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
(Address of principal executive offices) (Zip code)
Thomas R. Phillips, Esq., Vice President & Assistant Secretary
90 Hudson Street, Jersey City, NJ 07302
(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: 10/31/2013
| Item 1: | Report(s) to Shareholders. |
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L O R D A B B E T T
A N N U A L
R E P O R T
Lord Abbett
Alpha Strategy Fund
Fundamental Equity Fund
Growth Leaders Fund
International Core Equity Fund
International Dividend Income Fund
International Opportunities Fund
Value Opportunities Fund
For the fiscal year ended October 31, 2013
Lord Abbett Securities Trust
Lord Abbett Alpha Strategy Fund, Lord Abbett Fundamental Equity Fund, Lord Abbett Growth Leaders Fund, Lord Abbett International Core Equity Fund, Lord Abbett International Dividend Income Fund, Lord Abbett International Opportunities Fund, and Lord Abbett Value Opportunities Fund
Annual Report
For the fiscal year ended October 31, 2013
Daria L. Foster, Trustee, President and Chief Executive Officer of the Lord Abbett Funds, and E. Thayer Bigelow, Independent Chairman of the Lord Abbett Funds.
Dear Shareholders: We are pleased to provide you with this overview of the performance of the Funds for the fiscal year ended October 31, 2013. On this page and the following pages, we discuss the major factors that influenced fiscal year performance. For detailed and more timely information about the Funds, please visit our Website at www.lordabbett.com, where you also can access the quarterly commentaries that provide updates on each Fund’s performance and other portfolio related updates.
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,
Daria L. Foster
Trustee, President and Chief Executive Officer
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Alpha Strategy Fund
For the fiscal year ended October 31, 2013, the Fund returned 37.98%, reflecting performance at the net asset value (NAV) of Class A shares, with all distributions reinvested, compared to its benchmark, the combined 85% Russell 2000® Index1 / 15% S&P Developed Ex-U.S. SmallCap® Index,2 which returned 35.17% over the same period.
Global equity markets rose during the 12-month period amid an ongoing housing recovery in the Unites States, rising corporate profits, accommodative monetary policy, and economic stabilization in Europe. The equity market advance came in the face of a series of disruptive congressional showdowns, a two-week government shutdown, and concerns about growth in the largest emerging market economies. Domestic small cap equity markets (as represented by the Russell 2000® Index) outperformed foreign small cap equity markets (as represented by the S&P Developed Ex-U.S. SmallCap® Index). Within the U.S. small cap market, growth stocks (as represented by the Russell 2000® Growth Index3) outperformed value stocks (as represented by the Russell 2000® Value Index4), while micro cap stocks (as represented by the Russell Microcap® Index5) outperformed small cap stocks (as represented by the Russell 2000® Index) for the period.
The Fund’s exposure to domestic micro cap growth and small cap growth equities benefited relative performance, as each of these investment strategies significantly outperformed Alpha Strategy Fund’s index and the underlying investment strategy’s index. Within each of these underlying strategies, stock selection in the information technology and health care sectors contributed positively to performance relative to the underlying index.
Detracting from the Fund’s relative performance was the Fund’s exposure to domestic micro cap value equities, as this investment strategy underperformed Alpha Strategy Fund’s index and its underlying index. Within this asset class, stock selection in the industrials and consumer discretionary sectors detracted from performance relative to the underlying index. Also detracting from the Fund’s relative performance was exposure to the domestic small cap blend asset class. Stock selection within the materials and consumer discretionary sectors caused this investment strategy to underperform its underlying index.
Fundamental Equity Fund
For the fiscal year ended October 31, 2013, the Fund returned 31.11%, reflecting performance at the net asset value (NAV) of Class A shares, with all distributions reinvested, compared to the Russell 1000® Value Index,6 which returned 28.29% over the same period.
The 12-month period began and ended with the incessant U.S. budget debate which ultimately led to a temporary partial government shutdown and the postponement of a resolution until early 2014. Investors appeared to be most
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concerned with the possibility that the Federal Reserve may begin tapering its bond purchases. The broad market declined in June when Fed chairman Ben Bernanke alluded that tapering may occur by the end of 2013. Despite these obstacles, the broad market continued to move higher, reaching an all-time high near the end of the period. Positive indicators, such as strengthening U.S. employment reports, an improving U.S. housing market, and better than expected corporate earnings, continue to support the gradual economic recovery.
The Fund’s relative performance benefited from strong stock selection within the health care and energy sectors. Within the health care sector, shares of Celgene Corp., a biotechnology firm that develops and markets therapies for the treatment of hematologic malignancies, rose after reporting strong sales for its Revlimid and Pomalyst drugs as well as the anticipation of successful product launches in the pipeline. Shares of Actavis, Inc., an integrated global pharmaceutical company engaged in the development and distribution of generic and proprietary drugs, rallied following the announcement of a definitive agreement to acquire Warner Chilcott, a pharmaceutical company focused on women’s health. The merger is expected to benefit Actavis with operational synergies, and is consistent with management’s plans to build out its brand presence and lower its tax structure. Within the energy sector, shares of Halliburton Co., a provider of services and products for the exploration, development, and production of oil and natural gas, appreciated as the company continued to return capital back to shareholders through share repurchase programs as well as increasing dividends. Shares of Anadarko Petroleum Corporation, a large cap exploration and production company, appreciated as the firm benefited from offshore exploration and drilling.
Stock selection within the information technology sector was the largest detractor from the Fund’s relative performance during the period. Shares of Broadcom Corp., a provider of semiconductor chips used in mobility and broadband communication devices and infrastructure, fell after the firm released lower than expected revenue guidance in July amid slowing growth in the smartphone market. Shares of Ecommerce company, eBay Inc., underperformed within the sector as the company faced some challenges with weakening demand in Europe. In addition, stock selection within the financials sector detracted from relative performance. Health care real estate investment trust, Ventas, Inc., declined as investors’ concern increased about the negative affect of rising interest rates. Shares of Capital One Financial Group, a diversified financial services holding company, underperformed its sector as the company’s announcement that it would not be enacting a share buyback in 2013 disappointed investors. Investors also reacted negatively to the announced sale of the Best Buy private
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label and co-branded credit card accounts. This announcement was a reversal of the company’s efforts to grow in private label credit cards.
Growth Leaders Fund
For the fiscal year ended October 31, 2013, the Fund returned 42.20%, reflecting performance at the net asset value (NAV) of Class A shares, with all distributions reinvested, compared to its benchmark, the Russell 1000® Growth Index,7 which returned 28.29% over the same period.
Equity markets made considerable gains in the trailing 12-month period. Following the conclusion of the U.S. presidential election in November, and the last-minute resolution of the “fiscal cliff” in December, equity markets shook off challenges and marched significantly higher. By the end of the period in October, broad market equity indexes had recently hit all-time highs.
We were pleased with the Fund’s outperformance during the period, which we attribute to our fundamentally driven process focusing on sound business models, capable management, competitive advantages, and favorable industry conditions.
Security selection within the information technology sector contributed the most to relative Fund performance during the period. Shares of the world’s leading online social network, Facebook, Inc., were among the largest contributors. The company had a strong second quarter, posting a 41% increase in mobile advertisement revenue. Global technology company Google, Inc. also contributed to relative Fund performance within the sector. Revenue and earnings for the third quarter were particularly strong, beating Street expectations. The beat was the first in eight quarters for the company, and provided support for much of the run-up in the share price over the last 12 months.
Both security selection and a slight overweight to the consumer discretionary sector also contributed to relative Fund performance during the period. Shares of Tesla Motors, Inc., a manufacturer of high-end electric vehicles, rose significantly. Investors cheered midyear following a quarterly earnings report in which the company reported its first-ever profit. Starbucks Corporation, which owns coffee and tea shops in more than 60 countries, also saw its shares rise steadily throughout the period. The company benefited from an expanding digital platform, lower coffee costs, and significant growth opportunities domestically and abroad.
Security selection within the health care sector detracted from relative Fund performance during the period. Express Scripts, a provider of healthcare management and administration services, was among the most notable detractors within the sector. Shares of the company have been volatile over the period due to uncertainty surrounding the new health care law and what impact private exchanges would have on current customers. Onyx Pharmaceuticals, Inc., a biopharmaceutical company that develops
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cancer fighting therapies, also detracted from relative performance. Shares of the company pulled back in June 2013, having more than doubled from the year prior.
Both security selection and a slight underweight to the energy sector also detracted from relative Fund performance during the period. Halliburton Company, a provider of services and products used in the production of oil and natural gas, detracted from relative performance. Shares declined after they were added to the Fund in February 2013, following a run-up of nearly 40% since the beginning of the period. The Fund’s position in CARBO Ceramics, Inc., a supplier of ceramic proppants and the resin-coated sand used to extract natural gas from shale, also detracted from relative performance during the period. CARBO’s shares declined notably in the 2013 second quarter after a disappointing earnings report tied to competitive pricing pressure from lower-quality importers.
International Core Equity Fund
For the fiscal year ended October 31, 2013, the Fund returned 24.99%, reflecting performance at the net asset value (NAV) of Class A shares, with all distributions reinvested, compared to its benchmark, the MSCI EAFE Index with Gross Dividends,8 which returned 27.40% over the same period.
Global growth appeared to be broadening beyond the United States over the 12-month period, with numerable markets returning over 20%, many from Europe. Austria, Belgium, Finland, France, Germany, the Netherlands, Sweden, and Switzerland, for example, all posted returns greater than the United States’ 27.58% return, as measured by the MSCI All Country World Index – Gross Dividends. The United Kingdom also saw a return greater than 20%. After years marked by austerity, struggling eurozone members Italy, Spain, Ireland, and Greece were among the top performing markets: Italy posted a return just shy of 30%, while Greece topped the list at nearly 77%. In the Asia/Pacific region, Japan led a group of markets with double-digit positive returns that included Australia, Hong Kong, Korea, New Zealand, the Philippines, and Taiwan. India, Malaysia, Singapore, and Thailand posted single-digit returns, while Indonesia was the laggard, ending the period with a loss. Emerging markets, especially in South America, saw the weakest returns; Brazil, Chile, Colombia, and Peru all ended the period with negative returns.
Based on an analysis of stocks and sectors represented in the portfolio, stock selection within the energy and materials sectors was the primary reason for the Fund’s underperformance. A main detractor from the Fund’s performance from the energy sector was United Kingdom-based oil and gas exploration company Tullow Oil plc. After struggling early in 2013, shares of Tullow became increasingly scrutinized when a series of disappointing exploration results served only to worsen market sentiment, and we
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exited the position. Another detractor from the energy sector was Japan-based oil and gas exploration company Inpex Corp. In the first quarter of 2013, it was ascertained that the approximate enterprise value of Inpex’s Australian Ichthys liquid natural gas project was roughly 20% lower than forecasted. Also, the rumor that Japan’s new government could merge Inpex with its smaller national competitor, Japex, moved investors toward Japex, which would see greater benefit from a merger. A notable detractor from the materials sector was Kinross Gold Corp., a Canadian gold mining company. Given the continued outflow of investors away from precious metals and back into the higher-returning equity market, Kinross’s share price has been on a downward trend over the last 12 months. Kinross faced two analyst price-target reductions in February and April, which coincided with two substantial drops in the value of gold.
Contributing to Fund performance was stock selection in the health care and consumer staples sectors. Contributing from the health care sector was Switzerland-based Roche Holding Ltd. The Swiss drug maker started off the year with strong first quarter sales. Demand for its flu drug, Tamiflu, saw a spike in the United States, while sales of its cancer treatment medications lifted overall first quarter sales by 5% over estimates. Roche’s success continued in June, when the European Medicines Agency gave the green light on Roche’s injectable breast cancer treatment drug, Herceptin, which cuts treatment time from 30–90 minutes down to about five minutes. Another contributor from the health care sector was Germany-based biotechnology company Morphosys AG. Shares continued to climb as the company entered into a partnership with Celgene, in which Celgene agreed to market and sell the cancer fighting MOR202 antibody that was developed by Morphosys. In return, Morphosys received an upfront fee as well as additional revenue based on defined sales milestones. On top of the potential revenues, Celgene will likely invest additional money by way of a capital increase. From consumer staples, the Netherlands-based supermarket operator Koninklijke Ahold NV was a notable contributor to the portfolio. After fourth quarter 2012’s results beat expectations, Ahold announced a dividend that topped the previous year’s by 10% and stated that it would begin a 12-month share buyback program totaling €500 million. In addition, it completed its sale of Swedish retail company ICA, the proceeds of which might either be used to benefit shareholders immediately through another share buy-back program or reinvested through M&A for longer-term growth.
International Dividend Income Fund
For the fiscal year ended October 31, 2013, the Fund returned 21.54%, reflecting performance at the net asset value (NAV) of Class A shares, with all distributions
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reinvested, compared to its benchmark, the MSCI All Country World Ex-U.S. Value Index with Gross Dividends,9 which returned 21.40% over the same period.
Global growth appeared to be broadening beyond the United States over the 12-month period, with numerable markets returning over 20%, many from Europe. Austria, Belgium, Finland, France, Germany, the Netherlands, Sweden, and Switzerland, for example, all posted returns greater than the United States’ 27.58% return, as measured by the MSCI All Country World Index – Gross Dividends. The United Kingdom also saw a return greater than 20%. After years marked by austerity, struggling eurozone members Italy, Spain, Ireland, and Greece were among the top performing markets: Italy posted a return just shy of 30%, while Greece topped the list at nearly 77%. In the Asia/Pacific region, Japan led a group of markets with double-digit positive returns that included Australia, Hong Kong, Korea, New Zealand, the Philippines, and Taiwan. India, Malaysia, Singapore, and Thailand posted single-digit returns, while Indonesia was the laggard, ending the period with a loss. Emerging markets, especially in South America, saw the weakest returns; Brazil, Chile, Colombia, and Peru all ended the period with negative returns.
Strong stock selection, particularly in the consumer discretionary and telecommunication services sectors, was partially responsible for the Fund’s outperformance versus its benchmark index. One of the notable contributors from the consumer discretionary sector was Japan-based automaker Toyota Motor Corp. Demand for autos, particularly in the United States, has had a strong turn upward. In the United States, Toyota has surpassed Ford as the number two in auto sales for the first time since March 2010. In China, the opportunity to surpass German auto sales in China for premium cars has helped bolster Toyota’s share price. Another contributing automaker was Germany-based Daimler AG. A plan to reduce production costs and the introduction of new compact and SUV models to meet global demand are believed to put Daimler in the position to increase its return on sales in both segments over the course of its next fiscal year. A leading contributor from the telecommunication services sector was Israel-based Bezeq-Israeli Telecommunication Corp. Ltd. Increasing weakness in its competition, maintaining a stable average revenue per user, reduction in costs, and the announcement of the disbursement of 100% of its net income from the first half of 2013 to shareholders via dividend, has kept Bezeq’s share price on an upward trend.
Detracting from the Fund’s performance was stock selection in the financials and utilities sectors. From the financials sector, Stockland Trust Group, a residential and retail real estate developer, saw its shares fall in the middle of 2013. Deteriorating margins in residential real estate, a challenging environment for retail, and uncertainty at the management
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level adversely affected the stock. Another weak performer from the financials sector was Aozora Bank Ltd., a Japan-based bank. Investors in Aozora reacted poorly when the U.S. investment fund Cerberus Capital announced it would be boosting its stake in another Japanese financial firm, Seibu Holdings, by relinquishing its controlling stake in Aozora. Cerberus also announced plans to poach Aozora’s director, Yuji Shirakawa, to aid in a change in management at Seibu. From the utilities sector, CEZ, a.s., a Czech Republic-based producer and distributor of electricity, detracted from the Fund’s performance. Despite an attractive dividend yield, shares fell during the period as CEZ faced declining forward prices of electricity thanks to declining costs in coal, expanding renewable energy sources, and overall weak demand for electricity across Europe.
International Opportunities Fund
For the fiscal year ended October 31, 2013, the Fund returned 30.26%, reflecting performance at the net asset value (NAV) of Class A shares, with all distributions reinvested, compared to its benchmark, the S&P Developed Ex-U.S. SmallCap® Index,10 which returned 28.67% over the same period.
Global growth appeared to be broadening beyond the United States over the 12-month period, with numerable equity markets returning over 20%, many from Europe. Austria, Belgium, Finland, France, Germany, the Netherlands, Sweden, and Switzerland, for example, all posted returns greater than the United States’ 27.58% return, as measured by the MSCI All Country World Index – Gross Dividends. The United Kingdom also saw a return greater than 20%. After years marked by austerity, struggling eurozone members Italy, Spain, Ireland, and Greece were among the top performing markets: Italy posted a return just shy of 30%, while Greece topped the list at nearly 77%. In the Asia/Pacific region, Japan led a group of markets with double-digit positive returns that included Australia, Hong Kong, Korea, New Zealand, the Philippines, and Taiwan. India, Malaysia, Singapore, and Thailand posted single-digit returns, while Indonesia was the laggard, ending the period with a loss. Emerging markets, especially in South America, saw the weakest returns; Brazil, Chile, Colombia, and Peru all ended the period with negative returns.
The Fund’s pro-cyclical approach resulted in strong allocation in the top two contributing sectors to the Fund’s performance for the period. An overweight position in the consumer discretionary sector helped Fund performance, as it was the best performing sector for the period. Also contributing was an underweight position in the materials sector, the weakest performing sector for the period. In addition, contributing to the Fund’s performance was strong stock selection in the industrials sector. Shares of Ashtead Group plc benefited over the period thanks to its growing presence in the U.S. equipment rental market. Ashtead has been steadily gaining market share from its
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larger rival, United Rentals, over the last three years.
Detracting from Fund performance was an overweight in the consumer staples sector as it was one of the weaker performing sectors for the period. In addition, stock selection in the financials sector also detracted from the Fund’s performance. A significant detractor was Indonesia-based Bank of Tabungan Negara Persero. Its shares remained depressed for most of 2013, as three straight quarters of underwhelming earnings paired with macro-economic concerns including a depreciating currency in Indonesia have created an uncertain outlook for investors. Another financials holding that detracted was India-based real estate and infrastructure developer Housing Development & Infrastructure Ltd. (HDIL). Early in 2013, investors reacted poorly to the announcement that HDIL’s vice chairman and managing director sold more than half of his stake in the company. In addition, high levels of debt and a nonconvertible debenture rating downgrade, from ‘BBB+’ to ‘D,’ were among the issues that harmed HDIL’s stock performance for the period.
Value Opportunities Fund
For the fiscal year ended October 31, 2013, the Fund returned 34.08%, reflecting performance at the net asset value (NAV) of Class A shares, with all distributions reinvested, compared to its benchmark, Russell 2500™ Value Index,11 which returned 33.35% over the same period.
In a period marred by a series of congressional showdowns culminating in a two-week governmental shutdown, an escalating Syrian civil war, fears of a slowing Asian economy, and an ongoing European debt crisis, domestic equity markets could have very easily experienced lackluster returns. Instead, positive investor sentiment driven by a continuation of global accommodative monetary policy and a rebounding U.S. housing market led to a significant broad market rally for the trailing 12-month period. Meanwhile, in an anemic economic recovery, investors favored small capitalization companies over large and within the small to mid-cap space, growth companies over value.
During the period, stock selection was the prevailing factor of the Fund’s relative outperformance, most notably in consumer discretionary holding Red Robin Gourmet Burgers, Inc. Management’s efforts to revitalize the brand through an upgraded menu and promotional offerings drew people back to the casual dining restaurant, boosting same-store-sales and customer traffic. In addition, a focus on cost discipline led to margin expansion as the company continued to outperform its peers.
Other notable contributors included health care holding Actavis plc and industrials holding Jacobs Engineering Group, Inc. A series of transformational acquisitions by Actavis was lauded by investors as the integrated specialty pharmaceutical company continued to grow its generic business and expand into branded
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pharmaceuticals. Potential synergies from these acquisitions along with strong management execution led to positive price action in shares of the firm. For shares of Jacobs Engineering, an engineering and construction company, positive price momentum can be attributed to consistent backlog growth throughout the period as the firm experienced bookings strength in the chemicals and oil and gas sectors.
Conversely, the Fund’s biggest detractor of relative performance was industrials holding Atlas Worldwide Holdings, Inc. A weak global airfreight environment resulted in a muted outlook for the provider of air cargo services, leading to relatively weak stock performance. Due to secular concerns with the industry, the position was liquidated in April 2013.
Also detracting from the Fund’s relative performance was information technology holding Nuance Communications, Inc. and materials holding Axiall Corp. Following two negative guidance revisions, shares of Nuance communications skidded lower as the provider of voice and language solutions experienced weakness across multiple business segments. Due to continued fundamental disappointments and concerns with the company’s medical division, the position was exited in May 2013. Axiall Corp. struggled with rising ethylene costs, deterioration in caustic soda and chlorine prices, and weaker-than-expected PVC piping demand, leading to lower investor confidence and a woeful stock performance. Due to fundamental concerns in the integrated chemicals and building products company, the position was exited in October 2013.
Each Fund’s portfolio is actively managed and, therefore, its holdings and the weightings of a particular issuer or particular sector as a percentage of portfolio assets are subject to change. Sectors may include many industries.
1 The Russell 2000® Index measures the performance of the 2,000 smallest companies in the Russell 3000 Index, which represents approximately 10% of the total market capitalization of the Russell 3000 Index.
2 The S&P Developed Ex-U.S. SmallCap® Index captures the bottom 15% of companies domiciled in the developed markets excluding the United States within the S&P Global BMI with a float-adjusted market capitalization of at least US$100 million and a minimum annual trading liquidity of US$50 million.
3 The Russell 2000® Growth Index measures the performance of those Russell 2000 companies with higher price-to-book ratios and higher forecasted growth values.
4 The Russell 2000® Value Index measures the performance of those Russell 2000 companies with lower price-to-book ratios and lower forecasted growth values.
5 The Russell Microcap® Index measures performance of the micro-cap segment, representing less than 3% of the U.S. equity market. The Russell Microcap Index includes the smallest 1,000 securities in the small cap Russell 2000 Index plus the next smaller 1,000 securities.
6 The Russell 1000® Value Index measures the performance of those Russell 1000 companies with lower price-to-book ratios and lower forecasted growth values.
7 The Russell 1000® Growth Index measures the performance of large cap companies with higher price-to-book ratios and higher forecasted growth values.
8 The MSCI EAFE Index (Europe, Australasia, Far East) is a free float-adjusted market capitalization index that is designed to measure the equity market performance of developed markets, excluding the US
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& Canada. The MSCI EAFE Index consists of the following 22 developed market country indexes: Australia, Austria, Belgium, Denmark, Finland, France, Germany, Greece, Hong Kong, Ireland, Israel, Italy, Japan, the Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, and the United Kingdom.
The MSCI EAFE Index with Gross Dividends approximates the maximum possible dividend reinvestment. The amount reinvested is the entire dividend distributed to individuals resident in the country of the company, but does not include tax credits.
9 The MSCI ACWI (All Country World Index) ex-U.S. Value Index is a subset of the MSCI ACWI ex-U.S Index. The index is a free float-adjusted market capitalization-weighted index that is designed to measure the equity market performance of developed and emerging markets excluding the United States from a value perspective
The MSCI Global Value indexes cover the full range of developed, emerging, and All Country MSCI International Equity indexes across all size segmentations. MSCI uses a two-dimensional framework for style segmentation in which value and growth securities are categorized using a multi-factor approach, which uses three variables to define the value investment style characteristics and five variables to define the growth investment style characteristics, including forward looking variables. The objective of the index design is to divide constituents of an underlying MSCI Equity Index into respective value indexes, each targeting 50% of the free float-adjusted market capitalization of the underlying market index.
10 The S&P Developed Ex-U.S. SmallCap®Index captures the bottom 15% of companies domiciled in the developed markets excluding the United States within the S&P Global BMI with a float-adjusted market capitalization of at least US$100 million and a value traded of at least US$50 million for the past 12-months at the time of the annual reconstitution. Stocks are excluded if their market capitalization falls below US$75 million, or if the value traded is less than US$35 million at the time of reconstitution.
11 The Russell 2500™ Value Index measures the performance of those Russell 2500 companies with lower price-to-book ratios and lower forecasted growth values.
Unless otherwise specified, indexes reflect total return, with all dividends reinvested. Indexes are unmanaged, do not reflect the deduction of fees or expenses, and are not available for direct investment.
Important Performance and Other Information
Performance data quoted in the following pages reflect past performance and are no guarantee of future results. Current performance may be higher or lower than the performance quoted. The investment return and principal value of an investment in each Fund will fluctuate so that shares, on any given day or when redeemed, may be worth more or less than their original cost. You can obtain performance data current to the most recent month end by calling Lord Abbett at 888-522-2388 or referring to www.lordabbett.com.
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 classes of shares with distinct pricing options. For a full description of the differences in pricing alternatives, please see a Fund’s prospectus.
During certain periods shown, expense waivers and reimbursements were in place for Alpha Strategy Fund, Growth Leaders Fund, International Core Equity Fund and International Dividend Income Fund. Without such expense waivers and reimbursements, each of the Fund’s returns would have been lower.
The annual commentary above discusses the views of the Funds’ management and various portfolio holdings of the Funds as of October 31, 2013. These views and portfolio holdings may have changed after this date. Information provided in the commentary is not a recommendation to buy or sell securities. Because the Funds’ portfolios are actively managed and may change significantly, the Funds may no longer own the securities described above or may have otherwise changed their positions in the securities. For more recent information about the Funds’ portfolio holdings, please visit www.lordabbett.com.
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 each Fund, please see each Fund’s prospectus.
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.
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Alpha Strategy Fund
Investment Comparison
Below is a comparison of a $10,000 investment in Class A shares with the same investment in the Russell 2000® Index, 85% Russell 2000® Index/15% S&P Developed Ex-U.S. SmallCap Index, and the S&P Developed Ex-U.S. SmallCap Index, assuming reinvestment of all dividends and distributions. The performance of other classes will be greater than or less than the performance shown in the graph below due to different sales loads and expenses applicable to such classes. The graph and performance table below do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. During certain periods, expenses of the Fund have been waived or reimbursed by Lord Abbett; without such waiver or reimbursement of expenses, the Fund’s returns would have been lower. Past performance is no guarantee of future results.
Average Annual Total Returns at Maximum Applicable
Sales Charge for the Periods Ended October 31, 2013
| | | 1 Year | | 5 Years | | 10 Years | | Life of Class |
| Class A3 | | 30.04% | | 17.69% | | 10.82% | | — |
| Class B4 | | 31.93% | | 18.06% | | 10.90% | | — |
| Class C5 | | 35.97% | | 18.26% | | 10.74% | | — |
| Class F6 | | 38.19% | | 19.34% | | — | | 6.69% |
| Class I7 | | 38.32% | | 19.45% | | — | | 12.12% |
| Class R28 | | 37.49% | | 18.74% | | — | | 6.15% |
| Class R39 | | 37.60% | | 18.85% | | — | | 6.26% |
1 Reflects the deduction of the maximum initial sales charge of 5.75%.
2 Performance for each unmanaged index does not reflect any fees or expenses. The performance of each index is not necessarily representative of the Fund’s performance.
3 Total return, which is the percentage change in net asset value, after deduction of the maximum initial sales charge of 5.75% applicable to Class A shares, with all dividends and distributions reinvested for the periods shown ended October 31, 2013, is calculated using the SEC-required uniform method to compute such return.
4 Performance reflects the deduction of a CDSC of 5% for 1 year, 2% for 5 years, and 0% for 10 years. Class B shares automatically convert to Class A shares after approximately 8 years. (There is no initial sales charge for automatic conversions.) All returns for periods greater than 8 years reflect this conversion.
5 The 1% CDSC for Class C shares normally applies before the first anniversary of the purchase date. Performance for other periods is at net asset value.
6 Class F shares commenced operations and performance for the Class began on September 28, 2007. Performance is at net asset value.
7 Class I shares commenced operations on October 19, 2004. Performance is at net asset value.
8 Class R2 shares commenced operations and performance for the Class began on September 28, 2007. Performance is at net asset value.
9 Class R3 shares commenced operations and performance for the Class began on September 28, 2007. Performance is at net asset value.
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Fundamental Equity Fund
Investment Comparison
Below is a comparison of a $10,000 investment in Class A shares with the same investment in the Russell 1000® Value Index, Russell 3000® Value Index, Russell 3000® Index, and S&P 500® Index, assuming reinvestment of all dividends and distributions. The performance of other classes will be greater than or less than the performance shown in the graph below due to different sales loads and expenses applicable to such classes. The graph and performance table below do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Past performance is no guarantee of future results.
Average Annual Total Returns at Maximum Applicable
Sales Charge for the Periods Ended October 31, 2013
| | | 1 Year | | 5 Years | | 10 Years | | Life of Class |
| Class A3 | | 23.56% | | 13.63% | | 8.17% | | — |
| Class B4 | | 25.32% | | 14.00% | | 8.25% | | — |
| Class C5 | | 29.30% | | 14.22% | | 8.12% | | — |
| Class F6 | | 31.49% | | 15.25% | | — | | 6.15% |
| Class I7 | | 31.66% | | 15.37% | | 9.21% | | — |
| Class P8 | | 31.08% | | 14.86% | | 8.72% | | — |
| Class R29 | | 30.87% | | 14.69% | | — | | 5.64% |
| Class R310 | | 31.04% | | 14.81% | | — | | 5.73% |
1 Reflects the deduction of the maximum initial sales charge of 5.75%.
2 Performance for each unmanaged index does not reflect any fees or expenses. The performance of each index is not necessarily representative of the Fund’s performance.
3 Total return, which is the percentage change in net asset value, after deduction of the maximum initial sales charge of 5.75% applicable to Class A shares, with all dividends and distributions reinvested for the periods shown ended October 31, 2013, is calculated using the SEC-required uniform method to compute such return.
4 Performance reflects the deduction of a CDSC of 5% for 1 year, 2% for 5 years, and 0% for 10 years. Class B shares automatically convert to Class A shares after approximately 8 years. (There is no initial sales charge for automatic conversions.) All returns for periods greater than 8 years reflect this conversion.
5 The 1% CDSC for Class C shares normally applies before the first anniversary of the purchase date. Performance for other periods is at net asset value.
6 Class F shares commenced operations and performance for the Class began on September 28, 2007. Performance is at net asset value.
7 Class I shares commenced operations on March 31, 2003. Performance is at net asset value.
8 Class P shares commenced operations on August 15, 2001. Performance is at net asset value.
9 Class R2 shares commenced operations and performance for the Class began on September 28, 2007. Performance is at net asset value.
10 Class R3 shares commenced operations and performance for the Class began on September 28, 2007. Performance is at net asset value.
13
Growth Leaders Fund
Investment Comparison
Below is a comparison of a $10,000 investment in Class A shares with the same investment in the Russell 3000® Growth Index, Russell 1000® Growth Index, and S&P 500® Index, assuming reinvestment of all dividends and distributions. The performance of other classes will be greater than or less than the performance shown in the graph below due to different sales loads and expenses applicable to such classes. The graph and performance table below do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. During certain periods, expenses of the Fund have been waived or reimbursed by Lord Abbett; without such waiver or reimbursement of expenses, the Fund’s returns would have been lower. Past performance is no guarantee of future results.
Average Annual Total Returns at Maximum Applicable
Sales Charge for the Periods Ended October 31, 2013
| | | 1 Year | | Life of Class |
| Class A3 | | 34.06% | | 12.67% |
| Class B4 | | N/A | | 24.05% |
| Class C5 | | 40.24% | | 14.82% |
| Class F6 | | 42.51% | | 15.82% |
| Class I6 | | 42.67% | | 15.96% |
| Class R26 | | 42.62% | | 15.85% |
| Class R36 | | 41.98% | | 15.53% |
1 Reflects the deduction of the maximum initial sales charge of 5.75%.
2 Performance for each unmanaged index does not reflect any fees or expenses. The performance of each index is not necessarily representative of the Fund’s performance. Performance for each index begins on June 30, 2011.
3 Class A shares commenced operations on June 21, 2011 and performance for the Class began on June 30, 2011. Total return, which is the percentage change in net asset value, after deduction of the maximum initial sales charge of 5.75% applicable to Class A shares, with all dividends and distributions reinvested for the periods shown ended October 31, 2013, is calculated using the SEC-required uniform method to compute such return.
4 Class B shares commenced operations and performance for the Class began on February 11, 2013. Performance reflects the deduction of a CDSC of 5% for 1 year.
5 Class C shares commenced operations on June 24, 2011 and performance for the Class began on June 30, 2011. The 1% CDSC for Class C shares normally applies before the first anniversary of the purchase date. Performance for other periods is at net asset value.
6 Commenced operations on June 24, 2011 and performance for the Class began on June 30, 2011. Performance is at net asset value.
14
International Core Equity Fund
Investment Comparison
Below is a comparison of a $10,000 investment in Class A shares with the same investment in the Morgan Stanley Capital International Europe, Australasia, Far East Index (“MSCI EAFE® Index”) with Gross Dividends and the MSCI EAFE® Index with Net Dividends assuming reinvestment of all dividends and distributions. The MSCI EAFE Index with Net Dividends reflects a reduction in dividends after taking into account withholding of taxes by certain foreign countries represented in the MSCI EAFE Index. The performance of other classes will be greater than or less than the performance shown in the graph below due to different sales loads and expenses applicable to such classes. The graph and performance table below do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. During certain periods, expenses of the Fund have been waived or reimbursed by Lord Abbett; without such waiver or reimbursement of expenses, the Fund’s returns would have been lower. Past performance is no guarantee of future results.
Average Annual Total Returns at Maximum Applicable
Sales Charge for the Periods Ended October 31, 2013
| | | 1 Year | | 5 Years | | Life of Class |
| Class A3 | | 17.78% | | 10.59% | | 5.69% |
| Class B4 | | 19.18% | | 10.92% | | 5.77% |
| Class C5 | | 23.26% | | 11.21% | | 5.65% |
| Class F6 | | 25.35% | | 12.20% | | -0.46% |
| Class I7 | | 25.37% | | 12.31% | | 6.70% |
| Class P8 | | 24.91% | | 11.81% | | 6.22% |
| Class R29 | | 24.65% | | 11.79% | | -0.73% |
| Class R310 | | 24.80% | | 11.78% | | -0.83% |
1 Reflects the deduction of the maximum initial sales charge of 5.75%.
2 Performance for each unmanaged index does not reflect any fees or expenses. The performance of each index is not necessarily representative of the Fund’s performance. Performance of each index begins on December 31, 2003.
3 Class A shares commenced operations on December 15, 2003 and performance for the Class began on December 31, 2003. Total return, which is the percentage change in net asset value, after deduction of the maximum initial sales charge of 5.75% applicable to Class A shares, with all dividends and distributions reinvested for the periods shown ended October 31, 2013, is calculated using the SEC-required uniform method to compute such return.
4 Class B shares commenced operations on December 15, 2003 and performance for the Class began on December 31, 2003. Performance reflects the deduction of a CDSC of 5% for 1 year, 2% for 5 years and 0% for the Life of the Class. Class B shares automatically convert to Class A shares after approximately 8 years. (There is no initial sales charge for automatic conversions.) All returns for periods greater than 8 years reflect this conversion.
5 Class C shares commenced operations on December 15, 2003 and performance for the Class began on December 31, 2003. The 1% CDSC for Class C shares normally applies before the first anniversary of the purchase date. Performance for other periods is at net asset value.
6 Class F shares commenced operations and performance for the Class began on September 28, 2007. Performance is at net asset value.
7 Class I shares commenced operations on December 15, 2003 and performance for the Class began on December 31, 2003. Performance is at net asset value.
8 Class P shares commenced operations on December 15, 2003 and performance for the Class began on December 31, 2003. Performance is at net asset value.
9 Class R2 shares commenced operations and performance for the Class began on September 28, 2007. Performance is at net asset value.
10 Class R3 shares commenced operations and performance for the Class began on September 28, 2007. Performance is at net asset value.
15
International Dividend Income Fund
Investment Comparison
Below is a comparison of a $10,000 investment in Class A shares with the same investment in the Morgan Stanley Capital International (MSCI) All Country World Ex-U.S. Value Index with Gross Dividends and the MSCI All Country World Ex-U.S. Value Index with Net Dividends, assuming reinvestment of all dividends and distributions. The MSCI All Country World Ex-U.S. Value Index with Net Dividends reflects a reduction in dividends after taking into account withholding of taxes by certain foreign countries represented in the MSCI All Country World Ex-U.S. Value Index. The performance of other classes will be greater than or less than the performance shown in the graph below due to different sales loads and expenses applicable to such classes. The graph and performance table below do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. During certain periods, expenses of the Fund have been waived or reimbursed by Lord Abbett; without such waiver or reimbursements of expense, the Fund’s returns would have been lower. Past performance is no guarantee of future results.
Average Annual Total Returns at Maximum Applicable
Sales Charge for the Periods Ended October 31, 2013
| | | 1 Year | | 5 Years | | Life of Class |
| Class A3 | | 14.49% | | 11.06% | | 1.66% |
| Class C4 | | 19.70% | | 11.64% | | 2.12% |
| Class F5 | | 21.80% | | 12.65% | | 3.02% |
| Class I6 | | 21.86% | | 12.78% | | 3.14% |
| Class R27 | | 21.13% | | 12.44% | | 2.85% |
| Class R38 | | 21.30% | | 12.30% | | 2.74% |
1 Reflects the deduction of the maximum initial sales charge of 5.75%.
2 Performance for each unmanaged index does not reflect any fees or expenses. The performance of each index is not necessarily representative of the Fund’s performance. Performance of each index begins on June 30, 2008.
3 Class A shares commenced operations on June 23, 2008 and performance for the Class began on June 30, 2008. Total return, which is the percentage change in net asset value, after deduction of the maximum initial sales charge of 5.75% applicable to Class A shares, with all dividends and distributions reinvested for the periods shown ended October 31, 2013, is calculated using the SEC-required uniform method to compute such return.
4 Class C shares commenced operations on June 23, 2008 and performance for the Class began on June 30, 2008. The 1% CDSC for Class C shares normally applies before the first anniversary of the purchase date. Performance for other periods is at net asset value.
5 Class F shares commenced operations on June 23, 2008 and performance for the Class began on June 30, 2008. Performance is at net asset value.
6 Class I shares commenced operations on June 23, 2008 and performance for the Class began on June 30, 2008. Performance is at net asset value.
7 Class R2 shares commenced operations on June 23, 2008 and performance for the Class began on June 30, 2008. Performance is at net asset value.
8 Class R3 shares commenced operations on June 23, 2008 and performance for the Class began on June 30, 2008. Performance is at net asset value.
16
International Opportunities Fund
Investment Comparison
Below is a comparison of a $10,000 investment in Class A shares with the same investment in the S&P Developed Ex-U.S. SmallCap Index, assuming reinvestment of all dividends and distributions. The performance of other classes will be greater than or less than the performance shown in the graph below due to different sales loads and expenses applicable to such classes. The graph and performance table below do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Past performance is no guarantee of future results.
Average Annual Total Returns at Maximum Applicable
Sales Charge for the Periods Ended October 31, 2013
| | | 1 Year | | 5 Years | | 10 Years | | Life of Class |
| Class A3 | | 22.80% | | 17.92% | | 8.73% | | — |
| Class B4 | | 24.39% | | 18.34% | | 8.80% | | — |
| Class C5 | | 28.43% | | 18.57% | | 8.68% | | — |
| Class F6 | | 30.63% | | 19.61% | | — | | 1.42% |
| Class I7 | | 30.74% | | 19.72% | | 9.75% | | — |
| Class P7 | | 30.19% | | 19.21% | | 9.31% | | — |
| Class R28 | | 29.97% | | 19.03% | | — | | 0.93% |
| Class R39 | | 30.14% | | 19.18% | | — | | 1.09% |
1 Reflects the deduction of the maximum initial sales charge of 5.75%.
2 Performance for the unmanaged index does not reflect any fees or expenses. The performance of the index is not necessarily representative of the Fund’s performance.
3 Total return, which is the percentage change in net asset value, after deduction of the maximum initial sales charge of 5.75% applicable to Class A shares, with all dividends and distributions reinvested for the periods shown ended October 31, 2013, is calculated using the SEC-required uniform method to compute such return.
4 Performance reflects the deduction of a CDSC of 5% for 1 year, 2% for 5 years, and 0% for 10 years. Class B shares automatically convert to Class A shares after approximately 8 years. (There is no initial sales charge for automatic conversions.) All returns for periods greater than 8 years reflect this conversion.
5 The 1% CDSC for Class C shares normally applies before the first anniversary of the purchase date. Performance is at net asset value.
6 Class F shares commenced operations and performance for the Class began on September 28, 2007. Performance is at net asset value.
7 Performance is at net asset value.
8 Class R2 shares commenced operations and performance for the Class began on September 28, 2007. Performance is at net asset value.
9 Class R3 shares commenced operations and performance for the Class began on September 28, 2007. Performance is at net asset value.
17
Value Opportunities Fund
Investment Comparison
Below is a comparison of a $10,000 investment in Class A shares with the same investment in the Russell 2500® Value Index and the Russell 2500® Index, assuming reinvestment of all dividends and distributions. The performance of other classes will be greater than or less than the performance shown in the graph below due to different sales loads and expenses applicable to such classes. The graph and performance table below do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. During certain periods, expenses of the Fund have been waived or reimbursed by Lord Abbett; without such waiver or reimbursement of expenses, the Fund’s returns would have been lower. Past performance is no guarantee of future results.
Average Annual Total Returns at Maximum Applicable
Sales Charge for the Periods Ended October 31, 2013
| | | 1 Year | | 5 Years | | Life of Class |
| Class A3 | | 26.34% | | 15.58% | | 10.62% |
| Class B4 | | 28.29% | | 15.95% | | 10.76% |
| Class C5 | | 32.29% | | 16.20% | | 10.76% |
| Class F6 | | 34.54% | | 17.25% | | 8.14% |
| Class I7 | | 34.63% | | 17.36% | | 11.85% |
| Class P8 | | 34.09% | | 16.84% | | 11.36% |
| Class R29 | | 33.82% | | 16.66% | | 7.60% |
| Class R310 | | 33.92% | | 16.79% | | 7.71% |
1 Reflects the deduction of the maximum initial sales charge of 5.75%.
2 Performance for each unmanaged index does not reflect any fees or expenses. The performance of each index is not necessarily representative of the Fund’s performance. Performance for each index begins on December 30, 2005.
3 Class A shares commenced operations on December 20, 2005 and performance for the Class began on December 30, 2005. Total return, which is the percentage change in net asset value, after deduction of the maximum initial sales charge of 5.75% applicable to Class A shares, with all dividends and distributions reinvested for the periods shown ended October 31, 2013, is calculated using the SEC-required uniform method to compute such return.
4 Class B shares commenced operations on December 20, 2005 and performance for the Class began on December 30, 2005. Performance reflects the deduction of a CDSC of 5% for 1 year, 2% for 5 years, and 0% for Life of the Class. Class B shares automatically convert to Class A shares after approximately 8 years. (There is no initial sales charge for automatic conversions.) All returns for periods greater than 8 years reflect this conversion.
5 Class C shares commenced operations on December 20, 2005 and performance for the Class began on December 30, 2005. The 1% CDSC for Class C shares normally applies before the first anniversary of the purchase date. Performance for other periods is at net asset value.
6 Class F shares commenced operations and performance for the Class began on September 28, 2007. Performance is at net asset value.
7 Class I shares commenced operations on December 20, 2005 and performance for the Class began on December 30, 2005. Performance is at net asset value.
8 Class P shares commenced operations on December 20, 2005 and performance for the Class began on December 30, 2005. Performance is at net asset value.
9 Class R2 shares commenced operations and performance for the Class began on September 28, 2007. Performance is at net asset value.
10 Class R3 shares commenced operations and performance for the Class began on September 28, 2007. Performance is at net asset value.
18
Expense Example
As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments (these charges vary among the share classes); and (2) ongoing costs, including management fees; distribution and service (12b-1) fees (these charges vary among the share classes); and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in each Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (May 1, 2013 through October 31, 2013).
