Lord Abbett
Investment
Trust
o U.S. Government Securities Series
o Limited Duration U.S. Government Securities Series
o Balanced Series
-----------
SEMI-ANNUAL REPORT FOR THE SIX MONTHS ENDED MAY 31, 1998
-----------
[GRAPHIC OMITTED]
Three portfolios to help you meet your goals
[LOGO]
<PAGE>
Report to Shareholders
For the Six-Month Period Ended May 31, 1998
[PHOTO OMITTED]
/s/ Robert S. Dow
- -------------------------
ROBERT S. DOW
CHAIRMAN
JUNE 18, 1998
Table of Contents
U.S. Government Securities Series
- -------------------------------------------------------
About the Series 1
Statement of Net Assets 4
Limited Duration U.S. Government Securities Series
- -------------------------------------------------------
About the Series 3
Statement of Net Assets 6
Balanced Series
- -------------------------------------------------------
About the Series 3
Statement of Net Assets 7
Data On All Series
- -------------------------------------------------------
Statements of Operations 8
Statements of Changes in
Net Assets 9
Financial Highlights 10
Notes to Financial Statements 13
At the close of the first half of the fiscal year, the three portfolios in your
Trust had combined assets of $2 billion. Below is an overview of each Series'
performance for the six-month period ending May 31, 1998.
U.S. Government Securities Series
6 Months Ended 5/31/98
-----------------------------------
Class A Class B Class C
- ------------------------------------------------------------------------------
Net asset value $2.60 $2.60 $2.61
Dividends $ .09 $ .08 $ .08
Total return*+ +3.8% +3.9% +3.8%
Limited Duration
U.S. Government
Securities Series Balanced Series
Six Months Six Months 5/1/98**
Ended 5/31/98 Ended 5/31/98 to 5/31/98
--------------------------------------------------------
Class A Class C Class A Class C Class B
- ------------------------------------------------------------------------------
Net asset value $ 4.41 $ 4.41 $ 12.91 $ 12.89 $ 12.90
Dividends $ .12 $ .10 $ .24 $ .17 $ .04
Capital gains $ -- $ -- $ .35 $ .35 $ --
Total return*+ +3.0% +2.5% +5.6% +5.1% -1.6%
In an environment of low inflation and strong U.S. economic growth, U.S.
Government Securities Series and Limited Duration U.S. Government Securities
Series both maintained a heavy concentration in investments we believed would
provide extra yield over Treasuries, primarily mortgage-backed securities such
as FNMAs. A small portion of the portfolio remained in straight agency bonds and
very short-term cash-substitute securities. Going forward, we intend to maintain
our overweighting in such higher-yielding U.S. Government securities. Should
interest rates continue at low levels, or the Asian collapse become more severe,
we plan to shift a greater portion of assets from mortgages and agencies into
Treasuries.
On April 1, 1998, the Balanced Series adopted a "fund-of-funds" format, and as
of May 31, 1998 assets were divided 55%/45% between shares of Lord Abbett
Affiliated Fund (equity fund) and Lord Abbett Bond-Debenture Fund (fixed-income
fund), respectively.++ Affiliated Fund benefited from an increased weighting in
insurance stocks, which performed well, and is slowly building up its holdings
in retail, publishing and airline stocks. Bond-Debenture Fund has continued to
emphasize corporate high-yield bonds, focusing on asset values and growth
prospects of the companies we believe are likely candidates for credit upgrades.
The Fund has reduced exposure to cyclical industries, such as steel, chemicals
and paper, because we believe companies in these sectors may experience
difficulties in the current low-inflation environment.
Thank you for making Lord Abbett Investment Trust a part of your investment
portfolio. We look forward to helping you meet your financial goals in the years
ahead.
* Total return is the percent change in net asset value assuming the
reinvestment of all distributions.
** Commencements of offering Class shares.
+ Not annualized.
++ The portfolio is actively managed and as a result, asset allocation may
change from time to time.
<PAGE>
ABOUT THE U.S. GOVERNMENT SECURITIES SERIES
Total Return is Important to Fixed-Income Investors
Over the last 10 1/2 years, an investment in the Series provided relatively
stable dividend income and, assuming the reinvestment of all distributions, grew
by over 123%. The Series surpassed the increase in inflation (as measured by the
Consumer Price Index) over the last 10 1/2 years.
Lord Abbett U.S. Government Securities Series Versus Inflation(1)(2)
Growth of $100,000: 11/30/87 - 5/31/98
Fund CPI
11/30/87 96104 100000
11/30/88 105358 104246
11/30/89 117633 109099
11/30/90 126827 115945
11/30/91 145032 119411
11/30/92 158438 123050
11/30/93 175383 126343
11/30/94 167942 129723
11/30/95 192950 133102
11/30/96 201444 137435
11/30/97 214886 139948
11/30/98 223117 141075
The U.S. Government Securities Series Distribution Rate on 5/31/98 was 6.15%(3)
SEC Returns
Average annual compound returns for the periods ended June 30, 1998 at the
respective Class A share maximum sales charges,(4) with all distributions
reinvested:
Limited Duration
U.S. Government U.S. Government
Securities Series(2) Securities Series Balanced Series
- --------------------------------------------------------------------------------
1 year: +5.10% +4.10% +7.70%
5 years: +4.41% n/a n/a
10 years or Life of Series: +7.63% +3.10%(5) +14.01%(5)
SEC yield for the 30 days
ended 6/30/98: +5.10% +5.19% +3.95%
The results quoted herein represent past performance which is no indication of
future results. The investment return and principal value of an investment in
any Series of the Trust will fluctuate so that shares, on any given day or when
redeemed, may be worth more or less than their original cost. Each Series issues
separate classes of shares, with distinct pricing options. For a full discussion
of the differences in pricing alternatives, see the Trust's current prospectus.
(1) Total return is the percent change in value, assuming the reinvestment of
both dividends and capital gains distributions. The Series investment
reflects the deduction of the reduced 3.75% sales charge applicable to Class
A share investments of $100,000.
(2) Lord Abbett Investment Trust-U.S. Government Securities Series was
established 7/15/96. Its predecessor, Lord Abbett U.S. Government Securities
Fund, was established 9/19/32. Any performance relating to the Series for
periods prior to 7/15/96 reflects performance of the Series' predecessor.
(3) Based on the Class A share maximum offering price.
(4) The Class A share maximum sales charge is 4.75% for the U.S. Government
Securities Series and the Balanced Series and 3.00% for the Limited Duration
U.S. Government Securities Series.
(5) Limited Duration U.S. Government Securities Series commenced operations
11/4/93; Balanced Series commenced operations 12/27/94.
1
<PAGE>
ABOUT THE U.S. GOVERNMENT SECURITIES SERIES
Annual Total Returns Based on Calendar Year(1)
<TABLE>
<CAPTION>
1998
(6 Months
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 only)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Annual Total Return(1) +7.8% +12.7% +9.3% +16.9% +7.1% +9.2% -4.3% +15.7% +1.7% +9.2% +3.7%
- --------------------------------------------------------------------------------------------------------
</TABLE>
(1) Total return reflects the percent change in value with both dividends and
capital gains distributions reinvested. Results shown are at net asset
value for Class A shares. For performance at the maximum Class A share
sales charge, see page 1. See Important Information on page 4.
A Portfolio of High-Quality Securities
Conservative shareholders gain the comfort of owning U.S. Government securities,
which have the top investment grade and carry the least credit risk among
fixed-income securities.
[THE FOLLOWING TABLE WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL]
Lord Abbett's Focus on Quality:
Representative Structure as of 5/31/98(1)
FNMA 31.66%(2)
GNMA 22.67%(2)
FHLMC 20.36%(2)
U.S. Treasury Bonds 6.76%(2)
U.S. Treasury Notes 10.84%(2)
Other 7.71%(2)
(1) The portfolio is actively managed and as a result, its composition will
change from time to time.
(2) Percent of Total Long-Term Investments.
Who Owns the Series?
