION
The Trustees 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
the net assets of each fund. The outside Trustees may elect to defer receipt of
such fees. The deferred fees earn a return based on the performance of the Trust
or other funds within the Lord Abbett Family of Funds. The cost of such fees and
earnings accrued thereon is included in Trustees fee expense. Deferred fees and
related accrued earnings are not deductible for Federal income tax purposes
until such amounts are paid.
8. SUMMARY OF CAPITAL TRANSACTIONS
Transactions in Series with multiple classes (both shares and dollars) are as
follows:
GROWTH & INCOME SERIES
<TABLE>
<CAPTION>
Year Ended October 31, 2000 Year Ended October 31, 1999
-------------------------------------------------------------------------------------------------------------------------
Class A Shares Shares Amount Shares Amount
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 4,009,634 $ 43,048,165 2,628,331 $ 27,027,631
Reinvestment of dividends and distributions 455,277 4,957,960 301,078 2,760,885
Shares reacquired (2,060,366) (22,224,615) (1,497,971) (15,141,616)
-------------------------------------------------------------------------------------------------------------------------
Increase 2,404,545 $ 25,781,510 1,431,438 $ 14,646,900
-------------------------------------------------------------------------------------------------------------------------
Class B Shares
-------------------------------------------------------------------------------------------------------------------------
Shares sold 864,069 $ 9,271,592 646,865 $ 6,690,769
Reinvestment of dividends and distributions 45,110 489,894 13,395 123,096
Shares reacquired (279,003) (2,976,775) (135,302) (1,390,159)
-------------------------------------------------------------------------------------------------------------------------
Increase 630,176 $ 6,784,711 524,958 $ 5,423,706
-------------------------------------------------------------------------------------------------------------------------
Class C Shares
-------------------------------------------------------------------------------------------------------------------------
Shares sold 1,425,293 $ 15,138,178 1,020,638 $ 10,475,408
Reinvestment of dividends and distributions 480,261 5,196,428 339,411 3,112,399
Shares reacquired (1,698,890) (18,087,866) (1,493,299) (15,235,665)
-------------------------------------------------------------------------------------------------------------------------
Increase (Decrease) 206,664 $ 2,246,740 (133,250) $ (1,647,858)
-------------------------------------------------------------------------------------------------------------------------
30
<PAGE>
Notes to Financial Statements (continued)
INTERNATIONAL SERIES
Year Ended October 31, 2000 Year Ended October 31, 1999
-------------------------------------------------------------------------------------------------------------------------
Class A Shares Shares Amount Shares Amount
-------------------------------------------------------------------------------------------------------------------------
Shares sold 8,755,316 $140,790,208 4,846,083 $ 66,870,262
Reinvestment of dividends and distributions 475,436 6,451,673 56,456 717,663
Shares reacquired (7,422,573) (118,851,668) (3,845,434) (53,707,844)
-------------------------------------------------------------------------------------------------------------------------
Increase 1,808,179 $ 28,390,213 1,057,105 $ 13,880,081
-------------------------------------------------------------------------------------------------------------------------
Class B Shares
-------------------------------------------------------------------------------------------------------------------------
Shares sold 874,319 $ 14,478,773 727,191 $ 9,645,998
Reinvestment of dividends and distributions 97,062 1,307,432 3,886 51,717
Shares reacquired (323,873) (5,046,301) (360,473) (4,824,986)
-------------------------------------------------------------------------------------------------------------------------
Increase 647,508 $ 10,739,904 370,604 $ 4,872,729
-------------------------------------------------------------------------------------------------------------------------
Class C Shares
-------------------------------------------------------------------------------------------------------------------------
Shares sold 890,564 $ 14,132,703 3,886,561 $ 52,956,781
Reinvestment of dividends and distributions 85,648 1,153,674 3,396 45,553
Shares reacquired (655,061) (10,219,438) (3,541,853) (48,775,206)
-------------------------------------------------------------------------------------------------------------------------
Increase 321,151 $ 5,066,939 348,104 $ 4,227,128
-------------------------------------------------------------------------------------------------------------------------
Class P Shares
-------------------------------------------------------------------------------------------------------------------------
Shares sold 4 $ 63 86 $ 1,127
Reinvestment of dividends and distributions 6 85 - -
Shares reacquired - - - -
-------------------------------------------------------------------------------------------------------------------------
Increase 10 $ 148 86 $ 1,127
-------------------------------------------------------------------------------------------------------------------------
Class Y Shares
-------------------------------------------------------------------------------------------------------------------------
Shares sold 599,500 $ 10,398,182 1,185,525 $ 15,796,025
Reinvestment of dividends and distributions 314,305 4,287,118 27,395 351,560
Shares reacquired (80,747) (1,297,006) (29,754) (423,885)
-------------------------------------------------------------------------------------------------------------------------
Increase 833,058 $ 13,388,294 1,183,166 $ 15,723,700
-------------------------------------------------------------------------------------------------------------------------
WORLD BOND-DEBENTURE Series
-------------------------------------------------------------------------------------------------------------------------
Class A Shares
-------------------------------------------------------------------------------------------------------------------------
Shares sold 147,778 $ 1,350,305 288,744 $ 2,819,452
Reinvestment of dividends and distributions 65,271 596,773 66,196 637,644
Shares reacquired (209,062) (1,924,599) (206,397) (1,984,856)
-------------------------------------------------------------------------------------------------------------------------
Increase 3,987 $ 22,479 148,543 $ 1,472,240
-------------------------------------------------------------------------------------------------------------------------
Class B Shares
-------------------------------------------------------------------------------------------------------------------------
Shares sold 77,813 $ 698,885 104,575 $ 1,012,874
Reinvestment of dividends and distributions 10,790 98,480 9,010 86,541
