Lord Abbett
Investment
Trust
o U.S. Government Securities Series
o Limited Duration U.S. Government Securities Series
o Balanced Series
1998 ANNUAL REPORT
[GRAPHIC OMITTED]
Three portfolios to help
you meet your goals
[LOGO](R)
<PAGE>
Report to Shareholders For the
Fiscal Year Ended November 30, 1998
[PHOTO OMITTED]
/s/ ROBERT S. DOW
- ----------------------------------
ROBERT S. DOW
CHAIRMAN
JANUARY 8, 1999
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 7
Balanced Series
- ----------------------------------
About the Series 3
Statement of Net Assets 8
Data On All Series
- ----------------------------------
Statements of Operations 9
Statements of Changes in
Net Assets 10
Financial Highlights 11
Notes to Financial Statements 14
Lord Abbett Investment Trust completed its fiscal year on November 30, 1998,
with combined net assets in excess of $1.9 billion. We are pleased to present
you this performance overview, as well as class-specific data for three of the
Trust's Series.
U.S. Government Securities Series
Fiscal Year Ended 11/30/98
---------------------------------
Class A Class B Class C
- --------------------------------------------------------------------------------
Net asset value $2.64 $2.64 $2.65
Dividends $ .17 $ .15 $ .15
Total return* +8.9% +8.5% +8.5%
Limited Duration
U.S. Government
Securities Series Balanced Series
Fiscal Year Fiscal Year
Ended 11/30/98 Ended 11/30/98
------------------ --------------------------------
Class A Class C Class A Class B Class C
- ---------------------------------------------- --------------------------------
Net asset value $4.46 $4.47 $12.87 $12.86 $12.85
Dividends $ .24 $ .20 $ .52 $ .25 $ .39
Capital gains distributions $ - $ - $ .35 $ - $ .35
Total return* +7.1% +6.2% + 7.7% -.16%** +6.6%
Global political and economic uncertainties triggered a worldwide "flight to
quality" that pushed U.S. Treasury bond yields significantly lower during the
fall months. Within this environment, high-quality alternatives to U.S.
Treasuries, such as mortgaged-backed agency securities, became extremely
attractive because they provided superior relative yields without a significant
increase in market risk. Both the U.S. Government Securities Series and Limited
Duration U.S. Government Securities Series emphasized mortgage-backed
securities, such as FNMAs, FHLMCs, collateralized mortgage obligations (CMOs)
and commercial-backed securities (CMBS). We believe that because mortgage-backed
security prices have significantly lagged the Treasury market rally, they
represent good value for investors. Because we expect that current bond market
volatility is likely to continue in the months ahead, we will take the
opportunity during periods of low relative prices to add to our overweighting of
mortgage-backed securities.
The Balanced Series adopted a "fund of funds" format on April 1, 1998 and
divided assets 60%/40% between shares of Lord Abbett Affiliated Fund (equity)
and Lord Abbett Bond-Debenture Fund (fixed-income) during the third quarter.+ In
the fourth quarter, after significant equity price increases, we changed the
allocation to 55% equity and 45% fixed-income. Earlier in the year, Affiliated
Fund performance benefited from an increased weighting in insurance stocks,
which performed well. Fund performance was also enhanced by an overweighting in
utility stocks, particularly during the third quarter. The overall strategy of
Bond-Debenture Fund is to identify good bond values while being careful about
credit selection. Throughout the year, we reduced that Fund's corporate bond
holdings in basic industries such as steel, paper and chemicals because we
believed there was little opportunity for these companies to raise prices on
their products. We emphasized industries where cash flows are steady, such as
telecommunications, media and cable television providers. We expect that
long-term returns can be enhanced due to our selection of well-managed
high-yield companies, whose bonds represent particularly good value because they
are currently yielding more than 6% over Treasuries.
Thank you for making Lord Abbett Investment Trust a part of your investment
portfolio. We remain committed to helping you achieve your financial goals
throughout the new year and well into the future.
* Total return is the percent change in net asset value assuming the
reinvestment of all distributions.
** Not annualized. Commencement of offering Class B shares was 5/1/98.
+ The portfolio is actively managed and as a result, asset allocation may
change from time to time.
<PAGE>
ABOUT THE U.S. GOVERNMENT SECURITIES SERIES
Total Return is Important to Fixed-Income Investors
Over the last 10 years, an investment in the Series provided relatively stable
dividend income and, assuming the reinvestment of all distributions, grew by
over 114%. 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: 11/30/88-11/30/98
The U.S. Government Securities Series Distribution Rate on 11/30/98 was
6.06%(3)
[PLOT POINTS TO COME]
SEC Returns
Average annual compound returns for the periods ended December 31, 1998 at the
respective Class A share maximum sales charges,(4) with all distributions
reinvested:
Limited Duration
U.S. Government U.S. Government
Securities Series(2) Securities Series Balanced Series
- ---------------------------------------------------------------------------
1 year: +2.70% +3.30% +3.60%
5 years: +4.76% +3.54% n/a
10 years or Life of Series: +7.85% +3.51%(5) +12.86%(5)
SEC yield for the 30 days
ended 12/31/98: +5.37% +4.65% +4.55%
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>
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------
Annual Total Return(1) +12.7% +9.3% +16.9% +7.1% +9.2% -4.3% +15.7% +1.7% +9.2% +7.9%
- ----------------------------------------------------------------------------------------------
</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.
Lord Abbett's Focus on Quality:
Representative Structure as of 11/30/98(1)
[GRAPHIC OMITTED]
[The following table was depicted as a pie chart in the printed material.]
FNMA 32.8%(2)
GNMA 15.7%(2)
FHLMC 22.8%(2)
U.S. Treasury Bonds 8.6%(2)
U.S. Treasury Notes 7.1%(2)
Agency Debentures 3.7%(2)
Other 9.3%(2)
(1) The portfolio is actively managed and, as a result, its composition will
change from time to time.
(2) Percent of Total Long-Term Investments.
Who Owns the Series?
Investor Profile of Lord Abbett U.S. Government Securities Series
- --------------------------------------------------------------------------------
Fiduciaries Trusts 3,578
Pension & profit-sharing plans 6,461
Custodians for minors 1,811
Estates 148
- --------------------------------------------------------------------------------
Institutions Broker-held accounts 30,330
Corporate organizations 298
Religious, charitable & welfare organizations 238
Banks, credit unions & insurance companies 150
Clubs & Fraternal Organizations 102
Cemeteries & hospitals 58
Government agencies 25
Colleges & universities 16
- --------------------------------------------------------------------------------
Individuals Single & joint accounts & IRAs 37,326
- --------------------------------------------------------------------------------
Total Accounts in the Series on 11/30/98 80,541
- --------------------------------------------------------------------------------
2
<PAGE>
ABOUT THE LIMITED DURATION U.S. GOVERNMENT SECURITIES SERIES
The Series invests in intermediate-term U.S. Government securities. As of
November 30, 1998, the Series' distribution rate was competitive with the yield
for 10-year Treasuries, with less price volatility than the Treasuries.
Lord Abbett Limited Duration U.S. Government Securities Series(1)
Growth of $100,000 (as of 11/30/98)
The Limited Duration U.S. Government Securities Series' Distribution Rate on
11/30/98 was 5.22%(2)
[GRAPHIC OMITTED]
[The following table was depicted as a bar chart in the printed material.]
1 Year 3 Years Life of Series
------ ------- --------------
$104,456 $113,204 $119,950
Total return shown, above and below, reflects the percent change in value for
Class A shares with both dividends and capital gains reinvested.
