-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BOJ+0C6GU0GNbfJnIaZQUoiA89/3SlR97cw0xgUATkEyPOVHrzyG6Rcr5Fd0LFqV BomUgF/lPZ2wQNtG24hDrQ== 0001047469-03-023195.txt : 20030702 0001047469-03-023195.hdr.sgml : 20030702 20030702101854 ACCESSION NUMBER: 0001047469-03-023195 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20030430 FILED AS OF DATE: 20030702 EFFECTIVENESS DATE: 20030702 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LORD ABBETT SECURITIES TRUST CENTRAL INDEX KEY: 0000898031 IRS NUMBER: 133712440 STATE OF INCORPORATION: DE FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-07538 FILM NUMBER: 03769785 BUSINESS ADDRESS: STREET 1: 90 HUDSON STREET STREET 2: 11TH FLOOR CITY: JERSEY CITY STATE: NJ ZIP: 07302 BUSINESS PHONE: 201-395-2000 MAIL ADDRESS: STREET 1: 90 HUDSON STREET STREET 2: 11TH FLOOR CITY: JERSEY CITY STATE: NJ ZIP: 07302 N-CSR 1 a2112821zn-csr.txt N-CSR UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act File Number 811-07538 --------- LORD ABBETT SECURITIES TRUST ---------------------------- (Exact name of registrant as specified in charter) 90 Hudson Street, Jersey City, NJ 07302-3973 -------------------------------------------- (Address of principal executive offices) (zip code) Christina T. Simmons, Vice President and Assistant Secretary 90 Hudson Street, Jersey City, New Jersey 07302-3973 ---------------------------------------------------- (Name and address of agent for service) Registrant's telephone number, including area code: (800) 201-6984 -------------- Date of fiscal year end: 10/31 ----- Date of reporting period: 4/30/2003 --------- ITEM 1: Report to Shareholders. [LORD ABBETT LOGO] 2003 SEMI- ANNUAL REPORT LORD ABBETT ALL VALUE FUND ALPHA FUND INTERNATIONAL FUND FOR THE SIX MONTHS ENDED APRIL 30, 2003 (Unaudited) - -------------------------------------------------------------------------------- LORD ABBETT SECURITIES TRUST SEMI-ANNUAL REPORT FOR THE SIX MONTHS ENDED APRIL 30, 2003 DEAR SHAREHOLDERS: We are pleased to provide you with this six-month overview of the Lord Abbett Securities Trust's strategies and performance for the period ended April 30, 2003. On this and the following pages, we discuss the factors that influenced performance. Thank you for investing in Lord Abbett Mutual Funds. We value the trust that you place in us and look forward to serving your investment needs in the years to come. BEST REGARDS, /s/ Robert S. Dow ROBERT S. DOW CHAIRMAN - -------------------------------------------------------------------------------- MARKET REVIEW(1) War and general geopolitical concerns had an extremely negative effect on the psyche of businesses and consumers during the first part of the period. Corporations entered the first quarter of 2003 cautiously and remained wary, selling existing inventories and implementing layoffs, as the economy continued to decelerate. The unemployment rate in the U.S. rose in the last six months, reaching 6.0% by April. Consumers responded to heightened war threats and treacherous weather conditions on the east coast by reducing real spending. But, as the coalition's war effort made clear progress in the early spring, the fog of global uncertainty lifted and broad equity indices experienced meaningful advances. With a spike in consumer confidence and improving corporate profit outlooks, we continue to expect adequate consumer spending and a renewed capital spending cycle. After a rally in the fourth quarter of 2002, international equity markets continued to be volatile in early 2003. A global rally at the beginning of the year stalled, resulting in a new downtrend that brought several equity markets around the world to new multi-year lows before rallying again in March, as the U.S. invaded Iraq. Oil and gold prices also rose in anticipation of war and then fell back as the war was ended swiftly and successfully. Over the six-month period, Continental Europe was the strongest regional performer, helped by the sharp appreciation of the Euro versus the U.S. Dollar. Among small-cap markets, the U.K. and Japan were the weakest, reversing their formerly strong performance. LORD ABBETT ALL VALUE FUND For the six months ended April 30, 2003, Lord Abbett All Value Fund returned 5.8%(2), outperforming the Russell 3000(R) 1 (Unaudited) - -------------------------------------------------------------------------------- Value Index(3), which returned 5.4% over the same period. Standardized Average Annual Total Returns(4) for 1 year, 5 years and the life of the Fund(5) are - -24.65%, 0.58% and 8.41%, respectively as of March 31, 2003. During the period, the Fund gained from stock selection in the consumer discretionary sector. Specifically, stocks in the retail sector performed well, as consumer spending forecasts began to increase with the conclusion of the war in Iraq. With geopolitical concerns waning and a subsequent drop in oil prices, higher consumer disposable income has provided retail firms with stronger profit outlooks. In addition, stock selection in the consumer staples sector added to Fund returns, as Fund holdings continued to report solid profits and strong earnings visibility. Stock selection within the auto & transportation sector detracted from relative performance for the period, as Fund holdings in the airline industry suffered from increased fears resulting from the war in Iraq and volatile union negotiations. Additionally, within the energy sector, the Fund was hurt by investments in the oilfield services sector, which suffered from reduced demand for drilling services. LORD ABBETT ALPHA FUND The Alpha Series uses a "fund of funds" approach, which currently divides assets among the Lord Abbett Developing Growth Fund, Lord Abbett Securities Trust--International Series and Lord Abbett Small-Cap Value Fund. For the six months ended April 30, 2003, Lord Abbett Securities Trust--Alpha Series returned 5.0%(2), underperforming its benchmark, the Citigroup Small Cap World ex-U.S. Index(6), which returned 8.0% for the same period. Standardized Average Annual Total Returns(4) for 1 year, 5 years and the life of the Fund(5) are -29.19%, - -7.26% and -7.00%, respectively as of March 31, 2003. DEVELOPING GROWTH COMPONENT During the period, the Fund gained from stock selection in the consumer discretionary sector, as retail and apparel holdings benefited from renewed optimism over consumer spending amid a quick conclusion in the war in Iraq. In addition, the Fund benefited from stock selection in the healthcare sector. Stock selection within the technology sector was the primary detractor of performance this quarter. Stock selection within materials and processing also detracted from performance, as several of these holdings continue to be adversely affected by a weak manufacturing sector. INTERNATIONAL COMPONENT SEE LORD ABBETT INTERNATIONAL FUND. 2 (Unaudited) - -------------------------------------------------------------------------------- SMALL-CAP VALUE COMPONENT The largest positive contributor to performance during the quarter was stock selection within the materials & processing sector, where holdings benefited from increased customer demand, new product introductions and favorable domestic drilling activities. In addition, the Fund benefited from holdings in the consumer staple sector, as strong earnings outlooks propelled certain Fund holdings. During the period, the Fund was negatively impacted by our stock selection in the technology sector. Stock selection in the healthcare sector also contributed negatively to the Fund's performance, as investors moved away from this defensive sector into more speculative pockets. LORD ABBETT INTERNATIONAL FUND For the six months ended April 30, 2003, Lord Abbett International Fund returned 3.0%(2), underperforming the Citigroup Small Cap World ex-U.S. Index(6), which returned 8.0% over the same period. Standardized Average Annual Total Returns(4) for 1 year, 5 years and the life of the Fund(5) are -27.70%, -15.39% and -6.74%, respectively as of March 31, 2003. The Fund underperformed its benchmark principally due to stock selection in Japan and Continental Europe. While an underweight in Japan and overweight in Continental Europe added to performance, our healthcare holdings in each region did poorly on the back of disappointing new product news. Holdings in retail stocks across the portfolio also hurt performance, as several faster-growing chains announced sharply slowing sales. The strongest performing region in the portfolio was Asia ex-Japan, where our Australian stocks performed strongly, partly due to the appreciation of the Australian dollar relative to the U.S. dollar. Holdings in financial stocks also added to the Fund's return, driven by shares of several general insurers. 3 (Unaudited) - -------------------------------------------------------------------------------- (1) The views of the Trust's management and the portfolio holdings described in this report are as of April 30, 2003; these views and portfolio holdings may have changed subsequent to this date. Information provided in this report should not be considered a recommendation to purchase or sell securities. (2) Reflects performance at the Net Asset Value (NAV) of Class A shares, with all distributions reinvested, for the six months ended April 30, 2003. (3) The Russell 3000(R) Value Index measures the performance of those Russell 3000(R) Index companies with lower price-to-book ratios and lower forecasted growth values. The stocks in this index are also members of either the Russell 1000(R) Value or the Russell 2000(R) Value indices. Indices are unmanaged, do not reflect the deduction of fees or expenses and are not available for direct investment. (4) Reflects performance at the maximum 5.75% sales charge applicable to Class A share investments and includes the reinvestment of all distributions. (5) Inception dates are July 15, 1996 for Lord Abbett All Value Fund, March 18, 1998 for Lord Abbett Alpha Fund and December 13, 1996 for Lord Abbett International Fund. (6) The Citigroup Small Cap World ex-U.S. Index is a subset of the Global Citigroup Broad Market Index (BMI). The World ex-U.S. composite includes all developed countries except the United States. Indexes are unmanaged, do not reflect the deduction of fees or expenses and are not available for direct investment. The Citigroup Global Equity Index System(SM) ("GEIS") and the names of each of the indexes and subindexes which it comprises (GEIS and such indexes and subindexes, each an "Index" and collectively, the "Indexes") are service marks of Citigroup. Although information has been obtained from sources usually considered reliable. THE DATA AND THE INDEXES ARE PROVIDED "AS IS" AND CITIGROUP DOES NOT GUARANTEE ITS ACCURACY NOR DOES CITIGROUP ACCEPT ANY RESPONSIBILITY TO ANY PARTY FOR THE DATA OR THE INDEXES. CITIGROUP IS NOT UNDERTAKING TO MANAGE MONEY OR ACT AS A FIDUCIARY WITH RESPECT TO ANY ACCOUNT. THE DATA AND THE INDEX ARE PART OF A GENERAL INFORMATION SERVICE AND ARE NOT INTENDED AS AN OFFER OR SOLICITATION WITH RESPECT TO THE PURCHASE OR SALE OF ANY SECURITY. IMPORTANT PERFORMANCE AND OTHER INFORMATION A NOTE ABOUT RISK: See Notes to Financial Statements for a discussion of investment risks. For a more detailed discussion of the risks associated with the Funds please see each Fund's Prospectus. PERFORMANCE: PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. BECAUSE OF ONGOING MARKET VOLATILITY, FUND PERFORMANCE MAY BE SUBJECT TO SUBSTANTIAL FLUCTUATION. The investment return and principal value of an investment in a Fund will fluctuate so that shares, on any given day or when redeemed, may be worth more or less than their original cost. Except where noted, comparative fund performance does not account for the deduction of sales charges and would be different if sales charges were included. Each Fund offers additional classes of shares with distinct pricing options. For a full description of the differences in pricing alternatives, please see the Prospectus. The Funds are actively managed and, as a result, asset allocations may change. MUTUAL FUNDS ARE NOT INSURED BY THE FDIC, ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF, OR GUARANTEED BY BANKS, AND ARE SUBJECT TO INVESTMENT RISKS INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED. FOR MORE COMPETE INFORMATION ABOUT THIS OR ANY LORD ABBETT MUTUAL FUND, INCLUDING RISKS, CHARGES AND ONGOING EXPENSES, PLEASE CALL YOUR INVESTMENT PROFESSIONAL OR LORD ABBETT DISTRIBUTOR LLC AT 888-522-2388 FOR A PROSPECTUS. AN INVESTOR SHOULD READ THE PROSPECTUS CAREFULLY BEFORE INVESTING. 4 SCHEDULE OF INVESTMENTS (UNAUDITED) ALL VALUE FUND APRIL 30, 2003
VALUE INVESTMENTS SHARES (000) - --------------------------------------------------------------------------- COMMON STOCKS 91.49% AGRICULTURE FISHING & RANCHING 0.79% Delta & Pine Land Co. 95,000 $ 2,210 Monsanto Co. 63,900 1,112 ------------ TOTAL 3,322 ------------ AIR TRANSPORTATION 1.36% Alaska Air Group, Inc.* 50,000 892 AMR Corp.* 300,000 1,347 Southwest Airlines Co. 220,000 3,511 ------------ TOTAL 5,750 ------------ ALUMINUM 1.20% Alcoa, Inc. 220,000 5,045 ------------ AUTO PARTS: AFTER MARKET 1.29% Genuine Parts Co. 102,400 3,273 Superior Industries Int'l., Inc. 55,000 2,176 ------------ TOTAL 5,449 ------------ AUTO PARTS: ORIGINAL EQUIPMENT 0.79% American Axle & Mfg Holdings* 75,000 1,869 Borg Warner, Inc. 25,000 1,467 ------------ TOTAL 3,336 ------------ BANKS: OUTSIDE NEW YORK CITY 9.15% Bank of America Corp. 65,000 4,813 Bank One Corp. 88,800 3,201 Cullen/Frost Bankers, Inc. 130,000 4,263 Doral Financial Corp. 160,000 6,402 FleetBoston Financial Corp. 46,000 1,220 Mellon Financial Corp. 205,000 5,422 Wachovia Corp. 189,000 7,222 Wells Fargo & Co. 124,700 6,018 ------------ TOTAL 38,561 ------------ BEVERAGE: SOFT DRINKS 0.86% PepsiCo, Inc. 84,000 $ 3,635 ------------ CHEMICALS 3.90% E.I. du Pont de Nemours & Co. 155,000 6,592 Eastman Chemical Co. 26,600 812 Praxair, Inc. 110,000 6,389 Rohm & Haas Co. 80,000 2,649 ------------ TOTAL 16,442 ------------ COMMUNICATIONS TECHNOLOGY 2.80% Motorola, Inc. 525,000 4,153 Symbol Technologies, Inc. 700,000 7,651 ------------ TOTAL 11,804 ------------ COMPUTER SERVICES SOFTWARE & SYSTEMS 0.40% Reynolds & Reynolds Co. Class A 58,800 1,694 ------------ COMPUTER TECHNOLOGY 2.69% Apple Computer, Inc.* 405,000 5,751 EMC Corp.* 218,100 1,982 Zebra Technologies Corp. Class A* 54,100 3,607 ------------ TOTAL 11,340 ------------ CONSUMER PRODUCTS 0.94% Gillette Co. 130,000 3,958 ------------ CONTAINERS & PACKAGING: PAPER & PLASTIC 0.60% Pactiv Corp.* 123,000 2,524 ------------ DIVERSIFIED FINANCIAL SERVICES 4.02% Citigroup, Inc. 248,100 9,738 Merrill Lynch & Co., Inc. 176,000 7,225 ------------ TOTAL 16,963 ------------
SEE NOTES TO FINANCIAL STATEMENTS. 5 SCHEDULE OF INVESTMENTS (UNAUDITED)(CONTINUED) ALL VALUE FUND APRIL 30, 2003
VALUE INVESTMENTS SHARES (000) - --------------------------------------------------------------------------- DRUGS & PHARMACEUTICALS 4.20% Merck & Co., Inc. 79,000 $ 4,596 Mylan Laboratories, Inc. 123,000 3,477 Schering-Plough Corp. 380,900 6,894 Wyeth 63,000 2,743 ------------ TOTAL 17,710 ------------ ENTERTAINMENT 3.96% The Walt Disney Co. 535,000 9,983 Viacom, Inc. Class B* 155,000 6,729 ------------ TOTAL 16,712 ------------ FERTILIZERS 0.88% Potash Corp. of Saskatchewan(a) 60,000 3,693 ------------ FINANCIAL MISCELLANEOUS 0.76% MBNA Corp. 170,060 3,214 ------------ FOODS 1.23% Smithfield Foods, Inc.* 265,000 5,194 ------------ FOREST PRODUCTS 0.43% Georgia-Pacific Corp. 117,000 1,806 ------------ GOLD 0.77% Newmont Mining Corp. 120,000 3,242 ------------ HEALTHCARE FACILITIES 0.46% Manor Care, Inc.* 100,000 1,945 ------------ HEALTHCARE MANAGEMENT SERVICES 1.52% Caremark Rx, Inc.* 250,000 4,977 Sierra Health Services, Inc.* 85,000 1,411 ------------ TOTAL 6,388 ------------ HOTEL/MOTEL 0.72% Carnival Corp. 110,000 3,035 ------------ HOUSEHOLD FURNISHINGS 0.33% Newell Rubbermaid, Inc. 45,000 $ 1,372 ------------ IDENTIFICATION CONTROL & FILTER DEVICES 1.38% Hubbell, Inc. Class B 135,000 4,334 IDEX Corp. 46,000 1,465 ------------ TOTAL 5,799 ------------ INSURANCE: MULTI-LINE 3.16% American Int'l Group, Inc. 73,200 4,242 Markel Corp.* 27,100 6,568 SAFECO Corp. 65,000 2,503 ------------ TOTAL 13,313 ------------ INSURANCE: PROPERTY-CASUALTY 1.77% Odyssey Re Holdings Corp. 152,000 3,192 XL Capital Ltd. Class A(a) 52,000 4,280 ------------ TOTAL 7,472 ------------ INVESTMENT MANAGEMENT COMPANIES 0.25% Affiliated Managers Group, Inc.* 22,800 1,056 ------------ MACHINERY: AGRICULTURAL 1.80% Deere & Co. 172,000 7,573 ------------ MACHINERY: ENGINES 0.82% Briggs & Stratton Corp. 31,000 1,400 Cummins, Inc. 76,400 2,071 ------------ TOTAL 3,471 ------------ MACHINERY: INDUSTRIAL/SPECIALTY 1.25% Illinois Tool Works, Inc. 82,000 5,246 ------------ MACHINERY: OIL WELL EQUIPMENT & SERVICES 1.84% Baker Hughes, Inc. 40,000 1,120
SEE NOTES TO FINANCIAL STATEMENTS. 6 SCHEDULE OF INVESTMENTS (UNAUDITED)(CONTINUED) ALL VALUE FUND APRIL 30, 2003
