Lord Abbett
Investment
Trust
o U.S. Government Securities Series
o Limited Duration U.S. Government Securities Series
o Balanced Series
1997 ANNUAL REPORT
[Graphic: sunglasses and postcards]
Three portfolios to help you meet your goals
[LOGO]
<PAGE>
Report to Shareholders
For the Fiscal Year Ended November 30, 1997
[PHOTO: Robert S. Dow]
/s/ ROBERT S. DOW
- ----------------------
ROBERT S. DOW
CHAIRMAN
DECEMBER 12, 1997
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 6
Data On All Series
- --------------------------------------------------------
Statements of Operations 9
Statements of Changes in
Net Assets 10
Financial Highlights 11
Notes to Financial Statements 12
At the close of the fiscal year, the three portfolios in your Trust had combined
assets of $2.3 billion. Below is an overview of each Series' performance for the
year ended November 30, 1997.
U.S. Government Securities Series
Year Ended 11/30/97
-------------------------------------
Class A Class B Class C
- --------------------------------------------------------------------------------
Net asset value $ 2.59 $ 2.58 $ 2.59
Dividends $ .205 $ .185 $ .185
Total return* +6.7% +5.5% +5.9%
Limited Duration
U.S. Government
Securities Series Balanced Series
Year Ended 11/30/97 Year Ended 11/30/97
--------------------------------------------
Class A Class C Class A Class C
- -------------------------------------------------------------------------------
Net asset value $ 4.40 $ 4.40 $ 12.80 $ 12.78
Dividends $ .253 $ .211 $ .456 $ .336
Capital gains -- -- $ 0.17 $ 0.17
Total return* +5.5% +4.5% +14.2% +13.1%
Both the U.S. Government Securities Series and the Limited Duration U.S.
Government Securities Series continued to benefit from heavy weightings in
mortgage-backed securities, such as GNMAs and FNMAs. Over the year, the U.S.
Government Securities Series increased its holdings of mortgage-backed
securities from approximately half to two-thirds of its portfolio and the
Limited Duration U.S. Government Securities Series increased these holdings to
nearly a third of its portfolio. We will continue to emphasize mortgage-related
securities and maintain a diversification of maturities and mortgage types.
Over the last six months in particular, the bond market continued to perform
well, resulting in our maintaining a 50%-50% ratio between bond and equity
holdings in the Balanced Series. The continued low rate of inflation, along with
the volatility of international financial markets, was the catalyst for
relatively strong returns on fixed-income securities over this period. On the
equity side, we continued to overweight financial holdings which benefited from
lower interest rates. Recently, shareholders approved a change to the Series'
investment policy to allow the Balanced Series to gradually shift to a "fund of
funds" structure, with equity assets allocated to the Lord Abbett Affiliated
Fund and the fixed-income portion of the portfolio to the Lord Abbett
Bond-Debenture Fund.
Our outlook for 1998 is for the economy to grow at a rate averaging less than
2 1/2%, with inflation moving at about the same rate. Should the economy show
signs of rapid growth or if inflation picks up, we believe the Federal Reserve
Board would move to raise short-term interest rates in the hopes of maintaining
a moderate economic 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.
<PAGE>
ABOUT THE U.S. GOVERNMENT SECURITIES SERIES
Total Return is Important to Fixed-Income Investors
Over the last 10 years, an investment in the Series provided relatively stable
dividend income and, assuming the reinvestment of all distributions, grew by
almost 115%. The Series surpassed the increase in inflation (as measured by the
Consumer Price Index) over the last 10 years.
Lord Abbett U.S. Government Securities Series Versus Inflation(1)(2)
Growth of $100,000: 11/30/87-11/30/97
[Line chart omitted]
The U.S. Government Securities Series' Distribution Rate on 11/30/97 was
7.50%(3)
SEC Returns
Average annual compound returns for the periods ended December 31, 1997 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: +3.90% +3.60% +11.80%
5 years: +5.03% n/a n/a
10 years or Life of Series: +7.82% +2.81%(5) +14.25%(5)
SEC yield for the 30 days
ended 12/31/97: 4.93% 5.37% 2.42%
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>
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
Annual Total Return(1) +1.7% +7.8% +12.7% +9.3% +16.9% +7.1% +9.2% -4.3% +15.7% +1.7% +9.2%
- --------------------------------------------------------------------------------------------------------
</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 11/30/97
Cash Equivalents 1.79%
Mortgage-Related Securities
FHLMC 8.47%
GNMA 11.26%
FNMA 47.44%
U.S. Treasury Bonds 5.90%
U.S. Treasury Notes 25.14%
Who Owns the Series?
Investor Profile of Lord Abbett U.S. Government Securities Series
- --------------------------------------------------------------------------------
Fiduciaries Trusts 4,258
Pension & profit-sharing plans 4,874
Custodians for minors 2,113
Estates 163
- --------------------------------------------------------------------------------
Institutions Broker-held accounts 42,702
Corporate organizations 344
Religious, charitable & welfare organizations 260
Banks, credit unions & insurance companies 176
Cemeteries & hospitals 59
Government agencies 29
Colleges & universities 17
- --------------------------------------------------------------------------------
Individuals Single & joint accounts & IRAs 44,774
- --------------------------------------------------------------------------------
Other 117
- --------------------------------------------------------------------------------
Total Accounts in the Series on 11/30/97 99,886
- --------------------------------------------------------------------------------
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 11/30/97)
1 Year 3 years Life of Series
- ----------------------------------
$102,897 $115,815 $112,033
The Limited Duration U.S. Government Securities Series' Distribution Rate on
11/30/97 was 5.55%(2)
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 11/30/97)
1 Year Life of Series
- --------------------------
$109,953 $149,588
The Balanced Series' Average Annual Rate of Total Return Since Inception: 14.7%
Total return shown reflects the percent change in value for Class A shares with
both dividends and capital gains reinvested.