ABOUT THE BALANCED SERIES
The Series allocates its assets between fixed-income securities and equity
holdings, based on our economic outlook. This strategy has provided investors
with strong total returns, while generating monthly income.
Lord Abbett Balanced Series(3)
Growth of $100,000 (as of 11/30/98)
The Balanced Series' Average Annual Rate of Total Return Since Inception:
12.90%(2)
[GRAPHIC OMITTED]
[The following table was depicted as a bar chart in the printed material.]
1 Year 3 Years Life of Series
------ ------- --------------
$103,640 $133,528 $161,088
(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>
A Note About Year 2000 Matters
As you probably know, the Trust depends on the proper functioning of computer
systems for most, if not all, aspects of its operations. Many computer systems
now in use cannot distinguish between the year 2000 (Y2K) and the year 1900, an
inability that could disrupt the services provided to the Trust.
Lord Abbett, Lord Abbett Distributor LLC, the Trust's transfer agent, the
Trust's custodian and other providers of services critical to the Trust all have
advised the Trust that they have been actively working on changes to their
computer systems to prepare for the Year 2000 and expect that their systems, and
those of their external service providers, will be adapted in time. Although the
Y2K issue is unprecedented and the process of Y2K preparedness evaluation and
systems remediation is an ongoing one, we presently believe that there will be
no material effect on the Trust and its financial statements.
Important Information
Each Series' respective SEC yield is calculated on its maximum offering price on
12/31/98, using a standard method which does not take into account certain
portfolio strategies. Series' distribution rates differ from SEC yields
primarily because each Series purchases short- and intermediate-term,
high-coupon securities at a premium and distributes to shareholders all of the
interest income on those securities without amortizing the premiums. This
practice is consistent with applicable tax regulations and generally accepted
accounting principles, but may result in a decrease in the net asset values of
shares of the Series as the market values of the premium securities decrease
over time. Dividends paid from this interest income are taxable to shareholders
as ordinary income. Neither the U.S. Government Securities Series nor the
Limited Duration U.S. Government Securities Series is insured or guaranteed by
the U.S. Government.
Results quoted herein represent past performance based on the current sales
charge schedules and reflect appropriate Rule 12b-1 Plan expenses. Tax
consequences are not reflected. The U.S. Government Securities Series' sales
charge structure has changed from the past. If interest rates rise, the value of
bonds purchased by the Series would decrease, causing a decrease in the Series'
share values. If used as sales material after 3/31/99, 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, 1998
<TABLE>
<CAPTION>
Principal
Investments Amount Value
====================================================================================================================================
Investments in Securities 116.46%
====================================================================================================================================
<S> <C> <C> <C>
U.S. Treasury 18.31% U.S. Treasury Bonds Zero Coupon due 8/15/2020+ $532,326M $ 163,108,013
U.S. Treasury Bonds 8 3/4% due 5/15/2017+ 19,908M 27,920,970
U.S. Treasury Notes 3 5/8% due 7/15/2002+ 86,730M 88,396,842
U.S. Treasury Notes 6 1/4% due 4/30/2001+ 66,031M 68,424,624
U.S. Treasury Notes 6 5/8% due 5/15/2007+ 463M 520,224
Total 348,370,673
- ----------------------------------------------------------------------------------------------------------------------==============
Federal Home Loan 6 1/2% due on an announced basis 290,529M 292,265,532
Mortgage Corporation 7% due on an announced basis 199,343M 203,267,712
Pass-Through Securities 26.60% 10 1/2% due 5/1/2020 9,492M 10,565,452
Total 506,098,696
- ----------------------------------------------------------------------------------------------------------------------==============
Federal National 5 1/2% due 11/1/2025 4,342M 4,209,363
Mortgage Association 5 3/4% due 6/15/2005+ 10,527M 10,906,959
Pass-Through Securities 42.65% 6% due on an announced basis 1,561M 1,540,512
6% due 2028 23,308M 23,006,324
6.08% due 10/1/2008 26,262M 27,271,109
6.09% due 2008 11,960M 12,273,553
6.13% due 8/1/2008 7,195M 7,357,934
6.22% due 5/1/2008 4,477M 4,604,738
6.24% due 2008 14,589M 15,022,938
6 1/4% due 5/1/2008 2,118M 2,181,501
</TABLE>
4
<PAGE>
Statement of Net Assets
U.S. GOVERNMENT SECURITIES SERIES November 30, 1998
<TABLE>
<CAPTION>
Principal
Investments Amount Value
====================================================================================================================================
<S> <C> <C> <C>
6.29% due 6/1/2008 $ 4,811M $ 4,970,967
6.32% due 6/1/2008 9,103M 9,427,795
6.35% due 6/1/2008 3,983M 4,132,691
6.39% due 1/1/2008 7,320M 7,603,798
6.395% due 3/1/2008 3,245M 3,374,672
6.40% due 7/1/2008 3,587M 3,734,921
6.42% due 5/1/2008 5,398M 5,621,328
6.46% due 2006 to 2008 20,565M 21,538,830
6.49% due 8/1/2008 3,990M 4,181,789
6 1/2% due 2008 to 2013 206,973M 210,362,293
6.505% due 12/1/2007 4,162M 4,355,309
6.58% due 11/1/2004 3,059M 3,206,623
6 5/8% due 10/1/2007 9,698M 10,215,164
6.665% due 11/1/2007 3,184M 3,358,142
6.67% due 11/1/2004 7,881M 8,296,233
6.68% due 10/1/2007 9,749M 10,304,985
6.69% due 9/1/2007 7,912M 8,363,987
6.715% due 10/1/2005 2,814M 2,984,734
6 3/4% due 10/1/2007 7,957M 8,443,616
6.765% due 5/1/2007 4,932M 5,229,196
6.77% due 9/1/2004 4,610M 4,866,932
6.775% due 10/1/2007 6,979M 7,420,669
6.799% due 3/1/2007 5,833M 6,191,411
6.80% due 2004 to 2007 7,825M 8,314,201
6.802% due 10/1/2007 8,511M 9,064,561
6.805% due 3/1/2007 4,927M 5,230,863
6.812% due 10/1/2007 1,062M 1,128,649
6.825% due 11/1/2007 4,260M 4,545,731
6.84% due 10/1/2007 2,698M 2,879,739
6.86% due 10/1/2004 6,763M 7,178,208
6.907% due 6/1/2007 13,707M 14,613,608
6.91% due 3/1/2007 4,927M 5,265,858
6.935% due 4/1/2004 4,862M 5,158,049
7% due 2007 to 2013 117,627M 120,355,367
7.033% due 6/1/2007 2,342M 2,501,392
7.0427% due 12/1/2006 12,620M 13,687,238
7.06% due 11/1/2003 437M 464,609
7.20% due 7/1/2006 2,299M 2,511,276
7.205% due 6/1/2006 15,183M 16,618,683
7.28% due 10/1/2006 433M 470,646
7.31% due 7/1/2003 364M 388,638
7.40% due 7/1/2004+ 63,664M 70,388,510
7.43% due 6/1/2007 5,439M 6,001,988
7 1/2% due 2007 to 2023 46,534M 47,960,041
Total 811,288,871
- ----------------------------------------------------------------------------------------------------------------------==============
Government National 7% due 2023 to 2028 70,602M 72,315,435
Mortgage Association 7 1/2% due 2025 to 2028 168,000M 174,523,089
Pass-Through Securities 18.43% 8% due 2024 to 2028 90,437M 94,127,096
9% due 2018 to 2020 4,805M 5,163,218
10% due 2018 to 2019 4,092M 4,434,888
Total 350,563,726
-----------------------------------------------------------------------------------==============
</TABLE>
5
<PAGE>
Statement of Net Assets
U.S. GOVERNMENT SECURITIES SERIES November 30, 1998
<TABLE>
<CAPTION>
Principal
Investments Amount Value
===================================================================================================================================
<S> <C> <C> <C>
Real Estate Mortgage Federal Home Loan Mortgage Corp. 5% due 10/15/2016 $ 5,088M $ 5,059,316
Investment Conduit Federal Home Loan Mortgage Corp. 5.20% due 5/15/2005 2,264M 2,252,727
Pass-Through Certificates 9.58% Federal Home Loan Mortgage Corp. 5 1/4% due 1/15/2019 6,125M 6,099,976
Federal National Mortgage Association 5 1/4% due 8/25/2018 2,637M 2,622,642
Federal National Mortgage Association 5.44375% due 12/25/2003 20,725M 20,777,276
Federal National Mortgage Association 5.65% due 5/25/2017 5,379M 5,367,314
Federal Home Loan Mortgage Corp. 5.7125% due 5/15/2022 8,628M 8,671,640
Federal Home Loan Mortgage Corp. 5.80% due 7/15/2000 522M 520,430
Federal Home Loan Mortgage Corp. 5.7125% due 4/15/2008 3,780M 3,860,241
Federal National Mortgage Association 5.90% due 11/25/2005 240M 240,413
Federal Home Loan Mortgage Corp. 6% due 8/15/2006 5,066M 5,097,644
Federal National Mortgage Association 6% due 2000 to 2019 89,338M 89,369,433
Federal Home Loan Mortgage Corp. 6.05% due 2/15/2011 300M 300,208
Federal National Mortgage Association 5.5437% due 1/25/2024 8,666M 8,801,249
Federal National Mortgage Association 6 1/2% due 3/18/2008 23,149M 23,228,371
Total 182,268,880