VALUE INVESTMENTS SHARES (000) - --------------------------------------------------------------------------- Grant Prideco, Inc.* 60,000 $ 684 Grey Wolf, Inc.* 360,000 1,458 Helmerich & Payne, Inc. 75,000 1,930 Pride Int'l., Inc.* 165,000 2,561 ------------ TOTAL 7,753 ------------ MEDICAL & DENTAL INSTRUMENTS & SUPPLIES 0.79% Bausch & Lomb, Inc. 30,000 1,055 Boston Scientific Corp.* 38,400 1,653 ICU Medical, Inc.* 20,000 635 ------------ TOTAL 3,343 ------------ METAL FRABRICATING 1.51% Quanex Corp. 80,000 2,301 The Timken Co. 230,000 4,071 ------------ TOTAL 6,372 ------------ MILLING: FRUIT AND GRAIN PROCESSING 0.32% Archer-Daniels- Midland Co. 120,000 1,330 ------------ MISCELLANEOUS EQUIPMENT 1.15% W.W. Grainger, Inc. 105,000 4,846 ------------ MISCELLANEOUS MATERIALS & PROCESSING 0.20% Rogers Corp.* 25,000 827 ------------ MULTI-SECTOR COMPANIES 2.66% 3M Co. 22,700 2,861 Eaton Corp. 80,000 6,566 Tyco Int'l., Ltd.(a) 115,000 1,794 ------------ TOTAL 11,221 ------------ OFFICE FURNITURE & BUSINESS EQUIPMENT 1.44% Xerox Corp.* 615,000 6,064 ------------ OIL: INTEGRATED INTERNATIONAL 3.63% ChevronTexaco Corp. 24,900 $ 1,564 Exxon Mobil Corp. 390,012 13,728 ------------ TOTAL 15,292 ------------ PAPER 2.31% Int'l. Paper Co. 165,064 5,901 Meadwestvaco Corp. 163,000 3,845 ------------ TOTAL 9,746 ------------ PRODUCTION TECHNOLOGY EQUIPMENT 0.61% Dionex Corp.* 46,000 1,583 Teradyne, Inc.* 87,000 1,009 ------------ TOTAL 2,592 ------------ PUBLISHING: NEWSPAPERS 1.96% Gannett Co., Inc. 25,000 1,893 Journal Register Co.* 84,000 1,488 Tribune Co. 100,000 4,898 ------------ TOTAL 8,279 ------------ RADIO & TV BROADCASTERS 1.08% Clear Channel Communications, Inc.* 116,800 4,568 ------------ RAILROADS 2.93% CSX Corp. 212,000 6,780 Union Pacific Corp. 93,700 5,577 ------------ TOTAL 12,357 ------------ RESTAURANTS 0.40% CBRL Group, Inc. 53,000 1,690 ------------ RETAIL 5.46% Abercrombie & Fitch Co. Class A* 19,000 625 Barnes & Noble, Inc.* 80,000 1,576 Foot Locker, Inc. 86,500 951 Genesco, Inc.* 85,900 1,289
SEE NOTES TO FINANCIAL STATEMENTS. 7 SCHEDULE OF INVESTMENTS (UNAUDITED)(CONTINUED) ALL VALUE FUND APRIL 30, 2003
VALUE INVESTMENTS SHARES (000) - --------------------------------------------------------------------------- Limited Brands, Inc. 425,000 $ 6,179 Pier 1 Imports, Inc. 50,000 928 Target Corp. 343,300 11,480 ------------ TOTAL 23,028 ------------ SAVINGS & LOAN 0.19% Webster Financial Corp. 21,000 788 ------------ SHOES 1.35% NIKE, Inc. Class B 106,000 5,674 ------------ TOYS 0.56% Hasbro, Inc. 147,500 2,360 ------------ UTILITIES: CABLE TV & RADIO 1.34% Comcast Corp. Class A* 188,000 5,651 ------------ UTILITIES: ELECTRICAL 0.39% Ameren Corp. 40,000 1,639 ------------ UTILITIES: TELECOMMUNICATIONS 2.44% SBC Communications, Inc. 152,000 3,551 Verizon Communications, Inc. 180,000 6,728 ------------ TOTAL 10,279 ------------ UTILITIES: WATER 0.45% Philadelphia Suburban Corp. 84,000 1,903 ------------ TOTAL COMMON STOCKS (Cost $376,175,536) 385,666 ============ PRINCIAPL AMOUNT VALUE INVESTMENTS (000) (000) - --------------------------------------------------------------------------- SHORT-TERM INVESTMENT 7.72% REPURCHASE AGREEMENT 7.72% Repurchase Agreement dated 4/30/2003 1.27% due 5/1/2003 from State Street Bank & Trust Co. collateralized by $33,150,000 of Federal Home Loan Bank at 1.625% due 4/15/2005; value $33,176,818; proceeds: $32,524,323 (Cost $32,523,176) $ 32,523 $ 32,523 ============ TOTAL INVESTMENTS 99.21% (Cost $408,698,712) $ 418,189 ============
* Non-Income Producing Security. (a) Foreign security denominated in U.S. dollars. SEE NOTES TO FINANCIAL STATEMENTS. 8 SCHEDULE OF INVESTMENTS (UNAUDITED) ALPHA FUND APRIL 30, 2003
VALUE INVESTMENTS SHARES (000) - --------------------------------------------------------------------------- INVESTMENTS IN UNDERLYING FUNDS 98.04% Lord Abbett Developing Growth Fund, Inc.- Class Y*(a) 2,817,688 $ 32,178 Lord Abbett Research Fund, Inc.-Small-Cap Value Series-Class Y(b) 1,666,175 32,641 Lord Abbett Securities Trust-International Series-Class Y(b) 6,344,970 41,242 ------------ TOTAL INVESTMENTS IN UNDERLYING FUNDS (Cost $148,818,594) 106,061 ============ PRINCIPAL AMOUNT VALUE INVESTMENTS (000) (000) - --------------------------------------------------------------------------- SHORT-TERM INVESTMENT 1.86% REPURCHASE AGREEMENT 1.86% Repurchase Agreement dated 4/30/2003 1.27% due 5/1/2003 from State Street Bank & Trust Co. collateralized by $2,035,000 Federal Home Loan Mortgage Corp. at 2.00% due 1/21/2005; value $2,056,656; proceeds: $2,012,191 (Cost $2,012,120) $ 2,012 $ 2,012 ============ TOTAL INVESTMENTS 99.90% (Cost $150,830,714) $ 108,073 ============
* Non-Income Producing Security. (a) Fund investment objective is long-term growth of capital through a diversified and actively managed portfolio consisting of developing growth companies, many of which are traded over the counter. (b) Fund investment objective is long-term capital appreciation. SEE NOTES TO FINANCIAL STATEMENTS. 9 SCHEDULE OF INVESTMENTS (UNAUDITED) INTERNATIONAL FUND APRIL 30, 2003
US$ VALUE INVESTMENTS SHARES (000) - --------------------------------------------------------------------------- COMMON STOCK 90.25% AUSTRALIA 9.64% Amcor Ltd. 300,700 $ 1,563 Cochlear Ltd. 84,270 1,785 Newcrest Mining Ltd. 354,900 1,454 QBE Insurance Group Ltd.^ 407,500 2,177 Santos Ltd. 464,200 1,684 Stockland Trust Group^ 539,600 1,688 ------------ TOTAL 10,351 ------------ CANADA 4.59% Cognos, Inc.* 60,500 1,645 Cott Corp.* 77,200 1,410 Jean Coutu Group, Inc.^ 178,000 1,874 ------------ TOTAL 4,929 ------------ CHINA 1.07% People's Food Holdings Ltd.^ 1,294,000 641 United Food Holdings Ltd. 2,580,531 509 ------------ TOTAL 1,150 ------------ FRANCE 8.64% Imerys S.A.^ 11,800 1,566 IPSOS^ 30,100 1,545 Neopost S.A.* 48,550 1,680 Publicis Groupe^ 59,300 1,308 SR Teleperformance^ 74,900 1,145 Zodiac S.A. 90,000 2,031 ------------ TOTAL 9,275 ------------ GERMANY 3.46% Eigner US*~(b) 997,900 --(a) Medion AG^ 52,200 1,928 Puma AG^ 18,650 1,790 ------------ TOTAL 3,718 ------------ GREECE 2.16% Opap 138,200 $ 1,262 Vodafone Panafon S.A. 166,460 1,055 ------------ TOTAL 2,317 ------------ HONG KONG 1.79% Esprit Holdings Ltd. 508,000 996 Smartone Telecommunications 811,000 931 ------------ TOTAL 1,927 ------------ IRELAND 4.70% Anglo Irish Bank Corp. plc 262,800 1,977 IAWS Group plc 197,600 1,599 Irish Life & Permanent plc 127,200 1,476 ------------ TOTAL 5,052 ------------ ITALY 2.82% Banco Popolare di Verona e Novara Scrl^ 116,000 1,575 Davide Campari- Milano S.P.A.^ 42,300 1,459 ------------ TOTAL 3,034 ------------ JAPAN 19.93% Alps Electric Co. Ltd. 135,000 1,457 Cawachi Ltd. 8,400 469 Don Quijote Co. Ltd.^ 17,000 1,544 FamilyMart Co. Ltd. 55,445 1,058 Goodwill Group Inc. 211 766 Japan Medical Dynamic Mkt., Inc.^ 59,500 809 KOSE Corp. 67,100 2,127 Matsumotokiyoshi Co. Ltd.^ 28,900 1,284 Nitori Co. Ltd. 24,700 1,075 Nitto Denko Corp. 50,070 1,440 Paramount Bed Co. Ltd. 75,600 1,277
SEE NOTES TO FINANCIAL STATEMENTS. 10 SCHEDULE OF INVESTMENTS (UNAUDITED)(CONTINUED) INTERNATIONAL FUND APRIL 30, 2003
US$ VALUE INVESTMENTS SHARES (000) - --------------------------------------------------------------------------- Park24 Co. Ltd. 85,057 $ 1,373 Q.P. Corp.^ 189,900 1,529 Seino Transportation Co. Ltd.^ 240,600 1,420 Stanley Electronic Co Ltd. 118,700 1,493 Sundrug Co. Ltd. 7,300 200 Trend Micro, Inc.* 64,300 782 Yahoo Japan Corp.*^ 116 1,303 ------------ TOTAL 21,406 ------------ NETHERLANDS 1.48% Fugro N.V. 39,200 1,590 ------------ NEW ZEALAND 1.03% The Warehouse Group Ltd.^ 353,000 1,106 ------------ SINGAPORE 3.00% Great Eastern Holdings, Ltd. 234,000 1,245 SembCorp Logistics Ltd. 584,755 590 Venture Corp. 166,000 1,384 ------------ TOTAL 3,219 ------------ SOUTH KOREA 1.17% Shinhan Financial Group Co. Ltd. 127,100 1,255 ------------ SPAIN 8.66% Acerinox S.A.^ 41,100 1,532 Corporacion Mapfre S.A. 217,600 2,040 Grupo Dragados S.A. 56,205 1,074 Grupo Ferrovial S.A. 55,200 1,465 Iberia Lineas Aereas de Espana S.A. 903,700 1,583 Prosegur Compania de Seguridad S.A. 124,202 1,608 ------------ TOTAL 9,302 ------------ SWITZERLAND 3.93% Geberit AG 4,815 $ 1,516 Logitech Namen*^ 39,400 1,452 Nobel Biocare Holdings AG^ 22,600 1,250 ------------ TOTAL 4,218 ------------ UNITED KINGDOM 12.18% Aggregate Industries plc 1,169,200 1,439 Cattles plc 308,100 1,558 Close Brothers Group plc 175,750 1,482 HIT Entertainment plc 458,900 1,613 J.D. Wetherspoon plc 375,400 1,335 Jardine Lloyd Thompson Group plc 139,700 1,273 Jarvis plc 323,160 1,640 Next plc 98,500 1,485 William Morrison Supermarkets 422,000 1,258 ------------ TOTAL 13,083 ------------ TOTAL COMMON STOCKS (Cost $99,124,418) 96,932 ============ PRINCIPAL AMOUNT (000) ----- SHORT-TERM INVESTMENTS 19.47% COLLATERAL FOR SECURITIES ON LOAN 18.38% State Street Navigator Securities Lending Prime Portfolio 1.23%(c) $ 19,738 19,738 ------------
SEE NOTES TO FINANCIAL STATEMENTS. 11 SCHEDULE OF INVESTMENTS (UNAUDITED)(CONTINUED) INTERNATIONAL FUND APRIL 30, 2003
PRINCIPAL US$ AMOUNT VALUE INVESTMENTS (000) (000) - --------------------------------------------------------------------------- REPURCHASE AGREEMENT 1.09% Repurchase Agreement dated 4/30/2003 1.27% due 5/1/2003 from State Street Bank & Trust Co. collateralized by $1,200,000 of Federal Home Loan Bank at 1.30% due 4/7/2004; value $1,202,080; proceeds: $1,176,418 $ 1,176 $ 1,176 ============ TOTAL SHORT-TERM INVESTMENTS (Cost $20,914,329) 20,914 ============ TOTAL INVESTMENTS 109.72% (Cost $120,038,747) $ 117,846 ============
* Non-Income Producing Security. ^ Security (or a portion of security) on loan See Note 5. ~ Fair Valued Security - See Note 2a. (a) Value is less than $1,000. (b) Foreign security denominated in U.S. dollars. (c) Rate shown reflects 7 day yield as of April 30, 2003. SEE NOTES TO FINANCIAL STATEMENTS. 12 STATEMENTS OF ASSETS AND LIABILITIES (UNAUDITED) April 30, 2003
ALL VALUE ALPHA INTERNATIONAL FUND FUND FUND ASSETS: Investment in securities, at cost $ 408,698,712 $ 150,830,714 $ 120,038,747 - --------------------------------------------------------------------------------------------------------------------- Investment in securities, at value $ 418,189,011 $ 108,072,798 $ 117,846,228 Cash, at value (cost $8,093,463) - - 8,285,447 Receivables: Interest and dividends 376,646 71 290,520 Investment securities sold 33,892,471 2,005,448 3,788,218 Capital shares sold 4,285,815 50,452 880,029 From Lord, Abbett & Co. LLC 208 - 4,218 From Underlying Funds (See Note 3) - 404,228 - Prepaid expenses and other assets 85,843 3,127 1,292 - --------------------------------------------------------------------------------------------------------------------- TOTAL ASSETS 456,829,994 110,536,124 131,095,952 - --------------------------------------------------------------------------------------------------------------------- LIABILITIES: Payable upon return of securities on loan - - 19,737,952 Payables: Investment securities purchased 34,023,459 2,012,120 2,811,215 Capital shares reacquired 409,755 143,056 511,425 Management fees 223,712 - 63,721 12b-1 distribution fees 224,080 68,310 220,984 Administration fees 14,369 9,087 9,322 Trustees' fees 168,732 5,810 10,824 To affiliate - - 168,428 Accrued expenses and other liabilities 230,150 120,937 152,566 - --------------------------------------------------------------------------------------------------------------------- TOTAL LIABILITIES 35,294,257 2,359,320 23,686,437 ===================================================================================================================== NET ASSETS $ 421,535,737 $ 108,176,804 $ 107,409,515 ===================================================================================================================== COMPOSITION OF NET ASSETS: Paid-in capital $ 415,564,880 $ 158,961,138 $ 241,924,658 Undistributed (distributions in excess of) net investment income (141,616) 208,352 8,217 Accumulated net realized loss on investments and foreign currency related transactions (3,377,826) (8,234,770) (132,540,297) Net unrealized appreciation (depreciation) on investments and translation of assets and liabilities denominated in foreign currencies 9,490,299 (42,757,916) (1,983,063) - --------------------------------------------------------------------------------------------------------------------- NET ASSETS $ 421,535,737 $ 108,176,804 $ 107,409,515 ===================================================================================================================== NET ASSETS BY CLASS: Class A Shares $ 233,584,093 $ 49,916,603 $ 44,892,334 Class B Shares $ 60,263,309 $ 34,548,941 $ 13,501,779 Class C Shares $ 127,007,440 $ 23,711,260 $ 7,782,328 Class P Shares $ 670,033 - $ 599 Class Y Shares $ 10,862 - $ 41,232,475 OUTSTANDING SHARES BY CLASS: Class A Shares 27,458,695 4,515,927 7,002,141 Class B Shares 7,241,129 3,194,311 2,151,544 Class C Shares 15,303,311 2,191,964 1,241,314 Class P Shares 79,135 - 92.854 Class Y Shares 1,277.14 - 6,346,206 NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE (NET ASSETS DIVIDED BY OUTSTANDING SHARES): Class A Shares-Net asset value $ 8.51 $ 11.05 $ 6.41 Class A Shares-Maximum offering price (Net asset value plus sales charge of 5.75%) $ 9.03 $ 11.72 $ 6.80 Class B Shares-Net asset value $ 8.32 $ 10.82 $ 6.28 Class C Shares-Net asset value $ 8.30 $ 10.82 $ 6.27 Class P Shares-Net asset value $ 8.47 - $ 6.45 Class Y Shares-Net asset value $ 8.50 - $ 6.50 =====================================================================================================================
SEE NOTES TO FINANCIAL STATEMENTS. 13 STATEMENTS OF OPERATIONS (UNAUDITED) For the Six Months Ended April 30, 2003
ALL VALUE ALPHA INTERNATIONAL FUND FUND FUND INVESTMENT INCOME: Dividends $ 3,030,532 $ 572,817 $ 1,051,314 Interest and other 125,837 12,540 526,105 Securities lending - - 107,668 Foreign withholding tax (8,341) - (105,726) - --------------------------------------------------------------------------------------------------------------------- TOTAL INVESTMENT INCOME 3,148,028 585,357 1,579,361 - --------------------------------------------------------------------------------------------------------------------- EXPENSES: Management fees 1,283,293 269,235 393,821 12b-1 distribution plan-Class A 342,890 91,024 83,557 12b-1 distribution plan-Class B 253,353 169,189 64,136 12b-1 distribution plan-Class C 569,720 116,792 37,155 12b-1 distribution plan-Class P 1,083 - 2 Shareholder servicing 382,828 244,134 292,549 Market data 1,221 379 5,390 Professional 42,206 19,415 22,928 Reports to shareholders 44,796 13,500 14,143 Fund accounting 7,644 7,644 7,644 Fund administration 47,501 14,528 14,447 Custody 10,675 1,915 28,828 Trustees' fees 4,793 2,496 2,720 Registration 37,961 34,903 23,589 Organization - 4,329 - Subsidy (see Note 3) - - 150,453 Other 93,200 24,977 57,312 - --------------------------------------------------------------------------------------------------------------------- Gross expenses 3,123,164 1,014,460 1,198,674 Expense reductions (3,120) (986) (901) Management fee waived - (269,235) - Expenses assumed by Underlying Funds - (367,234) - - --------------------------------------------------------------------------------------------------------------------- NET EXPENSES 3,120,044 377,005 1,197,773 - --------------------------------------------------------------------------------------------------------------------- NET INVESTMENT INCOME 27,984 208,352 381,588 - --------------------------------------------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS): Capital gains received from Underlying Funds - 2,224,496 - Net realized loss on investments and foreign currency related transactions (2,220,009) (10,456,100) (8,164,365) Net change in unrealized appreciation/depreciation on investments and translation of assets and liabilities denominated in foreign currencies 24,225,264 12,807,783 10,679,429 ===================================================================================================================== NET REALIZED AND UNREALIZED GAIN 22,005,255 4,576,179 2,515,064 ===================================================================================================================== NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 22,033,239 $ 4,784,531 $ 2,896,652 =====================================================================================================================
SEE NOTES TO FINANCIAL STATEMENTS. 14 STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) Six Months Ended April 30, 2003