Investor Profile of Lord Abbett U.S. Government Securities Series
- --------------------------------------------------------------------------
Fiduciaries Trusts 3,774
Pension & profit-sharing plans 4,923
Custodians for minors 1,930
Estates 163
- --------------------------------------------------------------------------
Institutions Broker-held accounts 28,745
Corporate organizations 316
Religious, charitable & welfare organizations 246
Banks, credit unions & insurance companies 171
Cemeteries & hospitals 60
Government agencies 29
Colleges & universities 17
- --------------------------------------------------------------------------
Individuals Single & joint accounts & IRAs 39,198
- --------------------------------------------------------------------------
Other 106
- --------------------------------------------------------------------------
Total Accounts in the Series on 5/31/98 79,678
- --------------------------------------------------------------------------
2
<PAGE>
ABOUT THE LIMITED DURATION U.S. GOVERNMENT SECURITIES SERIES
The Series invests in intermediate-term U.S. Government securities. A portfolio
of these securities has generated a competitive distribution rate, with less
volatility than longer term U.S. Government bonds.
[THE FOLLOWING TABLE WAS REPRESENTED AS A BAR GRAPH IN THE PRINTED MATERIAL]
Lord Abbett Limited Duration U.S. Government Securities Series(1)
Growth of $100,000 (as of 5/31/98)
1 Year 3 years Life of Series
- ----------------------------------
$104,858 $112,411 $115,436
The Limited Duration U.S. Government Securities Series' Distribution Rate on
5/31/98 was 5.27%(2)
Total return shown, above and below, reflects the percent change in value for
Class A shares with both dividends and capital gains reinvested.
ABOUT THE BALANCED SERIES
The Series allocates its assets between fixed-income securities and equity
holdings, based on our economic outlook. This strategy has provided investors
with strong total returns, while generating monthly income.
[THE FOLLOWING TABLE WAS REPRESENTED AS A BAR GRAPH IN THE PRINTED MATERIAL]
Lord Abbett Balanced Series(3)
Growth of $100,000 (as of 5/31/98)
1 Year 3 years Life of Series
- ----------------------------------
$110,297 $142,110 $157,983
The Balanced Series' Average Annual Rate of Total Return Since Inception:
14.26%(2)
(1) The Limited Duration U.S. Government Securities Series commenced operations
on 11/4/93. Results reflect the deduction of the reduced 2.50% sales charge
applicable to Class A share investments of $100,000.
(2) Based on the Class A share maximum offering price.
(3) The Balanced Series commenced operations on 12/27/94. Results reflect the
deduction of the reduced 3.75% sales charge applicable to Class A share
investments of $100,000.
For Series' performance at the respective maximum Class A share sales
charges, see page 1.
3
<PAGE>
Important Information
Each Series' respective SEC yield is calculated on its maximum offering price on
6/30/98, using a standard method which does not take into account certain
portfolio strategies. Series' distribution rates differ from SEC yields
primarily because each Series purchases short- and intermediate-term,
high-coupon securities at a premium and distributes to shareholders all of the
interest income on those securities without amortizing the premiums. This
practice is consistent with applicable tax regulations and generally accepted
accounting principles, but may result in a decrease in the net asset values of
shares of the Series as the market values of the premium securities decrease
over time. Dividends paid from this interest income are taxable to shareholders
as ordinary income. Neither the U.S. Government Securities Series nor the
Limited Duration U.S. Government Securities Series is insured or guaranteed by
the U.S. Government.
Results quoted herein represent past performance based on the current sales
charge schedules and reflect appropriate Rule 12b-1 Plan expenses. Tax
consequences are not reflected. The U.S. Government Securities Series' sales
charge structure has changed from the past. If interest rates rise, the value of
bonds purchased by the Series would decrease, causing a decrease in the Series'
share values. If used as sales material after 9/30/98, this report must be
accompanied by Lord Abbett's Performance Quarterly for the most recently
completed calendar quarter.
Statement of Net Assets
U.S. GOVERNMENT SECURITIES SERIES May 31, 1998
<TABLE>
<CAPTION>
Principal
Investments Amount Market Value
==================================================================================================================================
Investments in Securities 110.07%
==================================================================================================================================
<S> <C> <C> <C>
U.S. Treasury 19.37% U.S. Treasury Bonds 10 5/8% due 8/15/2015+ $ 2,497M $ 3,781,394
U.S. Treasury Bonds Strips due 8/15/2020+ 528,033M 142,486,405
U.S. Treasury Inflation Index Notes 3 5/8% due 7/15/2002 80,275M 80,325,172
U.S. Treasury Notes 6% due 6/30/1999+ 20,000M 20,096,875
U.S. Treasury Notes 6 3/8% due 9/30/2001 38,696M 39,578,753
U.S. Treasury Notes 7 7/8% due 11/15/2004 12,054M 13,511,781
U.S. Treasury Strips due 2/15/2004+ 111,000M 81,099,375
Total 380,879,755
- ---------------------------------------------------------------------------------------------------------------------=============
U.S. Government Agencies 1.53% Federal National Mortgage Association 7.40% due 7/1/2004 27,900M 30,136,359
- ---------------------------------------------------------------------------------------------------------------------=============
Federal Home Loan 6 1/2% due on an announced basis 197,150M 196,225,859
Mortgage Corporation 7% due on an announced basis 16,300M 16,549,594
Pass-Through Securities 22.41% 7% due 2027 to 2028 212,790M 216,114,846
10 1/2% due 5/1/2020 10,568M 11,865,546
Total 440,755,845
- ---------------------------------------------------------------------------------------------------------------------=============
Federal National 5 1/2% due 11/1/2025 4,470M 4,233,057
Mortgage Association 6.21% due 11/7/2007 41,010M 41,689,228
Pass-Through Securities 33.32% 6.24% due 3/1/2008 3,295M 3,332,142
6.31% due 4/1/2008 2,848M 2,880,126
6.39% due 1/1/2008 7,356M 7,478,327
6.395% due 3/1/2008 3,261M 3,316,982
6.46% due 2006 to 2008 20,674M 21,072,076
6 1/2% due on an announced basis 165,695M 166,567,115
6 1/2% due 7/16/2007 28,200M 29,244,281
6.56% due 10/1/2007 10,114M 10,393,262
6.58% due 11/1/2004 3,075M 3,148,478
6.60% due 12/1/2007 7,294M 7,539,798
6 5/8% due 10/1/2007 9,746M 10,058,489
6.665% due 11/1/2007 3,207M 3,316,188
6.67% due 11/1/2004 7,720M 7,940,451
6.68% due 10/1/2007 9,797M 10,147,145
6.69% due 9/1/2007 7,950M 8,238,589
</TABLE>
4
<PAGE>
Statement of Net Assets
U.S. GOVERNMENT SECURITIES SERIES May 31, 1998
<TABLE>
<CAPTION>
Principal
Investments Amount Market Value
==================================================================================================================================
<S> <C> <C> <C>
6.715% due 10/1/2005 $ 2,829M $ 2,927,176
6 3/4% due 10/1/2007 8,001M 8,322,402
6.765% due 5/1/2007 4,956M 5,154,864
6.77% due 9/1/2004 4,645M 4,795,376
6.775% due 10/1/2007 7,012M 7,308,336
6.799% due 3/1/2007 5,860M 6,101,281
6.80% due 2004 to 2007 7,863M 8,188,729
6.805% due 3/1/2007 4,950M 5,158,584
6.825% due 11/1/2007 4,280M 4,476,419
6.84% due 10/1/2007 2,711M 2,837,180
6.86% due 10/1/2004 6,595M 6,845,498
6.907% due 6/1/2007 5,135M 5,377,715
6.91% due 3/1/2007 4,950M 5,192,082
6.935% due 4/1/2004 4,884M 5,074,278
6.96% due 4/2/2007 25,160M 26,834,713
6.98% due 6/1/2007 1,080M 1,134,543
7% due on an announced basis 104,500M 106,573,672
7% due 2013 24,353M 24,847,890
7.033% due 6/1/2007 2,456M 2,591,918
7.0427% due 12/1/2006 13,122M 13,817,409
7.43% due 6/1/2007 5,461M 5,921,875
7 1/2% due 2009 to 2023 53,220M 55,194,689
Total 655,272,363
- ---------------------------------------------------------------------------------------------------------------------=============