- ---------------------------------------------------------------------------------------------------------------------==============
Other .89% Federal National Mortgage Association 5 1/2% due 11/25/2006 709M 708,079
Federal National Mortgage Association 5 3/4% due 4/25/2018 9,156M 9,144,685
Government National Mortgage Association 5.81% due 5/16/2020 407M 406,959
Federal National Mortgage Association 5.6437% CMO Class 7 FG
due 8/25/2023 6,573M 6,626,305
Total 16,886,028
----------------------------------------------------------------------------------==============
Total Investments (Cost $2,174,559,730) 2,215,476,874
===================================================================================================================================
Other Assets, Less Liabilities (16.46)%
===================================================================================================================================
Other Assets
Short-Term Federal Home Loan Banks Discount Notes 5.22% due 12/1/1998 154,354M 154,306,919
Investments Federal Home Loan Mortgage Corp. 5% due 1998 to 1999 1,886M 1,880,864
U.S. Government Federal Home Loan Mortgage Corp. 5 1/2% due 1999 1,510M 1,505,814
Obligations Federal Home Loan Mortgage Corp. 6% due 2/1/1999 5,491M 5,477,246
Federal Home Loan Mortgage Corp. 15% due 2/11/1999 125,000M 127,279,593
Federal Home Loan Mortgage Corp. Discount Note 5.17% due 12/1/1998 13,646M 13,644,067
Total (Cost $304,098,987) 304,094,503
- ---------------------------------------------------------------------------------------------------------------------==============
Other (See Note 5) 80,198,761
- ---------------------------------------------------------------------------------------------------------------------==============
Cash 185,581
- ---------------------------------------------------------------------------------------------------------------------==============
Receivable for: Securities sold 484,464,809
Interest 9,987,478
Capital stock sold 577,480
Total Other Assets 879,508,612
- ---------------------------------------------------------------------------------------------------------------------==============
Payable for: Securities purchased 1,098,355,718
Payable for collateral on securities loaned 80,198,761
Dividends 7,721,573
Capital stock reacquired 2,868,232
Other liabilities 3,436,948
Total Liabilities 1,192,581,232
- ---------------------------------------------------------------------------------------------------------------------==============
Total Other Assets, Less Liabilities (313,072,620)
===================================================================================================================================
Net Assets 100.00% $1,902,404,254
===================================================================================================================================
Class A Shares-Net asset value ($1,712,349,823 / 648,149,209 shares outstanding) $2.64
Maximum offering price (Class A Shares) $2.77
Class B Shares-Net asset value ($29,292,731 / 11,100,263 shares outstanding) $2.64
Class C Shares-Net asset value ($160,761,700 / 60,767,078 shares outstanding) $2.65
</TABLE>
+ Securities (or a portion of securities) on
loan. See Note 5.
See Notes to Financial Statements.
6
<PAGE>
Statement of Net Assets
LIMITED DURATION U.S. GOVERNMENT SECURITIES SERIES November 30, 1998
<TABLE>
<CAPTION>
Principal
Investments Amount Value
====================================================================================================================================
Investments in Securities 101.60%
====================================================================================================================================
<S> <C> <C> <C>
U.S. Treasury 14.04% U.S. Treasury Notes 35/8% due 7/15/2002 $ 249M $ 253,785
U.S. Treasury Notes 61/4% due 4/30/2001 1,245M 1,290,131
Total 1,543,916
- ----------------------------------------------------------------------------------------------------------------------==============
Federal Home Loan 6 1/2% due on an announced basis 465M 467,325
Mortgage Corporation 7% due on an announced basis 1,333M 1,359,395
Pass-Through Securities 16.61% Total 1,826,720
- ----------------------------------------------------------------------------------------------------------------------==============
Federal National 6% due on an announced basis 457M 451,002
Mortgage Association 6 1/2% due 2003 to 2013 1,149M 1,168,694
Pass-Through Securities 33.22% 6.67% due 11/1/2004 99M 104,290
6.80% due 1/1/2004 295M 310,689
6.834% due 7/1/2003 205M 214,667
6.86% due 10/1/2004 99M 105,186
6.935% due 4/1/2004 296M 313,877
7.043% due 7/1/2006 122M 129,708
7.06% due 11/1/2003 118M 125,288
7.31% due 7/1/2003 69M 73,328
7.40% due 7/1/2004 595M 657,847
Total 3,654,576
- ----------------------------------------------------------------------------------------------------------------------==============
Government National 7% due 2028 890M 911,719
Mortgage Association 8% due 4/15/2028 159M 165,863
Pass-Through Securities 14.29% 10% due 6/15/2019 48M 52,043
10 1/2% due 2016 to 2020 404M 442,583
Total 1,572,208
- ----------------------------------------------------------------------------------------------------------------------==============
Real Estate Mortgage Federal Home Loan Mortgage Corp. 5 1/4% due 1/15/2019 154M 153,137
Investment Conduit Federal National Mortgage Association 5 1/4% due 8/25/2018 78M 77,280
Pass-Through Certificates 20.19% Federal National Mortgage Association 5.4437% due 12/25/2003 125M 125,416
Federal National Mortgage Association 5.65% due 5/25/2017 182M 181,943
Federal Home Loan Mortgage Corp. 5.65% due 7/15/2005 73M 72,865
Federal Home Loan Mortgage Corp. 5.7125% due 5/15/2022 152M 152,586
Federal Home Loan Mortgage Corp. 5.80% due 7/15/2000 58M 57,826
Federal Home Loan Mortgage Corp. 5.7125% due 4/15/2008 130M 133,112
Federal National Mortgage Association 5.90% due 11/25/2005 120M 120,206
Federal National Mortgage Association 6% due 2000 to 2009 735M 735,049
Federal Home Loan Mortgage Corp. 6% due 2004 to 2017 140M 140,276
Federal Home Loan Mortgage Corp. 6.05% due 2/15/2011 139M 139,631
Federal National Mortgage Association 5.5437% due 1/25/2024 130M 131,809
Total 2,221,136
- ----------------------------------------------------------------------------------------------------------------------==============
Other 3.25% Federal National Mortgage Association 5 1/2% due 2006 to 2018 222M 221,240
Government National Mortgage Association 5.8125% due 5/16/2020 24M 23,940
Federal National Mortgage Association 5.6437% CMO Class 7 FG
due 8/25/2023 111M 112,310
Total 357,490
-----------------------------------------------------------------------------------==============
Total Investments (Cost $11,081,638) 11,176,046
====================================================================================================================================
Other Assets, Less Liabilities (1.60)%
====================================================================================================================================
Other Assets
Short-Term Federal Home Loan Bank Discount Note 5.22% due 12/1/1998 1900M 1,899,728
Investments Federal Home Loan Mortgage Corp. 5% due 5/1/1999 76M 75,638
U.S. Government Federal Home Loan Mortgage Corp. 5 1/2% due 12/1/1998 67M 66,355
Obligations Total (Cost $2,041,265) 2,041,721
- ----------------------------------------------------------------------------------------------------------------------==============
Cash 185,330
- ----------------------------------------------------------------------------------------------------------------------==============
</TABLE>
7
<PAGE>
Statement of Net Assets
LIMITED DURATION U.S. GOVERNMENT SECURITIES SERIES November 30, 1998
<TABLE>
<CAPTION>
Value
===================================================================================================================================
<S> <C> <C>
Receivable for: Securities sold $ 3,000,646
Capital stock sold 177,138
Interest 64,431
Total Other Assets 5,469,266
- ---------------------------------------------------------------------------------------------------------------------==============
Payable for: Securities purchased 5,593,035
Other 52,472
Total Liabilities 5,645,507
----------------------------------------------------------------------------------==============
Total Other Assets, Less Liabilities (176,241)
===================================================================================================================================
Net Assets 100.00% $ 10,999,805
===================================================================================================================================