ALL VALUE ALPHA INTERNATIONAL INCREASE (DECREASE) IN NET ASSETS FUND FUND FUND OPERATIONS: Net investment income $ 27,984 $ 208,352 $ 381,588 Capital gains received from Underlying Funds - 2,224,496 - Net realized loss on investment and foreign currency related transactions (2,220,009) (10,456,100) (8,164,365) Net change in unrealized appreciation/depreciation on investments and translation of assets and liabilities denominated in foreign currencies 24,225,264 12,807,783 10,679,429 - --------------------------------------------------------------------------------------------------------------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 22,033,239 4,784,531 2,896,652 ===================================================================================================================== DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income Class A - - (382,449) Class B - - (12,252) Class C - - (48,713) Class P - - (4) Class Y - - (572,916) Net realized gain Class A (4,249,947) (455,055) - Class B (1,080,058) (307,754) - Class C (2,554,556) (213,342) - Class P (8,336) - - Class Y - - - - --------------------------------------------------------------------------------------------------------------------- TOTAL DISTRIBUTIONS TO SHAREHOLDERS (7,892,897) (976,151) (1,016,334) ===================================================================================================================== CAPITAL SHARE TRANSACTIONS: Net proceeds from sales of shares 98,613,676 10,460,049 27,660,510 Reinvestment of distributions 6,853,029 793,168 996,745 Cost of shares reacquired (47,612,706) (20,356,669) (34,849,352) - --------------------------------------------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL SHARE TRANSACTIONS 57,853,999 (9,103,452) (6,192,097) ===================================================================================================================== NET INCREASE (DECREASE) IN NET ASSETS 71,994,341 (5,295,072) (4,311,779) ===================================================================================================================== NET ASSETS: Beginning of period 349,541,396 113,471,876 111,721,294 - --------------------------------------------------------------------------------------------------------------------- END OF PERIOD $ 421,535,737 $ 108,176,804 $ 107,409,515 ===================================================================================================================== UNDISTRIBUTED (DISTRIBUTIONS IN EXCESS OF) NET INVESTMENT INCOME $ (141,616) $ 208,352 $ 8,217 =====================================================================================================================
SEE NOTES TO FINANCIAL STATEMENTS. 15 STATEMENTS OF CHANGES IN NET ASSETS Year Ended October 31, 2002
ALL VALUE ALPHA INTERNATIONAL INCREASE (DECREASE) IN NET ASSETS FUND FUND FUND OPERATIONS: Net investment income (loss) $ (401,829) $ (972,906) $ 659,700 Capital gains received from Underlying Funds - 2,542,308 - Net realized gain (loss) on investment transactions and foreign currency related transactions 6,735,080 (1,388,205) (37,731,158) Net change in unrealized appreciation/depreciation on investments and translation of assets and liabilities denominated in foreign currencies (40,555,786) (19,816,047) 10,796,886 - --------------------------------------------------------------------------------------------------------------------- NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS (34,222,535) (19,634,850) (26,274,572) ===================================================================================================================== DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income Class A (385,009) - - Class P (4) - - Net realized gain Class A (15,776,939) (3,180,149) - Class B (3,836,088) (2,286,945) - Class C (10,890,143) (1,598,309) - Class P (86) - - - --------------------------------------------------------------------------------------------------------------------- TOTAL DISTRIBUTIONS TO SHAREHOLDERS (30,888,269) (7,065,403) - ===================================================================================================================== CAPITAL SHARE TRANSACTIONS: Net proceeds from sales of shares 139,953,179 24,517,901 114,711,502 Reinvestment of distributions 27,031,403 5,468,702 - Cost of shares reacquired (70,226,400) (46,371,528) (137,676,731) - --------------------------------------------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS 96,758,182 (16,384,925) (22,965,229) ===================================================================================================================== NET INCREASE (DECREASE) IN NET ASSETS 31,647,378 (43,085,178) (49,239,801) ===================================================================================================================== NET ASSETS: Beginning of year 317,894,018 156,557,054 160,961,095 - --------------------------------------------------------------------------------------------------------------------- END OF YEAR $ 349,541,396 $ 113,471,876 $ 111,721,294 ===================================================================================================================== UNDISTRIBUTED (DISTRIBUTIONS IN EXCESS OF) NET INVESTMENT INCOME $ (169,600) - $ 642,963 =====================================================================================================================
SEE NOTES TO FINANCIAL STATEMENTS. 16 FINANCIAL HIGHLIGHTS ALL VALUE FUND
SIX MONTHS ENDED YEAR ENDED 10/31 4/30/2003 -------------------------------------------------------------------- (UNAUDITED) 2002 2001 2000 1999 1998 PER SHARE OPERATING PERFORMANCE (CLASS A SHARES) NET ASSET VALUE, BEGINNING OF PERIOD $ 8.22 $ 9.83 $ 11.53 $ 10.87 $ 9.15 $ 8.79 ========= ========= ========= ========= ========= ========= Investment operations Net investment income .01(a) .01(a) .04(a) .05(a) .04(a) .06 Net realized and unrealized gain (loss) .46 (.67) (.83) 1.17 2.06 .93 --------- --------- --------- --------- --------- --------- Total from investment operations .47 (.66) (.79) 1.22 2.10 .99 --------- --------- --------- --------- --------- --------- Distributions to shareholders from: Net investment income - (.02) (.03) - (.05) (.04) Net realized gain (.18) (.93) (.88) (.56) (.33) (.59) --------- --------- --------- --------- --------- --------- Total distributions (.18) (.95) (.91) (.56) (.38) (.63) --------- --------- --------- --------- --------- --------- NET ASSET VALUE, END OF PERIOD $ 8.51 $ 8.22 $ 9.83 $ 11.53 $ 10.87 $ 9.15 ========= ========= ========= ========= ========= ========= Total Return(b) 5.81%(d) (7.95)% (7.26)% 11.44% 23.77% 11.97% RATIOS TO AVERAGE NET ASSETS Expenses, including expense reductions .70%(d) 1.42% 1.42% 1.35% 1.30% 1.22% Expenses, excluding expense reductions .70%(d) 1.42% 1.43% 1.36% 1.30% 1.22% Net investment income .16%(d) .13% .40% .48% .36% .88% SIX MONTHS ENDED YEAR ENDED 10/31 4/30/2003 -------------------------------------------------------------------- SUPPLEMENTAL DATA: (UNAUDITED) 2002 2001 2000 1999 1998 - ---------------------------------------------------------------------------------------------------------------------------- Net assets, end of period (000) $ 233,584 $ 189,698 $ 166,406 $ 136,038 $ 102,329 $ 72,863 Portfolio turnover rate 22.95% 79.39% 103.11% 65.06% 37.68% 45.83% ============================================================================================================================
SEE NOTES TO FINANCIAL STATEMENTS. 17 FINANCIAL HIGHLIGHTS (CONTINUED) ALL VALUE FUND
SIX MONTHS ENDED YEAR ENDED 10/31 4/30/2003 -------------------------------------------------------------------- (UNAUDITED) 2002 2001 2000 1999 1998 PER SHARE OPERATING PERFORMANCE (CLASS B SHARES) NET ASSET VALUE, BEGINNING OF PERIOD $ 8.07 $ 9.70 $ 11.42 $ 10.85 $ 9.13 $ 8.80 ========= ========= ========= ========= ========= ========= Investment operations Net investment income (loss) (.01)(a) (.04)(a) (.03)(a) (.02)(a) (.04)(a) -(e) Net realized and unrealized gain (loss) .44 (.66) (.81) 1.15 2.10 .92 --------- --------- --------- --------- --------- --------- Total from investment operations .43 (.70) (.84) 1.13 2.06 .92 --------- --------- --------- --------- --------- --------- Distributions to shareholders from: Net investment income - - -(e) - (.01) - Net realized gain (.18) (.93) (.88) (.56) (.33) (.59) --------- --------- --------- --------- --------- --------- Total distributions (.18) (.93) (.88) (.56) (.34) (.59) --------- --------- --------- --------- --------- --------- NET ASSET VALUE, END OF PERIOD $ 8.32 $ 8.07 $ 9.70 $ 11.42 $ 10.85 $ 9.13 ========= ========= ========= ========= ========= ========= Total Return(b) 5.41%(d) (8.51)% (7.86)% 10.80% 23.17% 11.17% RATIOS TO AVERAGE NET ASSETS Expenses, including expense reductions 1.03%(d) 2.03% 2.03% 2.00% 1.98% 1.98% Expenses, excluding expense reductions 1.03%(d) 2.03% 2.04% 2.01% 1.98% 1.98% Net investment income (loss) (.17)%(d) (.48)% (.27)% (.17)% (.38)% .09% SIX MONTHS ENDED YEAR ENDED 10/31 4/30/2003 -------------------------------------------------------------------- SUPPLEMENTAL DATA: (UNAUDITED) 2002 2001 2000 1999 1998 - ---------------------------------------------------------------------------------------------------------------------------- Net assets, end of period (000) $ 60,263 $ 47,423 $ 39,188 $ 17,453 $ 9,739 $ 3,404 Portfolio turnover rate 22.95% 79.39% 103.11% 65.06% 37.68% 45.83% ============================================================================================================================
SEE NOTES TO FINANCIAL STATEMENTS. 18 FINANCIAL HIGHLIGHTS (CONTINUED) ALL VALUE FUND
SIX MONTHS ENDED YEAR ENDED 10/31 4/30/2003 -------------------------------------------------------------------- (UNAUDITED) 2002 2001 2000 1999 1998 PER SHARE OPERATING PERFORMANCE (CLASS C SHARES) NET ASSET VALUE, BEGINNING OF PERIOD $ 8.05 $ 9.67 $ 11.38 $ 10.81 $ 9.11 $ 8.80 ========= ========= ========= ========= ========= ========= Investment operations Net investment income (loss) (.01)(a) (.03)(a) (.01)(a) (.02)(a) (.03)(a) .01 Net realized and unrealized gain (loss) .44 (.66) (.82) 1.15 2.07 .89 --------- --------- --------- --------- --------- --------- Total from investment operations .43 (.69) (.83) 1.13 2.04 .90 --------- --------- --------- --------- --------- --------- Distributions to shareholders from: Net investment income - - -(e) - (.01) - Net realized gain (.18) (.93) (.88) (.56) (.33) (.59) --------- --------- --------- --------- --------- --------- Total distributions (.18) (.93) (.88) (.56) (.34) (.59) --------- --------- --------- --------- --------- --------- NET ASSET VALUE, END OF PERIOD $ 8.30 $ 8.05 $ 9.67 $ 11.38 $ 10.81 $ 9.11 ========= ========= ========= ========= ========= ========= Total Return(b) 5.43%(d) (8.42)% (7.70)% 10.74% 23.00% 10.94% RATIOS TO AVERAGE NET ASSETS Expenses, including expense reductions 1.03%(d) 1.89% 1.98% 2.00% 1.98% 1.98% Expenses, excluding expense reductions 1.03%(d) 1.89% 1.99% 2.01% 1.98% 1.98% Net investment income (loss) (.17)%(d) (.34)% (.14)% (.17)% (.31)% .12% SIX MONTHS ENDED YEAR ENDED 10/31 4/30/2003 -------------------------------------------------------------------- SUPPLEMENTAL DATA: (UNAUDITED) 2002 2001 2000 1999 1998 - ---------------------------------------------------------------------------------------------------------------------------- Net assets, end of period (000) $ 127,008 $ 112,052 $ 112,299 $ 112,776 $ 104,984 $ 89,637 Portfolio turnover rate 22.95% 79.39% 103.11% 65.06% 37.68% 45.83% ============================================================================================================================
SEE NOTES TO FINANCIAL STATEMENTS. 19 FINANCIAL HIGHLIGHTS (CONTINUED) ALL VALUE FUND
SIX MONTHS ENDED 8/15/2001(c) 4/30/2003 YEAR ENDED TO (UNAUDITED) 10/31/2002 10/31/2001 PER SHARE OPERATING PERFORMANCE (CLASS P SHARES) NET ASSET VALUE, BEGINNING OF PERIOD $ 8.19 $ 9.83 $ 10.85 =========== =========== ============ Investment operations Net investment income (loss) .01(a) -(a)(e) -(a)(e) Net realized and unrealized gain (loss) .45 (.66) (1.02) ----------- ----------- ------------ Total from investment operations .46 (.66) (1.02) ----------- ----------- ------------ Distributions to shareholders from: Net investment income - (.05) - Net realized gain (.18) (.93) - ----------- ----------- ------------ Total distributions (.18) (.98) - ----------- ----------- ------------ NET ASSET VALUE, END OF PERIOD $ 8.47 $ 8.19 $ 9.83 =========== =========== ============ Total Return(b) 5.71%(d) (8.04)% (9.40)%(d) RATIOS TO AVERAGE NET ASSETS Expenses, including expense reductions .75%(d) 1.48% .31%(d) Expenses, excluding expense reductions .75%(d) 1.48% .31%(d) Net investment income (loss) .11%(d) .07% (.01)%(d) SIX MONTHS ENDED 8/15/2001(c) 4/30/2003 YEAR ENDED TO SUPPLEMENTAL DATA: (UNAUDITED) 10/31/2002 10/31/2001 - ----------------------------------------------------------------------------------------- Net assets, end of period (000) $ 670 $ 368 $ 1 Portfolio turnover rate 22.95% 79.39% 103.11% =========================================================================================
SEE NOTES TO FINANCIAL STATEMENTS. 20 FINANCIAL HIGHLIGHTS (CONTINUED) ALL VALUE FUND
3/31/2003(c) TO 4/30/2003 (UNAUDITED) PER SHARE OPERATING PERFORMANCE (CLASS Y SHARES) NET ASSET VALUE, BEGINNING OF PERIOD $ 7.83 =========== Investment operations Net investment income -(a) Net realized and unrealized gain .67 ----------- Total from investment operations .67 ----------- Distributions to shareholders from: Net investment income - Net realized gain - ----------- Total distributions - ----------- NET ASSET VALUE, END OF PERIOD $ 8.50 ----------- Total Return(b) 8.56%(d) RATIOS TO AVERAGE NET ASSETS Expenses, including expense reductions .09%(d) Expenses, excluding expense reductions .11%(d) Net investment income .06%(d) 3/31/2003(c) TO 4/30/2003 SUPPLEMENTAL DATA: (UNAUDITED) - ---------------------------------------------------------------------------------------- Net assets, end of period (000) $ 11 Portfolio turnover rate 22.95% ========================================================================================
(a) Calculated using average shares outstanding during the period. (b) Total return does not consider the effects of sales loads and assumes the reinvestment of all distributions. (c) Commencement of offering of class shares. (d) Not annualized. (e) Amount is less than $.01. SEE NOTES TO FINANCIAL STATEMENTS. 21 FINANCIAL HIGHLIGHTS ALPHA FUND
SIX MONTHS ENDED YEAR ENDED 10/31 12/29/1997(c) 4/30/2003 ------------------------------------------------------ TO (UNAUDITED) 2002 2001 2000 1999 10/31/1998 PER SHARE OPERATING PERFORMANCE (CLASS A SHARES) NET ASSET VALUE, BEGINNING OF PERIOD $ 10.62 $ 12.96 $ 17.46 $ 15.21 $ 12.91 $ 13.52 ========= ========= ========= ========= ========= ========= Investment operations Net investment income (loss) .04(a) (.05)(a) (.05)(a) (.03)(a) .07(a) (.03)(a) Net realized and unrealized gain (loss) .48 (1.70) (3.82) 2.60 2.23 (.58) --------- --------- --------- --------- --------- --------- Total from investment operations .52 (1.75) (3.87) 2.57 2.30 (.61) --------- --------- --------- --------- --------- --------- Distributions to shareholders from: Net investment income - - (.30) (.21) - - Net realized gain (.09) (.59) (.33) (.11) - - --------- --------- --------- --------- --------- --------- Total distributions (.09) (.59) (.63) (.32) - - --------- --------- --------- --------- --------- --------- NET ASSET VALUE, END OF PERIOD $ 11.05 $ 10.62 $ 12.96 $ 17.46 $ 15.21 $ 12.91 ========= ========= ========= ========= ========= ========= Total Return(b) 4.96%(d) (14.41)% (22.67)% 17.10% 17.82% (4.51)%(d) RATIOS TO AVERAGE NET ASSETS Expenses, including expense reductions .18%(d) .37% .36% .40% .33% .21%(d) Expenses, excluding expense reductions .77%(d) 1.37% 1.34% 1.33% .83% .63%(d) Net investment income (loss) .36%(d) (.34)% (.32)% (.16)% .15% (.18)%(d) SIX MONTHS ENDED YEAR ENDED 10/31 12/29/1997(c) 4/30/2003 ------------------------------------------------------ TO SUPPLEMENTAL DATA: (UNAUDITED) 2002 2001 2000 1999 10/31/1998 - ------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period (000) $ 49,917 $ 53,121 $ 70,785 $ 96,652 $ 75,136 $ 49,587 Portfolio turnover rate 2.62% 1.75% 15.34% 1.54% 1.67% .01% ==============================================================================================================================
SEE NOTES TO FINANCIAL STATEMENTS. 22 FINANCIAL HIGHLIGHTS (CONTINUED) ALPHA FUND
SIX MONTHS ENDED YEAR ENDED 10/31 12/29/1997(c) 4/30/2003 ------------------------------------------------------ TO (UNAUDITED) 2002 2001 2000 1999 10/31/1998 PER SHARE OPERATING PERFORMANCE (CLASS B SHARES) NET ASSET VALUE, BEGINNING OF PERIOD $ 10.43 $ 12.81 $ 17.27 $ 15.05 $ 12.85 $ 13.52 ========= ========= ========= ========= ========= ========= Investment operations Net investment income (loss) -(a)(e) (.12)(a) (.14)(a) (.13)(a) (.03)(a) (.11)(a) Net realized and unrealized gain (loss) .48 (1.67) (3.79) 2.58 2.23 (.56) --------- --------- --------- --------- --------- --------- Total from investment operations .48 (1.79) (3.93) 2.45 2.20 (.67) --------- --------- --------- --------- --------- --------- Distributions to shareholders from: Net investment income - - (.20) (.12) - - Net realized gain (.09) (.59) (.33) (.11) - - --------- --------- --------- --------- --------- --------- Total distributions (.09) (.59) (.53) (.23) - - --------- --------- --------- --------- --------- --------- NET ASSET VALUE, END OF PERIOD $ 10.82 $ 10.43 $ 12.81 $ 17.27 $ 15.05 $ 12.85 ========= ========= ========= ========= ========= ========= Total Return(b) 4.66%(d) (14.91)% (23.21)% 16.40% 17.12% (4.96)%(d) RATIOS TO AVERAGE NET ASSETS Expenses, including expense reductions .50%(d) 1.00% 1.00% 1.00% 1.00% .83%(d) Expenses, excluding expense reductions 1.09%(d) 2.00% 1.98% 1.93% 1.50% 1.26%(d) Net investment income (loss) .04%(d) (.97)% (.96)% (.75)% (.83)% (.81)%(d) SIX MONTHS ENDED YEAR ENDED 10/31 12/29/1997(c) 4/30/2003 ------------------------------------------------------ TO SUPPLEMENTAL DATA: (UNAUDITED) 2002 2001 2000 1999 10/31/1998 - ----------------------------------------------------------------------------------------------------------------------------- Net assets, end of period (000) $ 34,549 $ 35,661 $ 50,377 $ 70,300 $ 52,280 $ 36,202 Portfolio turnover rate 2.62% 1.75% 15.34% 1.54% 1.67% .01% =============================================================================================================================