Actual Expenses
For each class of each Fund, the first line of the table on the following page provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading titled “Expenses Paid During Period 5/1/13 – 10/31/13” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
For each class of each Fund, the second line of the table on the following page provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in each Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
19
Alpha Strategy Fund
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads). Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| | | Beginning
Account
Value | | Ending
Account
Value | | Expenses
Paid During
Period†# |
| | | 5/1/13 | | 10/31/13 | | 5/1/13 -
10/31/13 |
| Class A | | | | | | |
| Actual | | $1,000.00 | | $1,191.30 | | $1.38 |
| Hypothetical (5% Return Before Expenses) | | $1,000.00 | | $1,023.95 | | $1.28 |
| Class B | | | | | | |
| Actual | | $1,000.00 | | $1,186.90 | | $5.51 |
| Hypothetical (5% Return Before Expenses) | | $1,000.00 | | $1,020.18 | | $5.09 |
| Class C | | | | | | |
| Actual | | $1,000.00 | | $1,187.10 | | $5.51 |
| Hypothetical (5% Return Before Expenses) | | $1,000.00 | | $1,020.20 | | $5.09 |
| Class F | | | | | | |
| Actual | | $1,000.00 | | $1,192.50 | | $0.55 |
| Hypothetical (5% Return Before Expenses) | | $1,000.00 | | $1,024.70 | | $0.51 |
| Class I | | | | | | |
| Actual | | $1,000.00 | | $1,193.00 | | $0.00 |
| Hypothetical (5% Return Before Expenses) | | $1,000.00 | | $1,025.21 | | $0.00 |
| Class R2 | | | | | | |
| Actual | | $1,000.00 | | $1,189.10 | | $3.31 |
| Hypothetical (5% Return Before Expenses) | | $1,000.00 | | $1,022.18 | | $3.06 |
| Class R3 | | | | | | |
| Actual | | $1,000.00 | | $1,189.60 | | $2.76 |
| Hypothetical (5% Return Before Expenses) | | $1,000.00 | | $1,022.71 | | $2.55 |
| † | For each class of the Fund, net expenses are equal to the annualized expense ratio for such class (0.25% for Class A, 1.00% for Classes B and C, 0.10% for Class F, 0.00% for Class I, 0.60% for Class R2 and 0.50% for Class R3) multiplied by the average account value over the period, multiplied by 184/365 (to reflect one-half year period). |
| # | Does not include expenses of Underlying Funds in which Alpha Strategy Fund invests. |
Portfolio Holdings Presented by Portfolio Allocation
October 31, 2013
| Underlying Fund Name | %* | |
| Lord Abbett Developing Growth Fund, Inc. - Class I | 20.30 | % |
| Lord Abbett Securities Trust - International Opportunities Fund - Class I | 19.84 | % |
| Lord Abbett Securities Trust - Micro-Cap Growth Fund - Class I | 10.66 | % |
| Lord Abbett Securities Trust - Micro-Cap Value Fund - Class I | 9.67 | % |
| Lord Abbett Research Fund, Inc. - Small-Cap Value Fund - Class I | 19.71 | % |
| Lord Abbett Securities Trust - Value Opportunities Fund - Class I | 19.78 | % |
| Repurchase Agreement | 0.04 | % |
| Total | 100.00 | % |
| * | Represents percent of total investments. |
20
Fundamental Equity Fund
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads). Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| | | Beginning
Account
Value | | Ending
Account
Value | | Expenses
Paid During
Period† |
| | | 5/1/13 | | 10/31/13 | | 5/1/13 -
10/31/13 |
| Class A | | | | | | |
| Actual | | $1,000.00 | | $1,110.20 | | $5.64 |
| Hypothetical (5% Return Before Expenses) | | $1,000.00 | | $1,019.88 | | $5.40 |
| Class B | | | | | | |
| Actual | | $1,000.00 | | $1,106.40 | | $9.08 |
| Hypothetical (5% Return Before Expenses) | | $1,000.00 | | $1,016.61 | | $8.69 |
| Class C | | | | | | |
| Actual | | $1,000.00 | | $1,106.20 | | $9.08 |
| Hypothetical (5% Return Before Expenses) | | $1,000.00 | | $1,016.61 | | $8.69 |
| Class F | | | | | | |
| Actual | | $1,000.00 | | $1,111.30 | | $4.31 |
| Hypothetical (5% Return Before Expenses) | | $1,000.00 | | $1,021.14 | | $4.13 |
| Class I | | | | | | |
| Actual | | $1,000.00 | | $1,111.60 | | $3.78 |
| Hypothetical (5% Return Before Expenses) | | $1,000.00 | | $1,021.64 | | $3.62 |
| Class P | | | | | | |
| Actual | | $1,000.00 | | $1,109.30 | | $6.17 |
| Hypothetical (5% Return Before Expenses) | | $1,000.00 | | $1,019.37 | | $5.90 |
| Class R2 | | | | | | |
| Actual | | $1,000.00 | | $1,109.10 | | $6.96 |
| Hypothetical (5% Return Before Expenses) | | $1,000.00 | | $1,018.62 | | $6.67 |
| Class R3 | | | | | | |
| Actual | | $1,000.00 | | $1,109.90 | | $6.43 |
| Hypothetical (5% Return Before Expenses) | | $1,000.00 | | $1,019.13 | | $6.16 |
| † | For each class of the Fund, net expenses are equal to the annualized expense ratio for such class (1.06% for Class A, 1.71% for Classes B and C, 0.81% for Class F, 0.71% for Class I, 1.16% for Class P, 1.31% for Class R2 and 1.21% for Class R3) multiplied by the average account value over the period, multiplied by 184/365 (to reflect one-half year period). |
Portfolio Holdings Presented by Sector
October 31, 2013
| Sector* | %** | |
| Consumer Discretionary | 14.01 | % |
| Consumer Staples | 5.02 | % |
| Energy | 13.79 | % |
| Financials | 22.85 | % |
| Health Care | 18.70 | % |
| Industrials | 7.09 | % |
| Sector* | %** | |
| Information Technology | 8.56 | % |
| Materials | 3.57 | % |
| Telecommunication Services | 2.42 | % |
| Utilities | 3.13 | % |
| Repurchase Agreement | 0.86 | % |
| Total | 100.00 | % |
| * | A sector may comprise several industries. |
| ** | Represents percent of total investments. |
21
Growth Leaders Fund
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads). Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| | | Beginning
Account
Value | | Ending
Account
Value | | Expenses
Paid During
Period† |
| | | 5/1/13 | | 10/31/13 | | 5/1/13 -
10/31/13 |
| Class A | | | | | | |
| Actual | | $1,000.00 | | $1,231.70 | | $4.78 |
| Hypothetical (5% Return Before Expenses) | | $1,000.00 | | $1,020.96 | | $4.33 |
| Class B | | | | | | |
| Actual | | $1,000.00 | | $1,227.50 | | $8.42 |
| Hypothetical (5% Return Before Expenses) | | $1,000.00 | | $1,017.69 | | $7.63 |
| Class C | | | | | | |
| Actual | | $1,000.00 | | $1,228.00 | | $8.09 |
| Hypothetical (5% Return Before Expenses) | | $1,000.00 | | $1,017.94 | | $7.32 |
| Class F | | | | | | |
| Actual | | $1,000.00 | | $1,232.50 | | $3.26 |
| Hypothetical (5% Return Before Expenses) | | $1,000.00 | | $1,022.26 | | $2.96 |
| Class I | | | | | | |
| Actual | | $1,000.00 | | $1,233.50 | | $2.81 |
| Hypothetical (5% Return Before Expenses) | | $1,000.00 | | $1,022.69 | | $2.55 |
| Class R2 | | | | | | |
| Actual | | $1,000.00 | | $1,233.30 | | $3.55 |
| Hypothetical (5% Return Before Expenses) | | $1,000.00 | | $1,022.05 | | $3.21 |
| Class R3 | | | | | | |
| Actual | | $1,000.00 | | $1,230.20 | | $5.62 |
| Hypothetical (5% Return Before Expenses) | | $1,000.00 | | $1,020.18 | | $5.09 |
| † | For each class of the Fund, net expenses are equal to the annualized expense ratio for such class (0.85% for Class A, 1.50% for Class B, 1.44% for Class C, 0.58% for Class F, 0.50% for Class I, 0.63% for Class R2 and 1.00% for Class R3) multiplied by the average account value over the period, multiplied by 184/365 (to reflect one-half year period). |
Portfolio Holdings Presented by Sector
October 31, 2013
| Sector* | %** | |
| Consumer Discretionary | 23.77 | % |
| Consumer Staples | 8.30 | % |
| Energy | 4.51 | % |
| Financials | 6.91 | % |
| Health Care | 13.53 | % |
| Industrials | 13.47 | % |
| Sector* | %** | |
| Information Technology | 24.40 | % |
| Materials | 1.32 | % |
| Telecommunication Services | 0.95 | % |
| Repurchase Agreement | 2.84 | % |
| Total | 100.00 | % |
| * | A sector may comprise several industries. |
| ** | Represents percent of total investments. |
22
International Core Equity Fund
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads). Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| | | Beginning
Account
Value | | Ending
Account
Value | | Expenses
Paid During
Period† |
| | | 5/1/13 | | 10/31/13 | | 5/1/13 -
10/31/13 |
| Class A | | | | | | |
| Actual | | $1,000.00 | | $1,090.60 | | $5.90 |
| Hypothetical (5% Return Before Expenses) | | $1,000.00 | | $1,019.56 | | $5.70 |
| Class B | | | | | | |
| Actual | | $1,000.00 | | $1,086.90 | | $9.31 |
| Hypothetical (5% Return Before Expenses) | | $1,000.00 | | $1,016.29 | | $9.00 |
| Class C | | | | | | |
| Actual | | $1,000.00 | | $1,086.80 | | $9.20 |
| Hypothetical (5% Return Before Expenses) | | $1,000.00 | | $1,016.40 | | $8.89 |
| Class F | | | | | | |
| Actual | | $1,000.00 | | $1,092.00 | | $4.59 |
| Hypothetical (5% Return Before Expenses) | | $1,000.00 | | $1,020.82 | | $4.43 |
| Class I | | | | | | |
| Actual | | $1,000.00 | | $1,092.40 | | $4.06 |
| Hypothetical (5% Return Before Expenses) | | $1,000.00 | | $1,021.33 | | $3.92 |
| Class P | | | | | | |
| Actual | | $1,000.00 | | $1,089.90 | | $6.43 |
| Hypothetical (5% Return Before Expenses) | | $1,000.00 | | $1,019.06 | | $6.21 |
| Class R2 | | | | | | |
| Actual | | $1,000.00 | | $1,089.20 | | $7.21 |
| Hypothetical (5% Return Before Expenses) | | $1,000.00 | | $1,018.30 | | $6.97 |
| Class R3 | | | | | | |
| Actual | | $1,000.00 | | $1,089.40 | | $6.69 |
| Hypothetical (5% Return Before Expenses) | | $1,000.00 | | $1,018.82 | | $6.46 |
| † | For each class of the Fund, net expenses are equal to the annualized expense ratio for such class (1.12% for Class A, 1.77% for Class B, 1.75% for Class C, 0.87% for Class F, 0.77% for Class I, 1.22% for Class P, 1.37% for Class R2 and 1.27% for Class R3) multiplied by the average account value over the period, multiplied by 184/365 (to reflect one-half year period). |
Portfolio Holdings Presented by Sector
October 31, 2013
| Sector* | %** | |
| Consumer Discretionary | 13.69 | % |
| Consumer Staples | 7.18 | % |
| Energy | 6.01 | % |
| Financials | 24.95 | % |
| Health Care | 6.81 | % |
| Industrials | 16.64 | % |
| Sector* | %** | |
| Information Technology | 7.09 | % |
| Materials | 8.45 | % |
| Telecommunication Services | 4.15 | % |
| Utilities | 1.50 | % |
| Repurchase Agreement | 3.53 | % |
| Total | 100.00 | % |
| * | A sector may comprise several industries. |
| ** | Represents percent of total investments. |
23
International Dividend Income Fund
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads). Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| | | Beginning
Account
Value | | Ending
Account
Value | | Expenses
Paid During
Period† |
| | | 5/1/13 | | 10/31/13 | | 5/1/13 -
10/31/13 |
| Class A | | | | | | |
| Actual | | $1,000.00 | | $1,062.20 | | $5.82 |
| Hypothetical (5% Return Before Expenses) | | $1,000.00 | | $1,019.56 | | $5.70 |
| Class C | | | | | | |
| Actual | | $1,000.00 | | $1,058.20 | | $9.18 |
| Hypothetical (5% Return Before Expenses) | | $1,000.00 | | $1,016.30 | | $9.00 |
| Class F | | | | | | |
| Actual | | $1,000.00 | | $1,063.40 | | $4.52 |
| Hypothetical (5% Return Before Expenses) | | $1,000.00 | | $1,020.82 | | $4.43 |
| Class I | | | | | | |
| Actual | | $1,000.00 | | $1,063.80 | | $4.01 |
| Hypothetical (5% Return Before Expenses) | | $1,000.00 | | $1,021.32 | | $3.92 |
| Class R2 | | | | | | |
| Actual | | $1,000.00 | | $1,061.00 | | $7.12 |
| Hypothetical (5% Return Before Expenses) | | $1,000.00 | | $1,018.31 | | $6.97 |
| Class R3 | | | | | | |
| Actual | | $1,000.00 | | $1,060.80 | | $6.65 |
| Hypothetical (5% Return Before Expenses) | | $1,000.00 | | $1,018.76 | | $6.51 |
| † | For each class of the Fund, net expenses are equal to the annualized expense ratio for such class (1.12% for Class A, 1.77% for Class C, 0.87% for Class F, 0.77% for Class I, 1.37% for Class R2 and 1.28% for Class R3) multiplied by the average account value over the period, multiplied by 184/365 (to reflect one-half year period). |
Portfolio Holdings Presented by Sector
October 31, 2013
| Sector* | %** | |
| Consumer Discretionary | 11.76 | % |
| Consumer Staples | 6.12 | % |
| Energy | 10.72 | % |
| Financials | 22.76 | % |
| Health Care | 5.67 | % |
| Industrials | 10.42 | % |
| Information Technology | 2.34 | % |
| Materials | 5.37 | % |
| Telecommunication Services | 12.09 | % |
| Utilities | 9.57 | % |
| Repurchase Agreement | 3.18 | % |
| Total | 100.00 | % |
| * | A sector may comprise several industries. |
| ** | Represents percent of total investments. |
24
International Opportunities Fund
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads). Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| | | Beginning
Account
Value | | Ending
Account
Value | | Expenses
Paid During
Period† |
| | | 5/1/13 | | 10/31/13 | | 5/1/13 -
10/31/13 |
| Class A | | | | | | |
| Actual | | $1,000.00 | | $1,105.10 | | $7.80 |
| Hypothetical (5% Return Before Expenses) | | $1,000.00 | | $1,017.80 | | $7.48 |
| Class B | | | | | | |
| Actual | | $1,000.00 | | $1,102.20 | | $11.18 |
| Hypothetical (5% Return Before Expenses) | | $1,000.00 | | $1,014.55 | | $10.71 |
| Class C | | | | | | |
| Actual | | $1,000.00 | | $1,102.30 | | $11.07 |
| Hypothetical (5% Return Before Expenses) | | $1,000.00 | | $1,014.65 | | $10.61 |
| Class F | | | | | | |
| Actual | | $1,000.00 | | $1,107.20 | | $6.48 |
| Hypothetical (5% Return Before Expenses) | | $1,000.00 | | $1,019.04 | | $6.21 |
| Class I | | | | | | |
| Actual | | $1,000.00 | | $1,107.20 | | $5.95 |
| Hypothetical (5% Return Before Expenses) | | $1,000.00 | | $1,019.56 | | $5.70 |
| Class P | | | | | | |
| Actual | | $1,000.00 | | $1,105.50 | | $8.33 |
| Hypothetical (5% Return Before Expenses) | | $1,000.00 | | $1,017.29 | | $7.98 |
| Class R2 | | | | | | |
| Actual | | $1,000.00 | | $1,104.60 | | $9.12 |
| Hypothetical (5% Return Before Expenses) | | $1,000.00 | | $1,016.54 | | $8.74 |
| Class R3 | | | | | | |
| Actual | | $1,000.00 | | $1,105.30 | | $8.54 |
| Hypothetical (5% Return Before Expenses) | | $1,000.00 | | $1,017.09 | | $8.19 |
| † | For each class of the Fund, net expenses are equal to the annualized expense ratio for such class (1.47% for Class A, 2.11% for Class B, 2.09% for Class C, 1.22% for Class F, 1.12% for Class I, 1.57% for Class P, 1.72% for Class R2 and 1.61% for Class R3) multiplied by the average account value over the period, multiplied by 184/365 (to reflect one-half year period). |
Portfolio Holdings Presented by Sector
October 31, 2013
| Sector* | %** | |
| Consumer Discretionary | 19.64 | % |
| Consumer Staples | 6.13 | % |
| Energy | 5.99 | % |
| Financials | 19.50 | % |
| Health Care | 5.97 | % |
| Industrials | 21.02 | % |
| Sector* | %** | |
| Information Technology | 10.74 | % |
| Materials | 4.76 | % |
| Telecommunication Services | 0.67 | % |
| Utilities | 1.48 | % |
| Repurchase Agreement | 4.10 | % |
| Total | 100.00 | % |
| * | A sector may comprise several industries. |
| ** | Represents percent of total investments. |
25
Value Opportunities Fund
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads). Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| | | Beginning
Account
Value | | Ending
Account
Value | | Expenses
Paid During
Period† |
| | | 5/1/13 | | 10/31/13 | | 5/1/13 -
10/31/13 |
| Class A | | | | | | | | | |
| Actual | | $1,000.00 | | $1,135.00 | | | $ | 6.83 | |
| Hypothetical (5% Return Before Expenses) | | $1,000.00 | | $1,018.80 | | | $ | 6.46 | |
| Class B | | | | | | | | | |
| Actual | | $1,000.00 | | $1,131.30 | | | $ | 10.31 | |
| Hypothetical (5% Return Before Expenses) | | $1,000.00 | | $1,015.53 | | | $ | 9.75 | |
| Class C | | | | | | | | | |
| Actual | | $1,000.00 | | $1,131.30 | | | $ | 10.31 | |
| Hypothetical (5% Return Before Expenses) | | $1,000.00 | | $1,015.53 | | | $ | 9.75 | |
| Class F | | | | | | | | | |
| Actual | | $1,000.00 | | $1,136.70 | | | $ | 5.49 | |
| Hypothetical (5% Return Before Expenses) | | $1,000.00 | | $1,020.06 | | | $ | 5.19 | |
| Class I | | | | | | | | | |
| Actual | | $1,000.00 | | $1,136.80 | | | $ | 4.96 | |
| Hypothetical (5% Return Before Expenses) | | $1,000.00 | | $1,020.56 | | | $ | 4.69 | |
| Class P | | | | | | | | | |
| Actual | | $1,000.00 | | $1,134.60 | | | $ | 7.37 | |
| Hypothetical (5% Return Before Expenses) | | $1,000.00 | | $1,018.29 | | | $ | 6.97 | |
| Class R2 | | | | | | | | | |
| Actual | | $1,000.00 | | $1,133.60 | | | $ | 8.17 | |
| Hypothetical (5% Return Before Expenses) | | $1,000.00 | | $1,017.54 | | | $ | 7.73 | |
| Class R3 | | | | | | | | | |
| Actual | | $1,000.00 | | $1,134.30 | | | $ | 7.64 | |
| Hypothetical (5% Return Before Expenses) | | $1,000.00 | | $1,018.04 | | | $ | 7.22 | |
| † | For each class of the Fund, net expenses are equal to the annualized expense ratio for such class (1.27% for Class A, 1.92% for Classes B and C, 1.02% for Class F, 0.92% for Class I, 1.37% for Class P, 1.52% for Class R2 and 1.42% for Class R3) multiplied by the average account value over the period, multiplied by 184/365 (to reflect one-half year period). |
Portfolio Holdings Presented by Sector
October 31, 2013
| Sector* | %** | |
| Consumer Discretionary | 14.15 | % |
| Consumer Staples | 3.44 | % |
| Energy | 8.05 | % |
| Financials | 26.47 | % |
| Health Care | 8.91 | % |
| Industrials | 9.70 | % |
| Sector* | %** | |
| Information Technology | 11.71 | % |
| Materials | 7.28 | % |
| Utilities | 6.58 | % |
| Repurchase Agreement | 3.71 | % |
| Total | 100.00 | % |
| * | A sector may comprise several industries. |
| ** | Represents percent of total investments. |
26
Schedule of Investments
ALPHA STRATEGY FUND October 31, 2013
| Investments | | Shares | | | Fair
Value
(000) | |
| INVESTMENTS IN UNDERLYING FUNDS(a) 99.81% | | | | | | | | |
| Lord Abbett Developing Growth Fund, Inc. – Class I*(b) | | | 7,332,152 | | | $ | 236,095 | |
| Lord Abbett Securities Trust – International Opportunities Fund – Class I(c) | | | 13,377,426 | | | | 230,761 | |
| Lord Abbett Securities Trust – Micro-Cap Growth Fund – Class I*(c) | | | 5,259,932 | | | | 123,976 | |
| Lord Abbett Securities Trust – Micro-Cap Value Fund – Class I(c) | | | 3,146,482 | | | | 112,550 | |
| Lord Abbett Research Fund, Inc. – Small-Cap Value Fund – Class I(c) | | | 5,298,451 | | | | 229,264 | |
| Lord Abbett Securities Trust – Value Opportunities Fund – Class I*(c) | | | 10,532,666 | | | | 230,139 | |
Total Investments in Underlying Funds
(cost $790,647,801) | | | | | | | 1,162,785 | |
| Investments | | Principal
Amount
(000) | | | Fair
Value
(000) | |
| SHORT-TERM INVESTMENT 0.04% | | | | | | | | |
| | | | | | | | | |
| Repurchase Agreement | | | | | | | | |
Repurchase Agreement dated 10/31/2013, Zero Coupon due 11/1/2013 with Fixed Income Clearing Corp. collateralized by $465,000 of U.S. Treasury Note at 2.125% due 12/31/2015; value $486,140; proceeds: $474,848
(cost $474,848) | | $ | 475 | | | $ | 475 | |
Total Investments in Securities 99.85%
(cost $791,122,649) | | | | | | | 1,163,260 | |
| Cash and Other Assets in Excess of Liabilities 0.15% | | | | | | | 1,776 | |
| Net Assets 100.00% | | | | | | $ | 1,165,036 | |
| * | Non-income producing security. |
| (a) | Affiliated issuers (See Note 11). |
| (b) | 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. |
| (c) | Fund investment objective is long-term capital appreciation. |
The following is a summary of the inputs used as of October 31, 2013 in valuing the Fund’s investments carried at fair value(1):
| Investment Type(2)(3) | Level 1
(000) | | Level 2
(000) | | Level 3
(000) | | Total
(000) | |
| Investments in Underlying Funds | $ | 1,162,785 | | $ | — | | $ | — | | $ | 1,162,785 | |
| Repurchase Agreement | | — | | | 475 | | | — | | | 475 | |
| Total | $ | 1,162,785 | | $ | 475 | | $ | — | | $ | 1,163,260 | |
| (1) | Refer to note 2(k) for a description of fair value measurements and the three-tier hierarchy of inputs. |
| (2) | See Schedule of Investments for fair values in each industry strategy of Underlying Funds. |
| (3) | There were no level transfers during the fiscal year ended October 31, 2013. |
| | See Notes to Financial Statements. | 27 |
Schedule of Investments
FUNDAMENTAL EQUITY FUND October 31, 2013
| Investments | | Shares | | | Fair
Value
(000) | |
| COMMON STOCKS 99.88% | | | | | | | | |
| | | | | | | | | |
| Aerospace & Defense 2.00% | | | | | | | | |
| General Dynamics Corp. | | | 639,000 | | | $ | 55,356 | |
| United Technologies Corp. | | | 557,100 | | | | 59,192 | |
| Total | | | | | | | 114,548 | |
| | | | | | | | | |
| Auto Components 1.73% | | | | | | | | |
| BorgWarner, Inc. | | | 485,200 | | | | 50,039 | |
| Delphi Automotive plc (United Kingdom)(a) | | | 861,700 | | | | 49,289 | |
| Total | | | | | | | 99,328 | |
| | | | | | | | | |
| Beverages 0.77% | | | | | | | | |
| Coca-Cola Co. (The) | | | 1,117,000 | | | | 44,200 | |
| | | | | | | | | |
| Biotechnology 5.25% | | | | | | | | |
| Aegerion Pharmaceuticals, Inc.* | | | 582,886 | | | | 48,275 | |
| Celgene Corp.* | | | 405,141 | | | | 60,159 | |
| Gilead Sciences, Inc.* | | | 1,664,400 | | | | 118,156 | |
| Incyte Corp.* | | | 776,000 | | | | 30,264 | |
| Puma Biotechnology, Inc.* | | | 612,700 | | | | 23,472 | |
| Sarepta Therapeutics, Inc.* | | | 525,958 | | | | 20,481 | |
| Total | | | | | | | 300,807 | |
| | | | | | | | | |
| Building Products 0.89% | | | | | | | | |
| USG Corp.* | | | 1,871,100 | | | | 51,100 | |
| | | | | | | | | |
| Capital Markets 2.75% | | | | | | | | |
| Affiliated Managers Group, Inc.* | | | 302,800 | | | | 59,785 | |
| Artisan Partners Asset Management, Inc. Class A | | | 408,594 | | | | 24,463 | |
| Invesco Ltd. | | | 2,174,000 | | | | 73,372 | |
| Total | | | | | | | 157,620 | |
| | | | | | | | | |
| Chemicals 1.94% | | | | | | | | |
| PPG Industries, Inc. | | | 607,600 | | | | 110,936 | |
| | | | | | | | | |
| Commercial Banks 4.92% | | | | | | | | |
| East West Bancorp, Inc. | | | 1,381,500 | | | | 46,543 | |
| Fifth Third Bancorp | | | 1,452,855 | | | | 27,648 | |
| First Republic Bank | | | 1,582,700 | | | | 80,828 | |
| Investments | | Shares | | | Fair
Value
(000) | |
| Signature Bank* | | | 315,000 | | | $ | 32,073 | |
| SunTrust Banks, Inc. | | | 1,882,051 | | | | 63,312 | |
| Wells Fargo & Co. | | | 737,212 | | | | 31,472 | |
| Total | | | | | | | 281,876 | |
| | | | | | | | | |
| Computers & Peripherals 1.21% | | | | | | | | |
| NCR Corp.* | | | 1,890,967 | | | | 69,115 | |
| | | | | | | | | |
| Construction & Engineering 1.98% | | | | | | | | |
| Jacobs Engineering Group, Inc.* | | | 828,600 | | | | 50,395 | |
| URS Corp. | | | 1,160,300 | | | | 62,912 | |
| Total | | | | | | | 113,307 | |
| | | | | | | | | �� |
| Consumer Finance 1.99% | | | | | | | | |
| Capital One Financial Corp. | | | 1,662,899 | | | | 114,191 | |
| | | | | | | | | |
| Diversified Financial Services 6.14% | | | | | | | | |
| Citigroup, Inc. | | | 3,191,300 | | | | 155,672 | |
| Intercontinental Exchange, Inc.* | | | 149,900 | | | | 28,890 | |
| JPMorgan Chase & Co. | | | 3,238,500 | | | | 166,912 | |
| Total | | | | | | | 351,474 | |
| | | | | | | | | |
| Diversified Telecommunication Services 2.44% | | | | | | | | |
| Verizon Communications, Inc. | | | 2,761,400 | | | | 139,478 | |
| | | | | | | | | |
| Electric: Utilities 1.22% | | | | | | | | |
| NextEra Energy, Inc. | | | 821,200 | | | | 69,597 | |
| | | | | | | | | |
| Electronic Equipment, Instruments & Components 0.86% | | | | | | | | |
| Anixter International, Inc.* | | | 578,111 | | | | 49,423 | |
| | | | | | | | | |
| Energy Equipment & Services 0.70% | | | | | | | | |
| Dril-Quip, Inc.* | | | 343,600 | | | | 40,346 | |
| | | | | | | | | |
| Food Products 2.96% | | | | | | | | |
| Kraft Foods Group, Inc. | | | 1,148,568 | | | | 62,459 | |
| Mondelez International, Inc. Class A | | | 3,187,400 | | | | 107,224 | |
| Total | | | | | | | 169,683 | |
| 28 | See Notes to Financial Statements. |
Schedule of Investments (continued)
FUNDAMENTAL EQUITY FUND October 31, 2013
| Investments | | Shares | | | Fair
Value
(000) | |
| Health Care Providers & Services 8.92% | | | | | | | | |
| CIGNA Corp. | | | 980,900 | | | $ | 75,510 | |
| Community Health Systems, Inc. | | | 1,274,800 | | | | 55,619 | |
| DaVita HealthCare Partners, Inc.* | | | 1,050,400 | | | | 59,043 | |
| Envision Healthcare Holdings, Inc.* | | | 1,050,084 | | | | 30,505 | |
| Express Scripts Holding Co.* | | | 1,957,300 | | | | 122,370 | |
| Humana, Inc. | | | 816,600 | | | | 75,250 | |
| Laboratory Corp. of America Holdings* | | | 513,400 | | | | 51,802 | |
| Team Health Holdings, Inc.* | | | 947,600 | | | | 41,164 | |
| Total | | | | | | | 511,263 | |
| | | | | | | | | |
| Household Products 1.32% | | | | | | | | |
| Kimberly-Clark Corp. | | | 700,511 | | | | 75,655 | |
| | | | | | | | | |
| Information Technology Services 3.70% | | | | | | | | |
| Alliance Data Systems Corp.* | | | 256,300 | | | | 60,758 | |
| Cognizant Technology Solutions Corp. Class A* | | | 947,300 | | | | 82,349 | |
| Vantiv, Inc. Class A* | | | 2,509,800 | | | | 69,020 | |
| Total | | | | | | | 212,127 | |
| | | | | | | | | |
| Insurance 7.22% | | | | | | | | |
| ACE Ltd. (Switzerland)(a) | | | 737,972 | | | | 70,432 | |
| Allstate Corp. (The) | | | 1,483,500 | | | | 78,715 | |
| Hartford Financial Services Group, Inc. | | | 2,772,900 | | | | 93,447 | |
| Lincoln National Corp. | | | 1,105,400 | | | | 50,196 | |
| Prudential Financial, Inc. | | | 865,100 | | | | 70,410 | |
| XL Group plc (Ireland)(a) | | | 1,644,600 | | | | 50,275 | |
| Total | | | | | | | 413,475 | |
| | | | | | | | | |
| Internet Software & Services 1.17% | | | | | | | | |
| eBay, Inc.* | | | 1,275,400 | | | | 67,226 | |
| Investments | | Shares | | | Fair
Value
(000) | |
| Life Sciences Tools & Services 2.32% | | | | | | | | |
| Quintiles Transnational Holdings, Inc.* | | | 948,911 | | | $ | 39,845 | |
| Thermo Fisher Scientific, Inc. | | | 954,400 | | | | 93,321 | |
| Total | | | | | | | 133,166 | |
| | | | | | | | | |
| Machinery 1.14% | | | | | | | | |
| Pentair Ltd. (Switzerland)(a) | | | 972,600 | | | | 65,252 | |
| | | | | | | | | |
| Media 5.41% | | | | | | | | |
| CBS Corp. Class B | | | 884,300 | | | | 52,297 | |
| Comcast Corp. Class A | | | 1,738,600 | | | | 82,723 | |
| Interpublic Group of Cos., Inc. (The) | | | 1,747,577 | | | | 29,359 | |
| Starz Class A* | | | 2,525,200 | | | | 76,135 | |
| Time Warner, Inc. | | | 1,005,800 | | | | 69,139 | |
| Total | | | | | | | 309,653 | |
| | | | | | | | | |
| Metals & Mining 1.66% | | | | | | | | |
| Reliance Steel & Aluminum Co. | | | 1,295,500 | | | | 94,947 | |
| | | | | | | | | |
| Multi-Utilities 1.94% | | | | | | | | |
| PG&E Corp. | | | 805,200 | | | | 33,698 | |
| Sempra Energy | | | 849,500 | | | | 77,423 | |
| Total | | | | | | | 111,121 | |
| | | | | | | | | |
| Oil, Gas & Consumable Fuels 13.19% | | | | | | | | |
| Apache Corp. | | | 672,200 | | | | 59,691 | |
| Cimarex Energy Co. | | | 683,900 | | | | 72,049 | |
| EQT Corp. | | | 760,900 | | | | 65,141 | |
| Exxon Mobil Corp. | | | 876,419 | | | | 78,545 | |
| Marathon Petroleum Corp. | | | 930,900 | | | | 66,708 | |
| Occidental Petroleum Corp. | | | 878,360 | | | | 84,393 | |
| Pioneer Natural Resources Co. | | | 485,900 | | | | 99,502 | |
| Range Resources Corp. | | | 898,252 | | | | 68,007 | |
| Southwestern Energy Co.* | | | 1,821,200 | | | | 67,785 | |
| Valero Energy Corp. | | | 2,281,000 | | | | 93,909 | |
| Total | | | | | | | 755,730 | |
| | See Notes to Financial Statements. | 29 |
Schedule of Investments (concluded)
FUNDAMENTAL EQUITY FUND October 31, 2013
| Investments | | Shares | | | Fair
Value
(000) | |
| Pharmaceuticals 2.34% | | | | | | | | |
| Actavis plc* | | | 774,000 | | | $ | 119,645 | |
| Eli Lilly & Co. | | | 293,300 | | | | 14,612 | |
| Total | | | | | | | 134,257 | |
| | | | | | | | | |
| Professional Services 0.72% | | | | | | | | |
| Towers Watson & Co.Class A | | | 360,700 | | | | 41,412 | |
| | | | | | | | | |
| Road & Rail 0.42% | | | | | | | | |
| Con-way, Inc. | | | 579,100 | | | | 23,859 | |
| | | | | | | | | |
| Semiconductors & Semiconductor Equipment 0.72% | | | | | | | | |
| Xilinx, Inc. | | | 905,400 | | | | 41,123 | |
| | | | | | | | | |
| Software 0.96% | | | | | | | | |
| Electronic Arts, Inc.* | | | 2,085,900 | | | | 54,755 | |
| | | | | | | | | |
| Specialty Retail 5.95% | | | | | | | | |
| Bed Bath & Beyond, Inc.* | | | 676,826 | | | | 52,332 | |
| CST Brands, Inc. | | | 1,542,188 | | | | 49,720 | |
| Foot Locker, Inc. | | | 1,822,000 | | | | 63,224 | |
| GNC Holdings, Inc. Class A | | | 992,500 | | | | 58,379 | |
| PetSmart, Inc. | | | 773,500 | | | | 56,280 | |
| TJX Cos., Inc. (The) | | | 1,002,800 | | | | 60,960 | |
| Total | | | | | | | 340,895 | |
| | | | | | | | | |
| Textiles, Apparel & Luxury Goods 1.03% | | | | | | | | |
| PVH Corp. | | | 473,100 | | | | 58,934 | |
Total Common Stocks
(cost $4,712,047,214) | | | | | | | 5,721,879 | |
| Investments | | Principal
Amount
(000) | | | Fair
Value
(000) | |
| SHORT-TERM INVESTMENT 0.86% | | | | | | | | |
| | | | | | | | | |
| Repurchase Agreement | | | | | | | | |
Repurchase Agreement dated 10/31/2013, Zero Coupon due 11/1/2013 with Fixed Income Clearing Corp. collateralized by $40,135,000 of U.S. Treasury Note at 0.75% due 3/31/2018; $11,510,000 of U.S. Treasury Note at 0.875% due 7/31/2019; value: $50,441,246; proceeds: $49,451,379
(cost $49,451,379) | | $ | 49,451 | | | $ | 49,451 | |
Total Investments in Securities 100.74%
(cost $4,761,498,593) | | | | | | | 5,771,330 | |
| Liabilities in Excess of Cash and Other Assets (0.74)% | | | | | | | (42,394 | ) |
| Net Assets 100.00% | | | | | | $ | 5,728,936 | |
| * | Non-income producing security. |
| (a) | Foreign security traded in U.S. dollars. |
The following is a summary of the inputs used as of October 31, 2013 in valuing the Fund’s investments carried at fair value(1):
| Investment Type(2)(3) | | Level 1
(000) | | | Level 2
(000) | | | Level 3
(000) | | | Total
(000) | |
| Common Stocks | | $ | 5,721,879 | | | $ | — | | | $ | — | | | $ | 5,721,879 | |
| Repurchase Agreement | | | — | | | | 49,451 | | | | — | | | | 49,451 | |
| Total | | $ | 5,721,879 | | | $ | 49,451 | | | $ | — | | | $ | 5,771,330 | |
| (1) | Refer to note 2(k) for a description of fair value measurements and the three-tier hierarchy of inputs. |
| (2) | See Schedule of Investments for fair values in each industry and identification of foreign issuers and/or geography. |
| (3) | There were no level transfers during the fiscal year ended October 31, 2013. |
| 30 | See Notes to Financial Statements. |
Schedule of Investments
GROWTH LEADERS FUND October 31, 2013
| Investments | | Shares | | | Fair
Value
(000) | |
| COMMON STOCKS 95.44% | | | | | | | | |
| | | | | | | | | |
| Aerospace & Defense 5.76% | | | | | | | | |
| B/E Aerospace, Inc.* | | | 52,963 | | | $ | 4,299 | |
| Boeing Co. (The) | | | 49,066 | | | | 6,403 | |
| Honeywell International, Inc. | | | 57,717 | | | | 5,006 | |
| Precision Castparts Corp. | | | 22,493 | | | | 5,701 | |
| United Technologies Corp. | | | 33,726 | | | | 3,583 | |
| Total | | | | | | | 24,992 | |
| | | | | | | | | |
| Air Freight & Logistics 1.18% | | | | | | | | |
| FedEx Corp. | | | 39,169 | | | | 5,131 | |
| | | | | | | | | |
| Auto Components 0.75% | | | | | | | | |
| Gentex Corp. | | | 110,642 | | | | 3,257 | |
| | | | | | | | | |
| Beverages 1.26% | | | | | | | | |
| PepsiCo, Inc. | | | 64,771 | | | | 5,447 | |
| | | | | | | | | |
| Biotechnology 7.70% | | | | | | | | |
| Alexion Pharmaceuticals, Inc.* | | | 42,028 | | | | 5,167 | |
| Biogen Idec, Inc.* | | | 33,353 | | | | 8,145 | |
| Celgene Corp.* | | | 37,832 | | | | 5,618 | |
| Gilead Sciences, Inc.* | | | 127,389 | | | | 9,043 | |
| Incyte Corp.* | | | 60,161 | | | | 2,346 | |
| Regeneron Pharmaceuticals, Inc.* | | | 10,779 | | | | 3,100 | |
| Total | | | | | | | 33,419 | |
| | | | | | | | | |
| Capital Markets 3.39% | | | | | | | | |
| Affiliated Managers Group, Inc.* | | | 23,064 | | | | 4,554 | |
| Charles Schwab Corp. (The) | | | 193,711 | | | | 4,388 | |
| Financial Engines, Inc. | | | 35,876 | | | | 2,004 | |
| TD Ameritrade Holding Corp. | | | 138,196 | | | | 3,767 | |
| Total | | | | | | | 14,713 | |
| | | | | | | | | |
| Chemicals 1.30% | | | | | | | | |
| Monsanto Co. | | | 53,623 | | | | 5,624 | |
| | | | | | | | | |
| Communications Equipment 0.46% | | | | | | | | |
| QUALCOMM, Inc. | | | 28,654 | | | | 1,991 | |
| Investments | | Shares | | | Fair
Value
(000) | |
| Computers & Peripherals 3.52% | | | | | | | | |
| Apple, Inc. | | | 20,475 | | | $ | 10,695 | |
| SanDisk Corp. | | | 65,853 | | | | 4,577 | |
| Total | | | | | | | 15,272 | |
| | | | | | | | | |
| Consumer Finance 1.49% | | | | | | | | |
| American Express Co. | | | 79,156 | | | | 6,475 | |
| | | | | | | | | |
| Diversified Consumer Services 0.84% | | | | | | | | |
| LifeLock, Inc.* | | | 226,200 | | | | 3,640 | |
| | | | | | | | | |
| Diversified Financial Services 1.14% | | | | | | | | |
| Intercontinental Exchange, Inc.* | | | 25,714 | | | | 4,956 | |
| | | | | | | | | |
| Diversified Telecommunication Services 0.93% | | | | | | | | |
| Verizon Communications, Inc. | | | 80,132 | | | | 4,047 | |
| | | | | | | | | |
| Electrical Equipment 1.20% | | | | | | | | |
| Rockwell Automation, Inc. | | | 47,170 | | | | 5,208 | |
| | | | | | | | | |
| Energy Equipment & Services 3.41% | | | | | | | | |
| CARBO Ceramics, Inc. | | | 14,451 | | | | 1,811 | |
| Core Laboratories NV (Netherlands)*(a) | | | 16,373 | | | | 3,065 | |
| Frank’s International NV (Netherlands)*(a) | | | 121,225 | | | | 3,708 | |
| Schlumberger Ltd. | | | 66,265 | | | | 6,211 | |
| Total | | | | | | | 14,795 | |
| | | | | | | | | |
| Food & Staples Retailing 4.40% | | | | | | | | |
| Costco Wholesale Corp. | | | 45,179 | | | | 5,331 | |
| United Natural Foods, Inc.* | | | 37,160 | | | | 2,655 | |
| Walgreen Co. | | | 103,263 | | | | 6,117 | |
| Whole Foods Market, Inc. | | | 79,290 | | | | 5,006 | |
| Total | | | | | | | 19,109 | |
| | | | | | | | | |
| Health Care Equipment & Supplies 0.51% | | | | | | | | |
| Align Technology, Inc.* | | | 38,510 | | | | 2,197 | |
| | | | | | | | | |
| Health Care Technology 1.01% | | | | | | | | |
| athenahealth, Inc.* | | | 18,650 | | | | 2,490 | |
| Medidata Solutions, Inc.* | | | 17,186 | | | | 1,896 | |
| Total | | | | | | | 4,386 | |
| | See Notes to Financial Statements. | 31 |
Schedule of Investments (continued)
GROWTH LEADERS FUND October 31, 2013
| Investments | | Shares | | | Fair
Value
(000) | |
| Hotels, Restaurants & Leisure 5.10% | | | | | | | | |
| Chipotle Mexican Grill, Inc.* | | | 9,511 | | | $ | 5,012 | |
| Las Vegas Sands Corp. | | | 84,027 | | | | 5,900 | |
| Starbucks Corp. | | | 84,212 | | | | 6,826 | |
| Starwood Hotels & Resorts Worldwide, Inc. | | | 59,831 | | | | 4,405 | |
| Total | | | | | | | 22,143 | |
| | | | | | | | | |
| Household Durables 0.72% | | | | | | | | |
| Harman International Industries, Inc. | | | 38,723 | | | | 3,137 | |
| | | | | | | | | |
| Household Products 1.57% | | | | | | | | |
| Colgate-Palmolive Co. | | | 105,213 | | | | 6,810 | |
| | | | | | | | | |
| Industrial Conglomerates 0.82% | | | | | | | | |
| Danaher Corp. | | | 49,608 | | | | 3,576 | |
| | | | | | | | | |
| Information Technology Services 3.58% | | | | | | | | |
| Cognizant Technology | | | | | | | | |
| Solutions Corp. Class A* | | | 48,552 | | | | 4,221 | |
| EPAM Systems, Inc.* | | | 87,085 | | | | 3,263 | |
| MasterCard, Inc. Class A | | | 6,517 | | | | 4,673 | |
| Visa, Inc. Class A | | | 17,086 | | | | 3,360 | |
| Total | | | | | | | 15,517 | |
| | | | | | | | | |
| Internet & Catalog Retail 4.74% | | | | | | | | |
| Amazon.com, Inc.* | | | 24,647 | | | | 8,972 | |
| Netflix, Inc.* | | | 8,320 | | | | 2,683 | |
| priceline.com, Inc.* | | | 5,962 | | | | 6,283 | |
| TripAdvisor, Inc.* | | | 31,973 | | | | 2,645 | |
| Total | | | | | | | 20,583 | |
| | | | | | | | | |
| Internet Software & Services 9.85% | | | | | | | | |
| Facebook, Inc. Class A* | | | 176,392 | | | | 8,866 | |
| Google, Inc. Class A* | | | 20,862 | | | | 21,500 | |
| LinkedIn Corp. Class A* | | | 14,388 | | | | 3,218 | |
| MercadoLibre, Inc. (Argentina)(a) | | | 29,994 | | | | 4,038 | |
| Pandora Media, Inc.* | | | 119,030 | | | | 2,991 | |
| Yandex NV Class A (Netherland)*(a) | | | 57,615 | | | | 2,124 | |
| Total | | | | | | | 42,737 | |
| Investments | | Shares | | | Fair
Value
(000) | |
| Leisure Equipment & Products 0.52% | | | | | | | | |
| Polaris Industries, Inc. | | | 17,287 | | | $ | 2,264 | |
| | | | | | | | | |
| Life Sciences Tools & Services 1.37% | | | | | | | | |
| Illumina, Inc.* | | | 63,319 | | | | 5,921 | |
| | | | | | | | | |
| Machinery 1.10% | | | | | | | | |
| Ingersoll-Rand plc (Ireland)(a) | | | 70,637 | | | | 4,770 | |
| | | | | | | | | |
| Media 3.63% | | | | | | | | |
| AMC Networks, Inc. Class A* | | | 49,764 | | | | 3,488 | |
| Comcast Corp. Class A | | | 172,554 | | | | 8,210 | |
| Time Warner, Inc. | | | 58,725 | | | | 4,037 | |
| Total | | | | | | | 15,735 | |
| | | | | | | | | |
| Oil, Gas & Consumable Fuels 1.02% | | | | | | | | |
| Continental Resources, Inc.* | | | 20,641 | | | | 2,351 | |
| Pioneer Natural Resources Co. | | | 10,216 | | | | 2,092 | |
| Total | | | | | | | 4,443 | |
| | | | | | | | | |
| Pharmaceuticals 2.71% | | | | | | | | |
| Bristol-Myers Squibb Co. | | | 161,839 | | | | 8,500 | |
| Perrigo Co. | | | 23,709 | | | | 3,269 | |
| Total | | | | | | | 11,769 | |
| | | | | | | | | |
| Professional Services 1.37% | | | | | | | | |
| Robert Half International, Inc. | | | 61,180 | | | | 2,357 | |
| Verisk Analytics, Inc. Class A* | | | 52,306 | | | | 3,584 | |
| Total | | | | | | | 5,941 | |
| | | | | | | | | |
| Road & Rail 1.05% | | | | | | | | |
| Kansas City Southern | | | 37,488 | | | | 4,556 | |
| | | | | | | | | |
| Semiconductors & Semiconductor Equipment 2.19% | | | | | | | | |
| ARM Holdings plc ADR | | | 44,148 | | | | 2,083 | |
| SunEdison, Inc.* | | | 435,055 | | | | 4,046 | |
| SunPower Corp.* | | | 111,620 | | | | 3,370 | |
| Total | | | | | | | 9,499 | |
| 32 | See Notes to Financial Statements. |
Schedule of Investments (continued)
GROWTH LEADERS FUND October 31, 2013
| Investments | | Shares | | | Fair
Value
(000) | |
| Software 4.37% | | | | | | | | |
| Adobe Systems, Inc.* | | | 85,026 | | | $ | 4,608 | |
| Concur Technologies, Inc.* | | | 30,187 | | | | 3,158 | |
| Salesforce.com, Inc.* | | | 106,687 | | | | 5,693 | |
| Splunk, Inc.* | | | 34,577 | | | | 2,168 | |
| Ultimate Software Group, Inc. (The)* | | | 21,721 | | | | 3,356 | |
| Total | | | | | | | 18,983 | |
| | | | | | | | | |
| Specialty Retail 3.95% | | | | | | | | |
| Lowe’s Cos., Inc. | | | 128,942 | | | | 6,419 | |
| TJX Cos., Inc. (The) | | | 101,118 | | | | 6,147 | |
| ULTA Salon, Cosmetics & Fragrance, Inc.* | | | 35,643 | | | | 4,592 | |
| Total | | | | | | | 17,158 | |
| | | | | | | | | |
| Textiles, Apparel & Luxury Goods 3.09% | | | | | | | | |
| Michael Kors Holdings Ltd. (Hong Kong)*(a) | | | 59,918 | | | | 4,611 | |
| NIKE, Inc. Class B | | | 74,378 | | | | 5,635 | |
| Under Armour, Inc. Class A* | | | 39,070 | | | | 3,170 | |
| Total | | | | | | | 13,416 | |
| | | | | | | | | |
| Thrifts & Mortgage Finance 0.76% | | | | | | | | |
| Ocwen Financial Corp.* | | | 58,975 | | | | 3,316 | |
| | | | | | | | | |
| Tobacco 0.93% | | | | | | | | |
| Lorillard, Inc. | | | 78,925 | | | | 4,026 | |
| | | | | | | | | |
| Trading Companies & Distributors 0.75% | | | | | | | | |
| United Rentals, Inc.* | | | 50,170 | | | | 3,240 | |
Total Common Stocks
(cost $391,160,129) | | | | | | | 414,199 | |
| Investments | | Principal
Amount
(000) | | | Fair
Value
(000) | |
| SHORT-TERM INVESTMENT 2.79% | | | | | | | | |
| | | | | | | | | |
| Repurchase Agreement | | | | | | | | |
Repurchase Agreement dated 10/31/2013, Zero Coupon due 11/1/2013 with Fixed Income Clearing Corp. collateralized by $11,810,000 of U.S. Treasury Note at 2.125% due 12/31/2015; value: $12,346,906; proceeds: $12,102,714
(cost $12,102,714) | | $ | 12,103 | | | $ | 12,103 | |
Total Investments in Securities 98.23%
(cost $403,262,843) | | | | | | | 426,302 | |
| Cash and Other Assets in Excess of Liabilities(b) 1.77% | | | | | | | 7,679 | |
| Net Assets 100.00% | | | | | | $ | 433,981 | |
| ADR | | American Depositary Receipt. |
| * | | Non-income producing security. |
| (a) | | Foreign security traded in U.S. dollars. |
| (b) | | Cash and Other Assets in Excess of Liabilities include net unrealized appreciation on futures contracts as follows: |
| | See Notes to Financial Statements. | 33 |
Schedule of Investments (concluded)
GROWTH LEADERS FUND October 31, 2013
Open Futures Contracts at October 31, 2013:
| Type | | Expiration | | Contracts | | Position | | Fair Value | | | Unrealized Appreciation | |
| E-Mini S&P 500 Index | | December 2013 | | 1 | | Long | | | $87,550 | | | | $2,625 | |
The following is a summary of the inputs used as of October 31, 2013 in valuing the Fund’s investments carried at fair value(1):
| Investment Type(2)(3) | | Level 1
(000) | | | Level 2
(000) | | | Level 3
(000) | | | Total
(000) | |
| Common Stocks | | $ | 414,199 | | | $ | — | | | $ | — | | | $ | 414,199 | |
| Repurchase Agreement | | | — | | | | 12,103 | | | | — | | | | 12,103 | |
| Total | | $ | 414,199 | | | $ | 12,103 | | | $ | — | | | $ | 426,302 | |
| Other Financial Instruments | | | | | | | | | | | | | | | | |
| Futures Contracts | | | | | | | | | | | | | | | | |
| Assets | | $ | 3 | | | $ | — | | | $ | — | | | $ | 3 | |
| Liabilities | | | — | | | | — | | | | — | | | | — | |
| Total | | $ | 3 | | | $ | — | | | $ | — | | | $ | 3 | |
| (1) | Refer to note 2(k) for a description of fair value measurements and the three-tier hierarchy of inputs. |
| (2) | See Schedule of Investments for fair values in each industry and identification of foreign issuers and/or geography. |
| (3) | There were no level transfers during the fiscal year ended October 31, 2013. |
| 34 | See Notes to Financial Statements. |
Schedule of Investments
INTERNATIONAL CORE EQUITY FUND October 31, 2013
| Investments | | Shares | | | U.S. $
Fair Value
(000) | |
| COMMON STOCKS 96.04% | | | | | | | | |
| | | | | | | | | |
| Austria 1.70% | | | | | | | | |
| | | | | | | | | |
| Diversified Telecommunication Services 0.69% | | | | | | | | |
| Telekom Austria AG | | | 692,320 | | | $ | 5,703 | |
| | | | | | | | | |
| Machinery 1.01% | | | | | | | | |
| Andritz AG | | | 136,225 | | | | 8,392 | |
| Total Austria | | | | | | | 14,095 | |
| | | | | | | | | |
| Canada 1.00% | | | | | | | | |
| | | | | | | | | |
| Metals & Mining | | | | | | | | |
| Teck Resources Ltd. Class B | | | 310,500 | | | | 8,309 | |
| | | | | | | | | |
| China 0.93% | | | | | | | | |
| | | | | | | | | |
| Real Estate Management & Development | | | | | | | | |