(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
12/31/97, 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 3/31/98, 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 November 30, 1997
<TABLE>
<CAPTION>
Principal
Investments Amount Market Value
================================================================================================================================
Investments in Securities 98.21%
================================================================================================================================
<S> <C> <C> <C>
U.S. Treasury 31.04% U.S. Treasury Bonds 10 5/8% due 8/15/2015+ $ 19,560M $ 29,071,050
U.S. Treasury Bonds Strips due 8/15/2020 237,000M 59,212,969
U.S. Treasury Inflation Index Notes 3 3/8% due 1/15/2007+ 20,000M 20,093,750
U.S. Treasury Inflation Index Notes 3 5/8% due 7/15/2002 83,784M 84,517,110
U.S. Treasury Notes 6% due 6/30/1999+ 177,000M 177,636,094
U.S. Treasury Notes 6 1/4% due 4/30/2001+ 60,600M 61,357,500
U.S. Treasury Notes 6 3/8% due 5/15/2000 120,000M 121,556,250
U.S. Treasury Notes 7 1/4% due 5/15/2016+ 35,000M 39,375,000
U.S. Treasury Notes 7 5/8% due 2/15/2025+ 11,050M 13,239,281
U.S. Treasury Strips due 2/15/2009+ 105,000M 53,714,063
U.S. Treasury Strips due 2/15/2015 143,000M 50,005,313
Total 709,778,380
- ------------------------------------------------------------------------------------------------------------------==============
Federal Home Loan 7 1/2% due on an announced basis 92,000M 93,955,000
Mortgage Corporation 10 1/2% due 5/1/2020 11,751M 13,121,235
Pass-Through Securities 4.68% Total 107,076,235
- ------------------------------------------------------------------------------------------------------------------==============
Federal National 5 1/2% due 11/1/2025 4,524M 4,225,529
Mortgage Association 6.21% due 11/7/2007 45,000M 44,782,031
Pass-Through Securities 47.44% 6.34% due 10/16/2007 27,200M 27,323,250
6 1/2% due on an announced basis 299,000M 294,553,126
6 1/2% due 2024 to 2026 31,709M 31,154,968
6.56% due 10/1/2007 10,162M 10,254,176
6 5/8% due 10/1/2007 9,792M 9,925,585
6.665% due 11/1/2007 3,230M 3,281,983
6.67% due 11/1/2004 7,755M 7,865,266
6.68% due 10/1/2007 9,843M 10,013,218
6.69% due 9/1/2007 7,988M 8,131,356
6.695% due 11/1/2007 1,500M 1,526,953
6 3/4% due 10/1/2007 8,043M 8,221,629
6.765% due 5/1/2007 4,978M 5,091,921
6.775% due 10/1/2007 7,045M 7,214,256
6.799% due 3/1/2007 5,887M 6,031,968
6.80% due 2004 to 2007 7,899M 8,092,354
6.805% due 3/1/2007 4,972M 5,096,933
</TABLE>
4
<PAGE>
Statement of Net Assets
U.S. GOVERNMENT SECURITIES SERIES November 30, 1997
<TABLE>
<CAPTION>
Principal
Investments Amount Market Value
================================================================================================================================
<S> <C> <C> <C>
6.825% due 11/1/2007 $ 4,300M $ 4,416,906
6.84% due 10/1/2007 2,723M 2,799,983
6.86% due 10/1/2004 6,624M 6,780,615
6.91% due 3/1/2007 4,972M 5,131,249
6.935% due 4/1/2004 4,906M 5,033,096
6.96% due 4/2/2007 25,000M 26,378,906
7% due on an announced basis 459,000M 461,110,470
7% due 2011 to 2012 10,916M 11,082,375
7.043% due 12/1/2006 12,027M 12,459,002
7 1/2% due on an announced basis 49,000M 50,117,813
7 1/2% due 11/1/2023 6,227M 6,513,061
Total 1,084,609,978
- ------------------------------------------------------------------------------------------------------------------==============
Government National 6 1/4% due 2035 to 2036 6,993M 6,610,794
Mortgage Association 6 1/2% due 3/15/2031 5,869M 5,642,313
Pass-Through Securities 11.26% 6.55% due 3/15/2031 6,923M 6,672,869
7 1/2% due 2026 to 2027 191,618M 195,598,334
8% due 2024 22,705M 23,524,634
9% due 2018 to 2020 6,670M 7,212,839
9 1/2% due 2019 to 2020 1,840M 2,001,112
10% due 2018 to 2019 9,060M 10,113,287
Total 257,376,182
- ------------------------------------------------------------------------------------------------------------------==============
Other 3.79% Federal Home Loan Mortgage Corp. 7% due 2027 86,430M 86,753,614
-----------------------------------------------------------------------------------==============
Total Investments (Cost $2,199,755,417) 2,245,594,389
================================================================================================================================
Other Assets, Less Liabilities 1.78%
================================================================================================================================
Other Assets
Short-Term Investments Federal Home Loan Banks 5.60% due 12/1/1997 23,321M 23,310,117
U.S. Government Obligations Federal Home Loan Banks 15% due 1997 470,000M 471,620,313
Federal Home Loan Mortgage Corp. 13% due 12/11/1997 260,000M 260,528,125
Federal Home Loan Mortgage Corp. 15% due 1/14/1998 118,740M 120,075,839
Federal National Mortgage Association 5.45% due 12/1/1997 41,300M 41,253,487
Student Loan Marketing Association 5.60% due 12/1/1997 24,260M 24,248,679
Total 941,036,560
- ------------------------------------------------------------------------------------------------------------------==============
Other (See Note 5) 258,514,856
-----------------------------------------------------------------------------------==============
Total Short-Term Investments (Cost $1,208,580,499) 1,199,551,416
- ------------------------------------------------------------------------------------------------------------------==============
Cash 1,119,406
- ------------------------------------------------------------------------------------------------------------------==============
Receivable for: Investments sold 14,962,419
Interest 26,197,696
Other 764,504
Total Other Assets 1,242,595,441
================================================================================================================================
Payable for: Investments purchased 924,402,050
Payable for collateral on securities loaned 258,514,856
Other 18,860,977
Total Liabilities 1,201,777,883
-----------------------------------------------------------------------------------==============
Total Other Assets, Less Liabilities 40,817,558
================================================================================================================================
Net Assets 100.00% $2,286,411,947
================================================================================================================================
Class A Shares-Net asset value ($2,081,318,254 / 804,678,136 shares outstanding) $ 2.59
Class B Shares-Net asset value ($14,205,104 / 5,496,872 shares outstanding) $ 2.58
Class C Shares-Net asset value ($190,888,589 / 73,646,340 shares outstanding) $ 2.59
</TABLE>
+Securities (or a portion of securities) on loan. See Note 5. See Notes to
Financial Statements.
5
<PAGE>
Statement of Net Assets
LIMITED DURATION U.S. GOVERNMENT SECURITIES SERIES November 30, 1997
<TABLE>
<CAPTION>
Principal
Investments Amount Market Value
================================================================================================================================
Investments in Securities 76.86%
================================================================================================================================
<S> <C> <C> <C>
U.S. Treasury 45.71% U.S. Treasury Inflation Index Notes 3 3/8% due 1/15/2007 $ 250M $ 251,172
U.S. Treasury Inflation Index Notes 3 5/8% due 7/15/2002 250M 252,188
U.S. Treasury Notes 5% due 1/15/1999 1,370M 1,358,441
U.S. Treasury Notes 6 1/4% due 4/15/2001 2,800M 2,835,000
Total 4,696,801
- ------------------------------------------------------------------------------------------------------------------==============
Federal National 6 1/2% due on an announced basis 1,550M 1,544,671
Mortgage Association 6 1/2% due 2007 to 2011 522M 522,811
Pass-Through Securities 24.08% 6.67% due 11/1/2004 100M 101,421
6.80% due 1/1/2004 99M 101,103
6.86% due 10/1/2004 100M 102,355
6.935% due 4/1/2004 100M 102,091
Total 2,474,452
- ------------------------------------------------------------------------------------------------------------------==============
Government National 10% due 6/15/2019 49M 55,155
Mortgage Association 10 1/2% due 2013 to 2020 597M 671,640
Pass-Through Securities 7.07% Total 726,795
-----------------------------------------------------------------------------------==============
Total Investments (Cost $7,869,395) 7,898,048
================================================================================================================================
Other Assets, Less Liabilities 23.14%
================================================================================================================================
Short-Term Investments Financing Corp. due 6/27/1998 350M 339,172
U.S. Treasury Notes 5 7/8% due 8/15/1998 3,400M 3,403,719
Total Short-Term Investments (Cost $3,736,969) 3,742,891
- ------------------------------------------------------------------------------------------------------------------==============
Cash and Receivables,
Net of Liabilities (1,364,718)
-----------------------------------------------------------------------------------==============
Total Other Assets, Less Liabilities 2,378,173
================================================================================================================================
Net Assets 100.00% $ 10,276,221
================================================================================================================================
Class A Shares-Net asset value ($4,835,988 / 1,098,742 shares outstanding) $ 4.40
Class C Shares-Net asset value ($5,440,233 / 1,235,919 shares outstanding) $ 4.40
</TABLE>
See Notes to Financial Statements.