SEE NOTES TO FINANCIAL STATEMENTS. 23 FINANCIAL HIGHLIGHTS (CONTINUED) ALPHA FUND
SIX MONTHS ENDED YEAR ENDED 10/31 12/29/1997(c) 4/30/2003 ------------------------------------------------------ TO (UNAUDITED) 2002 2001 2000 1999 10/31/1998 PER SHARE OPERATING PERFORMANCE (CLASS C SHARES) NET ASSET VALUE, BEGINNING OF PERIOD $ 10.43 $ 12.80 $ 17.25 $ 15.04 $ 12.86 $ 13.52 ========= ========= ========= ========= ========= ========= Investment operations Net investment income (loss) -(a) (.10)(a) (.14)(a) (.12)(a) (.04)(a) (.11)(a) Net realized and unrealized gain (loss) .48 (1.68) (3.78) 2.56 2.22 (.55) --------- --------- --------- --------- --------- --------- Total from investment operations .48 (1.78) (3.92) 2.44 2.18 (.66) --------- --------- --------- --------- --------- --------- Distributions to shareholders from: Net investment income - - (.20) (.12) - - Net realized gain (.09) (.59) (.33) (.11) - - --------- --------- --------- --------- --------- --------- Total distributions (.09) (.59) (.53) (.23) - - --------- --------- --------- --------- --------- --------- NET ASSET VALUE, END OF PERIOD $ 10.82 $ 10.43 $ 12.80 $ 17.25 $ 15.04 $ 12.86 ========= ========= ========= ========= ========= ========= Total Return(b) 4.66%(d) (14.77)% (23.25)% 16.34% 16.95% (4.88)%(d) RATIOS TO AVERAGE NET ASSETS Expenses, including expense reductions .50%(d) .89% 1.00% 1.00% 1.00% .82%(d) Expenses, excluding expense reductions 1.09%(d) 1.89% 1.98% 1.93% 1.50% 1.24%(d) Net investment income (loss) .04%(d) (.86)% (.97)% (.70)% (.84)% (.82)%(d) SIX MONTHS ENDED YEAR ENDED 10/31 12/29/1997(c) 4/30/2003 ------------------------------------------------------ TO SUPPLEMENTAL DATA: (UNAUDITED) 2002 2001 2000 1999 10/31/1998 - ----------------------------------------------------------------------------------------------------------------------------- Net assets, end of period (000) $ 23,711 $ 24,690 $ 35,395 $ 44,977 $ 34,667 $ 20,490 Portfolio turnover rate 2.62% 1.75% 15.34% 1.54% 1.67% .01% =============================================================================================================================
(a) Calculated using average shares outstanding during the period. (b) Total return does not consider the effects of sales loads and assumes the reinvestment of all distributions. (c) Commencement of offering of class shares. (d) Not annualized. (e) Amount is less than $.01. SEE NOTES TO FINANCIAL STATEMENTS. 24 FINANCIAL HIGHLIGHTS INTERNATIONAL FUND
SIX MONTHS ENDED YEAR ENDED 10/31 4/30/2003 -------------------------------------------------------------------- (UNAUDITED) 2002 2001 2000 1999 1998 PER SHARE OPERATING PERFORMANCE (CLASS A SHARES) NET ASSET VALUE, BEGINNING OF PERIOD $ 6.29 $ 7.78 $ 14.48 $ 13.90 $ 12.39 $ 10.86 ========= ========= ========= ========= ========= ========= Investment operations Net investment income (loss) .02(a) .03(a) (.06)(a) (.08)(a) .07(a) .11(a) Net realized and unrealized gain (loss) .15 (1.52) (6.56) 1.54 1.55 1.45 --------- --------- --------- --------- --------- --------- Total from investment operations .17 (1.49) (6.62) 1.46 1.62 1.56 --------- --------- --------- --------- --------- --------- Distributions to shareholders from: Net investment income (.05) - - (.06) (.09) (.03) Net realized gain - - (.08) (.82) (.02) - --------- --------- --------- --------- --------- --------- Total distributions (.05) - (.08) (.88) (.11) (.03) --------- --------- --------- --------- --------- --------- NET ASSET VALUE, END OF PERIOD $ 6.41 $ 6.29 $ 7.78 $ 14.48 $ 13.90 $ 12.39 ========= ========= ========= ========= ========= ========= Total Return(b) 2.95%(d) (19.16)% (45.92)% 10.97% 13.16% 14.36% RATIOS TO AVERAGE NET ASSETS Expenses, including expense reductions 1.15%(d) 1.89% 2.07% 1.80% 1.51% 1.31% Expenses, excluding expense reductions 1.15%(d) 1.89% 2.08% 1.80% 1.51% 1.31% Net investment income (loss) .31%(d) .50% (.55)% (.53)% .52% .80% SIX MONTHS ENDED YEAR ENDED 10/31 4/30/2003 -------------------------------------------------------------------- SUPPLEMENTAL DATA: (UNAUDITED) 2002 2001 2000 1999 1998 - ---------------------------------------------------------------------------------------------------------------------------- Net assets, end of period (000) $ 44,892 $ 44,975 $ 71,591 $ 135,701 $ 104,885 $ 80,606 Portfolio turnover rate 30.52% 82.38% 65.26% 35.14% 75.15% 20.52% ============================================================================================================================
SEE NOTES TO FINANCIAL STATEMENTS. 25 FINANCIAL HIGHLIGHTS (CONTINUED) INTERNATIONAL FUND
SIX MONTHS ENDED YEAR ENDED 10/31 4/30/2003 -------------------------------------------------------------------- (UNAUDITED) 2002 2001 2000 1999 1998 PER SHARE OPERATING PERFORMANCE (CLASS B SHARES) NET ASSET VALUE, BEGINNING OF PERIOD $ 6.13 $ 7.65 $ 14.31 $ 13.75 $ 12.28 $ 10.83 ========= ========= ========= ========= ========= ========= Investment operations Net investment income (loss) -(a)(e) (.02)(a) (.11)(a) (.17)(a) (.02)(a) .02(a) Net realized and unrealized gain (loss) .16 (1.50) (6.47) 1.55 1.53 1.43 --------- --------- --------- --------- --------- --------- Total from investment operations .16 (1.52) (6.58) 1.38 1.51 1.45 --------- --------- --------- --------- --------- --------- Distributions to shareholders from: Net investment income (.01) - - -(e) (.02) - Net realized gain - - (.08) (.82) (.02) - --------- --------- --------- --------- --------- --------- Total distributions (.01) - (.08) (.82) (.04) - --------- --------- --------- --------- --------- --------- NET ASSET VALUE, END OF PERIOD $ 6.28 $ 6.13 $ 7.65 $ 14.31 $ 13.75 $ 12.28 ========= ========= ========= ========= ========= ========= Total Return(b) 2.54%(d) (19.87)% (46.19)% 10.42% 12.31% 13.39% RATIOS TO AVERAGE NET ASSETS Expenses, including expense reductions 1.46%(d) 2.69% 2.59% 2.35% 2.19% 2.03% Expenses, excluding expense reductions 1.46%(d) 2.69% 2.60% 2.36% 2.19% 2.03% Net investment income (loss) .00%(d)(f) (.30)% (1.07)% (1.09)% (.16)% .18% SIX MONTHS ENDED YEAR ENDED 10/31 4/30/2003 -------------------------------------------------------------------- SUPPLEMENTAL DATA: (UNAUDITED) 2002 2001 2000 1999 1998 - ---------------------------------------------------------------------------------------------------------------------------- Net assets, end of period (000) $ 13,502 $ 13,174 $ 17,743 $ 33,124 $ 22,928 $ 15,933 Portfolio turnover rate 30.52% 82.38% 65.26% 35.14% 75.15% 20.52% ============================================================================================================================
SEE NOTES TO FINANCIAL STATEMENTS. 26 FINANCIAL HIGHLIGHTS (CONTINUED) INTERNATIONAL FUND
SIX MONTHS ENDED YEAR ENDED 10/31 4/30/2003 -------------------------------------------------------------------- (UNAUDITED) 2002 2001 2000 1999 1998 PER SHARE OPERATING PERFORMANCE (CLASS C SHARES) NET ASSET VALUE, BEGINNING OF PERIOD $ 6.12 $ 7.61 $ 14.30 $ 13.75 $ 12.28 $ 10.83 ========= ========= ========= ========= ========= ========= Investment operations Net investment income (loss) .03(a) -(a)(e) (.13)(a) (.17)(a) (.02)(a) .02(a) Net realized and unrealized gain (loss) .16 (1.49) (6.48) 1.54 1.53 1.43 --------- --------- --------- --------- --------- --------- Total from investment operations .19 (1.49) (6.61) 1.37 1.51 1.45 --------- --------- --------- --------- --------- --------- Distributions to shareholders from: Net investment income (.04) - - -(e) (.02) - Net realized gain - - (.08) (.82) (.02) - --------- --------- --------- --------- --------- --------- Total distributions (.04) - (.08) (.82) (.04) - --------- --------- --------- --------- --------- --------- NET ASSET VALUE, END OF PERIOD $ 6.27 $ 6.12 $ 7.61 $ 14.30 $ 13.75 $ 12.28 ========= ========= ========= ========= ========= ========= Total Return(b) 3.10%(d) (19.58)% (46.43)% 10.35% 12.31% 13.39% RATIOS TO AVERAGE NET ASSETS Expenses, including expense reductions 1.46%(d) 2.36% 2.83% 2.35% 2.19% 2.05% Expenses, excluding expense reductions 1.46%(d) 2.36% 2.84% 2.36% 2.19% 2.05% Net investment income (loss) .56%(d) .03% (1.32)% (1.10)% (.15)% .12% SIX MONTHS ENDED YEAR ENDED 10/31 4/30/2003 -------------------------------------------------------------------- SUPPLEMENTAL DATA: (UNAUDITED) 2002 2001 2000 1999 1998 - ---------------------------------------------------------------------------------------------------------------------------- Net assets, end of period (000) $ 7,782 $ 7,823 $ 11,399 $ 25,546 $ 20,111 $ 13,723 Portfolio turnover rate 30.52% 82.38% 65.26% 35.14% 75.15% 20.52% ============================================================================================================================
SEE NOTES TO FINANCIAL STATEMENTS. 27 FINANCIAL HIGHLIGHTS (CONTINUED) INTERNATIONAL FUND
SIX MONTHS ENDED YEAR ENDED 10/31 3/9/1999(c) 4/30/2003 ------------------------------------ TO (UNAUDITED) 2002 2001 2000 10/31/1999 PER SHARE OPERATING PERFORMANCE (CLASS P SHARES) NET ASSET VALUE, BEGINNING OF PERIOD $ 6.31 $ 7.82 $ 14.51 $ 13.91 $ 12.70 ======== ======== ======== ======== ======== Investment operations Net investment income (loss) .03(a) .03(a) (.06)(a) (.08)(a) .08(a) Net realized and unrealized gain (loss) .15 (1.54) (6.55) 1.55 1.13 -------- -------- -------- -------- -------- Total from investment operations .18 (1.51) (6.61) 1.47 1.21 -------- -------- -------- -------- -------- Distributions to shareholders from: Net investment income (.04) - - (.05) - Net realized gain - - (.08) (.82) - -------- -------- -------- -------- -------- Total distributions (.04) - (.08) (.87) - -------- -------- -------- -------- -------- NET ASSET VALUE, END OF PERIOD $ 6.45 $ 6.31 $ 7.82 $ 14.51 $ 13.91 ======== ======== ======== ======== ======== Total Return(b) 2.94%(d) (19.31)% (45.75)% 11.03% 9.53%(d) RATIOS TO AVERAGE NET ASSETS Expenses, including expense reductions 1.18%(d) 2.14% 2.04% 1.80% .98%(d) Expenses, excluding expense reductions 1.18%(d) 2.14% 2.05% 1.80% .98%(d) Net investment income (loss) .28%(d) .25% (.55)% (.51)% .60%(d) SIX MONTHS ENDED YEAR ENDED 10/31 3/9/1999(c) 4/30/2003 ------------------------------------ TO SUPPLEMENTAL DATA: (UNAUDITED) 2002 2001 2000 10/31/1999 - ---------------------------------------------------------------------------------------------------------------- Net assets, end of period (000) $ 1 $ 1 $ 1 $ 1 $ 1 Portfolio turnover rate 30.52% 82.38% 65.26% 35.14% 75.15% ================================================================================================================
SEE NOTES TO FINANCIAL STATEMENTS. 28 FINANCIAL HIGHLIGHTS (CONTINUED) INTERNATIONAL FUND
SIX MONTHS ENDED YEAR ENDED 10/31 12/29/1997(c) 4/30/2003 ------------------------------------------------------ TO (UNAUDITED) 2002 2001 2000 1999 10/31/1998 PER SHARE OPERATING PERFORMANCE (CLASS Y SHARES) NET ASSET VALUE, BEGINNING OF PERIOD $ 6.39 $ 7.90 $ 14.61 $ 14.00 $ 12.41 $ 11.28 ========= ========= ========= ========= ========= ========= Investment operations Net investment income (loss) .03(a) .06(a) (.01)(a) (.01)(a) .12(a) .15(a) Net realized and unrealized gain (loss) .16 (1.57) (6.62) 1.54 1.56 .98 --------- --------- --------- --------- --------- --------- Total from investment operations .19 (1.51) (6.63) 1.53 1.68 1.13 --------- --------- --------- --------- --------- --------- Distributions to shareholders from: Net investment income (.08) - - (.10) (.07) - Net realized gain - - (.08) (.82) (.02) - --------- --------- --------- --------- --------- --------- Total distributions (.08) - (.08) (.92) (.09) - --------- --------- --------- --------- --------- --------- NET ASSET VALUE, END OF PERIOD $ 6.50 $ 6.39 $ 7.90 $ 14.61 $ 14.00 $ 12.41 ========= ========= ========= ========= ========= ========= Total Return(b) 3.04%(d) (19.11)% (45.58)% 11.45% 13.65% 10.02%(d) RATIOS TO AVERAGE NET ASSETS Expenses, including expense reductions .96%(d) 1.69% 1.59% 1.35% 1.20% .84%(d) Expenses, excluding expense reductions .96%(d) 1.69% 1.60% 1.37% 1.20% .84%(d) Net investment income (loss) .50%(d) .70% (.06)% (.09)% .86% 1.11%(d) SIX MONTHS ENDED YEAR ENDED 10/31 12/29/1997(c) 4/30/2003 ------------------------------------------------------ TO SUPPLEMENTAL DATA: (UNAUDITED) 2002 2001 2000 1999 10/31/1998 - ----------------------------------------------------------------------------------------------------------------------------- Net assets, end of period (000) $ 41,233 $ 45,748 $ 60,227 $ 79,833 $ 64,810 $ 42,770 Portfolio turnover rate 30.52% 82.38% 65.26% 35.14% 75.15% 20.52% =============================================================================================================================
(a) Calculated using average shares outstanding during the period. (b) Total return does not consider the effects of sales loads and assumes the reinvestment of all distributions. (c) Commencement of offering of class shares. (d) Not annualized. (e) Amount is less than $.01. (f) Amount is less than .01%. SEE NOTES TO FINANCIAL STATEMENTS. 29 NOTES TO FINANCIAL STATEMENTS (UNAUDITED) 1. ORGANIZATION Lord Abbett Securities Trust (the "Trust") is registered under the Investment Company Act of 1940 (the "Act") as a diversified open-end management investment company organized as a Delaware business trust on February 26, 1993. The Trust currently consists of five funds. This report covers the following three funds and their respective classes (separately, a "Fund" and collectively, the "Funds"): Lord Abbett All Value Fund ("All Value Fund"), Class A, B, C, P and Y shares; Lord Abbett Alpha Series ("Alpha Fund"), Class A, B and C shares; and Lord Abbett International Series ("International Fund"), Class A, B, C, P and Y shares. All Value Fund's investment objective is long-term growth of capital and income without excessive fluctuations in market value. Alpha Fund and International Fund's investment objective is long-term capital appreciation. Alpha Fund invests in other funds ("Underlying Funds") managed by Lord, Abbett & Co. LLC ("Lord Abbett"). Each class of shares has different expenses and dividends. A front-end sales charge is normally added to the NAV for Class A shares. There is no front-end sales charge in the case of the Class B and C shares, although there may be a contingent deferred sales charge ("CDSC") as follows: certain redemptions of Class A shares made within 24 months following any purchases made without a sales charge; Class B shares redeemed before the sixth anniversary of purchase; and Class C shares redeemed before the first anniversary of purchase. Class B shares will convert to Class A shares on the eighth anniversary of original purchase of Class B shares. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. 2. SIGNIFICANT ACCOUNTING POLICIES (a) INVESTMENT VALUATION-Securities traded on national or foreign securities exchanges are valued at the last quoted sales price, or if no sales price is available, at the mean between the latest bid and asked prices on such exchanges, or, in the case of bonds, in the over-the-counter market if, in the judgment of the Trust's officers, that market more accurately reflects the market value of the bonds. Securities traded only in the over-the-counter market are valued at the mean between the latest bid and asked prices, except that securities admitted to trading on the NASDAQ National Market System are valued at the last sales price if it is determined that such price more accurately reflects the value of such securities. Securities for which market quotations are not readily available are valued at fair value as determined by management and approved in good faith by the Board of Trustees. Short-term securities with 60 days or less remaining to maturity are valued using the amortized cost method, which approximates current market value. Investments in the Underlying Funds are valued at the closing net asset value per share of each Underlying Fund on the day of valuation. (b) SECURITY TRANSACTIONS-Security transactions are recorded as of the date that the securities are purchased or sold (trade date). Realized gains and losses on sales of portfolio securities are calculated using the identified-cost method. 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. 