Shares reacquired (54,748) (497,754) (37,348) (358,336)
-------------------------------------------------------------------------------------------------------------------------
Increase 33,855 $ 299,611 76,237 $ 741,079
-------------------------------------------------------------------------------------------------------------------------
Class C Shares
-------------------------------------------------------------------------------------------------------------------------
Shares sold 53,178 $ 488,424 52,904 $ 514,071
Reinvestment of dividends and distributions 12,748 116,559 13,577 130,731
Shares reacquired (35,266) (326,339) (73,535) (704,963)
-------------------------------------------------------------------------------------------------------------------------
Increase (Decrease) 30,660 $ 278,644 (7,054) $ (60,161)
-------------------------------------------------------------------------------------------------------------------------
31
<PAGE>
Notes to Financial Statements (continued)
ALPHA Series
Year Ended October 31, 2000 Year Ended October 31, 1999
-------------------------------------------------------------------------------------------------------------------------
Class A Shares Shares Amount Shares Amount
-------------------------------------------------------------------------------------------------------------------------
Shares sold 1,717,103 $ 31,045,528 2,317,161 $ 33,875,154
Reinvestment of dividends and distributions 96,126 1,523,600 - -
Shares reacquired (1,219,114) (21,520,665) (1,216,119) (18,000,823)
-------------------------------------------------------------------------------------------------------------------------
Increase 594,115 $ 11,048,463 1,101,042 $ 15,874,331
-------------------------------------------------------------------------------------------------------------------------
Class B Shares
-------------------------------------------------------------------------------------------------------------------------
Shares sold 1,091,822 $ 19,473,681 1,436,209 $ 20,914,895
Reinvestment of dividends and distributions 48,581 765,646 - -
Shares reacquired (544,684) (9,596,596) (776,830) (11,344,308)
-------------------------------------------------------------------------------------------------------------------------
Increase 595,719 $ 10,642,731 659,379 $ 9,570,587
-------------------------------------------------------------------------------------------------------------------------
Class C Shares
-------------------------------------------------------------------------------------------------------------------------
Shares sold 820,875 $ 14,459,183 1,409,046 $ 20,553,519
Reinvestment of dividends and distributions 31,244 492,091 - -
Shares reacquired (549,087) (9,573,748) (698,835) (10,322,485)
-------------------------------------------------------------------------------------------------------------------------
Increase 303,032 $ 5,377,526 710,211 $ 10,231,034
-------------------------------------------------------------------------------------------------------------------------
</TABLE>
9. EXPENSE REDUCTION
The Trust has entered into arrangements with its transfer agent and custodian
whereby credits realized as a result of uninvested cash balances were used to
reduce a portion of the Trust's expenses.
10. LINE OF CREDIT
The Growth & Income Series 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 was at an annual rate of 0.06% during the year. Effective December 17,
1999, this fee was increased to 0.09% per annum. There were no loans outstanding
pursuant to this Facility at October 31, 2000, nor was the Facility utilized at
any time during the year.
32
<PAGE>
Independent Auditors' Reports
The Board of Trustees and Shareholders,
Lord Abbett Securities Trust:
We have audited the accompanying statements of assets and liabilities, including
the schedules of investments, of Lord Abbett Securities Trust-Growth & Income
Series, International Series, World Bond-Debenture Series and Alpha Series, as
of October 31, 2000, the related statements of operations for the year then
ended and changes in net assets for each of the two years in the period then
ended, and the financial highlights for each of the periods presented. These
financial statements and the financial highlights are the responsibility of the
Company's management. Our responsi bility is to express an opinion on these
financial statements and the financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned as of October 31, 2000 by correspondence with the custodian and
brokers; where replies were not received from brokers, we performed other
auditing procedures. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Lord
Abbett Securities Trust-Growth & Income Series, International Series, World
Bond-Debenture Series and Alpha Series as of October 31, 2000, the results of
their operations for the year then ended, the changes in their net assets for
each of the two years in the period then ended, and the financial highlights for
each of the periods presented, in conformity with accounting principles
generally accepted in the United States of America.
/s/ Deloitte & Touche LLP
New York, New York
December 20, 2000
33
<PAGE>
Investing in the
Lord Abbett
Family of Funds
<TABLE>
GROWTH FUNDS GROWTH & INCOME FUNDS TAX-FREE MONEY
INCOME FUNDS INCOME FUNDS MARKET FUND
<S> <C> <C> <C> <C>
Alpha Series(1) Affiliated Fund Bond-Debenture Fund o California U.S. Government
Global Fund o Connecticut Securities Money
Balanced Series(2) High Yield Fund o Florida Market Fund(3)(4)
Equity Series o Georgia
Growth & Income Series Global Fund-- o Hawaii
Growth Income Series o Michigan
Opportunities Research Fund -- o Minnesota
Fund Large-Cap Series U.S. Government o Missouri
Securities Series(3) o National
International Series o New Jersey
Limited Duration U.S. o New York
Large-Cap Growth Fund Government Securities o Pennsylvania
Series(3) o Texas
Mid-Cap Value Fund o Washington
World Bond-
Research Fund Debenture Series
Small-Cap Value Series
</TABLE>
Finding the right mutual fund can be confusing. At Lord, Abbett & Co., we
believe that your investment professional provides value in helping you identify
and understand your investment objectives and, ultimately, offering fund
recommendations suitable for your individual needs.
For more complete information about any Lord Abbett Fund, including risks,
charges and ongoing expenses, call your investment professional or Lord Abbett
Distributor LLC at 800-874-3733 for a prospectus. Read it carefully before
investing.
Numbers to Keep Handy
For Shareholder Account or Statement Inquiries: 800-821-5129
For Literature Only: 800-874-3733
24-Hour Automated Shareholder Service Line: 800-865-7582
Visit Our Website: www.lordabbett.com
(1) Lord Abbett Securities Trust - Alpha Series is a "fund of funds" investing
in shares of Lord Abbett Developing Growth Fund, Lord Abbett Research Fund -
Small-Cap Value Series and Lord Abbett Securities Trust - International Series.