Class A Shares-Net asset value ($5,705,009 / 1,278,737 shares outstanding) $4.46
Maximum offering price (Class A Shares) $4.60
Class C Shares-Net asset value ($5,294,796 / 1,185,415 shares outstanding) $4.47
</TABLE>
See Notes to Financial Statements.
Statement of Net Assets
BALANCED SERIES November 30, 1998
<TABLE>
<CAPTION>
Shares or
Investments Principal Amount Value
====================================================================================================================================
Investments in Securities 99.00%
====================================================================================================================================
<S> <C> <C> <C>
Miscellaneous 99.00% Lord Abbett Affiliated Fund, Inc.-Class Y 2,178,169 $31,213,156
Lord Abbett Bond-Debenture Fund, Inc.-Class Y 2,733,363 25,884,952
Total (Cost $58,675,665) 57,098,108
====================================================================================================================================
Other Assets, Less Liabilities 1.00%
====================================================================================================================================
Other Assets
Short-term Investment Federal Home Loan Bank Discount Note 5.22% due 12/1/1998 (Cost $127,982) 128M 127,982
- -------------------------------------------------------------------------------------------------------------------------===========
Cash and Receivables, Net of Liabilities 448,614
- -------------------------------------------------------------------------------------------------------------------------===========
Total Other Assets, Less Liabilities 576,596
====================================================================================================================================
Net Assets 100.00% $57,674,704
====================================================================================================================================
Class A Shares-Net asset value ($44,667,866 / 3,471,843 shares outstanding) $12.87
Maximum offering price (Class A Shares) $13.51
Class B Shares-Net asset value ($5,102,347 / 396,867 shares outstanding) $12.86
Class C Shares-Net asset value ($7,904,491 / 614,958 shares outstanding) $12.85
</TABLE>
See Notes to Financial Statements.
8
<PAGE>
Statements of Operations
<TABLE>
<CAPTION>
Year Ended November 30, 1998
---------------------------------------------------
Limited Duration
U.S. Government U.S. Government Balanced
Investment Income Securities Series Securities Series Series
===========================================================================================================================
<S> <C> <C> <C> <C>
Income Interest $ 148,672,139 $ 605,431 $ 223,334
Dividends - - 1,298,305
Total income 148,672,139 605,431 1,521,639
-------------------------------------------------------------------------------------------------------------
Expenses Management fee 10,186,509 48,030 257,904
Management fee waived - (48,030) (224,311)
12b-1 distribution plan-Class A 5,012,954 - -
12b-1 distribution plan-Class B 185,001 - 11,314
12b-1 distribution plan-Class C 1,595,520 38,536 53,014
Shareholder servicing 2,860,828 23,185 65,567
Reports to shareholders 377,028 1,744 8,829
Professional 164,800 11,833 8,864
Registration 70,000 25,650 37,149
Organization - 14,168 7,615
Trustees 53,000 300 1,000
Other 96,650 6,797 1,053
---------------------------------------------------
Total expenses before reductions and reimbursements 20,602,290 122,213 227,998
Expenses assumed by Lord Abbett - (39,818) -
Expenses assumed by Underlying Funds - - (72,978)
Expense reductions (352,985) (864) (2,885)
---------------------------------------------------
Net expenses 20,249,305 81,531 152,135
-------------------------------------------------------------------------------------------------------------
Net investment income 128,422,834 523,900 1,369,504
-------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain on Investments
===========================================================================================================================
Capital gain received from Underlying Funds - - 2,155,289
- ---------------------------------------------------------------------------------------------------------------------------
Realized gain from investment transactions
Proceeds from sales 13,070,132,869 32,821,216 43,711,029
Cost of investments sold 13,027,684,955 32,781,568 40,620,281
Net realized gain 42,447,914 39,648 3,090,748
-------------------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investments 4,102,771 60,289 (3,714,929)
- ---------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain on investments 46,550,685 99,937 1,531,108
- ---------------------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets Resulting from Operations $ 174,973,519 $ 623,837 $ 2,900,612
===========================================================================================================================
</TABLE>
See Notes to Financial Statements.
9
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended November 30, 1998
---------------------------------------------------
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 $ 128,422,834 $ 523,900 $ 1,369,504
Capital gain received from
Underlying Funds -- -- 2,155,289
Net realized gain (loss) from
investment transactions 42,447,914 39,648 3,090,748
Net unrealized appreciation
(depreciation) of investments 4,102,771 60,289 (3,714,929)
Net increase in net assets
resulting from operations 174,973,519 623,837 2,900,612
------------------------------------------------------------------------------------------
Undistributed net investment income included
in price of shares sold (reacquired) -- -- --
- -------------------------------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income-Class A (121,519,231) (292,470) (1,149,118)
Net investment income-Class B (1,432,091) -- (35,604)
Net investment income-Class C (9,773,665) (192,017) (156,346)
Net realized gain from investment
transactions-Class A -- -- (482,408)
Net realized gain from investment
transactions-Class C -- -- (88,565)
Total distributions (132,724,987) (484,487) (1,912,041)
------------------------------------------------------------------------------------------
Capital share transactions:
Net proceeds from sales of shares 122,718,704 9,901,812 40,507,038
Net asset value of shares issued to
shareholders in reinvestments of
net investments income and realized
gain from investment transactions 68,148,560 324,512 1,728,386
------------------------------------------------------------------------------------------
Total 190,867,264 10,226,324 42,235,424
------------------------------------------------------------------------------------------
Cost of shares reacquired (617,123,489) (9,642,090) (5,889,716)
------------------------------------------------------------------------------------------
Increase (decrease) in net assets
derived from capital share transactions (426,256,225) 584,234 36,345,708
------------------------------------------------------------------------------------------
Increase (decrease) in net assets (384,007,693) 723,584 37,334,279
- -------------------------------------------------------------------------------------------------------
Net Assets Beginning of period 2,286,411,947 10,276,221 20,340,425
------------------------------------------------------------------------------------------
End of period+ $ 1,902,404,254 $ 10,999,805 $ 57,674,704
==========================================================================================
<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
Capital gain received from
Underlying Funds -- -- --
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 shares sold (reacquired) -- -- 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)
------------------------------------------------------------------------------------------
Capital 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 reinvestments of
net investments income and realized
gain from investment transactions 92,399,913 373,050 578,863
------------------------------------------------------------------------------------------
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 capital 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
==========================================================================================
</TABLE>
+ Including undistributed (overdistributed) net investment
income of $(2,391,920), $51,920 and $40,055, respectively, as
of November 30, 1998 and $16,785,027, $(33,548) and $17,019,
respectively, as of November 30, 1997.