| China Overseas Land & Investment Ltd. | | | 2,502,000 | | | | 7,745 | |
| | | | | | | | | |
| Denmark 0.72% | | | | | | | | |
| | | | | | | | | |
| Pharmaceuticals | | | | | | | | |
| H Lundbeck A/S | | | 276,954 | | | | 5,954 | |
| | | | | | | | | |
| France 8.03% | | | | | | | | |
| | | | | | | | | |
| Aerospace & Defense 1.74% | | | | | | | | |
| Safran SA | | | 225,946 | | | | 14,442 | |
| | | | | | | | | |
| Diversified Telecommunication Services 1.62% | | | | | | | | |
| Vivendi SA | | | 531,785 | | | | 13,498 | |
| | | | | | | | | |
| Electrical Equipment 1.63% | | | | | | | | |
| Schneider Electric SA | | | 160,667 | | | | 13,536 | |
| | | | | | | | | |
| Insurance 1.59% | | | | | | | | |
| AXA SA | | | 528,648 | | | | 13,207 | |
| | | | | | | | | |
| Textiles, Apparel & Luxury Goods 1.45% | | | | | | | | |
| Kering | | | 52,952 | | | | 12,032 | |
| Total France | | | | | | | 66,715 | |
| Investments | | Shares | | | U.S.$
Fair Value
(000) | |
| Germany 8.77% | | | | | | | | |
| | | | | | | | | |
| Air Freight & Logistics 0.70% | | | | | | | | |
| Deutsche Post AG Registered Shares | | | 172,104 | | | $ | 5,824 | |
| | | | | | | | | |
| Automobiles 1.63% | | | | | | | | |
| Daimler AG Registered Shares | | | 164,773 | | | | 13,522 | |
| | | | | | | | | |
| Capital Markets 1.01% | | | | | | | | |
| Deutsche Bank AG Registered Shares | | | 173,659 | | | | 8,401 | |
| | | | | | | | | |
| Diversified Financial Services 1.22% | | | | | | | | |
| Deutsche Boerse AG | | | 135,153 | | | | 10,175 | |
| | | | | | | | | |
| Health Care Providers & Services 1.11% | | | | | | | | |
| Fresenius SE & Co. KGaA | | | 71,140 | | | | 9,247 | |
| | | | | | | | | |
| Industrial Conglomerates 1.83% | | | | | | | | |
| Siemens AG Registered Shares | | | 118,724 | | | | 15,182 | |
| | | | | | | | | |
| Life Sciences Tools & Services 1.27% | | | | | | | | |
| Morphosys AG* | | | 135,650 | | | | 10,518 | |
| Total Germany | | | | | | | 72,869 | |
| | | | | | | | | |
| Hong Kong 3.15% | | | | | | | | |
| | | | | | | | | |
| Airlines 1.31% | | | | | | | | |
| Cathay Pacific Airways Ltd. | | | 5,498,000 | | | | 10,907 | |
| | | | | | | | | |
| Hotels, Restaurants & Leisure 1.84% | | | | | | | | |
| SJM Holdings Ltd. | | | 4,715,000 | | | | 15,234 | |
| Total Hong Kong | | | | | | | 26,141 | |
| | | | | | | | | |
| Indonesia 0.69% | | | | | | | | |
| | | | | | | | | |
| Commercial Banks | | | | | | | | |
| PT Bank Negara Indonesia (Persero) Tbk | | | 13,456,500 | | | | 5,730 | |
| | See Notes to Financial Statements. | 35 |
Schedule of Investments (continued)
INTERNATIONAL CORE EQUITY FUND October 31, 2013
| Investments | | | Shares | | | | U.S. $
Fair Value
(000) | |
| Italy 2.14% | | | | | | | | |
| | | | | | | | | |
| Oil, Gas & Consumable Fuels | | | | | | | | |
| Eni SpA ADR | | | 350,700 | | | $ | 17,816 | |
| | | | | | | | | |
| Japan 19.73% | | | | | | | | |
| | | | | | | | | |
| Airlines 0.71% | | | | | | | | |
| Japan Airlines Co., Ltd. | | | 101,300 | | | | 5,903 | |
| | | | | | | | | |
| Automobiles 3.48% | | | | | | | | |
| Nissan Motor Co., Ltd. | | | 728,500 | | | | 7,275 | |
| Toyota Motor Corp. | | | 334,900 | | | | 21,662 | |
| | | | | | | | 28,937 | |
| | | | | | | | | |
| Chemicals 1.18% | | | | | | | | |
| Asahi Kasei Corp. | | | 1,288,000 | | | | 9,759 | |
| | | | | | | | | |
| Commercial Banks 1.41% | | | | | | | | |
| Bank of Yokohama Ltd. (The) | | | 2,137,000 | | | | 11,736 | |
| | | | | | | | | |
| Diversified Financial Services 1.64% | | | | | | | | |
| ORIX Corp. | | | 794,800 | | | | 13,628 | |
| | | | | | | | | |
| Electronic Equipment, Instruments & Components 3.76% | | | | | | | | |
| Hitachi Ltd. | | | 2,122,000 | | | | 14,782 | |
| Murata Manufacturing Co., Ltd. | | | 97,800 | | | | 7,828 | |
| Omron Corp. | | | 227,700 | | | | 8,661 | |
| | | | | | | | 31,271 | |
| | | | | | | | | |
| Machinery 0.93% | | | | | | | | |
| NSK Ltd. | | | 729,000 | | | | 7,725 | |
| | | | | | | | | |
| Real Estate Management & Development 1.26% | | | | | | | | |
| Daiwa House Industry Co., Ltd. | | | 525,000 | | | | 10,470 | |
| | | | | | | | | |
| Road & Rail 1.22% | | | | | | | | |
| East Japan Railway Co. | | | 117,100 | | | | 10,134 | |
| | | | | | | | | |
| Tobacco 1.09% | | | | | | | | |
| Japan Tobacco, Inc. | | | 251,000 | | | | 9,062 | |
| Investments | | Shares | | | U.S. $
Fair Value
(000) | |
| Trading Companies & Distributors 3.05% | | | | | | | | |
| Mitsubishi Corp. | | | 676,700 | | | $ | 13,640 | |
| Sumitomo Corp. | | | 902,900 | | | | 11,707 | |
| | | | | | | | 25,347 | |
| Total Japan | | | | | | | 163,972 | |
| | | | | | | | | |
| Luxembourg 1.23% | | | | | | | | |
| | | | | | | | | |
| Metals & Mining | | | | | | | | |
| ArcelorMittal Registered Shares | | | 645,400 | | | | 10,171 | |
| | | | | | | | | |
| Mexico 0.63% | | | | | | | | |
| | | | | | | | | |
| Real Estate Investment Trusts | | | | | | | | |
| Macquarie Mexico Real Estate Management SA de CV* | | | 2,863,200 | | | | 5,262 | |
| | | | | | | | | |
| Netherlands 5.77% | | | | | | | | |
| | | | | | | | | |
| Beverages 0.99% | | | | | | | | |
| Heineken Holding NV | | | 129,007 | | | | 8,214 | |
| | | | | | | | | |
| Diversified Financial Services 1.59% | | | | | | | | |
| ING Groep NV CVA* | | | 1,037,914 | | | | 13,223 | |
| | | | | | | | | |
| Diversified Telecommunication Services 0.38% | | | | | | | | |
| Koninklijke KPN NV* | | | 1,000,599 | | | | 3,198 | |
| | | | | | | | | |
| Food & Staples Retailing 1.31% | | | | | | | | |
| Koninklijke Ahold NV | | | 569,696 | | | | 10,845 | |
| | | | | | | | | |
| Insurance 1.50% | | | | | | | | |
| Aegon NV | | | 1,568,160 | | | | 12,485 | |
| Total Netherlands | | | | | | | 47,965 | |
| | | | | | | | | |
| Norway 6.90% | | | | | | | | |
| | | | | | | | | |
| Biotechnology 1.07% | | | | | | | | |
| Algeta ASA* | | | 223,862 | | | | 8,893 | |
| | | | | | | | | |
| Commercial Banks 2.11% | | | | | | | | |
| DnB NOR ASA | | | 991,820 | | | | 17,577 | |
| 36 | See Notes to Financial Statements. | |
Schedule of Investments (continued)
INTERNATIONAL CORE EQUITY FUND October 31, 2013
| Investments | | Shares | | | U.S. $
Fair Value
(000) | |
| Norway (continued) | | | | | | | | |
| | | | | | | | | |
| Diversified Telecommunication Services 1.44% | | | | | | | | |
| Telenor ASA | | | 497,210 | | | $ | 11,944 | |
| | | | | | | | | |
| Energy Equipment & Services 0.94% | | | | | | | | |
| Ocean Rig UDW, Inc.* | | | 444,196 | | | | 7,787 | |
| | | | | | | | | |
| Insurance 1.34% | | | | | | | | |
| Storebrand ASA* | | | 1,729,315 | | | | 11,166 | |
| Total Norway | | | | | | | 57,367 | |
| | | | | | | | | |
| Portugal 1.75% | | | | | | | | |
| | | | | | | | | |
| Oil, Gas & Consumable Fuels | | | | | | | | |
| Galp Energia SGPS SA | | | 858,957 | | | | 14,555 | |
| | | | | | | | | |
| South Korea 4.39% | | | | | | | | |
| | | | | | | | | |
| Chemicals 1.59% | | | | | | | | |
| LG Chem Ltd. | | | 46,826 | | | | 13,221 | |
| | | | | | | | | |
| Commercial Banks 0.49% | | | | | | | | |
| DGB Financial Group, Inc. | | | 255,330 | | | | 4,092 | |
| | | | | | | | | |
| Semiconductors & Semiconductor Equipment 2.31% | | | | | | | | |
| Samsung Electronics Co., Ltd. | | | 7,850 | | | | 10,842 | |
| SK Hynix, Inc.* | | | 277,480 | | | | 8,358 | |
| | | | | | | | 19,200 | |
| Total South Korea | | | | | | | 36,513 | |
| | | | | | | | | |
| Spain 3.41% | | | | | | | | |
| | | | | | | | | |
| Airlines 1.39% | | | | | | | | |
| International Consolidated Airlines Group SA* | | | 2,077,658 | | | | 11,590 | |
| | | | | | | | | |
| Construction & Engineering 1.05% | | | | | | | | |
| Obrascon Huarte Lain SA | | | 207,282 | | | | 8,696 | |
| | | | | | | | | |
| Media 0.97% | | | | | | | | |
| Mediaset Espana Comunicacion SA* | | | 661,295 | | | | 8,081 | |
| Total Spain | | | | | | | 28,367 | |
| Investments | | Shares | | | U.S. $
Fair Value
(000) | |
| Sweden 0.89% | | | | | | | | |
| | | | | | | | | |
| Household Durables | | | | | | | | |
| Electrolux AB Series B | | | 297,786 | | | $ | 7,353 | |
| | | | | | | | | |
| Switzerland 4.47% | | | | | | | | |
| | | | | | | | | |
| Chemicals 1.18% | | | | | | | | |
| Syngenta AG Registered Shares | | | 24,223 | | | | 9,784 | |
| | | | | | | | | |
| Insurance 0.68% | | | | | | | | |
| Swiss Re Ltd.* | | | 63,957 | | | | 5,618 | |
| | | | | | | | | |
| Pharmaceuticals 2.61% | | | | | | | | |
| Novartis AG Registered Shares | | | 132,814 | | | | 10,312 | |
| Roche Holding AG | | | 41,200 | | | | 11,406 | |
| | | | | | | | 21,718 | |
| Total Switzerland | | | | | | | 37,120 | |
| | | | | | | | | |
| Taiwan 0.99% | | | | | | | | |
| | | | | | | | | |
| Semiconductors & Semiconductor Equipment | | | | | | | | |
| Siliconware Precision Industries Co. ADR | | | 1,373,100 | | | | 8,225 | |
| | | | | | | | | |
| Thailand 1.10% | | | | | | | | |
| | | | | | | | | |
| Commercial Banks | | | | | | | | |
| Bangkok Bank Public Co., Ltd. | | | 1,383,600 | | | | 9,157 | |
| | | | | | | | | |
| United Kingdom 17.65% | | | | | | | | |
| | | | | | | | | |
| Commercial Banks 4.00% | | | | | | | | |
| Barclays plc | | | 3,985,492 | | | | 16,845 | |
| HSBC Holdings plc | | | 698,565 | | | | 7,640 | |
| HSBC Holdings plc ADR | | | 83,500 | | | | 4,596 | |
| Lloyds Banking Group plc* | | | 3,377,093 | | | | 4,198 | |
| | | | | | | | 33,279 | |
| | | | | | | | | |
| Electric: Utilities 0.88% | | | | | | | | |
| SSE plc | | | 323,437 | | | | 7,343 | |
| | | | | | | | | |
| Food & Staples Retailing 0.97% | | | | | | | | |
| Tesco plc | | | 1,383,860 | | | | 8,081 | |
| | See Notes to Financial Statements. | 37 |
Schedule of Investments (continued)
INTERNATIONAL CORE EQUITY FUND October 31, 2013
| Investments | | Shares | | | U.S. $
Fair Value
(000) | |
| United Kingdom (continued) | | | | | | | | |
| | | | | | | | | |
| Food Products 2.02% | | | | | | | | |
| Tate & Lyle plc | | | 834,506 | | | $ | 10,591 | |
| Unilever plc | | | 152,725 | | | | 6,183 | |
| | | | | | | | 16,774 | |
| | | | | | | | | |
| Household Durables 1.51% | | | | | | | | |
| Berkeley Group Holdings plc | | | 333,734 | | | | 12,522 | |
| | | | | | | | | |
| Insurance 1.62% | | | | | | | | |
| Prudential plc | | | 655,184 | | | | 13,436 | |
| | | | | | | | | |
| Media 1.88% | | | | | | | | |
| WPP plc | | | 733,822 | | | | 15,590 | |
| | | | | | | | | |
| Metals & Mining 2.24% | | | | | | | | |
| Rio Tinto plc ADR | | | 367,600 | | | | 18,637 | |
| | | | | | | | | |
| Multi-Utilities 0.61% | | | | | | | | |
| National Grid plc | | | 403,950 | | | | 5,081 | |
| | | | | | | | | |
| Oil, Gas & Consumable Fuels 1.15% | | | | | | | | |
| Genel Energy plc* | | | 627,215 | | | | 9,554 | |
| | | | | | | | | |
| Tobacco 0.77% | | | | | | | | |
| Imperial Tobacco Group plc | | | 171,301 | | | | 6,397 | |
| Total United Kingdom | | | | | | | 146,694 | |
Total Common Stocks
(cost $654,127,852) | | | | | | | 798,095 | |
| Investments | | Principal
Amount
(000) | | | U.S. $
Fair Value
(000) | |
| SHORT-TERM INVESTMENT 3.52% | | | | | | | | |
| | | | | | | | | |
| Repurchase Agreement | | | | | | | | |
Repurchase Agreement dated 10/31/2013, Zero Coupon due 11/1/2013 with Fixed Income Clearing Corp. collateralized by $28,515,000 of U.S. Treasury Note at 2.125% due 12/31/2015; value: $29,811,349; proceeds: $29,224,961
(cost $29,224,961) | | $ | 29,225 | | | $ | 29,225 | |
Total Investments in Securities 99.56%
(cost $683,352,813) | | | | | | | 827,320 | |
| Cash, Foreign Cash and Other Assets in Excess of Liabilities(a) 0.44% | | | | | | | 3,669 | |
| Net Assets 100.00% | | | | | | $ | 830,989 | |
| ADR | | American Depositary Receipt. |
| * | | Non-income producing security. |
| (a) | | Cash, Foreign Cash and Other Assets in Excess of Liabilities include net unrealized depreciation on forward foreign currency exchange contracts as follows: |
| 38 | See Notes to Financial Statements. | |
Schedule of Investments (continued)
INTERNATIONAL CORE EQUITY FUND October 31, 2013
Open Forward Foreign Currency Exchange Contracts at October 31, 2013:
Forward
Foreign
Currency
Exchange
Contracts | Transaction
Type | | Counterparty | | Expiration
Date | | Foreign
Currency | | | U.S. $
Cost on
Origination
Date | | | U.S. $
Current
Value | | | Unrealized
Appreciation | |
| Australian dollar | | Buy | | J.P.Morgan | | 12/9/2013 | | | 3,000,000 | | | $ | 2,664,189 | | | $ | 2,828,967 | | | $ | 164,778 | |
| Australian dollar | | Buy | | J.P.Morgan | | 12/9/2013 | | | 8,310,000 | | | | 7,513,644 | | | | 7,836,238 | | | | 322,594 | |
| Australian dollar | | Buy | | J.P.Morgan | | 12/9/2013 | | | 4,465,000 | | | | 4,038,186 | | | | 4,210,446 | | | | 172,260 | |
| Australian dollar | | Buy | | J.P.Morgan | | 2/10/2014 | | | 4,620,000 | | | | 4,319,289 | | | | 4,338,501 | | | | 19,212 | |
| Australian dollar | | Buy | | UBS AG | | 12/9/2013 | | | 2,090,000 | | | | 1,884,946 | | | | 1,970,847 | | | | 85,901 | |
| Australian dollar | | Buy | | UBS AG | | 12/9/2013 | | | 4,635,000 | | | | 4,111,829 | | | | 4,370,754 | | | | 258,925 | |
| Brazilian real | | Buy | | UBS AG | | 12/2/2013 | | | 14,280,000 | | | | 6,128,755 | | | | 6,331,434 | | | | 202,679 | |
| Chilean peso | | Buy | | Morgan Stanley | | 11/18/2013 | | | 1,453,000,000 | | | | 2,783,525 | | | | 2,830,758 | | | | 47,233 | |
| euro | | Buy | | J.P.Morgan | | 11/25/2013 | | | 1,050,000 | | | | 1,421,033 | | | | 1,425,703 | | | | 4,670 | |
| euro | | Buy | | Morgan Stanley | | 11/25/2013 | | | 3,450,000 | | | | 4,586,885 | | | | 4,684,452 | | | | 97,567 | |
| Singapore dollar | | Buy | | UBS AG | | 1/16/2014 | | | 2,150,000 | | | | 1,713,351 | | | | 1,730,903 | | | | 17,552 | |
| South African rand | | Buy | | J.P.Morgan | | 12/19/2013 | | | 23,250,000 | | | | 2,287,481 | | | | 2,300,618 | | | | 13,137 | |
| South Korean won | | Buy | | Credit Suisse | | 11/4/2013 | | | 4,584,000,000 | | | | 4,028,474 | | | | 4,321,471 | | | | 292,997 | |
| Swiss franc | | Buy | | Goldman Sachs | | 1/16/2014 | | | 1,930,000 | | | | 2,080,872 | | | | 2,128,385 | | | | 47,513 | |
| Swiss franc | | Buy | | Goldman Sachs | | 1/16/2014 | | | 5,725,000 | | | | 6,300,064 | | | | 6,313,475 | | | | 13,411 | |
| Canadian dollar | | Sell | | Morgan Stanley | | 2/24/2014 | | | 3,950,000 | | | | 3,827,037 | | | | 3,777,491 | | | | 49,546 | |
| Chilean peso | | Sell | | Morgan Stanley | | 11/18/2013 | | | 1,453,000,000 | | | | 2,856,581 | | | | 2,830,758 | | | | 25,823 | |
| Japanese yen | | Sell | | Barclays Bank plc | | 1/9/2014 | | | 954,000,000 | | | | 9,756,137 | | | | 9,706,471 | | | | 49,666 | |
| Japanese yen | | Sell | | Goldman Sachs | | 11/26/2013 | | | 201,000,000 | | | | 2,093,205 | | | | 2,044,346 | | | | 48,859 | |
| Mexican peso | | Sell | | J.P.Morgan | | 11/22/2013 | | | 16,540,000 | | | | 1,308,718 | | | | 1,265,893 | | | | 42,825 | |
| Norwegian krone | | Sell | | Deutsche Bank AG | | 12/12/2013 | | | 44,500,000 | | | | 7,506,069 | | | | 7,464,732 | | | | 41,337 | |
| Norwegian krone | | Sell | | Deutsche Bank AG | | 12/12/2013 | | | 39,020,000 | | | | 6,589,424 | | | | 6,545,479 | | | | 43,945 | |
| Norwegian krone | | Sell | | Goldman Sachs | | 1/24/2014 | | | 127,000,000 | | | | 21,427,851 | | | | 21,268,599 | | | | 159,252 | |
| Unrealized Appreciation on Forward Foreign Currency Exchange Contracts | | | $ | 2,221,682 | |
| | See Notes to Financial Statements. | 39 |
Schedule of Investments (concluded)
INTERNATIONAL CORE EQUITY FUND October 31, 2013
Forward
Foreign
Currency
Exchange
Contracts | Transaction
Type | | Counterparty | | Expiration
Date | | | Foreign
Currency | | | U.S. $
Cost on
Origination
Date | | | U.S. $
Current
Value | | | Unrealized
Depreciation | |
| Australian dollar | | Buy | | Goldman Sachs | | 12/9/2013 | | | 6,215,000 | | | $ | 5,861,932 | | | $ | 5,860,676 | | | $ | (1,256 | ) |
| Australian dollar | | Buy | | UBS AG | | 2/10/2014 | | | 26,265,000 | | | | 25,120,135 | | | | 24,664,658 | | | | (455,477 | ) |
| euro | | Buy | | J.P.Morgan | | 11/25/2013 | | | 2,060,000 | | | | 2,845,223 | | | | 2,797,093 | | | | (48,130 | ) |
| euro | | Buy | | J.P.Morgan | | 11/25/2013 | | | 1,155,000 | | | | 1,592,715 | | | | 1,568,273 | | | | (24,442 | ) |
| Japanese yen | | Buy | | Goldman Sachs | | 11/26/2013 | | | 201,000,000 | | | | 2,057,815 | | | | 2,044,347 | | | | (13,468 | ) |
| Japanese yen | | Buy | | Goldman Sachs | | 1/9/2014 | | | 139,000,000 | | | | 1,416,360 | | | | 1,414,255 | | | | (2,105 | ) |
| Japanese yen | | Buy | | Morgan Stanley | | 1/9/2014 | | | 245,000,000 | | | | 2,519,063 | | | | 2,492,752 | | | | (26,311 | ) |
| Mexican peso | | Buy | | Morgan Stanley | | 11/22/2013 | | | 16,540,000 | | | | 1,281,745 | | | | 1,265,893 | | | | (15,852 | ) |
| Singapore dollar | | Buy | | J.P.Morgan | | 1/16/2014 | | | 4,210,000 | | | | 3,401,273 | | | | 3,389,350 | | | | (11,923 | ) |
| Swiss franc | | Buy | | Goldman Sachs | | 2/25/2014 | | | 13,065,000 | | | | 14,638,951 | | | | 14,413,281 | | | | (225,670 | ) |
| euro | | Sell | | Goldman Sachs | | 2/18/2014 | | | 17,250,000 | | | | 23,401,229 | | | | 23,425,097 | | | | (23,868 | ) |
| euro | | Sell | | Morgan Stanley | | 12/30/2013 | | | 1,550,000 | | | | 2,052,507 | | | | 2,104,688 | | | | (52,181 | ) |
| euro | | Sell | | Morgan Stanley | | 12/30/2013 | | | 3,760,000 | | | | 4,936,109 | | | | 5,105,565 | | | | (169,456 | ) |
| euro | | Sell | | UBS AG | | 11/25/2013 | | | 5,100,000 | | | | 6,738,293 | | | | 6,924,843 | | | | (186,550 | ) |
| euro | | Sell | | UBS AG | | 11/25/2013 | | | 4,800,000 | | | | 6,382,829 | | | | 6,517,499 | | | | (134,670 | ) |
| euro | | Sell | | UBS AG | | 11/25/2013 | | | 7,600,000 | | | | 9,979,925 | | | | 10,319,373 | | | | (339,448 | ) |
| Norwegian krone | | Sell | | Morgan Stanley | | 1/24/2014 | | | 25,550,000 | | | | 4,206,939 | | | | 4,278,840 | | | | (71,901 | ) |
| South Korean won | | Sell | | Barclays Bank plc | | 12/30/2013 | | | 3,525,000,000 | | | | 3,258,910 | | | | 3,293,492 | | | | (34,582 | ) |
| South Korean won | | Sell | | Deutsche Bank AG | | 12/30/2013 | | | 5,400,000,000 | | | | 4,794,332 | | | | 5,045,350 | | | | (251,018 | ) |
| South Korean won | | Sell | | Morgan Stanley | | 12/30/2013 | | | 3,230,000,000 | | | | 2,965,215 | | | | 3,017,867 | | | | (52,652 | ) |
| South Korean won | | Sell | | Morgan Stanley | | 12/30/2013 | | | 6,220,000,000 | | | | 5,769,147 | | | | 5,811,496 | | | | (42,349 | ) |
| South Korean won | | Sell | | UBS AG | | 11/4/2013 | | | 4,584,000,000 | | | | 3,997,558 | | | | 4,321,471 | | | | (323,913 | ) |
| Unrealized Depreciation on Forward Foreign Currency Exchange Contracts | | | $ | (2,507,222 | ) |
The following is a summary of the inputs used as of October 31, 2013 in valuing the Fund’s investments carried at fair value(1):
| Investment Type(2)(3) | | Level 1
(000) | | | Level 2
(000) | | | Level 3
(000) | | | Total
(000) | |
| Common Stocks | | $ | 798,095 | | | $ | — | | | $ | — | | | $ | 798,095 | |
| Repurchase Agreement | | | — | | | | 29,225 | | | | — | | | | 29,225 | |
| Total | | $ | 798,095 | | | $ | 29,225 | | | $ | — | | | $ | 827,320 | |
| Other Financial Instruments | | | | | | | | | | | | | | | | |
| Forward Foreign Currency Exchange Contracts | | | | | | | | | | | | | |
| Assets | | $ | — | | | $ | 2,222 | | | $ | — | | | $ | 2,222 | |
| Liabilities | | | — | | | | (2,507 | ) | | | — | | | | (2,507 | ) |
| Total | | $ | — | | | $ | (285 | ) | | $ | — | | | $ | (285 | ) |
| (1) | Refer to note 2(k) for a description of fair value measurements and the three-tier hierarchy of inputs. |
| (2) | See Schedule of Investments for fair values in each industry and identification of foreign issuers and/or geography. |
| (3) | There were no level transfers during the fiscal year ended October 31, 2013. |
| 40 | See Notes to Financial Statements. | |
Schedule of Investments
INTERNATIONAL DIVIDEND INCOME FUND October 31, 2013
| Investments | | Shares | | | U.S. $
Fair Value
(000) | |
| LONG-TERM INVESTMENTS 96.29% | | | | | | | | |
| | | | | | | | | |
| COMMON STOCKS 94.46% | | | | | | | | |
| | | | | | | | | |
| Australia 4.32% | | | | | | | | |
| | | | | | | | | |
| Commercial Banks 2.27% | | | | | | | | |
| National Australia Bank Ltd. | | | 1,587,697 | | | $ | 52,986 | |
| | | | | | | | | |
| Electric: Utilities 2.05% | | | | | | | | |
| SP AusNet | | | 18,710,819 | | | | 22,106 | |
| Spark Infrastructure Group | | | 16,154,016 | | | | 25,879 | |
| | | | | | | | 47,985 | |
| Total Australia | | | | | | | 100,971 | |
| | | | | | | | | |
| Austria 1.22% | | | | | | | | |
| | | | | | | | | |
| Metals & Mining | | | | | | | | |
| Voestalpine AG | | | 604,620 | | | | 28,556 | |
| | | | | | | | | |
| Belgium 0.91% | | | | | | | | |
| | | | | | | | | |
| Air Freight & Logistics | | | | | | | | |
| bpost SA* | | | 1,014,634 | | | | 21,339 | |
| | | | | | | | | |
| Canada 1.21% | | | | | | | | |
| | | | | | | | | |
| Oil, Gas & Consumable Fuels | | | | | | | | |
| Baytex Energy Corp. | | | 320,600 | | | | 13,382 | |
| Lightstream Resources Ltd. | | | 2,304,200 | | | | 14,806 | |
| | | | | | | | 28,188 | |
| | | | | | | | | |
| Chile 0.74% | | | | | | | | |
| | | | | | | | | |
| Electric: Utilities | | | | | | | | |
| Enersis SA ADR | | | 1,043,692 | | | | 17,221 | |
| | | | | | | | | |
| Finland 1.54% | | | | | | | | |
| | | | | | | | | |
| Paper & Forest Products | | | | | | | | |
| UPM-Kymmene OYJ | | | 2,266,566 | | | | 36,037 | |
| | | | | | | | | |
| France 12.13% | | | | | | | | |
| | | | | | | | | |
| Commercial Banks 1.50% | | | | | | | | |
| BNP Paribas SA | | | 474,901 | | | | 35,167 | |
| Investments | | Shares | | | U.S. $
Fair Value
(000) | |
| Diversified Telecommunication Services 2.86% | | | | | | | | |
| Orange SA | | | 1,934,144 | | | $ | 26,550 | |
| Vivendi SA | | | 1,585,980 | | | | 40,257 | |
| | | | | | | | 66,807 | |
| | | | | | | | | |
| Electrical Equipment 1.17% | | | | | | | | |
| Schneider Electric SA | | | 324,847 | | | | 27,368 | |
| | | | | | | | | |
| Insurance 1.48% | | | | | | | | |
| AXA SA | | | 1,386,754 | | | | 34,645 | |
| | | | | | | | | |
| Media 0.63% | | | | | | | | |
| Lagardere SCA | | | 406,263 | | | | 14,777 | |
| | | | | | | | | |
| Oil, Gas & Consumable Fuels 1.89% | | | | | | | | |
| Total SA ADR | | | 721,480 | | | | 44,140 | |
| | | | | | | | | |
| Pharmaceuticals 1.45% | | | | | | | | |
| Sanofi | | | 317,730 | | | | 33,882 | |
| | | | | | | | | |
| Textiles, Apparel & Luxury Goods 1.15% | | | | | | | | |
| Kering | | | 118,085 | | | | 26,831 | |
| Total France | | | | | | | 283,617 | |
| | | | | | | | | |
| Germany 7.78% | | | | | | | | |
| | | | | | | | | |
| Air Freight & Logistics 0.75% | | | | | | | | |
| Deutsche Post AG Registered Shares | | | 519,013 | | | | 17,564 | |
| | | | | | | | | |
| Automobiles 1.63% | | | | | | | | |
| Daimler AG Registered Shares | | | 464,571 | | | | 38,124 | |
| | | | | | | | | |
| Diversified Telecommunication Services 1.65% | | | | | | | | |
| Deutsche Telekom AG Registered Shares | | | 2,456,839 | | | | 38,695 | |
| | | | | | | | | |
| Industrial Conglomerates 1.74% | | | | | | | | |
| Siemens AG Registered Shares | | | 318,202 | | | | 40,689 | |
| | | | | | | | | |
| Media 0.75% | | | | | | | | |
| ProSiebenSat.1 Media AG | | | 367,916 | | | | 17,524 | |
| | See Notes to Financial Statements. | 41 |
Schedule of Investments (continued)
INTERNATIONAL DIVIDEND INCOME FUND October 31, 2013
| Investments | | Shares | | | U.S. $
Fair Value
(000) | |
| Germany (continued) | | | | | | | | |
| | | | | | | | | |
| Wireless Telecommunication Services 1.26% | | | | | | | | |
| Freenet AG* | | | 1,127,246 | | | $ | 29,363 | |
| Total Germany | | | | | | | 181,959 | |
| | | | | | | | | |
| Hong Kong 4.78% | | | | | | | | |
| | | | | | | | | |
| Hotels, Restaurants & Leisure 2.75% | | | | | | | | |
| SJM Holdings Ltd. | | | 12,790,000 | | | | 41,324 | |
| Wynn Macau Ltd. | | | 6,010,800 | | | | 23,065 | |
| | | | | | | | 64,389 | |
| Industrial Conglomerates 0.60% | | | | | | | | |
| NWS Holdings Ltd. | | | 4,636,000 | | | | 7,235 | |
| Shanghai Industrial Holdings Ltd. | | | 2,015,000 | | | | 6,667 | |
| | | | | | | | 13,902 | |
| | | | | | | | | |
| Real Estate Management & Development 0.97% | | | | | | | | |
| Yuexiu Property Co., Ltd. | | | 81,184,000 | | | | 22,618 | |
| | | | | | | | | |
| Water Utilities 0.46% | | | | | | | | |
| Guangdong Investment Ltd. | | | 12,600,000 | | | | 10,840 | |
| Total Hong Kong | | | | | | | 111,749 | |
| | | | | | | | | |
| Israel 1.25% | | | | | | | | |
| | | | | | | | | |
| Diversified Telecommunication Services | | | | | | | | |
| Bezeq The Israeli Telecommunication Corp., Ltd. | | | 16,805,876 | | | | 29,268 | |
| | | | | | | | | |
| Italy 4.46% | | | | | | | | |
| | | | | | | | | |
| Commercial Banks 0.95% | | | | | | | | |
| Intesa Sanpaolo SpA | | | 8,914,516 | | | | 22,162 | |
| | | | | | | | | |
| Oil, Gas & Consumable Fuels 2.03% | | | | | | | | |
| Eni SpA ADR | | | 936,180 | | | | 47,558 | |
| | | | | | | | | |
| Transportation Infrastructure 1.48% | | | | | | | | |
| Atlantia SpA | | | 1,579,020 | | | | 34,624 | |
| Total Italy | | | | | | | 104,344 | |
| Investments | | Shares | | | U.S. $
Fair Value
(000) | |
| Japan 10.43% | | | | | | | | |
| | | | | | | | | |
| Automobiles 2.81% | | | | | | | | |
| Nissan Motor Co., Ltd. | | | 3,150,000 | | | $ | 31,458 | |
| Toyota Motor Corp. | | | 530,000 | | | | 34,281 | |
| | | | | | | | 65,739 | |
| | | | | | | | | |
| Commercial Banks 1.34% | | | | | | | | |
| Aozora Bank Ltd. | | | 10,833,000 | | | | 31,398 | |
| | | | | | | | | |
| Office Electronics 1.06% | | | | | | | | |
| Ricoh Co., Ltd. | | | 2,348,000 | | | | 24,667 | |
| | | | | | | | | |
| Real Estate Investment Trusts 1.18% | | | | | | | | |
| United Urban Investment Corp. | | | 18,123 | | | | 27,665 | |
| | | | | | | | | |
| Tobacco 0.87% | | | | | | | | |
| Japan Tobacco, Inc. | | | 563,200 | | | | 20,333 | |
| | | | | | | | | |
| Trading Companies & Distributors 3.07% | | | | | | | | |
| Mitsubishi Corp. | | | 1,774,300 | | | | 35,764 | |
| Sumitomo Corp. | | | 2,778,700 | | | | 36,030 | |
| | | | | | | | 71,794 | |
| | | | | | | | | |
| Wireless Telecommunication Services 0.10% | | | | | | | | |
| KDDI Corp. | | | 43,576 | | | | 2,353 | |
| Total Japan | | | | | | | 243,949 | |
| | | | | | | | | |
| Luxembourg 0.94% | | | | | | | | |
| | | | | | | | | |
| Media | | | | | | | | |
| RTL Group SA | | | 201,377 | | | | 21,874 | |
| | | | | | | | | |
| Mexico 0.75% | | | | | | | | |
| | | | | | | | | |
| Real Estate Investment Trusts | | | | | | | | |
| Macquarie Mexico Real Estate Management SA de CV* | | | 9,573,337 | | | | 17,595 | |
| 42 | See Notes to Financial Statements. | |
Schedule of Investments (continued)
INTERNATIONAL DIVIDEND INCOME FUND October 31, 2013
| Investments | | Shares | | | U.S. $
Fair Value
(000) | |
| Netherlands 2.65% | | | | | | | | |
| | | | | | | | | |
| Insurance | | | | | | | | |
| Aegon NV | | | 4,543,067 | | | $ | 36,171 | |
| Delta Lloyd NV | | | 1,211,405 | | | | 25,758 | |
| | | | | | | | 61,929 | |
| Total Netherlands | | | | | | | 61,929 | |
| | | | | | | | | |
| Norway 2.44% | | | | | | | | |
| | | | | | | | | |
| Diversified Telecommunication Services 1.43% | | | | | | | | |
| Telenor ASA | | | 1,393,494 | | | | 33,473 | |
| | | | | | | | | |
| Energy Equipment & Services 1.01% | | | | | | | | |
| Seadrill Ltd. | | | 506,900 | | | | 23,632 | |
| Total Norway | | | | | | | 57,105 | |
| | | | | | | | | |
| Portugal 1.67% | | | | | | | | |
| | | | | | | | | |
| Electric: Utilities | | | | | | | | |
| EDP – Energias de Portugal SA | | | 10,578,242 | | | | 38,951 | |
| | | | | | | | | |
| Russia 0.84% | | | | | | | | |
| | | | | | | | | |
| Oil, Gas & Consumable Fuels | | | | | | | | |
| Gazprom OAO ADR | | | 2,103,500 | | | | 19,689 | |
| | | | | | | | | |
| Singapore 0.55% | | | | | | | | |
| | | | | | | | | |
| Real Estate Investment Trusts | | | | | | | | |
| Mapletree Logistics Trust | | | 14,661,000 | | | | 12,924 | |
| | | | | | | | | |
| South Africa 0.29% | | | | | | | | |
| | | | | | | | | |
| Metals & Mining | | | | | | | | |
| Kumba Iron Ore Ltd. | | | 162,145 | | | | 6,788 | |
| | | | | | | | | |
| South Korea 1.07% | | | | | | | | |
| | | | | | | | | |
| Wireless Telecommunication Services | | | | | | | | |
| SK Telecom Co. Ltd. | | | 117,155 | | | | 25,071 | |
| Investments | | Shares | | | U.S. $
Fair Value
(000) | |
| Spain 4.68% | | | | | | | | |
| | | | | | | | | |
| Commercial Banks 1.24% | | | | | | | | |
| Banco Bilbao Vizcaya Argentaria SA | | | 2,481,114 | | | $ | 29,069 | |
| | | | | | | | | |
| Electric: Utilities 0.50% | | | | | | | | |
| Red Electrica Corp. SA | | | 186,015 | | | | 11,595 | |
| | | | | | | | | |
| Gas Utilities 1.11% | | | | | | | | |
| Gas Natural SDG SA | | | 1,102,196 | | | | 25,994 | |
| | | | | | | | | |
| Insurance 0.31% | | | | | | | | |
| Mapfre SA | | | 1,806,649 | | | | 7,271 | |
| | | | | | | | | |
| Oil, Gas & Consumable Fuels 1.52% | | | | | | | | |
| Repsol SA | | | 1,317,745 | | | | 35,390 | |
| Total Spain | | | | | | | 109,319 | |
| | | | | | | | | |
| Sweden 1.00% | | | | | | | | |
| | | | | | | | | |
| Construction & Engineering 0.64% | | | | | | | | |
| NCC AB B Shares | | | 488,401 | | | | 15,044 | |
| | | | | | | | | |
| Personal Products 0.36% | | | | | | | | |
| Oriflame Cosmetics SA SDR | | | 265,513 | | | | 8,399 | |
| Total Sweden | | | | | | | 23,443 | |
| | | | | | | | | |
| Switzerland 3.72% | | | | | | | | |
| | | | | | | | | |
| Insurance 0.79% | | | | | | | | |
| Swiss Re Ltd.* | | | 211,422 | | | | 18,571 | |
| | | | | | | | | |
| Pharmaceuticals 2.93% | | | | | | | | |
| Novartis AG Registered Shares | | | 400,522 | | | | 31,098 | |
| Roche Holding AG | | | 134,977 | | | | 37,368 | |
| | | | | | | | 68,466 | |
| Total Switzerland | | | | | | | 87,037 | |
| | | | | | | | | |
| Taiwan 1.28% | | | | | | | | |
| | | | | | | | | |
| Semiconductors & Semiconductor Equipment | | | | | | | | |
| Siliconware Precision Industries Co. ADR | | | 4,979,120 | | | | 29,825 | |
| | See Notes to Financial Statements. | 43 |
Schedule of Investments (continued)
INTERNATIONAL DIVIDEND INCOME FUND October 31, 2013
| Investments | | Shares | | | U.S. $
Fair Value
(000) | |
| Thailand 1.15% | | | | | | | | |
| | | | | | | | | |
| Commercial Banks | | | | | | | | |
| Krung Thai Bank PCL | | | 41,107,700 | | | $ | 26,811 | |
| | | | | | | | | |
| Turkey 0.56% | | | | | | | | |
| | | | | | | | | |
| Oil, Gas & Consumable Fuels | | | | | | | | |
| Tupras Turkiye Petrol Rafinerileri AS | | | 579,542 | | | | 13,151 | |
| | | | | | | | | |
| United Kingdom 20.10% | | | | | | | | |
| | | | | | | | | |
| Beverages 0.76% | | | | | | | | |
| Britvic plc | | | 1,765,768 | | | | 17,695 | |
| | | | | | | | | |
| Commercial Banks 2.71% | | | | | | | | |
| Barclays plc | | | 7,331,818 | | | | 30,988 | |
| HSBC Holdings plc | | | 2,954,027 | | | | 32,308 | |
| | | | | | | | 63,296 | |
| | | | | | | | | |
| Consumer Finance 0.26% | | | | | | | | |
| Provident Financial plc | | | 236,134 | | | | 5,982 | |
| | | | | | | | | |
| Diversified Telecommunication Services 0.22% | | | | | | | | |
| Cable & Wireless Communications plc | | | 6,981,227 | | | | 5,238 | |
| | | | | | | | | |
| Electric: Utilities 1.09% | | | | | | | | |
| SSE plc | | | 1,124,420 | | | | 25,529 | |
| | | | | | | | | |
| Food & Staples Retailing 1.09% | | | | | | | | |
| Tesco plc | | | 4,351,414 | | | | 25,410 | |
| | | | | | | | | |
| Food Products 1.91% | | | | | | | | |
| Tate & Lyle plc | | | 2,334,052 | | | | 29,621 | |
| Unilever plc | | | 373,537 | | | | 15,123 | |
| | | | | | | | 44,744 | |
| | | | | | | | | |
| Insurance 2.53% | | | | | | | | |
| Prudential plc | | | 1,625,694 | | | | 33,339 | |
| RSA Insurance Group plc | | | 12,593,292 | | | | 25,927 | |
| | | | | | | | 59,266 | |
| Investments | | Shares | | | U.S. $
Fair Value
(000) | |
| Media 1.03% | | | | | | | | |
| Reed Elsevier plc | | | 1,722,332 | | | $ | 24,136 | |
| | | | | | | | | |
| Metals & Mining 2.28% | | | | | | | | |
| Rio Tinto plc ADR | | | 1,053,200 | | | | 53,397 | |
| | | | | | | | | |
| Multi-Utilities 0.76% | | | | | | | | |
| National Grid plc | | | 1,412,397 | | | | 17,766 | |
| | | | | | | | | |
| Oil, Gas & Consumable Fuels 1.60% | | | | | | | | |
| BP plc | | | 4,845,482 | | | | 37,502 | |
| | | | | | | | | |
| Pharmaceuticals 1.27% | | | | | | | | |
| GlaxoSmithKline plc | | | 1,122,938 | | | | 29,592 | |
| | | | | | | | | |
| Tobacco 1.10% | | | | | | | | |
| Imperial Tobacco Group plc | | | 686,413 | | | | 25,633 | |
| | | | | | | | | |
| Wireless Telecommunication Services 1.49% | | | | | | | | |
| Vodafone Group plc | | | 9,683,999 | | | | 34,859 | |
| Total United Kingdom | | | | | | | 470,045 | |
Total Common Stocks
(cost $1,895,003,776) | | | | | | | 2,208,755 | |
| | | | | | | | | |
| PREFERRED STOCKS 1.83% | | | | | | | | |
| | | | | | | | | |
| Brazil | | | | | | | | |
| | | | | | | | | |
| Diversified Telecommunication Services 0.68% | | | | | | | | |
| Oi SA | | | 9,474,400 | | | | 15,902 | |
| | | | | | | | | |
| Independent Power Producers & Energy Traders 1.15% | | | | | | | | |
| AES Tiete SA | | | 2,735,600 | | | | 26,743 | |
| Total Brazil | | | | | | | 42,645 | |
Total Preferred Stocks
(cost $48,073,746) | | | | | | | 42,645 | |
Total Long-Term Investments
(cost $1,943,077,522) | | | | | | | 2,251,400 | |
| 44 | See Notes to Financial Statements. | |
Schedule of Investments (continued)
INTERNATIONAL DIVIDEND INCOME FUND October 31, 2013
| Investments | | Principal
Amount
(000) | | | U.S. $
Fair Value
(000) | |
| SHORT-TERM INVESTMENT 3.16% | | | | | | | | |
| | | | | | | | | |
| Repurchase Agreement | | | | | | | | |
Repurchase Agreement dated 10/31/2013, Zero Coupon due 11/1/2013 with Fixed Income Clearing Corp. collateralized by $72,140,000 of U.S. Treasury Note at 2.125% due 12/31/2015; value: $75,419,629; proceeds: $73,940,420
(cost $73,940,420) | | $ | 73,940 | | | $ | 73,940 | |
Total Investments in Securities 99.45%
(cost $2,017,017,942) | | | | | | | 2,325,340 | |
| Cash, Foreign Cash and Other Assets in Excess of Liabilities(a) 0.55% | | | | | | | 12,976 | |
| Net Assets 100.00% | | | | | | $ | 2,338,316 | |
| ADR | | American Depositary Receipt. |
| SDR | | Special Drawing Rights. |
| * | | Non-income producing security. |
| (a) | | Cash, Foreign Cash and Other Assets in Excess of Liabilities include net unrealized depreciation on forward foreign currency exchange contracts as follows: |
| | See Notes to Financial Statements. | 45 |
Schedule of Investments (continued)
INTERNATIONAL DIVIDEND INCOME FUND October 31, 2013
Open Forward Foreign Currency Exchange Contracts at October 31, 2013:
Forward
Foreign
Currency
Exchange
Contracts | Transaction
Type | | Counterparty | | Expiration
Date | | Foreign
Currency | | | U.S. $
Cost on
Origination
Date | | | U.S. $
Current
Value | | | Unrealized
Appreciation | |
| Australian dollar | | Buy | | Goldman Sachs | | 12/9/2013 | | | 4,500,000 | | | $ | 4,054,041 | | | $ | 4,243,450 | | | $ | 189,409 | |
| Australian dollar | | Buy | | Goldman Sachs | | 12/9/2013 | | | 11,800,000 | | | | 10,500,077 | | | | 11,127,269 | | | | 627,192 | |
| Australian dollar | | Buy | | J.P.Morgan | | 12/9/2013 | | | 22,500,000 | | | | 20,451,960 | | | | 21,217,251 | | | | 765,291 | |
| Australian dollar | | Buy | | J.P.Morgan | | 12/9/2013 | | | 21,460,000 | | | | 19,408,617 | | | | 20,236,542 | | | | 827,925 | |
| Australian dollar | | Buy | | J.P.Morgan | | 1/16/2014 | | | 24,000,000 | | | | 22,403,016 | | | | 22,575,004 | | | | 171,988 | |
| Australian dollar | | Buy | | J.P.Morgan | | 1/16/2014 | | | 60,000,000 | | | | 55,815,480 | | | | 56,437,511 | | | | 622,031 | |
| Australian dollar | | Buy | | J.P.Morgan | | 2/10/2014 | | | 150,450,000 | | | | 140,657,360 | | | | 141,282,991 | | | | 625,631 | |
| Australian dollar | | Buy | | Morgan Stanley | | 12/9/2013 | | | 10,300,000 | | | | 9,471,973 | | | | 9,712,786 | | | | 240,813 | |
| Australian dollar | | Buy | | UBS AG | | 12/9/2013 | | | 27,700,000 | | | | 24,573,390 | | | | 26,120,793 | | | | 1,547,403 | |
| Australian dollar | | Buy | | UBS AG | | 12/9/2013 | | | 7,925,000 | | | | 7,147,462 | | | | 7,473,187 | | | | 325,725 | |
| Australian dollar | | Buy | | UBS AG | | 1/16/2014 | | | 20,865,000 | | | | 19,189,269 | | | | 19,626,144 | | | | 436,875 | |
| Australian dollar | | Buy | | UBS AG | | 1/16/2014 | | | 41,900,000 | | | | 38,879,597 | | | | 39,412,195 | | | | 532,598 | |
| euro | | Buy | | Barclays Bank plc | | 11/25/2013 | | | 13,100,000 | | | | 17,497,880 | | | | 17,787,341 | | | | 289,461 | |
| euro | | Buy | | Goldman Sachs | | 11/25/2013 | | | 9,100,000 | | | | 12,008,087 | | | | 12,356,092 | | | | 348,005 | |
| euro | | Buy | | J.P.Morgan | | 11/25/2013 | | | 3,200,000 | | | | 4,227,792 | | | | 4,344,999 | | | | 117,207 | |
| euro | | Buy | | J.P.Morgan | | 11/25/2013 | | | 12,500,000 | | | | 16,917,063 | | | | 16,972,654 | | | | 55,591 | |
| euro | | Buy | | Morgan Stanley | | 11/25/2013 | | | 11,000,000 | | | | 14,624,852 | | | | 14,935,935 | | | | 311,083 | |
| euro | | Buy | | UBS AG | | 11/25/2013 | | | 5,000,000 | | | | 6,590,500 | | | | 6,789,061 | | | | 198,561 | |
| Israeli new shekel | | Buy | | Goldman Sachs | | 12/19/2013 | | | 56,100,000 | | | | 15,728,212 | | | | 15,896,896 | | | | 168,684 | |
| Israeli new shekel | | Buy | | J.P.Morgan | | 12/19/2013 | | | 18,000,000 | | | | 5,035,238 | | | | 5,100,608 | | | | 65,370 | |
| South African rand | | Buy | | Deutsche Bank AG | | 11/25/2013 | | | 24,350,000 | | | | 2,410,076 | | | | 2,418,383 | | | | 8,307 | |
| Thai baht | | Buy | | J.P.Morgan | | 11/5/2013 | | | 338,000,000 | | | | 10,803,554 | | | | 10,858,755 | | | | 55,201 | |
| Turkish lira | | Buy | | Barclays Bank plc | | 11/12/2013 | | | 10,970,000 | | | | 5,478,199 | | | | 5,484,872 | | | | 6,673 | |
| Turkish lira | | Buy | | Barclays Bank plc | | 1/16/2014 | | | 5,750,000 | | | | 2,762,870 | | | | 2,843,139 | | | | 80,269 | |
| Turkish lira | | Buy | | Deutsche Bank AG | | 1/16/2014 | | | 13,100,000 | | | | 6,383,225 | | | | 6,477,413 | | | | 94,188 | |
| Brazilian real | | Sell | | Goldman Sachs | | 12/12/2013 | | | 13,665,000 | | | | 6,114,499 | | | | 6,045,901 | | | | 68,598 | |
| British pound | | Sell | | Goldman Sachs | | 2/24/2014 | | | 14,135,000 | | | | 22,865,794 | | | | 22,644,532 | | | | 221,262 | |
| British pound | | Sell | | Goldman Sachs | | 2/24/2014 | | | 20,035,000 | | | | 32,356,525 | | | | 32,096,441 | | | | 260,084 | |
| British pound | | Sell | | Goldman Sachs | | 2/24/2014 | | | 7,345,000 | | | | 11,857,643 | | | | 11,766,826 | | | | 90,817 | |
| British pound | | Sell | | Goldman Sachs | | 2/24/2014 | | | 3,940,000 | | | | 6,320,256 | | | | 6,311,953 | | | | 8,303 | |
| British pound | | Sell | | Morgan Stanley | | 2/24/2014 | | | 2,760,000 | | | | 4,458,877 | | | | 4,421,571 | | | | 37,306 | |
| British pound | | Sell | | Morgan Stanley | | 2/24/2014 | | | 7,280,000 | | | | 11,693,165 | | | | 11,662,695 | | | | 30,470 | |
| Chilean peso | | Sell | | Morgan Stanley | | 11/18/2013 | | | 5,837,000,000 | | | | 11,475,474 | | | | 11,371,739 | | | | 103,735 | |
| euro | | Sell | | Goldman Sachs | | 12/30/2013 | | | 9,875,000 | | | | 13,426,149 | | | | 13,408,896 | | | | 17,253 | |
| Japanese yen | | Sell | | Goldman Sachs | | 11/26/2013 | | | 5,165,000,000 | | | | 53,788,076 | | | | 52,532,590 | | | | 1,255,486 | |
| Japanese yen | | Sell | | Goldman Sachs | | 1/9/2014 | | | 2,670,000,000 | | | | 27,299,776 | | | | 27,165,909 | | | | 133,867 | |
| Japanese yen | | Sell | | Morgan Stanley | | 2/25/2014 | | | 6,015,000,000 | | | | 61,859,105 | | | | 61,217,594 | | | | 641,511 | |
| Mexican peso | | Sell | | J.P.Morgan | | 2/25/2014 | | | 177,500,000 | | | | 13,603,747 | | | | 13,485,499 | | | | 118,248 | |
| Norwegian krone | | Sell | | Barclays Bank plc | | 1/24/2014 | | | 31,100,000 | | | | 5,219,009 | | | | 5,208,295 | | | | 10,714 | |
| Norwegian krone | | Sell | | Morgan Stanley | | 11/4/2013 | | | 31,000,000 | | | | 5,231,415 | | | | 5,207,415 | | | | 24,000 | |
| Norwegian krone | | Sell | | UBS AG | | 1/24/2014 | | | 103,300,000 | | | | 17,351,365 | | | | 17,299,577 | | | | 51,788 | |
| Thai baht | | Sell | | J.P.Morgan | | 11/5/2013 | | | 338,000,000 | | | | 10,860,136 | | | | 10,858,755 | | | | 1,381 | |
| Unrealized Appreciation on Forward Foreign Currency Exchange Contracts | | | $ | 11,786,304 | |
| 46 | See Notes to Financial Statements. | |
Schedule of Investments (continued)
INTERNATIONAL DIVIDEND INCOME FUND October 31, 2013
Forward
Foreign
Currency
Exchange
Contracts | Transaction
Type | | Counterparty | | Expiration
Date | | Foreign
Currency | | | U.S. $
Cost on
Origination
Date | | | U.S. $
Current
Value | | | Unrealized
Depreciation | |
| Australian dollar | | Buy | | Morgan Stanley | | 2/10/2014 | | | 6,570,000 | | | $ | 6,302,890 | | | $ | 6,169,686 | | | $ | (133,204 | ) |
| Australian dollar | | Buy | | UBS AG | | 2/10/2014 | | | 5,940,000 | | | | 5,681,081 | | | | 5,578,072 | | | | (103,009 | ) |
| Canadian dollar | | Buy | | J.P.Morgan | | 12/19/2013 | | | 6,985,000 | | | | 6,818,299 | | | | 6,691,227 | | | | (127,072 | ) |
| Canadian dollar | | Buy | | J.P.Morgan | | 12/19/2013 | | | 11,100,000 | | | | 10,745,256 | | | | 10,633,160 | | | | (112,096 | ) |
| Canadian dollar | | Buy | | Morgan Stanley | | 12/19/2013 | | | 4,800,000 | | | | 4,633,840 | | | | 4,598,123 | | | | (35,717 | ) |
| Canadian dollar | | Buy | | Morgan Stanley | | 2/24/2014 | | | 94,300,000 | | | | 91,364,460 | | | | 90,181,623 | | | | (1,182,837 | ) |
| Canadian dollar | | Buy | | UBS AG | | 2/21/2014 | | | 39,635,000 | | | | 38,389,789 | | | | 37,906,903 | | | | (482,886 | ) |
| euro | | Buy | | J.P.Morgan | | 11/25/2013 | | | 3,600,000 | | | | 4,920,512 | | | | 4,888,124 | | | | (32,388 | ) |
| euro | | Buy | | J.P.Morgan | | 11/25/2013 | | | 7,240,000 | | | | 9,999,714 | | | | 9,830,561 | | | | (169,153 | ) |
| euro | | Buy | | J.P.Morgan | | 11/25/2013 | | | 7,710,000 | | | | 10,613,432 | | | | 10,468,733 | | | | (144,699 | ) |
| euro | | Buy | | J.P.Morgan | | 12/30/2013 | | | 4,925,000 | | | | 6,780,085 | | | | 6,687,475 | | | | (92,610 | ) |
| euro | | Buy | | UBS AG | | 11/25/2013 | | | 5,450,000 | | | | 7,514,280 | | | | 7,400,077 | | | | (114,203 | ) |
| Japanese yen | | Buy | | Barclays Bank plc | | 11/26/2013 | | | 228,000,000 | | | | 2,334,461 | | | | 2,318,960 | | | | (15,501 | ) |
| Singapore dollar | | Buy | | J.P.Morgan | | 1/16/2014 | | | 28,100,000 | | | | 22,702,081 | | | | 22,622,500 | | | | (79,581 | ) |