(2) Lord Abbett Investment Trust - Balanced Series is a "fund of funds"
investing in shares of certain other Lord Abbett Funds.
(3) An investment in this Fund is neither insured nor guaranteed by the U.S.
Government.
(4) An investment in the Fund is neither insured nor guaranteed by the Federal
Deposit Insurance Corporation or any other government agency. Although the Fund
seeks to preserve the value of your investment at $1.00 per share, it is
possible to lose money by investing in the Fund. This Fund is managed to
maintain, and has maintained, its stable $1.00 price per share.
[LOGO]
PRSRT STD
U.S. POSTAGE
PAID
NEW YORK, NY
PERMIT NO. 2405
Lord Abbett Mutual Fund shares are distributed by:
Lord Abbett Distributor LLC
-----------------------------------------------------
90 Hudson Street o Jersey City, New Jersey 07302-3973
LST-2-1000
(12/00)
<PAGE>
Lord Abbett Micro-Cap Value Fund
Micro-Cap Growth Fund
2000 Annual report
[LOGO]
<PAGE>
<TABLE>
<CAPTION>
Schedule of Investments
Micro-Cap Value Fund October 31, 2000
Investments Shares Value
Common Stocks 91.37%
------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Aerospace/Defense AAR Corp. 1,900 $ 22,681
3.09% Doncasters plc ADR* 1,200 21,600
Kaman Corp. Class A 1,300 18,850
----------
Total 63,131
------------------------------------------------------------------------------------------
Air Transportation
4.22% Offshore Logistics, Inc.* 5,000 86,249
------------------------------------------------------------------------------------------
Apparel 1.57% Phillips-Van Heusen Corp. 2,700 32,063
------------------------------------------------------------------------------------------
Auto Trucks &
Parts 1.21% Oshkosh Truck Corp. 600 24,675
------------------------------------------------------------------------------------------
Banks: Regional
2.22% East-West Bancorp., Inc. 2,400 45,449
------------------------------------------------------------------------------------------
Building Materials LSI Industries, Inc.* 1,400 26,250
2.46% U.S. Concrete, Inc.* 3,700 24,050
----------
Total 50,300
------------------------------------------------------------------------------------------
Business Services
1.19% SFBC International, Inc.* 3,200 24,400
------------------------------------------------------------------------------------------
Computer Hardware
0.00% OpticNet, Inc.* 300 24
------------------------------------------------------------------------------------------
Computer Software Datastream Systems, Inc.* 2,200 26,950
2.14% NYFIX, Inc.* 425 16,788
----------
Total 43,738
------------------------------------------------------------------------------------------
Consumer Electronics
1.01% Good Guys, Inc.* 3,500 20,563
------------------------------------------------------------------------------------------
Consumer Products
1.22% Koala Corp.* 2,500 25,000
------------------------------------------------------------------------------------------
Containers 1.44% Ivex Packaging Corp.* 3,000 29,438
------------------------------------------------------------------------------------------
Data Processing
Equipment &
Computers 1.93% Micros Systems, Inc.* 2,000 39,500
------------------------------------------------------------------------------------------
Diversified Material
Process 1.03% Lydall, Inc.* 2,000 21,125
------------------------------------------------------------------------------------------
Drugs 1.48% Elite Pharmaceuticals, Inc.* 3,100 30,22
------------------------------------------------------------------------------------------
Electric: Equipment/
Component 1.32% Woodward Governor Co. 600 26,869
------------------------------------------------------------------------------------------
Electrical Equipment
1.18% Powell Industries, Inc.* 2,200 24,063
------------------------------------------------------------------------------------------
Electronics 9.28% BEI Technologies, Inc. 600 21,375
Bel Fuse, Inc. Class A* 1,000 42,687
Merrimac Industries, Inc.* 1,800 31,500
Rogers Corp.* 2,200 78,649
SBS Technologies, Inc.* 600 15,450
----------
Total 189,661
------------------------------------------------------------------------------------------
Electronics:
Semiconductor
1.49% Parlex Corp.* 1,900 30,400
------------------------------------------------------------------------------------------
Energy Equipment & Friede Goldman Halter, Inc.* 3,000 17,250
Services 2.91% Horizon Offshore, Inc.* 1,500 20,625
Trico Marine Services, Inc.* 1,300 21,613
----------
Total 59,488
------------------------------------------------------------------------------------------
<CAPTION>
------------------------------------------------------------------------------------------
Investments Shares Value
------------------------------------------------------------------------------------------
Engineer/Control
Services 5.40% Michael Baker Corp.* 13,700 $ 110,455
------------------------------------------------------------------------------------------
Financial: Financial Federal Corp.* 2,100 44,494
Miscellaneous 5.62% Interpool, Inc. 2,500 32,188
Medallion Financial Corp. 900 13,838
MicroFinancial, Inc. 2,400 24,300
----------
Total 114,820
------------------------------------------------------------------------------------------
Health Care Products ICU Medical, Inc.* 1,000 25,000
3.85% Meridian Diagnostics, Inc. 4,200 31,500
Spacelabs Medical, Inc.* 2,100 22,313
----------
Total 78,813
------------------------------------------------------------------------------------------
Health Care Services American Dental
1.17% Partners, Inc.* 4,000 24,000
------------------------------------------------------------------------------------------
Industrial Products
1.97% Sun Hydraulics, Inc. 5,500 40,218
------------------------------------------------------------------------------------------
Machinery: Cascade Corp. 1,100 17,463
Industrial Specialty Robbins & Myers, Inc.* 1,200 29,025
4.65% Tennant Co. 600 26,100
Twin Disc, Inc.* 1,400 22,575
----------
Total 95,163
------------------------------------------------------------------------------------------
Machinery: Oil Well Lufkin Industries, Inc. 1,200 21,600
Equipment 2.61% Universal Compression
Holdings, Inc.* 1,100 31,763
----------
Total 53,363
------------------------------------------------------------------------------------------
Media 1.58% Acme Communications, Inc.* 3,300 20,213
VDI MultiMedia* 2,700 12,150
----------
Total 32,363