Government National 7% due 2026 to 2028 53,738M 54,620,456
Mortgage Association 7 1/2% due 2025 to 2028 267,556M 275,928,155
Pass-Through Securities 24.96% 8% due 2024 to 2028 142,622M 148,457,684
9% due 2018 to 2020 5,897M 6,381,933
10% due 2018 to 2019 4,849M 5,362,714
Total 490,750,942
- ---------------------------------------------------------------------------------------------------------------------=============
Other 8.48% 5.20% due 5/15/2005 3,076M 3,051,434
5 1/4% due 2018 to 2019 6,788M 6,727,713
5 3/4% due 7/25/2006 10,000M 9,962,500
5.80% due 7/15/2000 743M 741,299
6% due 2000 to 2019 106,642M 106,518,967
6.10625% due 1/25/2024 9,345M 9,356,927
6 1/8% due 5/16/2020 3,330M 3,334,141
6 1/2% due 3/18/2008 27,015M 27,158,369
Total 166,851,350
------------------------------------------------------------------------------------=============
Total Investments (Cost $2,141,587,801) 2,164,646,614
==================================================================================================================================
Other Assets, Less Liabilities (10.07)%
==================================================================================================================================
Other Assets
Short-term Investments Federal Home Loan Mortgage Corp. 5% due 1999 2,085M 2,074,353
Federal Home Loan Mortgage Corp. 5 1/2% due 1999 2,728M 2,716,279
Federal Home Loan Mortgage Corp. 5.55% due 6/1/1998 90,700M 90,658,051
Federal Home Loan Mortgage Corp. 6% due 2/1/1999 8,540M 8,522,774
Federal National Mortgage Association 13% due 6/10/1998 200,000M 200,468,750
Total 304,440,207
- ---------------------------------------------------------------------------------------------------------------------=============
Other (See Note 5) 89,654,368
- ---------------------------------------------------------------------------------------------------------------------=============
Total Short-term Investments (Cost $394,494,925) 394,094,575
------------------------------------------------------------------------------------=============
</TABLE>
5
<PAGE>
Statement of Net Assets
U.S. GOVERNMENT SECURITIES SERIES May 31, 1998
<TABLE>
<S> <C> <C>
==================================================================================================================================
Cash $ 192,178
- --------------------------------------------------------------------------------------------------------------------==============
Receivable for: Securities sold 348,227,687
Interest 11,567,985
Other 949,373
Total Other Assets 755,031,798
==================================================================================================================================
Payable for: Securities purchased 937,836,238
Other 15,215,992
Total Liabilities 953,052,230
------------------------------------------------------------------------------------=============
Total Other Assets, Less Liabilities (198,020,432)
==================================================================================================================================
Net Assets 100.00% $1,966,626,182
==================================================================================================================================
Class A Shares-Net asset value ($1,785,573,239 / 686,052,078 shares outstanding) $2.60
Class B Shares-Net asset value ($16,513,707 / 6,351,465 shares outstanding) $2.60
Class C Shares-Net asset value ($164,539,236 / 63,160,945 shares outstanding) $2.61
+Securities (or a portion of securities) on loan. See Note 5.
</TABLE>
See Notes to Financial Statements.
Statement of Net Assets
LIMITED DURATION U.S. GOVERNMENT SECURITIES SERIES May 31, 1998
<TABLE>
<CAPTION>
Principal
Investments Amount Market Value
==================================================================================================================================
<S> <C> <C> <C>
Investments in Securities 84.42%
==================================================================================================================================
U.S. Treasury 24.60% U.S. Treasury Notes 3 5/8% due 7/15/2002 $ 145M $ 145,091
U.S. Treasury Notes 6 1/4% due 4/30/2001 2,010M 2,046,117
Total 2,191,208
- ---------------------------------------------------------------------------------------------------------------------=============
U.S. Government Agencies .85% Federal National Mortgage Association 7.40% due 7/1/2004 70M 75,610
- ---------------------------------------------------------------------------------------------------------------------=============
Federal Home Loan
Mortgage Corporation
Pass-Through Securities 15.62% 7% due 9/1/2027 1,370M 1,391,405
- ---------------------------------------------------------------------------------------------------------------------=============
Federal National 6 1/2% due on an announced basis 550M 553,094
Mortgage Association 6 1/2% due 2007 to 2011 483M 487,211
Pass-Through Securities 16.29% 6.67% due 11/1/2004 100M 102,390
6.80% due 1/1/2004 99M 101,887
6.86% due 10/1/2004 100M 103,338
6.935% due 4/1/2004 99M 102,926
Total 1,450,846
- ---------------------------------------------------------------------------------------------------------------------=============
Government National 7% due 2/15/2028 534M 542,310
Mortgage Association 8% due 4/15/2028 170M 176,717
Pass-Through Securities 14.92% 10% due 6/15/2019 49M 53,892
10 1/2% due 2013 to 2020 500M 556,635
Total 1,329,554
- ---------------------------------------------------------------------------------------------------------------------=============
Other 12.14% 4 1/2% due 9/15/1998 9M 9,267
5 1/4% due 2015 to 2018 162M 160,871
5 1/2% due 7/25/2004 90M 89,510
5.65% due 7/15/2005 98M 97,704
5.80% due 7/15/2000 83M 82,366
</TABLE>
6
<PAGE>
Statement of Net Assets
LIMITED DURATION U.S. GOVERNMENT SECURITIES SERIES May 31, 1998
<TABLE>
<CAPTION>
Principal
Investments Amount Market Value
==================================================================================================================================
<S> <C> <C> <C>
6% due 2000 to 2009 $ 459M $ 457,955
6.10625% due 1/25/2024 146M 146,410
6 1/8% due 5/16/2020 37M 37,369
Total 1,081,452
- ---------------------------------------------------------------------------------------------------------------------=============
Total Investments (Cost $7,491,224) 7,520,075
==================================================================================================================================
Other Assets, Less Liabilities 15.58%
==================================================================================================================================
Other Assets
Federal Home Loan Mortgage Corp. 5% due 5/1/1999 122M 121,712
Federal Home Loan Mortgage Corp. 5 1/2% due 1998 338M 336,976
Federal Home Loan Mortgage Corp. 5.55% due 6/1/1998 1,230M 1,229,431
Financing Corp. due 6/27/1998 350M 348,742
Total (Cost $2,053,157) 2,036,861
- ---------------------------------------------------------------------------------------------------------------------=============
Cash 19,431
- ---------------------------------------------------------------------------------------------------------------------=============
Receivable for: Interest 39,583
Other 1,200
Total Other Assets 2,097,075
==================================================================================================================================
Payable for: Securities purchased 698,957
Other 9,881
Total Liabilities 708,838
------------------------------------------------------------------------------------=============
Total Other Assets, Less Liabilities 1,388,237
==================================================================================================================================
Net Assets 100.00% $ 8,908,312
==================================================================================================================================
Class A Shares-Net asset value ($5,334,222 / 1,210,022 shares outstanding) $4.41
Class C Shares-Net asset value ($3,574,090 / 810,148 shares outstanding) $4.41
</TABLE>
See Notes to Financial Statements.