30 NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) (c) INVESTMENT INCOME-Dividend income is recorded on the ex-dividend date. Interest income is recorded on the accrual basis and discounts are accreted and premiums are amortized using the effective interest method. Investment income is allocated to each class of shares based upon the relative proportion of net assets at the beginning of the day. (d) FEDERAL TAXES-It is the policy of each Fund to meet the requirements of Subchapter M of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its taxable net investment income and capital gains to its shareholders. Therefore, no federal income tax provision is required. (e) ORGANIZATION EXPENSES-Organization expenses incurred prior to November 1, 1999 are amortized evenly over a period of five years. (f) EXPENSES-Expenses incurred by the Trust that do not specifically relate to an individual fund are allocated to the funds within the Trust on a pro rata basis. Expenses excluding class specific expenses are allocated to each class of shares based upon the relative proportion of net assets at the beginning of the day. Class A, Class B, Class C and Class P shares bear all expenses and fees relating to their respective 12b-1 Distribution Plans. (g) FOREIGN TRANSACTIONS-The books and records of International Fund are maintained in U.S. dollars and transactions denominated in foreign currencies are recorded in the Fund's records at the rate prevailing when earned or recorded. Asset and liability accounts that are denominated in foreign currencies are adjusted to reflect current exchange rates. The resultant exchange gains and losses are included as net realized gain (loss) on investments and foreign currency related transactions on the Statements of Operations. The Fund does not isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the changes in market prices of the securities. (h) FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS-International Fund may enter into forward foreign currency exchange contracts in order to reduce its exposure to changes in foreign currency exchange rates on its foreign portfolio holdings and to lock in the U.S. dollar cost of firm purchase and sale commitments for securities denominated in foreign currencies. A forward foreign currency exchange contract is a commitment to purchase or sell a foreign currency at a future date at a negotiated rate. The contracts are valued daily at forward exchange rates and any unrealized gain or loss is included in net unrealized appreciation/depreciation on investments and translation of assets and liabilities denominated in foreign currencies. The gain or loss arising from the difference between the U.S. dollar cost of the original contract and the value of the foreign currency in U.S. dollars upon closing of such contracts is included in net realized gain or loss on investments and foreign currency related transactions. At April 30, 2003, there are no forward foreign currency exchange contracts outstanding. (i) REPURCHASE AGREEMENT-Each Fund may enter into repurchase agreements with respect to securities. A repurchase agreement is a transaction in which a Fund acquires a security and simultaneously commits to resell that security to the seller (a bank or securities dealer) at an agreed upon price on an agreed-upon date. Each Fund requires at all times that the repurchase agreement be collateralized by cash or U.S. Government securities having a value equal to, or in excess of, the value of the repurchase agreement. If the seller of the agreement defaults on its obligation to repurchase the underlying securities at a time when the value of these securities has declined, the Fund may incur a loss upon disposition of them. 31 NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) 3. MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES MANAGEMENT FEES The Trust has a management agreement with Lord Abbett pursuant to which Lord Abbett supplies the Trust with investment management services and executive and other personnel, pays the remuneration of officers, provides office space and pays for ordinary and necessary office and clerical expenses relating to research and statistical work and supervision of the Trust's investment portfolios. The management fee is based on average daily net assets at the following annual rates:
MANAGEMENT VOLUNTARY FEES WAIVER - -------------------------------------------------------------------------------- All Value Fund .70%(1) - Alpha Fund .50% .50% International Fund .75% -
(1) The management fee for All Value Fund is based on average daily net assets at the following annual rates: - ---------------------------------- First $200 million .75% Next $300 million .65% Over $500 million .50% For the six months ended April 30, 2003, Lord Abbett voluntarily waived its management fees for Alpha Fund. Alpha Fund has entered into a Servicing Agreement with the Underlying Funds pursuant to which each Underlying Fund will pay a portion of the expenses (excluding management, distribution and service fees) of Alpha Fund in proportion to the average daily value of total Underlying Fund shares owned by Alpha Fund. Lord Abbett may stop waiving all or a portion of its management fee at any time. In addition, effective January 1, 2003, Lord Abbett began providing certain administrative services to each Fund pursuant to an Administrative Services Agreement at an annual rate of .04% of the Fund's average daily net assets. This will result in Lord Abbett paying Fund Accounting expenses that were previously charged to the Funds. 12b-1 DISTRIBUTION PLANS Each Fund has adopted a distribution plan (the "Plan") with respect to one or more classes of shares pursuant to Rule 12b-1 of the Act, which provides for the payment of ongoing distribution and service fees to Lord Abbett Distributor LLC ("Distributor"), an affiliate of Lord Abbett. The fees are accrued daily at annual rates based upon average daily net assets as follows:
FEE CLASS A CLASS B CLASS C CLASS P(3) - -------------------------------------------------------------------------------- Service .25% .25% .25% .20% Distribution .10%(1)(2) .75% .75% .25%
(1) In addition, each Fund pays a one-time distribution fee of up to 1% on certain qualifying purchases, which is generally amortized over a two-year period. (2) In addition, until January 1, 2003, each Fund paid an incremental marketing expense of approximately .03% of the average daily net assets of Class A. (3) All Value Fund and International Fund only. Class Y does not have a distribution plan. 32 NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) COMMISSIONS Distributor received the following commissions on sales of Class A shares of the Funds after concessions were paid to authorized dealers for the six months ended April 30, 2003:
DISTRIBUTOR DEALERS' COMMISSIONS CONCESSIONS - -------------------------------------------------------------------------------- All Value Fund $ 193,066 $ 1,071,564 Alpha Fund 33,090 187,303 International Fund 9,933 54,408
One Trustee and certain of the Trust's officers have an interest in Lord Abbett. 4. DISTRIBUTIONS AND CAPITAL LOSS CARRYFORWARD Dividends from net investment income, if any, are declared and paid semi-annually for All Value Fund, and annually for Alpha Fund and International Fund. Taxable net realized gains from investment transactions, reduced by capital loss carryforwards, if any, are declared and distributed to shareholders at least annually. The capital loss carryforward amount is available to offset future net capital gains. Dividends and distributions to shareholders are recorded on the ex-dividend date. The amount of dividends and distributions from net investment income and net realized capital gains are determined in accordance with federal income tax regulations which may differ from accounting principles generally accepted in the United States of America. These book/tax differences are either considered temporary or permanent in nature. To the extent these differences are permanent in nature, such amounts are reclassified within the components of net assets based on their federal tax basis treatment; temporary differences do not require reclassification. Dividends and distributions which exceed net investment income and net realized capital gains for tax purposes are reported as distributions of paid-in capital. The tax character of distributions paid during the six months ended April 30, 2003 and the fiscal year ended October 31, 2002 are as follows:
ALL VALUE FUND ALPHA FUND - -------------------------------------------------------------------------------- 4/30/2003 10/31/2002 4/30/2003 10/31/2002 - -------------------------------------------------------------------------------- Distributions paid from: Ordinary income $ - $ 385,013 $ - $ 95,687 Net long-term capital gains 7,892,897 30,503,256 976,151 6,969,716 - -------------------------------------------------------------------------------- Total distributions paid $ 7,892,897 $ 30,888,269 $ 976,151 $ 7,065,403 - -------------------------------------------------------------------------------- INTERNATIONAL FUND - ------------------------------------------------------- 4/30/2003 10/31/2002 - ------------------------------------------------------- Distributions paid from: Ordinary income $ 1,016,334 $ - Net long-term capital gains - - - ------------------------------------------------------- Total distributions paid $ 1,016,334 $ - - -------------------------------------------------------
33 NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) At fiscal year end October 31, 2002, the capital loss carryforwards along with the related expiration dates were as follows:
YEARS OF AMOUNT EXPIRATION - -------------------------------------------------------------------------------- All Value Fund - - Alpha Fund - - International Fund $ 124,372,656 2009-2010
As of April 30, 2003, the aggregate security unrealized gains and losses based on cost for U.S. Federal income tax purposes are as follows:
GROSS GROSS NET UNREALIZED UNREALIZED UNREALIZED TAX COST GAIN LOSS GAIN (LOSS) - -------------------------------------------------------------------------------- All Value Fund $ 409,852,694 $ 29,550,418 $ (21,214,101) $ 8,336,317 Alpha Fund 150,833,792 6,665,139 (49,426,133) (42,760,994) International Fund 100,542,717 9,720,764 (11,945,749) (2,224,985)
The difference between book-basis and tax-basis unrealized gains (losses) is primarily attributable to wash sales and other temporary tax adjustments. 5. PORTFOLIO SECURITIES TRANSACTIONS Each Fund may lend its securities to member banks of the Federal Reserve System and to registered broker-dealers approved by the Trust. The loans are collateralized at all times by cash and/or U.S. Treasury securities in an amount at least equal to the market value of the securities loaned. As of April 30, 2003, the value of securities loaned for International Fund was $18,867,822. These loans were collateralized by cash of $19,737,952, which was invested in a restricted money market account. Expenses related to securities lending of $38,909 for International Fund are included in other expenses on the Statements of Operations. The dividend and interest income earned on the securities loaned is accounted for in the same manner as other dividend and interest income. Lending portfolio securities could result in a loss or delay in recovering the Trust's securities if the borrower defaults. Purchases and sales of investment securities (other than short-term investments) for the six months ended April 30, 2003 are as follows:
PURCHASES SALES - -------------------------------------------------------------------------------- All Value Fund $ 119,912,385 $ 80,027,802 Alpha Fund 2,797,313 11,000,000 International Fund 29,730,487 36,634,744
6. TRUSTEES' REMUNERATION The Trust's officers and the one trustee who are associated with Lord Abbett do not receive any compensation from the Trust for serving in such capacities. Outside Trustees' fees are allocated among all Lord Abbett-sponsored funds based on the net assets of each fund. There is an equity based plan available to all outside Trustees under which outside Trustees must defer receipt of a portion of, and may elect to defer receipt of an additional portion of Trustees' fees. The deferred amounts are treated as though equivalent dollar amounts have been invested proportionately in 34 NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) the Trust. Such amounts and earnings accrued thereon are included in Trustees' fees on the Statements of Operations and in Trustees' fees payable on the Statements of Assets and Liabilities and are not deductible for federal income tax purposes until such amounts are paid. 7. EXPENSE REDUCTIONS The Trust has entered into arrangements with its transfer agent and custodian whereby credits realized as a result of uninvested cash balances are used to reduce a portion of the Funds' expenses. 8. LINE OF CREDIT All Value Fund and International Fund, along with certain other funds managed by Lord Abbett, have available a $200,000,000 unsecured revolving credit facility ("Facility"), from a consortium of banks, to be used for temporary or emergency purposes as an additional source of liquidity to fund redemptions of investor shares. Any borrowings under this Facility will bear interest at current market rates as defined in the agreement. The fee for this Facility is an annual rate of 0.09%. At April 30, 2003, there are no loans outstanding pursuant to this Facility nor was the Facility utilized at any time during the six month period. 9. CUSTODIAN AND ACCOUNTING AGENT State Street Bank and Trust Company ("SSB") is the Trust's custodian and accounting agent. SSB performs custodian functions and accounting and recordkeeping functions relating to portfolio transactions and calculating the Funds' net asset values. 10. INVESTMENT RISKS Each Fund is subject to the general risks and considerations associated with investing in equity securities. The value of an investment will fluctuate in response to movements in the stock market in general and to the changing prospects of individual companies in which the Funds invest. In addition, although All Value Fund invests a significant portion of its assets in large-cap company stocks, it also invests in mid-cap and small-cap company stocks which may be more volatile and less liquid than large-cap stocks. International Fund is subject to the risks of investing in foreign securities and in the securities of small-cap companies. Foreign securities may pose greater risks than domestic securities, including greater price fluctuations and higher transaction costs. Foreign investments also may be affected by changes in currency rates or currency controls. Investing in small-cap companies generally involves greater risks than investing in the stocks of large-cap companies, including more volatility and less liquidity. Alpha Fund's investments are concentrated in the Underlying Funds and, as a result, the Fund's performance is directly related to their performance and subject to their risks, including those associated with foreign investments and small-cap companies. These factors can affect the Funds' performance. For a more complete discussion of the risks associated with the Funds, please see the Funds' prospectus. 35 NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) 11. SUMMARY OF CAPITAL TRANSACTIONS The Trust has an unlimited number of authorized shares of beneficial interest.
SIX MONTHS ENDED YEAR ENDED ALL VALUE FUND APRIL 30, 2003 (UNAUDITED) OCTOBER 31, 2002 - ------------------------------------------------------------------------------------------------ CLASS A SHARES SHARES AMOUNT SHARES AMOUNT - ------------------------------------------------------------------------------------------------ Shares sold 7,472,447 $ 60,499,545 9,028,388 $ 82,077,095 Reinvestment of distributions 479,325 3,949,635 1,585,734 14,985,188 Shares reacquired (3,577,502) (28,826,477) (4,449,635) (39,993,514) - ------------------------------------------------------------------------------------------------ Increase 4,374,270 $ 35,622,703 6,164,487 $ 57,068,769 - ------------------------------------------------------------------------------------------------ CLASS B SHARES - ------------------------------------------------------------------------------------------------ Shares sold 1,930,507 $ 15,300,822 2,524,101 $ 22,912,055 Reinvestment of distributions 111,869 903,903 339,730 3,169,677 Shares reacquired (678,630) (5,344,374) (1,024,461) (8,863,956) - ------------------------------------------------------------------------------------------------ Increase 1,363,746 $ 10,860,351 1,839,370 $ 17,217,776 - ------------------------------------------------------------------------------------------------ CLASS C SHARES - ------------------------------------------------------------------------------------------------ Shares sold 2,835,475 $ 22,489,139 3,775,176 $ 34,514,834 Reinvestment of distributions 246,867 1,991,155 955,484 8,876,448 Shares reacquired (1,704,453) (13,393,322) (2,420,871) (21,316,561) - ------------------------------------------------------------------------------------------------ Increase 1,377,889 $ 11,086,972 2,309,789 $ 22,074,721 - ------------------------------------------------------------------------------------------------ CLASS P SHARES - ------------------------------------------------------------------------------------------------ Shares sold 39,383 $ 314,170 50,921 $ 449,195 Reinvestment of distributions 1,016 8,336 10 90 Shares reacquired (6,210) (48,533) (6,077) (52,369) - ------------------------------------------------------------------------------------------------ Increase 34,189 $ 273,973 44,854 $ 396,916 - ------------------------------------------------------------------------------------------------ SIX MONTHS ENDED CLASS Y SHARES APRIL 30, 2003 (UNAUDITED)* - ------------------------------------------------------------------------------------------------ Shares sold 1,277.14 $ 10,000 - ------------------------------------------------------------------------------------------------ Increase 1,277.14 $ 10,000 - ------------------------------------------------------------------------------------------------
* For the period March 31, 2003 to April 30, 2003.