------------------------------------------------------------------------------------------
Metal Fabricating Chase Industries, Inc.* 3,000 19,500
3.93% NN, Inc. 2,600 21,938
ROHN Industries, Inc.* 8,400 38,850
----------
Total 80,288
------------------------------------------------------------------------------------------
Non-Ferrous Metals RTI International
0.92% Metals, Inc.* 1,300 18,850
------------------------------------------------------------------------------------------
Office Furniture &
Business Equipment
0.70% Falcon Products, Inc. 1,800 14,400
------------------------------------------------------------------------------------------
Oil: Crude Producers Basin Exploration, Inc.* 2,200 43,588
3.22% Mallon Resources Corp.* 4,000 22,250
----------
Total 65,838
------------------------------------------------------------------------------------------
Plastics 2.33% Myers Industries, Inc.* 1,540 20,405
Summa Industries, Inc.* 2,500 27,188
----------
Total 47,593
------------------------------------------------------------------------------------------
Publishing 0.96% IDG Books Worldwide,
Inc. Class A* 2,200 19,525
------------------------------------------------------------------------------------------
Real Estate/REITS
1.03% Agree Realty Corp. 1,500 21,094
------------------------------------------------------------------------------------------
Restaurants 2.06% Buca, Inc.* 2,700 42,187
------------------------------------------------------------------------------------------
Retail 1.07% Musicland Stores Corp.* 2,700 21,938
------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
1
<PAGE>
<TABLE>
<CAPTION>
Schedule of Investments (continued)
Micro-Cap Value Fund October 31, 2000
<CAPTION>
Investments Shares Value
------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Retail: Specialty
1.60% Coldwater Creek, Inc.* 1,100 $ 32,655
------------------------------------------------------------------------------------------
Specialty Materials
1.76% Carbo Ceramics, Inc. 1,200 35,924
------------------------------------------------------------------------------------------
Truckers 2.55% Covenant Transport, Inc.
Class A* 2,300 20,844
Heartland Express, Inc.* 1,800 31,274
----------
Total 52,118
------------------------------------------------------------------------------------------
Total Common Stocks
(Cost $1,564,738) 1,867,966
------------------------------------------------------------------------------------------
<CAPTION>
Principal
Investments Amount Value
------------------------------------------------------------------------------------------
Short-Term Investments 7.48%
------------------------------------------------------------------------------------------
Freddie Mac
Discount Note
6.45% due 11/1/2000
(Cost $153,000) $ 153,000 $ 153,000
Total Investments 98.85%
(Cost $1,717,738) $2,020,966
------------------------------------------------------------------------------------------
<CAPTION>
Schedule of Investments
Micro-Cap Growth Fund October 31, 2000
Investments Shares Value
------------------------------------------------------------------------------------------
Common Stocks 92.77%
------------------------------------------------------------------------------------------
Apparel 6.98% McNaughton Apparel
Group, Inc.* 3,900 $ 53,624
Saucony, Inc. Class B* 3,500 37,844
Steve Madden Ltd.* 3,800 36,219
Tag-It Pacific, Inc.* 5,300 23,519
----------
Total 151,206
------------------------------------------------------------------------------------------
Biotechnology Corvas International, Inc.* 2,700 57,375
Research Products Cryolife, Inc.* 2,000 79,624
9.20% Interpore International, Inc.* 6,700 36,013
Trega Biosciences, Inc.* 12,800 26,400
----------
Total 199,412
------------------------------------------------------------------------------------------
Business Services A Consulting Team, Inc.* 3,600 16,875
14.43% APAC Customer
Services, Inc.* 7,000 37,625
Aegis Communications
Group, Inc.* 50,000 40,625
First Consulting Group,
Inc. ADR* 7,600 50,825
Headhunter.Net, Inc.* 6,100 54,900
MDC Corp., Inc.
Class A* 4,600 41,975
Provant, Inc.* 6,700 43,760
RemedyTemp, Inc. Class A* 1,700 14,663
United Shipping &
Technology, Inc.* 3,300 11,550
----------
Total 312,798
------------------------------------------------------------------------------------------
Capital Goods 2.54% Flow International Corp.* 4,400 55,000
------------------------------------------------------------------------------------------
Computer Service
1.41% Interactive Objects, Inc.* 16,000 30,501
------------------------------------------------------------------------------------------
Computer Software Interplay Enterainment Corp.* 8,000 29,000
5.56% Scientific Learning Corp.* 4,000 22,375
<CAPTION>
Investments Shares Value
------------------------------------------------------------------------------------------
Segue Software, Inc.* 1,300 $ 8,450
SkillSoft Corp.* 1,000 18,000
SPSS, Inc.* 1,900 42,750
----------
Total 120,575
------------------------------------------------------------------------------------------
Computer Technology
1.04% Rimage Corp.* 2,250 22,500
------------------------------------------------------------------------------------------
Consumer Advanced Marketing
Discretionary 1.49% Services, Inc. 1,800 32,400
------------------------------------------------------------------------------------------
Consumer Products Cuisine Solutions, Inc.* 38,500 42,111
3.98% Educational Development
Corp. 10,000 38,750
Evercel, Inc.* 300 5,400
----------
Total 86,261
------------------------------------------------------------------------------------------
Drugs 1.52% Akorn, Inc.* 2,800 12,950
Novavax, Inc.* 2,700 19,980
----------
Total 32,930
------------------------------------------------------------------------------------------
Education Services
1.94% ProsoftTraining.com* 6,000 42,000
------------------------------------------------------------------------------------------
Electronics 0.90% Metron Technology N.V.* 2,000 19,500
------------------------------------------------------------------------------------------
Electronics: BTU International, Inc.* 2,800 33,250
Semiconductor 4.19% Semitool, Inc.* 4,400 57,475
----------
Total 90,725
------------------------------------------------------------------------------------------
Financial Services Actrade Financial
4.75% Technologies* 2,700 63,113
Online Resources &