Statement of Net Assets
BALANCED SERIES November 30, 1997
<TABLE>
<CAPTION>
Investments Shares Market Value
====================================================================================================================================
<S> <C> <C> <C>
Investments in Securities 92.48%
==================================================================================================================================
Common Stocks 48.44%
==================================================================================================================================
Agricultural Products .95% Archer-Daniels-Midland Co.-Leading processor and seller of agricultural
commodities 9,050 $ 193,444
- ------------------------------------------------------------------------------------------------------------------------==========
Apparel .68% VF Corp.-Leading producer of blue jeans and other apparel 3,000 138,563
- ------------------------------------------------------------------------------------------------------------------------==========
Auto Parts: After Market .86% Snap-on, Inc.-Manufacturer and distributor of hand tools and diagnostic
equipment for the automotive industry 4,000 175,750
- ------------------------------------------------------------------------------------------------------------------------==========
Automobiles .81% General Motors Corp.-Worldwide auto producer 2,700 164,700
- ------------------------------------------------------------------------------------------------------------------------==========
Banks: Money Center 2.64% BankAmerica Corp.-Major money-center bank 2,950 215,350
Chase Manhattan Corp.-Major money-center bank holding company 1,650 179,231
First Chicago NBD-Major midwest bank 1,800 140,850
Total 535,431
- ------------------------------------------------------------------------------------------------------------------------==========
Banks: Regional 2.81% BankBoston, N.A.-Leading New England regional bank 2,200 196,075
First Union Corp.-Major east coast bank 2,300 112,125
</TABLE>
6
<PAGE>
Statement of Net Assets
BALANCED SERIES November 30, 1997
<TABLE>
<CAPTION>
Investments Shares Market Value
===================================================================================================================================
<S> <C> <C> <C>
KeyCorp-Multi-regional bank holding company serving the northwest U.S. 1,650 $ 111,272
Washington Mutual-A leading savings and loan company 2,205 152,421
Total 571,893
- --------------------------------------------------------------------------------------------------------------------------=========
Brokers .72% Morgan Stanley, Dean Witter, Discover & Co.-Major brokerage and credit card
company 2,700 146,644
- --------------------------------------------------------------------------------------------------------------------------=========
Chemicals 2.48% Air Products & Chemicals Inc.-Industrial gas producer 2,900 222,394
Dow Chemical Co.-Leading global chemical producer 1,300 128,375
Morton International Inc.-Producer of specialty chemicals, salt and airbags 4,500 153,281
Total 504,050
- --------------------------------------------------------------------------------------------------------------------------=========
Communications Equipment .70% Harris Corp.-Manufacturer of advanced electronic systems and communications
equipment 3,000 142,313
- --------------------------------------------------------------------------------------------------------------------------=========
Computer (Hardware) 2.53% Digital Equipment Corp.-Manufacturer of data processing equipment 2,000 98,500
Hewlett-Packard Co.-Leading manufacturer of computer products including
printers, servers, workstations and PCs 3,300 201,506
International Business Machines Corp.-Largest computer manufacturer 1,950 213,647
Total 513,653
- --------------------------------------------------------------------------------------------------------------------------=========
Computer (Peripherals) .33% *Seagate Technology Inc.-Manufacturer of computer disk drive equipment 3,000 68,063
- --------------------------------------------------------------------------------------------------------------------------=========
Computer (Software) .53% *Sun Microsystems Inc.-Supplier of network computer products including
workstations, servers, software, microprocessors and a full range of
services and support 3,000 108,000
- --------------------------------------------------------------------------------------------------------------------------=========
Containers .50% Crown Cork & Seal Inc.-Major producer of a wide variety of three-piece and
two-steel and aluminum containers for the food industry 2,100 102,506
- --------------------------------------------------------------------------------------------------------------------------=========
Drugs/Health Care Products American Home Products Corp.-Producer of drugs, food housewares and packaged
2.16% medicine and medical products 2,500 174,688
Bristol-Myers Squibb Company-Major worldwide pharmaceutical concern with
other interests in infant nutrition, non-prescription medications, medical
devices and toiletries 1,500 140,438
SmithKline Beecham plc ADR-United Kingdom-based health care company providing
prescription and over-the-counter drugs and clinical laboratory services 2,500 124,063
Total 439,189
- --------------------------------------------------------------------------------------------------------------------------=========
Electric Power 2.03% Baltimore Gas & Electric Co.-Regional electric utility 5,600 171,850
Carolina Power & Light Co.-Electric utility company serving North and South
Carolina 2,600 97,175
CINergy Corp.-Supplier of electricity and natural gas in southwestern Ohio
and adjacent Kentucky and Indiana territories 4,000 142,500
Total 411,525
- --------------------------------------------------------------------------------------------------------------------------=========
Electrical Equipment 1.57% Emerson Electric Co.-Diversified manufacturer of consumer and industrial
electrical components 5,800 319,000
- --------------------------------------------------------------------------------------------------------------------------=========
Financial: Miscellaneous .93% Federal National Mortgage Association-America's largest supplier of
conventional home mortgages 3,600 190,125
- --------------------------------------------------------------------------------------------------------------------------=========
Food 3.40% ConAgra Inc.-Major producer of agricultural and consumer products 5,800 208,438
CPC International Inc.-Producer of diversified packaged foods 1,700 175,738
Heinz H.J. Co.-Domestic packaged foods producer 6,150 307,884
Total 692,060
- --------------------------------------------------------------------------------------------------------------------------=========
Health Care Products .47% St. Jude Medical, Inc.-A leading manufacturer of artificial heart valves 3,200 94,800
- --------------------------------------------------------------------------------------------------------------------------=========
Health Care Services 1.24% Aetna Inc.-Major multi-line insurer 1,400 105,525
Humana Inc.-Major U.S. provider of managed health plans 6,650 147,547
Total 253,072
- --------------------------------------------------------------------------------------------------------------------------=========
Household Products 2.03% Fort James Corp.-Producer of paper-based consumer products, packaging and
communication papers 4,600 179,975
Kimberly Clark Corp.-Major producer of consumer and personal care products 4,462 232,303
Total 412,278
- --------------------------------------------------------------------------------------------------------------------------=========
Housewares .69% Fortune Brands Inc.-Consumer products conglomerate 3,900 141,131
- --------------------------------------------------------------------------------------------------------------------------=========
Insurance: Life 1.48% Jefferson-Pilot Corp.-Life insurance holding company 1,950 148,809
Transamerica Corp.-Diversified financial services company 1,400 151,987
Total 300,796
-------------------------------------------------------------------------------------------=========
</TABLE>
7
<PAGE>
Statement of Net Assets
BALANCED SERIES November 30, 1997
<TABLE>
<CAPTION>
Shares or
Investments Principal Amount Market Value
====================================================================================================================================
<S> <C> <C> <C>
Insurance: Property and Chubb Corp.-Broad-based property and casualty insurance organization 3,200 $ 227,000
Casualty 2.64% CIGNA Corp.-Multi-line insurance and medical services 900 150,525
SAFECO Corp.-Insurance and financial services 3,250 158,844
Total 536,369
- ------------------------------------------------------------------------------------------------------------------------============
Machinery: Diversified 1.15% Deere & Co.-World's largest manufacturer of farm equipment 4,250 232,952
- ------------------------------------------------------------------------------------------------------------------------============
Miscellaneous .77% Minnesota Mining & Manufacturing Co.-Diversified global manufacturer of
value-added industrial, consumer and medical products 1,600 155,900
- ------------------------------------------------------------------------------------------------------------------------============
Natural Gas: Distribution .83% Nicor Inc.-Natural gas distributor in Illinois 4,200 169,050
- ------------------------------------------------------------------------------------------------------------------------============
Natural Gas: Diversified 1.11% The Coastal Corporation-A diversified gas pipeline company 3,850 225,465
- ------------------------------------------------------------------------------------------------------------------------============
Natural Gas: Pipelines .58% Consolidated Natural Gas Co.-Producer of integrated natural gas systems 1,950 117,730
- ------------------------------------------------------------------------------------------------------------------------============
Oil: International Integrated Amoco Corp.-Major integrated petroleum and natural gas company with sizable
3.06% interests in chemicals 1,750 157,500
Chevron Corp.-Worldwide petroleum company with important interests in chemicals
and minerals 2,100 168,394
Exxon Corp.-World's largest integrated oil company 2,400 146,400
Mobil Corp.-Large international oil company 2,100 151,069
Total 623,363
- ------------------------------------------------------------------------------------------------------------------------============
Paper and Forest Products International Paper Co.-Producer of paper and forest products 3,850 182,633
1.67% Temple-Inland, Inc.-Leading manufacturer of corrugated boxes, bleached
paperboard, pulp and building materials 2,750 157,093
Total 339,726
- ------------------------------------------------------------------------------------------------------------------------============
Retail: Department and
Merchandise .46% May Department Stores Company-Leading department store retailer 1,750 94,063
- ------------------------------------------------------------------------------------------------------------------------============
Retail: Specialty .92% Toys R Us Inc.-Discount toy supermarts; department stores 5,500 187,688