| South African rand | | Buy | | Deutsche Bank AG | | 11/25/2013 | | | 28,600,000 | | | | 2,850,730 | | | | 2,840,483 | | | | (10,247 | ) |
| South African rand | | Buy | | J.P.Morgan | | 11/25/2013 | | | 83,450,000 | | | | 8,430,600 | | | | 8,288,052 | | | | (142,548 | ) |
| South African rand | | Buy | | J.P.Morgan | | 11/25/2013 | | | 31,625,000 | | | | 3,144,890 | | | | 3,140,919 | | | | (3,971 | ) |
| South African rand | | Buy | | J.P.Morgan | | 2/11/2014 | | | 333,000,000 | | | | 32,793,062 | | | | 32,686,366 | | | | (106,696 | ) |
| South African rand | | Buy | | Morgan Stanley | | 2/11/2014 | | | 35,200,000 | | | | 3,514,215 | | | | 3,455,135 | | | | (59,080 | ) |
| Turkish lira | | Buy | | J.P.Morgan | | 1/16/2014 | | | 13,675,000 | | | | 6,773,957 | | | | 6,761,726 | | | | (12,231 | ) |
| Brazilian real | | Sell | | Barclays Bank plc | | 12/12/2013 | | | 14,965,000 | | | | 6,471,771 | | | | 6,621,069 | | | | (149,298 | ) |
| Brazilian real | | Sell | | Goldman Sachs | | 12/12/2013 | | | 14,000,000 | | | | 5,927,803 | | | | 6,194,117 | | | | (266,314 | ) |
| British pound | | Sell | | Goldman Sachs | | 11/27/2013 | | | 25,450,000 | | | | 38,905,161 | | | | 40,799,485 | | | | (1,894,324 | ) |
| British pound | | Sell | | Goldman Sachs | | 11/27/2013 | | | 3,800,000 | | | | 5,772,143 | | | | 6,091,868 | | | | (319,725 | ) |
| British pound | | Sell | | Goldman Sachs | | 11/27/2013 | | | 41,970,000 | | | | 64,719,209 | | | | 67,283,080 | | | | (2,563,871 | ) |
| British pound | | Sell | | J.P.Morgan | | 11/27/2013 | | | 3,950,000 | | | | 6,237,406 | | | | 6,332,337 | | | | (94,931 | ) |
| British pound | | Sell | | J.P.Morgan | | 11/27/2013 | | | 6,400,000 | | | | 10,252,870 | | | | 10,259,988 | | | | (7,118 | ) |
| British pound | | Sell | | UBS AG | | 11/27/2013 | | | 8,930,000 | | | | 13,837,589 | | | | 14,315,890 | | | | (478,301 | ) |
| euro | | Sell | | Goldman Sachs | | 11/25/2013 | | | 8,100,000 | | | | 10,827,578 | | | | 10,998,280 | | | | (170,702 | ) |
| euro | | Sell | | Goldman Sachs | | 11/25/2013 | | | 13,600,000 | | | | 18,167,356 | | | | 18,466,247 | | | | (298,891 | ) |
| euro | | Sell | | Morgan Stanley | | 11/25/2013 | | | 9,200,000 | | | | 12,299,416 | | | | 12,491,873 | | | | (192,457 | ) |
| euro | | Sell | | Morgan Stanley | | 11/25/2013 | | | 10,700,000 | | | | 14,287,624 | | | | 14,528,591 | | | | (240,967 | ) |
| euro | | Sell | | Morgan Stanley | | 12/30/2013 | | | 9,000,000 | | | | 11,917,782 | | | | 12,220,766 | | | | (302,984 | ) |
| euro | | Sell | | UBS AG | | 11/25/2013 | | | 9,100,000 | | | | 11,949,647 | | | | 12,356,092 | | | | (406,445 | ) |
| euro | | Sell | | UBS AG | | 11/25/2013 | | | 27,200,000 | | | | 36,169,363 | | | | 36,932,494 | | | | (763,131 | ) |
| Japanese yen | | Sell | | Barclays Bank plc | | 11/26/2013 | | | 1,294,000,000 | | | | 12,908,581 | | | | 13,161,117 | | | | (252,536 | ) |
| Japanese yen | | Sell | | Credit Suisse | | 1/9/2014 | | | 8,010,000,000 | | | | 80,254,168 | | | | 81,497,727 | | | | (1,243,559 | ) |
| Japanese yen | | Sell | | Morgan Stanley | | 11/26/2013 | | | 745,000,000 | | | | 7,573,286 | | | | 7,577,305 | | | | (4,019 | ) |
| Japanese yen | | Sell | | UBS AG | | 1/9/2014 | | | 655,600,000 | | | | 6,591,469 | | | | 6,670,401 | | | | (78,932 | ) |
| South Korean won | | Sell | | Deutsche Bank AG | | 11/18/2013 | | | 6,200,000,000 | | | | 5,526,339 | | | | 5,825,060 | | | | (298,721 | ) |
| South Korean won | | Sell | | Deutsche Bank AG | | 11/18/2013 | | | 6,640,000,000 | | | | 6,007,691 | | | | 6,238,452 | | | | (230,761 | ) |
| Swiss franc | | Sell | | Barclays Bank plc | | 11/25/2013 | | | 13,125,000 | | | | 14,053,802 | | | | 14,467,656 | | | | (413,854 | ) |
| Swiss franc | | Sell | | Credit Suisse | | 11/25/2013 | | | 18,300,000 | | | | 19,569,995 | | | | 20,172,047 | | | | (602,052 | ) |
| Taiwan dollar | | Sell | | Deutsche Bank AG | | 1/27/2014 | | | 301,300,000 | | | | 10,248,299 | | | | 10,260,864 | | | | (12,565 | ) |
| Unrealized Depreciation on Forward Foreign Currency Exchange Contracts | | | $ | (14,446,187 | ) |
| | See Notes to Financial Statements. | 47 |
Schedule of Investments (concluded)
INTERNATIONAL DIVIDEND INCOME FUND October 31, 2013
The following is a summary of the inputs used as of October 31, 2013 in valuing the Fund’s investments carried at fair value(1):
| Investment Type(2)(3) | | Level 1
(000) | | | Level 2
(000) | | | Level 3
(000) | | | Total
(000) | |
| Common Stocks | | $ | 2,208,755 | | | $ | — | | | $ | — | | | $ | 2,208,755 | |
| Preferred Stocks | | | 42,645 | | | | — | | | | — | | | | 42,645 | |
| Repurchase Agreement | | | — | | | | 73,940 | | | | — | | | | 73,940 | |
| Total | | $ | 2,251,400 | | | $ | 73,940 | | | $ | — | | | $ | 2,325,340 | |
| Other Financial Instruments | | | | | | | | | | | | | | | | |
| Forward Foreign Currency Exchange Contracts | | | | | | | | | | | | | |
| Assets | | $ | — | | | $ | 11,786 | | | $ | — | | | $ | 11,786 | |
| Liabilities | | | — | | | | (14,446 | ) | | | — | | | | (14,446 | ) |
| Total | | $ | — | | | $ | (2,660 | ) | | $ | — | | | $ | (2,660 | ) |
| (1) | Refer to note 2(k) for a description of fair value measurements and the three-tier hierarchy of inputs. |
| (2) | See Schedule of Investments for fair values in each industry and identification of foreign issuers and/or geography. |
| (3) | There were no level transfers during the fiscal year ended October 31, 2013. |
| 48 | See Notes to Financial Statements. | |
Schedule of Investments
INTERNATIONAL OPPORTUNITIES FUND October 31, 2013
| Investments | | Shares | | | U.S. $
Fair Value
(000) | |
| COMMON STOCKS 96.80% | | | | | | | | |
| | | | | | | | | |
| Australia 0.88% | | | | | | | | |
| | | | | | | | | |
| Multi-Utilities | | | | | | | | |
| DUET Group | | | 1,771,932 | | | $ | 3,601 | |
| | | | | | | | | |
| Austria 0.50% | | | | | | | | |
| | | | | | | | | |
| Insurance | | | | | | | | |
| UNIQA Insurance Group AG | | | 167,979 | | | | 2,057 | |
| | | | | | | | | |
| Belgium 0.64% | | | | | | | | |
| | | | | | | | | |
| Electric: Utilities | | | | | | | | |
| Elia System Operator SA | | | 57,101 | | | | 2,613 | |
| | | | | | | | | |
| Canada 2.99% | | | | | | | | |
| | | | | | | | | |
| Metals & Mining 0.92% | | | | | | | | |
| HudBay Minerals, Inc. | | | 461,866 | | | | 3,765 | |
| | | | | | | | | |
| Oil, Gas & Consumable Fuels 0.43% | | | | | | | | |
| TORC Oil & Gas Ltd. | | | 183,458 | | | | 1,758 | |
| | | | | | | | | |
| Paper & Forest Products 1.64% | | | | | | | | |
| International Forest Products Ltd. Class A* | | | 158,109 | | | | 1,791 | |
| West Fraser Timber Co., Ltd. | | | 53,708 | | | | 4,923 | |
| | | | | | | | 6,714 | |
| Total Canada | | | | | | | 12,237 | |
| | | | | | | | | |
| Finland 1.10% | | | | | | | | |
| | | | | | | | | |
| Leisure Equipment & Products | | | | | | | | |
| Amer Sports OYJ A Shares | | | 219,139 | | | | 4,505 | |
| | | | | | | | | |
| France 1.87% | | | | | | | | |
| | | | | | | | | |
| Auto Components 1.57% | | | | | | | | |
| Plastic Omnium SA | | | 223,993 | | | | 6,417 | |
| | | | | | | | | |
| Internet Software & Services 0.30% | | | | | | | | |
| Criteo SA ADR* | | | 35,145 | | | | 1,241 | |
| Total France | | | | | | | 7,658 | |
| Investments | | Shares | | | U.S. $
Fair Value
(000) | |
| Germany 8.92% | | | | | | | | |
| | | | | | | | | |
| Chemicals 1.08% | | | | | | | | |
| Symrise GmbH & Co. AG | | | 104,710 | | | $ | 4,439 | |
| | | | | | | | | |
| Computers & Peripherals 1.53% | | | | | | | | |
| Wincor Nixdorf AG | | | 94,674 | | | | 6,274 | |
| | | | | | | | | |
| Life Sciences Tools & Services 2.07% | | | | | | | | |
| Gerresheimer AG | | | 82,535 | | | | 5,471 | |
| Morphosys AG* | | | 38,714 | | | | 3,002 | |
| | | | | | | | 8,473 | |
| | | | | | | | | |
| Machinery 2.71% | | | | | | | | |
| Deutz AG* | | | 418,916 | | | | 3,987 | |
| DMG MORI SEIKI AG | | | 165,467 | | | | 5,451 | |
| Norma Group SE | | | 32,804 | | | | 1,644 | |
| | | | | | | | 11,082 | |
| | | | | | | | | |
| Real Estate Management & Development 1.53% | | | | | | | | |
| GAGFAH SA * | | | 275,699 | | | | 3,919 | |
| Patrizia Immobilien AG* | | | 247,533 | | | | 2,326 | |
| | | | | | | | 6,245 | |
| Total Germany | | | | | | | 36,513 | |
| | | | | | | | | |
| Hong Kong 6.81% | | | | | | | | |
| | | | | | | | | |
| Auto Components 1.60% | | | | | | | | |
| Minth Group Ltd. | | | 1,140,000 | | | | 2,388 | |
| Nexteer Automotive Group Ltd.* | | | 11,515,000 | | | | 4,159 | |
| | | | | | | | 6,547 | |
| | | | | | | | | |
| Communications Equipment 1.22% | | | | | | | | |
| VTech Holdings Ltd. | | | 347,600 | | | | 4,990 | |
| | | | | | | | | |
| Energy Equipment & Services 1.13% | | | | | | | | |
| Hilong Holding Ltd. | | | 6,966,000 | | | | 4,636 | |
| | | | | | | | | |
| Hotels, Restaurants & Leisure 1.15% | | | | | | | | |
| REXLot Holdings Ltd. | | | 53,800,000 | | | | 4,719 | |
| | | | | | | | | |
| Household Durables 0.76% | | | | | | | | |
| Techtronic Industries Co. | | | 1,236,500 | | | | 3,110 | |
| | See Notes to Financial Statements. | 49 |
Schedule of Investments (continued)
INTERNATIONAL OPPORTUNITIES FUND October 31, 2013
| Investments | | Shares | | | U.S. $
Fair Value
(000) | |
| Hong Kong (continued) | | | | | | | | |
| | | | | | | | | |
| Machinery 0.47% | | | | | | | | |
| Sinotruk Hong Kong Ltd. | | | 3,657,500 | | | $ | 1,915 | |
| | | | | | | | | |
| Multi-Line Retail 0.48% | | | | | | | | |
| Maoye International Holdings Ltd. | | | 10,277,000 | | | | 1,988 | |
| Total Hong Kong | | | | | | | 27,905 | |
| | | | | | | | | |
| Hungary 1.28% | | | | | | | | |
| | | | | | | | | |
| Pharmaceuticals | | | | | | | | |
| EGIS Pharmaceuticals plc | | | 42,185 | | | | 5,230 | |
| | | | | | | | | |
| India 1.00% | | | | | | | | |
| | | | | | | | | |
| Consumer Finance | | | | | | | | |
| SKS Microfinance Ltd.* | | | 1,614,342 | | | | 4,090 | |
| | | | | | | | | |
| Indonesia 1.05% | | | | | | | | |
| | | | | | | | | |
| Commercial Banks 0.57% | | | | | | | | |
| Bank Tabungan Negara Persero Tbk PT | | | 27,194,000 | | | | 2,340 | |
| | | | | | | | | |
| Consumer Finance 0.48% | | | | | | | | |
| PT Clipan Finance Indonesia Tbk | | | 52,233,850 | | | | 1,946 | |
| Total Indonesia | | | | | | | 4,286 | |
| | | | | | | | | |
| Ireland 1.03% | | | | | | | | |
| | | | | | | | | |
| Health Care Providers & Services | | | | | | | | |
| UDG Healthcare plc | | | 847,543 | | | | 4,240 | |
| | | | | | | | | |
| Italy 2.22% | | | | | | | | |
| | | | | | | | | |
| Internet & Catalog Retail 1.18% | | | | | | | | |
| Yoox SpA* | | | 134,177 | | | | 4,828 | |
| | | | | | | | | |
| Textiles, Apparel & Luxury Goods 1.04% | | | | | | | | |
| Brunello Cucinelli SpA | | | 135,900 | | | | 4,244 | |
| Total Italy | | | | | | | 9,072 | |
| Investments | | Shares | | | U.S. $
Fair Value
(000) | |
| Japan 19.32% | | | | | | | | |
| | | | | | | | | |
| Auto Components 1.16% | | | | | | | | |
| Keihin Corp. | | | 291,300 | | | $ | 4,737 | |
| | | | | | | | | |
| Building Products 1.02% | | | | | | | | |
| Aica Kogyo Co., Ltd. | | | 203,800 | | | | 4,162 | |
| | | | | | | | | |
| Construction & Engineering 1.00% | | | | | | | | |
| SHO-BOND Holdings Co., Ltd. | | | 87,700 | | | | 4,089 | |
| | | | | | | | | |
| Diversified Financial Services 0.96% | | | | | | | | |
| Century Tokyo Leasing Corp. | | | 124,300 | | | | 3,919 | |
| | | | | | | | | |
| Food & Staples Retailing 1.20% | | | | | | | | |
| Sundrug Co., Ltd. | | | 99,100 | | | | 4,923 | |
| | | | | | | | | |
| Food Products 0.29% | | | | | | | | |
| Toyo Suisan Kaisha Ltd. | | | 38,000 | | | | 1,206 | |
| | | | | | | | | |
| Health Care Equipment & Supplies 1.12% | | | | | | | | |
| Hogy Medical Co., Ltd. | | | 79,000 | | | | 4,587 | |
| | | | | | | | | |
| Hotels, Restaurants & Leisure 1.04% | | | | | | | | |
| St. Marc Holdings Co., Ltd. | | | 83,100 | | | | 4,268 | |
| | | | | | | | | |
| Household Durables 0.98% | | | | | | | | |
| Arnest One Corp. | | | 77,000 | | | | 2,107 | |
| Hajime Construction Co., Ltd. | | | 27,500 | | | | 1,915 | |
| | | | | | | | 4,022 | |
| | | | | | | | | |
| Information Technology Services 1.56% | | | | | | | | |
| NS Solutions Corp. | | | 156,000 | | | | 3,549 | |
| Obic Co., Ltd. | | | 90,700 | | | | 2,841 | |
| | | | | | | | 6,390 | |
| | | | | | | | | |
| Machinery 2.01% | | | | | | | | |
| Nabtesco Corp. | | | 169,200 | | | | 4,114 | |
| NSK Ltd. | | | 388,000 | | | | 4,112 | |
| | | | | | | | 8,226 | |
| | | | | | | | | |
| Personal Products 1.74% | | | | | | | | |
| Aderans Co., Ltd. | | | 249,308 | | | | 3,040 | |
| Kobayashi Pharmaceutical Co., Ltd. | | | 73,100 | | | | 4,081 | |
| | | | | | | | 7,121 | |
| 50 | See Notes to Financial Statements. |
Schedule of Investments (continued)
INTERNATIONAL OPPORTUNITIES FUND October 31, 2013
| Investments | | Shares | | | U.S. $
Fair Value
(000) | |
| Japan (continued) | | | | | | | | |
| | | | | | | | | |
| Real Estate Investment Trusts 0.64% | | | | | | | | |
| Kenedix Realty Investment Corp. | | | 583 | | | $ | 2,612 | |
| | | | | | | | | |
| Real Estate Management & Development 1.53% | | | | | | | | |
| Iida Home Max | | | 74,100 | | | | 1,708 | |
| Takara Leben Co., Ltd. | | | 1,164,600 | | | | 4,572 | |
| | | | | | | | 6,280 | |
| | | | | | | | | |
| Software 0.58% | | | | | | | | |
| NSD Co., Ltd. | | | 194,900 | | | | 2,380 | |
| | | | | | | | | |
| Specialty Retail 1.81% | | | | | | | | |
| K’s Holdings Corp. | | | 119,200 | | | | 3,486 | |
| United Arrows Ltd. | | | 91,600 | | | | 3,931 | |
| | | | | | | | 7,417 | |
| | | | | | | | | |
| Wireless Telecommunication Services 0.68% | | | | | | | | |
| Okinawa Cellular Telephone Co. | | | 112,600 | | | | 2,768 | |
| Total Japan | | | | | | | 79,107 | |
| | | | | | | | | |
| Mexico 0.90% | | | | | | | | |
| | | | | | | | | |
| Real Estate Investment Trusts | | | | | | | | |
| Macquarie Mexico Real | | | | | | | | |
| Estate Management SA de CV* | | | 2,010,375 | | | | 3,695 | |
| | | | | | | | | |
| Netherlands 4.00% | | | | | | | | |
| | | | | | | | | |
| Construction & Engineering 1.13% | | | | | | | | |
| Arcadis NV | | | 148,076 | | | | 4,649 | |
| | | | | | | | | |
| Machinery 1.55% | | | | | | | | |
| Aalberts Industries NV | | | 212,116 | | | | 6,348 | |
| | | | | | | | | |
| Professional Services 1.32% | | | | | | | | |
| Brunel International NV | | | 91,722 | | | | 5,397 | |
| Total Netherlands | | | | | | | 16,394 | |
| Investments | | Shares | | | U.S. $
Fair Value
(000) | |
| New Zealand 1.33% | | | | | | | | |
| | | | | | | | | |
| Airlines | | | | | | | | |
| Air New Zealand Ltd. | | | 4,091,600 | | | $ | 5,441 | |
| | | | | | | | | |
| Norway 1.70% | | | | | | | | |
| | | | | | | | | |
| Biotechnology 0.52% | | | | | | | | |
| Algeta ASA* | | | 53,513 | | | | 2,126 | |
| | | | | | | | | |
| Oil, Gas & Consumable Fuels 1.18% | | | | | | | | |
| DNO International ASA* | | | 1,709,302 | | | | 4,844 | |
| Total Norway | | | | | | | 6,970 | |
| | | | | | | | | |
| Philippines 2.29% | | | | | | | | |
| | | | | | | | | |
| Commercial Banks 1.08% | | | | | | | | |
| Rizal Commercial Banking Corp. | | | 4,043,200 | | | | 4,398 | |
| | | | | | | | | |
| Real Estate Management & Development 1.21% | | | | | | | | |
| Filinvest Land, Inc. | | | 133,362,000 | | | | 4,969 | |
| Total Philippines | | | | | | | 9,367 | |
| | | | | | | | | |
| Spain 4.07% | | | | | | | | |
| | | | | | | | | |
| Diversified Financial Services 0.85% | | | | | | | | |
| Bolsas y Mercados Espanoles SA | | | 92,822 | | | | 3,474 | |
| | | | | | | | | |
| Food Products 1.71% | | | | | | | | |
| Ebro Foods SA | | | 150,555 | | | | 3,401 | |
| Viscofan SA | | | 67,759 | | | | 3,597 | |
| | | | | | | | 6,998 | |
| | | | | | | | | |
| Media 1.51% | | | | | | | | |
| Mediaset Espana Comunicacion SA* | | | 507,529 | | | | 6,202 | |
| Total Spain | | | | | | | 16,674 | |
| | | | | | | | | |
| Sweden 3.76% | | | | | | | | |
| | | | | | | | | |
| Commercial Services & Supplies 2.51% | | | | | | | | |
| Intrum Justitia AB | | | 218,562 | | | | 5,818 | |
| Loomis AB | | | 186,355 | | | | 4,472 | |
| | | | | | | | 10,290 | |
| | See Notes to Financial Statements. | 51 |
Schedule of Investments (continued)
INTERNATIONAL OPPORTUNITIES FUND October 31, 2013
| Investments | | Shares | | | U.S. $
Fair Value
(000) | |
| Food & Staples Retailing 1.25% | | | | | | | | |
| Axfood AB | | | 98,671 | | | $ | 5,109 | |
| Total Sweden | | | | | | | 15,399 | |
| | | | | | | | | |
| Switzerland 2.57% | | | | | | | | |
| | | | | | | | | |
| Capital Markets 1.46% | | | | | | | | |
| EFG International AG* | | | 406,667 | | | | 5,983 | |
| | | | | | | | | |
| Household Durables 1.11% | | | | | | | | |
| Forbo Holding AG Registered Shares* | | | 5,766 | | | | 4,525 | |
| Total Switzerland | | | | | | | 10,508 | |
| | | | | | | | | |
| United Kingdom 26.57% | | | | | | | | |
| | | | | | | | | |
| Capital Markets 3.63% | | | | | | | | |
| 3i Group plc | | | 648,946 | | | | 3,882 | |
| Ashmore Group plc | | | 741,818 | | | | 4,811 | |
| Jupiter Fund Management plc | | | 964,579 | | | | 6,167 | |
| | | | | | | | 14,860 | |
| | | | | | | | | |
| Chemicals 1.16% | | | | | | | | |
| Essentra plc | | | 378,153 | | | | 4,751 | |
| | | | | | | | | |
| Commercial Banks 0.80% | | | | | | | | |
| Bank of Georgia Holdings plc | | | 103,803 | | | | 3,285 | |
| | | | | | | | | |
| Communications Equipment 0.82% | | | | | | | | |
| Spirent Communications plc | | | 1,892,303 | | | | 3,365 | |
| | | | | | | | | |
| Diversified Financial Services 1.58% | | | | | | | | |
| Arrow Global Group plc* | | | 1,659,305 | | | | 6,452 | |
| | | | | | | | | |
| Electronic Equipment, Instruments & Components 2.16% | | | | | | | | |
| Diploma plc | | | 392,195 | | | | 4,358 | |
| Electrocomponents plc | | | 937,047 | | | | 4,482 | |
| | | | | | | | 8,840 | |
| | | | | | | | | |
| Hotels, Restaurants & Leisure 0.23% | | | | | | | | |
| Ladbrokes plc | | | 303,676 | | | | 930 | |
| Investments | | Shares | | | U.S. $
Fair Value
(000) | |
| Household Durables 0.70% | | | | | | | | |
| Berkeley Group Holdings plc | | | 76,122 | | | $ | 2,856 | |
| | | | | | | | | |
| Independent Power Producers & Energy Traders 0.85% | | | | | | | | |
| APR Energy plc | | | 187,836 | | | | 3,494 | |
| | | | | | | | | |
| Information Technology Services 0.48% | | | | | | | | |
| Innovation Group plc* | | | 3,873,321 | | | | 1,972 | |
| | | | | | | | | |
| Insurance 0.97% | | | | | | | | |
| Catlin Group Ltd. | | | 485,344 | | | | 3,984 | |
| | | | | | | | | |
| Internet & Catalog Retail 0.94% | | | | | | | | |
| N Brown Group plc | | | 456,622 | | | | 3,840 | |
| | | | | | | | | |
| Internet Software & Services 0.69% | | | | | | | | |
| Blinkx plc* | | | 1,073,894 | | | | 2,824 | |
| | | | | | | | | |
| Oil, Gas & Consumable Fuels 3.31% | | | | | | | | |
| Afren plc * | | | 1,295,511 | | | | 3,276 | |
| Cairn Energy plc* | | | 677,615 | | | | 3,072 | |
| Genel Energy plc* | | | 270,143 | | | | 4,115 | |
| Ophir Energy plc* | | | 577,779 | | | | 3,075 | |
| | | | | | | | 13,538 | |
| | | | | | | | | |
| Professional Services 2.66% | | | | | | | | |
| Hays plc | | | 2,837,565 | | | | 5,665 | |
| Michael Page International plc | | | 672,231 | | | | 5,223 | |
| | | | | | | | 10,888 | |
| Software 1.49% | | | | | | | | |
| Playtech plc | | | 517,903 | | | | 6,116 | |
| | | | | | | | | |
| Specialty Retail 1.47% | | | | | | | | |
| Howden Joinery Group plc | | | 1,162,784 | | | | 6,016 | |
| | | | | | | | | |
| Trading Companies & Distributors 2.63% | | | | | | | | |
| Ashtead Group plc | | | 591,742 | | | | 6,215 | |
| Speedy Hire plc | | | 4,389,047 | | | | 4,574 | |
| | | | | | | | 10,789 | |
| Total United Kingdom | | | | | | | 108,800 | |
Total Common Stocks
(cost $324,942,692) | | | | | | | 396,362 | |
| 52 | See Notes to Financial Statements. |
Schedule of Investments (continued)
INTERNATIONAL OPPORTUNITIES FUND October 31, 2013
| Investments | | Principal
Amount
(000) | | | U.S. $
Fair Value
(000) | |
| SHORT-TERM INVESTMENT 4.14% | | | | | | | | |
| | | | | | | | | |
| Repurchase Agreement | | | | | | | | |
Repurchase Agreement dated 10/31/2013, Zero Coupon due 11/1/2013 with Fixed Income Clearing Corp. collateralized by $16,525,000 of U.S. Treasury Note at 2.125% due 12/31/2015; value: $17,276,260; proceeds: $16,933,183
(cost $16,933,183) | | $ | 16,933 | | | $ | 16,933 | |
Total Investments in Securities 100.94%
(cost $341,875,875) | | | | | | | 413,295 | |
| Liabilities in Excess of Cash, Foreign Cash and Other Assets(a) (0.94)% | | | | | | | (3,843 | ) |
| Net Assets 100.00% | | | | | | $ | 409,452 | |
| ADR | | American Depositary Receipt. |
| * | | Non-income producing security. |
| (a) | | Liabilities in Excess of Cash, Foreign Cash and Other Assets include net unrealized depreciation on forward foreign currency exchange contracts as follows: |
| | See Notes to Financial Statements. | 53 |
Schedule of Investments (continued)
INTERNATIONAL OPPORTUNITIES FUND October 31, 2013
Open Forward Foreign Currency Exchange Contracts at October 31, 2013:
Forward
Foreign
Currency
Exchange
Contracts | | Transaction
Type | | Counterparty | | Expiration
Date | | Foreign
Currency | | | U.S. $
Cost on
Origination
Date | | | U.S. $
Current
Value | | | Unrealized
Appreciation | |
| Australian dollar | | Buy | | Goldman Sachs | | 12/9/2013 | | | 2,000,000 | | | $ | 1,781,290 | | | $ | 1,885,978 | | | $ | 104,688 | |
| Australian dollar | | Buy | | Goldman Sachs | | 12/9/2013 | | | 742,000 | | | | 691,233 | | | | 699,698 | | | | 8,465 | |
| Australian dollar | | Buy | | J.P.Morgan | | 12/9/2013 | | | 1,280,000 | | | | 1,157,644 | | | | 1,207,026 | | | | 49,382 | |
| Australian dollar | | Buy | | J.P.Morgan | | 1/16/2014 | | | 4,500,000 | | | | 4,186,161 | | | | 4,232,813 | | | | 46,652 | |
| Australian dollar | | Buy | | Morgan Stanley | | 12/9/2013 | | | 817,000 | | | | 751,320 | | | | 770,422 | | | | 19,102 | |
| Australian dollar | | Buy | | UBS AG | | 12/9/2013 | | | 610,000 | | | | 541,147 | | | | 575,223 | | | | 34,076 | |
| Canadian dollar | | Buy | | Goldman Sachs | | 2/24/2014 | | | 1,065,000 | | | | 1,016,203 | | | | 1,018,488 | | | | 2,285 | |
| Canadian dollar | | Buy | | Morgan Stanley | | 2/24/2014 | | | 1,065,000 | | | | 1,016,935 | | | | 1,018,488 | | | | 1,553 | |
| euro | | Buy | | Morgan Stanley | | 12/30/2013 | | | 1,145,000 | | | | 1,545,477 | | | | 1,554,753 | | | | 9,276 | |
| Japanese yen | | Buy | | J.P.Morgan | | 11/25/2013 | | | 75,000,000 | | | | 760,329 | | | | 762,812 | | | | 2,483 | |
| Norwegian krone | | Buy | | Morgan Stanley | | 11/4/2013 | | | 5,800,000 | | | | 965,414 | | | | 974,290 | | | | 8,876 | |
| Norwegian krone | | Buy | | Morgan Stanley | | 11/4/2013 | | | 4,230,000 | | | | 707,160 | | | | 710,560 | | | | 3,400 | |
| Singapore dollar | | Buy | | Deutsche Bank AG | | 1/9/2014 | | | 2,405,000 | | | | 1,880,684 | | | | 1,936,181 | | | | 55,497 | |
| South Korean won | | Buy | | Deutsche Bank AG | | 11/18/2013 | | | 736,500,000 | | | | 656,476 | | | | 691,961 | | | | 35,485 | |
| South Korean won | | Buy | | Goldman Sachs | | 11/18/2013 | | | 3,600,000,000 | | | | 3,206,413 | | | | 3,382,293 | | | | 175,880 | |
| South Korean won | | Buy | | Goldman Sachs | | 11/18/2013 | | | 888,000,000 | | | | 793,672 | | | | 834,299 | | | | 40,627 | |
| South Korean won | | Buy | | UBS AG | | 1/13/2014 | | | 1,348,000,000 | | | | 1,233,867 | | | | 1,258,355 | | | | 24,488 | |
| South Korean won | | Buy | | UBS AG | | 1/13/2014 | | | 10,645,000,000 | | | | 9,757,104 | | | | 9,937,085 | | | | 179,981 | |
| Swiss franc | | Buy | | Barclays Bank plc | | 12/5/2013 | | | 11,250,000 | | | | 12,105,339 | | | | 12,401,859 | | | | 296,520 | |
| Swiss franc | | Buy | | Goldman Sachs | | 12/5/2013 | | | 895,000 | | | | 982,367 | | | | 986,637 | | | | 4,270 | |
| British pound | | Sell | | Goldman Sachs | | 2/11/2014 | | | 730,000 | | | | 1,179,074 | | | | 1,169,592 | | | | 9,482 | |
| British pound | | Sell | | Morgan Stanley | | 2/11/2014 | | | 4,185,000 | | | | 6,706,375 | | | | 6,705,129 | | | | 1,246 | |
| Japanese yen | | Sell | | Barclays Bank plc | | 2/28/2014 | | | 174,000,000 | | | | 1,782,741 | | | | 1,770,921 | | | | 11,820 | |
| Japanese yen | | Sell | | J.P.Morgan | | 11/25/2013 | | | 131,400,000 | | | | 1,339,784 | | | | 1,336,447 | | | | 3,337 | |
| Japanese yen | | Sell | | J.P.Morgan | | 2/28/2014 | �� | | 142,000,000 | | | | 1,460,470 | | | | 1,445,234 | | | | 15,236 | |
| Japanese yen | | Sell | | J.P.Morgan | | 2/28/2014 | | | 80,000,000 | | | | 817,306 | | | | 814,217 | | | | 3,089 | |
| Japanese yen | | Sell | | Morgan Stanley | | 2/28/2014 | | | 95,000,000 | | | | 977,060 | | | | 966,882 | | | | 10,178 | |
| Japanese yen | | Sell | | UBS AG | | 11/25/2013 | | | 125,000,000 | | | | 1,277,254 | | | | 1,271,354 | | | | 5,900 | |
| Mexican peso | | Sell | | J.P.Morgan | | 2/25/2014 | | | 21,400,000 | | | | 1,640,114 | | | | 1,625,857 | | | | 14,257 | |
| Norwegian krone | | Sell | | Morgan Stanley | | 11/4/2013 | | | 5,900,000 | | | | 995,656 | | | | 991,089 | | | | 4,567 | |
| Unrealized Appreciation on Forward Foreign Currency Exchange Contracts | | | | | | | $ | 1,182,098 | |
| 54 | See Notes to Financial Statements. |
Schedule of Investments (continued)
INTERNATIONAL OPPORTUNITIES FUND October 31, 2013
Forward
Foreign
Currency
Exchange
Contracts | | Transaction
Type | | Counterparty | | Expiration
Date | | Foreign
Currency | | | U.S. $
Cost on
Origination
Date | | | U.S. $
Current
Value | | | Unrealized
Depreciation | |
| Australian dollar | | Buy | | UBS AG | | 2/10/2014 | | | 8,370,000 | | | $ | 8,005,160 | | | $ | 7,860,011 | | | $ | (145,149 | ) |
| Canadian dollar | | Buy | | J.P.Morgan | | 12/19/2013 | | | 2,215,000 | | | | 2,144,211 | | | | 2,121,842 | | | | (22,369 | ) |
| Canadian dollar | | Buy | | Morgan Stanley | | 12/19/2013 | | | 3,790,000 | | | | 3,658,803 | | | | 3,630,601 | | | | (28,202 | ) |
| Canadian dollar | | Buy | | Morgan Stanley | | 2/24/2014 | | | 9,510,000 | | | | 9,213,956 | | | | 9,094,668 | | | | (119,288 | ) |
| Japanese yen | | Buy | | Goldman Sachs | | 11/25/2013 | | | 108,000,000 | | | | 1,105,685 | | | | 1,098,450 | | | | (7,235 | ) |
| Japanese yen | | Buy | | J.P.Morgan | | 11/25/2013 | | | 255,400,000 | | | | 2,618,263 | | | | 2,597,630 | | | | (20,633 | ) |
| Norwegian krone | | Buy | | Morgan Stanley | | 1/3/2014 | | | 3,800,000 | | | | 639,623 | | | | 636,910 | | | | (2,713 | ) |
| Norwegian krone | | Buy | | Morgan Stanley | | 1/3/2014 | | | 7,000,000 | | | | 1,182,814 | | | | 1,173,255 | | | | (9,559 | ) |
| Swiss franc | | Buy | | Goldman Sachs | | 2/25/2014 | | | 1,360,000 | | | | 1,523,840 | | | | 1,500,349 | | | | (23,491 | ) |
| British pound | | Sell | | Credit Suisse | | 11/27/2013 | | | 955,000 | | | | 1,509,714 | | | | 1,530,983 | | | | (21,269 | ) |
| British pound | | Sell | | Credit Suisse | | 11/27/2013 | | | 685,000 | | | | 1,085,780 | | | | 1,098,139 | | | | (12,359 | ) |
| British pound | | Sell | | Goldman Sachs | | 11/27/2013 | | | 2,870,000 | | | | 4,359,487 | | | | 4,600,964 | | | | (241,477 | ) |
| British pound | | Sell | | Goldman Sachs | | 11/27/2013 | | | 820,000 | | | | 1,271,230 | | | | 1,314,561 | | | | (43,331 | ) |
| British pound | | Sell | | Goldman Sachs | | 11/27/2013 | | | 505,000 | | | | 808,024 | | | | 809,577 | | | | (1,553 | ) |
| British pound | | Sell | | J.P.Morgan | | 11/4/2013 | | | 850,000 | | | | 1,295,180 | | | | 1,362,889 | | | | (67,709 | ) |
| British pound | | Sell | | J.P.Morgan | | 11/4/2013 | | | 580,000 | | | | 884,397 | | | | 929,972 | | | | (45,575 | ) |
| British pound | | Sell | | J.P.Morgan | | 11/4/2013 | | | 750,000 | | | | 1,114,007 | | | | 1,202,549 | | | | (88,542 | ) |
| British pound | | Sell | | J.P.Morgan | | 11/4/2013 | | | 650,000 | | | | 987,004 | | | | 1,042,209 | | | | (55,205 | ) |
| British pound | | Sell | | J.P.Morgan | | 11/27/2013 | | | 1,200,000 | | | | 1,839,533 | | | | 1,923,748 | | | | (84,215 | ) |
| British pound | | Sell | | J.P.Morgan | | 11/27/2013 | | | 475,000 | | | | 750,068 | | | | 761,484 | | | | (11,416 | ) |
| British pound | | Sell | | J.P.Morgan | | 11/27/2013 | | | 3,040,000 | | | | 4,857,561 | | | | 4,873,495 | | | | (15,934 | ) |
| British pound | | Sell | | Morgan Stanley | | 2/11/2014 | | | 1,050,000 | | | | 1,670,653 | | | | 1,682,291 | | | | (11,638 | ) |
| British pound | | Sell | | UBS AG | | 11/4/2013 | | | 1,350,000 | | | | 2,057,198 | | | | 2,164,589 | | | | (107,391 | ) |
| British pound | | Sell | | UBS AG | | 11/27/2013 | | | 950,000 | | | | 1,472,084 | | | | 1,522,967 | | | | (50,883 | ) |
| euro | | Sell | | J.P.Morgan | | 12/30/2013 | | | 3,025,000 | | | | 4,051,443 | | | | 4,107,535 | | | | (56,092 | ) |
| euro | | Sell | | J.P.Morgan | | 12/30/2013 | | | 1,070,000 | | | | 1,424,904 | | | | 1,452,913 | | | | (28,009 | ) |
| euro | | Sell | | Morgan Stanley | | 12/30/2013 | | | 880,000 | | | | 1,165,294 | | | | 1,194,919 | | | | (29,625 | ) |
| Japanese yen | | Sell | | J.P.Morgan | | 11/25/2013 | | | 77,000,000 | | | | 771,131 | | | | 783,154 | | | | (12,023 | ) |
| Japanese yen | | Sell | | J.P.Morgan | | 11/25/2013 | | | 105,000,000 | | | | 1,053,049 | | | | 1,067,937 | | | | (14,888 | ) |
| New Zealand dollar | | Sell | | UBS AG | | 1/16/2014 | | | 1,632,000 | | | | 1,314,974 | | | | 1,341,264 | | | | (26,290 | ) |
| Norwegian krone | | Sell | | Barclays Bank plc | | 1/3/2014 | | | 28,700,000 | | | | 4,688,145 | | | | 4,810,346 | | | | (122,201 | ) |
| Norwegian krone | | Sell | | J.P.Morgan | | 11/4/2013 | | | 4,130,000 | | | | 676,208 | | | | 693,762 | | | | (17,554 | ) |
| Philippine peso | | Sell | | J.P.Morgan | | 1/21/2014 | | | 226,000,000 | | | | 5,230,271 | | | | 5,236,142 | | | | (5,871 | ) |
| Unrealized Depreciation on Forward Foreign Currency Exchange Contracts | | | | | | | $ | (1,549,689 | ) |
| | See Notes to Financial Statements. | 55 |
Schedule of Investments (concluded)
INTERNATIONAL OPPORTUNITIES FUND October 31, 2013
The following is a summary of the inputs used as of October 31, 2013 in valuing the Fund’s investments carried at fair value(1):
| Investment Type(2)(3) | | Level 1
(000) | | | Level 2
(000) | | | Level 3
(000) | | | Total
(000) | |
| Common Stocks | | $ | 390,632 | | | $ | 5,730 | | | $ | — | | | $ | 396,362 | |
| Repurchase Agreement | | | — | | | | 16,933 | | | | — | | | | 16,933 | |
| Total | | $ | 390,632 | | | $ | 22,663 | | | $ | — | | | $ | 413,295 | |
| Other Financial Instruments | | | | | | | | | | | | | | | | |
| Forward Foreign Currency Exchange Contracts | | | | | | | | | | | | | | | | |
| Assets | | $ | — | | | $ | 1,182 | | | $ | — | | | $ | 1,182 | |
| Liabilities | | | — | | | | (1,550 | ) | | | — | | | | (1,550 | ) |
| Total | | $ | — | | | $ | (368 | ) | | $ | — | | | $ | (368 | ) |
| (1) | Refer to note 2(k) for a description of fair value measurements and the three-tier hierarchy of inputs. |
| (2) | See Schedule of Investments for fair values in each industry and identification of foreign issuers and/or geography. |
| (3) | There were no level transfers during the fiscal year ended October 31, 2013. |
| 56 | See Notes to Financial Statements. |
Schedule of Investments
VALUE OPPORTUNITIES FUND October 31, 2013
| Investments | | Shares | | | Fair
Value
(000) | |
| COMMON STOCKS 98.17% | | | | | | |
| | | | | | | | | |
| Aerospace & Defense 0.15% | | | | | | | | |
| Hexcel Corp.* | | | 113,936 | | | $ | 4,821 | |
| | | | | | | | | |
| Airlines 1.95% | | | | | | | | |
| Spirit Airlines, Inc.* | | | 436,229 | | | | 18,823 | |
| US Airways Group, Inc.* | | | 1,916,900 | | | | 42,115 | |
| Total | | | | | | | 60,938 | |
| | | | | | | | | |
| Auto Components 0.73% | | | | | | | | |
| Tenneco, Inc.* | | | 431,700 | | | | 22,910 | |
| | | | | | | | | |
| Beverages 1.10% | | | | | | | | |
| Beam, Inc. | | | 512,783 | | | | 34,510 | |
| | | | | | | | | |
| Building Products 0.70% | | | | | | | | |
| Fortune Brands Home & Security, Inc. | | | 508,128 | | | | 21,890 | |
| | | | | | | | | |
| Capital Markets 3.45% | | | | | | | | |
| Ares Capital Corp. | | | 1,934,837 | | | | 33,608 | |
| Raymond James Financial, Inc. | | | 918,983 | | | | 41,952 | |
| Waddell & Reed Financial, Inc. Class A | | | 523,300 | | | | 32,314 | |
| Total | | | | | | | 107,874 | |
| | | | | | | | | |
| Chemicals 1.32% | | | | | | | | |
| Chemtura Corp.* | | | 1,184,501 | | | | 29,020 | |
| OM Group, Inc.* | | | 362,080 | | | | 12,311 | |
| Total | | | | | | | 41,331 | |
| | | | | | | | | |
| Commercial Banks 9.93% | | | | | | | | |
| BOK Financial Corp. | | | 369,263 | | | | 22,610 | |
| CapitalSource, Inc. | | | 4,849,965 | | | | 63,438 | |
| City National Corp. | | | 299,315 | | | | 21,584 | |
| Comerica, Inc. | | | 1,001,757 | | | | 43,376 | |
| East West Bancorp, Inc. | | | 1,147,556 | | | | 38,661 | |
| FirstMerit Corp. | | | 1,767,300 | | | | 39,694 | |
| Signature Bank* | | | 398,011 | | | | 40,525 | |
| Western Alliance Bancorp* | | | 1,932,694 | | | | 40,876 | |
| Total | | | | | | | 310,764 | |
| Investments | | Shares | | | Fair
Value
(000) | |
| Commercial Services & Supplies 0.44% | | | | | | | | |
| Waste Connections, Inc. | | | 319,220 | | | $ | 13,644 | |
| | | | | | | | | |
| Computers & Peripherals 1.50% | | | | | | | | |
| NCR Corp.* | | | 1,283,809 | | | | 46,923 | |
| | | | | | | | | |
| Construction & Engineering 1.24% | | | | | | | | |
| Jacobs Engineering Group, Inc.* | | | 636,262 | | | | 38,698 | |
| | | | | | | | | |
| Containers & Packaging 2.97% | | | | | | | | |
| Berry Plastics Group, Inc.* | | | 1,386,432 | | | | 27,839 | |
| Rock-Tenn Co. Class A | | | 450,500 | | | | 48,208 | |
| Sealed Air Corp. | | | 559,300 | | | | 16,880 | |
| Total | | | | | | | 92,927 | |
| | | | | | | | | |
| Electric: Utilities 2.74% | | | | | | | | |
| Cleco Corp. | | | 549,901 | | | | 25,482 | |
| ITC Holdings Corp. | | | 320,600 | | | | 32,249 | |
| NV Energy, Inc. | | | 1,174,200 | | | | 27,876 | |
| Total | | | | | | | 85,607 | |
| | | | | | | | | |
| Electronic Equipment, Instruments & Components 0.66% | | | | | | | | |
| Amphenol Corp. Class A | | | 255,300 | | | | 20,498 | |
| | | | | | | | | |
| Energy Equipment & Services 6.23% | | | | | | | | |
| Bristow Group, Inc. | | | 424,900 | | | | 34,192 | |
| GulfMark Offshore, Inc. Class A | | | 735,296 | | | | 36,603 | |
| Helix Energy Solutions Group, Inc.* | | | 1,738,900 | | | | 41,143 | |
| Helmerich & Payne, Inc. | | | 600,700 | | | | 46,584 | |
| Superior Energy Services, Inc.* | | | 1,357,000 | | | | 36,408 | |
| Total | | | | | | | 194,930 | |
| | | | | | | | | |
| Food Products 2.40% | | | | | | | | |
| Bunge Ltd. | | | 449,800 | | | | 36,942 | |
| Ingredion, Inc. | | | 227,400 | | | | 14,954 | |
| Pinnacle Foods, Inc. | | | 861,455 | | | | 23,337 | |
| Total | | | | | | | 75,233 | |
| | See Notes to Financial Statements. | 57 |
Schedule of Investments (continued)
VALUE OPPORTUNITIES FUND October 31, 2013
| Investments | | Shares | | | Fair
Value
(000) | |
| Health Care Providers & Services 5.01% | | | | | | | | |
| Community Health Systems, Inc. | | | 556,407 | | | $ | 24,276 | |
| ExamWorks Group, Inc.* | | | 1,170,766 | | | | 30,264 | |
| Hanger, Inc.* | | | 738,169 | | | | 27,091 | |
| MEDNAX, Inc.* | | | 425,800 | | | | 46,421 | |
| Team Health Holdings, Inc.* | | | 659,900 | | | | 28,666 | |
| Total | | | | | | | 156,718 | |
| | | | | | | | | |
| Hotels, Restaurants & Leisure 1.84% | | | | | | | | |
| Life Time Fitness, Inc.* | | | 607,000 | | | | 27,570 | |
| Red Robin Gourmet Burgers, Inc.* | | | 394,933 | | | | 30,086 | |
| Total | | | | | | | 57,656 | |
| | | | | | | | | |
| Household Durables 4.28% | | | | | | | | |
| Jarden Corp.* | | | 1,272,700 | | | | 70,457 | |
| Mohawk Industries, Inc.* | | | 479,298 | | | | 63,468 | |
| Total | | | | | | | 133,925 | |
| | | | | | | | | |
| Information Technology Services 5.47% | | | | | | | | |
| Acxiom Corp.* | | | 578,896 | | | | 19,237 | |
| Alliance Data Systems Corp.* | | | 118,500 | | | | 28,091 | |
| Amdocs Ltd. | | | 856,798 | | | | 32,944 | |
| Cardtronics, Inc.* | | | 379,099 | | | | 14,880 | |
| Fidelity National Information Services, Inc. | | | 915,736 | | | | 44,642 | |
| Sapient Corp.* | | | 1,987,227 | | | | 31,418 | |
| Total | | | | | | | 171,212 | |
| | | | | | | | | |
| Insurance 7.90% | | | | | | | | |
| Arch Capital Group Ltd.* | | | 736,706 | | | | 42,699 | |
| Brown & Brown, Inc. | | | 711,800 | | | | 22,728 | |
| Everest Re Group Ltd. | | | 289,600 | | | | 44,523 | |
| Hartford Financial Services Group, Inc. | | | 1,543,535 | | | | 52,017 | |
| HCC Insurance Holdings, Inc. | | | 1,086,025 | | | | 49,577 | |
| Markel Corp.* | | | 67,213 | | | | 35,601 | |
| Total | | | | | | | 247,145 | |
| Investments | | Shares | | | Fair
Value
(000) | |
| Internet Software & Services 1.49% | | | | | | | | |
| Akamai Technologies, Inc.* | | | 1,045,100 | | | $ | 46,758 | |
| | | | | | | | | |
| Leisure Equipment & Products 1.27% | | | | | | | | |
| Brunswick Corp. | | | 879,200 | | | | 39,678 | |
| | | | | | | | | |
| Life Sciences Tools & Services 2.34% | | | | | | | | |
| PerkinElmer, Inc. | | | 1,226,200 | | | | 46,644 | |
| Quintiles Transnational Holdings, Inc.* | | | 629,049 | | | | 26,414 | |
| Total | | | | | | | 73,058 | |
| | | | | | | | | |
| Media 2.18% | | | | | | | | |
| Interpublic Group of Cos., Inc. (The) | | | 1,988,139 | | | | 33,401 | |
| New York Times Co. (The) Class A | | | 2,514,364 | | | | 34,773 | |
| Total | | | | | | | 68,174 | |
| | | | | | | | | |
| Metals & Mining 3.13% | | | | | | | | |
| Allegheny Technologies, Inc. | | | 974,500 | | | | 32,256 | |
| Carpenter Technology Corp. | | | 274,376 | | | | 16,279 | |
| Reliance Steel & Aluminum Co. | | | 672,700 | | | | 49,302 | |
| Total | | | | | | | 97,837 | |
| | | | | | | | | |
| Multi-Utilities 2.40% | | | | | | | | |
| CMS Energy Corp. | | | 1,302,900 | | | | 35,778 | |
| Wisconsin Energy Corp. | | | 929,899 | | | | 39,158 | |
| Total | | | | | | | 74,936 | |
| | | | | | | | | |
| Oil, Gas & Consumable Fuels 1.98% | | | | | | | | |
| Cimarex Energy Co. | | | 306,903 | | | | 32,332 | |
| EQT Corp. | | | 344,600 | | | | 29,501 | |
| Total | | | | | | | 61,833 | |
| | | | | | | | | |
| Pharmaceuticals 1.74% | | | | | | | | |
| Actavis plc* | | | 352,820 | | | | 54,539 | |
| | | | | | | | | |
| Professional Services 0.85% | | | | | | | | |
| Robert Half | | | | | | | | |
| International, Inc. | | | 689,860 | | | | 26,580 | |
| 58 | See Notes to Financial Statements. |
Schedule of Investments (continued)
VALUE OPPORTUNITIES FUND October 31, 2013
| Investments | | Shares | | | Fair
Value
(000) | |
| Real Estate Investment Trusts 4.93% | | | | | | | | |
| BioMed Realty Trust, Inc. | | | 1,641,175 | | | $ | 32,692 | |
| Brandywine Realty Trust | | | 2,407,850 | | | | 34,264 | |
| Camden Property Trust | | | 328,100 | | | | 21,064 | |
| DDR Corp. | | | 1,955,418 | | | | 33,145 | |
| Liberty Property Trust | | | 885,300 | | | | 32,924 | |
| Total | | | | | | | 154,089 | |
| | | | | | | | | |
| Real Estate Management & Development 0.49% | | | | | | | | |
| Realogy Holdings Corp.* | | | 373,926 | | | | 15,383 | |
| | | | | | | | | |
| Road & Rail 1.75% | | | | | | | | |
| Genesee & Wyoming, Inc. Class A* | | | 230,800 | | | | 23,043 | |
| Swift Transportation Co.* | | | 1,455,100 | | | | 31,707 | |
| Total | | | | | | | 54,750 | |
| | | | | | | | | |
| Semiconductors & Semiconductor Equipment 1.73% | | | | | | | | |
| Lam Research Corp.* | | | 502,500 | | | | 27,250 | |
| Synaptics, Inc.* | | | 576,878 | | | | 26,825 | |
| Total | | | | | | | 54,075 | |
| | | | | | | | | |
| Software 1.08% | | | | | | | | |
| Rovi Corp.* | | | 2,024,400 | | | | 33,929 | |
| | | | | | | | | |
| Specialty Retail 3.10% | | | | | | | | |
| Chico’s FAS, Inc. | | | 1,486,800 | | | | 25,499 | |
| Dick’s Sporting Goods, Inc. | | | 445,000 | | | | 23,678 | |
| GameStop Corp. Class A | | | 581,921 | | | | 31,901 | |
| Penske Automotive Group, Inc. | | | 398,800 | | | | 15,800 | |
| Total | | | | | | | 96,878 | |
| | | | | | | | | |
| Textiles, Apparel & Luxury Goods 1.03% | | | | | | | | |
| PVH Corp. | | | 257,599 | | | | 32,089 | |
| | | | | | | | | |
| Thrifts & Mortgage Finance 0.29% | | | | | | | | |
| Essent Group Ltd.* | | | 470,376 | | | | 9,110 | |
| Investments | | Shares | | | Fair
Value
(000) | |
| Trading Companies & Distributors 2.81% | | | | | | | | |
| HD Supply Holdings, Inc.* | | | 665,829 | | | $ | 13,443 | |
| TAL International Group, Inc.* | | | 726,054 | | | | 35,076 | |
| United Rentals, Inc.* | | | 612,000 | | | | 39,529 | |
| Total | | | | | | | 88,048 | |
| | | | | | | | | |
| Water Utilities 1.57% | | | | | | | | |
| American Water Works Co., Inc. | | | 1,147,618 | | | | 49,198 | |
Total Common Stocks
(cost $2,387,045,418) | | | | | | | 3,071,096 | |
| | | Principal
Amount
(000) | | | | |
| SHORT-TERM INVESTMENT 3.78% | | | | | | | | |
| | | | | | | | | |
| Repurchase Agreement | | | | | | | | |
Repurchase Agreement dated 10/31/2013, Zero Coupon due 11/1/2013 with Fixed Income Clearing Corp. collateralized by $115,435,000 of U.S. Treasury Note at 2.125% due 12/31/2015; value: $120,682,906; proceeds: $118,311,612
(cost $118,311,612) | | $ | 118,312 | | | | 118,312 | |
Total Investments in Securities 101.95%
(cost $2,505,357,030) | | | | | | | 3,189,408 | |
| Liabilities in Excess of Cash and Other Assets (1.95)% | | | | | | | (61,080 | ) |
| Net Assets 100.00% | | | | | | $ | 3,128,328 | |
| * | Non-income producing security. |
| | See Notes to Financial Statements. | 59 |
Schedule of Investments (concluded)
VALUE OPPORTUNITIES FUND October 31, 2013
The following is a summary of the inputs used as of October 31, 2013 in valuing the Fund’s investments carried at fair value(1):
| Investment Type(2)(3) | | Level 1
(000) | | | Level 2
(000) | | | Level 3
(000) | | | Total
(000) | |
| Common Stocks | | $ | 3,071,096 | | | $ | — | | | $ | — | | | $ | 3,071,096 | |
| Repurchase Agreement | | | — | | | | 118,312 | | | | — | | | | 118,312 | |
| Total | | $ | 3,071,096 | | | $ | 118,312 | | | $ | — | | | $ | 3,189,408 | |
| (1) | Refer to note 2(k) for a description of fair value measurements and the three-tier hierarchy of inputs. |
| (2) | See Schedule of Investments for fair values in each industry and identification of foreign issuers and/or geography. |
| (3) | There were no level transfers during the fiscal year ended October 31, 2013. |
| 60 | See Notes to Financial Statements. |
This page is intentionally left blank.