SIX MONTHS ENDED YEAR ENDED ALPHA FUND APRIL 30, 2003 (UNAUDITED) OCTOBER 31, 2002 - ------------------------------------------------------------------------------------------------ CLASS A SHARES SHARES AMOUNT SHARES AMOUNT - ------------------------------------------------------------------------------------------------ Shares sold 755,506 $ 7,917,173 1,259,523 $ 16,229,854 Reinvestment of distributions 40,092 423,777 217,763 2,887,537 Shares reacquired (1,281,584) (13,330,912) (1,937,993) (24,663,884) - ------------------------------------------------------------------------------------------------ Decrease (485,986) $ (4,989,962) (460,707) $ (5,546,493) - ------------------------------------------------------------------------------------------------ CLASS B SHARES - ------------------------------------------------------------------------------------------------ Shares sold 141,572 $ 1,472,727 338,313 $ 4,292,317 Reinvestment of distributions 21,207 219,918 116,826 1,529,252 Shares reacquired (389,000) (4,010,009) (967,442) (11,847,822) - ------------------------------------------------------------------------------------------------ Decrease (226,221) $ (2,317,364) (512,303) $ (6,026,253) - ------------------------------------------------------------------------------------------------ CLASS C SHARES - ------------------------------------------------------------------------------------------------ Shares sold 102,884 $ 1,070,149 313,141 $ 3,995,730 Reinvestment of distributions 14,414 149,473 80,483 1,051,913 Shares reacquired (293,041) (3,015,748) (791,152) (9,859,822) - ------------------------------------------------------------------------------------------------ Decrease (175,743) $ (1,796,126) (397,528) $ (4,812,179) - ------------------------------------------------------------------------------------------------
36 NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONCLUDED)
SIX MONTHS ENDED YEAR ENDED INTERNATIONAL FUND APRIL 30, 2003 (UNAUDITED) OCTOBER 31, 2002 - ------------------------------------------------------------------------------------------------ CLASS A SHARES SHARES AMOUNT SHARES AMOUNT - ------------------------------------------------------------------------------------------------ Shares sold 3,422,393 $ 20,908,846 13,459,848 $ 100,658,102 Reinvestment of distributions 58,932 367,146 - - Shares reacquired (3,625,580) (22,206,381) (15,511,892) (117,292,594) - ------------------------------------------------------------------------------------------------ Decrease (144,255) $ (930,389) (2,052,044) $ (16,634,492) - ------------------------------------------------------------------------------------------------ CLASS B SHARES - ------------------------------------------------------------------------------------------------ Shares sold 298,249 $ 1,785,373 564,618 $ 4,098,278 Reinvestment of distributions 1,854 11,365 - - Shares reacquired (298,087) (1,782,406) (734,680) (5,319,485) - ------------------------------------------------------------------------------------------------ Increase (decrease) 2,016 $ 14,332 (170,062) $ (1,221,207) - ------------------------------------------------------------------------------------------------ CLASS C SHARES - ------------------------------------------------------------------------------------------------ Shares sold 619,231 $ 3,743,614 1,392,701 $ 9,955,122 Reinvestment of distributions 7,440 45,314 - - Shares reacquired (662,974) (4,030,230) (1,611,969) (11,645,242) - ------------------------------------------------------------------------------------------------ Decrease (36,303) $ (241,302) (219,268) $ (1,690,120) - ------------------------------------------------------------------------------------------------ CLASS P SHARES - ------------------------------------------------------------------------------------------------ Reinvestment of distributions .625 $ 4 - $ - - ------------------------------------------------------------------------------------------------ Increase .625 $ 4 - $ - - ------------------------------------------------------------------------------------------------ CLASS Y SHARES - ------------------------------------------------------------------------------------------------ Shares sold 197,925 $ 1,222,677 - $ - Reinvestment of distributions 90,651 572,916 - - Shares reacquired (1,101,009) (6,830,335) (469,370) (3,419,410) - ------------------------------------------------------------------------------------------------ Decrease (812,433) $ (5,034,742) (469,370) $ (3,419,410) - ------------------------------------------------------------------------------------------------
37 HOUSEHOLDING The Trust has adopted a policy that allows them to send only one copy of the Funds' prospectus, proxy material, annual report and semi-annual report to certain shareholders residing at the same "household." This reduces Trust expenses, which benefits you and other shareholders. If you need additional copies or do not want your mailings to be "householded," please call Lord Abbett at 800-821-5129 or send a written request with your name, the name of your fund or funds and your account number or numbers to Lord Abbett Family of Funds, P.O. Box 219100, Kansas City MO 64121. 38 [LORD ABBETT(R) LOGO] This report when not used for the general information of shareholders of the Fund, is to be distributed only if preceded or accompanied by a current Fund Prospectus. Lord Abbett Mutual Fund shares are distributed by: LORD ABBETT DISTRIBUTOR LLC 90 Hudson Street - Jersey City, New Jersey 07302-3973 Lord Abbett Securities Trust Lord Abbett All Value Fund International Series Alpha Series LST-3-403 (6/03) [LORD ABBETT LOGO] 2003 SEMI- ANNUAL REPORT LORD ABBETT MICRO-CAP GROWTH FUND MICRO-CAP VALUE FUND FOR THE SIX MONTHS ENDED APRIL 30, 2003 (Unaudited) - -------------------------------------------------------------------------------- LORD ABBETT MICRO-CAP GROWTH AND MICRO-CAP VALUE SEMI-ANNUAL REPORT FOR THE SIX MONTHS ENDED APRIL 30, 2003 DEAR SHAREHOLDERS: We are pleased to provide you with this six-month overview of the Lord Abbett Micro-Cap Growth Fund and Lord Abbett Micro-Cap Value Fund's strategies and performance for the period ended April 30, 2003. On this and the following page, we discuss the factors that influenced performance. Thank you for investing in Lord Abbett Mutual Funds. We value the trust that you place in us and look forward to serving your investment needs in the years to come. BEST REGARDS, /s/ Robert S. Dow ROBERT S. DOW CHAIRMAN - -------------------------------------------------------------------------------- MARKET REVIEW(1) War and general geopolitical concerns had an extremely negative effect on the psyche of businesses and consumers during the first part of the period. Corporations entered the first quarter of 2003 cautiously and remained wary, selling existing inventories and implementing layoffs, as the economy continued to decelerate. The unemployment rate in the U.S. rose in the last six months, reaching 6.0% by April. Consumers responded to heightened war threats and treacherous weather conditions on the east coast by reducing real spending. But, as the coalition's war effort made clear progress in the early spring, the fog of global uncertainty lifted, and broad equity indices experienced meaningful advances. With a spike in consumer confidence and improving corporate profit outlooks, we continue to expect adequate consumer spending and a renewed capital spending cycle. LORD ABBETT MICRO-CAP GROWTH FUND For the six months ended April 30, 2003, Lord Abbett Micro-Cap Growth Fund returned 6.9%(2), underperforming the Russell 2000(R) Growth Index(3), which returned 7.7% over the same period. Standardized Average Annual Total Returns(4) for 1 year and the life of the Fund(5) are -37.14% and -20.72%, respectively as of March 31, 2003. Stock selection within the financial sector boosted returns for the period, as the Fund's holdings benefited from strong net income and revenue growth. In addition, positions in the information technology sector added to Fund returns, from strong sales growth in makers of supercomputers. The largest detractor from performance was stock selection in the healthcare sector where companies in the 1 (Unaudited) - -------------------------------------------------------------------------------- laboratory testing services sector performed poorly as the company wrestled with a slower growing sales and lower profits. Stock selection in the telecom industry also hurt the Fund's performance for the quarter. LORD ABBETT MICRO-CAP VALUE FUND For the six months ended April 30, 2003, Lord Abbett Micro-Cap Value Fund returned 4.3%(2), underperforming the Russell 2000(R) Value Index(6), which returned 7.4% over the same period. Standardized Average Annual Total Returns(4) for 1 year and the life of the Fund(5) are -26.88% and 10.45%, respectively as of March 31, 2003. Stock selection in the information technology sector was the largest positive contributor to the Fund for the period. Specifically, companies that provide information management technology management in the dental industry performed well. In addition, in the materials sector, stock selection added to performance. Detracting from the Fund's performance for the period was stock selection in the consumer discretionary and energy sector. (1) The views of the Trust's management and the portfolio holdings described in this report are as of April 30, 2003; these views and portfolio holdings may have changed subsequent to this date. Information provided in this report should not be considered a recommendation to purchase or sell securities. (2) Reflects performance at the Net Asset Value (NAV) of Class A shares, with all distributions reinvested, for the six months ended April 30, 2003. (3) The Russell 2000(R) Growth Index measures the performance of those Russell 2000 companies with higher price-to-book ratios and higher forecasted growth values. Indices are unmanaged, do not reflect the deduction of fees or expenses and are not available for direct investment. (4) Reflects performance at the maximum 5.75% sales charge applicable to Class A share investments and includes the reinvestment of all distributions. (5) Inception date for Lord Abbett Micro-Cap Growth Fund and Lord Abbett Micro-Cap Value Fund is May 1, 2000. (6) Russell 2000(R) Value Index measures the performance of those Russell 2000 companies with lower price-to-book ratios and lower forecasted growth values. Indices are unmanaged, do not reflect the deduction of fees or expenses and are not available for direct investment. IMPORTANT PERFORMANCE AND OTHER INFORMATION A NOTE ABOUT RISK: See Notes to Financial Statements for a discussion of investment risks. For a more detailed discussion of the risks associated with the Funds please see the Funds' Prospectus. PERFORMANCE: PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. BECAUSE OF ONGOING MARKET VOLATILITY, FUND PERFORMANCE MAY BE SUBJECT TO SUBSTANTIAL FLUCTUATION. The investment return and principal value of an investment in the Fund will fluctuate so that shares, on any given day or when redeemed, may be worth more or less than their original cost. Except where noted, comparative fund performance does not account for the deduction of sales charges and would be different if sales charges were included. Each Fund offers additional classes of shares with distinct pricing options. For a full description of the differences in pricing alternatives, please see the Prospectus. The Funds are actively managed and, as a result, asset allocation may change. MUTUAL FUNDS ARE NOT INSURED BY THE FDIC, ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF, OR GUARANTEED BY BANKS, AND ARE SUBJECT TO INVESTMENT RISKS INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED. FOR MORE COMPETE INFORMATION ABOUT THIS OR ANY LORD ABBETT MUTUAL FUND, INCLUDING RISKS, CHARGES AND ONGOING EXPENSES, PLEASE CALL YOUR INVESTMENT PROFESSIONAL OR LORD ABBETT DISTRIBUTOR LLC AT 888-522-2388 FOR A PROSPECTUS. AN INVESTOR SHOULD READ THE PROSPECTUS CAREFULLY BEFORE INVESTING. 2 SCHEDULE OF INVESTMENTS (UNAUDITED) MICRO-CAP GROWTH FUND APRIL 30, 2003
VALUE INVESTMENTS SHARES (000) - -------------------------------------------------------------------------------- COMMON STOCKS 90.68% BANKS 1.44% Online Resources Corp.* 13,500 $ 44 ---------- BIOTECHNOLOGY RESEARCH & PRODUCTION 2.12% Regeneration Technologies, Inc.* 6,500 65 ---------- CASINOS & GAMBLING 4.96% Multimedia Games, Inc.* 3,300 83 Shuffle Master, Inc.* 3,000 69 ---------- TOTAL 152 ---------- COMMERCIAL INFORMATION SERVICES 2.51% Looksmart, Ltd.* 22,900 77 ---------- COMMUNICATIONS TECHNOLOGY 3.00% Integral Technologies, Inc.* 104,000 92 ---------- COMPUTER SERVICES SOFTWARE & SYSTEMS 3.75% Digitas, Inc.* 11,200 45 eCollege.com, Inc.* 12,000 70 ---------- TOTAL 115 ---------- COMPUTER TECHNOLOGY 1.50% Cray, Inc.* 6,100 46 ---------- CONSUMER ELECTRONICS 3.10% Concur Technologies, Inc.* 8,600 52 Euniverse, Inc.* 11,300 43 ---------- TOTAL 95 ---------- DIVERSIFIED MANUFACTURING 1.70% Armor Holdings, Inc.* 4,300 52 ---------- DRUGS & PHARMACEUTICALS 8.12% Bradley Pharm, Inc.* 4,200 $ 60 D&K Healthcare Resources 8,200 108 SFBC Int'l., Inc.* 5,200 81 ---------- TOTAL 249 ---------- ELECTRONICS 3.23% CompuDyne Corp.* 6,200 43 Drexler Tech Corp.* 3,500 56 ---------- TOTAL 99 ---------- ELECTRONICS: MEDICAL SYSTEMS 5.74% eResearch Technology Inc* 2,700 81 PracticeWorks, Inc.* 8,100 95 ---------- TOTAL 176 ---------- ELECTRONICS: SEMI-CONDUCTORS/COMPONENTS 2.51% Microsemi Corp.* 6,600 77 ---------- ELECTRONICS: TECHNOLOGY 1.30% Identix, Inc* 8,218 40 ---------- ENGINEERING & CONTRACTING SERVICES 1.73% The Keith Cos., Inc.* 4,800 53 ---------- HEALTH & PERSONAL CARE 3.10% Bio-Reference Labs, Inc.* 10,800 51 Matria Healthcare, Inc.* 3,525 44 ---------- TOTAL 95 ---------- HEALTHCARE MANAGEMENT SERVICES 3.07% MIM Corp.* 7,400 54 Vitalworks, Inc.* 11,300 40 ---------- TOTAL 94 ----------
SEE NOTES TO FINANCIAL STATEMENTS. 3 SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED) MICRO-CAP GROWTH FUND APRIL 30, 2003
VALUE INVESTMENTS SHARES (000) - -------------------------------------------------------------------------------- HOUSEHOLD FURNISHINGS 3.00% Select Comfort Corp.* 6,800 $ 92 ---------- LEISURE TIME 2.77% Action Performance Co., Inc. 4,600 85 ---------- MEDICAL & DENTAL INSTRUMENTS & SUPPLIES 8.45% BioSource Int'l., Inc.* 15,500 89 Conceptus, Inc.* 4,700 49 Neogen Corp.* 3,000 49 Novoste Corp.* 9,400 72 ---------- TOTAL 259 ---------- MEDICAL SERVICES 1.21% Pediatric Services of America* 7,700 37 ---------- MISCELLANEOUS BUSINESS & CONSUMER DISCRETIONARY 1.76% Danka Business Systems plc ADR*(a) 13,800 54 ---------- OFFICE FURNITURE & BUSINESS EQUIPMENT 1.24% Insignia Systems, Inc.* 6,300 38 ---------- RESTAURANTS 0.46% Champps Entertainment, Inc.* 2,700 14 ---------- RETAIL 9.62% A.C. Moore Arts & Crafts, Inc.* 7,800 134 Sonic Automotive, Inc.* 4,000 69 The Gymboree Corp.* 5,500 92 ---------- TOTAL 295 ---------- SERVICES: COMMERCIAL 7.76% Exponent, Inc.* 4,200 $ 58 FirstService Corp.*(a) 2,200 27 Opinion Research Corp.* 8,100 41 Raindance Comm, Inc.* 17,100 51 Startek, Inc.* 2,200 61 ---------- TOTAL 238 ---------- TELECOMMUNICATIONS EQUIPMENT 1.53% CellStar Corp.* 8,200 47 ---------- TOTAL COMMON STOCKS (Cost $2,906,338) 2,780 ========== PRINCIPAL AMOUNT (000) --------- SHORT-TERM INVESTMENT 8.41% REPURCHASE AGREEMENT 8.41% Repurchase Agreement dated 4/30/2003 1.27% due 5/1/2003 from State Street Bank & Trust Co. collateralized by $265,000 of Federal Home Loan Mortgage Corp. at 1.37% due 5/3/2004; value $265,151; proceeds: $257,722 (Cost $257,713) $ 258 258 ========== TOTAL INVESTMENTS 99.09% (Cost $3,164,051) $ 3,038 ==========
* Non-Income Producing Security. (a) Foreign security denominated in U.S. dollars. ADR-American Depository Receipt SEE NOTES TO FINANCIAL STATEMENTS. 4 SCHEDULE OF INVESTMENTS (UNAUDITED) MICRO-CAP VALUE FUND APRIL 30, 2003
VALUE INVESTMENTS SHARES (000) - -------------------------------------------------------------------------------- COMMON STOCKS 93.69% AIR TRANSPORTATION 2.17% Frontier Airlines, Inc.* 10,500 $ 64 Offshore Logistics, Inc.* 3,500 66 ---------- TOTAL 130 ---------- AUTO COMPONENTS 6.13% Wabash National Corp.* 39,200 368 ---------- AUTO PARTS: AFTER MARKET 2.50% Keystone Automotive Industries, Inc.* 8,200 150 ---------- BANKS 1.72% Hanmi Financial Corp. 6,158 103 ---------- CHEMICALS 1.30% Quaker Chemical Corp. 3,500 78 ---------- COMMUNICATIONS TECHNOLOGY 0.85% Bel Fuse, Inc. Class A* 3,000 51 ---------- COMPUTER SERVICES SOFTWARE & SYSTEMS 3.52% Datastream Systems, Inc.* 7,000 61 MICROS Systems, Inc.* 6,000 150 OpticNet, Inc.* 300 --(a) ---------- TOTAL 211 ---------- COMPUTER TECHNOLOGY 2.88% Concurrent Computer Corp* 27,000 55 Fargo Electronics* 12,000 118 ---------- TOTAL 173 ---------- CONSTRUCTION 1.71% Modtech Holdings, Inc.* 12,700 103 ---------- CONTAINERS & PACKAGING: METAL & GLASS 0.78% Mobile Mini, Inc.* 3,000 $ 47 ---------- CONTAINERS & PACKAGING: PAPER & PLASTIC 0.25% AEP Industries, Inc.* 2,100 15 ---------- DRUGS & PHARMACEUTICALS 2.08% SFBC Int'l., Inc.* 8,000 125 ---------- ELECTRICAL EQUIPMENT & COMPONENTS 1.17% Powell Industries, Inc.* 5,000 70 ---------- ELECTRONICS 1.22% BEI Technologies, Inc. 8,500 73 ---------- ELECTRONICS: MEDICAL SYSTEMS 3.53% PracticeWorks, Inc.* 18,000 212 ---------- ENGINEERING & CONTRACTING SERVICES 1.23% Michael Baker Corp.* 8,400 74 ---------- FERTILIZERS 0.78% Lesco, Inc.* 4,500 47 ---------- FINANCIAL MISCELLANEOUS 1.23% Financial Federal Corp.* 3,300 74 ---------- FUNERAL PARLORS & CEMETERY 2.42% Carriage Services, Inc.* 19,000 70 Rock of Ages Corp. 12,500 75 ---------- TOTAL 145 ---------- HEALTHCARE MANAGEMENT SERVICES 3.97% American Dental Partners, Inc.* 12,000 105 Sierra Health Services, Inc.* 8,000 133 ---------- TOTAL 238 ----------
SEE NOTES TO FINANCIAL STATEMENTS. 5 SCHEDULE OF INVESTMENTS (UNAUDITED)(CONTINUED) MICRO-CAP VALUE FUND APRIL 30, 2003
VALUE INVESTMENTS SHARES (000) - -------------------------------------------------------------------------------- HOTEL/MOTEL 2.13% The Marcus Corp. 9,000 $ 128 ---------- HOUSEHOLD EQUIPMENT & PRODUCTS 1.47% Craftmade Int'l., Inc. 6,000 88 ---------- HOUSEHOLD FURNISHINGS 0.93% Haverty Furniture Cos., Inc. 4,000 56 ---------- IDENTIFICATION CONTROL & FILTER DEVICES 1.78% ESCO Technologies, Inc.* 1,800 71 Robbins & Myers, Inc. 2,100 36 ---------- TOTAL 107 ---------- INSURANCE: PROPERTY-CASUALTY 1.78% The Navigators Group, Inc.* 4,000 107 ---------- MACHINERY: INDUSTRIAL/SPECIALTY 2.92% Summa Industries, Inc.* 11,000 84 Tennant Co. 600 20 Twin Disc, Inc. 6,000 71 ---------- TOTAL 175 ---------- MACHINERY: OIL WELL EQUIPMENT & SERVICES 1.02% Lufkin Industries, Inc. 1,100 25 Universal Compression Hldgs., Inc.* 2,000 36 ---------- TOTAL 61 ---------- MACHINERY: SPECIALTY 1.23% Quipp, Inc.* 7,500 74 ---------- METAL FRABRICATING 1.25% NN, Inc. 7,000 75 ---------- MISCELLANEOUS MATERIALS & PROCESSING 0.83% Rogers Corp.* 1,500 $ 50 ---------- OFFSHORE DRILLING 1.92% TMBR/Sharp Drilling, Inc.* 6,000 115 ---------- OIL: CRUDE PRODUCERS 0.52% Stone Energy Corp.* 874 31 ---------- OIL: INTEGRATED DOMESTIC 1.35% Pioneer Drilling Co.* 21,000 81 ---------- POLLUTION CONTROL AND ENVIRONMENTAL SERVICES 3.25% Headwaters, Inc.* 6,000 98 Team, Inc.* 14,000 97 ---------- TOTAL 195 ---------- RAILROADS 1.27% Genesee & Wyoming, Inc. Class A* 4,425 76 ---------- REAL ESTATE INVESTMENT TRUSTS 3.22% Agree Realty Corp. 3,900 81 Lasalle Hotel Properties 8,000 112 ---------- TOTAL 193 ---------- RENTAL & LEASING SERVICES: COMMERCIAL 1.13% Interpool, Inc. 4,500 68 ---------- RETAIL 7.58% Hibbett Sporting Goods, Inc.* 3,000 82 Mothers Work, Inc.* 4,400 110 Sharper Image Corp.* 3,500 69 The Gymboree Corp.* 5,800 97 Ultimate Electronics Inc* 7,500 63