- ------------------------------------------------------------------------------------------------------------------------============
Telephone: Local 1.65% Bell Atlantic Corp.-Regional telephone company 1,200 107,100
BellSouth Corp.-Regional telephone company 2,050 112,238
SBC Communication Inc.-Mexican telephone monopoly 1,600 116,500
Total 335,838
- ------------------------------------------------------------------------------------------------------------------------============
Tobacco 1.06% Philip Morris Inc.-Leading tobacco company 2,750 119,625
RJR Nabisco-Diversified food and tobacco producer 2,650 96,559
Total 216,184
-----------------------------------------------------------------------------------------============
Total Investments in Common Stocks (Cost $7,847,183) 9,853,314
====================================================================================================================================
U.S. Government Obligations 44.04%
====================================================================================================================================
Federal National Mortgage Association 7% due 2027 2,475M 2,480,800
Federal National Mortgage Association 7% due on an announced basis 700M 701,422
Government National Mortgage Association 7 1/2% due 2027 1,023M 1,044,523
U.S. Treasury Bonds 10 5/8% due 8/15/2015 1,000M 1,486,250
U.S. Treasury Inflation Index Notes 3 5/8% due 7/15/2002 200M 200,938
U.S. Treasury Inflation Index Notes 3 3/8% due 1/15/2007 200M 200,938
U.S. Treasury Notes 6 7/8% due 8/15/2025 890M 977,888
U.S. Treasury Notes 6 1/4% due 5/31/1999 750M 755,156
U.S. Treasury Notes 5 1/4% due 1/31/2001 320M 314,900
U.S. Treasury Notes 5% due 1/31/1999 800M 793,250
Total Investments in U.S. Government Obligations (Cost $8,825,636) 8,956,877
-----------------------------------------------------------------------------------------============
Total Investments (Cost $16,672,819) 18,810,191
====================================================================================================================================
Other Assets, Less Liabilities 7.52%
====================================================================================================================================
Short-Term Investments General Electric Capital Corp. 5.55% due 12/1/1997 750M 750,000
Prudential Funding Corp. 5.55% due 12/1/1997 750M 750,000
Total Short-Term Investments (Cost $1,500,000) 1,500,000
-----------------------------------------------------------------------------------------============
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
<S> <C> <C>
Cash $ 392,271
- -------------------------------------------------------------------------------------------------------------------------===========
Receivable for: Interest 115,634
Capital stock sold 186,905
Securities sold 135,147
Dividends 19,242
Other 36,182
------------------------------------------------------------------------------------------===========
Total Other Assets 2,385,381
------------------------------------------------------------------------------------------===========
Payable for: Securities purchased 853,633
Other 1,514
Total Liabilities 855,147
------------------------------------------------------------------------------------------===========
Total Other Assets, Less Liabilities 1,530,234
====================================================================================================================================
Net Assets 100.00% $20,340,425
====================================================================================================================================
Class A Shares-Net asset value ($17,148,738 / 1,340,258 shares outstanding) $ 12.80
Class C Shares-Net asset value ($3,191,687 / 249,784 shares outstanding) $ 12.78
</TABLE>
*Non-income producing. The descriptions of the companies shown in the portfolio,
which were obtained from published reports and other sources believed to be
reliable, are supplemental and unaudited. See Notes to Financial Statements.
Statements of Operations
<TABLE>
<CAPTION>
Year Ended November 30, 1997
----------------------------------------------
Limited Duration
U.S. Government U.S. Government Balanced
Investment Income Securities Series Securities Series Series
=================================================================================================================
<S> <C> <C> <C> <C>
Income Interest $ 218,195,748 $ 724,491 $ 585,153
Dividends -- -- 164,480
Total income 218,195,748 724,491 749,633
---------------------------------------------------------------------------------------------------
Expenses Management fee 12,500,454 57,654 113,238
Management fee waived -- (54,884) (65,087)
12b-1 distribution plan-Class A 6,368,420 -- --
12b-1 distribution plan-Class B 93,175 -- --
12b-1 distribution plan-Class C 1,842,584 63,057 23,527
Shareholder servicing 3,070,792 20,813 48,004
Reports to shareholders 383,183 3,627 2,423
Professional 150,724 19,492 13,430
Registration 60,000 33,000 37,847
Trustees 53,000 300 300
Organization -- 15,456 7,615
Other 55,992 10,410 7,667
Total expenses before reductions and reimbursements 24,578,324 168,925 188,964
Expenses assumed by Lord Abbett -- (47,168) --
Expense reductions (368,299) (914) (1,226)
Net expenses 24,210,025 120,843 187,738
---------------------------------------------------------------------------------------------------
Net investment income 193,985,723 603,648 561,895
---------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss) on Investments
=================================================================================================================
Realized gain (loss) from investment transactions
Proceeds from sales 25,876,715,130 37,358,444 35,396,467
Cost of investments sold 25,919,745,530 37,319,422 34,816,545
Net realized gain (loss) (43,030,400) 39,022 579,922
---------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investments (10,950,190) (103,709) 874,298
- -----------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments (53,980,590) (64,687) 1,454,220
- -----------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets Resulting from Operations $ 140,005,133 $ 538,961 $ 2,016,115
=================================================================================================================
</TABLE>
See Notes to Financial Statements.
9
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended November 30, 1997
------------------------------------------------
Limited Duration
U.S. Government U.S. Government Balanced
Increase (Decrease) in Net Assets Securities Series Securities Series Series
=================================================================================================================================
<S> <C> <C> <C> <C>
Operations Net investment income $ 193,985,723 $ 603,648 $ 561,895
Net realized gain (loss) from investment transactions (43,030,400) 39,022 579,922
Net unrealized appreciation (depreciation) of investments (10,950,190) (103,709) 874,298
Net increase in net assets resulting from operations 140,005,133 538,961 2,016,115
-------------------------------------------------------------------------------------------------------------------
Undistributed net investment income included in price of share transactions -- -- 4,365
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income-Class A (182,138,357) (262,499) (469,284)
Net investment income-Class B (669,146) -- --
Net investment income-Class C (15,887,823) (339,791) (64,755)
Net realized gain from investment transactions-Class A -- -- (142,166)
Net realized gain from investment transactions-Class C -- -- (25,083)
Total distributions (198,695,326) (602,290) (701,288)
-------------------------------------------------------------------------------------------------------------------
Share transactions:
Net proceeds from sales of shares 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 92,399,913 373,050 578,863
Net asset value of shares issued in exchange for assets
acquired in tax-free acquisition -- -- --
Total 182,493,585 5,124,814 9,019,195
-------------------------------------------------------------------------------------------------------------------
Cost of shares reacquired (744,682,611) (7,481,616) (1,404,283)
-------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets derived from share transactions (562,189,026) (2,356,802) 7,614,912
-------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets (620,879,219) (2,420,131) 8,934,104
- ---------------------------------------------------------------------------------------------------------------------------------
Net Assets Beginning of period 2,907,291,166 12,696,352 11,406,321
-------------------------------------------------------------------------------------------------------------------
End of period+ $ 2,286,411,947 $ 10,276,221 $ 20,340,425
===================================================================================================================
<CAPTION>
Year Ended
November 30, 1996
-----------------
U.S. Government
Increase (Decrease) in Net Assets Securities Series
==================================================================================================
<S> <C>
Operations Net investment income $ 243,527,547
Net realized gain (loss) from investment transactions (135,807,633)
Net unrealized appreciation (depreciation) of investments 24,404,768
Net increase in net assets resulting from operations 132,124,682
------------------------------------------------------------------------------------
Undistributed net investment income included in price of share transactions --
- --------------------------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income-Class A (234,687,601)
Net investment income-Class B (53,288)
Net investment income-Class C (7,753,839)
Net realized gain from investment transactions-Class A --
Net realized gain from investment transactions-Class C --
Total distributions (242,494,728)
------------------------------------------------------------------------------------
Share transactions:
Net proceeds from sales of shares 205,714,518
Net asset value of shares issued to shareholders in reinvestment of
net investment income and realized gain from investment transactions 115,794,926
Net asset value of shares issued in exchange for assets
acquired in tax-free acquisition 285,355,479
Total 606,864,923
------------------------------------------------------------------------------------
Cost of shares reacquired (862,069,019)
------------------------------------------------------------------------------------
Increase (decrease) in net assets derived from share transactions (255,204,096)
------------------------------------------------------------------------------------
Increase (decrease) in net assets (365,574,142)
- --------------------------------------------------------------------------------------------------
Net Assets Beginning of period 3,272,865,308
------------------------------------------------------------------------------------
End of period+ $ 2,907,291,166
====================================================================================
</TABLE>
+Including undistributed (overdistributed) net investment income of $16,785,027,
$(33,548) and $17,019, respectively, as of November 30, 1997 and $21,494,630 as
of November 30, 1996. See Notes to Financial Statements.