Communications Corp.* 3,900 16,575
Transmedia Network, Inc.* 9,800 23,275
----------
Total 102,963
------------------------------------------------------------------------------------------
Health Care Products ATS Medical, Inc.* 5,800 106,212
11.67% Boston Biomedica, Inc.* 5,700 19,950
</TABLE>
See Notes to Financial Statements
2
<PAGE>
<TABLE>
<CAPTION>
Schedule of Investments (continued)
Micro-Cap Growth Fund October 31, 2000
Investments Shares Value
------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Candela Corp.* 4,000 $ 25,750
Colorado Medtech, Inc.* 4,800 27,000
Eclipse Surgical
Technologies* 2,600 3,331
Endocardial Solutions, Inc.* 3,500 14,219
Iridex Corp.* 2,500 23,125
Micro Therapeutics, Inc.* 5,000 33,282
----------
Total 252,869
------------------------------------------------------------------------------------------
Health Care Services Health Risk
2.18% Management, Inc.* 3,000 23,625
Matria Healthcare, Inc.* 5,200 10,888
Medcom USA, Inc.* 8,000 12,750
----------
Total 47,263
------------------------------------------------------------------------------------------
Industrial Products
1.89% Northwest Pipe Co. ADR* 3,900 40,950
------------------------------------------------------------------------------------------
Leisure 6.18% Shuffle Master, Inc.* 4,000 89,750
Cinar Corp. Class B* 13,600 44,200
----------
Total 133,950
------------------------------------------------------------------------------------------
Retail 2.70% Wet Seal, Inc. Class A* 1,300 24,375
Sharper Image Corp.* 1,800 34,200
----------
Total 58,575
------------------------------------------------------------------------------------------
<CAPTION>
Investments Shares Value
------------------------------------------------------------------------------------------
Security Services
2.44% Armor Holdings, Inc.* 3,400 $ 52,912
------------------------------------------------------------------------------------------
Telecommunications
0.67% ClearWorks.Net, Inc.* 6,000 14,625
------------------------------------------------------------------------------------------
Telecommunications Anicom, Inc.*+ 6,800 22,029
Equipment 5.11% Gentner Communications
Corp.* 2,000 32,000
U.S. Wireless Data, Inc.* 2,625 9,188
Xeta Technologies, Inc.* 4,400 47,575
----------
Total 110,792
------------------------------------------------------------------------------------------
Total Common Stocks
(Cost $2,196,512) 2,010,707
------------------------------------------------------------------------------------------
Short-Term Investments 7.75% Principal Amount
------------------------------------------------------------------------------------------
Freddie Mac
Discount Note
6.45% due
11/1/2000
(Cost $168,000) $168,000 168,000
------------------------------------------------------------------------------------------
Total Investments 100.52%
(Cost $2,364,512) $2,178,707
------------------------------------------------------------------------------------------
</TABLE>
*Non-income producing security.
+Security valued at
fair value - see Note 2.
REIT Real Estate Investment Trust.
ADR-American Depository Receipt.
See Notes to Financial Statements
3
<PAGE>
Statements of Assets and Liabilities
October 31, 2000
<TABLE>
<CAPTION>
Micro-Cap Micro-Cap
Value Fund Growth Fund
ASSETS:
<S> <C> <C>
Investments in securities, at cost $ 1,717,738 $ 2,364,512
-----------------------------------------------------------------------------------------------------------------------------------
Investments in securities, at value $ 2,020,966 $ 2,178,707
Cash 10,066 21,566
Receivables:
Investment securities sold 27,328 --
Interest & dividends 675 --
From advisor 6,361 6,250
-----------------------------------------------------------------------------------------------------------------------------------
Total assets 2,065,396 2,206,523
-----------------------------------------------------------------------------------------------------------------------------------
LIABILITIES:
Payables:
Investment securities purchased 6,903 28,350
Trustees' fees 119 118
12b-1 distribution fees 3,165 3,702
Accrued expenses and other liabilities 10,716 6,813
-----------------------------------------------------------------------------------------------------------------------------------
Total liabilities 20,903 38,983
-----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS $ 2,044,493 $ 2,167,540
-----------------------------------------------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS:
Paid-in capital 1,403,040 1,949,740
Undistributed net investment income 15,312 1,001
Undistributed net realized gain from investments 322,913 402,604
Net unrealized appreciation (depreciation) on investments 303,228 (185,805)
-----------------------------------------------------------------------------------------------------------------------------------
Net Assets $ 2,044,493 $ 2,167,540
-----------------------------------------------------------------------------------------------------------------------------------
Net assets by class:
Class A Shares $ 2,032,367 $ 2,159,661
Class Y Shares $ 12,126 $ 7,879
Outstanding shares by class:
Class A Shares 127,853 163,807
Class Y Shares 761.615 596.659
Net asset value, offering and redemption price per share (net assets divided by
outstanding shares):
Class A Shares-Net asset value $ 15.90 $ 13.18
Class A Shares-Maximum offering price (net asset value plus sales charge of 5.75%) $ 16.87 $ 13.98
Class Y Shares-Net asset value $ 15.92 $ 13.21
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements
4
<PAGE>
Statements of Operations
For the Year Ended October 31, 2000
<TABLE>
<CAPTION>
Micro-Cap Micro-Cap
INVESTMENT INCOME: Value Fund Growth Fund
<S> <C> <C>
Dividends $ 14,371 $ 694
Interest 5,795 4,384
Total investment income 20,166 5,078
-----------------------------------------------------------------------------------------------------------------------------------
Expenses:
Management fee 24,354 31,528
12b-1 distribution plan-Class A 3,165 3,702
Professional 8,561 8,561
Registration 4,308 4,308
Reports to shareholders 2,576 2,616
Shareholder servicing 618 618
Trustees' 148 137
Custody 62 89
Other 1,075 1,075
-----------------------------------------------------------------------------------------------------------------------------------
Gross expenses 44,867 52,634
Management fees waived (24,354) (31,528)
Expenses assumed by Lord, Abbett & Co. (17,286) (17,315)