SEE NOTES TO FINANCIAL STATEMENTS. 6 SCHEDULE OF INVESTMENTS (UNAUDITED)(CONTINUED) MICRO-CAP VALUE FUND APRIL 30, 2003
VALUE INVESTMENTS SHARES (000) - -------------------------------------------------------------------------------- United Retail Group Inc.* 23,000 $ 34 ---------- TOTAL 455 ---------- SERVICES: COMMERCIAL 3.77% Ambassadors Int'l., Inc.* 3,000 38 Exponent, Inc.* 5,500 76 Monro Muffler Brake, Inc.* 5,000 112 ---------- TOTAL 226 ---------- SHOES 0.78% Vans, Inc.* 10,000 47 ---------- TELECOMMUNICATIONS EQUIPMENT 2.50% Arris Group Inc* 18,500 72 C-Cor.Net Corp.* 22,900 78 ---------- TOTAL 150 ---------- TEXTILE PRODUCTS 0.42% Quaker Fabric Corp. 4,000 25 ---------- TEXTILES APPAREL MANUFACTURERS 1.62% Phillips-Van Heusen Corp. 7,300 97 ---------- TOBACCO 1.57% Dimon, Inc. 14,300 94 ---------- TRUCKERS 3.13% Covenant Transport, Inc.* 6,600 120 Heartland Express, Inc.* 2,956 68 ---------- TOTAL 188 ---------- UTILITIES: GAS DISTRIBUTORS 1.65% Chesapeake Utilities Corp. 5,000 99 ---------- UTILITIES: MISCELLANEOUS 1.23% Waste Industries USA, Inc.* 11,000 74 ---------- TOTAL COMMON STOCKS (Cost $5,021,538) 5,622 ========== PRINCIPAL AMOUNT VALUE INVESTMENTS (000) (000) - -------------------------------------------------------------------------------- SHORT-TERM INVESTMENT 7.04% REPURCHASE AGREEMENT 7.04% Repurchase Agreement dated 4/30/2003 1.27% due 5/1/2003 from State Street Bank & Trust Co. collateralized by $425,000 of Federal Home Loan Mortgage Corp. at 3.50% due 2/20/2004; value $435,571; proceeds: $422,381. (Cost $422,367) $ 422 $ 422 ========== TOTAL INVESTMENTS 100.73% (Cost $5,443,905) $ 6,044 ==========
* Non-Income Producing Security. (a) Value is less than $1,000. SEE NOTES TO FINANCIAL STATEMENTS. 7 STATEMENTS OF ASSETS AND LIABILITIES (UNAUDITED) April 30, 2003
MICRO-CAP MICRO-CAP GROWTH FUND VALUE FUND ASSETS: Investment in securities, at cost $ 3,164,051 $ 5,443,905 - -------------------------------------------------------------------------------------------------- Investment in securities, at value $ 3,037,955 $ 6,043,963 Receivables: Interest and dividends 9 1,920 Investment securities sold 363,681 425,226 From Lord, Abbett & Co. LLC 9,544 - Prepaid expenses and other assets 15 63 - -------------------------------------------------------------------------------------------------- TOTAL ASSETS 3,411,204 6,471,172 - -------------------------------------------------------------------------------------------------- LIABILITIES: Payables: Investment securities purchased 323,645 422,366 Capital shares reacquired - 3,710 Management fees 3,619 7,108 12b-1 distribution fees 3,410 6,457 Administration fees 317 6,367 Trustees' fees 90 92 To Lord, Abbett & Co. LLC - 6,007 Accrued expenses and other liabilities 13,748 18,901 - -------------------------------------------------------------------------------------------------- TOTAL LIABILITIES 344,829 471,008 ================================================================================================== NET ASSETS $ 3,066,375 $ 6,000,164 ================================================================================================== COMPOSITION OF NET ASSETS: Paid-in capital $ 4,130,153 $ 5,341,459 Distributions in excess of net investment income (14,887) (7,684) Accumulated net realized gain (loss) on investments (922,795) 66,331 Net unrealized appreciation (depreciation) on investments (126,096) 600,058 - -------------------------------------------------------------------------------------------------- NET ASSETS $ 3,066,375 $ 6,000,164 ================================================================================================== NET ASSETS BY CLASS: Class A Shares $ 3,060,396 $ 5,984,593 Class Y Shares $ 5,979 $ 15,571 OUTSTANDING SHARES BY CLASS: Class A Shares 380,897 385,033 Class Y Shares 739 999 NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE (NET ASSETS DIVIDED BY OUTSTANDING SHARES): Class A Shares-Net asset value $ 8.03 $ 15.54 Class A Shares-Maximum offering price (Net asset value plus sales charge of 5.75%) $ 8.52 $ 16.49 Class Y Shares-Net asset value $ 8.09 $ 15.59 ==================================================================================================
SEE NOTES TO FINANCIAL STATEMENTS. 8 STATEMENTS OF OPERATIONS (UNAUDITED) For the Six Months Ended April 30, 2003
MICRO-CAP MICRO-CAP GROWTH FUND VALUE FUND INVESTMENT INCOME: Dividends $ 1,062 $ 23,353 Interest 1,275 1,972 - -------------------------------------------------------------------------------------------------- TOTAL INVESTMENT INCOME 2,337 25,325 - -------------------------------------------------------------------------------------------------- EXPENSES: Management fees 21,453 42,908 12b-1 distribution plan-Class A 4,995 9,987 Shareholder servicing 1,819 2,596 Market Data 19 36 Professional 4,698 2,950 Reports to shareholders 1,979 4,182 Fund accounting 7,644 2,656 Fund administration 381 759 Custody 1,617 2,762 Trustees' fees 34 65 Registration 2,202 1,021 Other 2,460 - - -------------------------------------------------------------------------------------------------- Gross expenses 49,301 69,922 Expense reductions (38) (50) Management fee waived (11,625) (23,270) Expenses assumed by Lord, Abbett & Co. LLC (20,414) (12,181) - -------------------------------------------------------------------------------------------------- NET EXPENSES 17,224 34,421 - -------------------------------------------------------------------------------------------------- NET INVESTMENT INCOME (14,887) (9,096) - -------------------------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS): Net realized gain (loss) on investments (325,954) 66,360 Net change in unrealized appreciation/depreciation on investments 528,968 176,851 ================================================================================================== NET REALIZED AND UNREALIZED GAIN 203,014 243,211 ================================================================================================== NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 188,127 $ 234,115 ==================================================================================================
SEE NOTES TO FINANCIAL STATEMENTS. 9 STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) Six Months Ended April 30, 2003
MICRO-CAP MICRO-CAP INCREASE IN NET ASSETS GROWTH FUND VALUE FUND OPERATIONS: Net investment loss $ (14,887) $ (9,096) Net realized gain (loss) on investments (325,954) 66,360 Net change in unrealized appreciation/depreciation on investments 528,968 176,851 - -------------------------------------------------------------------------------------------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 188,127 234,115 ================================================================================================== DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income Class A - (18,897) Class Y - (107) Net realized gain Class A - (222,077) Class Y - (596) - -------------------------------------------------------------------------------------------------- TOTAL DISTRIBUTIONS TO SHAREHOLDERS - (241,677) ================================================================================================== CAPITAL SHARE TRANSACTIONS: Net proceeds from sales of shares 280,193 400,308 Reinvestment of distributions - 239,810 Cost of shares reacquired (105,896) (89,139) - -------------------------------------------------------------------------------------------------- NET INCREASE IN NET ASSETS FROM CAPITAL SHARE TRANSACTIONS 174,297 550,979 - -------------------------------------------------------------------------------------------------- NET INCREASE IN NET ASSETS 362,424 543,417 ================================================================================================== NET ASSETS: Beginning of period 2,703,951 5,456,747 - -------------------------------------------------------------------------------------------------- END OF PERIOD $ 3,066,375 $ 6,000,164 - -------------------------------------------------------------------------------------------------- DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME $ (14,887) $ (7,684) ==================================================================================================
SEE NOTES TO FINANCIAL STATEMENTS. 10 STATEMENTS OF CHANGES IN NET ASSETS Year Ended October 31, 2002
MICRO-CAP MICRO-CAP INCREASE IN NET ASSETS GROWTH FUND VALUE FUND OPERATIONS: Net investment income (loss) $ (7,717) $ 19,032 Net realized gain (loss) on investments (469,113) 222,672 Net change in unrealized appreciation/depreciation on investments (320,647) (60,598) - -------------------------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (797,477) 181,106 ================================================================================================== DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income Class A (1,960) (14,974) Class Y (25) (71) Net realized gain Class A - (223,636) Class Y - (650) - -------------------------------------------------------------------------------------------------- TOTAL DISTRIBUTIONS TO SHAREHOLDERS (1,985) (239,331) ================================================================================================== CAPITAL SHARE TRANSACTIONS: Net proceeds from sales of shares 1,617,928 1,842,286 Reinvestment of distributions 1,547 237,716 Cost of shares reacquired (388,684) (1,468,390) - -------------------------------------------------------------------------------------------------- NET INCREASE IN NET ASSETS FROM CAPITAL SHARE TRANSACTIONS 1,230,791 611,612 ================================================================================================== NET INCREASE IN NET ASSETS 431,329 553,387 ================================================================================================== NET ASSETS: Beginning of year 2,272,622 4,903,360 - -------------------------------------------------------------------------------------------------- END OF YEAR $ 2,703,951 $ 5,456,747 ================================================================================================== UNDISTRIBUTED NET INVESTMENT INCOME $ - $ 20,416 ==================================================================================================
SEE NOTES TO FINANCIAL STATEMENTS. 11 FINANCIAL HIGHLIGHTS MICRO-CAP GROWTH FUND
SIX MONTHS ENDED YEAR ENDED 10/31 5/1/2000(c) 4/30/2003 -------------------------- TO (UNAUDITED) 2002 2001 10/31/2000 PER SHARE OPERATING PERFORMANCE (CLASS A SHARES) NET ASSET VALUE, BEGINNING OF PERIOD $ 7.51 $ 9.49 $ 13.18 $ 16.76 =========== ========= ========= =========== Investment operations Net investment income (loss) (.04)(a) (.02)(a) -(a)(f) (.01)(a) Net realized and unrealized gain (loss) .56 (1.95) (1.34) (3.57) ----------- --------- --------- ----------- Total from investment operations .52 (1.97) (1.34) (3.58) ----------- --------- --------- ----------- Distributions to shareholders from: Net investment income - (.01) (.01) - Net realized gain - - (2.34) - ----------- --------- --------- ----------- Total distributions - (.01) (2.35) - ----------- --------- --------- ----------- NET ASSET VALUE, END OF PERIOD $ 8.03 $ 7.51 $ 9.49 $ 13.18 =========== ========= ========= =========== Total Return(b) 6.92%(e) (20.81)% (11.30)% (21.36)%(e) RATIOS TO AVERAGE NET ASSETS Expenses, including waiver and expense reductions .60%(e) .38% .38% .18%(e) Expenses, excluding waiver and expense reductions 1.71%(e) 2.99% 4.02% 1.36%(e) Net investment income (loss) (.52)%(e) (.24)% .04% (.04)%(e) SIX MONTHS ENDED YEAR ENDED 10/31 5/1/2000(c) 4/30/2003 -------------------------- TO SUPPLEMENTAL DATA: (UNAUDITED) 2002 2001 10/31/2000 - ----------------------------------------------------------------------------------------------------------------------------- Net assets, end of period (000) $ 3,060 $ 2,698 $ 2,266 $ 2,160 Portfolio turnover rate 47.31% 34.08% 80.17% 103.33% =============================================================================================================================
SEE NOTES TO FINANCIAL STATEMENTS. 12 FINANCIAL HIGHLIGHTS (CONTINUED) MICRO-CAP GROWTH FUND
SIX MONTHS ENDED YEAR ENDED 10/31 12/15/1998(d) 4/30/2003 ---------------------------------------- TO (UNAUDITED) 2002 2001 2000 10/31/1999 PER SHARE OPERATING PERFORMANCE (CLASS Y SHARES) NET ASSET VALUE, BEGINNING OF PERIOD $ 7.55 $ 9.52 $ 13.21 $ 12.57 $ 10.00 =========== ======== ======== ======== ============= Investment operations Net investment income (loss) (.03)(a) .01(a) .04(a) .04(a) .02(a) Net realized and unrealized gain (loss) .57 (1.95) (1.35) 1.73 2.55 ----------- -------- -------- -------- ------------- Total from investment operations .54 (1.94) (1.31) 1.77 2.57 ----------- -------- -------- -------- ------------- Distributions to shareholders from: Net investment income - (.03) (.04) (.02) - Net realized gain - - (2.34) (1.11) - ----------- -------- -------- -------- ------------- Total distributions - (.03) (2.38) (1.13) - ----------- -------- -------- -------- ------------- NET ASSET VALUE, END OF PERIOD $ 8.09 $ 7.55 $ 9.52 $ 13.21 $ 12.57 =========== ======== ======== ======== ============= Total Return(b) 7.15%(e) (20.42)% (11.00)% 14.48% 25.70%(e) RATIOS TO AVERAGE NET ASSETS Expenses, including waiver and expense reductions .43%(e) .00% .00% .00% .00%(e) Expenses, excluding waiver and expense reductions 1.54%(e) 2.61% 3.64% 2.33% 1.71%(e) Net investment income (loss) (.35)%(e) .14% .42% .22% .19%(e) SIX MONTHS ENDED YEAR ENDED 10/31 12/15/1998(d) 4/30/2003 ---------------------------------------- TO SUPPLEMENTAL DATA: (UNAUDITED) 2002 2001 2000 10/31/1999 - ------------------------------------------------------------------------------------------------------------------------------- Net assets, end of period (000) $ 6 $ 6 $ 7 $ 8 $ 1,404 Portfolio turnover rate 47.31% 34.08% 80.17% 103.33% 41.18% ===============================================================================================================================
(a) Calculated using average shares outstanding during the period. (b) Total return does not consider the effects of sales loads and assumes the reinvestment of all distributions. (c) Commencement of offering of class shares. (d) Commencement of investment operations. (e) Not annualized. (f) Amount is less than $.01. SEE NOTES TO FINANCIAL STATEMENTS. 13 FINANCIAL HIGHLIGHTS MICRO-CAP VALUE FUND
SIX MONTHS ENDED YEAR ENDED 10/31 5/1/2000(c) 4/30/2003 -------------------------- TO (UNAUDITED) 2002 2001 10/31/2000 PER SHARE OPERATING PERFORMANCE (CLASS A SHARES) NET ASSET VALUE, BEGINNING OF PERIOD $ 15.56 $ 15.68 $ 15.90 $ 13.13 =========== ========= ========= =========== Investment operations Net investment income (loss) (.02)(a) .05(a) .10(a) .07(a) Net realized and unrealized gain .68 .60 2.20 2.70 ----------- --------- --------- ----------- Total from investment operations .66 .65 2.30 2.77 ----------- --------- --------- ----------- Distributions to shareholders from: Net investment income (.05) (.05) (.14) - Net realized gain (.63) (.72) (2.38) - ----------- --------- --------- ----------- Total distributions (.68) (.77) (2.52) - ----------- --------- --------- ----------- NET ASSET VALUE, END OF PERIOD $ 15.54 $ 15.56 $ 15.68 $ 15.90 =========== ========= ========= =========== Total Return(b) 4.28%(e) 4.12% 17.16% 21.10%(e) RATIOS TO AVERAGE NET ASSETS Expenses, including waiver and expense reductions .61%(e) .38% .38% .17%(e) Expenses, excluding waiver and expense reductions 1.22%(e) 2.76% 3.08% 1.50%(e) Net investment income (loss) (.17)%(e) .31% .64% .49%(e) SIX MONTHS ENDED YEAR ENDED 10/31 5/1/2000(c) 4/30/2003 -------------------------- TO SUPPLEMENTAL DATA: (UNAUDITED) 2002 2001 10/31/2000 - ----------------------------------------------------------------------------------------------------------------------------- Net assets, end of period (000) $ 5,985 $ 5,442 $ 4,889 $ 2,032 Portfolio turnover rate 21.48% 36.02% 52.63% 82.02% =============================================================================================================================
SEE NOTES TO FINANCIAL STATEMENTS. 14 FINANCIAL HIGHLIGHTS (CONTINUED) MICRO-CAP VALUE FUND
SIX MONTHS ENDED YEAR ENDED 10/31 12/15/1998(d) 4/30/2003 -------------------------------------- TO (UNAUDITED) 2002 2001 2000 10/31/1999 PER SHARE OPERATING PERFORMANCE (CLASS Y SHARES) NET ASSET VALUE, BEGINNING OF PERIOD $ 15.63 $ 15.72 $ 15.92 $ 10.75 $ 10.00 =========== ========= ======== ======== ============= Investment operations Net investment income -(a)(f) .12(a) .16(a) .14(a) .12(a) Net realized and unrealized gain .70 .59 2.19 5.19 .63 ----------- --------- -------- -------- ------------- Total from investment operations .70 .71 2.35 5.33 .75 ----------- --------- -------- -------- ------------- Distributions to shareholders from: Net investment income (.11) (.08) (.17) (.09) - Net realized gain (.63) (.72) (2.38) (.07) - ----------- --------- -------- -------- ------------- Total distributions (.74) (.80) (2.55) (.16) - ----------- --------- -------- -------- ------------- NET ASSET VALUE, END OF PERIOD $ 15.59 $ 15.63 $ 15.72 $ 15.92 $ 10.75 =========== ========= ======== ======== ============= Total Return(b) 4.53%(e) 4.51% 17.48% 50.12% 7.60%(e) RATIOS TO AVERAGE NET ASSETS Expenses, including waiver and expense reductions .44%(e) .00% .00% .00% .00%(e) Expenses, excluding waiver and expense reductions 1.05%(e) 2.38% 2.70% 2.50% 1.80%(e) Net investment income .00%(e)(g) .69% 1.02% 1.15% 1.08%(e) SIX MONTHS ENDED YEAR ENDED 10/31 12/15/1998(d) 4/30/2003 -------------------------------------- TO SUPPLEMENTAL DATA: (UNAUDITED) 2002 2001 2000 10/31/1999 - ------------------------------------------------------------------------------------------------------------------------------- Net assets, end of period (000) $ 15 $ 15 $ 14 $ 12 $ 1,152 Portfolio turnover rate 21.48% 36.02% 52.63% 82.02% 30.38% ===============================================================================================================================