Statement of Net Assets
BALANCED SERIES May 31, 1998
<TABLE>
<CAPTION>
Shares or
Investments Principle Amount Market Value
==================================================================================================================================
<S> <C> <C> <C>
Investments in Securities 99.46%
==================================================================================================================================
Lord Abbett Affiliated Fund, Inc.-Class Y 1,186,465 $ 17,939,353
Lord Abbett Bond-Debenture Fund, Inc.-Class Y 1,515,049 14,968,684
Total (Cost $33,436,191) 32,908,037
==================================================================================================================================
Other Assets, Less Liabilities .54%
==================================================================================================================================
Other Assets
Short-term Investments Federal Home Loan Mortgage Corp. 5.55% due 6/1/1998 161M 160,926
- ---------------------------------------------------------------------------------------------------------------------=============
Cash and Receivables, Net of Liabilities 16,692
- ---------------------------------------------------------------------------------------------------------------------=============
Total Other Assets, Less Liabilities 177,618
==================================================================================================================================
Net Assets 100.00% $ 33,085,655
==================================================================================================================================
Class A Shares-Net asset value ($27,461,919 / 2,127,149 shares outstanding) $12.91
Class B Shares-Net asset value ($328,173 / 25,449 shares outstanding) $12.90
Class C Shares-Net asset value ($5,295,563 / 410,749 shares outstanding) $12.89
</TABLE>
See Notes to Financial Statements.
7
<PAGE>
Statements of Operations
<TABLE>
<CAPTION>
Six Months Ended May 31, 1998
------------------------------------------------
Limited Duration
U.S. Government U.S. Government Balanced
Investment Income Securities Series Securities Series Series
==================================================================================================================================
<S> <C> <C> <C>
Income Interest $ 85,053,347 $ 306,351 $ 219,195
Dividends -- -- 322,016
Total income 85,053,347 306,351 541,211
--------------------------------------------------------------------------------------------------------------------
Expenses Management fee 5,393,850 23,929 95,377
Management fee waived -- (23,929) (60,754)
12b-1 distribution plan-Class A 2,661,158 -- --
12b-1 distribution plan-Class B 77,556 -- 160
12b-1 distribution plan-Class C 847,873 19,788 20,250
Shareholder servicing 1,528,330 12,489 32,347
Reports to shareholders 191,718 888 1,693
Professional 77,400 5,952 16,406
Registration 30,000 18,644 14,800
Organization -- 7,084 3,560
Other 71,508 2,586 6,996
Total expenses before reductions and reimbursements 10,879,393 67,431 130,835
Expenses assumed by Lord Abbett -- (25,728) --
Expenses assumed by other funds -- -- (21,027)
Expense reductions (219,776) (324) (1,314)
Net expenses 10,659,617 41,379 108,494
--------------------------------------------------------------------------------------------------------------------
Net investment income 74,393,730 264,972 432,717
--------------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain on Investments
==================================================================================================================================
Realized gain from investment transactions
Proceeds from sales 8,397,618,271 14,747,850 36,621,531
Cost of investments sold 8,372,546,055 14,720,338 33,206,099
Net realized gain 25,072,216 27,512 3,415,432
--------------------------------------------------------------------------------------------------------------------
Unrealized (depreciation) of investments (14,151,426) (22,020) (2,665,526)
- ----------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain on investments 10,920,790 5,492 749,906
- ----------------------------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets Resulting from Operations $ 85,314,520 $ 270,464 $ 1,182,623
==================================================================================================================================
</TABLE>
See Notes to Financial Statements.
8
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Six Months Ended May 31, 1998 Year Ended November 30, 1997
--------------------------------------- -----------------------------------------
Limited Limited
Duration Duration
U.S. U.S. U.S. U.S.
Increase (Decrease) in Net Assets Government Government Government Government
Securities Securities Balanced Securities Securities Balanced
Series Series Series Series Series Series
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Operations Net investment income $ 74,393,730 $ 264,972 $ 432,717 $ 193,985,723 $ 603,648 $ 561,895
Net realized gain (loss) from
investment transactions 25,072,216 27,512 3,415,432 (43,030,400) 39,022 579,922
Net unrealized appreciation
(depreciation) of investments (14,151,426) (22,020) (2,665,526) (10,950,190) (103,709) 874,298
Net increase in net assets
resulting from operations 85,314,520 270,464 1,182,623 140,005,133 538,961 2,016,115
----------------------------------------------------------------------------------------------------------------------
Undistributed net investment income included
in price of shares sold (reacquired) -- -- -- -- -- 4,365
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income-Class A (65,565,025) (116,724) (381,978) (182,138,357) (262,499) (469,284)
Net investment income-Class B (486,991) (127,071) (241) (669,146) - -
Net investment income-Class C (5,612,847) -- (55,209) (15,887,823) (339,791) (64,755)
Net realized gain from investment
transactions-Class A -- -- (482,407) -- -- (142,166)
Net realized gain from investment
transactions-Class C -- -- (88,565) -- -- (25,083)
Total distribution (71,664,863) (243,795) (1,008,400) (198,695,326) (602,290) (701,288)
----------------------------------------------------------------------------------------------------------------------
Capital share transactions:
Net proceeds from sales of shares 36,601,966 2,931,660 14,527,425 90,093,672 4,751,764 8,440,332
Net asset value of shares issued
to shareholders in reinvestment of
net investment income and realized
gain from investment transactions 34,995,514 159,010 896,593 92,399,913 373,050 578,863
Total 71,597,480 3,090,670 15,424,018 182,493,585 5,124,814 9,019,195
----------------------------------------------------------------------------------------------------------------------
Cost of shares reacquired (405,032,902) (4,485,248) (2,853,011) (744,682,611) (7,481,616) (1,404,283)
----------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets
derived from capital share
transactions (333,435,422) (1,394,578) 12,571,007 (562,189,026) (2,356,802) 7,614,912
----------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets (319,785,765) (1,367,909) 12,745,230 (620,879,219) (2,420,131) 8,934,104
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets Beginning of period 2,286,411,947 10,276,221 20,340,425 2,907,291,166 12,696,352 11,406,321
----------------------------------------------------------------------------------------------------------------------
End of period+ $1,966,626,182 $8,908,312 $33,085,655 $2,286,411,947 $10,276,221 $20,340,425
====================================================================================================================================
+Including undistributed (overdistributed) net investment income of $19,513,895, $(12,371) and $12,310, respectively,
as of May 31, 1998 and $16,785,027, $(33,548) and $17,019 as of November 30, 1997.
</TABLE>
See Notes to Financial Statements.
9
<PAGE>
Financial Highlights
U.S. GOVERNMENT SECURITIES SERIES
<TABLE>
<CAPTION>
Class A Shares
----------------------------------------------------------------------
Six Months
Ended
May 31, Year Ended November 30,
Per Share Operating Performance: 1998 1997 1996 1995 1994 1993
=================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 2.59 $ 2.63 $ 2.73 $ 2.59 $ 3.00 $ 2.94
- ---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations
Net investment income .09(d) .20(d) .215 .235 .247 .239
Net realized and unrealized gain (loss)
on investments .01 (.03) (.105) .136 (.3685) .070
Total from investment operations .10 .17 .11 .371 (.1215) .309
--------------------------------------------------------------------------------------------------------------------------
Distributions
Dividends from net investment income (.09) (.21) (.210) (.231) (.246) (.249)
Distribution from net realized gain -- -- -- -- (.0425) --
--------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 2.60 $ 2.59 $ 2.63 $ 2.73 $ 2.59 $ 3.00
Total Return(b) 3.83%(c) 6.67% 4.41% 14.89% (4.24)% 10.70%
=================================================================================================================================
Ratios to Average Net Assets:
Expenses 0.48%(c)(e) 0.92%(e) 0.88% 0.90% 0.90% 0.89%
Net investment income 3.47%(c) 7.82% 8.12% 8.85% 8.92% 7.94%
--------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Class B Shares Class C Shares
---------------------------------------- ----------------------------------------
Six Year Six Year
Months Ended Months Ended
Ended November 8/1/96(a) Ended November 7/15/96(a)
May 31, 30, to May 31, 30, to
Per Share Operating Performance: 1998 1997 11/30/96 1998 1997 11/30/96
===============================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 2.58 $ 2.63 $ 2.57 $ 2.59 $ 2.63 $ 2.55
- -------------------------------------------------------------------------------------------------------------------------------
Income from investment operations
Net investment income .08(d) .18(d) .063 .08(d) .18(d) .066
Net realized and unrealized gain
(loss) on investments .02 (.04) .060 .02 (.03) .085
Total from investment operations .10 .14 .123 .10 .15 .151
------------------------------------------------------------------------------------------------------------------------
Distributions
Dividends from net investment income (.08) (.19) (.063) (.08) (.19) (.071)
Distribution from net realized gain -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 2.60 $ 2.58 $ 2.63 $ 2.61 $ 2.59 $ 2.63
- -------------------------------------------------------------------------------------------------------------------------------
Total Return(b) 3.86%(c) 5.47% 5.45%(c) 3.84%(c) 5.86% 6.49%(c)
===============================================================================================================================
Ratios to Average Net Assets:
Expenses 0.83%(c)(e) 1.64%(e) 0.48%(c) 0.81%(c)(e) 1.55%(e) 0.60%(c)
Net investment income 3.06%(c) 6.77% 2.21%(c) 3.13%(c) 7.25% 2.60%(c)
========================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Six Months
Ended
May 31, Year Ended November 30,
Supplemental Data for All Classes: 1998 1997 1996 1995 1994 1993
===============================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Net assets, end of period (000) $1,966,626 $2,286,412 $2,907,291 $3,272,865 $3,232,012 $3,909,868
Portfolio turnover rate 246.66% 712.82% 820.59% 544.31% 790.57% 586.18%
========================================================================================================================
</TABLE>
(a) Commencement of offering respective Class shares.