<TABLE>
<CAPTION>
One Month Ended November 30, 1996
-------------------------------------
Limited Duration
U.S. Government Balanced
Increase (Decrease) in Net Assets Securities Series Series
=====================================================================================================================
<S> <C> <C> <C>
Operations Net investment income $ 46,080 $ 27,534
Net realized gain (loss) from investment transactions 61,342 26,147
Net unrealized appreciation of investments 26,842 468,521
Net increase in net assets resulting from operations 134,264 522,202
-------------------------------------------------------------------------------------------------------
Undistributed net investment income included in price of share transactions -- --
- ---------------------------------------------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income-Class A (23,217) (33,810)
Net investment income-Class C (32,286) (5,272)
Net realized gain from investment transactions-Class A -- --
Net realized gain from investment transactions-Class C -- --
Total distributions (55,503) (39,082)
-------------------------------------------------------------------------------------------------------
Share transactions:
Net proceeds from sales of shares 201,352 274,243
Net asset value of shares issued to shareholders in reinvestment
of net investment income and realized gain from investment transactions 38,005 30,893
Net asset value of shares issued in exchange for assets
acquired in tax-free acquisition -- --
Total 239,357 305,136
-------------------------------------------------------------------------------------------------------
Cost of shares reacquired (356,754) (369,841)
-------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets derived from share transactions (117,397) (64,705)
-------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets (38,636) 418,415
- ---------------------------------------------------------------------------------------------------------------------
Net Assets Beginning of period 12,734,988 10,987,906
-------------------------------------------------------------------------------------------------------
End of period+ $ 12,696,352 $ 11,406,321
=======================================================================================================
<CAPTION>
Year Ended October 31, 1996
- --------------------------------------------------------------------------------------------------------------------
Limited Duration
U.S. Government Balanced
Increase (Decrease) in Net Assets Securities Series Series
====================================================================================================================
Operations Net investment income $ 345,962 $ 331,658
Net realized gain (loss) from investment transactions (24,632) 179,639
Net unrealized appreciation of investments 93,038 446,760
Net increase in net assets resulting from operations 414,368 958,057
------------------------------------------------------------------------------------------------------
Undistributed net investment income included in price of share transactions -- 974
- --------------------------------------------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income-Class A (304,434) (305,290)
Net investment income-Class C (101,264) (20,498)
Net realized gain from investment transactions-Class A -- (99,333)
Net realized gain from investment transactions-Class C -- (6,322)
Total distributions (405,698) (431,443)
------------------------------------------------------------------------------------------------------
Share transactions:
Net proceeds from sales of shares 4,145,228 3,426,542
Net asset value of shares issued to shareholders in reinvestment
of net investment income and realized gain from investment transactions 282,194 357,344
Net asset value of shares issued in exchange for assets
acquired in tax-free acquisition 7,981,785 2,971,062
Total 12,409,207 6,754,948
------------------------------------------------------------------------------------------------------
Cost of shares reacquired (8,604,516) (2,007,309)
------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets derived from share transactions 3,804,691 4,747,639
------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets 3,813,361 5,275,227
- --------------------------------------------------------------------------------------------------------------------
Net Assets Beginning of period 8,921,627 5,712,679
------------------------------------------------------------------------------------------------------
End of period+ $ 12,734,988 $ 10,987,906
======================================================================================================
</TABLE>
+Including (overdistributed) net investment income of $(34,906) and $(15,202),
respectively, as of November 30, 1996,and $(25,483) and $(3,654), respectively,
as of October 31, 1996. See Notes to Financial Statements.
10
<PAGE>
Financial Highlights
U.S. GOVERNMENT SECURITIES SERIES
<TABLE>
<CAPTION>
Class A Shares Class B Shares
------------------------------------------- ------------------------------
Year
Ended
Year Ended November 30, November 30, 8/1/96(a)
Per Share Operating Performance: 1997 1996 1995 1994 1993 1997 to 11/30/96
========================================================================================== ==============================
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $2.63 $2.73 $ 2.59 $ 3.00 $ 2.94 $2.63 $2.57
- ------------------------------------------------------------------------------------------ ------------------------------
Income from investment operations
Net investment income .20(e) .215 .235 .247 .239 .18(e) .063
Net realized and unrealized gain (loss)
on investments (.03) (.105) .136 (.3685) .070 (.04) .060
Total from investment operations .17 .11 .371 (.1215) .309 .14 .123
------------------------------------------------------------------------------------ ------------------------------
Distributions
Dividends from net investment income (.21) (.210) (.231) (.246) (.249) (.19) (.063)
Distribution from net realized gain -- -- -- (.0425) -- -- --
------------------------------------------------------------------------------------ ------------------------------
Net asset value, end of period $2.59 $2.63 $ 2.73 $ 2.59 $ 3.00 $2.58 $2.63
- ------------------------------------------------------------------------------------------ ------------------------------
Total Return(b) 6.67% 4.41% 14.89% (4.24)% 10.70% 5.47% 5.45%(c)
============================================================================================================================
Ratios to Average Net Assets:
Expenses 0.92%(f) 0.88% 0.90% 0.90% 0.89% 1.64%(f) 0.48%(c)
Net investment income 7.82% 8.12% 8.85% 8.92% 7.94% 6.77% 2.21%(c)
======================================================================================================================
</TABLE>
Class C Shares
------------------------------
Year
Ended
November 30, 7/15/96(a)
Per Share Operating Performance: 1997 to 11/30/96
=============================================================================
Net asset value, beginning of period $2.63 $2.55
- -----------------------------------------------------------------------------
Income from investment operations
Net investment income .18(e) .066
Net realized and unrealized gain (loss)
on investments (.03) .085
Total from investment operations .15 .151
-----------------------------------------------------------------------
Distributions
Dividends from net investment income (.19) (.071)
Distribution from net realized gain -- --
-----------------------------------------------------------------------
Net asset value, end of period $2.59 $2.63
- -----------------------------------------------------------------------------
Total Return(b) 5.86% 6.49%(c)
=============================================================================
Ratios to Average Net Assets:
Expenses 1.55%(f) 0.60%(c)
Net investment income 7.25% 2.60%(c)
=======================================================================
<TABLE>
<CAPTION>
Year Ended November 30,
-------------------------------------
Supplemental Data for All Classes: 1997 1996 1995
- ------======================================================================
<S> <C> <C> <C>
Net assets, end of period (000) $2,286,412 $2,907,291 $3,272,865
Portfolio turnover rate 712.82% 820.59% 544.31%
======================================================================
</TABLE>
Year Ended November 30,
------------------------
Supplemental Data for All Classes: 1994 1993
- ------=========================================================