See Notes to Financial Statements.
10
<PAGE>
Financial Highlights
U.S. GOVERNMENT SECURITIES SERIES
<TABLE>
<CAPTION>
Class A Shares
-------------------------------------------------
Year Ended November 30,
Per Share Operating Performance: 1998 1997 1996 1995 1994
=================================================================================================================
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $2.59 $2.63 $2.73 $2.59 $3.00
- -----------------------------------------------------------------------------------------------------------------
Income from investment operations
Net investment income .17(d) .20(d) .215 .235 .247
Net realized and unrealized gain (loss) on investments .05 (.03) (.105) .136 (.3685)
Total from investment operations .22 .17 .11 .371 (.1215)
-----------------------------------------------------------------------------------------------------------
Distributions
Dividends from net investment income (.17) (.21) (.21) (.231) (.246)
Distribution from net realized gain - - - - (.0425)
-----------------------------------------------------------------------------------------------------------
Net asset value, end of year $2.64 $2.59 $2.63 $2.73 $2.59
- -----------------------------------------------------------------------------------------------------------------
Total Return(b) 8.86% 6.67% 4.41% 14.89% (4.24)%
=================================================================================================================
Ratios to Average Net Assets:
Expenses 0.96%(e) 0.92%(e) 0.88% 0.90% 0.90%
Net investment income 6.36% 7.82% 8.12% 8.85% 8.92%
===========================================================================================================
<CAPTION>
Class B Shares
----------------------------------------------
Year
Ended
November 30, 8/1/96(a)
Per Share Operating Performance: 1998 1997 to 11/30/96
=========================================================================================================
<S> <C> <C> <C>
Net asset value, beginning of period $2.58 $2.63 $2.57
- ---------------------------------------------------------------------------------------------------------
Income from investment operations
Net investment income .14(d) .18(d) .063
Net realized and unrealized gain (loss) on investments .07 (.04) .060
Total from investment operations .21 .14 .123
- ---------------------------------------------------------------------------------------------------------
Distributions
Dividends from net investment income (.15) (.19) (.063)
- ---------------------------------------------------------------------------------------------------------
Net asset value, end of period $2.64 $2.58 $2.63
- ---------------------------------------------------------------------------------------------------------
Total Return(b) 8.49% 5.47% 5.45%(c)
=========================================================================================================
Ratios to Average Net Assets:
Expenses 1.66%(e) 1.64%(e) 0.48%(c)
Net investment income 5.36% 6.77% 2.21%(c)
===================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Class C Shares
----------------------------------------
Year
Ended
November 30, 7/15/96(a)
Per Share Operating Performance: 1998 1997 to 11/30/96
=======================================================================================================
<S> <C> <C> <C>
Net asset value, beginning of period $2.59 $2.63 $2.55
- -------------------------------------------------------------------------------------------------------
Income from investment operations
Net investment income .15(d) .18(d) .066
Net realized and unrealized gain (loss) on investments .06 (.03) .085
Total from investment operations .21 .15 .151
--------------------------------------------------------------------------------------------------
Distributions
Dividends from net investment income (.15) (.19) (.071)
--------------------------------------------------------------------------------------------------
Net asset value, end of period $2.65 $2.59 $2.63
- --------------------------------------------------------------------------------------------------------
Total Return(b) 8.47% 5.86% 6.49%(c)
========================================================================================================
Ratios to Average Net Assets:
Expenses 1.62%(e) 1.55%(e) 0.60%(c)
Net investment income 5.69% 7.25% 2.60%(c)
==================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Year Ended November 30,
Supplemental Data for All Classes: 1998 1997 199 1995 1994
============================================================================================================
<S> <C> <C> <C> <C> <C>
Net assets, end of year (000) $1,902,404 $2,286,412 $2,907,291 $3,272,865 $3,232,012
Portfolio turnover rate 440.49% 712.82% 820.59% 544.31% 790.57%
======================================================================================================
</TABLE>
(a) Commencement of offering respective Class shares.
(b) Total return does not consider the effects of sales loads and
assumes the reinvestment of all distributions.
(c) Not annualized.
(d) Calculated using average shares outstanding during the period.
(e) The ratios for 1998 and 1997 include expenses paid through an
expense offset arrangement.
See Notes to Financial Statements.
11
<PAGE>
Financial Highlights
LIMITED DURATION SERIES
<TABLE>
<CAPTION>
Class A Shares
-------------------------------------
Year One
Ended Month
November 30, Ended
Per Share Operating Performance: 1998 1997 11/30/96
===================================================================================================
<S> <C> <C> <C>
Net asset value, beginning of period $4.40 $4.42 $4.39
- ---------------------------------------------------------------------------------------------------
Income from investment operations
Net investment income .26(e) .25(e) .0174
Net realized and unrealized gain (loss) on investments .04 (.02) .0333
Total from investment operations .30 .23 .0507
---------------------------------------------------------------------------------------------
Distributions
Dividends from net investment income (.24) (.25) (.0207)
---------------------------------------------------------------------------------------------
Net asset value, end of period $4.46 $4.40 $4.42
- ---------------------------------------------------------------------------------------------------
Total Return(b) 7.06% 5.46% 1.15%(c)
===================================================================================================
Ratios to Average Net Assets:
Expenses, including waiver and reimbursement 0.47%(f) 0.51%(f) 0.11%(c)
Expenses, excluding waiver and reimbursement 1.38% 1.40% 0.13%(c)
Net investment income 5.86% 5.81% 0.41%(c)
=============================================================================================
<CAPTION>
Class A Shares
---------------------------------------
Year Ended 11/4/93(d)
Per Share Operating Performance: 10/31/96 10/31/95 to 10/31/94
======================================================================================================
<S> <C> <C> <C>
Net asset value, beginning of period $4.53 $4.44 $ 4.85
- ------------------------------------------------------------------------------------------------------
Income from investment operations
Net investment income .1912 .2316 .2650
Net realized and unrealized gain (loss) on investments (.0751) .1017 (.4123)
Total from investment operations .1161 .3333 (.1473)
------------------------------------------------------------------------------------------------
Distributions
Dividends from net investment income (.2561) (.2433) (.2627)
------------------------------------------------------------------------------------------------
Net asset value, end of period $4.39 $4.53 $4.44
- ------------------------------------------------------------------------------------------------------
Total Return(b) 2.67% 8.16% (3.09)%(c)
======================================================================================================
Ratios to Average Net Assets:
Expenses, including waiver and reimbursement 1.81% 1.40% 0.89%(c)
Expenses, excluding waiver and reimbursement 2.73% 1.71% 0.89%(c)
Net investment income 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: 1998 1997 11/30/96 to 10/31/96
==================================================================================================================
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 4.40 $4.42 $4.39 $4.34
- ------------------------------------------------------------------------------------------------------------------
Income from investment operations
Net investment income .22(e) .21(e) .0138 .0667
Net realized and unrealized gain (loss) on investments .05 (.02) .0342 .0515
Total from investment operations .27 .19 .0480 .1182
------------------------------------------------------------------------------------------------------------
Distributions
Dividends from net investment income (.20) (.21) (.0180) (.0682)
------------------------------------------------------------------------------------------------------------
Net asset value, end of period $4.47 $4.40 $4.42 $4.39
- ------------------------------------------------------------------------------------------------------------------
Total Return(b) 6.23% 4.45% 1.09%(c) 2.98%(c)
==================================================================================================================
Ratios to Average Net Assets:
Expenses, including waiver and reimbursement 1.35%(f) 1.44%(f) 0.19%(c) 0.69%(c)
Expenses, excluding waiver and reimbursement 2.26% 2.32% 0.21%(c) 0.77%(c)
Net investment income 4.94% 4.84% 0.33%(c) 1.26%(c)
============================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Year Ended One
November 30, Month Ended Year Ended 11/4/93(d)
Supplemental Data for All Classes: 1998 1997 11/30/96 10/31/96 10/31/95 to 10/31/94
======================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Net assets, end of period (000) $11,000 $10,276 $12,696 $12,735 $8,922 $10,256
Portfolio turnover rate 346.67% 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 and
assumes the reinvestment of all distributions.