(b) Total return does not consider the effects of sales loads.
(c) Not annualized.
(d) Calculated using average shares outstanding during the period.
(e) The ratios for 1997 and 1998 include expenses paid through an expenses
offset arrangement. See Notes to Financial Statements.
10
<PAGE>
Financial Highlights
LIMITED DURATION SERIES
<TABLE>
<CAPTION>
Class A Shares
------------------------------------------------------------------------------
Six Months Year One
Ended Ended Month
May 31, November 30, Ended Year Ended Year Ended 11/4/93(d)
Per Share Operating Performance: 1998 1997 11/30/96 10/31/96 10/31/95 to 10/31/94
============================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $4.40 $4.42 $4.39 $4.53 $4.44 $4.85
- ----------------------------------------------------------------------------------------------------------------------------
Income from investment operations
Net investment income .13(e) .25(e) .0174 .1912 .2316 .2650
Net realized and unrealized gain (loss)
on investments .00(g) (.02) .0333 (.0751) .1017 (.4123)
Total from investment operations .13 .23 .0507 .1161 .3333 (.1473)
-----------------------------------------------------------------------------------------------------------------------
Distributions
Dividends from net investment income (.12) (.25) (.0207) (.2561) (.2433) (.2627)
-----------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $4.41 $4.40 $4.42 $4.39 $4.53 $4.44
- ----------------------------------------------------------------------------------------------------------------------------
Total Return(b) 3.04%(c) 5.46% 1.15%(c) 2.67% 8.16% (3.09)%(c)
============================================================================================================================
Ratios to Average Net Assets:
Expenses, including waiver and reimbursement 0.23%(c)(f) 0.51%(f) 0.11%(c) 1.81% 1.40% 0.89%(c)
Expenses, excluding waiver and reimbursement 0.75%(c) 1.40% 0.13%(c) 2.73% 1.71% 0.89%(c)
Net investment income 2.98%(c) 5.81% 0.41%(c) 4.58% 5.62% 5.61%(c)
=======================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Class C Shares
------------------------------------------------------
Six Months Year
Ended Ended One Month
May 31, November 30, Ended 7/15/96(a)
Per Share Operating Performance: 1998 1997 11/30/96 to 10/31/96
====================================================================================================
<S> <C> <C> <C> <C>
Net asset value, beginning of period $4.40 $4.42 $4.39 $4.34
- ----------------------------------------------------------------------------------------------------
Income from investment operations
Net investment income .11(e) .21(e) .0138 .0667
Net realized and unrealized gain (loss)
on investments .00(g) (.02) .0342 .0515
Total from investment operations .11 .19 .0480 .1182
-----------------------------------------------------------------------------------------------
Distributions
Dividends from net investment income (.10) (.21) (.0180) (.0682)
-----------------------------------------------------------------------------------------------
Net asset value, end of period $4.41 $4.40 $4.42 $4.39
- ----------------------------------------------------------------------------------------------------
Total Return(b) 2.53%(c) 4.45% 1.09%(c) 2.98%(c)
====================================================================================================
Ratios to Average Net Assets:
Expenses, including waiver and reimbursement 0.68%(c)(f) 1.44%(f) 0.19%(c) 0.69%(c)
Expenses, excluding waiver and reimbursement 1.20%(c) 2.32% 0.21%(c) 0.77%(c)
Net investment income 2.52%(c) 4.84% 0.33%(c) 1.26%(c)
===============================================================================================
</TABLE>
<TABLE>
<CAPTION>
Six Months Year
Ended Ended One
May 31, November 30, Month Ended Year Ended Year Ended 11/4/93(d)
Supplemental Data for All Classes: 1998 1997 11/30/96 10/31/96 10/31/95 to 10/31/94
==================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Net assets, end of period (000) $8,908 $10,276 $12,696 $12,735 $8,922 $10,256
Portfolio turnover rate 123.08% 343.53% 175.98% 340.62% 222.00% 895.63%
=============================================================================================================
</TABLE>
(a) Commencement of offering respective Class shares.
(b) Total return does not consider the effects of sales loads.
(c) Not annualized.
(d) Commencement of operations.
(e) Calculated using average shares outstanding during the period.
(f) The ratios for 1997 and 1998 include expenses paid through an expenses
offset arrangement.
(g) Amount less than $.01.
See Notes to Financial Statements.
11
<PAGE>
Financial Highlights
BALANCED SERIES
<TABLE>
<CAPTION>
Class A Shares
---------------------------------------------------------------------
Six Months
Ended Year Ended One Month
May 31, November 30, Ended Year Ended 12/27/94(d)
Per Share Operating Performance: 1998 1997 11/30/96 10/31/96 to 10/31/95
=======================================================================================================================
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $12.80 $11.81 $11.30 $10.71 $ 9.52
- -----------------------------------------------------------------------------------------------------------------------
Income from investment operations
Net investment income .23 .47(e) .0312 .472 .365
Net realized and unrealized gain on investments .47 1.15 .5208 .732 1.185
Total from investment operations .70 1.62 .552 1.204 1.55
------------------------------------------------------------------------------------------------------------------
Distributions
Dividends from net investment income (.24) (.46) (.0420) (.462) (.36)
Distributions from net realized gain (.35) (.17) - (.152) -
------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $12.91 $12.80 $11.81 $11.30 $10.71
- -----------------------------------------------------------------------------------------------------------------------
Total Return(b) 5.61%(c) 14.24% 4.89%(c) 11.55% 16.32%(c)
=======================================================================================================================
Ratios to Average Net Assets:
Expenses, including waiver and reimbursement 0.34%(c)(f) 1.10%(f) 0.07%(c) 0.93% 0.37%(c)
Expenses, excluding waiver and reimbursement 0.64%(c) 1.53% 0.11%(c) 1.59% 1.26%(c)
Net investment income 1.76%(c) 3.89% 0.26%(c) 4.18% 4.39%(c)
==================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Class B Shares Class C Shares
-------------- -------------------------------------------------------
Six Months Year Ended One Month
5/1/98(a) Ended November 30, Ended 7/15/96(a)
Per Share Operating Performance: to 5/31/98 5/31/98 1997 11/30/96 to 10/31/96
================================================================= =======================================================
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $13.14 $12.78 $11.79 $11.29 $10.73
- ----------------------------------------------------------------- -------------------------------------------------------
Income from investment operations
Net investment income .04 .19 .35(e) .0067 .0349
Net realized and unrealized gain (loss)
on investments (.24) .44 1.15 .5298 .6346
Total from investment operations (.20) .63 1.50 .5365 .6695
------------------------------------------------------------ -------------------------------------------------------
Distributions
Dividends from net investment income (.04) (.17) (.34) (.0365) (.0730)
Distributions from net realized gain - (.35) (.17) - (.0365)
------------------------------------------------------------ -------------------------------------------------------
Net asset value, end of period $12.90 $12.89 $12.78 $11.79 $11.29
- ----------------------------------------------------------------- -------------------------------------------------------
Total Return(b) (1.56)%(c) 5.12%(c) 13.14% 4.76%(c) 7.78%(c)
==========================================================================================================================
Ratios to Average Net Assets:
Expenses, including waiver and reimbursement 0.11%(c)(f) 0.84%(c)(f) 2.08%(f) 0.16%(c) 0.62%(c)
Expenses, excluding waiver and reimbursement 0.28%(c) 1.33%(c) 2.51% 0.20%(c) 0.77%(c)
Net investment income 0.13%(c) 1.41%(c) 2.88% 0.17%(c) 0.70%(c)
=====================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Six Months Year Ended One Month
Ended November 30, Ended Year Ended 12/27/94(d)
Supplemental Data for All Classes: 5/31/98 1997 11/30/96 10/31/96 to 10/31/95
======================================================================================================================
<S> <C> <C> <C> <C> <C>
Net assets, end of period (000) $33,086 $20,340 $11,406 $10,988 $5,713
Portfolio turnover rate 156.78% 216.07% 10.05% 187.78% 131.80%
=================================================================================================================
</TABLE>
(a) Commencement of offering respective Class shares.