Net assets, end of period (000) $3,232,012 $3,909,868
Portfolio turnover rate 790.57% 586.18%
=========================================================
LIMITED DURATION SERIES
<TABLE>
<CAPTION>
Class A Shares
--------------------------------------------------------------------
Year One
Ended Month
November 30, Ended Year Ended Year Ended 11/4/93(d)
Per Share Operating Performance: 1997 11/30/96 10/31/96 10/31/95 to 10/31/94
===================================================================================================================
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 4.42 $ 4.39 $ 4.53 $ 4.44 $ 4.85
- -------------------------------------------------------------------------------------------------------------------
Income from investment operations
Net investment income .25(e) .0174 .1912 .2316 .2650
Net realized and unrealized gain (loss)
on investments (.02) .0333 (.0751) .1017 (.4123)
Total from investment operations .23 .0507 .1161 .3333 (.1473)
-------------------------------------------------------------------------------------------------------------
Distributions
Dividends from net investment income (.25) (.0207) (.2561) (.2433) (.2627)
-------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 4.40 $ 4.42 $ 4.39 $ 4.53 $ 4.44
- -------------------------------------------------------------------------------------------------------------------
Total Return(b) 5.46% 1.15%(c) 2.67% 8.16% (3.09)%(c)
===================================================================================================================
Ratios to Average Net Assets:
Expenses, including waiver and reimbursement 0.51%(f) 0.11%(c) 1.81% 1.40% 0.89%(c)
Expenses, excluding waiver and reimbursement 1.40% 0.13%(c) 2.73% 1.71% 0.89%(c)
Net investment income 5.81% 0.41%(c) 4.58% 5.62% 5.61%(c)
=============================================================================================================
<CAPTION>
Class C Shares
--------------------------------------------
Year
Ended One Month
November 30, Ended 7/15/96(a)
Per Share Operating Performance: 1997 11/30/96 to 10/31/96
===========================================================================================
<S> <C> <C> <C>
Net asset value, beginning of period $ 4.42 $ 4.39 $ 4.34
- -------------------------------------------------------------------------------------------
Income from investment operations
Net investment income .21(e) .0138 .0667
Net realized and unrealized gain (loss)
on investments (.02) .0342 .0515
Total from investment operations .19 .0480 .1182
-------------------------------------------------------------------------------------
Distributions
Dividends from net investment income (.21) (.0180) (.0682)
-------------------------------------------------------------------------------------
Net asset value, end of period $ 4.40 $ 4.42 $ 4.39
- -------------------------------------------------------------------------------------------
Total Return(b) 4.45% 1.09%(c) 2.98%(c)
===========================================================================================
Ratios to Average Net Assets:
Expenses, including waiver and reimbursement 1.44%(f) 0.19%(c) 0.69%(c)
Expenses, excluding waiver and reimbursement 2.32% 0.21%(c) 0.77%(c)
Net investment income 4.84% 0.33%(c) 1.26%(c)
=====================================================================================
</TABLE>
<TABLE>
<CAPTION>
Year Ended One
November 30, Month Ended Year Ended Year Ended 11/4/93(d)
Supplemental Data for All Classes: 1997 11/30/96 10/31/96 10/31/95 to 10/31/94
=======================================================================================================
<S> <C> <C> <C> <C> <C>
Net assets, end of period (000) $10,276 $12,696 $12,735 $8,922 $10,256
Portfolio turnover rate 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 include expenses paid through an expenses offset
arrangement.
See Notes to Financial Statements.
11
<PAGE>
Financial Highlights
BALANCED SERIES
<TABLE>
<CAPTION>
Class A Shares
---------------------------------------------------------
Year Ended One Month
November 30, Ended Year Ended 12/27/94(d)
Per Share Operating Performance: 1997 11/30/96 10/31/96 to 10/31/95
============================================================================================================
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 11.81 $ 11.30 $ 10.71 $ 9.52
- ------------------------------------------------------------------------------------------------------------
Income from investment operations
Net investment income .47(e) .0312 .472 .365
Net realized and unrealized gain on investments 1.15 .5208 .732 1.185
Total from investment operations 1.62 .552 1.204 1.55
------------------------------------------------------------------------------------------------------
Distributions
Dividends from net investment income (.46) (.0420) (.462) (.36)
Distributions from net realized gain (.17) -- (.152) --
------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 12.80 $ 11.81 $ 11.30 $ 10.71
- ------------------------------------------------------------------------------------------------------------
Total Return(b) 14.24% 4.89%(c) 11.55% 16.32%(c)
============================================================================================================
Ratios to Average Net Assets:
Expenses, including waiver and reimbursement 1.10%(f) 0.07%(c) 0.93% 0.37%(c)
Expenses, excluding waiver and reimbursement 1.53% 0.11%(c) 1.59% 1.26%(c)
Net investment income 3.89% 0.26%(c) 4.18% 4.39%(c)
======================================================================================================
<CAPTION>
Class C Shares
----------------------------------------------
Year Ended One Month
November 30, Ended 7/15/96(a)
Per Share Operating Performance: 1997 11/30/96 to 10/31/96
=================================================================================================
<S> <C> <C> <C>
Net asset value, beginning of period $ 11.79 $ 11.29 $ 10.73
- -------------------------------------------------------------------------------------------------
Income from investment operations
Net investment income .35(e) .0067 .0349
Net realized and unrealized gain on investments 1.15 .5298 .6346
Total from investment operations 1.50 .5365 .6695
-------------------------------------------------------------------------------------------
Distributions
Dividends from net investment income (.34) (.0365) (.0730)
Distributions from net realized gain (.17) -- (.0365)
-------------------------------------------------------------------------------------------
Net asset value, end of period $ 12.78 $ 11.79 $ 11.29
- -------------------------------------------------------------------------------------------------
Total Return(b) 13.14% 4.76%(c) 7.78%(c)
=================================================================================================
Ratios to Average Net Assets:
Expenses, including waiver and reimbursement 2.08%(f) 0.16%(c) 0.62%(c)
Expenses, excluding waiver and reimbursement 2.51% 0.20%(c) 0.77%(c)
Net investment income 2.88% 0.17%(c) 0.70%(c)
===========================================================================================
</TABLE>
<TABLE>
<CAPTION>
Year Ended One
November 30, Month Ended Year Ended 12/27/94(d)
Supplemental Data for All Classes: 1997 11/30/96 10/31/96 to 10/31/95
=======================================================================================================================
<S> <C> <C> <C> <C>
Net assets, end of period (000) $ 20,340 $ 11,406 $ 10,988 $ 5,713
Portfolio turnover rate 216.07% 10.05% 187.78% 131.80%
Average commissions per share paid
on equity transactiolns $ .058 $ .067 $ .057 $ .056
=================================================================================================================
</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 include expenses paid through an expenses offset
arrangement.
See Notes to Financial Statements.
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 three separate portfolios ("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"). 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.
(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.
12
<PAGE>
Notes to Financial Statements
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 a portion of its management fee
during the period for Limited Duration Series and 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 November 30, 1997,
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
pay 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 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 pay 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.