Statements of Assets and Liabilities
October 31, 2013
| | | Alpha Strategy
Fund | | | Fundamental
Equity Fund | | | Growth
Leaders Fund | |
| ASSETS: | | | | | | | | | | | | |
| Investments in securities, at cost | | $ | 791,122,649 | | | $ | 4,761,498,593 | | | $ | 403,262,843 | |
| Investments in securities, at fair value | | $ | 1,163,259,735 | | | $ | 5,771,329,730 | | | $ | 426,301,874 | |
| Cash | | | 44,507 | | | | 4,634,983 | | | | 1,134,364 | |
| Deposits with brokers for futures collateral | | | — | | | | — | | | | 4,100 | |
| Foreign cash, at value (cost $0, $0, $0, $39,448, $8,489,355, $165,185 and $0, respectively) | | | — | | | | — | | | | — | |
| Receivables: | | | | | | | | | | | | |
| Investment securities sold | | | — | | | | 75,032,108 | | | | 38,504,645 | |
| Dividends | | | — | | | | 3,385,789 | | | | 94,438 | |
| Capital shares sold | | | 3,695,835 | | | | 7,323,296 | | | | 10,397,669 | |
| From advisor (See Note 3) | | | — | | | | — | | | | 135,157 | |
| From affiliates (See Note 3) | | | 100,560 | | | | — | | | | — | |
| Unrealized appreciation on forward foreign currency exchange contracts | | | — | | | | — | | | | — | |
| Prepaid expenses and other assets | | | 56,581 | | | | 157,590 | | | | 44,975 | |
| Total assets | | | 1,167,157,218 | | | | 5,861,863,496 | | | | 476,617,222 | |
| LIABILITIES: | | | | | | | | | | | | |
| Payables: | | | | | | | | | | | | |
| Investment securities purchased | | | — | | | | 115,365,277 | | | | 41,590,173 | |
| Capital shares reacquired | | | 1,298,045 | | | | 10,654,290 | | | | 520,800 | |
| 12b-1 distribution fees | | | 468,820 | | | | 2,445,616 | | | | 150,566 | |
| Trustees’ fees | | | 90,673 | | | | 646,371 | | | | 28,299 | |
| Management fee | | | — | | | | 2,484,657 | | | | 176,504 | |
| Fund administration | | | — | | | | 192,318 | | | | 12,837 | |
| Variation margin | | | — | | | | — | | | | 481 | |
| To affiliates (See Note 3) | | | — | | | | 4,616 | | | | 4,632 | |
| Unrealized depreciation on forward foreign currency exchange contracts | | | — | | | | — | | | | — | |
| Accrued expenses and other liabilities | | | 263,233 | | | | 1,134,474 | | | | 152,352 | |
| Total liabilities | | | 2,120,771 | | | | 132,927,619 | | | | 42,636,644 | |
| NET ASSETS | | $ | 1,165,036,447 | | | $ | 5,728,935,877 | | | $ | 433,980,578 | |
| COMPOSITION OF NET ASSETS: | | | | | | | | | | | | |
| Paid-in capital | | $ | 760,896,591 | | | $ | 3,841,889,009 | | | $ | 383,825,782 | |
| Undistributed (distributions in excess of) net investment income | | | (1,793,084 | ) | | | 13,093,728 | | | | (300,557 | ) |
| Accumulated net realized gain (loss) on investments, futures contracts and foreign currency related transactions | | | 33,795,854 | | | | 864,122,003 | | | | 27,413,697 | |
| Net unrealized appreciation on investments, futures contracts and translation of assets and liabilities denominated in foreign currencies | | | 372,137,086 | | | | 1,009,831,137 | | | | 23,041,656 | |
| Net Assets | | $ | 1,165,036,447 | | | $ | 5,728,935,877 | | | $ | 433,980,578 | |
| 62 | See Notes to Financial Statements. |
| | International
Core Equity
Fund | | | International
Dividend
Income Fund | | | International
Opportunities
Fund | | | Value
Opportunities
Fund | |
| | | | | | | | | | | | |
| | $ | 683,352,813 | | | $ | 2,017,017,942 | | | $ | 341,875,875 | | | $ | 2,505,357,030 | |
| | $ | 827,319,572 | | | $ | 2,325,340,365 | | | $ | 413,294,550 | | | $ | 3,189,408,246 | |
| | | 4,019,199 | | | | 14,880,293 | | | | 1,947,115 | | | | 11,089,120 | |
| | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | |
| | | 39,025 | | | | 8,520,361 | | | | 164,623 | | | | — | |
| | | | | | | | | | | | | | | | |
| | | 1,608,456 | | | | 2,285,791 | | | | 2,343,771 | | | | 20,923,976 | |
| | | 2,313,945 | | | | 6,030,175 | | | | 747,108 | | | | 895,555 | |
| | | 717,780 | | | | 11,043,721 | | | | 2,557,733 | | | | 3,636,149 | |
| | | 120,447 | | | | 312,048 | | | | — | | | | — | |
| | | — | | | | — | | | | — | | | | — | |
| | | 2,221,682 | | | | 11,786,304 | | | | 1,182,098 | | | | — | |
| | | 31,809 | | | | 92,288 | | | | 20,454 | | | | 157,105 | |
| | | 838,391,915 | | | | 2,380,291,346 | | | | 422,257,452 | | | | 3,226,110,151 | |
| | | | | | | | | | | | | | | | |
| | | 2,699,317 | | | | 21,995,912 | | | | 10,646,080 | | | | 74,186,633 | |
| | | 1,031,555 | | | | 3,120,739 | | | | 85,726 | | | | 19,426,378 | |
| | | 221,127 | | | | 457,978 | | | | 64,996 | | | | 1,182,041 | |
| | | 134,205 | | | | 80,430 | | | | 54,741 | | | | 270,014 | |
| | | 487,758 | | | | 1,298,085 | | | | 249,938 | | | | 1,829,739 | |
| | | 27,872 | | | | 78,046 | | | | 13,330 | | | | 104,759 | |
| | | — | | | | — | | | | — | | | | — | |
| | | 3,701 | | | | 56,977 | | | | 22,057 | | | | 24,049 | |
| | | 2,507,222 | | | | 14,446,187 | | | | 1,549,689 | | | | — | |
| | | 290,472 | | | | 440,659 | | | | 118,580 | | | | 758,157 | |
| | | 7,403,229 | | | | 41,975,013 | | | | 12,805,137 | | | | 97,781,770 | |
| | $ | 830,988,686 | | | $ | 2,338,316,333 | | | $ | 409,452,315 | | | $ | 3,128,328,381 | |
| | | | | | | | | | | | | | | | |
| | $ | 966,474,447 | | | $ | 2,059,380,148 | | | $ | 368,316,572 | | | $ | 2,168,276,080 | |
| | | | | | | | | | | | | | | | |
| | | 10,827,511 | | | | 8,494,357 | | | | 3,589,530 | | | | (1,053,909 | ) |
| | | | | | | | | | | | | | | | |
| | | (290,016,050 | ) | | | (35,328,595 | ) | | | (33,514,599 | ) | | | 277,054,994 | |
| | | | | | | | | | | | | | | | |
| | | 143,702,778 | | | | 305,770,423 | | | | 71,060,812 | | | | 684,051,216 | |
| | $ | 830,988,686 | | | $ | 2,338,316,333 | | | $ | 409,452,315 | | | $ | 3,128,328,381 | |
| | See Notes to Financial Statements. | 63 |
Statements of Assets and Liabilities (concluded)
October 31, 2013
| | | Alpha Strategy
Fund | | | Fundamental
Equity Fund | | | Growth
Leaders Fund | |
| Net assets by class: | | | | | | | | | | | | |
| Class A Shares | | $ | 567,123,925 | | | $ | 3,031,189,577 | | | $ | 191,798,408 | |
| Class B Shares | | $ | 22,883,202 | | | $ | 62,408,985 | | | $ | 8,041,171 | |
| Class C Shares | | $ | 294,779,560 | | | $ | 1,012,596,838 | | | $ | 66,471,162 | |
| Class F Shares | | $ | 197,939,236 | | | $ | 716,579,033 | | | $ | 109,010,788 | |
| Class I Shares | | $ | 44,997,997 | | | $ | 531,676,194 | | | $ | 50,326,329 | |
| Class P Shares | | | — | | | $ | 26,423,815 | | | | — | |
| Class R2 Shares | | $ | 2,738,235 | | | $ | 25,110,780 | | | $ | 44,054 | |
| Class R3 Shares | | $ | 34,574,292 | | | $ | 322,950,655 | | | $ | 8,288,666 | |
| Outstanding shares by class (unlimited number of authorized shares of beneficial interest): | | | | | | | | | | | | |
| Class A Shares | | | 17,379,927 | | | | 180,068,448 | | | | 8,946,266 | |
| Class B Shares | | | 758,739 | | | | 3,922,468 | | | | 376,953 | |
| Class C Shares | | | 9,843,641 | | | | 63,957,471 | | | | 3,144,703 | |
| Class F Shares | | | 6,051,744 | | | | 42,717,835 | | | | 5,073,532 | |
| Class I Shares | | | 1,363,307 | | | | 31,398,007 | | | | 2,339,575 | |
| Class P Shares | | | — | | | | 1,588,108 | | | | — | |
| Class R2 Shares | | | 85,372 | | | | 1,515,661 | | | | 2,041 | |
| Class R3 Shares | | | 1,074,280 | | | | 19,389,177 | | | | 386,493 | |
| Net asset value, offering and redemption price per share (Net assets divided by outstanding shares): | | | | | | | | | | | | |
| Class A Shares-Net asset value | | | $32.63 | | | | $16.83 | | | | $21.44 | |
Class A Shares-Maximum offering price
(Net asset value plus sales charge of 5.75%) | | | $34.62 | | | | $17.86 | | | | $22.75 | |
| Class B Shares-Net asset value | | | $30.16 | | | | $15.91 | | | | $21.33 | |
| Class C Shares-Net asset value | | | $29.95 | | | | $15.83 | | | | $21.14 | |
| Class F Shares-Net asset value | | | $32.71 | | | | $16.77 | | | | $21.49 | |
| Class I Shares-Net asset value | | | $33.01 | | | | $16.93 | | | | $21.51 | |
| Class P Shares-Net asset value | | | — | | | | $16.64 | | | | — | |
| Class R2 Shares-Net asset value | | | $32.07 | | | | $16.57 | | | | $21.58 | |
| Class R3 Shares-Net asset value | | | $32.18 | | | | $16.66 | | | | $21.45 | |
| 64 | See Notes to Financial Statements. |
| | International
Core Equity
Fund | | | International
Dividend
Income Fund | | | International
Opportunities
Fund | | | Value
Opportunities
Fund | |
| | | | | | | | | | | | |
| | $ | 437,270,570 | | | $ | 954,304,708 | | | $ | 99,529,885 | | | $ | 1,372,436,082 | |
| | $ | 17,238,567 | | | | — | | | $ | 6,356,648 | | | $ | 24,910,585 | |
| | $ | 57,778,566 | | | $ | 143,807,236 | | | $ | 18,137,814 | | | $ | 400,419,782 | |
| | $ | 142,062,914 | | | $ | 228,586,012 | | | $ | 18,046,158 | | | $ | 456,370,340 | |
| | $ | 155,753,722 | | | $ | 1,005,557,687 | | | $ | 259,952,065 | | | $ | 675,592,578 | |
| | $ | 277,552 | | | | — | | | $ | 1,095,604 | | | $ | 54,080,708 | |
| | $ | 867,760 | | | $ | 860,443 | | | $ | 200,723 | | | $ | 13,921,714 | |
| | $ | 19,739,035 | | | $ | 5,200,247 | | | $ | 6,133,418 | | | $ | 130,596,592 | |
| | | | | | | | | | | | | | | | |
| | | 31,304,232 | | | | 104,794,331 | | | | 5,913,119 | | | | 64,000,492 | |
| | | 1,252,904 | | | | — | | | | 398,288 | | | | 1,219,654 | |
| | | 4,196,566 | | | | 15,913,532 | | | | 1,145,114 | | | | 19,606,013 | |
| | | 10,230,031 | | | | 25,064,223 | | | | 1,078,597 | | | | 21,110,692 | |
| | | 11,068,449 | | | | 110,020,194 | | | | 15,069,868 | | | | 30,915,820 | |
| | | 19,911 | | | | — | | | | 64,158 | | | | 2,536,754 | |
| | | 62,337 | | | | 92,845 | | | | 12,028 | | | | 658,851 | |
| | | 1,433,836 | | | | 566,402 | | | | 370,046 | | | | 6,160,533 | |
| | | | | | | | | | | | | | | | |
| | | $13.97 | | | | $9.11 | | | | $16.83 | | | | $21.44 | |
| | | | | | | | | | | | | | | | |
| | | $14.82 | | | | $9.67 | | | | $17.86 | | | | $22.75 | |
| | | $13.76 | | | | — | | | | $15.96 | | | | $20.42 | |
| | | $13.77 | | | | $9.04 | | | | $15.84 | | | | $20.42 | |
| | | $13.89 | | | | $9.12 | | | | $16.73 | | | | $21.62 | |
| | | $14.07 | | | | $9.14 | | | | $17.25 | | | | $21.85 | |
| | | $13.94 | | | | — | | | | $17.08 | | | | $21.32 | |
| | | $13.92 | | | | $9.27 | | | | $16.69 | | | | $21.13 | |
| | | $13.77 | | | | $9.18 | | | | $16.57 | | | | $21.20 | |
| | See Notes to Financial Statements. | 65 |
Statements of Operations
For the Year Ended October 31, 2013
| | | Alpha Strategy
Fund | | | Fundamental
Equity Fund | | | Growth
Leaders Fund | |
| Investment income: | | | | | | | | | | | | |
| Dividends (net of foreign withholding taxes of $0, $174,202, $5,216, $1,855,767, $10,209,971, $565,809 and $3,831, respectively) | | $ | 5,723,154 | | | $ | 79,935,899 | | | $ | 1,071,079 | |
| Interest and other | | | — | | | | — | | | | 75 | |
| Total investment income | | | 5,723,154 | | | | 79,935,899 | | | | 1,071,154 | |
| Expenses: | | | | | | | | | | | | |
| Management fee | | | 969,115 | | | | 26,522,357 | | | | 855,733 | |
| 12b-1 distribution plan-Class A | | | 1,164,513 | | | | 9,484,968 | | | | 277,247 | |
| 12b-1 distribution plan-Class B | | | 220,749 | | | | 684,346 | | | | 47,311 | |
| 12b-1 distribution plan-Class C | | | 2,486,538 | | | | 8,858,189 | | | | 224,864 | |
| 12b-1 distribution plan-Class F | | | 158,802 | | | | 640,076 | | | | 18,138 | |
| 12b-1 distribution plan-Class P | | | — | | | | 121,433 | | | | — | |
| 12b-1 distribution plan-Class R2 | | | 15,709 | | | | 141,498 | | | | 131 | |
| 12b-1 distribution plan-Class R3 | | | 156,892 | | | | 1,477,130 | | | | 21,651 | |
| Shareholder servicing | | | 1,570,929 | | | | 6,944,033 | | | | 223,765 | |
| Fund administration | | | — | | | | 2,045,789 | | | | 62,235 | |
| Reports to shareholders | | | 101,330 | | | | 417,026 | | | | 25,304 | |
| Subsidy (See Note 3) | | | — | | | | 66,600 | | | | 44,447 | |
| Trustees’ fees | | | 33,276 | | | | 177,806 | | | | 5,206 | |
| Custody | | | 19,421 | | | | 98,347 | | | | 19,861 | |
| Registration | | | 88,042 | | | | 188,139 | | | | 131,436 | |
| Professional | | | 35,679 | | | | 68,771 | | | | 47,509 | |
| Other | | | 21,107 | | | | 97,936 | | | | 99,927 | |
| Gross expenses | | | 7,042,102 | | | | 58,034,444 | | | | 2,104,765 | |
| Expense reductions (See Note 8) | | | (888 | ) | | | (4,988 | ) | | | (177 | ) |
| Management fee waived (See Note 3) | | | (969,115 | ) | | | — | | | | (737,418 | ) |
| Expenses assumed by Underlying Funds (See Note 3) | | | (1,868,897 | ) | | | — | | | | — | |
| Net expenses | | | 4,203,202 | | | | 58,029,456 | | | | 1,367,170 | |
| Net investment income (loss) | | | 1,519,952 | | | | 21,906,443 | | | | (296,016 | ) |
| Net realized and unrealized gain: | | | | | | | | | | | | |
| Capital gain distributions received from Underlying Funds | | | 35,119,656 | | | | — | | | | — | |
| Net realized gain on investments (net of foreign capital gains tax of $0, $0, $0, $289,671, $718,889, $0 and $0, respectively), futures contracts and foreign currency related transactions | | | 7,916,093 | | | | 873,052,554 | | | | 44,678,973 | |
| Net change in unrealized appreciation/depreciation on investments, futures contracts and translation of assets and liabilities denominated in foreign currencies | | | 266,739,166 | | | | 466,096,062 | | | | 12,825,042 | |
| Net realized and unrealized gain | | | 309,774,915 | | | | 1,339,148,616 | | | | 57,504,015 | |
| Net Increase in Net Assets Resulting From Operations | | $ | 311,294,867 | | | $ | 1,361,055,059 | | | $ | 57,207,999 | |
| 66 | See Notes to Financial Statements. |
| | International
Core Equity
Fund | | | International
Dividend
Income Fund | | | International
Opportunities
Fund | | | Value
Opportunities
Fund | |
| | | | | | | | | | | | |
| | $ | 18,883,765 | | | $ | 106,385,925 | | | $ | 7,096,019 | | | $ | 30,308,773 | |
| | | 3,313 | | | | — | | | | — | | | | 2,876 | |
| | | 18,887,078 | | | | 106,385,925 | | | | 7,096,019 | | | | 30,311,649 | |
| | | | | | | | | | | | | | | | |
| | | 5,435,116 | | | | 14,390,532 | | | | 2,504,205 | | | | 17,003,098 | |
| | | 1,410,237 | | | | 2,743,503 | | | | 291,504 | | | | 3,640,980 | |
| | | 184,331 | | | | — | | | | 63,507 | | | | 171,556 | |
| | | 532,415 | | | | 1,077,361 | | | | 150,917 | | | | 2,983,870 | |
| | | 132,511 | | | | 180,711 | | | | 6,841 | | | | 380,116 | |
| | | 1,142 | | | | — | | | | 4,884 | | | | 69,960 | |
| | | 4,749 | | | | 3,735 | | | | 718 | | | | 74,543 | |
| | | 91,415 | | | | 168,431 | | | | 30,246 | | | | 531,364 | |
| | | 1,425,826 | | | | 1,925,509 | | | | 337,152 | | | | 3,420,217 | |
| | | 303,517 | | | | 839,826 | | | | 133,558 | | | | 954,203 | |
| | | 97,684 | | | | 159,087 | | | | 23,347 | | | | 148,612 | |
| | | 64,823 | | | | 1,003,183 | | | | 412,257 | | | | 347,271 | |
| | | 26,389 | | | | 71,764 | | | | 11,423 | | | | 79,545 | |
| | | 247,633 | | | | 704,904 | | | | 156,054 | | | | 62,236 | |
| | | 97,964 | | | | 166,605 | | | | 75,372 | | | | 165,779 | |
| | | 70,890 | | | | 63,507 | | | | 69,055 | | | | 57,218 | |
| | | 46,183 | | | | 54,701 | | | | 37,075 | | | | 49,267 | |
| | | 10,172,825 | | | | 23,553,359 | | | | 4,308,115 | | | | 30,139,835 | |
| | | (666 | ) | | | (1,529 | ) | | | (107 | ) | | | (2,184 | ) |
| | | (1,972,669 | ) | | | (3,211,432 | ) | | | — | | | | — | |
| | | — | | | | — | | | | — | | | | — | |
| | | 8,199,490 | | | | 20,340,398 | | | | 4,308,008 | | | | 30,137,651 | |
| | | 10,687,588 | | | | 86,045,527 | | | | 2,788,011 | | | | 173,998 | |
| | | | | | | | | | | | | | | | |
| | | — | | | | — | | | | — | | | | — | |
| | | 63,478,850 | | | | 126,313,720 | | | | 32,716,248 | | | | 288,203,211 | |
| | | | | | | | | | | | | | | | |
| | | 97,502,747 | | | | 189,234,719 | | | | 54,455,622 | | | | 386,735,492 | |
| | | 160,981,597 | | | | 315,548,439 | | | | 87,171,870 | | | | 674,938,703 | |
| | $ | 171,669,185 | | | $ | 401,593,966 | | | $ | 89,959,881 | | | $ | 675,112,701 | |
| | See Notes to Financial Statements. | 67 |
Statements of Changes in Net Assets
| | | Alpha Strategy Fund |
| | | For the | | For the | |
| | | Year Ended | | Year Ended | |
| INCREASE (DECREASE) IN NET ASSETS | | October 31, 2013 | | October 31, 2012 | |
| Operations: | | | | | | | |
| Net investment income (loss) | | $ | 1,519,952 | | $ | (2,039,983 | ) |
| Capital gains distributions received from Underlying Funds | | | 35,119,656 | | | 23,324,449 | |
| Net realized gain on investments and futures contracts | | | 7,916,093 | | | 13,988,321 | |
| Net change in unrealized appreciation/depreciation on investments and futures contracts | | | 266,739,166 | | | 39,699,323 | |
| Net increase in net assets resulting from operations | | | 311,294,867 | | | 74,972,110 | |
| Distributions to shareholders from: | | | | | | | |
| Net investment income | | | | | | | |
| Class A | | | (647,485 | ) | | — | |
| Class B | | | — | | | — | |
| Class C | | | — | | | — | |
| Class F | | | (432,685 | ) | | — | |
| Class I | | | (134,848 | ) | | — | |
| Class P | | | — | | | — | |
| Class R2 | | | — | | | — | |
| Class R3 | | | — | | | — | |
| Net realized gain | | | | | | | |
| Class A | | | (17,131,264 | ) | | (1,320,901 | ) |
| Class B | | | (966,734 | ) | | (89,833 | ) |
| Class C | | | (10,054,013 | ) | | (758,348 | ) |
| Class F | | | (5,841,246 | ) | | (496,799 | ) |
| Class I | | | (1,352,332 | ) | | (86,333 | ) |
| Class P | | | — | | | — | |
| Class R2 | | | (122,985 | ) | | (10,876 | ) |
| Class R3 | | | (1,261,213 | ) | | (88,046 | ) |
| Total distributions to shareholders | | | (37,944,805 | ) | | (2,851,136 | ) |
| Capital share transactions (Net of share conversions) (See Note 13): | |
| Net proceeds from sales of shares | | | 244,276,150 | | | 160,376,566 | |
| Net proceeds from reorganizations (See Note 14) | | | — | | | — | |
| Reinvestment of distributions | | | 31,295,662 | | | 2,290,398 | |
| Cost of shares reacquired | | | (242,936,060 | ) | | (257,960,933 | ) |
| Net increase (decrease) in net assets resulting from capital share transactions | | | 32,635,752 | | | (95,293,969 | ) |
| Net increase (decrease) in net assets | | | 305,985,814 | | | (23,172,995 | ) |
| NET ASSETS: | | | | | | | |
| Beginning of year | | $ | 859,050,633 | | $ | 882,223,628 | |
| End of year | | $ | 1,165,036,447 | | $ | 859,050,633 | |
| Undistributed (distributions in excess of) net investment income | | $ | (1,793,084 | ) | $ | (2,098,018 | ) |
| 68 | See Notes to Financial Statements. |
| | | Fundamental Equity Fund | | Growth Leaders Fund | |
| | | For the | | For the | | For the | | For the | |
| | | Year Ended | | Year Ended | | Year Ended | | Period Ended | |
| | | October 31, 2013 | | October 31, 2012 | | October 31, 2013 | | October 31, 2012 | |
| | | | | | | | | | | | | | |
| | | $ | 21,906,443 | | $ | 28,622,896 | | $ | (296,016 | ) | $ | (157 | ) |
| | | | — | | | — | | | — | | | — | |
| | | | 873,052,554 | | | 56,031,069 | | | 44,678,973 | | | 723,147 | |
| | | | | | | | | | | | | | |
| | | | 466,096,062 | | | 238,428,823 | | | 12,825,042 | | | (698,127 | ) |
| | | | 1,361,055,059 | | | 323,082,788 | | | 57,207,999 | | | 24,863 | |
| | | | | | | | | | | | | | |
| | | | (16,829,215 | ) | | (4,346,345 | ) | | (44,858 | ) | | — | |
| | | | (4 | ) | | — | | | — | | | — | |
| | | | (597,013 | ) | | — | | | (4,106 | ) | | — | |
| | | | (5,561,734 | ) | | (2,767,175 | ) | | (19,395 | ) | | (4,091 | ) |
| | | | (4,107,851 | ) | | (1,297,980 | ) | | (17,861 | ) | | (1,877 | ) |
| | | | (151,921 | ) | | (15,617 | ) | | — | | | — | |
| | | | (97,503 | ) | | (9,753 | ) | | (21 | ) | | — | |
| | | | (1,540,249 | ) | | (295,096 | ) | | (55 | ) | | — | |
| | | | | | | | | | | | | | |
| | | | (27,685,960 | ) | | (50,846,537 | ) | | — | | | — | |
| | | | (914,108 | ) | | (2,537,677 | ) | | — | | | — | |
| | | | (9,641,827 | ) | | (18,296,808 | ) | | — | | | — | |
| | | | (6,775,122 | ) | | (13,809,878 | ) | | — | | | — | |
| | | | (4,471,009 | ) | | (5,334,579 | ) | | — | | | — | |
| | | | (312,583 | ) | | (658,136 | ) | | — | | | — | |
| | | | (257,833 | ) | | (438,898 | ) | | — | | | — | |
| | | | (3,113,664 | ) | | (4,123,564 | ) | | — | | | — | |
| | | | (82,057,596 | ) | | (104,778,043 | ) | | (86,296 | ) | | (5,968 | ) |
| | | | | | | | | | | | | | |
| | | | 988,203,901 | | | 1,267,974,937 | | | 253,214,453 | | | 20,271,860 | |
| | | | — | | | 39,288,499 | | | 141,354,303 | | | — | |
| | | | 72,629,278 | | | 89,512,509 | | | 66,454 | | | 262 | |
| | | | (1,243,038,488 | ) | | (1,414,939,992 | ) | | (41,561,801 | ) | | (12,527,193 | ) |
| | | | | | | | | | | | | | |
| | | | (182,205,309 | ) | | (18,164,047 | ) | | 353,073,409 | | | 7,744,929 | |
| | | | 1,096,792,154 | | | 200,140,698 | | | 410,195,112 | | | 7,763,824 | |
| | | | | | | | | | | | | | |
| | | $ | 4,632,143,723 | | $ | 4,432,003,025 | | $ | 23,785,466 | | $ | 16,021,642 | |
| | | $ | 5,728,935,877 | | $ | 4,632,143,723 | | $ | 433,980,578 | | $ | 23,785,466 | |
| | | $ | 13,093,728 | | $ | 19,602,384 | | $ | (300,557 | ) | $ | 11,717 | |
| | See Notes to Financial Statements. | 69 |
Statements of Changes in Net Assets (continued)
| | | International Core Equity Fund |
| | | For the | | For the | |
| | | Year Ended | | Year Ended | |
| INCREASE (DECREASE) IN NET ASSETS | | October 31, 2013 | | October 31, 2012 | |
| Operations: | | | | | | | |
| Net investment income | | $ | 10,687,588 | | $ | 18,288,954 | |
| Net realized gain (loss) on investments and foreign currency related transactions | | | 63,478,850 | | | (7,748,252 | ) |
| Net change in unrealized appreciation/depreciation on investments and translation of assets and liabilities denominated in foreign currencies | | | 97,502,747 | | | 17,454,403 | |
| Net increase in net assets resulting from operations | | | 171,669,185 | | | 27,995,105 | |
| Distributions to shareholders from: | | | | | | | |
| Net investment income | | | | | | | |
| Class A | | | (8,588,056 | ) | | (8,371,658 | ) |
| Class B | | | (318,035 | ) | | (316,771 | ) |
| Class C | | | (906,187 | ) | | (830,063 | ) |
| Class F | | | (3,996,551 | ) | | (2,022,225 | ) |
| Class I | | | (2,934,294 | ) | | (4,638,582 | ) |
| Class P | | | (5,020 | ) | | (6,017 | ) |
| Class R2 | | | (15,516 | ) | | (12,015 | ) |
| Class R3 | | | (389,151 | ) | | (249,020 | ) |
| Total distributions to shareholders | | | (17,152,810 | ) | | (16,446,351 | ) |
| Capital share transactions (Net of share conversions) (See Note 13): | |
| Net proceeds from sales of shares | | | 189,549,520 | | | 205,500,578 | |
| Reinvestment of distributions | | | 16,249,667 | | | 15,573,757 | |
| Cost of shares reacquired | | | (263,199,454 | ) | | (352,301,226 | ) |
| Net increase (decrease) in net assets resulting from capital share transactions | | | (57,400,267 | ) | | (131,226,891 | ) |
| Net increase (decrease) in net assets | | | 97,116,108 | | | (119,678,137 | ) |
| NET ASSETS: | | | | | | | |
| Beginning of year | | $ | 733,872,578 | | $ | 853,550,715 | |
| End of year | | $ | 830,988,686 | | $ | 733,872,578 | |
| Undistributed net investment income | | $ | 10,827,511 | | $ | 15,478,272 | |
| 70 | See Notes to Financial Statements. |
| | | International Dividend Income Fund | | International Opportunities Fund | |
| | | For the | | For the | | For the | | For the | |
| | | Year Ended | | Year Ended | | Year Ended | | Year Ended | |
| | | October 31, 2013 | | October 31, 2012 | | October 31, 2013 | | October 31, 2012 | |
| | | | | | | | | | | | | | |
| | | $ | 86,045,527 | | $ | 66,003,619 | | $ | 2,788,011 | | $ | 4,195,287 | |
| | | | | | | | | | | | | | |
| | | | 126,313,720 | | | (109,644,672 | ) | | 32,716,248 | | | 7,557,973 | |
| | | | | | | | | | | | | | |
| | | | 189,234,719 | | | 114,844,497 | | | 54,455,622 | | | 19,362,776 | |
| | | | 401,593,966 | | | 71,203,444 | | | 89,959,881 | | | 31,116,036 | |
| | | | | | | | | | | | | | |
| | | | (32,111,914 | ) | | (22,602,992 | ) | | (1,418,818 | ) | | (555,543 | ) |
| | | | — | | | — | | | (82,875 | ) | | — | |
| | | | (3,890,097 | ) | | (2,102,331 | ) | | (194,491 | ) | | (10,632 | ) |
| | | | (7,748,411 | ) | | (4,103,730 | ) | | (20,145 | ) | | (10,276 | ) |
| | | | (42,319,079 | ) | | (37,908,179 | ) | | (4,209,751 | ) | | (2,327,143 | ) |
| | | | — | | | — | | | (17,169 | ) | | (4,835 | ) |
| | | | (24,379 | ) | | (10,747 | ) | | (1,645 | ) | | (384 | ) |
| | | | (1,382,570 | ) | | (1,138,500 | ) | | (117,563 | ) | | (35,689 | ) |
| | | | (87,476,450 | ) | | (67,866,479 | ) | | (6,062,457 | ) | | (2,944,502 | ) |
| | | | | | | | | | | | | | |
| | | | 937,817,583 | | | 1,047,552,615 | | | 75,778,082 | | | 19,978,248 | |
| | | | 77,712,636 | | | 59,256,416 | | | 5,914,722 | | | 2,867,207 | |
| | | | (739,775,936 | ) | | (250,121,696 | ) | | (57,044,631 | ) | | (79,691,628 | ) |
| | | | | | | | | | | | | | |
| | | | 275,754,283 | | | 856,687,335 | | | 24,648,173 | | | (56,846,173 | ) |
| | | | 589,871,799 | | | 860,024,300 | | | 108,545,597 | | | (28,674,639 | ) |
| | | | | | | | | | | | | | |
| | | $ | 1,748,444,534 | | $ | 888,420,234 | | $ | 300,906,718 | | $ | 329,581,357 | |
| | | $ | 2,338,316,333 | | $ | 1,748,444,534 | | $ | 409,452,315 | | $ | 300,906,718 | |
| | | $ | 8,494,357 | | $ | 641,610 | | $ | 3,589,530 | | $ | 4,603,947 | |
| | See Notes to Financial Statements. | 71 |
Statements of Changes in Net Assets (concluded)
| | | Value Opportunities Fund |
| | | For the | | For the | |
| | | Year Ended | | Year Ended | |
| INCREASE IN NET ASSETS | | October 31, 2013 | | October 31, 2012 | |
| Operations: | | | | | | | |
| Net investment income (loss) | | $ | 173,998 | | $ | (3,517,380 | ) |
| Net realized gain (loss) on investments | | | 288,203,211 | | | (6,641,357 | ) |
| Net change in unrealized appreciation/depreciation on investments | | | 386,735,492 | | | 122,363,437 | |
| Net increase in net assets resulting from operations | | | 675,112,701 | | | 112,204,700 | |
| Distributions to shareholders from: | | | | | | | |
| Net realized gain | | | | | | | |
| Class A | | | — | | | (3,286,340 | ) |
| Class B | | | — | | | (59,750 | ) |
| Class C | | | — | | | (1,016,764 | ) |
| Class F | | | — | | | (1,427,757 | ) |
| Class I | | | — | | | (1,077,354 | ) |
| Class P | | | — | | | (11,405 | ) |
| Class R2 | | | — | | | (35,968 | ) |
| Class R3 | | | — | | | (245,680 | ) |
| Total distributions to shareholders | | | — | | | (7,161,018 | ) |
| Capital share transactions (Net of share conversions) (See Note 13): | |
| Net proceeds from sales of shares | | | 584,281,519 | | | 775,084,950 | |
| Net proceeds from reorganizations (See Note 14) | | | 571,815,180 | | | — | |
| Reinvestment of distributions | | | — | | | 6,175,022 | |
| Cost of shares reacquired | | | (714,403,451 | ) | | (790,564,647 | ) |
| Net increase (decrease) in net assets resulting from capital share transactions | | | 441,693,248 | | | (9,304,675 | ) |
| Net increase in net assets | | | 1,116,805,949 | | | 95,739,007 | |
| NET ASSETS: | | | | | | | |
| Beginning of year | | $ | 2,011,522,432 | | $ | 1,915,783,425 | |
| End of year | | $ | 3,128,328,381 | | $ | 2,011,522,432 | |
| Accumulated net investment loss | | $ | (1,053,909 | ) | $ | (3,923,259 | ) |
| 72 | See Notes to Financial Statements. |
Financial Highlights
ALPHA STRATEGY FUND
| | | Class A Shares |
| | | Year Ended 10/31 |
| | | 2013 | | | 2012 | | | 2011 | | | 2010 | | | 2009 | |
| Per Share Operating Performance | | | | | | | | | | | | | | | | | | | | |
| Net asset value, beginning of year | | | $24.71 | | | | $22.72 | | | | $21.93 | | | | $17.24 | | | | $15.58 | |
| Investment operations: | | | | | | | | | | | | | | | | | | | | |
| Net investment income (loss)(a) | | | .09 | | | | (.01 | ) | | | (.02 | ) | | | (.03 | ) | | | .01 | |
| Net realized and unrealized gain | | | 8.92 | | | | 2.07 | | | | .81 | | | | 4.74 | | | | 2.81 | |
| Total from investment operations | | | 9.01 | | | | 2.06 | | | | .79 | | | | 4.71 | | | | 2.82 | |
| Distributions to shareholders from: | | | | | | | | | | | | | | | | | | | | |
| Net investment income | | | (.04 | ) | | | — | | | | — | | | | (.02 | ) | | | (.03 | ) |
| Net realized gain | | | (1.05 | ) | | | (.07 | ) | | | — | | | | — | | | | (1.13 | ) |
| Total distributions | | | (1.09 | ) | | | (.07 | ) | | | — | | | | (.02 | ) | | | (1.16 | ) |
| Net asset value, end of year | | | $32.63 | | | | $24.71 | | | | $22.72 | | | | $21.93 | | | | $17.24 | |
| Total Return(b) | | | 37.98 | % | | | 9.12 | % | | | 3.60 | % | | | 27.36 | % | | | 20.57 | % |
| Ratios to Average Net Assets:* | | | | | | | | | | | | | | | | | | | | |
| Expenses, excluding expense reductions and including expenses assumed and management fee waived | | | .25 | % | | | .25 | % | | | .28 | % | | | .35 | % | | | .35 | % |
| Expenses, including expense reductions, expenses assumed and management fee waived | | | .25 | % | | | .25 | % | | | .28 | % | | | .35 | % | | | .35 | % |
| Expenses, excluding expense reductions, expenses assumed and management fee waived | | | .54 | % | | | .57 | % | | | .60 | % | | | .70 | % | | | .87 | % |
| Net investment income (loss) | | | .33 | % | | | (.05 | )% | | | (.10 | )% | | | (.16 | )% | | | .09 | % |
| | | | | | | | | | | | | | | | | | | | | |
| Supplemental Data: | | | | | | | | | | | | | | | | | | | | |
| Net assets, end of year (000) | | | $567,124 | | | | $421,927 | | | | $432,698 | | | | $404,804 | | | | $296,989 | |
| Portfolio turnover rate | | | 8.12 | % | | | 3.84 | % | | | 6.78 | % | | | 1.16 | % | | | 7.18 | % |
| * | Does not include expenses of the Underlying Funds in which the Fund invests. |
| (a) | Calculated using average shares outstanding during the year. |
| (b) | Total return does not consider the effects of sales loads and assumes the reinvestment of all distributions. |
| | See Notes to Financial Statements. | 73 |
Financial Highlights (continued)
ALPHA STRATEGY FUND
| | | Class B Shares |
| | | Year Ended 10/31 |
| | | 2013 | | | 2012 | | | 2011 | | | 2010 | | | 2009 | |
| Per Share Operating Performance | | | | | | | | | | | | | | | | | | | | |
| Net asset value, beginning of year | | | $23.05 | | | | $21.36 | | | | $20.76 | | | | $16.41 | | | | $14.94 | |
| Investment operations: | | | | | | | | | | | | | | | | | | | | |
| Net investment loss(a) | | | (.09 | ) | | | (.17 | ) | | | (.18 | ) | | | (.15 | ) | | | (.08 | ) |
| Net realized and unrealized gain | | | 8.25 | | | | 1.93 | | | | .78 | | | | 4.50 | | | | 2.68 | |
| Total from investment operations | | | 8.16 | | | | 1.76 | | | | .60 | | | | 4.35 | | | | 2.60 | |
| Distributions to shareholders from: | | | | | | | | | | | | | | | | | | | | |
| Net realized gain | | | (1.05 | ) | | | (.07 | ) | | | — | | | | — | | | | (1.13 | ) |
| Net asset value, end of year | | | $30.16 | | | | $23.05 | | | | $21.36 | | | | $20.76 | | | | $16.41 | |
| Total Return(b) | | | 36.93 | % | | | 8.29 | % | | | 2.89 | % | | | 26.51 | % | | | 19.86 | % |
| Ratios to Average Net Assets:* | | | | | | | | | | | | | | | | | | | | |
| Expenses, excluding expense reductions and including expenses assumed and management fee waived | | | 1.00 | % | | | 1.00 | % | | | 1.00 | % | | | 1.00 | % | | | 1.00 | % |
| Expenses, including expense reductions, expenses assumed and management fee waived | | | 1.00 | % | | | 1.00 | % | | | 1.00 | % | | | 1.00 | % | | | 1.00 | % |
| Expenses, excluding expense reductions, expenses assumed and management fee waived | | | 1.29 | % | | | 1.32 | % | | | 1.32 | % | | | 1.35 | % | | | 1.52 | % |
| Net investment loss | | | (.36 | )% | | | (.78 | )% | | | (.79 | )% | | | (.79 | )% | | | (.55 | )% |
| | | | | | | | | | | | | | | | | | | | | |
| Supplemental Data: | | | | | | | | | | | | | | | | | | | | |
| Net assets, end of year (000) | | | $22,883 | | | | $21,776 | | | | $26,877 | | | | $33,394 | | | | $31,294 | |
| Portfolio turnover rate | | | 8.12 | % | | | 3.84 | % | | | 6.78 | % | | | 1.16 | % | | | 7.18 | % |
| * | Does not include expenses of the Underlying Funds in which the Fund invests. |
| (a) | Calculated using average shares outstanding during the year. |
| (b) | Total return does not consider the effects of sales loads and assumes the reinvestment of all distributions. |
| 74 | See Notes to Financial Statements. |
Financial Highlights (continued)
ALPHA STRATEGY FUND
| | | Class C Shares |
| | | Year Ended 10/31 |
| | | 2013 | | | 2012 | | | 2011 | | | 2010 | | | 2009 | |
| Per Share Operating Performance | | | | | | | | | | | | | | | |
| Net asset value, beginning of year | | | $22.89 | | | | $21.21 | | | | $20.61 | | | | $16.29 | | | | $14.85 | |
| Investment operations: | | | | | | | | | | | | | | | | | | | | |
| Net investment loss(a) | | | (.10 | ) | | | (.18 | ) | | | (.18 | ) | | | (.15 | ) | | | (.08 | ) |
| Net realized and unrealized gain | | | 8.21 | | | | 1.93 | | | | .78 | | | | 4.47 | | | | 2.65 | |
| Total from investment operations | | | 8.11 | | | | 1.75 | | | | .60 | | | | 4.32 | | | | 2.57 | |
| Distributions to shareholders from: | | | | | | | | | | | | | | | | | | | | |
| Net realized gain | | | (1.05 | ) | | | (.07 | ) | | | — | | | | — | | | | (1.13 | ) |
| Net asset value, end of year | | | $29.95 | | | | $22.89 | | | | $21.21 | | | | $20.61 | | | | $16.29 | |
| Total Return(b) | | | 36.97 | % | | | 8.30 | % | | | 2.91 | % | | | 26.52 | % | | | 19.78 | % |
| Ratios to Average Net Assets:* | | | | | | | | | | | | | | | | | | | | |
| Expenses, excluding expense reductions and including expenses assumed and management fee waived | | | .99 | % | | | .99 | % | | | .99 | % | | | 1.00 | % | | | 1.00 | % |
| Expenses, including expense reductions, expenses assumed and management fee waived | | | .99 | % | | | .99 | % | | | .99 | % | | | 1.00 | % | | | 1.00 | % |
| Expenses, excluding expense reductions, expenses assumed and management fee waived | | | 1.28 | % | | | 1.31 | % | | | 1.31 | % | | | 1.35 | % | | | 1.52 | % |
| Net investment loss | | | (.40 | )% | | | (.79 | )% | | | (.80 | )% | | | (.81 | )% | | | (.59 | )% |
| | | | | | | | | | | | | | | | | | | | | |
| Supplemental Data: | | | | | | | | | | | | | | | | | | | | |
| Net assets, end of year (000) | | | $294,780 | | | | $223,165 | | | | $223,295 | | | | $208,051 | | | | $150,633 | |
| Portfolio turnover rate | | | 8.12 | % | | | 3.84 | % | | | 6.78 | % | | | 1.16 | % | | | 7.18 | % |
| * | Does not include expenses of the Underlying Funds in which the Fund invests. |
| (a) | Calculated using average shares outstanding during the year. |
| (b) | Total return does not consider the effects of sales loads and assumes the reinvestment of all distributions. |
| | See Notes to Financial Statements. | 75 |
Financial Highlights (continued)
ALPHA STRATEGY FUND
| | | Class F Shares |
| | | Year Ended 10/31 |
| | | 2013 | | | 2012 | | | 2011 | | | 2010 | | | 2009 | |
| Per Share Operating Performance | | | | | | | | | | | | | | | | | | | | |
| Net asset value, beginning of year | | | $24.77 | | | | $22.74 | | | | $21.91 | | | | $17.22 | | | | $15.58 | |
| Investment operations: | | | | | | | | | | | | | | | | | | | | |
| Net investment income(a) | | | .14 | | | | .03 | | | | .02 | | | | — | (b) | | | .01 | |
| Net realized and unrealized gain | | | 8.93 | | | | 2.07 | | | | .81 | | | | 4.76 | | | | 2.85 | |
| Total from investment operations | | | 9.07 | | | | 2.10 | | | | .83 | | | | 4.76 | | | | 2.86 | |
| Distributions to shareholders from: | | | | | | | | | | | | | | | | | | | | |
| Net investment income | | | (.08 | ) | | | — | | | | — | | | | (.07 | ) | | | (.09 | ) |
| Net realized gain | | | (1.05 | ) | | | (.07 | ) | | | — | | | | — | | | | (1.13 | ) |
| Total distributions | | | (1.13 | ) | | | (.07 | ) | | | — | | | | (.07 | ) | | | (1.22 | ) |
| Net asset value, end of year | | | $32.71 | | | | $24.77 | | | | $22.74 | | | | $21.91 | | | | $17.22 | |
| Total Return(c) | | | 38.19 | % | | | 9.28 | % | | | 3.79 | % | | | 27.67 | % | | | 20.95 | % |
| Ratios to Average Net Assets:* | | | | | | | | | | | | | | | | | | | | |
| Expenses, excluding expense reductions and including expenses assumed and management fee waived | | | .10 | % | | | .10 | % | | | .10 | % | | | .10 | % | | | .10 | % |
| Expenses, including expense reductions, expenses assumed and management fee waived | | | .10 | % | | | .10 | % | | | .10 | % | | | .10 | % | | | .10 | % |
| Expenses, excluding expense reductions, expenses assumed and management fee waived | | | .39 | % | | | .42 | % | | | .42 | % | | | .44 | % | | | .60 | % |
| Net investment income (loss) | | | .49 | % | | | .12 | % | | | .08 | % | | | (.01 | )% | | | .05 | % |
| | | | | | | | | | | | | | | | | | | | | |
| Supplemental Data: | | | | | | | | | | | | | | | | | | | | |
| Net assets, end of year (000) | | $ | 197,939 | | | $ | 140,860 | | | $ | 142,150 | | | $ | 120,316 | | | $ | 29,762 | |
| Portfolio turnover rate | | | 8.12 | % | | | 3.84 | % | | | 6.78 | % | | | 1.16 | % | | | 7.18 | % |
| * | Does not include expenses of the Underlying Funds in which the Fund invests. |
| (a) | Calculated using average shares outstanding during the year. |
| (b) | Amount is less than $.01. |
| (c) | Total return assumes the reinvestment of all distributions. |
| 76 | See Notes to Financial Statements. | |
Financial Highlights (continued)
ALPHA STRATEGY FUND
| | | Class I Shares |
| | | Year Ended 10/31 |
| | | 2013 | | | 2012 | | | 2011 | | | 2010 | | | 2009 | |
| Per Share Operating Performance | | | | | | | | | | | | | | | | | | | | |
| Net asset value, beginning of year | | | $24.99 | | | | $22.92 | | | | $22.06 | | | | $17.33 | | | | $15.67 | |
| Investment operations: | | | | | | | | | | | | | | | | | | | | |
| Net investment income(a) | | | .17 | | | | .06 | | | | .05 | | | | .04 | | | | .06 | |
| Net realized and unrealized gain | | | 9.01 | | | | 2.08 | | | | .81 | | | | 4.77 | | | | 2.83 | |
| Total from investment operations | | | 9.18 | | | | 2.14 | | | | .86 | | | | 4.81 | | | | 2.89 | |
| Distributions to shareholders from: | | | | | | | | | | | | | | | | | | | | |
| Net investment income | | | (.11 | ) | | | — | | | | — | | | | (.08 | ) | | | (.10 | ) |
| Net realized gain | | | (1.05 | ) | | | (.07 | ) | | | — | | | | — | | | | (1.13 | ) |
| Total distributions | | | (1.16 | ) | | | (.07 | ) | | | — | | | | (.08 | ) | | | (1.23 | ) |
| Net asset value, end of year | | | $33.01 | | | | $24.99 | | | | $22.92 | | | | $22.06 | | | | $17.33 | |
| Total Return(b) | | | 38.32 | % | | | 9.39 | % | | | 3.90 | % | | | 27.80 | % | | | 21.06 | % |
| Ratios to Average Net Assets:* | | | | | | | | | | | | | | | | | | | | |
| Expenses, excluding expense reductions and including expenses assumed and management fee waived | | | .00 | % | | | .00 | % | | | .00 | % | | | .00 | % | | | .00 | % |
| Expenses, including expense reductions, expenses assumed and management fee waived | | | .00 | % | | | .00 | % | | | .00 | % | | | .00 | % | | | .00 | % |
| Expenses, excluding expense reductions, expenses assumed and management fee waived | | | .29 | % | | | .32 | % | | | .32 | % | | | .35 | % | | | .52 | % |
| Net investment income | | | .60 | % | | | .24 | % | | | .20 | % | | | .18 | % | | | .39 | % |
| | | | | | | | | | | | | | | | | | | | | |
| Supplemental Data: | | | | | | | | | | | | | | | | | | | | |
| Net assets, end of year (000) | | $ | 44,998 | | | $ | 18,677 | | | $ | 26,906 | | | $ | 25,426 | | | $ | 11,785 | |
| Portfolio turnover rate | | | 8.12 | % | | | 3.84 | % | | | 6.78 | % | | | 1.16 | % | | | 7.18 | % |
| * | Does not include expenses of the Underlying Funds in which the Fund invests. |
| (a) | Calculated using average shares outstanding during the year. |
| (b) | Total return assumes the reinvestment of all distributions. |
| | See Notes to Financial Statements. | 77 |
Financial Highlights (continued)
ALPHA STRATEGY FUND
| | | Class R2 Shares |
| | | Year Ended 10/31 |
| | | 2013 | | | 2012 | | | 2011 | | | 2010 | | | 2009 | |
| Per Share Operating Performance | | | | | | | | | | | | | | | | | | | | |
| Net asset value, beginning of year | | | $24.35 | | | | $22.47 | | | | $21.76 | | | | $17.13 | | | | $15.51 | |
| Investment operations: | | | | | | | | | | | | | | | | | | | | |
| Net investment income (loss)(a) | | | .04 | | | | (.09 | ) | | | (.09 | ) | | | (.09 | ) | | | (.05 | ) |
| Net realized and unrealized gain | | | 8.73 | | | | 2.04 | | | | .80 | | | | 4.72 | | | | 2.83 | |
| Total from investment operations | | | 8.77 | | | | 1.95 | | | | .71 | | | | 4.63 | | | | 2.78 | |
| Distributions to shareholders from: | | | | | | | | | | | | | | | | | | | | |
| Net investment income | | | — | | | | — | | | | — | | | | — | | | | (.03 | ) |
| Net realized gain | | | (1.05 | ) | | | (.07 | ) | | | — | | | | — | | | | (1.13 | ) |
| Total distributions | | | (1.05 | ) | | | (.07 | ) | | | — | | | | — | | | | (1.16 | ) |
| Net asset value, end of year | | | $32.07 | | | | $24.35 | | | | $22.47 | | | | $21.76 | | | | $17.13 | |
| Total Return(b) | | | 37.49 | % | | | 8.73 | % | | | 3.26 | % | | | 27.03 | % | | | 20.37 | % |
| Ratios to Average Net Assets:* | | | | | | | | | | | | | | | | | | | | |
| Expenses, excluding expense reductions and including expenses assumed and management fee waived | | | .60 | % | | | .60 | % | | | .60 | % | | | .60 | % | | | .60 | % |
| Expenses, including expense reductions, expenses assumed and management fee waived | | | .60 | % | | | .60 | % | | | .60 | % | | | .60 | % | | | .60 | % |
| Expenses, excluding expense reductions, expenses assumed and management fee waived | | | .89 | % | | | .92 | % | | | .92 | % | | | .94 | % | | | 1.11 | % |
| Net investment income (loss) | | | .14 | % | | | (.39 | )% | | | (.39 | )% | | | (.44 | )% | | | (.32 | )% |
| | | | | | | | | | | | | | | | | | | | | |
| Supplemental Data: | | | | | | | | | | | | | | | | | | | | |
| Net assets, end of year (000) | | | $2,738 | �� | | | $2,982 | | | | $3,373 | | | | $3,437 | | | | $1,433 | |
| Portfolio turnover rate | | | 8.12 | % | | | 3.84 | % | | | 6.78 | % | | | 1.16 | % | | | 7.18 | % |
| * | Does not include expenses of the Underlying Funds in which the Fund invests. |
| (a) | Calculated using average shares outstanding during the year. |
| (b) | Total return assumes the reinvestment of all distributions. |
| 78 | See Notes to Financial Statements. | |
Financial Highlights (concluded)
ALPHA STRATEGY FUND
| | | Class R3 Shares |
| | | Year Ended 10/31 |
| | | 2013 | | | 2012 | | | 2011 | | | 2010 | | | 2009 | |
| Per Share Operating Performance | | | | | | | | | | | | | | | |
| Net asset value, beginning of year | | | $24.41 | | | | $22.50 | | | | $21.76 | | | | $17.12 | | | | $15.53 | |
| Investment operations: | | | | | | | | | | | | | | | | | | | | |
| Net investment income (loss)(a) | | | .04 | | | | (.07 | ) | | | (.07 | ) | | | (.08 | ) | | | (.02 | ) |
| Net realized and unrealized gain | | | 8.78 | | | | 2.05 | | | | .81 | | | | 4.73 | | | | 2.79 | |
| Total from investment operations | | | 8.82 | | | | 1.98 | | | | .74 | | | | 4.65 | | | | 2.77 | |
| Distributions to shareholders from: | | | | | | | | | | | | | | | | | | | | |
| Net investment income | | | — | | | | — | | | | — | | | | (.01 | ) | | | (.05 | ) |
| Net realized gain | | | (1.05 | ) | | | (.07 | ) | | | — | | | | — | | | | (1.13 | ) |
| Total distributions | | | (1.05 | ) | | | (.07 | ) | | | — | | | | (.01 | ) | | | (1.18 | ) |
| Net asset value, end of year | | | $32.18 | | | | $24.41 | | | | $22.50 | | | | $21.76 | | | | $17.12 | |
| Total Return(b) | | | 37.60 | % | | | 8.85 | % | | | 3.40 | % | | | 27.18 | % | | | 20.39 | % |
| Ratios to Average Net Assets:* | | | | | | | | | | | | | | | | | | | | |
| Expenses, excluding expense reductions and including expenses assumed and management fee waived | | | .50 | % | | | .50 | % | | | .50 | % | | | .50 | % | | | .50 | % |
| Expenses, including expense reductions, expenses assumed and management fee waived | | | .50 | % | | | .50 | % | | | .50 | % | | | .50 | % | | | .50 | % |
| Expenses, excluding expense reductions, expenses assumed and management fee waived | | | .79 | % | | | .82 | % | | | .82 | % | | | .84 | % | | | 1.01 | % |
| Net investment income (loss) | | | .13 | % | | | (.30 | )% | | | (.31 | )% | | | (.39 | )% | | | (.15 | )% |
| | | | | | | | | | | | | | | | | | | | | |
| Supplemental Data: | | | | | | | | | | | | | | | | | | | | |
| Net assets, end of year (000) | | $ | 34,574 | | | $ | 29,663 | | | $ | 26,924 | | | $ | 22,941 | | | | $6,979 | |
| Portfolio turnover rate | | | 8.12 | % | | | 3.84 | % | | | 6.78 | % | | | 1.16 | % | | | 7.18 | % |
| * | Does not include expenses of the Underlying Funds in which the Fund invests. |
| (a) | Calculated using average shares outstanding during the year. |
| (b) | Total return assumes the reinvestment of all distributions. |
| | See Notes to Financial Statements. | 79 |
Financial Highlights
FUNDAMENTAL EQUITY FUND
| | | Class A Shares |
| | | Year Ended 10/31 |
| | | 2013 | | | 2012 | | | 2011 | | | 2010 | | | 2009 | |
| Per Share Operating Performance |
| Net asset value, beginning of year | | | $13.08 | | | | $12.51 | | | | $11.89 | | | | $9.99 | | | | $8.85 | |
| Investment operations: | | | | | | | | | | | | | | | | | | | | |
| Net investment income(a) | | | .07 | | | | .09 | | | | .02 | | | | .04 | | | | .03 | |
| Net realized and unrealized gain | | | 3.92 | | | | .77 | | | | .64 | | | | 1.86 | | | | 1.17 | |
| Total from investment operations | | | 3.99 | | | | .86 | | | | .66 | | | | 1.90 | | | | 1.20 | |
| Distributions to shareholders from: | | | | | | | | | | | | | | | | | | | | |
| Net investment income | | | (.09 | ) | | | (.02 | ) | | | (.04 | ) | | | — | (b) | | | (.06 | ) |
| Net realized gain | | | (.15 | ) | | | (.27 | ) | | | — | | | | — | | | | — | |
| Total distributions | | | (.24 | ) | | | (.29 | ) | | | (.04 | ) | | | — | (b) | | | (.06 | ) |
| Net asset value, end of year | | | $16.83 | | | | $13.08 | | | | $12.51 | | | | $11.89 | | | | $9.99 | |
| Total Return(c) | | | 31.11 | % | | | 7.17 | % | | | 5.53 | % | | | 19.06 | % | | | 13.84 | % |
| Ratios to Average Net Assets: | | | | | | | | | | | | | | | | | | | | |
| Expenses, including expense reductions | | | 1.06 | % | | | 1.09 | % | | | 1.09 | % | | | 1.12 | % | | | 1.19 | % |
| Expenses, excluding expense reductions | | | 1.06 | % | | | 1.09 | % | | | 1.09 | % | | | 1.12 | % | | | 1.19 | % |
| Net investment income | | | .50 | % | | | .68 | % | | | .16 | % | | | .38 | % | | | .28 | % |
| | | | | | | | | | | | | | | | | | | | | |
| Supplemental Data: | | | | | | | | | | | | | | | | | | | | |
| Net assets, end of year (000) | | $ | 3,031,190 | | | $ | 2,439,466 | | | $ | 2,379,453 | | | $ | 1,850,569 | | | $ | 1,656,209 | |
| Portfolio turnover rate | | | 87.47 | % | | | 83.80 | %(d) | | | 55.07 | % | | | 80.98 | % | | | 88.13 | % |
| (a) | Calculated using average shares outstanding during the year. |
| (b) | Amount is less than $.01. |
| (c) | Total return does not consider the effects of sales loads and assumes the reinvestment of all distributions. |
| (d) | Excludes purchases and sales of securities in connection with the acquisition of Lord Abbett Large Cap Value Fund on June 15, 2012. |
| 80 | See Notes to Financial Statements. | |
Financial Highlights (continued)
FUNDAMENTAL EQUITY FUND
| | | Class B Shares |
| | | Year Ended 10/31 |
| | | 2013 | | | 2012 | | | 2011 | | | 2010 | | | 2009 | |
| Per Share Operating Performance | | | | | | | | | | |
| Net asset value, beginning of year | | $12.36 | | | $11.89 | | | $11.35 | | | $9.58 | | | $8.48 | |
| Investment operations: | | | | | | | | | | | | | | | |
| Net investment income (loss)(a) | | (.02 | ) | | .01 | | | (.06 | ) | | (.03 | ) | | (.03 | ) |
| Net realized and unrealized gain | | 3.72 | | | .73 | | | .60 | | | 1.80 | | | 1.13 | |
| Total from investment operations | | 3.70 | | | .74 | | | .54 | | | 1.77 | | | 1.10 | |
| Distributions to shareholders from: | | | | | | | | | | | | | | | |
| Net investment income | | — | (b) | | — | | | — | | | — | | | — | |
| Net realized gain | | (.15 | ) | | (.27 | ) | | — | | | — | | | — | |
| Total distributions | | (.15 | ) | | (.27 | ) | | — | | | — | | | — | |
| Net asset value, end of year | | $15.91 | | | $12.36 | | | $11.89 | | | $11.35 | | | $9.58 | |
| Total Return(c) | | 30.32 | % | | 6.47 | % | | 4.76 | % | | 18.48 | % | | 12.97 | % |
| Ratios to Average Net Assets: | | | | | | | | | | | | | | | |
| Expenses, including expense reductions | | 1.71 | % | | 1.74 | % | | 1.73 | % | | 1.77 | % | | 1.84 | % |
| Expenses, excluding expense reductions | | 1.71 | % | | 1.74 | % | | 1.73 | % | | 1.77 | % | | 1.84 | % |
| Net investment income (loss) | | (.12 | )% | | .04 | % | | (.49 | )% | | (.29 | )% | | (.35 | )% |
| | | | | | | | | | | | | | | | |
| Supplemental Data: | | | | | | | | | | | | | | | |
| Net assets, end of year (000) | | $62,409 | | | $76,533 | | | $114,980 | | | $149,531 | | | $161,233 | |
| Portfolio turnover rate | | 87.47 | % | | 83.80 | %(d) | | 55.07 | % | | 80.98 | % | | 88.13 | % |
| (a) | | Calculated using average shares outstanding during the year. |
| (b) | | Amount is less than $.01. |