(c) Not annualized.
(d) Commencement of operations.
(e) Calculated using average shares outstanding during the period.
(f) The ratios for 1998 and 1997 include expenses paid through an
expense offset arrangement.
See Notes to Financial Statements.
12
<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: 1998 1997 11/30/96 10/31/96 to 10/31/95
==================================================================================================================================
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $12.80 $11.81 $11.30 $10.71 $ 9.52
- ----------------------------------------------------------------------------------------------------------------------------------
Income from investment operations
Net investment income .54(e) .47(e) .0312 .472 .365
Net realized and unrealized gain on investments .40 1.15 .5208 .732 1.185
Total from investment operations .94 1.62 .552 1.204 1.55
----------------------------------------------------------------------------------------------------------------------------
Distributions
Dividends from net investment income (.52) (.46) (.0420) (.462) (.36)
Distributions from net realized gain (.35) (.17) - (.152) -
----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $12.87 $12.80 $11.81 $11.30 $10.71
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return(b) 7.69% 14.24% 4.89%(c) 11.55% 16.32%(c)
==================================================================================================================================
Ratios to Average Net Assets:
Expenses, including waiver and reimbursement 0.27%(f) 1.10%(f) 0.07%(c) 0.93% 0.37%(c)
Expenses, excluding waiver and reimbursement from
Lord Abbett 0.92% 1.53% 0.11%(c) 1.59% 1.26%(c)
Net investment income 4.28% 3.89% 0.26%(c) 4.18% 4.39%(c)
============================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Class B Shares Class C Shares
------------------- -------------------------------------------------
Year Ended One Month
5/1/98(a) November 30, Ended 7/15/96(a)
Per Share Operating Performance: to 11/30/98 1998 1997 11/30/96 to 10/31/96
================================================================================= =================================================
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $13.14 $12.78 $11.79 $11.29 $10.73
- --------------------------------------------------------------------------------- -------------------------------------------------
Income from investment operations
Net investment income .25(e) .41(e) .35(e) .0067 .0349
Net realized and unrealized gain (loss) on investments (.28) .40 1.15 .5298 .6346
Total from investment operations (.03) .81 1.50 .5365 .6695
--------------------------------------------------------------------------- -------------------------------------------------
Distributions
Dividends from net investment income (.25) (.39) (.34) (.0365) (.0730)
Distributions from net realized gain - (.35) (.17) - (.0365)
--------------------------------------------------------------------------- -------------------------------------------------
Net asset value, end of period $12.86 $12.85 $12.78 $11.79 $11.29
- --------------------------------------------------------------------------------- -------------------------------------------------
Total Return(b) (.16)%(c) 6.62% 13.14% 4.76%(c) 7.78%(c)
================================================================================= =================================================
Ratios to Average Net Assets:
Expenses, including waiver and reimbursement 0.61%(c)(f) 1.26%(f) 2.08%(f) 0.16%(c) 0.62%(c)
Expenses, excluding waiver and reimbursement from
Lord Abbett 1.26%(c) 1.91% 2.51% 0.20%(c) 0.77%(c)
Net investment income 1.98%(c) 3.24% 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: 1998 1997 11/30/96 10/31/96 to 10/31/95
==========================================================================================================
<S> <C> <C> <C> <C> <C>
Net assets, end of period (000) $57,675 $20,340 $11,406 $10,988 $5,713
Portfolio turnover rate 131.36% 216.07% 10.05% 187.78% 131.80%
====================================================================================================
</TABLE>
(a) Commencement of offering respective Class shares.
(b) Total return does not consider the effects of sales loads and
assumes the reinvestment of all distributions.
(c) Not annualized.
(d) Commencement of operations.
(e) Calculated using average shares outstanding during the period.
(f) The ratios for 1998 and 1997 include expenses paid through an
expense offset arrangement.
See Notes to Financial Statements.
13
<PAGE>
Notes to Financial Statements
1. Significant Accounting Policies
Lord Abbett Investment Trust (the "Trust") is an open-end management investment
company organized as a Delaware business trust on August 16, 1993. The Trust
consists of four separate portfolios ("Series"). This report covers three of the
Series-Lord Abbett U.S. Government Securities Series ("U.S. Government Series"),
Lord Abbett Limited Duration U.S. Government Securities Series ("Limited
Duration Series") and Lord Abbett Balanced Series ("Balanced Series"). Effective
March 31, 1998, the Balanced Series structure was changed from investing
directly in portfolio securities to investing in other funds managed by Lord
Abbett ("Underlying Funds"). Each Series is diversified as defined under the
Investment Company Act of 1940. The financial statements have been prepared in
conformity with generally accepted accounting principles which require
management to make certain estimates and assumptions at the date of the
financial statements. The following summarizes the significant accounting
policies of the Trust:
(a) Securities are valued as follows: Portfolio securities listed or admitted to
trading privileges on any securities exchange are valued at the last sales price
on the exchange on which such securities are traded as of the close of business
on the day the securities are being valued or, lacking any sales, at the latest
price on the basis of current quotations from dealers (as in the case of bonds),
from valuations furnished by an independent pricing service or, in their
absence, fair value as determined under procedures approved by the Board of
Trustees. Investments in the Underlying Funds are valued at the closing net
asset value per share of each Under lying Fund on the day of valuation.
Short-term securities are valued at amortized cost which approximates market
value.
(b) It is the policy of the Trust to meet the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute all
of its taxable income. Therefore, no federal income tax provision is required.
(c) Security transactions are accounted for on the date that the securities are
purchased or sold (trade date). Realized gains and losses from investment
transactions are determined on the identified cost basis. Dividend income and
distributions to shareholders are recorded on the ex-dividend date and interest
income is recorded on the accrual basis. Net investment income (other than
distribution and service fees) and realized and unrealized gains or losses are
allocated to each class of shares based upon the relative proportion of net
assets at the beginning of the day. Discounts on strips are accrued to maturity
using the constant yield method. The Trust has elected not to amortize premiums
on U.S. Government bonds, which is consistent with the treatment for federal
income tax purposes.