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 $210,555 $1,259,215
- --------------------------------------------------------------------------------
Limited Duration Series-Class A 10,284 64,398
- --------------------------------------------------------------------------------
Balanced Series-Class A 25,237 169,265
- --------------------------------------------------------------------------------
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 November 30, 1997, accumulated net
realized gain (loss) for financial reporting purposes aggregated $(615,067,889),
$(1,784,459) and $570,450 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>
Year Ended November 30, 1997
----------------------------- ---------------------------
U.S. Government Series Limited Duration Series
Class A Shares Amount Shares Amount
- ----------------------------------------------------------------------------------------------- ---------------------------
<S> <C> <C> <C> <C>
Sales of shares 25,354,195 $ 64,626,884 957,560 $ 4,183,207
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
Total 58,507,677 149,299,870 996,712 4,354,392
- ----------------------------------------------------------------------------------------------- ---------------------------
Shares reacquired (253,938,633) (648,051,118) (1,001,795) (4,369,426)
Increase (decrease) in shares (195,430,956) $(498,751,248) (5,083) $ (15,034)
- -----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Year Ended November 30, 1997
----------------------------
Balanced Series
Class A Shares Amount
- -----------------------------------------------------------------------------------------
<S> <C> <C>
Sales of shares 556,934 $ 6,810,253
Shares issued to shareholders in reinvestment of net investment
income and realized gain from investment transactions 42,316 502,999
Total 599,250 7,313,252
- -----------------------------------------------------------------------------------------
Shares reacquired (79,396) (966,521)
Increase (decrease) in shares 519,854 $ 6,346,731
- -----------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
One Month Ended
Year Ended November 30, 1996 November 30, 1996
----------------------------- ---------------------------
U.S. Government Series Limited Duration Series
Class A Shares Amount Shares Amount
- ----------------------------------------------------------------------------------------------- ---------------------------
<S> <C> <C> <C> <C>
Sales of shares 72,259,734 $ 192,372,587 34,768 $ 152,780
Shares issued to shareholders in
reinvestment of net investment income 43,159,256 112,858,274 3,669 16,106
Total 115,418,990 305,230,861 38,437 168,886
- ----------------------------------------------------------------------------------------------- ---------------------------
Shares reacquired (316,044,390) (824,750,733) (45,364) (199,668)
Increase (decrease) in shares (200,625,400) $(519,519,872) (6,927) $ (30,782)
- -----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
One Month Ended
November 30, 1996
-------------------------
Balanced Series
Class A Shares Amount
- -----------------------------------------------------------------------------------------
<S> <C> <C>
Sales of shares 19,415 $ 225,934
Shares issued to shareholders in
reinvestment of net investment income 2,328 26,976
Total 21,743 252,910
- -----------------------------------------------------------------------------------------
Shares reacquired (4,373) (50,932)
Increase (decrease) in shares 17,370 $ 201,978
- -----------------------------------------------------------------------------------------
</TABLE>
13
<PAGE>
Notes to Financial Statements
<TABLE>
<CAPTION>
Year Ended October 31, 1996
----------------------------------------------------
Limited Duration Series Balanced Series
Class A Shares Amount Shares Amount
- ------------------------------------------------------------------------------------------------------ ----------------------
<S> <C> <C> <C> <C>
Sales of shares 788,323 $ 3,464,010 299,112 $ 3,295,785
Shares issued to shareholders in reinvestment of net investment
income and realized gain from investment transactions 50,016 219,212 30,403 334,794
Total 838,339 3,683,222 329,515 3,630,579
- ------------------------------------------------------------------------------------------------------ ----------------------
Shares reacquired (1,697,060) (7,646,454) (59,788) (662,931)
Increase (decrease) in shares (858,721) $(3,963,232) 269,727 $ 2,967,648
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
August 1, 1996
(Commencement of
Year Ended Offering Class B Shares)
November 30, 1997 to November 30, 1996
----------------------------------------------------
U.S. Government Series U.S. Government Series
Class B Shares Amount Shares Amount
- ------------------------------------------------------------------------------------------------------ ------------------------
<S> <C> <C> <C> <C>
Sales of shares 4,045,212 $10,307,080 1,832,979 $ 4,727,423
Shares issued to shareholders in reinvestment of net investment income 95,421 243,523 7,800 20,109
Total 4,140,633 10,550,603 1,840,779 4,747,532
- ------------------------------------------------------------------------------------------------------ ------------------------
Shares reacquired (464,040) (1,177,526) (20,500) (52,563)
Increase in shares 3,676,593 $ 9,373,077 1,820,279 $ 4,694,969
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Year Ended November 30, 1997
----------------------------- ---------------------------
U.S. Government Series Limited Duration Series
Class C Shares Amount Shares Amount
- ----------------------------------------------------------------------------------------------- ---------------------------
<S> <C> <C> <C> <C>
Sales of shares 5,922,523 $ 15,159,708 130,136 $ 568,557
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
Total 8,849,148 22,643,112 176,369 770,422
- ----------------------------------------------------------------------------------------------- ---------------------------
Shares reacquired (37,517,932) (95,453,967) (711,754) (3,112,190)
Increase (decrease) in shares (28,668,784) $ (72,810,855) (535,385) $ (2,341,768)
- -----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Year Ended November 30, 1997
----------------------------
Balanced Series
Class C Shares Amount
- -----------------------------------------------------------------------------------------
<S> <C> <C>
Sales of shares 133,693 $ 1,630,079
Shares issued to shareholders in reinvestmment of net investment
income and realized gain from investment transactions 6,375 75,864
Total 140,068 1,705,943
- -----------------------------------------------------------------------------------------
Shares reacquired (35,998) (437,762)
Increase (decrease) in shares 104,070 $ 1,268,181
- -----------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
July 15, 1996 (Commencement of Offering One Month Ended
Class C Shares) to November 30, 1996 November 30, 1996
---------------------------------------- ----------------------------
U.S. Government Series Limited Duration Series
Class C Shares Amount Shares Amount
- ---------------------------------------------------------------------------------------------------- ----------------------------
<S> <C> <C> <C> <C>
Sales of shares 3,478,886 $ 8,614,508 11,036 $ 48,572
Shares issued to shareholders in reinvestment of
net investment income 1,135,351 2,916,543 4,989 21,899
Shares issued to shareholders in exchange for assets acquired
in tax-free acquisition 112,123,960 285,355,479 -- --
Total 116,738,197 296,886,530 16,025 70,471
- ---------------------------------------------------------------------------------------------------- ----------------------------
Shares reacquired (14,423,073) (37,265,723) (35,688) (157,086)
Increase (decrease) in shares 102,315,124 $ 259,620,807 (19,663) $ (86,615)
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
One Month Ended November 30, 1997
----------------------------------
Balanced Series
Class C Shares Amount
- -----------------------------------------------------------------------------------------
<S> <C> <C>
Sales of shares 4,185 $ 48,309
Shares issued to shareholders in reinvestment of
net investment income 338 3,917
Shares issued to shareholders in exchange for assets acquired
in tax-free acquisition -- --
Total 4,523 52,226
- -----------------------------------------------------------------------------------------
Shares reacquired (28,031) (318,909)
Increase (decrease) in shares (23,508) $ (266,683)
- -----------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
July 15, 1996 (Commencement of Offering
Class C Shares) to October 31, 1996
----------------------------------------------------
Limited Duration Series Balanced Series
Class C Shares Amount Shares Amount
- ------------------------------------------------------------------------------------------------------ ----------------------
<S> <C> <C> <C> <C>
Sales of shares 156,244 $ 681,218 12,190 $ 130,757
Shares issued to shareholders in reinvestment of net investment
income and realized gain from investment transactions 14,461 62,982 2,086 22,550
Shares issued to shareholders in exchange for assets acquired
in tax-free acquisition 1,839,969 7,981,785 276,867 2,971,062
Total 2,010,674 8,725,985 291,143 3,124,369
- ------------------------------------------------------------------------------------------------------ ----------------------
Shares reacquired (219,707) (958,062) (121,921) (1,344,378)
Increase in shares 1,790,967 $ 7,767,923 169,222 $ 1,779,991
- ------------------------------------------------------------------------------------------------------ ----------------------
</TABLE>
At November 30, 1997, paid in capital aggregated $2,847,884,920 for U.S.
Government Series, $12,059,653 for Limited Duration Series and $17,615,584 for
Balanced Series.