| (c) | | Total return does not consider the effects of sales loads and assumes the reinvestment of all distributions. |
| (d) | | Excludes purchases and sales of securities in connection with the acquisition of Lord Abbett Large Cap Value Fund on June 15, 2012. |
| | See Notes to Financial Statements. | 81 |
Financial Highlights (continued)
FUNDAMENTAL EQUITY FUND
| | | Class C Shares |
| | | Year Ended 10/31 |
| | | 2013 | | | 2012 | | | 2011 | | | 2010 | | | 2009 | |
| Per Share Operating Performance | | | | | | | | | | |
| Net asset value, beginning of year | | $12.31 | | | $11.85 | | | $11.30 | | | $9.55 | | | $8.45 | |
| Investment operations: | | | | | | | | | | | | | | | |
| Net investment income (loss)(a) | | (.02 | ) | | — | (b) | | (.06 | ) | | (.03 | ) | | (.03 | ) |
| Net realized and unrealized gain | | 3.70 | | | .73 | | | .61 | | | 1.78 | | | 1.13 | |
| Total from investment operations | | 3.68 | | | .73 | | | .55 | | | 1.75 | | | 1.10 | |
| Distributions to shareholders from: | | | | | | | | | | | | | | | |
| Net investment income | | (.01 | ) | | — | | | — | | | — | | | — | |
| Net realized gain | | (.15 | ) | | (.27 | ) | | — | | | — | | | — | |
| Total distributions | | (.16 | ) | | (.27 | ) | | — | | | — | | | — | |
| Net asset value, end of year | | $15.83 | | | $12.31 | | | $11.85 | | | $11.30 | | | $9.55 | |
| Total Return(c) | | 30.30 | % | | 6.41 | % | | 4.87 | % | | 18.32 | % | | 13.02 | % |
| Ratios to Average Net Assets: | | | | | | | | | | | | | | | |
| Expenses, including expense reductions | | 1.71 | % | | 1.74 | % | | 1.73 | % | | 1.77 | % | | 1.84 | % |
| Expenses, excluding expense reductions | | 1.71 | % | | 1.74 | % | | 1.73 | % | | 1.77 | % | | 1.84 | % |
| Net investment income (loss) | | (.15 | )% | | .03 | % | | (.49 | )% | | (.26 | )% | | (.37 | )% |
| | | | | | | | | | | | | | | | |
| Supplemental Data: | | | | | | | | | | | | | | | |
| Net assets, end of year (000) | | $1,012,597 | | | $802,053 | | | $817,590 | | | $603,639 | | | $485,484 | |
| Portfolio turnover rate | | 87.47 | % | | 83.80 | %(d) | | 55.07 | % | | 80.98 | % | | 88.13 | % |
| (a) | Calculated using average shares outstanding during the year. |
| (b) | Amount is less than $.01. |
| (c) | Total return does not consider the effects of sales loads and assumes the reinvestment of all distributions. |
| (d) | Excludes purchases and sales of securities in connection with the acquisition of Lord Abbett Large Cap Value Fund on June 15, 2012. |
| 82 | See Notes to Financial Statements. | |
Financial Highlights (continued)
FUNDAMENTAL EQUITY FUND
| | | Class F Shares |
| | | Year Ended 10/31 |
| | | 2013 | | | 2012 | | | 2011 | | | 2010 | | | 2009 | |
| Per Share Operating Performance | | | | | | | | | | |
| Net asset value, beginning of year | | $13.03 | | | $12.47 | | | $11.86 | | | $9.96 | | | $8.85 | |
| Investment operations: | | | | | | | | | | | | | | | |
| Net investment income(a) | | .11 | | | .12 | | | .05 | | | .09 | | | .03 | |
| Net realized and unrealized gain | | 3.90 | | | .76 | | | .63 | | | 1.84 | | | 1.18 | |
| Total from investment operations | | 4.01 | | | .88 | | | .68 | | | 1.93 | | | 1.21 | |
| Distributions to shareholders from: | | | | | | | | | | | | | | | |
| Net investment income | | (.12 | ) | | (.05 | ) | | (.07 | ) | | (.03 | ) | | (.10 | ) |
| Net realized gain | | (.15 | ) | | (.27 | ) | | — | | | — | | | — | |
| Total distributions | | (.27 | ) | | (.32 | ) | | (.07 | ) | | (.03 | ) | | (.10 | ) |
| Net asset value, end of year | | $16.77 | | | $13.03 | | | $12.47 | | | $11.86 | | | $9.96 | |
| Total Return(b) | | 31.49 | % | | 7.40 | % | | 5.75 | % | | 19.42 | % | | 14.03 | % |
| Ratios to Average Net Assets: | | | | | | | | | | | | | | | |
| Expenses, including expense reductions | | .82 | % | | .84 | % | | .84 | % | | .86 | % | | .93 | % |
| Expenses, excluding expense reductions | | .82 | % | | .84 | % | | .84 | % | | .86 | % | | .93 | % |
| Net investment income | | .75 | % | | .93 | % | | .41 | % | | .77 | % | | .29 | % |
| | | | | | | | | | | | | | | | |
| Supplemental Data: | | | | | | | | | | | | | | | |
| Net assets, end of year (000) | | $716,579 | | | $598,688 | | | $642,636 | | | $282,018 | | | $73,742 | |
| Portfolio turnover rate | | 87.47 | % | | 83.80 | %(c) | | 55.07 | % | | 80.98 | % | | 88.13 | % |
| (a) | Calculated using average shares outstanding during the year. |
| (b) | Total return assumes the reinvestment of all distributions. |
| (c) | Excludes purchases and sales of securities in connection with the acquisition of Lord Abbett Large Cap Value Fund on June 15, 2012. |
| | See Notes to Financial Statements. | 83 |
Financial Highlights (continued)
FUNDAMENTAL EQUITY FUND
| | | Class I Shares |
| | | Year Ended 10/31 |
| | | 2013 | | | 2012 | | | 2011 | | | 2010 | | | 2009 | |
| Per Share Operating Performance | | | | | | | | | | |
| Net asset value, beginning of year | | $13.15 | | | $12.59 | | | $11.96 | | | $10.04 | | | $8.92 | |
| Investment operations: | | | | | | | | | | | | | | | |
| Net investment income(a) | | .13 | | | .13 | | | .07 | | | .08 | | | .05 | |
| Net realized and unrealized gain | | 3.94 | | | .76 | | | .64 | | | 1.88 | | | 1.17 | |
| Total from investment operations | | 4.07 | | | .89 | | | .71 | | | 1.96 | | | 1.22 | |
| Distributions to shareholders from: | | | | | | | | | | | | | | | |
| Net investment income | | (.14 | ) | | (.06 | ) | | (.08 | ) | | (.04 | ) | | (.10 | ) |
| Net realized gain | | (.15 | ) | | (.27 | ) | | — | | | — | | | — | |
| Total distributions | | (.29 | ) | | (.33 | ) | | (.08 | ) | | (.04 | ) | | (.10 | ) |
| Net asset value, end of year | | $16.93 | | | $13.15 | | | $12.59 | | | $11.96 | | | $10.04 | |
| Total Return(b) | | 31.66 | % | | 7.43 | % | | 5.94 | % | | 19.54 | % | | 14.11 | % |
| Ratios to Average Net Assets: | | | | | | | | | | | | | | | |
| Expenses, including expense reductions | | .72 | % | | .74 | % | | .74 | % | | .77 | % | | .84 | % |
| Expenses, excluding expense reductions | | .72 | % | | .74 | % | | .74 | % | | .77 | % | | .84 | % |
| Net investment income | | .84 | % | | 1.00 | % | | .52 | % | | .75 | % | | .58 | % |
| | | | | | | | | | | | | | | | |
| Supplemental Data: | | | | | | | | | | | | | | | |
| Net assets, end of year (000) | | $531,676 | | | $394,842 | | | $245,329 | | | $162,114 | | | $98,570 | |
| Portfolio turnover rate | | 87.47 | % | | 83.80 | %(c) | | 55.07 | % | | 80.98 | % | | 88.13 | % |
| (a) | Calculated using average shares outstanding during the year. |
| (b) | Total return assumes the reinvestment of all distributions. |
| (c) | Excludes purchases and sales of securities in connection with the acquisition of Lord Abbett Large Cap Value Fund on June 15, 2012. |
| 84 | See Notes to Financial Statements. | |
Financial Highlights (continued)
FUNDAMENTAL EQUITY FUND
| | | Class P Shares |
| | | Year Ended 10/31 |
| | | 2013 | | | 2012 | | | 2011 | | | 2010 | | | 2009 | |
| Per Share Operating Performance | | | | | | | | | | |
| Net asset value, beginning of year | | $12.92 | | | $12.36 | | | $11.75 | | | $9.87 | | | $8.75 | |
| Investment operations: | | | | | | | | | | | | | | | |
| Net investment income(a) | | .06 | | | .07 | | | .01 | | | .03 | | | .01 | |
| Net realized and unrealized gain | | 3.88 | | | .77 | | | .62 | | | 1.85 | | | 1.16 | |
| Total from investment operations | | 3.94 | | | .84 | | | .63 | | | 1.88 | | | 1.17 | |
| Distributions to shareholders from: | | | | | | | | | | | | | | | |
| Net investment income | | (.07 | ) | | (.01 | ) | | (.02 | ) | | — | | | (.05 | ) |
| Net realized gain | | (.15 | ) | | (.27 | ) | | — | | | — | | | — | |
| Total distributions | | (.22 | ) | | (.28 | ) | | (.02 | ) | | — | | | (.05 | ) |
| Net asset value, end of year | | $16.64 | | | $12.92 | | | $12.36 | | | $11.75 | | | $9.87 | |
| Total Return(b) | | 31.08 | % | | 7.03 | % | | 5.40 | % | | 19.05 | % | | 13.59 | % |
| Ratios to Average Net Assets: | | | | | | | | | | | | | | | |
| Expenses, including expense reductions | | 1.17 | % | | 1.19 | % | | 1.19 | % | | 1.22 | % | | 1.29 | % |
| Expenses, excluding expense reductions | | 1.17 | % | | 1.19 | % | | 1.19 | % | | 1.22 | % | | 1.29 | % |
| Net investment income | | .42 | % | | .58 | % | | .05 | % | | .28 | % | | .17 | % |
| | | | | | | | | | | | | | | | |
| Supplemental Data: | | | | | | | | | | | | | | | |
| Net assets, end of year (000) | | $26,424 | | | $27,937 | | | $31,223 | | | $30,598 | | | $29,361 | |
| Portfolio turnover rate | | 87.47 | % | | 83.80 | %(c) | | 55.07 | % | | 80.98 | % | | 88.13 | % |
| (a) | Calculated using average shares outstanding during the year. |
| (b) | Total return assumes the reinvestment of all distributions. |
| (c) | Excludes purchases and sales of securities in connection with the acquisition of Lord Abbett Large Cap Value Fund on June 15, 2012. |
| | See Notes to Financial Statements. | 85 |
Financial Highlights (continued)
FUNDAMENTAL EQUITY FUND
| | | | Class R2 Shares |
| | | | Year Ended 10/31 |
| | | 2013 | | | 2012 | | | 2011 | | | 2010 | | | 2009 | |
| Per Share Operating Performance | | | | | | | | | | | | | | | | | | | | |
| Net asset value, beginning of year | | | $12.87 | | | | $12.33 | | | | $11.75 | | | | $9.89 | | | | $8.82 | |
| Investment operations: | | | | | | | | | | | | | | | | | | | | |
| Net investment income (loss)(a) | | | .04 | | | | .05 | | | | (.01 | ) | | | .04 | | | | (.01 | ) |
| Net realized and unrealized gain | | | 3.87 | | | | .77 | | | | .63 | | | | 1.82 | | | | 1.17 | |
| Total from investment operations | | | 3.91 | | | | .82 | | | | .62 | | | | 1.86 | | | | 1.16 | |
| Distributions to shareholders from: | | | | | | | | | | | | | | | | | | | | |
| Net investment income | | | (.06 | ) | | | (.01 | ) | | | (.04 | ) | | | — | (b) | | | (.09 | ) |
| Net realized gain | | | (.15 | ) | | | (.27 | ) | | | — | | | | — | | | | — | |
| Total distributions | | | (.21 | ) | | | (.28 | ) | | | (.04 | ) | | | — | (b) | | | (.09 | ) |
| Net asset value, end of year | | | $16.57 | | | | $12.87 | | | | $12.33 | | | | $11.75 | | | | $9.89 | |
| Total Return(c) | | | 30.87 | % | | | 6.87 | % | | | 5.27 | % | | | 18.81 | % | | | 13.44 | % |
| Ratios to Average Net Assets: | | | | | | | | | | | | | | | | | | | | |
| Expenses, including expense reductions | | | 1.31 | % | | | 1.34 | % | | | 1.34 | % | | | 1.36 | % | | | 1.42 | % |
| Expenses, excluding expense reductions | | | 1.31 | % | | | 1.34 | % | | | 1.34 | % | | | 1.36 | % | | | 1.42 | % |
| Net investment income (loss) | | | .26 | % | | | .43 | % | | | (.11 | )% | | | .36 | % | | | (.14 | )% |
| | | | | | | | | | | | | | | | | | | | | |
| Supplemental Data: | | | | | | | | | | | | | | | | | | | | |
| Net assets, end of year (000) | | | $25,111 | | | | $22,335 | | | | $19,997 | | | | $4,444 | | | | $1,187 | |
| Portfolio turnover rate | | | 87.47 | % | | | 83.80 | %(d) | | | 55.07 | % | | | 80.98 | % | | | 88.13 | % |
| (a) | Calculated using average shares outstanding during the year. |
| (b) | Amount is less than $.01. |
| (c) | Total return assumes the reinvestment of all distributions. |
| (d) | Excludes purchases and sales of securities in connection with the acquisition of Lord Abbett Large Cap Value Fund on June 15, 2012. |
| 86 | See Notes to Financial Statements. | |
Financial Highlights (concluded)
FUNDAMENTAL EQUITY FUND
| | | | Class R3 Shares |
| | | | Year Ended 10/31 |
| | | 2013 | | | 2012 | | | 2011 | | | 2010 | | | 2009 | |
| Per Share Operating Performance | | | | | | | | | | | | | | | |
| Net asset value, beginning of year | | | $12.94 | | | | $12.40 | | | | $11.80 | | | | $9.92 | | | | $8.82 | |
| Investment operations: | | | | | | | | | | | | | | | | | | | | |
| Net investment income(a) | | | .05 | | | | .06 | | | | — | (b) | | | .03 | | | | — | (b) |
| Net realized and unrealized gain | | | 3.89 | | | | .77 | | | | .63 | | | | 1.85 | | | | 1.17 | |
| Total from investment operations | | | 3.94 | | | | .83 | | | | .63 | | | | 1.88 | | | | 1.17 | |
| Distributions to shareholders from: | | | | | | | | | | | | | | | | | | | | |
| Net investment income | | | (.07 | ) | | | (.02 | ) | | | (.03 | ) | | | — | (b) | | | (.07 | ) |
| Net realized gain | | | (.15 | ) | | | (.27 | ) | | | — | | | | — | | | | — | |
| Total distributions | | | (.22 | ) | | | (.29 | ) | | | (.03 | ) | | | — | (b) | | | (.07 | ) |
| Net asset value, end of year | | | $16.66 | | | | $12.94 | | | | $12.40 | | | | $11.80 | | | | $9.92 | |
| Total Return(c) | | | 31.04 | % | | | 6.95 | % | | | 5.36 | % | | | 18.96 | % | | | 13.55 | % |
| Ratios to Average Net Assets: | | | | | | | | | | | | | | | | | | | | |
| Expenses, including expense reductions | | | 1.21 | % | | | 1.24 | % | | | 1.24 | % | | | 1.26 | % | | | 1.33 | % |
| Expenses, excluding expense reductions | | | 1.21 | % | | | 1.24 | % | | | 1.24 | % | | | 1.26 | % | | | 1.33 | % |
| Net investment income | | | .35 | % | | | .51 | % | | | .01 | % | | | .30 | % | | | .05 | % |
| | | | | | | | | | | | | | | | | | | | | |
| Supplemental Data: | | | | | | | | | | | | | | | | | | | | |
| Net assets, end of year (000) | | | $322,951 | | | | $270,290 | | | | $180,795 | | | | $67,814 | | | | $28,510 | |
| Portfolio turnover rate | | | 87.47 | % | | | 83.80 | %(d) | | | 55.07 | % | | | 80.98 | % | | | 88.13 | % |
| (a) | Calculated using average shares outstanding during the year. |
| (b) | Amount is less than $.01. |
| (c) | Total return assumes the reinvestment of all distributions. |
| (d) | Excludes purchases and sales of securities in connection with the acquisition of Lord Abbett Large Cap Value Fund on June 15, 2012. |
| | See Notes to Financial Statements. | 87 |
Financial Highlights
GROWTH LEADERS FUND
| | | | Class A Shares |
| | | | Year Ended 10/31 | | | 6/24/2011(a)
to |
| | | 2013 | | | 2012 | | | 10/31/2011 |
| Per Share Operating Performance | | | | | | | | | |
| Net asset value, beginning of period | | | $15.15 | | | | $14.50 | | | | $15.00 | |
| Investment operations: | | | | | | | | | | | | |
| Net investment loss(b) | | | (.03 | ) | | | (.01 | ) | | | (.01 | ) |
| Net realized and unrealized gain (loss) | | | 6.36 | | | | .66 | | | | (.49 | ) |
| Total from investment operations | | | 6.33 | | | | .65 | | | | (.50 | ) |
| Distributions to shareholders from: | | | | | | | | | | | | |
| Net investment income | | | (.04 | ) | | | — | | | | — | |
| Net asset value, end of period | | | $21.44 | | | | $15.15 | | | | $14.50 | |
| Total Return(c) | | | 42.20 | % | | | 4.48 | % | | | (3.33 | )%(d) |
| Ratios to Average Net Assets: | | | | | | | | | | | | |
| Expenses, excluding expense reductions and including management fee waived and expenses reimbursed | | | .85 | % | | | .85 | % | | | .84 | %(e) |
| Expenses, including expense reductions, management fee waived and expenses reimbursed | | | .85 | % | | | .85 | % | | | .84 | %(e) |
| Expenses, excluding expense reductions, management fee waived and expenses reimbursed | | | 1.34 | % | | | 1.55 | % | | | 3.04 | %(e) |
| Net investment loss | | | (.14 | )% | | | (.06 | )% | | | (.23 | )%(e) |
| | | | | | | | | | | | | |
| Supplemental Data: | | | | | | | | | | | | |
| Net assets, end of period (000) | | | $191,798 | | | | $15,372 | | | | $7,882 | |
| Portfolio turnover rate | | | 451.09 | %(f) | | | 683.50 | % | | | 208.96 | % |
| (a) | Commencement of operations was 6/24/2011, SEC effective date was 6/15/2011 and date shares first became available to the public was 7/1/2011. |
| (b) | Calculated using average shares outstanding during the period. |
| (c) | Total return does not consider the effects of sales loads and assumes the reinvestment of all distributions. |
| (d) | Not annualized. |
| (e) | Annualized. |
| (f) | Excludes purchases and sales of securities in connection with the acquisition of Lord Abbett Stock Appreciation Fund on March 22, 2013. |
| 88 | See Notes to Financial Statements. | |
Financial Highlights (continued)
GROWTH LEADERS FUND
| | | Class B Shares |
| | | 2/11/2013(a) |
| | | to |
| | | 10/31/2013 |
| Per Share Operating Performance | | | | |
| Net asset value, beginning of period | | | $16.56 | |
| Investment operations: | | | | |
| Net investment loss(b) | | | (.11 | ) |
| Net realized and unrealized gain | | | 4.88 | |
| Total from investment operations | | | 4.77 | |
| Net asset value, end of period | | | $21.33 | |
| Total Return(c) | | | 29.05 | %(d) |
| Ratios to Average Net Assets: | | | | |
| Expenses, excluding expense reductions and including management fee waived and expenses reimbursed | | | 1.49 | %(e) |
| Expenses, including expense reductions, management fee waived and expenses reimbursed | | | 1.49 | %(e) |
| Expenses, excluding expense reductions, management fee waived and expenses reimbursed | | | 1.88 | %(e) |
| Net investment loss | | | (.82 | )%(e) |
| | | | | |
| Supplemental Data: | | | | |
| Net assets, end of period (000) | | | $8,041 | |
| Portfolio turnover rate | | | 451.09 | %(f) |
| (a) | Commencement of operations was 2/11/2013, SEC effective date was 11/28/2012. |
| (b) | Calculated using average shares outstanding during the period. |
| (c) | Total return does not consider the effects of sales loads and assumes the reinvestment of all distributions. |
| (d) | Not annualized. |
| (e) | Annualized. |
| (f) | Excludes purchases and sales of securities in connection with the acquisition of Lord Abbett Stock Appreciation Fund on March 22, 2013. |
| | See Notes to Financial Statements. | 89 |
Financial Highlights (continued)
GROWTH LEADERS FUND
| | | | Class C Shares |
| | | | Year Ended 10/31 | | | 6/24/2011(a)
to |
| | | 2013 | | | 2012 | | | 10/31/2011 |
| Per Share Operating Performance | | | | | | | | | | | | |
| Net asset value, beginning of period | | | $15.02 | | | | $14.47 | | | | $15.00 | |
| Investment operations: | | | | | | | | | | | | |
| Net investment loss(b) | | | (.15 | ) | | | (.11 | ) | | | (.05 | ) |
| Net realized and unrealized gain (loss) | | | 6.30 | | | | .66 | | | | (.48 | ) |
| Total from investment operations | | | 6.15 | | | | .55 | | | | (.53 | ) |
| Distributions to shareholders from: | | | | | | | | | | | | |
| Net investment income | | | (.03 | ) | | | — | | | | — | |
| Net asset value, end of period | | | $21.14 | | | | $15.02 | | | | $14.47 | |
| Total Return(c) | | | 41.24 | % | | | 3.80 | % | | | (3.53 | )%(d) |
| Ratios to Average Net Assets: | | | | | | | | | | | | |
| Expenses, excluding expense reductions and including management fee waived and expenses reimbursed | | | 1.45 | % | | | 1.49 | % | | | 1.47 | %(e) |
| Expenses, including expense reductions, management fee waived and expenses reimbursed | | | 1.45 | % | | | 1.49 | % | | | 1.47 | %(e) |
| Expenses, excluding expense reductions, management fee waived and expenses reimbursed | | | 1.88 | % | | | 2.15 | % | | | 2.78 | %(e) |
| Net investment loss | | | (.79 | )% | | | (.70 | )% | | | (.91 | )%(e) |
| | | | | | | | | | | | | |
| Supplemental Data: | | | | | | | | | | | | |
| Net assets, end of period (000) | | | $66,471 | | | | $1,898 | | | | $175 | |
| Portfolio turnover rate | | | 451.09 | %(f) | | | 683.50 | % | | | 208.96 | % |
| (a) | Commencement of operations was 6/24/2011, SEC effective date was 6/15/2011 and date shares first became available to the public was 7/1/2011. |
| (b) | Calculated using average shares outstanding during the period. |
| (c) | Total return does not consider the effects of sales loads and assumes the reinvestment of all distributions. |
| (d) | Not annualized. |
| (e) | Annualized. |
| (f) | Excludes purchases and sales of securities in connection with the acquisition of Lord Abbett Stock Appreciation Fund on March 22, 2013. |
| 90 | See Notes to Financial Statements. | |
Financial Highlights (continued)
GROWTH LEADERS FUND
| | | Class F Shares |
| | | | | | | | | 6/24/2011(a) |
| | | Year Ended 10/31 | | | to |
| | | 2013 | | | 2012 | | | 10/31/2011 |
| Per Share Operating Performance | | | | | | | | | | | | |
| Net asset value, beginning of period | | | $15.18 | | | | $14.51 | | | | $15.00 | |
| Investment operations: | | | | | | | | | | | | |
| Net investment income(b) | | | — | (c) | | | .03 | | | | — | (c) |
| Net realized and unrealized gain (loss) | | | 6.39 | | | | .65 | | | | (.49 | ) |
| Total from investment operations | | | 6.39 | | | | .68 | | | | (.49 | ) |
| Distributions to shareholders from: | | | | | | | | | | | | |
| Net investment income | | | (.08 | ) | | | (.01 | ) | | | — | |
| Net asset value, end of period | | | $21.49 | | | | $15.18 | | | | $14.51 | |
| Total Return(d) | | | 42.51 | % | | | 4.69 | % | | | (3.27 | )%(e) |
| Ratios to Average Net Assets: | | | | | | | | | | | | |
| Expenses, excluding expense reductions and including management fee waived and expenses reimbursed | | | .60 | % | | | .60 | % | | | .59 | %(f) |
| Expenses, including expense reductions, management fee waived and expenses reimbursed | | | .60 | % | | | .60 | % | | | .59 | %(f) |
| Expenses, excluding expense reductions, management fee waived and expenses reimbursed | | | 1.07 | % | | | 1.33 | % | | | 1.95 | %(f) |
| Net investment income | | | .01 | % | | | .21 | % | | | .08 | %(f) |
| | | | | | | | | | | | | |
| Supplemental Data: | | | | | | | | | | | | |
| Net assets, end of period (000) | | | $109,011 | | | | $3,797 | | | | $5,993 | |
| Portfolio turnover rate | | | 451.09 | %(g) | | | 683.50 | % | | | 208.96 | % |
| (a) | | Commencement of operations was 6/24/2011, SEC effective date was 6/15/2011 and date shares first became available to the public was 7/1/2011. |
| (b) | | Calculated using average shares outstanding during the period. |
| (c) | | Amount is less than $.01. |
| (d) | | Total return assumes the reinvestment of all distributions. |
| (g) | | Excludes purchases and sales of securities in connection with the acquisition of Lord Abbett Stock Appreciation Fund on March 22, 2013. |
| | See Notes to Financial Statements. | 91 |
Financial Highlights (continued)
GROWTH LEADERS FUND
| | | Class I Shares |
| | | | | | | | | 6/24/2011(a) |
| | | Year Ended 10/31 | | | to |
| | | 2013 | | | 2012 | | | 10/31/2011 |
| Per Share Operating Performance | | | | | | | | | |
| Net asset value, beginning of period | | | $15.20 | | | | $14.51 | | | | $15.00 | |
| Investment operations: | | | | | | | | | | | | |
| Net investment income(b) | | | .04 | | | | .04 | | | | .01 | |
| Net realized and unrealized gain (loss) | | | 6.36 | | | | .67 | | | | (.50 | ) |
| Total from investment operations | | | 6.40 | | | | .71 | | | | (.49 | ) |
| Distributions to shareholders from: | | | | | | | | | | | | |
| Net investment income | | | (.09 | ) | | | (.02 | ) | | | — | |
| Net asset value, end of period | | | $21.51 | | | | $15.20 | | | | $14.51 | |
| Total Return(c) | | | 42.67 | % | | | 4.87 | % | | | (3.27 | )%(d) |
| Ratios to Average Net Assets: | | | | | | | | | | | | |
| Expenses, excluding expense reductions and including management fee waived and expenses reimbursed | | | .50 | % | | | .50 | % | | | .49 | %(e) |
| Expenses, including expense reductions, management fee waived and expenses reimbursed | | | .50 | % | | | .50 | % | | | .49 | %(e) |
| Expenses, excluding expense reductions, management fee waived and expenses reimbursed | | | .95 | % | | | 1.22 | % | | | 2.20 | %(e) |
| Net investment income | | | .21 | % | | | .29 | % | | | .17 | %(e) |
| | | | | | | | | | | | | |
| Supplemental Data: | | | | | | | | | | | | |
| Net assets, end of period (000) | | | $50,326 | | | | $2,697 | | | | $1,952 | |
| Portfolio turnover rate | | | 451.09 | %(f) | | | 683.50 | % | | | 208.96 | % |
| (a) | | Commencement of operations was 6/24/2011, SEC effective date was 6/15/2011 and date shares first became available to the public was 7/1/2011. |
| (b) | | Calculated using average shares outstanding during the period. |
| (c) | | Total return assumes the reinvestment of all distributions. |
| (f) | | Excludes purchases and sales of securities in connection with the acquisition of Lord Abbett Stock Appreciation Fund on March 22, 2013. |
| 92 | See Notes to Financial Statements. | |
Financial Highlights (continued)
GROWTH LEADERS FUND
| | | Class R2 Shares |
| | | | | | | | | 6/24/2011(a) |
| | | Year Ended 10/31 | | | to |
| | | 2013 | | | 2012 | | | 10/31/2011 |
| Per Share Operating Performance | | | | | | | | | | | | |
| Net asset value, beginning of period | | | $15.19 | | | | $14.49 | | | | $15.00 | |
| Investment operations: | | | | | | | | | | | | |
| Net investment income (loss)(b) | | | .04 | | | | .05 | | | | (.03 | ) |
| Net realized and unrealized gain (loss) | | | 6.38 | | | | .65 | | | | (.48 | ) |
| Total from investment operations | | | 6.42 | | | | .70 | | | | (.51 | ) |
| Distributions to shareholders from: | | | | | | | | | | | | |
| Net investment income | | | (.03 | ) | | | — | | | | — | |
| Net asset value, end of period | | | $21.58 | | | | $15.19 | | | | $14.49 | |
| Total Return(c) | | | 42.62 | % | | | 4.83 | % | | | (3.40 | )%(d) |
| Ratios to Average Net Assets: | | | | | | | | | | | | |
| Expenses, excluding expense reductions and including management fee waived and expenses reimbursed | | | .58 | % | | | .48 | % | | | 1.06 | %(e) |
| Expenses, including expense reductions, management fee waived and expenses reimbursed | | | .58 | % | | | .48 | % | | | 1.06 | %(e) |
| Expenses, excluding expense reductions, management fee waived and expenses reimbursed | | | 1.70 | % | | | 1.22 | % | | | 5.05 | %(e) |
| Net investment income (loss) | | | .22 | % | | | .31 | % | | | (.49 | )%(e) |
| | | | | | | | | | | | | |
| Supplemental Data: | | | | | | | | | | | | |
| Net assets, end of period (000) | | | $44 | | | | $10 | | | | $10 | |
| Portfolio turnover rate | | | 451.09 | %(f) | | | 683.50 | % | | | 208.96 | % |
| (a) | | Commencement of operations was 6/24/2011, SEC effective date was 6/15/2011 and date shares first became available to the public was 7/1/2011. |
| (b) | | Calculated using average shares outstanding during the period. |
| (c) | | Total return assumes the reinvestment of all distributions. |
| (f) | | Excludes purchases and sales of securities in connection with the acquisition of Lord Abbett Stock Appreciation Fund on March 22, 2013. |
| | See Notes to Financial Statements. | 93 |
Financial Highlights (concluded)
GROWTH LEADERS FUND
| | | Class R3 Shares |
| | | | | | | | | 6/24/2011(a) |
| | | Year Ended 10/31 | | | to |
| | | 2013 | | | 2012 | | | 10/31/2011 |
| Per Share Operating Performance | | | | | | | | | | | | |
| Net asset value, beginning of period | | | $15.16 | | | | $14.49 | | | | $15.00 | |
| Investment operations: | | | | | | | | | | | | |
| Net investment income (loss)(b) | | | (.06 | ) | | | .01 | | | | (.02 | ) |
| Net realized and unrealized gain (loss) | | | 6.38 | | | | .66 | | | | (.49 | ) |
| Total from investment operations | | | 6.32 | | | | .67 | | | | (.51 | ) |
| Distributions to shareholders from: | | | | | | | | | | | | |
| Net investment income | | | (.03 | ) | | | — | | | | — | |
| Net asset value, end of period | | | $21.45 | | | | $15.16 | | | | $14.49 | |
| Total Return(c) | | | 41.98 | % | | | 4.62 | % | | | (3.40 | )%(d) |
| Ratios to Average Net Assets: | | | | | | | | | | | | |
| Expenses, excluding expense reductions and including management fee waived and expenses reimbursed | | | 1.00 | % | | | .72 | % | | | .97 | %(e) |
| Expenses, including expense reductions, management fee waived and expenses reimbursed | | | 1.00 | % | | | .72 | % | | | .97 | %(e) |
| Expenses, excluding expense reductions, management fee waived and expenses reimbursed | | | 1.39 | % | | | 1.42 | % | | | 4.96 | %(e) |
| Net investment income (loss) | | | (.33 | )% | | | .08 | % | | | (.40 | )%(e) |
| | | | | | | | | | | | | |
| Supplemental Data: | | | | | | | | | | | | |
| Net assets, end of period (000) | | | $8,289 | | | | $11 | | | | $10 | |
| Portfolio turnover rate | | | 451.09 | %(f) | | | 683.50 | % | | | 208.96 | % |
| (a) | | Commencement of operations was 6/24/2011, SEC effective date was 6/15/2011 and date shares first became available to the public was 7/1/2011. |
| (b) | | Calculated using average shares outstanding during the period. |
| (c) | | Total return assumes the reinvestment of all distributions. |
| (f) | | Excludes purchases and sales of securities in connection with the acquisition of Lord Abbett Stock Appreciation Fund on March 22, 2013. |
| 94 | See Notes to Financial Statements. | |
Financial Highlights
INTERNATIONAL CORE EQUITY FUND
| | | Class A Shares |
| | | Year Ended 10/31 |
| | | 2013 | | | 2012 | | | 2011 | | | 2010 | | | 2009 | |
| Per Share Operating Performance | | | | | | | | | | | | | | | | | | | | |
| Net asset value, beginning of year | | | $11.43 | | | | $11.25 | | | | $12.12 | | | | $11.20 | | | | $8.68 | |
| Investment operations: | | | | | | | | | | | | | | | | | | | | |
| Net investment income(a) | | | .18 | | | | .28 | | | | .20 | | | | .12 | | | | .08 | |
| Net realized and unrealized gain (loss) | | | 2.62 | | | | .12 | | | | (.94 | ) | | | .88 | | | | 2.66 | |
| Total from investment operations | | | 2.80 | | | | .40 | | | | (.74 | ) | | | 1.00 | | | | 2.74 | |
| Distributions to shareholders from: | | | | | | | | | | | | | | | | | | | | |
| Net investment income | | | (.26 | ) | | | (.22 | ) | | | (.13 | ) | | | (.08 | ) | | | (.22 | ) |
| Net asset value, end of year | | | $13.97 | | | | $11.43 | | | | $11.25 | | | | $12.12 | | | | $11.20 | |
| Total Return(b) | | | 24.99 | % | | | 3.81 | % | | | (6.16 | )% | | | 8.95 | % | | | 32.32 | % |
| Ratios to Average Net Assets: | | | | | | | | | | | | | | | | | | | | |
| Expenses, excluding expense reductions and including management fee waived and expenses reimbursed | | | 1.12 | % | | | 1.12 | % | | | 1.12 | % | | | 1.18 | % | | | 1.55 | % |
| Expenses, including expense reductions, management fee waived and expenses reimbursed | | | 1.12 | % | | | 1.12 | % | | | 1.12 | % | | | 1.18 | % | | | 1.55 | % |
| Expenses, excluding expense reductions, management fee waived and expenses reimbursed | | | 1.38 | % | | | 1.47 | % | | | 1.42 | % | | | 1.44 | % | | | 1.55 | % |
| Net investment income | | | 1.41 | % | | | 2.53 | % | | | 1.64 | % | | | 1.05 | % | | | .92 | % |
| | | | | | | | | | | | | | | | | | | | | |
| Supplemental Data: | | | | | | | | | | | | | | | | | | | | |
| Net assets, end of year (000) | | | $437,271 | | | | $383,244 | | | | $439,938 | | | | $542,452 | | | | $574,731 | |
| Portfolio turnover rate | | | 80.77 | % | | | 81.50 | % | | | 83.78 | % | | | 98.73 | % | | | 132.22 | % |
| (a) | | Calculated using average shares outstanding during the year. |
| (b) | | Total return does not consider the effects of sales loads and assumes the reinvestment of all distributions. |
| | See Notes to Financial Statements. | 95 |
Financial Highlights (continued)
INTERNATIONAL CORE EQUITY FUND
| | | Class B Shares |
| | | Year Ended 10/31 |
| | | 2013 | | 2012 | | 2011 | | 2010 | | 2009 |
| Per Share Operating Performance | | | | | | | | | | |
| Net asset value, beginning of year | | | $11.26 | | | | $11.06 | | | | $11.91 | | | | $11.02 | | | | $8.50 | |
| Investment operations: | | | | | | | | | | | | | | | | | | | | |
| Net investment income(a) | | | .09 | | | | .21 | | | | .12 | | | | .04 | | | | .02 | |
| Net realized and unrealized gain (loss) | | | 2.60 | | | | .12 | | | | (.92 | ) | | | .87 | | | | 2.62 | |
| Total from investment operations | | | 2.69 | | | | .33 | | | | (.80 | ) | | | .91 | | | | 2.64 | |
| Distributions to shareholders from: | | | | | | | | | | | | | | | | | | | | |
| Net investment income | | | (.19 | ) | | | (.13 | ) | | | (.05 | ) | | | (.02 | ) | | | (.12 | ) |
| Net asset value, end of year | | | $13.76 | | | | $11.26 | | | | $11.06 | | | | $11.91 | | | | $11.02 | |
| Total Return(b) | | | 24.18 | % | | | 3.13 | % | | | (6.75 | )% | | | 8.23 | % | | | 31.46 | % |
| Ratios to Average Net Assets: | | | | | | | | | | | | | | | | | | | | |
| Expenses, excluding expense reductions and including management fee waived and expenses reimbursed | | | 1.77 | % | | | 1.77 | % | | | 1.77 | % | | | 1.84 | % | | | 2.20 | % |
| Expenses, including expense reductions, management fee waived and expenses reimbursed | | | 1.77 | % | | | 1.77 | % | | | 1.77 | % | | | 1.84 | % | | | 2.20 | % |
| Expenses, excluding expense reductions, management fee waived and expenses reimbursed | | | 2.03 | % | | | 2.12 | % | | | 2.06 | % | | | 2.09 | % | | | 2.20 | % |
| Net investment income | | | .73 | % | | | 1.91 | % | | | .96 | % | | | .40 | % | | | .27 | % |
| | | | | | | | | | | | | | | | | | | | | |
| Supplemental Data: | | | | | | | | | | | | | | | | | | | | |
| Net assets, end of year (000) | | | $17,239 | | | | $20,125 | | | | $27,896 | | | | $39,255 | | | | $43,492 | |
| Portfolio turnover rate | | | 80.77 | % | | | 81.50 | % | | | 83.78 | % | | | 98.73 | % | | | 132.22 | % |
| (a) | Calculated using average shares outstanding during the year. |
| (b) | Total return does not consider the effects of sales loads and assumes the reinvestment of all distributions. |
| 96 | See Notes to Financial Statements. | |
Financial Highlights (continued)
INTERNATIONAL CORE EQUITY FUND
| | | Class C Shares |
| | | Year Ended 10/31 |
| | | 2013 | | 2012 | | 2011 | | 2010 | | 2009 |
| Per Share Operating Performance | | | | | | | | | | |
| Net asset value, beginning of year | | | $11.27 | | | | $11.08 | | | | $11.93 | | | | $11.04 | | | | $8.50 | |
| Investment operations: | | | | | | | | | | | | | | | | | | | | |
| Net investment income(a) | | | .09 | | | | .21 | | | | .12 | | | | .04 | | | | .03 | |
| Net realized and unrealized gain (loss) | | | 2.61 | | | | .12 | | | | (.92 | ) | | | .87 | | | | 2.62 | |
| Total from investment operations | | | 2.70 | | | | .33 | | | | (.80 | ) | | | .91 | | | | 2.65 | |
| Distributions to shareholders from: | | | | | | | | | | | | | | | | | | | | |
| Net investment income | | | (.20 | ) | | | (.14 | ) | | | (.05 | ) | | | (.02 | ) | | | (.11 | ) |
| Net asset value, end of year | | | $13.77 | | | | $11.27 | | | | $11.08 | | | | $11.93 | | | | $11.04 | |
| Total Return(b) | | | 24.26 | % | | | 3.11 | % | | | (6.73 | )% | | | 8.21 | % | | | 31.52 | % |
| Ratios to Average Net Assets: | | | | | | | | | | | | | | | | | | | | |
| Expenses, excluding expense reductions and including management fee waived and expenses reimbursed | | | 1.75 | % | | | 1.75 | % | | | 1.74 | % | | | 1.84 | % | | | 2.20 | % |
| Expenses, including expense reductions, management fee waived and expenses reimbursed | | | 1.75 | % | | | 1.75 | % | | | 1.74 | % | | | 1.84 | % | | | 2.20 | % |
| Expenses, excluding expense reductions, management fee waived and expenses reimbursed | | | 2.01 | % | | | 2.10 | % | | | 2.03 | % | | | 2.09 | % | | | 2.20 | % |
| Net investment income | | | .77 | % | | | 1.91 | % | | | 1.01 | % | | | .38 | % | | | .28 | % |
| | | | | | | | | | | | | | | | | | | | | |
| Supplemental Data: | | | | | | | | | | | | | | | | | | | | |
| Net assets, end of year (000) | | | $57,779 | | | | $54,056 | | | | $68,316 | | | | $91,550 | | | | $105,557 | |
| Portfolio turnover rate | | | 80.77 | % | | | 81.50 | % | | | 83.78 | % | | | 98.73 | % | | | 132.22 | % |
| (a) | Calculated using average shares outstanding during the year. |
| (b) | Total return does not consider the effects of sales loads and assumes the reinvestment of all distributions. |
| | See Notes to Financial Statements. | 97 |
Financial Highlights (continued)
INTERNATIONAL CORE EQUITY FUND
| | | Class F Shares |
| | | Year Ended 10/31 |
| | | 2013 | | 2012 | | 2011 | | 2010 | | 2009 |
| Per Share Operating Performance | | | | | | | | | | |
| Net asset value, beginning of year | | | $11.36 | | | | $11.20 | | | | $12.08 | | | | $11.16 | | | | $8.68 | |
| Investment operations: | | | | | | | | | | | | | | | | | | | | |
| Net investment income(a) | | | .18 | | | | .30 | | | | .24 | | | | .16 | | | | .16 | |
| Net realized and unrealized gain (loss) | | | 2.64 | | | | .12 | | | | (.95 | ) | | | .86 | | | | 2.59 | |
| Total from investment operations | | | 2.82 | | | | .42 | | | | (.71 | ) | | | 1.02 | | | | 2.75 | |
| Distributions to shareholders from: | | | | | | | | | | | | | | | | | | | | |
| Net investment income | | | (.29 | ) | | | (.26 | ) | | | (.17 | ) | | | (.10 | ) | | | (.27 | ) |
| Net asset value, end of year | | | $13.89 | | | | $11.36 | | | | $11.20 | | | | $12.08 | | | | $11.16 | |
| Total Return(b) | | | 25.35 | % | | | 4.02 | % | | | (5.98 | )% | | | 9.25 | % | | | 32.76 | % |
| Ratios to Average Net Assets: | | | | | | | | | | | | | | | | | | | | |
| Expenses, excluding expense reductions and including management fee waived and expenses reimbursed | | | .87 | % | | | .87 | % | | | .87 | % | | | .90 | % | | | 1.27 | % |
| Expenses, including expense reductions, management fee waived and expenses reimbursed | | | .87 | % | | | .87 | % | | | .87 | % | | | .90 | % | | | 1.27 | % |
| Expenses, excluding expense reductions, management fee waived and expenses reimbursed | | | 1.13 | % | | | 1.22 | % | | | 1.18 | % | | | 1.18 | % | | | 1.27 | % |
| Net investment income | | | 1.42 | % | | | 2.71 | % | | | 1.98 | % | | | 1.45 | % | | | 1.73 | % |
| | | | | | | | | | | | | | | | | | | | | |
| Supplemental Data: | | | | | | | | | | | | | | | | | | | | |
| Net assets, end of year (000) | | | $142,063 | | | | $151,246 | | | | $80,747 | | | | $31,153 | | | | $9,009 | |
| Portfolio turnover rate | | | 80.77 | % | | | 81.50 | % | | | 83.78 | % | | | 98.73 | % | | | 132.22 | % |
| (a) | Calculated using average shares outstanding during the year. |
| (b) | Total return assumes the reinvestment of all distributions. |
| 98 | See Notes to Financial Statements. | |
Financial Highlights (continued)
INTERNATIONAL CORE EQUITY FUND
| | | Class I Shares |
| | | Year Ended 10/31 |
| | | 2013 | | 2012 | | 2011 | | 2010 | | 2009 |
| Per Share Operating Performance | | | | | | | | | | |
| Net asset value, beginning of year | | | $11.51 | | | | $11.34 | | | | $12.21 | | | | $11.28 | | | | $8.77 | |
| Investment operations: | | | | | | | | | | | | | | | | | | | | |
| Net investment income(a) | | | .22 | | | | .27 | | | | .25 | | | | .15 | | | | .13 | |
| Net realized and unrealized gain (loss) | | | 2.64 | | | | .17 | | | | (.95 | ) | | | .89 | | | | 2.65 | |
| Total from investment operations | | | 2.86 | | | | .44 | | | | (.70 | ) | | | 1.04 | | | | 2.78 | |
| Distributions to shareholders from: | | | | | | | | | | | | | | | | | | | | |
| Net investment income | | | (.30 | ) | | | (.27 | ) | | | (.17 | ) | | | (.11 | ) | | | (.27 | ) |
| Net asset value, end of year | | | $14.07 | | | | $11.51 | | | | $11.34 | | | | $12.21 | | | | $11.28 | |
| Total Return(b) | | | 25.37 | % | | | 4.15 | % | | | (5.78 | )% | | | 9.31 | % | | | 32.86 | % |
| Ratios to Average Net Assets: | | | | | | | | | | | | | | | | | | | | |
| Expenses, excluding expense reductions and including management fee waived and expenses reimbursed | | | .77 | % | | | .77 | % | | | .77 | % | | | .82 | % | | | 1.19 | % |
| Expenses, including expense reductions, management fee waived and expenses reimbursed | | | .77 | % | | | .77 | % | | | .77 | % | | | .82 | % | | | 1.19 | % |
| Expenses, excluding expense reductions, management fee waived and expenses reimbursed | | | 1.03 | % | | | 1.12 | % | | | 1.07 | % | | | 1.08 | % | | | 1.19 | % |
| Net investment income | | | 1.77 | % | | | 2.48 | % | | | 2.06 | % | | | 1.34 | % | | | 1.34 | % |
| | | | | | | | | | | | | | | | | | | | | |
| Supplemental Data: | | | | | | | | | | | | | | | | | | | | |
| Net assets, end of year (000) | | | $155,754 | | | | $107,076 | | | | $222,808 | | | | $267,253 | | | | $167,574 | |
| Portfolio turnover rate | | | 80.77 | % | | | 81.50 | % | | | 83.78 | % | | | 98.73 | % | | | 132.22 | % |
| (a) | Calculated using average shares outstanding during the year. |
| (b) | Total return assumes the reinvestment of all distributions. |
| | See Notes to Financial Statements. | 99 |
Financial Highlights (continued)
INTERNATIONAL CORE EQUITY FUND
| | | Class P Shares |
| | | Year Ended 10/31 |
| | | 2013 | | | 2012 | | | 2011 | | | 2010 | | | 2009 | |
| Per Share Operating Performance | | | | | | | | | | | | | | | | | | | | |
| Net asset value, beginning of year | | | $11.39 | | | | $11.17 | | | | $12.04 | | | | $11.13 | | | | $8.63 | |
| Investment operations: | | | | | | | | | | | | | | | | | | | | |
| Net investment income(a) | | | .16 | | | | .27 | | | | .10 | | | | .10 | | | | .07 | |
| Net realized and unrealized gain (loss) | | | 2.63 | | | | .12 | | | | (.84 | ) | | | .88 | | | | 2.64 | |
| Total from investment operations | | | 2.79 | | | | .39 | | | | (.74 | ) | | | .98 | | | | 2.71 | |
| Distributions to shareholders from: | | | | | | | | | | | | | | | | | | | | |
| Net investment income | | | (.24 | ) | | | (.17 | ) | | | (.13 | ) | | | (.07 | ) | | | (.21 | ) |
| Net asset value, end of year | | | $13.94 | | | | $11.39 | | | | $11.17 | | | | $12.04 | | | | $11.13 | |
| Total Return(b) | | | 24.91 | % | | | 3.63 | % | | | (6.23 | )% | | | 8.84 | % | | | 32.29 | % |
| Ratios to Average Net Assets: | | | | | | | | | | | | | | | | | | | | |
| Expenses, excluding expense reductions and including management fee waived and expenses reimbursed | | | 1.22 | % | | | 1.22 | % | | | 1.22 | % | | | 1.29 | % | | | 1.64 | % |
| Expenses, including expense reductions, management fee waived and expenses reimbursed | | | 1.22 | % | | | 1.22 | % | | | 1.22 | % | | | 1.29 | % | | | 1.64 | % |
| Expenses, excluding expense reductions, management fee waived and expenses reimbursed | | | 1.48 | % | | | 1.58 | % | | | 1.51 | % | | | 1.54 | % | | | 1.64 | % |
| Net investment income | | | 1.30 | % | | | 2.45 | % | | | .83 | % | | | .92 | % | | | .78 | % |
| | | | | | | | | | | | | | | | | | | | | |
| Supplemental Data: | | | | | | | | | | | | | | | | | | | | |
| Net assets, end of year (000) | | | $278 | | | | $282 | | | | $470 | | | | $1,765 | | | | $1,825 | |
| Portfolio turnover rate | | | 80.77 | % | | | 81.50 | % | | | 83.78 | % | | | 98.73 | % | | | 132.22 | % |
| (a) | Calculated using average shares outstanding during the year. |
| (b) | Total return assumes the reinvestment of all distributions. |
| 100 | See Notes to Financial Statements. |
Financial Highlights (continued)
INTERNATIONAL CORE EQUITY FUND
| | | Class R2 Shares |
| | | Year Ended 10/31 |
| | | 2013 | | | 2012 | | | 2011 | | | 2010 | | | 2009 | |
| Per Share Operating Performance | | | | | | | | | | | | | | | | | | | | |
| Net asset value, beginning of year | | | $11.41 | | | | $11.24 | | | | $12.14 | | | | $11.20 | | | | $8.69 | |
| Investment operations: | | | | | | | | | | | | | | | | | | | | |
| Net investment income(a) | | | .15 | | | | .23 | | | | .18 | | | | .08 | | | | .12 | |
| Net realized and unrealized gain (loss) | | | 2.61 | | | | .14 | | | | (.95 | ) | | | .91 | | | | 2.65 | |
| Total from investment operations | | | 2.76 | | | | .37 | | | | (.77 | ) | | | .99 | | | | 2.77 | |
| Distributions to shareholders from: | | | | | | | | | | | | | | | | | | | | |
| Net investment income | | | (.25 | ) | | | (.20 | ) | | | (.13 | ) | | | (.05 | ) | | | (.26 | ) |
| Net asset value, end of year | | | $13.92 | | | | $11.41 | | | | $11.24 | | | | $12.14 | | | | $11.20 | |
| Total Return(b) | | | 24.65 | % | | | 3.51 | % | | | (6.38 | )% | | | 8.86 | % | | | 32.77 | % |
| Ratios to Average Net Assets: | | | | | | | | | | | | | | | | | | | | |
| Expenses, excluding expense reductions and including management fee waived and expenses reimbursed | | | 1.37 | % | | | 1.37 | % | | | 1.37 | % | | | 1.35 | % | | | 1.16 | % |
| Expenses, including expense reductions, management fee waived and expenses reimbursed | | | 1.37 | % | | | 1.37 | % | | | 1.37 | % | | | 1.35 | % | | | 1.16 | % |
| Expenses, excluding expense reductions, management fee waived and expenses reimbursed | | | 1.63 | % | | | 1.72 | % | | | 1.67 | % | | | 1.64 | % | | | 1.16 | % |
| Net investment income | | | 1.20 | % | | | 2.13 | % | | | 1.46 | % | | | .73 | % | | | 1.33 | % |
| | | | | | | | | | | | | | | | | | | | | |
| Supplemental Data: | | | | | | | | | | | | | | | | | | | | |
| Net assets, end of year (000) | | | $868 | | | | $568 | | | | $651 | | | | $570 | | | | $7 | |
| Portfolio turnover rate | | | 80.77 | % | | | 81.50 | % | | | 83.78 | % | | | 98.73 | % | | | 132.22 | % |
| (a) | Calculated using average shares outstanding during the year. |
| (b) | Total return assumes the reinvestment of all distributions. |
| | See Notes to Financial Statements. | 101 |
Financial Highlights (concluded)
INTERNATIONAL CORE EQUITY FUND
| | | Class R3 Shares |
| | | Year Ended 10/31 |
| | | 2013 | | | 2012 | | | 2011 | | | 2010 | | | 2009 | |
| Per Share Operating Performance | | | | | | | | | | | | | | | | | | | | |
| Net asset value, beginning of year | | | $11.28 | | | | $11.11 | | | | $12.00 | | | | $11.10 | | | | $8.65 | |
| Investment operations: | | | | | | | | | | | | | | | | | | | | |
| Net investment income(a) | | | .16 | | | | .26 | | | | .19 | | | | .11 | | | | .06 | |
| Net realized and unrealized gain (loss) | | | 2.59 | | | | .12 | | | | (.94 | ) | | | .87 | | | | 2.64 | |
| Total from investment operations | | | 2.75 | | | | .38 | | | | (.75 | ) | | | .98 | | | | 2.70 | |
| Distributions to shareholders from: | | | | | | | | | | | | | | | | | | | | |
| Net investment income | | | (.26 | ) | | | (.21 | ) | | | (.14 | ) | | | (.08 | ) | | | (.25 | ) |
| Net asset value, end of year | | | $13.77 | | | | $11.28 | | | | $11.11 | | | | $12.00 | | | | $11.10 | |
| Total Return(b) | | | 24.80 | % | | | 3.68 | % | | | (6.35 | )% | | | 8.89 | % | | | 32.23 | % |
| Ratios to Average Net Assets: | | | | | | | | | | | | | | | | | | | | |
| Expenses, excluding expense reductions and including management fee waived and expenses reimbursed | | | 1.26 | % | | | 1.26 | % | | | 1.26 | % | | | 1.28 | % | | | 1.68 | % |
| Expenses, including expense reductions, management fee waived and expenses reimbursed | | | 1.26 | % | | | 1.26 | % | | | 1.26 | % | | | 1.28 | % | | | 1.68 | % |
| Expenses, excluding expense reductions, management fee waived and expenses reimbursed | | | 1.52 | % | | | 1.61 | % | | | 1.57 | % | | | 1.57 | % | | | 1.68 | % |
| Net investment income | | | 1.27 | % | | | 2.36 | % | | | 1.54 | % | | | 1.02 | % | | | .65 | % |
| | | | | | | | | | | | | | | | | | | | | |
| Supplemental Data: | | | | | | | | | | | | | | | | | | | | |
| Net assets, end of year (000) | | | $19,739 | | | | $17,275 | | | | $12,725 | | | | $10,418 | | | | $1,439 | |
| Portfolio turnover rate | | | 80.77 | % | | | 81.50 | % | | | 83.78 | % | | | 98.73 | % | | | 132.22 | % |
| (a) | Calculated using average shares outstanding during the year. |
| (b) | Total return assumes the reinvestment of all distributions. |
| 102 | See Notes to Financial Statements. |
Financial Highlights
INTERNATIONAL DIVIDEND INCOME FUND
| | | Class A Shares |
| | | Year Ended 10/31 |
| | | 2013 | | | 2012 | | | 2011 | | | 2010 | | | 2009 | |
| Per Share Operating Performance | | | | | | | | | | | | | | | | | | | | |
| Net asset value, beginning of year | | | $7.80 | | | | $7.88 | | | | $8.64 | | | | $8.22 | | | | $6.29 | |
| Investment operations: | | | | | | | | | | | | | | | | | | | | |
| Net investment income(a) | | | .33 | | | | .35 | | | | .42 | | | | .34 | | | | .28 | |
| Net realized and unrealized gain (loss) | | | 1.31 | | | | (.08 | ) | | | (.78 | ) | | | .42 | | | | 1.90 | |
| Total from investment operations | | | 1.64 | | | | .27 | | | | (.36 | ) | | | .76 | | | | 2.18 | |
| Distributions to shareholders from: | | | | | | | | | | | | | | | | | | | | |
| Net investment income | | | (.33 | ) | | | (.35 | ) | | | (.40 | ) | | | (.34 | ) | | | (.25 | ) |
| Net asset value, end of year | | | $9.11 | | | | $7.80 | | | | $7.88 | | | | $8.64 | | | | $8.22 | |
| Total Return(b) | | | 21.54 | % | | | 3.60 | % | | | (4.42 | )% | | | 9.58 | % | | | 35.88 | % |
| Ratios to Average Net Assets: | | | | | | | | | | | | | | | | | | | | |
| Expenses, excluding expense reductions and including management fee waived and expenses reimbursed | | | 1.12 | % | | | 1.12 | % | | | 1.12 | % | | | 1.14 | % | | | 1.35 | % |
| Expenses, including expense reductions, management fee waived and expenses reimbursed | | | 1.12 | % | | | 1.12 | % | | | 1.12 | % | | | 1.14 | % | | | 1.35 | % |
| Expenses, excluding expense reductions, management fee waived and expenses reimbursed | | | 1.27 | % | | | 1.36 | % | | | 1.43 | % | | | 1.46 | % | | | 1.63 | % |
| Net investment income | | | 3.94 | % | | | 4.59 | % | | | 4.96 | % | | | 4.23 | % | | | 4.08 | % |
| | | | | | | | | | | | | | | | | | | | | |
| Supplemental Data: | | | | | | | | | | | | | | | | | | | | |
| Net assets, end of year (000) | | | $954,305 | | | | $618,824 | | | | $278,975 | | | | $162,611 | | | | $52,935 | |
| Portfolio turnover rate | | | 78.39 | % | | | 84.81 | % | | | 100.16 | % | | | 100.06 | % | | | 105.74 | % |