(d) Effective December 1, 1997, Balanced Series discontinued the accounting
practice of equalization. Undistributed net investment income of $15,965,
representing accumulated equalization at November 30, 1997, was transferred to
paid-in-capital. Such reclassification had no effect on net assets, results of
operations, or net asset value per share.
(e) The organization expenses of Limited Duration Series and Balanced Series are
amortized evenly over a period of five years from their respective commencement
dates of operations.
2. Management Fee and Other Transactions with Affiliates
The Trust has a management agreement with Lord, Abbett & Co. ("Lord Abbett")
pursuant to which Lord Abbett supplies the Trust with investment management,
research, statistical and advisory services and pays officers' remuneration and
certain other expenses of the Trust. The management fee is based on average
daily net assets for each month at the annual rate of 0.50% for U.S. Government
Series and Limited Duration Series and 0.75% for Balanced Series. The management
fee for U.S. Government Series is reduced to 0.45% for average daily net assets
in excess of $3 billion. Lord Abbett waived its management fee during the year
for Limited Duration Series. Lord Abbett waived a portion of its management fee
for Balanced Series during the four months ended March 31, 1998 and all of its
fee subsequent to that date.
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' Class A net assets
reaching $100 million and $50 million, respectively. Pursuant to the Class B
Plan of U.S. Government and Balanced Series, each Series pays Distributor an
annual service and distribution fee of 0.25% and 0.75%, respectively, of the
average daily net asset value of the Class B shares. Pursuant to the Class C
Plan, each Series pays Distributor (1)a service fee and a distribution fee, at
the time such shares are sold, not to exceed 0.25% and 0.75%, respectively, of
the net asset value of such shares sold and (2) at each quarter-end after the
first anniversary of the sale of such shares, a service fee and a distribution
fee at an annual rate not to exceed 0.25% and 0.75%, respectively, of the
average annual net asset value of such shares outstanding.
The Balanced Series has entered into a Servicing Arrangement with each
Underlying Fund pursuant to which each Underlying Fund will pay a portion of the
expenses (excluding management fee, distribution and service fees) of the
Balanced Series in proportion to the average daily value of shares owned by the
Balanced Series to the extent each Underlying Fund benefits.
Distributor received the following commissions on sales of shares of the Trust
after concessions were paid to authorized dealers:
Distributor Dealers'
Series Commissions Concessions
- --------------------------------------------------------------------------------
U.S. Government Series-Class A $140,926 $970,169
- --------------------------------------------------------------------------------
Limited Duration Series-Class A $ 13,562 $ 84,045
- --------------------------------------------------------------------------------
Balanced Series-Class A $125,114 $794,762
- --------------------------------------------------------------------------------
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, 1998, accumulated net
realized gain (loss) for financial reporting purposes aggregated $(572,619,975),
$(1,690,261) and
14
<PAGE>
Notes to Financial Statements
$5,233,644 for U.S. Government Series, Limited Duration Series and Balanced
Series, respectively. The capital loss carryforwards (which are substantially
the same as the accumulated net realized loss) for U.S. Government Series
expire in 2001, 2002, 2003, 2004 and 2005, and for Limited Duration Series
expire in 2002, 2003, and 2004.
Income and capital gains distributions are determined in accordance with income
tax regulations which may differ from methods used to determine the
corresponding income and capital gain amounts in accordance with generally
accepted accounting principles.
Capital gain distributions declared on December 10, 1998 and payable on December
18, 1998 to shareholders of record as of December 10, 1998 were as follows:
Rate Aggregate
Capital Gains Per Share Amount
- --------------------------------------------------------------------------------
Balanced Series-Class A $1.14 $4,049,550.52
- --------------------------------------------------------------------------------
Balanced Series-Class B $1.14 $ 489,367.93
- --------------------------------------------------------------------------------
Balanced Series-Class C $1.14 $ 713,054.27
- --------------------------------------------------------------------------------
4. Capital
Transactions in shares of beneficial interest (both shares and dollar amounts)
were as follows:
<TABLE>
<CAPTION>
Year Ended November 30, 1998
-------------------------------------------------------------------------------
U.S. Government Series Limited Duration Series Balanced Series
Class A Shares Amount Shares Amount Shares Amount
- -------------------------------------------------------------------------------- -------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Sales of shares 31,799,161 $ 83,299,155 1,524,406 $ 6,744,941 2,402,438 $ 30,136,303
Shares issued to shareholders in reinvestment of net
investment income and realized gain distributions 23,996,526 62,543,335 47,643 210,812 117,883 1,467,499
Total 55,795,687 145,842,490 1,572,049 6,955,753 2,520,321 31,603,802
- -------------------------------------------------------------------------------- -------------------------------------------------
Shares reacquired (212,324,614) (553,290,364) (1,392,054) (6,158,851) (388,736) (4,812,834)
Increase (decrease) (156,528,927) $(407,447,874) 179,995 $ 796,902 2,131,585 $ 26,790,968
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Year Ended November 30, 1997
-------------------------------------------------------------------------------
U.S. Government Series Limited Duration Series Balanced Series
Class A Shares Amount Shares Amount Shares Amount
- -------------------------------------------------------------------------------- -------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Sales of shares 25,354,195 $ 64,626,884 957,560 $ 4,183,207 556,934 $ 6,810,253
Shares issued to shareholders in reinvestment of net
investment income and realized gain distributions 33,153,482 84,672,986 39,152 171,185 42,316 502,999
Total 58,507,677 149,299,870 996,712 4,354,392 599,250 7,313,252
- -------------------------------------------------------------------------------- -------------------------------------------------
Shares reacquired (253,938,633) (648,051,118) (1,001,795) (4,369,426) (79,396) (966,521)
Increase (decrease) (195,430,956) $(498,751,248) (5,083) $ (15,034) 519,854 $ 6,346,731
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
May 1, 1998
(Commencement of
Year Ended Offering Class B Shares) Year Ended
November 30, 1998 to November 30, 1998 November 30, 1997
------------------------ ----------------------- -------------------------
U.S. Government Series Balanced Series U.S. Government Series
Class B Shares Amount Shares Amount Shares Amount
- ------------------------------------------------------------------------------- ----------------------- -------------------------
<S> <C> <C> <C> <C> <C> <C>
Sales of shares 7,509,963 $ 19,690,555 410,635 $ 5,100,065 4,045,212 $ 10,307,080
Shares issued to shareholders in reinvestment of net
investment income dividends 188,901 492,870 2,589 31,378 95,421 243,523
Total 7,698,864 20,183,425 413,224 5,131,443 4,140,633 10,550,603
- ------------------------------------------------------------------------------- ----------------------- -------------------------
Shares reacquired (2,095,473) (5,468,912) (16,357) (192,344) (464,040) (1,177,526)
Increase 5,603,391 $ 14,714,513 396,867 $ 4,939,099 3,676,593 $ 9,373,077
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Year Ended November 30, 1998
----------------------------------------------------------------------------
U.S. Government Series Limited Duration Series Balanced Series
Class C Shares Amount Shares Amount Shares Amount
- -------------------------------------------------------------------------------- ------------------------ ---------------------
<S> <C> <C> <C> <C> <C> <C>
Sales of shares 7,523,887 $ 19,728,994 709,733 $ 3,156,871 417,362 $ 5,270,670
Shares issued to shareholders in reinvestment of net
investment income and realized gain distributions 1,957,718 5,112,355 25,683 113,700 18,437 229,509
Total 9,481,605 24,841,349 735,416 3,270,571 435,799 5,500,179
- -------------------------------------------------------------------------------- ------------------------ ---------------------
Shares reacquired (22,360,867) (58,364,213) (785,920) (3,483,239) (70,625) (884,538)
Increase (decrease) (12,879,262) $(33,522,864) (50,504) $ (212,668) 365,174 $ 4,615,641
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
15
<PAGE>
Notes to Financial Statements
<TABLE>
<CAPTION>
Year Ended November 30, 1997
----------------------------------------------------------------------------
U.S. Government Series Limited Duration Series Balanced Series
Class C Shares Amount Shares Amount Shares Amount
- -------------------------------------------------------------------------------- --------- ------------ ----------------------
<S> <C> <C> <C> <C> <C> <C>
Sales of shares 5,922,523 $ 15,159,708 130,136 $ 568,557 133,693 $ 1,630,079
Shares issued to shareholders in reinvestment of net
investment income and realized gain distributions 2,926,625 7,483,404 46,233 201,865 6,375 75,864
Total 8,849,148 22,643,112 176,369 770,422 140,068 1,705,943
- -------------------------------------------------------------------------------- ---------- ----------- ----------------------
Shares reacquired (37,517,932) (95,453,967) (711,754) (3,112,190) (35,998) (437,762)
Increase (decrease) (28,668,784) $(72,810,855) (535,385) $(2,341,768) 104,070 $ 1,268,181
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
At November 30, 1998, paid in capital aggregated $2,436,503,489 for U.S.