14
<PAGE>
Notes to Financial Statements
5. Portfolio Securities
Purchases and sales of investment securities (other than short-term investments)
were as follows:
Series Purchases Sales
- --------------------------------------------------------------------------------
U.S. Government Series $ 20,308,357,792 $ 21,653,925,876
- --------------------------------------------------------------------------------
Limited Duration Series $ 36,155,328 $ 34,836,787
- --------------------------------------------------------------------------------
Balanced Series $ 35,482,277 $ 28,674,172
- --------------------------------------------------------------------------------
As of November 30, 1997, net unrealized appreciation, unrealized appreciation
and unrealized depreciation of investments based on cost for federal income tax
purposes were as follows:
Net Unrealized Unrealized Unrealized
Series Appreciation Appreciation Depreciation
- --------------------------------------------------------------------------------
U.S. Government Series $ 36,809,889 $ 46,474,736 $ 9,664,847
- --------------------------------------------------------------------------------
Limited Duration Series $ 34,575 $ 38,007 $ 3,432
- --------------------------------------------------------------------------------
Balanced Series $ 2,137,372 $ 2,217,304 $ 79,932
- --------------------------------------------------------------------------------
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
November 30, 1997, the market value of securities on loan to brokers was
$250,305,051 for which the Series has obtained collateral aggregating
$259,475,383 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
November 30, 1997 under a deferred compensation plan were $746,000.
7. Acquisition
On July 12, 1996, the U.S. Government Series, Limited Duration Series and
Balanced Series acquired the net assets of the respective Series of Lord Abbett
Securities Trust ("Securities Trust") pursuant to a plan of reorganization
approved by the Securities Trust's shareholders on June 19, 1996. The
acquisition was accomplished by a tax-free exchange of newly issued Class C
shares of each Series for shares of the respective Series of the Securities
Trust. The number of Class C shares of each Series issued, the number of shares
of each Series of the Securities Trust exchanged, and the aggregate net assets
of each Series of the Trust and Securities Trust (including net unrealized
appreciation and accumulated net realized losses for the Securities Trust)
immediately before the acquisition were as follows:
Securities
Class C Trust Shares Net Assets
Shares Issued Exchanged of Trust
- -------------------------------------------------------------------------------
U.S. Government Series 112,123,960 66,150,183 $ 2,752,491,293
- -------------------------------------------------------------------------------
Limited Duration Series 1,839,969 1,777,883 $ 4,482,517
- --------------------------------------------------------------------------------
Balanced Series 276,867 272,026 $ 7,831,343
- -------------------------------------------------------------------------------
Unrealized
Net Assets Appreciation Accumulated Net
of Securities Trust (Depreciation) Realized Loss
- --------------------------------------------------------------------------------
U.S. Government Series $285,355,479 $(1,704,531) $ (55,655,663)
- --------------------------------------------------------------------------------
Limited Duration Series $ 7,981,785 $ (99,776) $ (843,841)
- --------------------------------------------------------------------------------
Balanced Series $ 2,971,062 $ 63,398 $ (1,195)
- --------------------------------------------------------------------------------
8. 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.
9. 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.
10. Proxy Results (unaudited)
At a Special Meeting of Shareholders held on November 12, 1997, the Balanced
Series shareholders voted and approved a proposal to amend one of the fund's
investment restrictions in order to permit the Balanced Series to gradually
convert to a fund of funds.
The results of the shareholder vote were as follows:
For Against Abstain Non-Vote
- --------------------------------------------------------------------------------
781,058 35,385 37,082 573
- --------------------------------------------------------------------------------
15
<PAGE>
State Tax Information
A portion of the dividends paid by each Series of the Trust may be exempt from
state income tax because they were derived from the following types of U.S.
Government securities: U.S. Treasury securities, Federal Farm Credit Banks,
Federal Home Loan Banks and Financing Corporation. For the percent of your
Series' dividends exempt from state income tax, refer to the Lord Abbett
Shareholder 1997 Tax Guide mailed to shareholders of each Series of the Trust,
along with their 1099-DIV Forms. Shareholders should consult their tax advisers.
Independent Auditors' Report
The Board of Trustees and Shareholders,
Lord Abbett Investment Trust:
We have audited the accompanying statements of net assets of Lord Abbett
Investment Trust-U.S. Government Securities Series, Limited Duration U.S.
Government Securities Series and Balanced Series as of November 30, 1997, the
related statements of operations and of changes in net assets and the financial
highlights for each of the periods presented. These financial statements and the
financial highlights are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and the
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned at November
30, 1997 by correspondence with the custodian and brokers; where replies were
not received from brokers, we performed other auditing procedures. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Lord Abbett
Investment Trust-U.S. Government Securities Series, Limited Duration
U.S. Government Securities Series and Balanced Series at November 30, 1997, the
results of their operations, the changes in their net assets and the financial
highlights for each of the periods presented in conformity with generally
accepted accounting principles.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
New York, New York
January 5, 1998
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
Zane E. Brown, Executive Vice
President and Portfolio Manager
Paul A. Hilstad, Vice President
and Secretary
Stephen I. Allen, Vice President
Daniel E. Carper, Vice President
Daria L. Foster, Vice President
Robert G. Morris, Vice President
Robert J. Noelke, Vice President
E. Wayne Nordberg, Vice President
John J. Walsh, Vice President
Lawrence 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: Robert I. Gerber, Burton Zwick,
Zane E. Brown and Timothy W. Horan]
(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
portfolio manager -
Lord Abbett Investment Trust
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 under-
writer). 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
shareholders 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, C. Alan MacDonald.
C. Alan MacDonald
Trustee-Lord Abbett
Investment Trust
[PHOTO: C. Alan MacDonald]
Mr. MacDonald is a graduate of
Cornell University's School of Hotel
Administration and has over 40
years of corporate management
experience. He is currently the
Managing Director of Directorship,
a firm that focuses on the respon-
sibilities of corporate boards.
Mr. MacDonald serves as director
for Fountainhead Water Company,
DenAmerica Corp., J.B. Williams
and Exigent Diagnostics, Inc. He has
been an independent trustee/director
for all of Lord Abbett's funds
since 1988.
<PAGE>
Investing in the
Lord Abbett
Family of Funds
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
GROWTH
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
INCOME
- ----------------------------------------------------------------------------------------------------------------------------
Growth Funds Growth & Balanced Fund Income Funds Tax-Free Money
Income Funds Income Funds Market Fund
<S> <C> <C> <C> <C> <C> <C>
Developing Global Fund- Affiliated Fund Balanced Series Bond-Debenture o National U.S. Government
Growth Fund Equity Series Fund o California Securities
Growth & Income o Connecticut Money Market
International Mid-Cap Series Global Fund- o Florida Fund*+
Series Value Fund Income Series o Georgia
Research Fund- o Hawaii
Research Fund- Large-Cap Limited Duration o Michigan
Small-Cap Series U.S. Government o Minnesota
Series Securities Series* o Missouri
o New Jersey
U.S. Government o New York
Securities Series* o Pennsylvania
o Texas
o Washington
</TABLE>
Finding the right mutual fund can be confusing. At Lord, Abbett & Co., we
believe your financial adviser 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 Investment
Trust.
For more complete information about any other Lord Abbett fund, including
charges and expenses, call your financial adviser 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 financial adviser can diversify your investments
between equity and income funds.
Flexibility. As your investment goals change, your financial adviser can help
you reallocate your portfolio.
As an investor in the Lord Abbett Family of Funds, you have access to 28
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 financial adviser 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
* An investment in this Fund is neither insured nor guaranteed by the U.S.
Government.
+ There can be no assurance that this Fund will be able to maintain a stable
net asset value of $1.00 per share. This Fund is managed to maintain, and
has maintained, its stable $1.00 per share price.
---------------
[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-2-1197
The GM Building o 767 Fifth Avenue o New York, NY 10153-0203 (1/98)