(b) Total return does not consider the effects of sales loads.
(c) Not annualized.
(d) Commencement of operations.
(e) Calculated using average shares outstanding during the period.
(f) The ratios for 1997 and 1998 include expenses paid through an expenses
offset arrangement.
See Notes to Financial Statements.
12
<PAGE>
Notes to Financial Statements
1. Significant Accounting Policies
Lord Abbett Investment Trust (the "Trust") is an open-end management investment
company organized as a Delaware business trust on August 16, 1993. The Trust
consists of four separate portfolios ("Series"). This reports covers three of
the Series-Lord Abbett U.S. Government Securities Series ("U.S. Government"),
Lord Abbett Limited Duration U.S. Government Securities Series ("Limited
Duration") and Lord Abbett Balanced Series ("Balanced"). Effective March 31,
1998, the Balanced Series structure was changed from investing directly in
portfolio securities to investing in other funds managed by Lord Abbett
("Underlying Funds"). Each Series is diversified as defined under the Investment
Company Act of 1940. The financial statements have been prepared in conformity
with generally accepted accounting principles which require management to make
certain estimates and assumptions at the date of the financial statements. The
following summarizes the significant accounting policies of the Trust:
(a) Market value is determined as follows: Securities listed or admitted to
trading privileges on any securities exchange are valued at the last sales price
on the exchange on which such securities are traded as of the close of business
on the day the securities are being valued or, lacking any sales, at the latest
price on the basis of current quotations from dealers (as in the case of bonds),
from valuations furnished by an independent pricing service or, in their
absence, fair value as determined under procedures approved by the Board of
Trustees. Investments in the Underlying Funds are valued at the closing net
asset value per share of each Underlying Fund on the day of valuation.
Short-term securities are valued at amortized cost which approximates market
value.
(b) It is the policy of the Trust to meet the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute all
of its taxable income. Therefore, no federal income tax provision is required.
(c) Security transactions are accounted for on the date that the securities are
purchased or sold (trade date). Realized gains and losses from investment
transactions are determined on the identified cost basis. Dividend income and
distributions to shareholders are recorded on the ex-dividend date and interest
income is recorded on the accrual basis. Net investment income (other than
distribution and service fees) and realized and unrealized gains or losses are
allocated to each class of shares based upon the relative proportion of net
assets at the beginning of the day. Discounts on strips are accrued to maturity
using the constant yield method. The Trust has elected not to amortize premiums
on U.S. Government bonds, which is consistent with the treatment for federal
income tax purposes.
(d) With respect to Balanced Series, a portion of the proceeds from sales and
costs of repurchases of shares, equivalent to the amount of distributable net
investment income on the date of the transaction, is credited or charged to
undistributed income. Undistributed net investment income per share thus is
unaffected by sales or repurchases of shares.
(e) The organization expenses of Limited Duration Series and Balanced Series are
amortized evenly over a period of five years from their respective commencement
dates of operations.
2. Management Fee and Other Transactions with Affiliates
The Trust has a management agreement with Lord, Abbett & Co. ("Lord Abbett")
pursuant to which Lord Abbett supplies the Trust with investment management,
research, statistical and advisory services and pays officers' remuneration and
certain other expenses of the Trust. The management fee is based on average
daily net assets for each month at the annual rate of 0.50% for U.S. Government
Series and Limited Duration Series and 0.75% for Balanced Series. The management
fee for U.S. Government Series is reduced to 0.45% for average daily net assets
in excess of $3 billion. Lord Abbett waived its management fee during the period
for Limited Duration Series and a portion of its management fee for Balanced
Series.
Lord Abbett may waive its management fees and reimburse the Trust for certain of
its other expenses. Any such other expenses reimbursed are subject to repayment
by the Series, pursuant to a formula based on the asset size and expense ratio
of each Series. The Series shall not be obligated to repay Lord Abbett after
five full fiscal years after the commencement of operations or the termination
of the management agreement, whichever is earlier. As of May 31, 1998, other
expenses reimbursed by Lord Abbett and not repaid by Limited Duration Series and
Balanced Series amounted to $34,952 and $4,576, respectively.
Each Series of the Trust has Rule 12b-1 plans and agreements with respect to one
or more classes of shares as described below (the "Class A, Class B and Class C
Plans") with Lord Abbett Distributor LLC ("Distributor"), an affiliate of Lord
Abbett. Each Series makes payments to Distributor which uses or passes on such
payments to authorized institutions. Pursuant to the Class A Plan, the Series
pays Distributor (1) an annual service fee of (a) 0.15% of the average daily net
asset value of shares sold prior to September 1, 1985 and 0.25% of the average
daily net asset value of shares sold on or after that date for U.S. Government
Series and (b) 0.25% of the average daily net asset value of Class A shares of
Limited Duration Series and Balanced Series, (2) a one-time distribution fee of
up to 1% on certain qualifying purchases and (3) a supplemental annual
distribution fee of 0.10% of the average daily net asset value of Class A shares
serviced by certain qualifying institutions. The Class A Plan of Limited
Duration Series and Balanced Series will not become operative until the first
day of the calendar quarter subsequent to the Series' net assets reaching $100
million and $50 million, respectively. Pursuant to the Class B Plan of U.S.
Government and Balanced Series, the Series pays Distributor an annual service
and distribution fee of 0.25% and 0.75%, respectively, of the average daily net
asset value of the Class B shares. Pursuant to the Class C Plan of each Series,
the Series pays Distributor (1) a service fee and a distribution fee, at the
time such shares are sold, not to exceed 0.25% and 0.75%, respectively, of the
net asset value of such shares sold and (2) at each quarter-end after the first
anniversary of the sale of such shares, a service fee and a distribution fee at
an annual rate not to exceed 0.25% and 0.75%, respectively, of the average
annual net asset value of such shares outstanding.
The Balanced Series has entered into a Servicing Arrangement with each
Underlying Fund: pursuant to which each Underlying Fund will pay a portion of
the expenses of the Balanced Series in proportion to the average daily value of
shares owned by the Balanced Series to the extent each Underlying Fund benefits.