Expense reductions (62) (89)
-----------------------------------------------------------------------------------------------------------------------------------
Net expenses 3,165 3,702
-----------------------------------------------------------------------------------------------------------------------------------
Net investment income 17,001 1,376
-----------------------------------------------------------------------------------------------------------------------------------
Realized and unrealized gain on investments:
Net realized gain from investment transactions 322,944 403,403
Net change in unrealized appreciation/depreciation on investments 283,659 (211,279)
-----------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain on investments 606,603 192,124
-----------------------------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets Resulting From Operations $ 623,604 $ 193,500
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements
5
<PAGE>
Statements of Changes in Net Assets
Year Ended October 31, 2000
<TABLE>
<CAPTION>
Micro-Cap Micro-Cap
INCREASE IN NET ASSETS Value Fund Growth Fund
Operations:
<S> <C> <C>
Net investment income $ 17,001 $ 1,376
Net realized gain from investment transactions 322,944 403,403
Net change in unrealized appreciation/depreciation on investments 283,659 (211,279)
-----------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 623,604 193,500
-----------------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income
Class A -- --
Class Y (10,566) (2,266)
Net realized gain
Class Y (8,012) (131,886)
Total distributions to shareholders (18,578) (134,152)
-----------------------------------------------------------------------------------------------------------------------------------
Capital share transactions:
Net proceeds from sales of shares 2,104,154 3,321,659
Reinvestment of distributions 18,578 134,152
Cost of shares reacquired (1,834,818) (2,751,198)
Net increase in net assets resulting from capital share transactions 287,914 704,613
-----------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets 892,940 763,961
-----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of year 1,151,553 1,403,579
-----------------------------------------------------------------------------------------------------------------------------------
End of year $ 2,044,493 $ 2,167,540
-----------------------------------------------------------------------------------------------------------------------------------
Undistributed net investment income $ 15,312 $ 1,001
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements
6
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
12/15/98* 12/15/98*
to 10/31/99 to 10/31/99
Micro-Cap Micro-Cap
INCREASE IN NET ASSETS Value Fund Growth Fund
Operations
<S> <C> <C>
Net investment income $ 8,877 $ 1,891
Net realized gain from investment transactions 7,981 131,087
Net change in unrealized appreciation on investments 19,569 25,474
Net increase in net assets resulting from operations 36,427 158,452
------------------------------------------------------------------------------------------------------------------------------------
Capital share transactions:
Net proceeds from sales of shares 1,115,126 1,245,127
Net increase in net assets resulting from capital share transactions 1,115,126 1,245,127
------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets 1,151,553 1,403,579
------------------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period -- --
------------------------------------------------------------------------------------------------------------------------------------
End of period $1,151,553 $1,403,579
------------------------------------------------------------------------------------------------------------------------------------
Undistributed net investment income $ 8,877 $ 1,891
-----------------------------------------------------------------------------------------------------------------------------------
*Commencement of operations.
</TABLE>
See Notes to Financial Statements
7
<PAGE>
Financial Highlights
MICRO-CAP VALUE FUND
<TABLE>
<CAPTION>
5/1/00(f)
Per Share Operating Performance (Class A Shares) to 10/31/00
Net asset value, beginning of period$13.13
<S> <C>
Investment operations
Net investment income .07(c)
Net realized and unrealized gain on investments 2.70
------------
Total from investment operations 2.77
------------
Distributions to shareholders from:
Net investment income -
Net realized gain -
------------
Total distributions -
------------
Net asset value, end of period $15.90
------------
Total Return(d) 21.10%(b)
Ratios to Average Net Assets
Expenses, including waiver and expense reductions(e) .17%(b)
Expenses, excluding waiver and expense reductions 1.50%(b)
Net investment income .49%(b)
</TABLE>
<TABLE>
<CAPTION>
Year Ended 12/15/98(a)
Per Share Operating Performance (Class Y Shares) 10/31/00 to 10/31/99
<S> <C> <C>
Net asset value, beginning of period $10.75 $10.00
------------ -------------
Investment operations
Net investment income .14(c) .12(c)
Net realized and unrealized gain on investments 5.19 .63
------------ -------------
Total from investment operations 5.33 .75
------------ -------------
Distributions to shareholders from:
Net investment income (.09) -
Net realized gain (.07) -
------------ -------------
Total distributions (.16) -
------------ -------------
Net asset value, end of period $15.92 $10.75
------------ -------------
Total Return(d) 50.12% 7.60%(b)
Ratios to Average Net Assets
Expenses, including waiver and expense reductions(e) .00% .00%(b)
Expenses, excluding waiver and expense reductions 2.50% 1.80%(b)
Net investment income 1.15% 1.08%(b)
-----------------------------------------------------------------------------------------------------------------------------
Year Ended 12/15/98(a)
Supplemental Data for All Classes: 10/31/00 to 10/31/99
-----------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (000) $2,044 $1,152
Portfolio turnover rate 82.02% 30.38%
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Commencement of operations.
(b) Not annualized.
(c) Calculated using average shares outstanding during the period.
(d) Total return does not consider the effects of sales loads and assumes the
reinvestment of all distributions.
(e) The ratio includes expenses paid through an expense offset arrangement.
(f) Commencement of offering of class shares.
See Notes to Financial Statements.