| (a) | Calculated using average shares outstanding during the year. |
| (b) | Total return does not consider the effects of sales loads and assumes the reinvestment of all distributions. |
| | See Notes to Financial Statements. | 103 |
Financial Highlights (continued)
INTERNATIONAL DIVIDEND INCOME FUND
| | | Class C Shares |
| | | Year Ended 10/31 |
| | | 2013 | | | 2012 | | | 2011 | | | 2010 | | | 2009 | |
| Per Share Operating Performance | | | | | | | | | | | | | | | | | | | | |
| Net asset value, beginning of year | | | $7.75 | | | | $7.84 | | | | $8.60 | | | | $8.19 | | | | $6.28 | |
| Investment operations: | | | | | | | | | | | | | | | | | | | | |
| Net investment income(a) | | | .28 | | | | .29 | | | | .36 | | | | .29 | | | | .21 | |
| Net realized and unrealized gain (loss) | | | 1.29 | | | | (.07 | ) | | | (.77 | ) | | | .41 | | | | 1.92 | |
| Total from investment operations | | | 1.57 | | | | .22 | | | | (.41 | ) | | | .70 | | | | 2.13 | |
| Distributions to shareholders from: | | | | | | | | | | | | | | | | | | | | |
| Net investment income | | | (.28 | ) | | | (.31 | ) | | | (.35 | ) | | | (.29 | ) | | | (.22 | ) |
| Net asset value, end of year | | | $9.04 | | | | $7.75 | | | | $7.84 | | | | $8.60 | | | | $8.19 | |
| Total Return(b) | | | 20.70 | % | | | 2.95 | % | | | (5.03 | )% | | | 8.99 | % | | | 34.87 | % |
| Ratios to Average Net Assets: | | | | | | | | | | | | | | | | | | | | |
| Expenses, excluding expense reductions and including management fee waived and expenses reimbursed | | | 1.77 | % | | | 1.76 | % | | | 1.76 | % | | | 1.79 | % | | | 1.98 | % |
| Expenses, including expense reductions, management fee waived and expenses reimbursed | | | 1.77 | % | | | 1.76 | % | | | 1.76 | % | | | 1.79 | % | | | 1.98 | % |
| Expenses, excluding expense reductions, management fee waived and expenses reimbursed | | | 1.92 | % | | | 2.01 | % | | | 2.07 | % | | | 2.10 | % | | | 2.26 | % |
| Net investment income | | | 3.33 | % | | | 3.88 | % | | | 4.29 | % | | | 3.61 | % | | | 2.93 | % |
| | | | | | | | | | | | | | | | | | | | | |
| Supplemental Data: | | | | | | | | | | | | | | | | | | | | |
| Net assets, end of year (000) | | | $143,807 | | | | $74,664 | | | | $22,329 | | | | $13,561 | | | | $4,376 | |
| Portfolio turnover rate | | | 78.39 | % | | | 84.81 | % | | | 100.16 | % | | | 100.06 | % | | | 105.74 | % |
| (a) | Calculated using average shares outstanding during the year. |
| (b) | Total return does not consider the effects of sales loads and assumes the reinvestment of all distributions. |
| 104 | See Notes to Financial Statements. |
Financial Highlights (continued)
INTERNATIONAL DIVIDEND INCOME FUND
| | | Class F Shares |
| | | Year Ended 10/31 |
| | | 2013 | | | 2012 | | | 2011 | | | 2010 | | | 2009 | |
| Per Share Operating Performance | | | | | | | | | | | | | | | | | | | | |
| Net asset value, beginning of year | | | $7.81 | | | | $7.89 | | | | $8.65 | | | | $8.23 | | | | $6.29 | |
| Investment operations: | | | | | | | | | | | | | | | | | | | | |
| Net investment income(a) | | | .36 | | | | .37 | | | | .45 | | | | .39 | | | | .18 | |
| Net realized and unrealized gain (loss) | | | 1.30 | | | | (.08 | ) | | | (.79 | ) | | | .39 | | | | 2.02 | |
| Total from investment operations | | | 1.66 | | | | .29 | | | | (.34 | ) | | | .78 | | | | 2.20 | |
| Distributions to shareholders from: | | | | | | | | | | | | | | | | | | | | |
| Net investment income | | | (.35 | ) | | | (.37 | ) | | | (.42 | ) | | | (.36 | ) | | | (.26 | ) |
| Net asset value, end of year | | | $9.12 | | | | $7.81 | | | | $7.89 | | | | $8.65 | | | | $8.23 | |
| Total Return(b) | | | 21.80 | % | | | 3.83 | % | | | (4.18 | )% | | | 9.95 | % | | | 36.13 | % |
| Ratios to Average Net Assets: | | | | | | | | | | | | | | | | | | | | |
| Expenses, excluding expense reductions and including management fee waived and expenses reimbursed | | | .87 | % | | | .87 | % | | | .87 | % | | | .88 | % | | | 1.07 | % |
| Expenses, including expense reductions, management fee waived and expenses reimbursed | | | .87 | % | | | .87 | % | | | .87 | % | | | .88 | % | | | 1.07 | % |
| Expenses, excluding expense reductions, management fee waived and expenses reimbursed | | | 1.02 | % | | | 1.11 | % | | | 1.18 | % | | | 1.21 | % | | | 1.39 | % |
| Net investment income | | | 4.23 | % | | | 4.79 | % | | | 5.27 | % | | | 4.78 | % | | | 2.32 | % |
| | | | | | | | | | | | | | | | | | | | | |
| Supplemental Data: | | | | | | | | | | | | | | | | | | | | |
| Net assets, end of year (000) | | | $228,586 | | | | $128,360 | | | | $26,892 | | | | $12,745 | | | | $1,772 | |
| Portfolio turnover rate | | | 78.39 | % | | | 84.81 | % | | | 100.16 | % | | | 100.06 | % | | | 105.74 | % |
| (a) | Calculated using average shares outstanding during the year. |
| (b) | Total return assumes the reinvestment of all distributions. |
| | See Notes to Financial Statements. | 105 |
Financial Highlights (continued)
INTERNATIONAL DIVIDEND INCOME FUND
| | | Class I Shares |
| | | Year Ended 10/31 |
| | | 2013 | | | 2012 | | | 2011 | | | 2010 | | | 2009 | |
| Per Share Operating Performance | | | | | | | | | | | | | | | | | | | | |
| Net asset value, beginning of year | | | $7.83 | | | | $7.91 | | | | $8.66 | | | | $8.24 | | | | $6.29 | |
| Investment operations: | | | | | | | | | | | | | | | | | | | | |
| Net investment income(a) | | | .36 | | | | .38 | | | | .43 | | | | .37 | | | | .29 | |
| Net realized and unrealized gain (loss) | | | 1.31 | | | | (.09 | ) | | | (.75 | ) | | | .41 | | | | 1.93 | |
| Total from investment operations | | | 1.67 | | | | .29 | | | | (.32 | ) | | | .78 | | | | 2.22 | |
| Distributions to shareholders from: | | | | | | | | | | | | | | | | | | | | |
| Net investment income | | | (.36 | ) | | | (.37 | ) | | | (.43 | ) | | | (.36 | ) | | | (.27 | ) |
| Net asset value, end of year | | | $9.14 | | | | $7.83 | | | | $7.91 | | | | $8.66 | | | | $8.24 | |
| Total Return(b) | | | 21.86 | % | | | 3.91 | % | | | (3.97 | )% | | | 10.03 | % | | | 36.38 | % |
| Ratios to Average Net Assets: | | | | | | | | | | | | | | | | | | | | |
| Expenses, excluding expense reductions and including management fee waived and expenses reimbursed | | | .77 | % | | | .77 | % | | | .77 | % | | | .81 | % | | | .99 | % |
| Expenses, including expense reductions, management fee waived and expenses reimbursed | | | .77 | % | | | .77 | % | | | .77 | % | | | .81 | % | | | .99 | % |
| Expenses, excluding expense reductions, management fee waived and expenses reimbursed | | | .92 | % | | | 1.01 | % | | | 1.09 | % | | | 1.10 | % | | | 1.28 | % |
| Net investment income | | | 4.28 | % | | | 5.00 | % | | | 5.06 | % | | | 4.53 | % | | | 4.13 | % |
| | | | | | | | | | | | | | | | | | | | | |
| Supplemental Data: | | | | | | | | | | | | | | | | | | | | |
| Net assets, end of year (000) | | | $1,005,558 | | | | $893,066 | | | | $559,879 | | | | $265,348 | | | | $225,668 | |
| Portfolio turnover rate | | | 78.39 | % | | | 84.81 | % | | | 100.16 | % | | | 100.06 | % | | | 105.74 | % |
| (a) | Calculated using average shares outstanding during the year. |
| (b) | Total return assumes the reinvestment of all distributions. |
| 106 | See Notes to Financial Statements. |
Financial Highlights (continued)
INTERNATIONAL DIVIDEND INCOME FUND
| | | Class R2 Shares |
| | | Year Ended 10/31 |
| | | 2013 | | | 2012 | | | 2011 | | | 2010 | | | 2009 | |
| Per Share Operating Performance | | | | | | | | | | | | | | | | | | | | |
| Net asset value, beginning of year | | | $7.94 | | | | $8.03 | | | | $8.76 | | | | $8.29 | | | | $6.30 | |
| Investment operations: | | | | | | | | | | | | | | | | | | | | |
| Net investment income(a) | | | .32 | | | | .33 | | | | .45 | | | | .37 | | | | .31 | |
| Net realized and unrealized gain (loss) | | | 1.32 | | | | (.08 | ) | | | (.79 | ) | | | .42 | | | | 1.91 | |
| Total from investment operations | | | 1.64 | | | | .25 | | | | (.34 | ) | | | .79 | | | | 2.22 | |
| Distributions to shareholders from: | | | | | | | | | | | | | | | | | | | | |
| Net investment income | | | (.31 | ) | | | (.34 | ) | | | (.39 | ) | | | (.32 | ) | | | (.23 | ) |
| Net asset value, end of year | | | $9.27 | | | | $7.94 | | | | $8.03 | | | | $8.76 | | | | $8.29 | |
| Total Return(b) | | | 21.13 | % | | | 3.32 | % | | | (4.15 | )% | | | 9.96 | % | | | 36.26 | % |
| Ratios to Average Net Assets: | | | | | | | | | | | | | | | | | | | | |
| Expenses, excluding expense reductions and including management fee waived and expenses reimbursed | | | 1.37 | % | | | 1.34 | % | | | .91 | % | | | .84 | % | | | .96 | % |
| Expenses, including expense reductions, management fee waived and expenses reimbursed | | | 1.37 | % | | | 1.34 | % | | | .91 | % | | | .84 | % | | | .96 | % |
| Expenses, excluding expense reductions, management fee waived and expenses reimbursed | | | 1.52 | % | | | 1.60 | % | | | 1.22 | % | | | 1.13 | % | | | 1.27 | % |
| Net investment income | | | 3.73 | % | | | 4.24 | % | | | 5.15 | % | | | 4.45 | % | | | 4.63 | % |
| | | | | | | | | | | | | | | | | | | | | |
| Supplemental Data: | | | | | | | | | | | | | | | | | | | | |
| Net assets, end of year (000) | | | $860 | | | | $464 | | | | $16 | | | | $10 | | | | $9 | |
| Portfolio turnover rate | | | 78.39 | % | | | 84.81 | % | | | 100.16 | % | | | 100.06 | % | | | 105.74 | % |
| (a) | Calculated using average shares outstanding during the year. |
| (b) | Total return assumes the reinvestment of all distributions. |
| | See Notes to Financial Statements. | 107 |
Financial Highlights (concluded)
INTERNATIONAL DIVIDEND INCOME FUND
| | | Class R3 Shares |
| | | Year Ended 10/31 |
| | | 2013 | | | 2012 | | | 2011 | | | 2010 | | | 2009 | |
| Per Share Operating Performance | | | | | | | | | | | | | | | | | | | | |
| Net asset value, beginning of year | | | $7.86 | | | | $7.94 | | | | $8.71 | | | | $8.28 | | | | $6.30 | |
| Investment operations: | | | | | | | | | | | | | | | | | | | | |
| Net investment income(a) | | | .35 | | | | .37 | | | | .41 | | | | .36 | | | | .31 | |
| Net realized and unrealized gain (loss) | | | 1.29 | | | | (.12 | ) | | | (.79 | ) | | | .40 | | | | 1.91 | |
| Total from investment operations | | | 1.64 | | | | .25 | | | | (.38 | ) | | | .76 | | | | 2.22 | |
| Distributions to shareholders from: | | | | | | | | | | | | | | | | | | | | |
| Net investment income | | | (.32 | ) | | | (.33 | ) | | | (.39 | ) | | | (.33 | ) | | | (.24 | ) |
| Net asset value, end of year | | | $9.18 | | | | $7.86 | | | | $7.94 | | | | $8.71 | | | | $8.28 | |
| Total Return(b) | | | 21.30 | % | | | 3.39 | % | | | (4.61 | )% | | | 9.62 | % | | | 36.22 | % |
| Ratios to Average Net Assets: | | | | | | | | | | | | | | | | | | | | |
| Expenses, excluding expense reductions and including management fee waived and expenses reimbursed | | | 1.27 | % | | | 1.27 | % | | | 1.26 | % | | | 1.24 | % | | | .96 | % |
| Expenses, including expense reductions, management fee waived and expenses reimbursed | | | 1.27 | % | | | 1.27 | % | | | 1.26 | % | | | 1.24 | % | | | .96 | % |
| Expenses, excluding expense reductions, management fee waived and expenses reimbursed | | | 1.42 | % | | | 1.50 | % | | | 1.59 | % | | | 1.58 | % | | | 1.27 | % |
| Net investment income | | | 4.11 | % | | | 4.80 | % | | | 4.80 | % | | | 4.40 | % | | | 4.62 | % |
| | | | | | | | | | | | | | | | | | | | | |
| Supplemental Data: | | | | | | | | | | | | | | | | | | | | |
| Net assets, end of year (000) | | | $5,200 | | | | $33,065 | | | | $331 | | | | $111 | | | | $9 | |
| Portfolio turnover rate | | | 78.39 | % | | | 84.81 | % | | | 100.16 | % | | | 100.06 | % | | | 105.74 | % |
| (a) | Calculated using average shares outstanding during the year. |
| (b) | Total return assumes the reinvestment of all distributions. |
| 108 | See Notes to Financial Statements. |
Financial Highlights
INTERNATIONAL OPPORTUNITIES FUND
| | | Class A Shares |
| | | Year Ended 10/31 |
| | | 2013 | | | 2012 | | | 2011 | | | 2010 | | | 2009 | |
| Per Share Operating Performance | | | | | | | | | | | | | | | | | | | | |
| Net asset value, beginning of year | | | $13.17 | | | | $12.00 | | | | $12.87 | | | | $10.70 | | | | $7.29 | |
| Investment operations: | | | | | | | | | | | | | | | | | | | | |
| Net investment income(a) | | | .10 | | | | .15 | | | | .10 | | | | .06 | | | | .04 | |
| Net realized and unrealized gain (loss) | | | 3.82 | | | | 1.10 | | | | (.92 | ) | | | 2.20 | | | | 3.42 | |
| Total from investment operations | | | 3.92 | | | | 1.25 | | | | (.82 | ) | | | 2.26 | | | | 3.46 | |
| Distributions to shareholders from: | | | | | | | | | | | | | | | | | | | | |
| Net investment income | | | (.26 | ) | | | (.08 | ) | | | (.05 | ) | | | (.09 | ) | | | (.05 | ) |
| Net asset value, end of year | | | $16.83 | | | | $13.17 | | | | $12.00 | | | | $12.87 | | | | $10.70 | |
| Total Return(b) | | | 30.26 | % | | | 10.59 | % | | | (6.39 | )% | | | 21.21 | % | | | 47.94 | % |
| Ratios to Average Net Assets: | | | | | | | | | | | | | | | | | | | | |
| Expenses, including expense reductions | | | 1.47 | % | | | 1.52 | % | | | 1.49 | % | | | 1.54 | % | | | 1.77 | % |
| Expenses, excluding expense reductions | | | 1.47 | % | | | 1.52 | % | | | 1.49 | % | | | 1.54 | % | | | 1.77 | % |
| Net investment income | | | .66 | % | | | 1.20 | % | | | .79 | % | | | .54 | % | | | .50 | % |
| | | | | | | | | | | | | | | | | | | | | |
| Supplemental Data: | | | | | | | | | | | | | | | | | | | | |
| Net assets, end of year (000) | | | $99,530 | | | | $76,139 | | | | $83,729 | | | | $98,272 | | | | $92,188 | |
| Portfolio turnover rate | | | 99.98 | % | | | 91.18 | % | | | 103.98 | % | | | 83.13 | % | | | 115.58 | % |
| (a) | Calculated using average shares outstanding during the year. |
| (b) | Total return does not consider the effects of sales loads and assumes the reinvestment of all distributions. |
| | See Notes to Financial Statements. | 109 |
Financial Highlights (continued)
INTERNATIONAL OPPORTUNITIES FUND
| | | Class B Shares |
| | | Year Ended 10/31 |
| | | 2013 | | | 2012 | | | 2011 | | | 2010 | | | 2009 | |
| Per Share Operating Performance | | | | | | | | | | | | | | | | | | | | |
| Net asset value, beginning of year | | | $12.49 | | | | $11.36 | | | | $12.21 | | | | $10.17 | | | | $6.92 | |
| Investment operations: | | | | | | | | | | | | | | | | | | | | |
| Net investment income (loss)(a) | | | — | (b) | | | .06 | | | | .02 | | | | (.01 | ) | | | (.01 | ) |
| Net realized and unrealized gain (loss) | | | 3.63 | | | | 1.07 | | | | (.87 | ) | | | 2.08 | | | | 3.26 | |
| Total from investment operations | | | 3.63 | | | | 1.13 | | | | (.85 | ) | | | 2.07 | | | | 3.25 | |
| Distributions to shareholders from: | | | | | | | | | | | | | | | | | | | | |
| Net investment income | | | (.16 | ) | | | — | | | | — | | | | (.03 | ) | | | — | |
| Net asset value, end of year | | | $15.96 | | | | $12.49 | | | | $11.36 | | | | $12.21 | | | | $10.17 | |
| Total Return(c) | | | 29.39 | % | | | 9.95 | % | | | (6.96 | )% | | | 20.35 | % | | | 46.97 | % |
| Ratios to Average Net Assets: | | | | | | | | | | | | | | | | | | | | |
| Expenses, including expense reductions | | | 2.12 | % | | | 2.16 | % | | | 2.13 | % | | | 2.19 | % | | | 2.42 | % |
| Expenses, excluding expense reductions | | | 2.12 | % | | | 2.16 | % | | | 2.13 | % | | | 2.19 | % | | | 2.42 | % |
| Net investment income (loss) | | | (.03 | )% | | | .52 | % | | | .12 | % | | | (.13 | )% | | | (.15 | )% |
| | | | | | | | | | | | | | | | | | | | | |
| Supplemental Data: | | | | | | | | | | | | | | | | | | | | |
| Net assets, end of year (000) | | | $6,357 | | | | $6,854 | | | | $9,439 | | | | $14,307 | | | | $17,103 | |
| Portfolio turnover rate | | | 99.98 | % | | | 91.18 | % | | | 103.98 | % | | | 83.13 | % | | | 115.58 | % |
| (a) | Calculated using average shares outstanding during the year. |
| (b) | Amount is less than $.01. |
| (c) | Total return does not consider the effects of sales loads and assumes the reinvestment of all distributions. |
| 110 | See Notes to Financial Statements. |
Financial Highlights (continued)
INTERNATIONAL OPPORTUNITIES FUND
| | | Class C Shares |
| | | Year Ended 10/31 |
| | | 2013 | | | 2012 | | | 2011 | | | 2010 | | | 2009 | |
| Per Share Operating Performance | | | | | | | | | | | | | | | | | | | | |
| Net asset value, beginning of year | | | $12.41 | | | | $11.29 | | | | $12.14 | | | | $10.12 | | | | $6.88 | |
| Investment operations: | | | | | | | | | | | | | | | | | | | | |
| Net investment income (loss)(a) | | | — | (b) | | | .07 | | | | .02 | | | | (.01 | ) | | | (.01 | ) |
| Net realized and unrealized gain (loss) | | | 3.61 | | | | 1.06 | | | | (.87 | ) | | | 2.06 | | | | 3.25 | |
| Total from investment operations | | | 3.61 | | | | 1.13 | | | | (.85 | ) | | | 2.05 | | | | 3.24 | |
| Distributions to shareholders from: | | | | | | | | | | | | | | | | | | | | |
| Net investment income | | | (.18 | ) | | | (.01 | ) | | | — | | | | (.03 | ) | | | — | |
| Net asset value, end of year | | | $15.84 | | | | $12.41 | | | | $11.29 | | | | $12.14 | | | | $10.12 | |
| Total Return(c) | | | 29.43 | % | | | 10.00 | % | | | (7.00 | )% | | | 20.34 | % | | | 47.09 | % |
| Ratios to Average Net Assets: | | | | | | | | | | | | | | | | | | | | |
| Expenses, including expense reductions | | | 2.10 | % | | | 2.14 | % | | | 2.10 | % | | | 2.19 | % | | | 2.42 | % |
| Expenses, excluding expense reductions | | | 2.10 | % | | | 2.14 | % | | | 2.10 | % | | | 2.19 | % | | | 2.42 | % |
| Net investment income (loss) | | | .03 | % | | | .59 | % | | | .17 | % | | | (.13 | )% | | | (.14 | )% |
| | | | | | | | | | | | | | | | | | | | | |
| Supplemental Data: | | | | | | | | | | | | | | | | | | | | |
| Net assets, end of year (000) | | | $18,138 | | | | $13,953 | | | | $15,603 | | | | $19,969 | | | | $21,668 | |
| Portfolio turnover rate | | | 99.98 | % | | | 91.18 | % | | | 103.98 | % | | | 83.13 | % | | | 115.58 | % |
| (a) | Calculated using average shares outstanding during the year. |
| (b) | Amount is less than $0.01. |
| (c) | Total return does not consider the effects of sales loads and assumes the reinvestment of all distributions. |
| | See Notes to Financial Statements. | 111 |
Financial Highlights (continued)
INTERNATIONAL OPPORTUNITIES FUND
| | | Class F Shares |
| | | Year Ended 10/31 |
| | | 2013 | | | 2012 | | | 2011 | | | 2010 | | | 2009 | |
| Per Share Operating Performance | | | | | | | | | | | | | | | | | | | | |
| Net asset value, beginning of year | | | $13.09 | | | | $11.94 | | | | $12.81 | | | | $10.65 | | | | $7.28 | |
| Investment operations: | | | | | | | | | | | | | | | | | | | | |
| Net investment income(a) | | | .17 | | | | .18 | | | | .13 | | | | .10 | | | | .09 | |
| Net realized and unrealized gain (loss) | | | 3.76 | | | | 1.09 | | | | (.91 | ) | | | 2.17 | | | | 3.37 | |
| Total from investment operations | | | 3.93 | | | | 1.27 | | | | (.78 | ) | | | 2.27 | | | | 3.46 | |
| Distributions to shareholders from: | | | | | | | | | | | | | | | | | | | | |
| Net investment income | | | (.29 | ) | | | (.12 | ) | | | (.09 | ) | | | (.11 | ) | | | (.09 | ) |
| Net asset value, end of year | | | $16.73 | | | | $13.09 | | | | $11.94 | | | | $12.81 | | | | $10.65 | |
| Total Return(b) | | | 30.63 | % | | | 10.83 | % | | | (6.16 | )% | | | 21.47 | % | | | 48.36 | % |
| Ratios to Average Net Assets: | | | | | | | | | | | | | | | | | | | | |
| Expenses, including expense reductions | | | 1.22 | % | | | 1.27 | % | | | 1.24 | % | | | 1.28 | % | | | 1.49 | % |
| Expenses, excluding expense reductions | | | 1.22 | % | | | 1.27 | % | | | 1.24 | % | | | 1.28 | % | | | 1.49 | % |
| Net investment income | | | 1.13 | % | | | 1.47 | % | | | 1.00 | % | | | .88 | % | | | 1.00 | % |
| | | | | | | | | | | | | | | | | | | | | |
| Supplemental Data: | | | | | | | | | | | | | | | | | | | | |
| Net assets, end of year (000) | | | $18,046 | | | | $944 | | | | $934 | | | | $934 | | | | $384 | |
| Portfolio turnover rate | | | 99.98 | % | | | 91.18 | % | | | 103.98 | % | | | 83.13 | % | | | 115.58 | % |
| (a) | Calculated using average shares outstanding during the year. |
| (b) | Total return assumes the reinvestment of all distributions. |
| 112 | See Notes to Financial Statements. |
Financial Highlights (continued)
INTERNATIONAL OPPORTUNITIES FUND
| | | Class I Shares |
| | | Year Ended 10/31 |
| | | 2013 | | | 2012 | | | 2011 | | | 2010 | | | 2009 | |
| Per Share Operating Performance | | | | | | | | | | | | | | | | | | | | |
| Net asset value, beginning of year | | | $13.49 | | | | $12.30 | | | | $13.18 | | | | $10.96 | | | | $7.48 | |
| Investment operations: | | | | | | | | | | | | | | | | | | | | |
| Net investment income(a) | | | .15 | | | | .19 | | | | .16 | | | | .11 | | | | .08 | |
| Net realized and unrealized gain (loss) | | | 3.91 | | | | 1.13 | | | | (.95 | ) | | | 2.23 | | | | 3.50 | |
| Total from investment operations | | | 4.06 | | | | 1.32 | | | | (.79 | ) | | | 2.34 | | | | 3.58 | |
| Distributions to shareholders from: | | | | | | | | | | | | | | | | | | | | |
| Net investment income | | | (.30 | ) | | | (.13 | ) | | | (.09 | ) | | | (.12 | ) | | | (.10 | ) |
| Net asset value, end of year | | | $17.25 | | | | $13.49 | | | | $12.30 | | | | $13.18 | | | | $10.96 | |
| Total Return(b) | | | 30.74 | % | | | 10.96 | % | | | (6.01 | )% | | | 21.50 | % | | | 48.47 | % |
| Ratios to Average Net Assets: | | | | | | | | | | | | | | | | | | | | |
| Expenses, including expense reductions | | | 1.12 | % | | | 1.17 | % | | | 1.14 | % | | | 1.18 | % | | | 1.42 | % |
| Expenses, excluding expense reductions | | | 1.12 | % | | | 1.17 | % | | | 1.14 | % | | | 1.18 | % | | | 1.42 | % |
| Net investment income | | | .99 | % | | | 1.54 | % | | | 1.17 | % | | | .93 | % | | | .87 | % |
| | | | | | | | | | | | | | | | | | | | | |
| Supplemental Data: | | | | | | | | | | | | | | | | | | | | |
| Net assets, end of year (000) | | | $259,952 | | | | $195,785 | | | | $213,865 | | | | $232,027 | | | | $160,456 | |
| Portfolio turnover rate | | | 99.98 | % | | | 91.18 | % | | | 103.98 | % | | | 83.13 | % | | | 115.58 | % |
| (a) | Calculated using average shares outstanding during the year. |
| (b) | Total return assumes the reinvestment of all distributions. |
| | See Notes to Financial Statements. | 113 |
Financial Highlights (continued)
INTERNATIONAL OPPORTUNITIES FUND
| | | Class P Shares |
| | | Year Ended 10/31 |
| | | 2013 | | | 2012 | | | 2011 | | | 2010 | | | 2009 | |
| Per Share Operating Performance | | | | | | | | | | | | | | | | | | | | |
| Net asset value, beginning of year | | | $13.36 | | | | $12.17 | | | | $13.06 | | | | $10.86 | | | | $7.36 | |
| Investment operations: | | | | | | | | | | | | | | | | | | | | |
| Net investment income(a) | | | .09 | | | | .14 | | | | .09 | | | | .05 | | | | .03 | |
| Net realized and unrealized gain (loss) | | | 3.88 | | | | 1.12 | | | | (.94 | ) | | | 2.22 | | | | 3.48 | |
| Total from investment operations | | | 3.97 | | | | 1.26 | | | | (.85 | ) | | | 2.27 | | | | 3.51 | |
| Distributions to shareholders from: | | | | | | | | | | | | | | | | | | | | |
| Net investment income | | | (.25 | ) | | | (.07 | ) | | | (.04 | ) | | | (.07 | ) | | | (.01 | ) |
| Net asset value, end of year | | | $17.08 | | | | $13.36 | | | | $12.17 | | | | $13.06 | | | | $10.86 | |
| Total Return(b) | | | 30.19 | % | | | 10.49 | % | | | (6.51 | )% | | | 21.05 | % | | | 47.86 | % |
| Ratios to Average Net Assets: | | | | | | | | | | | | | | | | | | | | |
| Expenses, including expense reductions | | | 1.57 | % | | | 1.62 | % | | | 1.59 | % | | | 1.64 | % | | | 1.87 | % |
| Expenses, excluding expense reductions | | | 1.57 | % | | | 1.62 | % | | | 1.59 | % | | | 1.64 | % | | | 1.87 | % |
| Net investment income | | | .57 | % | | | 1.14 | % | | | .69 | % | | | .44 | % | | | .36 | % |
| | | | | | | | | | | | | | | | | | | | | |
| Supplemental Data: | | | | | | | | | | | | | | | | | | | | |
| Net assets, end of year (000) | | | $1,096 | | | | $929 | | | | $820 | | | | $900 | | | | $781 | |
| Portfolio turnover rate | | | 99.98 | % | | | 91.18 | % | | | 103.98 | % | | | 83.13 | % | | | 115.58 | % |
| (a) | Calculated using average shares outstanding during the year. |
| (b) | Total return assumes the reinvestment of all distributions. |
| 114 | See Notes to Financial Statements. |
Financial Highlights (continued)
INTERNATIONAL OPPORTUNITIES FUND
| | | Class R2 Shares |
| | | Year Ended 10/31 |
| | | 2013 | | | 2012 | | | 2011 | | | 2010 | | | 2009 | |
| Per Share Operating Performance | | | | | | | | | | | | | | | | | | | | |
| Net asset value, beginning of year | | | $13.07 | | | | $11.90 | | | | $12.77 | | | | $10.64 | | | | $7.24 | |
| Investment operations: | | | | | | | | | | | | | | | | | | | | |
| Net investment income(a) | | | .06 | | | | .11 | | | | .07 | | | | .03 | | | | .03 | |
| Net realized and unrealized gain (loss) | | | 3.79 | | | | 1.11 | | | | (.92 | ) | | | 2.18 | | | | 3.40 | |
| Total from investment operations | | | 3.85 | | | | 1.22 | | | | (.85 | ) | | | 2.21 | | | | 3.43 | |
| Distributions to shareholders from: | | | | | | | | | | | | | | | | | | | | |
| Net investment income | | | (.23 | ) | | | (.05 | ) | | | (.02 | ) | | | (.08 | ) | | | (.03 | ) |
| Net asset value, end of year | | | $16.69 | | | | $13.07 | | | | $11.90 | | | | $12.77 | | | | $10.64 | |
| Total Return(b) | | | 29.97 | % | | | 10.35 | % | | | (6.68 | )% | | | 20.90 | % | | | 47.69 | % |
| Ratios to Average Net Assets: | | | | | | | | | | | | | | | | | | | | |
| Expenses, including expense reductions | | | 1.72 | % | | | 1.76 | % | | | 1.74 | % | | | 1.79 | % | | | 1.97 | % |
| Expenses, excluding expense reductions | | | 1.72 | % | | | 1.76 | % | | | 1.74 | % | | | 1.79 | % | | | 1.97 | % |
| Net investment income | | | .40 | % | | | .90 | % | | | .56 | % | | | .31 | % | | | .34 | % |
| | | | | | | | | | | | | | | | | | | | | |
| Supplemental Data: | | | | | | | | | | | | | | | | | | | | |
| Net assets, end of year (000) | | | $201 | | | | $91 | | | | $95 | | | | $96 | | | | $91 | |
| Portfolio turnover rate | | | 99.98 | % | | | 91.18 | % | | | 103.98 | % | | | 83.13 | % | | | 115.58 | % |
| (a) | Calculated using average shares outstanding during the year. |
| (b) | Total return assumes the reinvestment of all distributions. |
| | See Notes to Financial Statements. | 115 |
Financial Highlights (concluded)
INTERNATIONAL OPPORTUNITIES FUND
| | | Class R3 Shares |
| | | Year Ended 10/31 |
| | | 2013 | | | 2012 | | | 2011 | | | 2010 | | | 2009 | |
| Per Share Operating Performance | | | | | | | | | | | | | | | | | | | | |
| Net asset value, beginning of year | | | $12.98 | | | | $11.84 | | | | $12.72 | | | | $10.60 | | | | $7.27 | |
| Investment operations: | | | | | | | | | | | | | | | | | | | | |
| Net investment income(a) | | | .06 | | | | .13 | | | | .10 | | | | .05 | | | | .01 | |
| Net realized and unrealized gain (loss) | | | 3.78 | | | | 1.09 | | | | (.92 | ) | | | 2.17 | | | | 3.41 | |
| Total from investment operations | | | 3.84 | | | | 1.22 | | | | (.82 | ) | | | 2.22 | | | | 3.42 | |
| Distributions to shareholders from: | | | | | | | | | | | | | | | | | | | | |
| Net investment income | | | (.25 | ) | | | (.08 | ) | | | (.06 | ) | | | (.10 | ) | | | (.09 | ) |
| Net asset value, end of year | | | $16.57 | | | | $12.98 | | | | $11.84 | | | | $12.72 | | | | $10.60 | |
| Total Return(b) | | | 30.14 | % | | | 10.49 | % | | | (6.51 | )% | | | 21.04 | % | | | 47.75 | % |
| Ratios to Average Net Assets: | | | | | | | | | | | | | | | | | | | | |
| Expenses, including expense reductions | | | 1.62 | % | | | 1.65 | % | | | 1.60 | % | | | 1.67 | % | | | 1.81 | % |
| Expenses, excluding expense reductions | | | 1.62 | % | | | 1.65 | % | | | 1.60 | % | | | 1.67 | % | | | 1.81 | % |
| Net investment income | | | .45 | % | | | 1.11 | % | | | .74 | % | | | .45 | % | | | .14 | % |
| | | | | | | | | | | | | | | | | | | | | |
| Supplemental Data: | | | | | | | | | | | | | | | | | | | | |
| Net assets, end of year (000) | | | $6,133 | | | | $6,212 | | | | $5,097 | | | | $3,016 | | | | $573 | |
| Portfolio turnover rate | | | 99.98 | % | | | 91.18 | % | | | 103.98 | % | | | 83.13 | % | | | 115.58 | % |
| (a) | Calculated using average shares outstanding during the year. |
| (b) | Total return assumes the reinvestment of all distributions. |
| 116 | See Notes to Financial Statements. |
Financial Highlights
VALUE OPPORTUNITIES FUND
| | | Class A Shares |
| | | Year Ended 10/31 |
| | | 2013 | | | 2012 | | | 2011 | | | 2010 | | | 2009 | |
| Per Share Operating Performance | | | | | | | | | | | | | | | | | | | | |
| Net asset value, beginning of year | | | $15.99 | | | | $15.16 | | | | $14.45 | | | | $11.65 | | | | $9.91 | |
| Investment operations: | | | | | | | | | | | | | | | | | | | | |
| Net investment loss(a) | | | — | (b) | | | (.03 | ) | | | (.05 | ) | | | (.03 | ) | | | (.04 | ) |
| Net realized and unrealized gain | | | 5.45 | | | | .92 | | | | .83 | | | | 2.83 | | | | 1.80 | |
| Total from investment operations | | | 5.45 | | | | .89 | | | | .78 | | | | 2.80 | | | | 1.76 | |
| Distributions to shareholders from: | | | | | | | | | | | | | | | | | | | | |
| Net investment income | | | — | | | | — | | | | — | | | | — | | | | (.02 | ) |
| Net realized gain | | | — | | | | (.06 | ) | | | (.07 | ) | | | — | | | | — | |
| Total distributions | | | — | | | | (.06 | ) | | | (.07 | ) | | | — | | | | (.02 | ) |
| Net asset value, end of year | | | $21.44 | | | | $15.99 | | | | $15.16 | | | | $14.45 | | | | $11.65 | |
| Total Return(c) | | | 34.08 | % | | | 5.89 | % | | | 5.45 | % | | | 24.03 | % | | | 17.81 | % |
| Ratios to Average Net Assets: | | | | | | | | | | | | | | | | | | | | |
| Expenses, excluding expense reductions and including management fee waived and expenses reimbursed | | | 1.28 | % | | | 1.31 | % | | | 1.31 | % | | | 1.34 | % | | | 1.35 | % |
| Expenses, including expense reductions, management fee waived and expenses reimbursed | | | 1.28 | % | | | 1.31 | % | | | 1.31 | % | | | 1.34 | % | | | 1.35 | % |
| Expenses, excluding expense reductions, management fee waived and expenses reimbursed | | | 1.28 | % | | | 1.31 | % | | | 1.31 | % | | | 1.34 | % | | | 1.46 | % |
| Net investment loss | | | (.01 | )% | | | (.19 | )% | | | (.29 | )% | | | (.19 | )% | | | (.34 | )% |
| | | | | | | | | | | | | | | | | | | | | |
| Supplemental Data: | | | | | | | | | | | | | | | | | | | | |
| Net assets, end of year (000) | | | $1,372,436 | | | | $870,567 | | | | $883,444 | | | | $582,806 | | | | $250,435 | |
| Portfolio turnover rate | | | 69.49 | %(d) | | | 58.84 | % | | | 56.87 | % | | | 69.83 | % | | | 77.87 | % |
| (a) | Calculated using average shares outstanding during the year. |
| (b) | Amount is less than $.01. |
| (c) | Total return does not consider the effects of sales loads and assumes the reinvestment of all distributions. |
| (d) | Excludes purchases and sales of securities in connection with the acquisition of Lord Abbett Small Cap Blend Fund on July 19, 2013. |
| | See Notes to Financial Statements. | 117 |
Financial Highlights (continued)
VALUE OPPORTUNITIES FUND
| | | Class B Shares |
| | | Year Ended 10/31 |
| | | 2013 | | | 2012 | | | 2011 | | | 2010 | | | 2009 | |
| Per Share Operating Performance | | | | | | | | | | | | | | | | | | | | |
| Net asset value, beginning of year | | | $15.32 | | | | $14.63 | | | | $14.03 | | | | $11.39 | | | | $9.74 | |
| Investment operations: | | | | | | | | | | | | | | | | | | | | |
| Net investment loss(a) | | | (.12 | ) | | | (.12 | ) | | | (.14 | ) | | | (.11 | ) | | | (.09 | ) |
| Net realized and unrealized gain | | | 5.22 | | | | .87 | | | | .81 | | | | 2.75 | | | | 1.74 | |
| Total from investment operations | | | 5.10 | | | | .75 | | | | .67 | | | | 2.64 | | | | 1.65 | |
| Distributions to shareholders from: | | | | | | | | | | | | | | | | | | | | |
| Net realized gain | | | — | | | | (.06 | ) | | | (.07 | ) | | | — | | | | — | |
| Net asset value, end of year | | | $20.42 | | | | $15.32 | | | | $14.63 | | | | $14.03 | | | | $11.39 | |
| Total Return(b) | | | 33.29 | % | | | 5.14 | % | | | 4.83 | % | | | 23.18 | % | | | 16.94 | % |
| Ratios to Average Net Assets: | | | | | | | | | | | | | | | | | | | | |
| Expenses, excluding expense reductions and including management fee waived and expenses reimbursed | | | 1.93 | % | | | 1.96 | % | | | 1.96 | % | | | 1.99 | % | | | 2.00 | % |
| Expenses, including expense reductions, management fee waived and expenses reimbursed | | | 1.93 | % | | | 1.96 | % | | | 1.96 | % | | | 1.99 | % | | | 2.00 | % |
| Expenses, excluding expense reductions, management fee waived and expenses reimbursed | | | 1.93 | % | | | 1.96 | % | | | 1.96 | % | | | 1.99 | % | | | 2.12 | % |
| Net investment loss | | | (.68 | )% | | | (.83 | )% | | | (.91 | )% | | | (.85 | )% | | | (.95 | )% |
| | | | | | | | | | | | | | | | | | | | | |
| Supplemental Data: | | | | | | | | | | | | | | | | | | | | |
| Net assets, end of year (000) | | | $24,911 | | | | $13,315 | | | | $15,700 | | | | $19,110 | | | | $18,739 | |
| Portfolio turnover rate | | | 69.49 | %(c) | | | 58.84 | % | | | 56.87 | % | | | 69.83 | % | | | 77.87 | % |
| (a) | Calculated using average shares outstanding during the year. |
| (b) | Total return does not consider the effects of sales loads and assumes the reinvestment of all distributions. |
| (c) | Excludes purchases and sales of securities in connection with the acquisition of Lord Abbett Small Cap Blend Fund on July 19, 2013. |
| 118 | See Notes to Financial Statements. |
Financial Highlights (continued)
VALUE OPPORTUNITIES FUND
| | | Class C Shares |
| | | Year Ended 10/31 |
| | | 2013 | | | 2012 | | | 2011 | | | 2010 | | | 2009 | |
| Per Share Operating Performance | | | | | | | | | | | | | | | | | | | | |
| Net asset value, beginning of year | | | $15.32 | | | | $14.62 | | | | $14.03 | | | | $11.39 | | | | $9.74 | |
| Investment operations: | | | | | | | | | | | | | | | | | | | | |
| Net investment loss(a) | | | (.12 | ) | | | (.13 | ) | | | (.14 | ) | | | (.11 | ) | | | (.10 | ) |
| Net realized and unrealized gain | | | 5.22 | | | | .89 | | | | .80 | | | | 2.75 | | | | 1.75 | |
| Total from investment operations | | | 5.10 | | | | .76 | | | | .66 | | | | 2.64 | | | | 1.65 | |
| Distributions to shareholders from: | | | | | | | | | | | | | | | | | | | | |
| Net realized gain | | | — | | | | (.06 | ) | | | (.07 | ) | | | — | | | | — | |
| Net asset value, end of year | | | $20.42 | | | | $15.32 | | | | $14.62 | | | | $14.03 | | | | $11.39 | |
| Total Return(b) | | | 33.29 | % | | | 5.21 | % | | | 4.76 | % | | | 23.18 | % | | | 17.06 | % |
| Ratios to Average Net Assets: | | | | | | | | | | | | | | | | | | | | |
| Expenses, excluding expense reductions and including management fee waived and expenses reimbursed | | | 1.93 | % | | | 1.96 | % | | | 1.96 | % | | | 1.99 | % | | | 2.00 | % |
| Expenses, including expense reductions, management fee waived and expenses reimbursed | | | 1.93 | % | | | 1.96 | % | | | 1.96 | % | | | 1.99 | % | | | 2.00 | % |
| Expenses, excluding expense reductions, management fee waived and expenses reimbursed | | | 1.93 | % | | | 1.96 | % | | | 1.96 | % | | | 1.99 | % | | | 2.11 | % |
| Net investment loss | | | (.66 | )% | | | (.83 | )% | | | (.95 | )% | | | (.83 | )% | | | (.97 | )% |
| | | | | | | | | | | | | | | | | | | | | |
| Supplemental Data: | | | | | | | | | | | | | | | | | | | | |
| Net assets, end of year (000) | | | $400,420 | | | | $248,357 | | | | $263,798 | | | | $147,193 | | | | $79,527 | |
| Portfolio turnover rate | | | 69.49 | %(c) | | | 58.84 | % | | | 56.87 | % | | | 69.83 | % | | | 77.87 | % |
| (a) | Calculated using average shares outstanding during the year. |
| (b) | Total return does not consider the effects of sales loads and assumes the reinvestment of all distributions. |
| (c) | Excludes purchases and sales of securities in connection with the acquisition of Lord Abbett Small Cap Blend Fund on July 19, 2013. |
| | See Notes to Financial Statements. | 119 |
Financial Highlights (continued)
VALUE OPPORTUNITIES FUND
| | | Class F Shares |
| | | Year Ended 10/31 |
| | | 2013 | | | 2012 | | | 2011 | | | 2010 | | | 2009 | |
| Per Share Operating Performance | | | | | | | | | | | | | | | | | | | | |
| Net asset value, beginning of year | | | $16.07 | | | | $15.20 | | | | $14.45 | | | | $11.62 | | | | $9.91 | |
| Investment operations: | | | | | | | | | | | | | | | | | | | | |
| Net investment income (loss)(a) | | | .05 | | | | .01 | | | | (.01 | ) | | | .01 | | | | (.02 | ) |
| Net realized and unrealized gain | | | 5.50 | | | | .92 | | | | .83 | | | | 2.82 | | | | 1.78 | |
| Total from investment operations | | | 5.55 | | | | .93 | | | | .82 | | | | 2.83 | | | | 1.76 | |
| Distributions to shareholders from: | | | | | | | | | | | | | | | | | | | | |
| Net investment income | | | — | | | | — | | | | — | | | | — | | | | (.05 | ) |
| Net realized gain | | | — | | | | (.06 | ) | | | (.07 | ) | | | — | | | | — | |
| Total distributions | | | — | | | | (.06 | ) | | | (.07 | ) | | | — | | | | (.05 | ) |
| Net asset value, end of year | | | $21.62 | | | | $16.07 | | | | $15.20 | | | | $14.45 | | | | $11.62 | |
| Total Return(b) | | | 34.54 | % | | | 6.13 | % | | | 5.73 | % | | | 24.25 | % | | | 18.12 | % |
| Ratios to Average Net Assets: | | | | | | | | | | | | | | | | | | | | |
| Expenses, excluding expense reductions and including management fee waived and expenses reimbursed | | | 1.03 | % | | | 1.06 | % | | | 1.07 | % | | | 1.10 | % | | | 1.09 | % |
| Expenses, including expense reductions, management fee waived and expenses reimbursed | | | 1.03 | % | | | 1.06 | % | | | 1.07 | % | | | 1.10 | % | | | 1.09 | % |
| Expenses, excluding expense reductions, management fee waived and expenses reimbursed | | | 1.03 | % | | | 1.06 | % | | | 1.07 | % | | | 1.10 | % | | | 1.20 | % |
| Net investment income (loss) | | | .26 | % | | | .06 | % | | | (.06 | )% | | | .07 | % | | | (.19 | )% |
| | | | | | | | | | | | | | | | | | | | | |
| Supplemental Data: | | | | | | | | | | | | | | | | | | | | |
| Net assets, end of year (000) | | | $456,370 | | | | $369,321 | | | | $385,086 | | | | $168,415 | | | | $51,757 | |
| Portfolio turnover rate | | | 69.49 | %(c) | | | 58.84 | % | | | 56.87 | % | | | 69.83 | % | | | 77.87 | % |
| (a) | Calculated using average shares outstanding during the year. |
| (b) | Total return assumes the reinvestment of all distributions. |
| (c) | Excludes purchases and sales of securities in connection with the acquisition of Lord Abbett Small Cap Blend Fund on July 19, 2013. |
| 120 | See Notes to Financial Statements. |
Financial Highlights (continued)
VALUE OPPORTUNITIES FUND
| | | Class I Shares |
| | | Year Ended 10/31 |
| | | 2013 | | | 2012 | | | 2011 | | | 2010 | | | 2009 | |
| Per Share Operating Performance | | | | | | | | | | | | | | | | | | | | |
| Net asset value, beginning of year | | | $16.23 | | | | $15.34 | | | | $14.57 | | | | $11.70 | | | | $9.98 | |
| Investment operations: | | | | | | | | | | | | | | | | | | | | |
| Net investment income(a) | | | .06 | | | | .02 | | | | .01 | | | | .02 | | | | — | (b) |
| Net realized and unrealized gain | | | 5.56 | | | | .93 | | | | .83 | | | | 2.85 | | | | 1.78 | |
| Total from investment operations | | | 5.62 | | | | .95 | | | | .84 | | | | 2.87 | | | | 1.78 | |
| Distributions to shareholders from: | | | | | | | | | | | | | | | | | | | | |
| Net investment income | | | — | | | | — | | | | — | | | | — | | | | (.06 | ) |
| Net realized gain | | | — | | | | (.06 | ) | | | (.07 | ) | | | — | | | | — | |
| Total distributions | | | — | | | | (.06 | ) | | | (.07 | ) | | | — | | | | (.06 | ) |
| Net asset value, end of year | | | $21.85 | | | | $16.23 | | | | $15.34 | | | | $14.57 | | | | $11.70 | |
| Total Return(c) | | | 34.63 | % | | | 6.21 | % | | | 5.82 | % | | | 24.42 | % | | | 18.27 | % |
| Ratios to Average Net Assets: | | | | | | | | | | | | | | | | | | | | |
| Expenses, excluding expense reductions and including management fee waived and expenses reimbursed | | | .93 | % | | | .97 | % | | | .97 | % | | | .99 | % | | | 1.00 | % |
| Expenses, including expense reductions, management fee waived and expenses reimbursed | | | .93 | % | | | .97 | % | | | .97 | % | | | .99 | % | | | 1.00 | % |
| Expenses, excluding expense reductions, management fee waived and expenses reimbursed | | | .93 | % | | | .97 | % | | | .97 | % | | | .99 | % | | | 1.12 | % |
| Net investment income | | | .33 | % | | | .15 | % | | | .06 | % | | | .16 | % | | | .03 | % |
| | | | | | | | | | | | | | | | | | | | | |
| Supplemental Data: | | | | | | | | | | | | | | | | | | | | |
| Net assets, end of year (000) | | | $675,593 | | | | $411,546 | | | | $291,056 | | | | $190,103 | | | | $121,462 | |
| Portfolio turnover rate | | | 69.49 | %(d) | | | 58.84 | % | | | 56.87 | % | | | 69.83 | % | | | 77.87 | % |
| (a) | Calculated using average shares outstanding during the year. |
| (b) | Amount is less than $.01. |
| (c) | Total return assumes the reinvestment of all distributions. |
| (d) | Excludes purchases and sales of securities in connection with the acquisition of Lord Abbett Small Cap Blend Fund on July 19, 2013. |
| | See Notes to Financial Statements. | 121 |
Financial Highlights (continued)
VALUE OPPORTUNITIES FUND
| | | Class P Shares |
| | | Year Ended 10/31 |
| | | 2013 | | | 2012 | | | 2011 | | | 2010 | | | 2009 | |
| Per Share Operating Performance | | | | | | | | | | | | | | | | | | | | |
| Net asset value, beginning of year | | | $15.90 | | | | $15.09 | | | | $14.40 | | | | $11.62 | | | | $9.88 | |
| Investment operations: | | | | | | | | | | | | | | | | | | | | |
| Net investment loss(a) | | | (.07 | ) | | | (.04 | ) | | | (.05 | ) | | | (.04 | ) | | | (.04 | ) |
| Net realized and unrealized gain | | | 5.49 | | | | .91 | | | | .81 | | | | 2.82 | | | | 1.78 | |
| Total from investment operations | | | 5.42 | | | | .87 | | | | .76 | | | | 2.78 | | | | 1.74 | |
| Distributions to shareholders from: | | | | | | | | | | | | | | | | | | | | |
| Net realized gain | | | — | | | | (.06 | ) | | | (.07 | ) | | | — | | | | — | |
| Net asset value, end of year | | | $21.32 | | | | $15.90 | | | | $15.09 | | | | $14.40 | | | | $11.62 | |
| Total Return(b) | | | 34.09 | % | | | 5.78 | % | | | 5.33 | % | | | 23.92 | % | | | 17.61 | % |
| Ratios to Average Net Assets: | | | | | | | | | | | | | | | | | | | | |
| Expenses, excluding expense reductions and including management fee waived and expenses reimbursed | | | 1.37 | % | | | 1.41 | % | | | 1.41 | % | | | 1.44 | % | | | 1.45 | % |
| Expenses, including expense reductions, management fee waived and expenses reimbursed | | | 1.37 | % | | | 1.41 | % | | | 1.41 | % | | | 1.44 | % | | | 1.45 | % |
| Expenses, excluding expense reductions, management fee waived and expenses reimbursed | | | 1.37 | % | | | 1.41 | % | | | 1.41 | % | | | 1.44 | % | | | 1.57 | % |
| Net investment loss | | | (.34 | )% | | | (.24 | )% | | | (.35 | )% | | | (.29 | )% | | | (.39 | )% |
| | | | | | | | | | | | | | | | | | | | | |
| Supplemental Data: | | | | | | | | | | | | | | | | | | | | |
| Net assets, end of year (000) | | | $54,081 | | | | $918 | | | | $3,392 | | | | $4,344 | | | | $3,445 | |
| Portfolio turnover rate | | | 69.49 | %(c) | | | 58.84 | % | | | 56.87 | % | | | 69.83 | % | | | 77.87 | % |
| (a) | Calculated using average shares outstanding during the year. |
| (b) | Total return assumes the reinvestment of all distributions. |
| (c) | Excludes purchases and sales of securities in connection with the acquisition of Lord Abbett Small Cap Blend Fund on July 19, 2013. |
| 122 | See Notes to Financial Statements. |
Financial Highlights (continued)
VALUE OPPORTUNITIES FUND
| | | Class R2 Shares |
| | | Year Ended 10/31 |
| | | 2013 | | | 2012 | | | 2011 | | | 2010 | | | 2009 | |
| Per Share Operating Performance | | | | | | | | | | | | | | | | | | | | |
| Net asset value, beginning of year | | | $15.79 | | | | $15.01 | | | | $14.34 | | | | $11.59 | | | | $9.87 | |
| Investment operations: | | | | | | | | | | | | | | | | | | | | |
| Net investment loss(a) | | | (.04 | ) | | | (.07 | ) | | | (.09 | ) | | | (.06 | ) | | | (.09 | ) |
| Net realized and unrealized gain | | | 5.38 | | | | .91 | | | | .83 | | | | 2.81 | | | | 1.81 | |
| Total from investment operations | | | 5.34 | | | | .84 | | | | .74 | | | | 2.75 | | | | 1.72 | |
| Distributions to shareholders from: | | | | | | | | | | | | | | | | | | | | |
| Net realized gain | | | — | | | | (.06 | ) | | | (.07 | ) | | | — | | | | — | |
| Net asset value, end of year | | | $21.13 | | | | $15.79 | | | | $15.01 | | | | $14.34 | | | | $11.59 | |
| Total Return(b) | | | 33.82 | % | | | 5.61 | % | | | 5.21 | % | | | 23.62 | % | | | 17.53 | % |
| Ratios to Average Net Assets: | | | | | | | | | | | | | | | | | | | | |
| Expenses, excluding expense reductions and including management fee waived and expenses reimbursed | | | 1.53 | % | | | 1.56 | % | | | 1.57 | % | | | 1.60 | % | | | 1.59 | % |
| Expenses, including expense reductions, management fee waived and expenses reimbursed | | | 1.53 | % | | | 1.56 | % | | | 1.57 | % | | | 1.60 | % | | | 1.59 | % |
| Expenses, excluding expense reductions, management fee waived and expenses reimbursed | | | 1.53 | % | | | 1.56 | % | | | 1.57 | % | | | 1.60 | % | | | 1.68 | % |
| Net investment loss | | | (.24 | )% | | | (.44 | )% | | | (.58 | )% | | | (.42 | )% | | | (.83 | )% |
| | | | | | | | | | | | | | | | | | | | | |
| Supplemental Data: | | | | | | | | | | | | | | | | | | | | |
| Net assets, end of year (000) | | | $13,922 | | | | $11,056 | | | | $8,804 | | | | $2,538 | | | | $1,466 | |
| Portfolio turnover rate | | | 69.49 | %(c) | | | 58.84 | % | | | 56.87 | % | | | 69.83 | % | | | 77.87 | % |
| (a) | Calculated using average shares outstanding during the year. |
| (b) | Total return assumes the reinvestment of all distributions. |
| (c) | Excludes purchases and sales of securities in connection with the acquisition of Lord Abbett Small Cap Blend Fund on July 19, 2013. |
| | See Notes to Financial Statements. | 123 |
Financial Highlights (concluded)
VALUE OPPORTUNITIES FUND
| | | Class R3 Shares |
| | | Year Ended 10/31 |
| | | 2013 | | | 2012 | | | 2011 | | | 2010 | | | 2009 | |
| Per Share Operating Performance | | | | | | | | | | | | | | | | | | | | |
| Net asset value, beginning of year | | | $15.83 | | | | $15.03 | | | | $14.34 | | | | $11.58 | | | | $9.87 | |
| Investment operations: | | | | | | | | | | | | | | | | | | | | |
| Net investment loss(a) | | | (.03 | ) | | | (.05 | ) | | | (.07 | ) | | | (.04 | ) | | | (.05 | ) |
| Net realized and unrealized gain | | | 5.40 | | | | .91 | | | | .83 | | | | 2.80 | | | | 1.78 | |
| Total from investment operations | | | 5.37 | | | | .86 | | | | .76 | | | | 2.76 | | | | 1.73 | |
| Distributions to shareholders from: | | | | | | | | | | | | | | | | | | | | |
| Net investment income | | | — | | | | — | | | | — | | | | — | | | | (.02 | ) |
| Net realized gain | | | — | | | | (.06 | ) | | | (.07 | ) | | | — | | | | — | |
| Total distributions | | | — | | | | (.06 | ) | | | (.07 | ) | | | — | | | | (.02 | ) |
| Net asset value, end of year | | | $21.20 | | | | $15.83 | | | | $15.03 | | | | $14.34 | | | | $11.58 | |
| Total Return(b) | | | 33.92 | % | | | 5.74 | % | | | 5.35 | % | | | 23.73 | % | | | 17.69 | % |
| Ratios to Average Net Assets: | | | | | | | | | | | | | | | | | | | | |
| Expenses, excluding expense reductions and including management fee waived and expenses reimbursed | | | 1.43 | % | | | 1.46 | % | | | 1.47 | % | | | 1.49 | % | | | 1.49 | % |
| Expenses, including expense reductions, management fee waived and expenses reimbursed | | | 1.43 | % | | | 1.46 | % | | | 1.47 | % | | | 1.49 | % | | | 1.49 | % |
| Expenses, excluding expense reductions, management fee waived and expenses reimbursed | | | 1.43 | % | | | 1.46 | % | | | 1.47 | % | | | 1.50 | % | | | 1.61 | % |
| Net investment loss | | | (.17 | )% | | | (.35 | )% | | | (.47 | )% | | | (.31 | )% | | | (.50 | )% |
| | | | | | | | | | | | | | | | | | | | | |
| Supplemental Data: | | | | | | | | | | | | | | | | | | | | |
| Net assets, end of year (000) | | | $130,597 | | | | $86,441 | | | | $64,504 | | | | $20,456 | | | | $4,227 | |
| Portfolio turnover rate | | | 69.49 | %(c) | | | 58.84 | % | | | 56.87 | % | | | 69.83 | % | | | 77.87 | % |
| (a) | Calculated using average shares outstanding during the year. |
| (b) | Total return assumes the reinvestment of all distributions. |
| (c) | Excludes purchases and sales of securities in connection with the acquisition of Lord Abbett Small Cap Blend Fund on July 19, 2013. |
| 124 | See Notes to Financial Statements. |
Notes to Financial Statements
Lord Abbett Securities Trust (the “Trust”) is registered under the Investment Company Act of 1940, as amended (the “Act”), as a diversified, open-end management investment company and was organized as a Delaware statutory trust on February 26, 1993.