Distributor received the following commissions on sales of shares of the Trust
after concessions were paid to authorized dealers:
Distributor Dealers'
Series Commissions Concessions
- --------------------------------------------------------------------------------
U.S. Government Series-Class A $ 72,325 $488,269
- --------------------------------------------------------------------------------
Limited Duration Series-Class A 5,596 32,061
- --------------------------------------------------------------------------------
Balanced Series-Class A 40,949 282,431
- --------------------------------------------------------------------------------
13
<PAGE>
3. Distributions
Dividends from net investment income are declared daily and paid monthly with
respect to U.S. Government Series and Limited Duration Series and declared
quarterly and paid monthly with respect to Balanced Series. Taxable net realized
gains from investment transactions in excess of any capital loss carryforward
are distributed to shareholders annually. At May 31, 1998, accumulated net
realized gain (loss) for financial reporting purposes aggregated $(589,995,673),
$(1,756,947) and $3,468,909 for U.S. Government Series, Limited Duration Series
and Balanced Series, respectively. The capital loss carryforwards for U.S.
Government Series and Limited Duration Series (which are substantially the same
as the accumulated net realized loss) expire in 2001, 2002, 2003, 2004 and 2005.
Income and capital gains distributions are determined in accordance with income
tax regulations which may differ from methods used to determine the
corresponding income and capital gains amounts in accordance with generally
accepted accounting principles.
4. Capital
Transactions in shares of beneficial interest (both shares and dollar amounts)
were as follows:
<TABLE>
<CAPTION>
Six Months Ended May 31, 1998
--------------------------------------------------------------------------------
U.S. Government Series Limited Duration Series Balanced Series
Class A Shares Amount Shares Amount Shares Amount
- ------------------------------------------------------------------------- ----------------------- -----------------------
<S> <C> <C> <C> <C> <C> <C>
Sales of shares 9,378,346 $ 24,370,705 631,057 $ 2,782,043 928,107 $11,955,288
Shares issued to shareholders in reinvestment
of net investment income and realized gain
from investment transactions 12,388,418 32,129,905 23,261 102,566 60,891 767,511
Total 21,766,764 56,500,610 654,318 2,884,609 988,998 12,722,799
- ------------------------------------------------------------------------- ----------------------- -----------------------
Shares reacquired (140,392,822) (364,847,266) (543,038) (2,394,930) (202,107) (2,552,201)
Increase (decrease) in shares (118,626,058) $(308,346,656) 111,280 $ (489,679) 786,891 $10,170,598
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Year Ended November 30, 1997
--------------------------------------------------------------------------------
U.S. Government Series Limited Duration Series Balanced Series
Class A Shares Amount Shares Amount Shares Amount
- ------------------------------------------------------------------------- ----------------------- -----------------------
<S> <C> <C> <C> <C> <C> <C>
Sales of shares 25,354,195 $ 64,626,884 957,560 $4,183,207 556,934 $6,810,253
Shares issued to shareholders in reinvestment
of net investment income and realized gain
from investment transactions 33,153,482 84,672,986 39,152 171,185 42,316 502,999
Total 58,507,677 149,299,870 996,712 4,354,392 599,250 7,313,252
- ------------------------------------------------------------------------- ----------------------- -----------------------
Shares reacquired (253,938,633) (648,051,118) (1,001,795) (4,369,426) (79,396) (966,521)
Increase (decrease) in shares (195,430,956) $(498,751,248) (5,083) $ (15,034) 519,854 $6,346,731
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
May 1, 1998
(Commencement of
Six Months Ended Offering Class B Shares) Year Ended
May 31, 1998 to May 31, 1998 November 30, 1997
-------------------------------------------------------------------------------
U.S. Government Series Balanced Series U.S. Government Series
Class B Shares Amount Shares Amount Shares Amount
- ------------------------------------------------------------------------ ------------------------- ------------------------
<S> <C> <C> <C> <C> <C> <C>
Sales of shares 2,043,128 $ 5,305,659 25,451 $331,447 4,045,212 $10,307,080
Shares issued to shareholders in
reinvestment of net investment income 77,922 201,971 10 133 95,421 243,523
Total 2,121,050 5,507,630 25,461 331,580 4,140,633 10,550,603
- ------------------------------------------------------------------------ ------------------------- ------------------------
Shares reacquired (1,266,458) (3,293,840) (12) (150) (464,040) (1,177,526)
Increase in shares 854,592 $ 2,213,790 25,449 $331,430 3,676,593 $ 9,373,077
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended May 31, 1998
--------------------------------------------------------------------------------
U.S. Government Series Limited Duration Series Balanced Series
Class C Shares Amount Shares Amount Shares Amount
- ------------------------------------------------------------------------ ------------------------- ------------------------
<S> <C> <C> <C> <C> <C> <C>
Sales of shares 2,661,595 $ 6,925,602 33,869 $ 149,617 173,916 $2,240,690
Shares issued to shareholders in reinvestment
of net investment income and realized gain
from investment transactions 1,024,421 2,663,638 12,796 56,444 10,251 128,949
Total 3,686,016 9,589,240 46,665 206,061 184,167 2,369,639
- ------------------------------------------------------------------------ ------------------------- ------------------------
Shares reacquired (14,171,412) (36,891,796) (472,436) (2,090,318) (23,203) (300,661)
Increase (decrease) in shares (10,485,396) $(27,302,556) (425,771) $(1,884,257) 160,964 $2,068,978
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
14
<PAGE>
Notes to Financial Statements
<TABLE>
<CAPTION>
Year Ended November 30, 1997
- -------------------------------------------------------------------------------------------------------------------------------
U.S. Government Series Limited Duration Series Balanced Series
Class C Shares Amount Shares Amount Shares Amount
- ------------------------------------------------------------------------ ------------------------- ------------------------
<S> <C> <C> <C> <C> <C> <C>
Sales of shares 5,922,523 $ 15,159,708 130,136 $ 568,557 133,693 $1,630,079
Shares issued to shareholders in reinvestmment
of net investment income and realized gain
from investment transactions 2,926,625 7,483,404 46,233 201,865 6,375 75,864
Total 8,849,148 22,643,112 176,369 770,422 140,068 1,705,943
- ------------------------------------------------------------------------ ------------------------- ------------------------
Shares reacquired (37,517,932) (95,453,967) (711,754) (3,112,190) (35,998) (437,762)
Increase (decrease) in shares (28,668,784) $(72,810,855) (535,385) $(2,341,768) 104,070 $1,268,181
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
At May 31, 1998, paid in capital aggregated $2,514,449,497 for U.S. Government
Series, $10,665,075 for Limited Duration Series and $30,186,589 for Balanced
Series.
5. Portfolio Securities
Purchases and sales of investment securities (other than short-term investments)
were as follows:
Series Purchases Sales
- --------------------------------------------------------------------------------
U.S. Government Series $5,348,846,906 $5,442,097,096
- --------------------------------------------------------------------------------
Limited Duration Series $ 10,858,619 $ 14,547,363
- --------------------------------------------------------------------------------
Balanced Series $ 50,670,505 $ 37,334,564
- --------------------------------------------------------------------------------
As of May 31, 1998, net unrealized appreciation, unrealized appreciation and
unrealized depreciation of investments based on cost for federal income tax
purposes were as follows:
Net Unrealized
Appreciation Unrealized Unrealized
Series (Depreciation) Appreciation Depreciation
- --------------------------------------------------------------------------------
U.S. Government Series $22,658,463 $23,484,130 $(825,667)
- --------------------------------------------------------------------------------
Limited Duration Series $ 12,555 $ 23,099 $ (10,544)
- --------------------------------------------------------------------------------
Balanced Series $ (528,154) $ - $(528,154)
- --------------------------------------------------------------------------------
The cost of investments for federal income tax purposes is substantially the
same as that used for financial reporting purposes.
The U.S. Government Series loans its portfolio investments to brokers. As of May
31, 1998, the market value of securities on loan to brokers was $89,127,431 for
which the Series has obtained collateral aggregating $91,483,390 consisting of
cash and U.S. Treasury securities.
6. Trustees' Remuneration
The Trustees of the Trust associated with Lord Abbett and all officers of the
Trust receive no compensation from the Trust for acting as such. Outside
Trustees' fees and retirement costs are allocated among all funds in the Lord
Abbett group based on the net assets of each fund. Trustees' fees payable at May
31, 1998 under a deferred compensation plan were $717,112.