8
<PAGE>
Financial Highlights
MICRO-CAP Growth FUND
<TABLE>
<CAPTION>
5/1/00(f)
Per Share Operating Performance (Class A Shares) to 10/31/00
<S> <C> <C> <C>
Net asset value, beginning of period $16.76
-----------
Investment operations
Net investment loss (.01)(c)
Net realized and unrealized loss on investments (3.57)
-----------
Total from investment operations (3.58)
-----------
Distributions to shareholders from:
Net investment income -
Net realized gain -
-----------
Total distributions -
-----------
Net asset value, end of period $13.18
-----------
Total Return(d) (21.36)%(b)
Ratios to Average Net Assets
Expenses, including waiver and expense reductions(e) .18%(b)
Expenses, excluding waiver and expense reductions 1.36%(b)
Net investment loss (.04)%(b)
Year Ended 12/15/98(a)
Per Share Operating Performance (Class Y Shares) 10/31/00 to 10/31/99
Net asset value, beginning of period $12.57 $10.00
----------- ----------
Investment operations
Net investment income .04(c) .02(c)
Net realized and unrealized gain on investments 1.73 2.55
----------- ----------
Total from investment operations 1.77 2.57
----------- ----------
Distributions to shareholders from:
Net investment income (.02) -
Net realized gain (1.11) -
----------- ----------
Total distributions (1.13) -
----------- ----------
Net asset value, end of period $13.21 $12.57
----------- ----------
Total Return(d) 14.48% 25.70%(b)
Ratios to Average Net Assets
Expenses, including waiver and expense reductions(e) .00% .00%(b)
Expenses, excluding waiver and expense reductions 2.33% 1.71%(b)
Net investment income .22% .19%(b)
----------- ----------
Year Ended 12/15/98(a)
Supplemental Data for All Classes: 10/31/00 to 10/31/99
----------- ----------
Net assets, end of year (000) $2,168 $1,404
Portfolio turnover rate 103.33% 41.18%
----------- ----------
</TABLE>
(a) Commencement of operations.
(b) Not annualized.
(c) Calculated using average shares outstanding during the period.
(d) Total return does not consider the effects of sales loads and assumes
the reinvestment of all distributions.
(e) The ratio includes expenses paid through an expense offset arrangement.
(f) Commencement of offering of class shares.
See Notes to Financial Statements.
9
<PAGE>
Notes to Financial Statements
1. ORGANIZATION
Lord Abbett Securities Trust (the "Trust") is an open-end management investment
company, organized as a Delaware business trust. The Trust currently consists of
six portfolios (the"Funds"). This report covers the following two Funds: Lord
Abbett Micro-Cap Value Fund and Lord Abbett Micro-Cap Growth Fund. The Funds are
diversified under the Investment Company Act of 1940 (the "Act"). The financial
statements have been prepared in conformity with accounting principles generally
accepted in the United States of America, which permit management to make
certain estimates and assumptions that affect the reported amounts and
disclosures at the date of the financial statements. Actual results could differ
from those estimates.
2. SIGNIFICANT ACCOUNTING POLICIES
(a) Investment Valuation-Securities traded on national or foreign securities
exchanges are valued at the last quoted sales price, or if no sales price is
available, at the mean between the latest bid and ask prices. Over the counter
securities are valued at the mean between the latest bid and ask prices as
furnished by dealers who make markets in such securities or by an independent
pricing service. Securities for which market quotations are not readily
available are valued at fair value as determined by management and approved in
good faith by the Board of Trustees. Short-term securities with 60 days or less
remaining to maturity are valued using the amortized cost method, which
approximates current market value.
(b) Security Transactions and Investment Income-Security transactions are
recorded as of the date that the securities are purchased or sold (trade date).
Realized gains and losses on sales of portfolio securities are calculated using
the identified-cost method. Dividend income and distributions to shareholders
are recorded on the ex-dividend date. Interest income is recorded on the accrual
basis. Net investment income 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.
(c) Federal Taxes-It is the policy of the Trust to meet the requirements of the
Internal Revenue Code applicable to regulated investment com- panies and to
distribute substantially all of its taxable net investment income and capital
gains to its shareholders. Therefore, no federal income tax provision is
required.
(d) Expenses-Expenses incurred by the Trust that do not specifically relate to
an individual Fund are allocated to the Fund on a pro rata basis. Class A
shareholders bear all expenses and fees relating to its 12b-1 Distribution Plan.
3. MANAGEMENT FEES AND OTHER TRANSACTIONs WITH AFFILIATES
Management Fees
The Trust has a management agreement with Lord, Abbett & Co. ("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 following annual rates:
<TABLE>
<CAPTION>
Management Fee Voluntary Waiver
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Micro-Cap Value Fund 1.50% 1.50%
Micro-Cap Growth Fund 1.50% 1.50%
</TABLE>
For the period ended October 31, 2000, Lord Abbett voluntarily waived its
management fees.
12b-1 Plans
The Trust has adopted a distribution plan (the "Plan") with respect to Class A
shares pursuant to Rule 12b-1 of the Act, which provides for payment of ongoing
account maintenance and distribution fees to Lord Abbett Distributor LLC
("Distributor"), an affiliate of Lord Abbett. The service and distribution fees
are accrued daily at an annual rate of .25% and .10%, respectively. In addition,
the Funds pay a one-time distribution fee of up to 1% on certain qualifying
purchases, which is generally amortized over a one-year period. Class Y does not
have a distribution plan.
4. DISTRIBUTIONS
Dividends from net investment income and distributions from net realized gain
from investment transactions, if any, are declared and paid annually. 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 gain amounts in accordance with accounting principles
generally accepted in the United States of America.