Government Series, $12,543,282 for Limited Duration Series and $53,978,562 for
Balanced Series.
5. Portfolio Securities
Purchases and sales of investment securities (other than short-term investments)
were as follows:
Series Purchases Sales
- --------------------------------------------------------------------------------
U.S. Government Series $10,082,555,925 $9,252,883,962
- --------------------------------------------------------------------------------
Limited Duration Series $29,035,753 $29,985,632
- --------------------------------------------------------------------------------
Balanced Series $82,623,348 $43,711,029
- --------------------------------------------------------------------------------
As of November 30, 1998, net unrealized appreciation, unrealized appreciation
and unrealized depreciation of investments based on cost for federal income tax
purposes were as follows:
Net Unrealized
Appreciation Unrealized Unrealized
Series (Depreciation) Appreciation Depreciation
- -------------------------------------------------------------------------------
U.S. Government Series $40,912,660 $41,645,747 $ 733,087
- -------------------------------------------------------------------------------
Limited Duration Series $ 94,864 $ 103,219 $ 8,355
- -------------------------------------------------------------------------------
Balanced Series $(1,577,557) $ - $1,577,557
- -------------------------------------------------------------------------------
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, 1998, the market value of securities on loan to brokers was
$79,043,672 for which the Series has obtained collateral aggregating $80,198,761
consisting of cash and cash equivalents.
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, 1998, under a deferred compensation plan, were $777,600.
7. Expense Reduction
The Trust has entered into an arrangement with its transfer agent whereby
credits realized as a result of uninvested cash balances were used to reduce a
portion of each Series' expenses.
16
<PAGE>
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, 1998, the
related statements of operations for the year then ended and of changes in net
assets for each of the years in the two-year period then ended and the financial
highlights for each of the periods presented. These financial statements and
the financial highlights are the responsibility of the Trust's management. Our
responsibility is to express an opinion on these financial statements and the
financial highlights based on our audits.
We conducted our audits in accordance with 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, 1998 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, 1998, the
results of their operations, the changes in their net assets and their 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 8, 1999
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-DIVForms. Shareholders should consult their tax advisers.
Our Management
Board of Trustees
Robert S. Dow
E. Thayer Bigelow*+
William H. T. Bush*
Robert B. Calhoun, Jr.*
Stewart S. Dixon*
John C. Jansing*
C. Alan MacDonald*+
Hansel B. Millican, Jr.*
Thomas J. Neff*+
*Outside Trustee
+Audit Committee
Officers
Robert S. Dow, Chairman and President
Robert G. Morris, Executive Vice
President and Portfolio Manager
Robert I. Gerber, Executive Vice
President and Portfolio Manager
Paul A. Hilstad, Vice President
and Secretary
Zane E. Brown, Vice President
Daniel E. Carper, Vice President
W. Thomas Hudson, Jr., Vice President
Lawrence H. Kaplan, Vice President
and Assistant Secretary
Thomas F. Konop, Vice President
and Assistant Secretary
Robert A. Lee, Vice President
A. Edward Oberhaus III, Vice President
Keith F. O'Connor, Vice President
Walter H. Prahl, 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) 1999 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.
<PAGE>
Investing in the
Lord Abbett
Family of Funds
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
GROWTH
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
INCOME
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Aggressive Growth Funds Growth & Balanced Fund Income Funds Tax-Free Money Market
Growth Fund Income Funds Income Funds Fund
Alpha Series Balanced Series Bond-Debenture
Developing Affiliated Fund Fund o National U.S. Government
Growth Fund Global Fund- o California Securities
Equity Series Growth & Global Fund- o Connecticut Money Market
Income Series Income Series o Florida Fund**+*
Growth o Georgia
Opportunities Research Fund- High Yield Fund o Hawaii
Fund Large-Cap o Michigan
Series Limited Duration o Minnesota
International U.S. Government o Missouri
Series Securities Series** o New Jersey
o New York
Mid-Cap U.S. Government o Pennsylvania
Value Fund Securities Series** o Texas
o Washington
Research Fund- World Bond-
Small-Cap Debenture Series
Series*
</TABLE>
Finding the right mutual fund can be confusing. At Lord, Abbett & Co., we
believe your investment professional provides value in helping you identify and
under stand 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 cur rent prospectus for Lord Abbett Investment
Trust.
For more complete information about any other Lord Abbett fund, including
charges and expenses, call your investment professional or Lord Abbett
Distributor LLC at 800-874-3733 for a prospectus. Read it carefully before
investing.
When you invest in a family of funds, you benefit from:
Diversification. You and your investment professional can diversify your
investments between equity and income funds.
Flexibility. As your investment goals change, your investment professional can
help you reallocate your portfolio.
As an investor in the Lord Abbett Family of Funds, you have access to 32
portfolios designed to meet a variety of investment needs. While you may
reallocate your assets among our funds at any time, we recommend speaking with
your investment professional to help you customize your investment plan.
Numbers to Keep Handy
For Shareholder Account or Statement Inquiries: 800-821-5129
For Literature Only: 800-874-3733
24-Hour Automated Shareholder Service Line: 800-865-7582
Visit Our Web Site: http://www.lordabbett.com
* The Lord Abbett Research Fund-Small-Cap Series is closed to new investors.
** An investment in this Fund is neither insured nor guaranteed by the U.S.
Government.
+ An investment in the Fund is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency. Although the
Fund seeks to preserve the value of your investment at $1.00 per share, it
is possible to lose money by investing in the Fund. This Fund is managed
to maintain, and has maintained its stable $1.00 price per share.
[LOGO](R) LORD, ABBETT & CO. ---------------
Investment Management BULK RATE
U.S. POSTAGE
A Tradition of Performance Through Disciplined Investing PAID
PERMIT NO. 2405
NEW YORK, N.Y.
---------------
Lord Abbett mutual fund shares are distributed by:
LORD ABBETT DISTRIBUTOR LLC
- ------------------------------------------------------------ LAIT-2-1198
The GM Building o 767 Fifth Avenue o New York, NY 10153-0203 (1/99)