7. U.S. Government Series
On July 12, 1996, Lord Abbett U.S. Government Securities Fund, Inc. became a
Series of the Trust. The Limited Duration Series and Balanced Series changed
their fiscal year end from October 31 to November 30 to conform to the fiscal
year end of the U.S. Government Series. Accordingly, the financial statements of
the Limited Duration Series and Balanced Series covered a one month period from
November 1, 1996 to November 30, 1996.
8. Expense Reduction
The Trust has entered into an arrangement with its transfer agent whereby
credits realized as a result of uninvested cash balances were used to reduce a
portion of each Series' expenses.
15
<PAGE>
Our Management
Board of Trustees
Robert S. Dow
E. Wayne Nordberg
E. Thayer Bigelow*+
Stewart S. Dixon*
John C. Jansing*
C. Alan MacDonald*+
Hansel B. Millican, Jr.*
Thomas J. Neff*+
* Outside Trustee
+ Audit Committee
Officers
Robert S. Dow, Chairman and President
Robert G. Morris, Executive Vice
President and Portfolio Manager
Robert I. Gerber, Executive Vice
President and Portfolio Manager
Paul A. Hilstad, Vice President
and Secretary
Zane E. Brown, Vice President
Daniel E. Carper, Vice President
W. Thomas Hudson, Jr., Vice President
Robert A. Lee, Vice President
E. Wayne Nordberg, Vice President
Walter H. Prahl, Vice President
Laurence H. Kaplan, Vice President
and Assistant Secretary
Thomas F. Konop, Vice President
and Assistant Secretary
A. Edward Oberhaus III, Vice President
Keith F. O'Connor, Vice President
Donna McManus, Treasurer
Joseph Van Dyke, Assistant Treasurer
Lydia Guzman, Assistant Secretary
Robert M. Hickey, Assistant Secretary
Investment Manager and
Underwriter
Lord, Abbett & Co. and
Lord Abbett Distributor LLC
The General Motors Building
767 Fifth Avenue
New York, NY 10153-0203
212-848-1800
Custodian
The Bank of New York
New York, NY
Transfer Agent
United Missouri Bank of
Kansas City, N.A.
Shareholder Servicing Agent
DST Systems, Inc.
P.O. Box 419100
Kansas City, MO 64141
800-821-5129
Auditors
Deloitte & Touche llp
New York, NY
Counsel
Debevoise & Plimpton
New York, NY
Copyright (C) 1998 by Lord Abbett Investment Trust, 767 Fifth Avenue, New York,
NY 10153-0203
This publication, when not used for the general information of shareholders of
Lord Abbett Investment Trust, is to be distributed only if preceded or
accompanied by a current prospectus which includes information concerning each
Series' investment objective and policies, sales charges and other matters.
There is no guarantee that the forecasts contained within this publication will
come to pass.
All rights reserved. Printed in the U.S.A.
16
<PAGE>
Lord, Abbett & Co.
A Tradition of Performance Through
Disciplined
Investing
[PHOTO OMITTED]
(standing, from left to right)
Robert I. Gerber, Director of Taxable-Fixed Income Management and
Portfolio Manager--Lord Abbett Investment Trust
Burton Zwick, Senior Economist
(seated, from left to right)
Zane E. Brown, Partner and Director of Fixed Income
Timothy W. Horan, Portfolio Manager--Lord Abbett Investment Trust
A successful long-term track record is evidence of a successful
investment strategy. For decades we, at Lord, Abbett & Co., have
believed that investing with a disciplined, value approach is the best
way to achieve competitive returns and reduce portfolio risk. This
commitment and the dedication of our team of 55 investment
professionals have helped us earn the trust of financial professionals
and investors for over 65 years.
About Your
Trust's
Board of
Trustees
The Securities and Exchange Commission (SEC) views the role of the independent
Board of Trustees as one of the most important components in overseeing a mutual
fund. The Board of Trustees watches over your Trust's general operations and
represents your interests. Board members review and approve every contract
between your Trust and Lord, Abbett & Co. (the Trust's investment manager) and
Lord Abbett Distributor LLC (the Trust's underwriter). They meet regularly to
review a wide variety of information and issues regarding your Trust. Every
member of the Board possesses extensive business experience. Lord Abbett
Investment Trust share-holders are indeed fortunate to have a group of
independent trustees with diverse backgrounds to provide a variety of viewpoints
in the oversight of their Trust. Below, we feature one of our independent
trustees, E. Thayer Bigelow, Jr.
E. Thayer Bigelow, Jr.
Director--Lord Abbett
Investment Trust
[PHOTO OMITTED]
Mr. Bigelow is a graduate of Trinity College and earned his MBA at the
University of Colgate Darden Business School. He is currently the CEO of Court
Room Television Network, and previously served for five years as President and
CEO of Time Warner Cable Programming, Inc.
Mr. Bigelow serves as a member of the Board of Trustees for the Cate School. He
is also a member of the Board of Directors for the Visiting Nurse Service of New
York, Crane Co., Medusa Inc., and The Boy's Club of New York. He has been an
independent director for all of Lord Abbett's funds since 1994.
<PAGE>
Investing in the
Lord Abbett
Family of Funds
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
GROWTH
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
INCOME
- ----------------------------------------------------------------------------------------------------------------------------
Aggressive Growth Funds Growth & Balanced Fund Income Funds Tax-Free Money
Growth Fund Income Funds Income Funds Market Fund
<S> <C> <C> <C> <C> <C> <C>
Developing Alpha Series Affiliated Fund Balanced Series Bond-Debenture o National U.S. Government
Growth Fund Fund o California Securities
Global Fund- Growth & o Connecticut Money Market
Equity Series Income Series Global Fund- o Florida Fund**+
Income Series o Georgia
International Research Fund- o Hawaii
Series Large-Cap Limited Duration o Michigan
Series U.S. Government o Minnesota
Mid-Cap Securities Series** o Missouri
Value Fund o New Jersey
U.S. Government o New York
Research Fund- Securities Series** o Pennsylvania
Small-Cap o Texas
Series* World Bond- o Washington
Debenture Series
</TABLE>
Finding the right mutual fund can be confusing. At Lord, Abbett & Co., we
believe your investment professional provides value in helping you identify and
understand your investment objectives and, ultimately, offering fund
recommendations suitable for your individual needs.
This publication, when used as sales literature, is to be distributed only if
preceded or accompanied by a current prospectus for Lord Abbett Global Value
Fund.
For more complete information about any other Lord Abbett fund, including
charges and expenses, call your investment professional or Lord Abbett
Distributor LLC at 800-874-3733 for a prospectus. Read it carefully before
investing.
When you invest in a family of funds, you benefit from:
Diversification. You and your investment professional can diversify your
investments between equity and income funds.
Flexibility. As your investment goals change, your investment professional can
help you reallocate your portfolio.
As an investor in the Lord Abbett Family of Funds, you have access to 30
portfolios designed to meet a variety of investment needs. While you may
reallocate your assets among our funds at any time, we recommend speaking with
your investment professional to help you customize your investment plan.
Numbers to Keep Handy
For Shareholder Account or Statement Inquiries: 800-821-5129
For Literature: 800-874-3733
For More Information: 800-426-1130
Visit Our Web Site: http://www.lordabbett.com
* The Lord Abbett Research Fund-Small-Cap Series is closed to new investors.
For more information, call Lord Abbett Distributor LLC at 800-426-1130.
** An investment in this Fund is neither insured nor guaranteed by the U.S.
Government.
+ Although the Fund is managed to maintain, and has maintained, its stable
net asset value of $1.00 per share price, it is possible to lose money by
investing in the Fund.
---------------
[LOGO](R) LORD, ABBETT & CO. BULK RATE
Investment Management U.S. POSTAGE
A Tradition of Performance Through Disciplined Investing PAID
PERMIT NO. 2405
NEW YORK, N.Y.
---------------
LORD ABBETT DISTRIBUTOR LLC LAIT-3-598
- ------------------------------------------------------------
The GM Building o 767 Fifth Avenue o New York, NY 10153-0203 (7/98)