(a) Calculated using average shares outstanding during the period. (b) Total return does not consider the effects of sales loads and assumes the reinvestment of all distributions. (c) Commencement of offering of class shares. (d) Commencement of investment operations. (e) Not annualized. (f) Amount is less than $.01. (g) Amount is less than .01%. SEE NOTES TO FINANCIAL STATEMENTS. 15 NOTES TO FINANCIAL STATEMENTS (UNAUDITED) 1. ORGANIZATION Lord Abbett Securities Trust (the "Trust") is registered under the Investment Company Act of 1940 (the "Act") as a diversified open-end management investment company organized as a Delaware business trust on February 26, 1993. The Trust currently consists of five funds. This report covers the following two Funds and their respective classes (separately, a "Fund" and collectively, the "Funds"): Lord Abbett Micro-Cap Growth Fund ("Micro-Cap Growth Fund"), Class A and Y shares and Lord Abbett Micro-Cap Value Fund ("Micro-Cap Value Fund"), Class A and Y shares. The investment objective of both Micro-Cap Growth Fund and Micro-Cap Value Fund is long-term capital appreciation. Each class of shares has different expenses and dividends. A front-end sales charge is normally added to the NAV for Class A shares. There is no front-end sales charge in the case of Class Y shares, although there may be a contingent deferred sales charge ("CDSC") for certain redemptions of Class A shares made with in 24 months following any purchases made without a sales charge. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. 2. SIGNIFICANT ACCOUNTING POLICIES (a) INVESTMENT VALUATION-Securities traded on national or foreign securities exchanges are valued at the last quoted sales price, or if no sales price is available, at the mean between the latest bid and asked prices on such exchanges. Securities traded only in the over-the-counter market are valued at the mean between the latest bid and asked prices, except that securities admitted to trading on the NASDAQ National Market System are valued at the last sales price if it is determined that such price more accurately reflects the value of such securities. Securities for which market quotations are not readily available are valued at fair value as determined by management and approved in good faith by the Board of Trustees. Short-term securities with 60 days or less remaining to maturity are valued using the amortized cost method, which approximates current market value. (b) SECURITY TRANSACTIONS-Security transactions are recorded as of the date that the securities are purchased or sold (trade date). Realized gains and losses on sales of portfolio securities are calculated using the identified-cost method. Realized and unrealized gains or losses are allocated to each class of shares based upon the relative proportion of net assets at the beginning of the day. (c) INVESTMENT INCOME-Dividend income is recorded on the ex-dividend date. Interest income is recorded on the accrual basis. Discounts are accreted and premiums are amortized using the effective interest method. Investment income is allocated to each class of shares based upon the relative proportion of net assets at the beginning of the day. 16 NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) (d) FEDERAL TAXES-It is the policy of each Fund to meet the requirements of Subchapter M of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its taxable net investment income and capital gains to its shareholders. Therefore, no federal income tax provision is required. (e) EXPENSES-Expenses incurred by the Trust that do not specifically relate to an individual fund are allocated to the funds within the Trust on a pro rata basis. Expenses excluding class specific expenses are allocated to each class of shares based upon the relative proportion of net assets at the beginning of the day. Class A shares bear all expenses and fees relating to its 12b-1 Distribution Plan. (f) REPURCHASE AGREEMENT-Each Fund may enter into repurchase agreements with respect to securities. A repurchase agreement is a transaction in which a fund acquires a security and simultaneously commits to resell that security to the seller (a bank or securities dealer) at an agreed upon price on an agreed-upon date. Each Fund requires at all times that the repurchase agreement be collateralized by cash or U.S. Government securities having a value equal to, or in excess of, the value of the repurchase agreement. If the seller of the agreement defaults on its obligation to repurchase the underlying securities at a time when the value of these securities has declined, the Fund may incur a loss upon disposition of them. 3. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES MANAGEMENT FEES The Trust has a management agreement with Lord, Abbett & Co. LLC ("Lord Abbett") pursuant to which Lord Abbett supplies the Trust with investment management services and executive and other personnel, pays the remuneration of officers, provides office space and pays for ordinary and necessary office and clerical expenses relating to research and statistical work and supervision of the Trust's investment portfolios. The management fee is based on average daily net assets at an annual rate of 1.50%. For the six months ended April 30, 2003, Lord Abbett voluntarily waived its management fees and assumed other expenses as follows:
VOLUNTARY MANAGEMENT OTHER FEE WAIVER EXPENSES - -------------------------------------------------------------------------------- Micro-Cap Growth Fund .40% .89% Micro-Cap Value Fund .40% .21%
Lord Abbett may stop waiving its management fee and assuming other expenses at any time. In addition, effective January 1, 2003, Lord Abbett began providing certain administrative services to each Fund pursuant to an Administrative Services Agreement at an annual rate of .04% of each Fund's average daily net assets. This will result in Lord Abbett paying Fund Accounting expenses that were previously charged to the Funds. 17 NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) 12b-1 DISTRIBUTION PLANS Each Fund has adopted a distribution plan (the "Plan") with respect to the Class A shares of the Micro-Cap Growth Fund and Micro-Cap Value Fund pursuant to Rule 12b-1 of the Act, which provides for the payment of ongoing distribution and service fees to Lord Abbett Distributor LLC ("Distributor"), an affiliate of Lord Abbett. The fees are accrued daily based upon the average daily net assets of Class A at an annual rate of .25% and .10%, respectively. Class Y does not have a distribution plan. One Trustee and certain of the Trust's officers have an interest in Lord Abbett. 4. DISTRIBUTIONS AND CAPITAL LOSS CARRYFORWARDS Dividends from net investment income, if any, are declared and paid at least annually. Taxable net realized gains from investment transactions, reduced by capital loss carryforwards, if any, are distributed to shareholders at least annually. The capital loss carryforward amount is available to offset future net capital gains. Dividends and distributions to shareholders are recorded on the ex-dividend date. The amount of dividends and distributions from net investment income and net realized capital gains are determined in accordance with federal income tax regulations which may differ from accounting principles generally accepted in the United States of America. These book/tax differences are either considered temporary or permanent in nature. To the extent these differences are permanent in nature, such amounts are reclassified within the components of net assets based on their federal tax basis treatment; temporary differences do not require reclassification. Dividends and distributions, which exceed net investment income and net, realized capital gains for tax purposes are reported as distributions of paid-in capital. The tax character of distributions paid during the six months ended April 30, 2003, and the fiscal year ended October 31, 2002 are as follows:
MICRO-CAP GROWTH FUND MICRO-CAP VALUE FUND - ---------------------------------------------------------------------------------- 4/30/2003 10/31/2002 4/30/2003 10/31/2002 - ---------------------------------------------------------------------------------- Distributions paid from: Ordinary income -- $ 1,985 $ 19,004 $ 165,092 Net long term capital gains -- - 222,673 74,239 - ---------------------------------------------------------------------------------- Total distributions -- 1,985 241,677 239,331 - ---------------------------------------------------------------------------------- Total distributions paid -- $ 1,985 $ 241,677 $ 239,331 - ----------------------------------------------------------------------------------
At fiscal year end October 31, 2002, the capital loss carryforwards along with the related expiration dates were as follows:
YEARS OF AMOUNT EXPIRATION - -------------------------------------------------------------------------------- Micro-Cap Growth $ 596,841 2009 to 2010 Micro-Cap Value -- --
18 NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) As of April 30, 2003, each Fund's aggregate security unrealized gains and losses based on cost for U.S. federal income tax purposes are as follows:
GROSS GROSS NET UNREALIZED UNREALIZED UNREALIZED TAX COST GAIN LOSS GAIN (LOSS) - -------------------------------------------------------------------------------- Micro-Cap Growth $ 3,164,051 $ 342,678 $ (468,774) $ (126,096) Micro-Cap Value 5,442,465 1,017,825 (416,327) 601,498
The difference between book-basis and tax-basis unrealized gains (losses) is primarily attributable to wash sales and other temporary tax adjustments. 5. PORTFOLIO SECURITIES TRANSACTIONS Purchases and sales of investment securities (other than short-term investments) are as follows for the six months ended April 30, 2003:
PURCHASES SALES - -------------------------------------------------------------------------------- Micro-Cap Growth $ 1,321,508 $ 1,273,906 Micro-Cap Value 1,485,099 1,172,466
6. TRUSTEES' REMUNERATION The Trust's officers and the one Trustee who are associated with Lord Abbett do not receive any compensation from the Trust for serving in such capacities. Outside Trustees' fees are allocated among all Lord Abbett-sponsored funds based on the net assets of each fund. There is an equity based plan available to all outside Trustees under which outside Trustees must defer receipt of a portion of, and may elect to defer receipt of an additional portion of Trustees' fees. The deferred amounts are treated as though equivalent dollar amounts have been invested proportionately in the Funds. Such amounts and earnings accrued thereon are included in Trustees' fees on the Statement of Operations and in Trustees' fees payable on the Statement of Assets and Liabilities and are not deductible for federal income tax purposes until such amounts are paid. 7. EXPENSE REDUCTIONS The Trust has entered into arrangements with its transfer agent and custodian whereby credits realized as a result of uninvested cash balances are used to reduce a portion of the Funds' expenses. 8. CUSTODIAN AND ACCOUNTING AGENT State Street Bank and Trust Company ("SSB") is the Trust's custodian and accounting agent. SSB performs custodian functions and the accounting and recordkeeping functions relating to portfolio transactions and calculating the Trusts' net asset values. 9. INVESTMENT RISKS Each Fund is subject to the general risks and considerations associated with equity investing, and the particular risks associated with micro-cap and growth or value stocks. The value of your investment will fluctuate in response to movements in the stock market in general and to the 19 NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) changing prospects of individual companies in which the Funds invest. Micro-cap companies may be subject to greater risks and may be more sensitive to changes in economic conditions than larger, more established companies. There may be less liquidity in micro-cap company stocks, subjecting them to greater price fluctuations than larger company stocks. In the case of Micro-Cap Growth Fund, the growth stocks in which it generally invests may add to the Fund's volatility. In the case of the Micro-Cap Value Fund, the intrinsic value of particular value stocks may not be recognized for a long time. These factors can affect the Funds' performance. For a more complete discussion of the risks associated with the Funds, please see the Funds' prospectus. 10. SUMMARY OF CAPITAL TRANSACTIONS The Trust has an unlimited number of authorized shares of beneficial interest.
SIX MONTHS ENDED YEAR ENDED MICRO-CAP GROWTH APRIL 30, 2003 (UNAUDITED) OCTOBER 31, 2002 - --------------------------------------------------------------------------------------- CLASS A SHARES SHARES AMOUNT SHARES AMOUNT - --------------------------------------------------------------------------------------- SHARES SOLD 36,494 $ 280,193 160,649 $ 1,617,928 REINVESTMENT OF DISTRIBUTIONS - - 151 1,522 SHARES REACQUIRED (14,781) (105,896) (40,426) (388,684) - --------------------------------------------------------------------------------------- INCREASE 21,713 $ 174,297 120,374 $ 1,230,766 - --------------------------------------------------------------------------------------- CLASS Y SHARES - --------------------------------------------------------------------------------------- REINVESTMENT OF DISTRIBUTIONS - - 2.510 $ 25 - --------------------------------------------------------------------------------------- INCREASE - - 2.510 $ 25 - --------------------------------------------------------------------------------------- SIX MONTHS ENDED YEAR ENDED MICRO-CAP VALUE APRIL 30, 2003 (UNAUDITED) OCTOBER 31, 2002 - --------------------------------------------------------------------------------------- CLASS A SHARES SHARES AMOUNT SHARES AMOUNT - --------------------------------------------------------------------------------------- SHARES SOLD 25,535 $ 400,308 111,635 $ 1,842,286 REINVESTMENT OF DISTRIBUTIONS 15,557 239,107 15,261 237,001 SHARES REACQUIRED (5,874) (89,139) (88,986) (1,468,390) - --------------------------------------------------------------------------------------- INCREASE 35,218 $ 550,276 37,910 $ 610,897 - --------------------------------------------------------------------------------------- CLASS Y SHARES - --------------------------------------------------------------------------------------- REINVESTMENT OF DISTRIBUTIONS 46 $ 703 46 $ 715 - --------------------------------------------------------------------------------------- INCREASE 46 $ 703 46 $ 715 - ---------------------------------------------------------------------------------------
All of the outstanding capital shares of Micro-Cap Growth Fund and Micro-Cap Value Fund are held by Lord Abbett and partners and employees of Lord Abbett. 20 HOUSEHOLDING The Trust has adopted a policy that allows it to send only one copy of the Funds' prospectus, proxy material, annual report and semi-annual report to certain shareholders residing at the same "household." This reduces Trust expenses, which benefits you and other shareholders. If you need additional copies or do not want your mailings to be "householded," please call Lord Abbett at 800-821-5129 or send a written request with your name, the name of your fund or funds and your account number or numbers to Lord Abbett Family of Funds, P.O. Box 219100, Kansas City, MO 64121. 21 [LORD ABBETT LOGO] This report when not used for the general information of shareholders of the Fund, is to be distributed only if preceded or accompanied by a current Fund prospectus. Lord Abbett Mutual Fund shares are distributed by: LORD ABBETT DISTRIBUTOR LLC 90 Hudson Street - Jersey City, New Jersey 07302-3973 Lord Abbett Securities Trust Lord Abbett Micro-Cap Growth Fund Lord Abbett Micro-Cap Value Fund LAMC-3-403 6/03 ITEM 2: Code of Ethics. Not applicable ITEM 3: Audit Committee Financial Expert. Not applicable. ITEM 4-8: [Reserved] ITEM 9: Controls and Procedures. (a) Based on their evaluation of the registrant's disclosure controls and procedures (as defined in Rule 30a-2(c) under the Investment Company Act of 1940) as of June 18, 2003, the Chief Executive Officer and Chief Financial Officer of the registrant have concluded that such disclosure controls and procedures are reasonably designed and effective to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to them by others within those entities. (b) There were no significant changes in the registrant's internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. ITEM 10: Exhibits. ITEM 10(a): Not applicable. ITEM 10(b): (i) Certification of each principal executive officer and principal financial officer of the Registrant as required by Rule 30a-2 under the Act (17 CFR 270.30a-2) is attached hereto as a part of EX-99.CERT. (ii) Certification of each principal executive officer and principal financial officer of the Registrant as required by Section 906 of the Sarbanes-Oxley Act of 2002 is attached hereto as a part of EX-99.906CERT. SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. LORD ABBETT SECURITIES TRUST /s/ ROBERT S. DOW ----------------- Robert S. Dow Chief Executive Officer, Chairman and President /s/ JOAN A. BINSTOCK -------------------- Joan A. Binstock Chief Financial Officer and Vice President Date: June 18, 2003 Pursuant to the requirements of the Securities and Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. LORD ABBETT SECURITIES TRUST /s/ ROBERT S. DOW ----------------- Robert S. Dow Chief Executive Officer, Chairman and President /s/ JOAN A. BINSTOCK -------------------- Joan A. Binstock Chief Financial Officer and Vice President Date: June 18, 2003 EX-99.CERT 3 a2112821zex-99_cert.txt EX-99.CERT EX-99.CERT CERTIFICATIONS Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 I, Robert S. Dow, certify that: 1. I have reviewed this report on Form N-CSR of Lord Abbett Securities Trust; 2. Based on my knowledge, this report does not contain any untrue statements of material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report. 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-2(c) under the Investment Company Act of 1940) for the registrant and have: a. designated such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b. evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this report (the "Evaluation Date"); and c. presented in this report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee or the registrant's board of trustees (or persons performing the equivalent functions): a. all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize, and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: June 18, 2003 /s/ ROBERT S. DOW ----------------- Robert S. Dow Chief Executive Officer, Chairman and President CERTIFICATIONS Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 I, Joan A. Binstock, certify that: 1. I have reviewed this report on Form N-CSR of Lord Abbett Securities Trust; 2. Based on my knowledge, this report does not contain any untrue statements of material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report. 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-2(c) under the Investment Company Act of 1940) for the registrant and have: a. designated such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b. evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this report (the "Evaluation Date"); and c. presented in this report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee or the registrant's board of trustees (or persons performing the equivalent functions): a. all significant deficiencies in the design or operation of internal controls which cold adversely affect the registrant's ability to record, process, summarize, and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: June 18, 2003 /s/ JOAN A. BINSTOCK -------------------- Joan A. Binstock Chief Financial Officer and Vice President EX-99.906CERT 4 a2112821zex-99_906cert.txt EX-99.906CERT CERTIFICATIONS Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 I, Robert S. Dow, certify that: 1. This report on Form N-CSR of Lord Abbett Securities Trust (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly present, in all material respects, the financial condition and results of operations of the issuer. Date: June 18, 2003 By: /s/ ROBERT S. DOW ----------------- Robert S. Dow Chief Executive Officer, Chairman and President A SIGNED ORIGINAL OF THIS WRITTEN STATEMENT REQUIRED BY SECTION 906, OR OTHER DOCUMENT AUTHENTICATING, ACKNOWLEDGING, OR OTHERWISE ADOPTING THE SIGNATURE THAT APPEARS IN TYPED FORM WITHIN THE ELECTRONIC VERSION OF THIS WRITTEN STATEMENT REQUIRED BY SECTION 906, HAS BEEN PROVIDED TO THE REGISTRANT AND WILL BE RETAINED BY THE REGISTRANT AND FURNISHED TO THE SECURITIES AND EXCHANGE COMMISSION OR ITS STAFF UPON REQUEST. CERTIFICATIONS Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 I, Joan A. Binstock, certify that: 1. This report on Form N-CSR of Lord Abbett Securities Trust (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly present, in all material respects, the financial condition and results of operations of the issuer. Date: June 18, 2003 By: /s/ JOAN A. BINSTOCK -------------------- Joan A. Binstock Chief Financial Officer and Vice President A SIGNED ORIGINAL OF THIS WRITTEN STATEMENT REQUIRED BY SECTION 906, OR OTHER DOCUMENT AUTHENTICATING, ACKNOWLEDGING, OR OTHERWISE ADOPTING THE SIGNATURE THAT APPEARS IN TYPED FORM WITHIN THE ELECTRONIC VERSION OF THIS WRITTEN STATEMENT REQUIRED BY SECTION 906, HAS BEEN PROVIDED TO THE REGISTRANT AND WILL BE RETAINED BY THE REGISTRANT AND FURNISHED TO THE SECURITIES AND EXCHANGE COMMISSION OR ITS STAFF UPON REQUEST. -----END PRIVACY-ENHANCED MESSAGE-----