10
<PAGE>
Notes to Financial Statements (continued)
Distributions declared on November 15, 2000, and paid on November 21, 2000 to
shareholders of record as of November 20, 2000 were as follows:
<TABLE>
<CAPTION>
Rate Aggregate
Per Share Amount
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Micro-Cap Value Fund
Net Investment Income - Class A $ 0.1373 $ 18,494
Net Investment Income - Class Y 0.1702 130
Short-Term Capital Gains - Class A 1.9083 257,015
Short-Term Capital Gains - Class Y 1.9083 1,453
Long-Term Capital Gains - Class A 0.4758 64,080
Long-Term Capital Gains - Class Y 0.4758 362
Micro-Cap Growth Fund
Net Investment Income - Class A 0.0083 1,421
Net Investment Income - Class Y 0.0375 22
Short-Term Capital Gains - Class A 1.5815 271,054
Short-Term Capital Gains - Class Y 1.5815 944
Long-Term Capital Gains - Class A 0.7595 130,162
Long-Term Capital Gains - Class Y 0.7595 453
5. PORTFOLIO SECURITIES TRANSACTIONS
Purchases and sales of investment securities (other than short-term investments)
are as follows for the year ended October 31, 2000:
Purchases Sales
------------------------------------------------------------------------------------------------------------------------
Micro-Cap Value Fund $1,499,166 $1,288,237
Micro-Cap Growth Fund 2,631,312 2,094,654
As of October 31, 2000, the aggregate cost of investments, gross unrealized
appreciation, gross unrealized depreciation and net unrealized appreciation
(depreciation) of investments based on cost for federal income tax purposes were
as follows:
</TABLE>
<TABLE>
<CAPTION>
Net
Gross Gross Unrealized
Unrealized Unrealized Appreciation
Tax Cost Appreciation Depreciation (Depreciation)
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Micro-Cap Value Fund $1,717,738 $370,085 $ (66,857) $ 303,228
Micro-Cap Growth Fund 2,364,512 340,358 (526,163) (185,805)
</TABLE>
6. TRUSTEE'S REMUNERATION
The Trustees associated with Lord Abbett and all officers of the Trust receive
no compensation from the Trust for acting as such. Outside Trustees' fees are
allocated among all Lord Abbett-sponsored funds based on the net assets of each
fund. The outside Trustees may elect to defer receipt of such fees. The deferred
fees earn a return based on the performance of the Trust, or other funds within
the Lord Abbett Family of Funds. Such cost and earnings accrued thereon are
included in Trustees' expense on the Statement of Operations and are not
deductible for Federal income tax purposes until such amounts are paid.
7. EXPENSE REDUCTIONS
The Trust has entered into an arrangement with its custodian whereby credits
realized as a result of uninvested cash balances were used to reduce the Trust's
custody expense.
<PAGE>
Notes to Financial Statements (continued)
8. SUMMARY OF CAPITAL TRANSACTIONS
Transactions in Funds with multiple classes (both shares and dollars) are as
follows:
<TABLE>
<CAPTION>
Micro-Cap Value Fund
------------------------------------------------------------------------------------------------------------------------
Period Ended October 31, 2000** Period Ended October 31, 1999*
Class A Shares Shares Amount Shares Amount
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Shares sold 127,856 $ 1,702,126 - -
Reinvestment of distributions - - - -
Shares reacquired (3) (50) - -
------------------------------------------------------------------------------------------------------------------------
Increase 127,853 $ 1,702,076 - -
------------------------------------------------------------------------------------------------------------------------
Class Y Shares Year Ended October 31, 2000
------------------------------------------------------------------------------------------------------------------------
Shares sold 35,145 $ 402,028 107,076 $ 1,115,126
Reinvestment of distributions 1,624 18,578 - -
Shares reacquired (143,083) (1,834,768) - -
------------------------------------------------------------------------------------------------------------------------
Increase (Decrease) (106,314) $(1,414,162) 107,076 $ 1,115,126
------------------------------------------------------------------------------------------------------------------------
Micro-Cap Growth Fund
Class A Shares Period Ended October 31, 2000**
-----------------------------------------------------------------------------------------------------------------------
Shares sold 180,441 $ 2,834,010 - -
Reinvestment of distributions - - - -
Shares reacquired (16,634) (250,065) - -
-----------------------------------------------------------------------------------------------------------------------
Increase 163,807 $ 2,583,945 - -
-----------------------------------------------------------------------------------------------------------------------
Class Y Shares Year Ended October 31, 2000
-----------------------------------------------------------------------------------------------------------------------
Shares sold 36,492 $ 487,649 111,635 $1,245,127
Reinvestment of distributions 10,655 134,152 - -
Shares reacquired (158,186) (2,501,133) - -
-----------------------------------------------------------------------------------------------------------------------
Increase (Decrease) (111,039) $(1,879,332) 111,635 $1,245,127
-----------------------------------------------------------------------------------------------------------------------
</TABLE>
*For the period December 15, 1998 to October 31, 1999.
**For the period May 1, 2000 to October 31, 2000.
12
<PAGE>
Independent Auditors' Reports
The Board of Trustees and Shareholders,
Lord Abbett Securities Trust:
We have audited the accompanying statements of assets and liabilities, including
the schedules of investments, of Lord Abbett Securities Trust-Micro-Cap Value
Fund and Micro-Cap Growth Fund ("The Trust") as of October 31, 2000, the related
statements of operations for the year then ended and changes in net assets, and
the financial highlights for each of the periods presented. These financial
statements and the financial highlights are the responsibility of the Trust's
management. Our responsibility is to express an opinion on these financial
statements and the financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned as of October 31, 2000 by correspondence with the custodian and
brokers; where replies were not received from brokers, we performed other
auditing procedures. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion. In our opinion, the financial statements and
financial highlights referred to above present fairly, in all material respects,
the financial position of Lord Abbett Securities Trust-Micro-Cap Value Fund and
Micro-Cap Growth Fund as of October 31, 2000, the results of their operations
for the year then ended, the changes in their net assets, and the financial
highlights for each of the periods presented, in conformity with accounting
principles generally accepted in the United States of America.
/S/ DELOITTE & TOUCHE LLP
New York, New York
December 20, 2000
Copyright (c) by Lord Abbett Securities Trust-Micro-Cap Value Fund and Micro-Cap
Growth Fund, 90 Hudson Street, Jersey City. NJ 07302-3973.
This publication, when not used for the general information of shareholders of
Lord Abbett Securities Trust-Micro-Cap Value Fund and Micro-Cap Growth Fund, 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.
13