The Trust currently consists of nine funds. This report covers the following seven funds (separately, a “Fund” and collectively, the “Funds”) and their respective classes:
| Funds | | Classes |
| Lord Abbett Alpha Strategy Fund (“Alpha Strategy Fund”) | | A, B, C, F, I, P, R2 and R3 |
| Lord Abbett Fundamental Equity Fund (“Fundamental Equity Fund”) | | A, B, C, F, I, P, R2 and R3 |
| Lord Abbett Growth Leaders Fund (“Growth Leaders Fund”) | | A, B, C, F, I, R2 and R3 |
| Lord Abbett International Core Equity Fund (“International Core Equity Fund”) | | A, B, C, F, I, P, R2 and R3 |
| Lord Abbett International Dividend Income Fund (“International Dividend Income Fund”) | | A, C, F, I, R2 and R3 |
| Lord Abbett International Opportunities Fund (“International Opportunities Fund”) | | A, B, C, F, I, P, R2 and R3 |
| Lord Abbett Value Opportunities Fund (“Value Opportunities Fund”) | | A, B, C, F, I, P, R2 and R3 |
Class B shares of Growth Leaders Fund commenced investment operations on February 11, 2013. The Funds no longer issue Class B shares for purchase. The Funds’ Class P shares are closed to substantially all investors, with certain exceptions as set forth in the Funds’ prospectus. As of the date of this report, Alpha Strategy Fund has not issued Class P shares.
Each of Alpha Strategy Fund’s, International Core Equity Fund’s, International Opportunities Fund’s and Value Opportunities Fund’s investment objective is to seek long-term capital appreciation. Alpha Strategy Fund invests in other funds (“Underlying Funds”) managed by Lord, Abbett & Co. LLC (“Lord Abbett”). Fundamental Equity Fund’s investment objective is long-term growth of capital and income without excessive fluctuations in market value. Growth Leaders Fund’s investment objective is to seek capital appreciation. International Dividend Income Fund’s investment objective is to seek a high level of total return.
Each class of shares has different expenses and dividends. A front-end sales charge is normally added to the net asset value (“NAV”) for Class A shares. There is no front-end sales charge in the case of Class B, C, F, I, P, R2 and R3 shares, although there may be a contingent deferred sales charge (“CDSC”) in certain cases as follows: Class A shares purchased without a sales charge and redeemed before the first day of the month in which the one-year anniversary of the purchase falls (subject to certain exceptions as set forth in each Fund’s prospectus); 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 automatically convert to Class A shares on the 25th day of the month (or, if the 25th day is not a business day, the next business day thereafter) following the eighth anniversary of the day on which the purchase order was accepted.
On July 19, 2013, Value Opportunities Fund acquired the net assets of Lord Abbett Small Cap Blend Fund (“Small Cap Blend Fund”). Refer to Note 14 Reorganizations for additional information.
On March 22, 2013, Growth Leaders Fund acquired the net assets of Lord Abbett Stock Appreciation Fund (“Stock Appreciation Fund”). Refer to Note 14 Reorganizations for additional information.
The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make certain estimates and
125
Notes to Financial Statements (continued)
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–Under procedures approved by the Funds’ Board of Trustees (the “Board”), Lord Abbett, each Fund’s investment manager, has formed a Pricing Committee to administer the pricing and valuation of portfolio investments and to ensure that prices utilized reasonably reflect fair value. Among other things, these procedures allow each Fund to utilize independent pricing services, quotations from securities and financial instrument dealers and other market sources to determine fair value. |
| | |
| | Securities actively traded on any recognized U.S. or non-U.S. exchange or on The NASDAQ Stock Market LLC are valued at the last sale price or official closing price on the exchange or system on which they are principally traded. Events occurring after the close of trading on non-U.S. exchanges may result in adjustments to the valuation of foreign securities to reflect their fair value as of the close of regular trading on the New York Stock Exchange LLC (“NYSE”). Each Fund may rely on an independent fair valuation service in adjusting the valuations of foreign securities. Unlisted equity securities are valued at the last quoted sale price or, if no sale price is available, at the mean between the most recently quoted bid and asked prices. Forward foreign currency exchange contracts are valued using daily forward exchange rates. Investments in the Underlying Funds are valued at their NAV each business day at the close of regular trading on the NYSE, normally 4:00 p.m. Eastern time. Exchange traded options and futures contracts are valued at the last sale price in the market where they are principally traded. |
| | |
| | Securities for which prices are not readily available are valued at fair value as determined by the Pricing Committee and approved by the Board. The Pricing Committee considers a number of factors, including observable and unobservable inputs, when arriving at fair value. The Pricing Committee may use related or comparable assets or liabilities, recent transactions, market multiples, book values and other relevant information to determine fair value of portfolio investments. The Board or a designated committee thereof regularly reviews fair value determinations made by the Pricing Committee and employs techniques such as reviewing related market activity, reviewing inputs and assumptions, and retrospectively comparing prices of subsequent purchases and sales transactions to fair value determinations made by the Pricing Committee. |
| | |
| | Short-term securities with 60 days or less remaining to maturity are valued using the amortized cost method, which approximates fair 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 (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 as earned. Discounts are accreted and premiums are amortized using the effective interest method and are included in Interest and other income on the |
126
Notes to Financial Statements (continued)
| | Statements of Operations. Withholding taxes on foreign dividends have been provided for in accordance with the applicable country’s tax rules and rates. Investment income is allocated to each class of shares based upon the relative proportion of net assets at the beginning of the day. |
| | |
| (d) | Income 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 taxable income and capital gains to its shareholders. Therefore, no income tax provision is required. |
| | |
| | Each Fund files U.S. federal and various state and local tax returns. No income tax returns are currently under examination. The statute of limitations on each Fund’s filed U.S. federal tax returns remains open for the fiscal years ended October 31, 2010 through October 31, 2013. The statutes of limitations on the Trust’s state and local tax returns may remain open for an additional year depending upon the jurisdiction. |
| | |
| (e) | Expenses–Expenses incurred by the Trust that do not specifically relate to an individual fund are generally allocated to the Funds within the Trust on a pro rata basis by relative net assets. 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, B, C, F, P, R2 and R3 shares bear their class-specific share of all expenses and fees relating to the Funds’ 12b-1 Distribution Plan. |
| | |
| (f) | Foreign Transactions–The books and records of each Fund are maintained in U.S. dollars and transactions denominated in foreign currencies are recorded in each Fund’s records at the rate prevailing when earned or recorded. Asset and liability accounts that are denominated in foreign currencies are adjusted daily to reflect current exchange rates and any unrealized gain (loss) is included in Net change in unrealized appreciation/depreciation on investments, futures contracts and translation of assets and liabilities denominated in foreign currencies on each Fund’s Statement of Operations. The resultant exchange gains and losses upon settlement of such transactions are included in Net realized gain on investments (net of foreign capital gains tax), futures contracts and foreign currency related transactions on each Fund’s Statement of Operations. Each 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. |
| | |
| | The Funds use foreign currency exchange contracts to facilitate transactions in foreign- denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts’ terms. |
| | |
| (g) | Forward Foreign Currency Exchange Contracts–International Core Equity Fund, International Dividend Income Fund and International Opportunities Fund may enter into forward foreign currency exchange contracts in order to reduce their exposure to changes in foreign currency exchange rates on their foreign portfolio holdings or gain or reduce exposure to foreign currency for investment purposes. 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 (loss) is included in Net change in unrealized appreciation/depreciation on investments, futures contracts and translation of assets and liabilities denominated in foreign currencies on each Fund’s Statement of Operations. The gain (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 |
127
Notes to Financial Statements (continued)
| | contracts is included in Net realized gain on investments (net of foreign capital gains tax), futures contracts and foreign currency related transactions on each Fund’s Statement of Operations. |
| | |
| (h) | Futures Contracts–Each Fund may purchase and sell index futures contracts to manage cash or as a substitute position for holding the underlying asset on which the instrument is based. At the time of entering into a futures transaction, an investor is required to deposit and maintain a specified amount of cash or eligible securities called “initial margin.” Subsequent payments made or received by a Fund called “variation margin” are made on a daily basis as the market price of the futures contract fluctuates. Each Fund will record an unrealized gain (loss) based on the amount of variation margin. When a contract is closed, a realized gain (loss) is recorded equal to the difference between the opening and closing value of the contract. As of October 31, 2013, Growth Leaders Fund had an open futures contract. |
| | |
| (i) | Repurchase Agreements–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 by securities of the U.S. Government, its agencies, its instrumentalities, or U.S. Government sponsored enterprises having a value equal to, or in excess of, the value of the repurchase agreement (including accrued interest). If the seller of the agreement defaults on its obligation to repurchase the underlying securities at a time when the fair value of these securities has declined, a Fund may incur a loss upon disposition of the securities. |
| | |
| (j) | When-Issued or Forward Transactions–Each Fund may purchase portfolio securities on a when-issued or forward basis. When-issued or forward transactions involve a commitment by a Fund to purchase securities, with payment and delivery (“settlement”) to take place in the future, in order to secure what is considered to be an advantageous price or yield at the time of entering into the transaction. During the period between purchase and settlement, the fair value of the securities will fluctuate and assets consisting of cash and/or marketable securities (normally short-term U.S. Government or U.S. Government sponsored enterprise securities) marked to market daily in an amount sufficient to make payment at settlement will be segregated at each Fund’s custodian in order to pay for the commitment. At the time each Fund makes the commitment to purchase a security on a when-issued basis, it will record the transaction and reflect the liability for the purchase and fair value of the security in determining its NAV. Each Fund, generally, has the ability to close out a purchase obligation on or before the settlement date rather than take delivery of the security. Under no circumstances will settlement for such securities take place more than 120 days after the purchase date. |
| | |
| (k) | Fair Value Measurements–Fair value is defined as the price that each Fund would receive upon selling an investment or transferring a liability in an orderly transaction to an independent buyer in the principal or most advantageous market of the investment. A three-tier hierarchy is used to maximize the use of observable market data and minimize the use of unobservable inputs and to establish classification of fair value measurements for disclosure purposes. Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk – for example, the risk inherent in a particular valuation technique used to measure fair value (such as a pricing model) and/or the risk inherent in the inputs to the valuation technique. Inputs may be observable or unobservable. Observable inputs reflect the assumptions market participants would use in |
128
Notes to Financial Statements (continued)
| | pricing the asset or liability. Observable inputs are based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability. Unobservable inputs are based on the best information available in the circumstances. The three-tier hierarchy of inputs is summarized in the three broad Levels listed below: |
| | • | Level 1 – | unadjusted quoted prices in active markets for identical investments; |
| | | | |
| | • | Level 2 – | other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.); and |
| | | | |
| | • | Level 3 – | significant unobservable inputs (including each Fund’s own assumptions in determining the fair value of investments). |
| | A summary of inputs used in valuing each Fund’s investments and other financial instruments as of October 31, 2013 and, if applicable, Level 1/Level 2 transfers and Level 3 rollforwards for the fiscal year then ended is included in each Fund’s Schedule of Investments. Changes in valuation techniques may result in transfers into or out of an assigned level within the three-tier hierarchy. All transfers between different levels within the three-tier hierarchy are deemed to have occurred as of the beginning of the reporting period. The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. |
| | |
| 3. | MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES |
| | |
| | Management Fee |
| | The Trust has a management agreement with Lord Abbett, pursuant to which Lord Abbett supplies each Fund with investment management services and executive and other personnel, provides office space and pays for ordinary and necessary office and clerical expenses relating to research and statistical work and supervision of each Fund’s investment portfolio. |
| | |
| | For the fiscal year ended October 31, 2013, the effective management fee, net of any applicable waivers or reimbursements, was based on each Fund’s average daily net assets at the following annualized rates: |
| | | Effective
Management Fee |
| Alpha Strategy Fund | | | .00 | %(1) |
| Fundamental Equity Fund | | | .52 | %(2) |
| Growth Leaders Fund | | | .07 | %(3) |
| International Core Equity Fund | | | .46 | %(4) |
| International Dividend Income Fund | | | .53 | %(4) |
| International Opportunities Fund | | | .75 | %(5) |
| Value Opportunities Fund | | | .71 | %(6) |
| (1) | The management fee for Alpha Strategy Fund is based on the Fund’s average daily net assets at an annual rate of .10%. For the fiscal year ended October 31, 2013 and continuing through February 28, 2014, Lord Abbett has contractually agreed to waive 0.05% of its management fee. For the fiscal year ended October 31, 2013, Lord Abbett voluntarily waived an additional .05% of its management fee. Lord Abbett may discontinue the voluntary reimbursement or change the level of its voluntary reimbursement at any time. |
| | |
| (2) | The management fee for Fundamental Equity Fund is based on the Fund’s average daily net assets at the following annual rates: |
| First $200 million | | | .75 | % |
| Next $300 million | | | .65 | % |
| Over $500 million | | | .50 | % |
129
Notes to Financial Statements (continued)
| (3) | The management fee for Growth Leaders Fund is based on the Fund’s average daily net assets at the following annual rates: |
| First $2 billion | | | .55 | % |
| Over $2 billion | | | .50 | % |
| (4) | The management fee for International Core Equity Fund and International Dividend Income Fund is based on the Fund’s average daily net assets. Effective March 1, 2013, the management agreement was amended, resulting in the following annual rates: |
| | | Effective
March 1, 2013 | | Prior to
March 1, 2013 |
| First $1 billion | | | .70 | % | | | .75 | % |
| Next $1 billion | | | .65 | % | | | .70 | % |
| Over $2 billion | | | .60 | % | | | .65 | % |
| (5) | The management fee for International Opportunities Fund is based on the average daily net assets at the following annual rates: |
| First $1 billion | | | .75 | % |
| Next $1 billion | | | .70 | % |
| Over $2 billion | | | .65 | % |
| (6) | The management fee for Value Opportunities Fund is based on the Fund’s average daily net assets. Effective March 1, 2013, the management agreement was amended, resulting in the following annual rates: |
| | | Effective
March 1, 2013 | | Prior to
March 1, 2013 |
| First $1 billion | | | .75 | % | | | .75 | % |
| Next $1 billion | | | .70 | % | | | .70 | % |
| Next $3 billion | | | .65 | % | | | .65 | % |
| Over $5 billion | | | .58 | % | | | .65 | % |
In addition, Lord Abbett provides certain administrative services to each Fund pursuant to an Administrative Services Agreement in return for a fee at an annual rate of .04% of each Fund’s average daily net assets.
For the fiscal year ended October 31, 2013 and continuing through February 28, 2014, Lord Abbett has contractually agreed to waive all or a portion of its management fee and, if necessary, waive all or a portion of its administrative fee and reimburse other expenses to the extent necessary so that the total net annual operating expenses for each class, excluding 12b-1 fees, do not exceed the following annual rates:
| Fund | | Rate | |
| Growth Leaders Fund | | | .50 | % |
| International Core Equity Fund | | | .77 | % |
| International Dividend Income Fund | | | .77 | % |
All contractual management fee waiver and expense reimbursement agreements between the Funds and Lord Abbett may be terminated only upon the approval of the Funds’ Board.
Alpha Strategy Fund has entered into a Servicing Arrangement with the Underlying Funds in which it invests, pursuant to which each Underlying Fund will pay a portion of the expenses (excluding management fees and distribution and service fees) of Alpha Strategy Fund in proportion to the average daily value of total Underlying Fund shares owned by Alpha Strategy Fund. The expenses assumed by the Underlying Funds are reflected in Expenses assumed by Underlying Funds on Alpha Strategy Fund’s Statement of Operations and Receivables from affiliates on Alpha Strategy Fund’s Statement of Assets and Liabilities.
130
Notes to Financial Statements (continued)
In addition, Fundamental Equity Fund, Growth Leaders Fund, International Core Equity Fund, International Dividend Income Fund, International Opportunities Fund, and Value Opportunities Fund, along with certain other funds managed by Lord Abbett, have entered into a Servicing Arrangement with Alpha Strategy Fund, Lord Abbett Balanced Strategy Fund, Lord Abbett Diversified Equity Strategy Fund, Lord Abbett Diversified Income Strategy Fund, and Lord Abbett Growth & Income Strategy Fund of Lord Abbett Investment Trust and Lord Abbett Global Allocation Fund of Lord Abbett Global Fund, Inc. (each, a “Fund of Funds”), pursuant to which each Underlying Fund pays a portion of the expenses (excluding management fees and distribution and service fees) of each Fund of Funds in proportion to the average daily value of the Underlying Fund shares owned by each Fund of Funds. Amounts paid pursuant to the Servicing Arrangement are included in Subsidy expense on each Fund’s Statement of Operations and Payable to affiliates on each Fund’s Statement of Assets and Liabilities.
As of October 31, 2013, the percentages of Fundamental Equity Fund’s, Growth Leaders Fund’s, International Core Equity Fund’s, International Dividend Income Fund’s, International Opportunities Fund’s and Value Opportunities Fund’s outstanding shares owned by each Fund of Funds were as follows:
| Fund of Funds | | Fundamental
Equity Fund | | | Growth
Leaders
Fund | | | International
Core Equity
Fund | | | International
Dividend
Income Fund | | | International
Opportunities
Fund | | | Value
Opportunities
Fund | |
| Alpha Strategy Fund | | | — | | | | — | | | | — | | | | — | | | | 55.62 | % | | | 7.20 | % |
| Balanced Strategy Fund | | | — | | | | — | | | | — | | | | 11.95 | % | | | — | | | | — | |
| Diversified Equity Strategy Fund | | | 0.66 | % | | | 8.78 | % | | | 3.65 | % | | | — | | | | 5.06 | % | | | 0.80 | % |
| Diversified Income Strategy Fund | | | — | | | | — | | | | — | | | | 5.49 | % | | | — | | | | — | |
| Global Allocation Fund | | | — | | | | — | | | | — | | | | 3.87 | % | | | — | | | | — | |
| Growth & Income Strategy Fund | | | — | | | | — | | | | — | | | | 8.76 | % | | | — | | | | 0.48 | % |
12b-1 Distribution Plan
Each Fund has adopted a distribution plan with respect to Class A, B, C, F, P, R2 and R3 shares pursuant to Rule 12b-1 under the Act, which provides for the payment of ongoing distribution and service fees to Lord Abbett Distributor LLC (the “Distributor”), an affiliate of Lord Abbett. The following annual rates have been approved by the Board pursuant to the plan:
| Fees* | | Class A(1) | | Class B | | Class C | | Class F | | Class P(2) | | Class R2 | | Class R3 |
| Service | | | .25 | % | | | .25 | % | | | .25 | % | | | — | | | | .25 | % | | | .25 | % | | | .25 | % |
| Distribution | | | .10 | % | | | .75 | % | | | .75 | % | | | .10 | % | | | .20 | % | | | .35 | % | | | .25 | % |
| * | The Funds may designate a portion of the aggregate fee as attributable to service activities for purposes of calculating Financial Industry Regulatory Authority, Inc. (“FINRA”) sales charge limitations. |
| (1) | The Class A 12b-1 fees for Alpha Strategy Fund is .25% (.25% service, .00% distribution) of the Fund’s average daily net assets. |
| (2) | Fundamental Equity Fund, International Core Equity Fund, International Opportunities Fund and Value Opportunities Fund only. |
Class I shares do not have a distribution plan.
131
Notes to Financial Statements (continued)
Commissions
Distributor received the following commissions on sales of shares of the Funds, after concessions were paid to authorized dealers, for the fiscal year ended October 31, 2013:
| | | Distributor
Commissions | | | Dealers’
Concessions | |
| Alpha Strategy Fund | | $ | 220,970 | | | $ | 1,226,332 | |
| Fundamental Equity Fund | | | 602,115 | | | | 3,292,270 | |
| Growth Leaders Fund | | | 155,440 | | | | 889,848 | |
| International Core Equity Fund | | | 126,992 | | | | 674,545 | |
| International Dividend Income Fund | | | 699,298 | | | | 3,729,133 | |
| International Opportunities Fund | | | 36,365 | | | | 196,157 | |
| Value Opportunities Fund | | | 254,773 | | | | 1,394,959 | |
Distributor received the following amount of CDSCs for the fiscal year ended October 31, 2013:
| | | Class A | | | Class C | |
| Alpha Strategy Fund | | $ | 678 | | | $ | 14,058 | |
| Fundamental Equity Fund | | | 18,263 | | | | 50,928 | |
| Growth Leaders Fund | | | 12,110 | | | | 2,423 | |
| International Core Equity Fund | | | 1,804 | | | | 3,148 | |
| International Dividend Income Fund | | | 20,505 | | | | 27,953 | |
| International Opportunities Fund | | | 724 | | | | 2,814 | |
| Value Opportunities Fund | | | 6,947 | | | | 23,810 | |
A 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 quarterly for International Dividend Income Fund and annually for Alpha Strategy Fund, Fundamental Equity Fund, Growth Leaders Fund, International Core Equity Fund, International Opportunities Fund, and Value Opportunities Fund. Taxable net realized gains from investment transactions, reduced by allowable capital loss carryforwards, if any, are declared and distributed to shareholders at least annually. The capital loss carryforward amount, if any, is available to offset future net capital gains. Dividends and distributions to shareholders are recorded on the ex-dividend date. The amounts 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 earnings and profits for tax purposes, are reported as a tax return of capital.
Subsequent to the Funds’ fiscal year ended October 31, 2013, distributions were declared on November 18, 2013 and paid on November 22, 2013 to shareholders of record on November 21, 2013. The approximate amounts were as follows:
| | | Net Investment
Income | | | Net Short-Term
Capital Gain | | | Net Long-Term
Capital Gain | |
| Fundamental Equity Fund | | $ | 15,060,000 | | | $ | 193,756,000 | | | $ | 675,477,000 | |
| Growth Leaders Fund | | | — | | | | 29,386,000 | | | | 390,000 | |
| Value Opportunities Fund | | | — | | | | 57,058,000 | | | | 221,546,000 | |
132
Notes to Financial Statements (continued)
Subsequent to the Funds’ fiscal year ended October 31, 2013, distributions were declared on December 11, 2013 and paid on December 18, 2013 to shareholders of record on December 17, 2013. The approximate amounts were as follows:
| | | Net Investment
Income | |
| International Core Equity Fund | | $ | 15,951,000 | |
| International Dividend Income Fund | | | 11,220,000 | |
| International Opportunities Fund | | | 6,003,000 | |
Subsequent to Alpha Strategy Fund’s fiscal year ended October 31, 2013, distributions were declared on December 11, 2013 and paid on December 20, 2013 to shareholders of record on December 19, 2013. The approximate amounts were as follows:
| | Net Investment
Income | | | Net Long-Term
Capital Gain | |
| | $ | 45,888,000 | | | $ | 41,358,000 | |
The tax character of distributions paid during the fiscal years ended October 31, 2013 and 2012 was as follows:
| | | Alpha Strategy Fund | | | Fundamental Equity Fund | |
| | | Year Ended 10/31/2013 | | | Year Ended 10/31/2012 | | | Year Ended 10/31/2013 | | | Year Ended 10/31/2012 | |
| Distributions paid from: | | | | | | | | | | | | | | | | |
| Ordinary income | | $ | 1,215,018 | | | $ | — | | | $ | 28,885,490 | | | $ | 8,731,966 | |
| Net long-term capital gains | | | 36,729,787 | | | | 2,851,136 | | | | 53,172,106 | | | | 96,046,077 | |
| Total distributions paid | | $ | 37,944,805 | | | $ | 2,851,136 | | | $ | 82,057,596 | | | $ | 104,778,043 | |
| | | | | | | |
| | | Growth Leaders Fund | | | International Core Equity Fund | |
| | | Year Ended 10/31/2013 | | | Year Ended 10/31/2012 | | | Year Ended 10/31/2013 | | | Year Ended 10/31/2012 | |
| Distributions paid from: | | | | | | | | | | | | | | | | |
| Ordinary income | | $ | 86,296 | | | $ | 5,968 | | | $ | 17,152,810 | | | $ | 16,446,351 | |
| Total distributions paid | | $ | 86,296 | | | $ | 5,968 | | | $ | 17,152,810 | | | $ | 16,446,351 | |
| | | | | | | |
| | | International Dividend Income Fund | | | International Opportunities Fund | |
| | | Year Ended 10/31/2013 | | | Year Ended 10/31/2012 | | | Year Ended 10/31/2013 | | | Year Ended 10/31/2012 | |
| Distributions paid from: | | | | | | | | | | | | | | | | |
| Ordinary income | | $ | 87,476,450 | | | $ | 67,866,479 | | | $ | 6,062,457 | | | $ | 2,944,502 | |
| Total distributions paid | | $ | 87,476,450 | | | $ | 67,866,479 | | | $ | 6,062,457 | | | $ | 2,944,502 | |
| | | | | | | | | | | | |
| | | Value Opportunities Fund | | | | | | | | | |
| | | Year Ended 10/31/2013 | | | Year Ended 10/31/2012 | | | | | | | | | |
| Distributions paid from: | | | | | | | | | | | | | | | | |
| Net long-term capital gains | | $ | — | | | $ | 7,161,018 | | | | | | | | | |
| Total distributions paid | | $ | — | | | $ | 7,161,018 | | | | | | | | | |
133
Notes to Financial Statements (continued)
As of October 31, 2013, the components of accumulated gains (losses) on a tax-basis were as follows:
| | | Alpha
Strategy Fund | | | Fundamental
Equity Fund | |
| Undistributed ordinary income-net | | $ | 1,870,367 | | | $ | 207,493,554 | |
| Undistributed long-term capital gains | | | 41,358,355 | | | | 675,446,735 | |
| Total undistributed earnings | | $ | 43,228,722 | | | $ | 882,940,289 | |
| Capital loss carryforwards* | | | — | | | | (3,842,415 | ) |
| Temporary differences | | | (3,663,451 | ) | | | (646,371 | ) |
| Unrealized gains-net | | | 364,574,585 | | | | 1,008,595,365 | |
| Total accumulated gains-net | | $ | 404,139,856 | | | $ | 1,887,046,868 | |
| | | | | | | | | |
| | | Growth
Leaders Fund | | | International
Core Equity Fund | |
| Undistributed ordinary income-net | | $ | 29,724,002 | | | $ | 15,951,422 | |
| Undistributed long-term capital gains | | | 389,214 | | | | — | |
| Total undistributed earnings | | $ | 30,113,216 | | | $ | 15,951,422 | |
| Capital loss carryforwards* | | | — | | | | (288,074,212 | ) |
| Temporary differences | | | (300,557 | ) | | | (134,205 | ) |
| Unrealized gains-net | | | 20,342,137 | | | | 136,771,234 | |
| Total accumulated gains (losses)-net | | $ | 50,154,796 | | | $ | (135,485,761 | ) |
| | | | | | | | | |
| | | International
Dividend
Income Fund | | | International
Opportunities
Fund | |
| Undistributed ordinary income-net | | $ | 12,572,871 | | | $ | 5,618,360 | |
| Total undistributed earnings | | $ | 12,572,871 | | | $ | 5,618,360 | |
| Capital loss carryforwards* | | | (26,280,823 | ) | | | (32,638,627 | ) |
| Temporary differences | | | (80,429 | ) | | | (54,741 | ) |
| Unrealized gains-net | | | 292,724,566 | | | | 68,210,751 | |
| Total accumulated gains-net | | $ | 278,936,185 | | | $ | 41,135,743 | |
| | | | | | | | | |
| Value Opportunities Fund | | | | | |
| Undistributed ordinary income-net | | $ | 57,050,419 | | | | | |
| Undistributed long-term capital gains | | | 221,536,531 | | | | | |
| Total undistributed earnings | | $ | 278,586,950 | | | | | |
| Temporary differences | | | (1,053,909 | ) | | | | |
| Unrealized gains-net | | | 682,519,260 | | | | | |
| Total accumulated gains-net | | $ | 960,052,301 | | | | | |
* As of October 31, 2013, the capital loss carryforwards, along with the related expiration dates, were as follows:
| | | 2016 | | | 2017 | | | Indefinite | | | Total | |
| Fundamental Equity Fund | | $ | 3,842,415 | | | $ | — | | | $ | — | | | $ | 3,842,415 | |
| International Core Equity Fund | | | 55,621,868 | | | | 232,452,344 | | | | — | | | | 288,074,212 | |
| International Dividend Income Fund | | | 7,593,041 | | | | 13,669,537 | | | | 5,018,245 | | | | 26,280,823 | |
| International Opportunities Fund | | | — | | | | 32,638,627 | | | | — | | | | 32,638,627 | |
As of March 22, 2013 (the date Growth Leaders Fund acquired the net assets of Stock Appreciation Fund), the cumulative allowable capital loss carryforwards of Stock Appreciation Fund transferred into Growth Leaders Fund were $15,711,703.
134
Notes to Financial Statements (continued)
In accordance with the Regulated Investment Company Modernization Act of 2010, each Fund will carryforward capital losses incurred in taxable years beginning after December 22, 2010 (“post-enactment losses”) indefinitely. Post-enactment losses will also retain their character as either short-term or long-term and be utilized before any pre-enactment losses.
At each Fund’s election, certain losses incurred within the taxable year (Qualified Late-Year Losses) are deemed to arise on the first business day of the Fund’s next taxable year. The following Funds incurred and will elect to defer late-year ordinary losses during fiscal 2013 as follows:
| Alpha Strategy Fund | | $ | 3,572,778 | |
| Growth Leaders Fund | | | 272,258 | |
| Value Opportunities Fund | | | 783,895 | |
As of October 31, 2013, the aggregate unrealized security gains and losses based on cost for U.S. federal income tax purposes were as follows:
| | | Alpha
Strategy Fund | | | Fundamental
Equity Fund | | | Growth
Leaders Fund | |
| Tax cost | | $ | 798,685,150 | | | $ | 4,762,734,365 | | | $ | 405,959,737 | |
| Gross unrealized gain | | | 364,574,585 | | | | 1,036,202,936 | | | | 22,117,123 | |
| Gross unrealized loss | | | — | | | | (27,607,571 | ) | | | (1,774,986 | ) |
| Net unrealized security gain | | $ | 364,574,585 | | | $ | 1,008,595,365 | | | $ | 20,342,137 | |
| | | | | | | | | | |
| | | International
Core Equity Fund | | | International
Dividend
Income Fund | | | International
Opportunities Fund | |
| Tax cost | | $ | 690,649,574 | | | $ | 2,032,791,853 | | | $ | 345,143,153 | |
| Gross unrealized gain | | | 141,198,668 | | | | 325,546,151 | | | | 73,570,982 | |
| Gross unrealized loss | | | (4,528,670 | ) | | | (32,997,639 | ) | | | (5,419,585 | ) |
| Net unrealized security gain | | $ | 136,669,998 | | | $ | 292,548,512 | | | $ | 68,151,397 | |
| | | | | | | | | | | | |
| | | Value
Opportunities
Fund | | | | | | | | | |
| Tax cost | | $ | 2,506,888,986 | | | | | | | | | |
| Gross unrealized gain | | | 707,143,686 | | | | | | | | | |
| Gross unrealized loss | | | (24,624,426 | ) | | | | | | | | |
| Net unrealized security gain | | $ | 682,519,260 | | | | | | | | | |
The difference between book-basis and tax-basis unrealized gains (losses) is attributable to the tax treatment of certain securities and wash sales.
Permanent items identified during the fiscal year ended October 31, 2013 have been reclassified among the components of net assets based on their tax basis treatment as follows:
| | | Undistributed
(Distributions
in Excess of)
Net Investment
Income | | | Accumulated Net
Realized Gain (Loss) | | | Paid-in Capital | |
| Fundamental Equity Fund | | $ | 470,391 | | | $ | (520,391 | ) | | $ | 50,000 | |
| Growth Leaders | | | 95,314 | | | | (7,801 | ) | | | (87,513 | ) |
| International Core Equity Fund | | | 1,814,461 | | | | (1,814,461 | ) | | | — | |
| International Dividend Income Fund | | | 9,283,670 | | | | (9,283,670 | ) | | | — | |
| International Opportunities Fund | | | 2,260,029 | | | | (2,260,029 | ) | | | — | |
| Value Opportunities Fund | | | 2,849,043 | | | | (2,848,877 | ) | | | (166 | ) |
135
Notes to Financial Statements (continued)
The permanent differences are attributable to the tax treatment of net investment losses, certain distributions, certain expenses, foreign currency transactions, and certain securities.
| 5. | PORTFOLIO SECURITIES TRANSACTIONS |
Purchases and sales of investment securities (excluding short-term investments) for the fiscal year ended October 31, 2013 were as follows:
| | | Purchases | | | Sales | |
| Alpha Strategy Fund | | $ | 105,506,864 | | | $ | 78,725,653 | |
| Fundamental Equity Fund | | | 4,428,533,253 | | | | 4,633,927,797 | |
| Growth Leaders Fund | | | 924,713,519 | | | | 726,500,106 | |
| International Core Equity Fund | | | 596,553,297 | | | | 679,131,662 | |
| International Dividend Income Fund | | | 1,835,530,142 | | | | 1,582,964,299 | |
| International Opportunities Fund | | | 343,120,010 | | | | 322,610,296 | |
| Value Opportunities Fund | | | 1,634,607,681 | | | | 1,761,988,766 | |
There were no purchases or sales of U.S. Government securities for the fiscal year ended October 31, 2013.
| 6. | DISCLOSURES ABOUT DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES |
International Core Equity Fund, International Dividend Income Fund and International Opportunities Fund entered into forward foreign currency exchange contracts for the fiscal year ended October 31, 2013 (as described in note 2(g)). A forward foreign currency exchange contract reduces each Fund’s exposure to changes in the value of the currency it will deliver (or settle in cash) and increases its exposure to changes in the value of the currency it will receive (or settle in cash) for the duration of the contract. Each Fund’s use of forward foreign currency exchange contracts involves the risk that Lord Abbett will not accurately predict currency movements, and each Fund’s returns could be reduced as a result. Forward foreign currency exchange contracts are subject to the risk that those currencies will decline in value relative to the U.S. dollar, or, in the case of hedged positions, that the U.S. dollar will decline relative to the currency being hedged. Currency rates in foreign countries may fluctuate significantly over short periods of time. Each Fund’s risk of loss from counterparty credit risk is the unrealized appreciation on forward foreign currency exchange contracts.
Growth Leaders Fund entered into E-Mini S&P 500 Index futures contracts for the fiscal year ended October 31, 2013 (as described in note 2(h)) to manage cash. The Fund bears the risk that the underlying index will move unexpectedly, in which case the Fund may realize a loss. There is minimal counterparty credit risk to the Fund since futures are exchange traded and the exchange’s clearinghouse, as counterparty to all exchange traded futures, guarantees futures against default.
As of October 31, 2013, Growth Leaders Fund, International Core Equity Fund, International Dividend Income Fund and International Opportunities Fund had the following derivatives, grouped into appropriate risk categories that illustrate how and why the Funds use derivative instruments:
136
Notes to Financial Statements (continued)
| | | | | | Growth Leaders Fund | | | International
Core Equity Fund | |
| Asset Derivatives | | Equity Index
Contracts | | | Forward
Foreign
Currency
Exchange
Contracts | | | Fair Value | | | Forward
Foreign
Currency
Exchange
Contracts | | | Fair Value | |
| Forward Foreign Currency Exchange Contracts(1) | | $ | — | | | $ | — | | | $ | — | | | $ | 2,221,682 | | | $ | 2,221,682 | |
| Futures Contracts(2) | | | 2,625 | | | | — | | | | 2,625 | | | | — | | | | — | |
| Total | | $ | 2,625 | | | $ | — | | | $ | 2,625 | | | $ | 2,221,682 | | | $ | 2,221,682 | |
| | | | | | | | | | | | | | | | | | | | | |
| Liability Derivatives | | | | | | | | | | | | | | | | | | | | |
| Forward Foreign Currency Exchange Contracts(3) | | $ | — | | | $ | — | | | $ | — | | | $ | 2,507,222 | | | $ | 2,507,222 | |
| Total | | $ | — | | | $ | — | | | $ | — | | | $ | 2,507,222 | | | $ | 2,507,222 | |
| | | International
Dividend Income Fund | | | International
Opportunities Fund | |
| Asset Derivatives | | Forward
Foreign
Currency
Exchange
Contracts | | | Fair Value | | | Forward
Foreign
Currency
Exchange
Contracts | | | Fair Value | |
| Forward Foreign Currency Exchange Contracts(1) | | $ | 11,786,304 | | | $ | 11,786,304 | | | $ | 1,182,098 | | | $ | 1,182,098 | |
| | | | | | | | | | | | | | | | | |
| Liability Derivatives | | | | | | | | | | | | | | | | |
| Forward Foreign Currency Exchange Contracts(3) | | $ | 14,446,187 | | | $ | 14,446,187 | | | $ | 1,549,689 | | | $ | 1,549,689 | |
| (1) | Statements of Assets and Liabilities location: Unrealized appreciation on forward foreign currency exchange contracts. |
| (2) | Statements of Assets and Liabilities location: Includes cumulative unrealized appreciation of futures contracts as reported on the Schedule of Investments. Only current day’s variation margin is reported within the Statements of Assets and Liabilities. |
| (3) | Statements of Assets and Liabilities location: Unrealized depreciation on forward foreign currency exchange contracts. |
Transactions in derivative instruments for the fiscal year ended October 31, 2013, were as follows:
| | | Growth Leaders Fund | | | International
Core Equity Fund | |
| | | Equity Index
Contracts | | | Total | | | Forward
Foreign
Currency
Exchange
Contracts | | | Total | |
| Net Realized Gain (Loss)(1) | | | | | | | | | | | | | | | | |
| Forward Foreign Currency Exchange Contracts | | $ | — | | | $ | — | | | $ | (2,769,994 | ) | | $ | (2,769,994 | ) |
| Futures Contracts | | | 2,871 | | | | 2,871 | | | | — | | | | — | |
| Net Change in Unrealized Appreciation/Depreciation(2) | | | | | | | | | | | | | | | | |
| Forward Foreign Currency Exchange Contracts | | $ | — | | | $ | — | | | $ | (173,980 | ) | | $ | (173,980 | ) |
| Futures Contracts | | | 2,625 | | | | 2,625 | | | | — | | | | — | |
| Average Number of Contracts/Notional Amounts* | | | | | | | | | | | | | | | | |
| Forward Foreign Currency Exchange Contracts(3) | | | — | | | | — | | | $ | 281,691,713 | | | $ | 281,691,713 | |
| Futures Contracts(4) | | | — | (5) | | | — | (5) | | | — | | | | — | |
137
Notes to Financial Statements (continued)
| | | International
Dividend Income Fund | | | International
Opportunities Fund | |
| | | Forward
Foreign
Currency
Exchange
Contracts | | | Total | | | Forward
Foreign
Currency
Exchange
Contracts | | | Total | |
| Net Realized Gain(1) | | | | | | | | | | | | | | | | |
| Forward Foreign Currency Exchange Contracts | | $ | 1,383,364 | | | $ | 1,383,364 | | | $ | 1,709,455 | | | $ | 1,709,455 | |
| | | | | | | | | | | | | | | | | |
| Net Change in Unrealized Appreciation/Depreciation(2) | | | | | | | | | | | | | | | | |
| Forward Foreign Currency Exchange Contracts | | $ | (6,722,040 | ) | | $ | (6,722,040 | ) | | $ | (793,946 | ) | | $ | (793,946 | ) |
| Average Notional Amounts* | | | | | | | | | | | | | | | | |
| Forward Foreign Currency Exchange Contracts(3) | | $ | 1,417,205,953 | | | $ | 1,417,205,953 | | | $ | 116,195,734 | | | $ | 116,195,734 | |
| * | Calculated based on the number of contracts or notional amounts for the fiscal year ended October 31, 2013. |
| (1) | Statements of Operations location: Net realized gain (loss) on investments (net of foreign capital gains tax), futures contracts and foreign currency related transactions. |
| (2) | Statements of Operations location: Net change in unrealized appreciation/depreciation on investments, futures contracts and translation of assets and liabilities denominated in foreign currencies. |
| (3) | Amount represents notional amounts in U.S. dollars. |
| (4) | Amount represents number of contracts. |
| (5) | Average contract is less than 1. |
The Trust’s officers and a Trustee, who are associated with Lord Abbett, do not receive any compensation from the Trust for serving in such capacities. Independent 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 Independent Trustees under which Independent 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 had been invested in the funds. 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 U.S. federal income tax purposes until such amounts are paid.
The Trust has entered into an arrangement with its transfer agent and custodian, whereby credits realized as a result of uninvested cash balances are used to reduce a portion of each Fund’s expenses.
During the fiscal year ended October 31, 2013, the Funds (except for Alpha Strategy Fund) and certain other funds managed by Lord Abbett (the “participating funds”) participated in an unsecured revolving credit facility (“Facility”) with State Street Bank and Trust Company (“SSB”). The Facility is to be used for temporary or emergency purposes as an additional source of liquidity to fund redemptions of investor shares. The Board considers annual renewal of the Facility under terms that depend on market conditions at the time of the renewal. The amounts available under the Facility are (i) the lesser of either $250,000,000 or 33.33% of total assets per participating fund
138
Notes to Financial Statements (continued)
and (ii) $350,000,000 in the aggregate for all participating funds. The annual fee to maintain the Facility is .09% of the amount available under the Facility. Each participating fund pays its pro rata share based on the net assets of each participating fund. This amount is included in Other expenses on each Fund’s Statement of Operations. Any borrowings under this Facility will bear interest at current market rates as set forth in the credit agreement.
Effective July 1, 2013, the Funds and participating funds renewed the Facility through June 30, 2014 under the same terms as described above.
During the fiscal year ended October 31, 2013, a participating fund also managed by Lord Abbett utilized the Facility and fully repaid its borrowings on June 13, 2013. As of October 31, 2013, there were no loans outstanding pursuant to this Facility.
| 10. | CUSTODIAN AND ACCOUNTING AGENT |
SSB is the Trust’s custodian and accounting agent. SSB performs custodial, accounting and recordkeeping functions relating to portfolio transactions and calculating each Fund’s NAV.
| 11. | TRANSACTIONS WITH AFFILIATED ISSUERS |
An affiliated issuer is one in which a Fund has ownership of at least 5% of the outstanding voting securities of the underlying issuer at any point during the fiscal year or any company which is under common ownership or control. Alpha Strategy Fund had the following transactions with affiliated issuers (i.e. the Underlying Funds) during the fiscal year ended October 31, 2013:
| Affiliated Issuer | | Balance of
Shares
Held at
10/31/2012 | | Gross
Additions | | Gross
Sales | | | Balance of
Shares
Held at
10/31/2013 | | Fair
Value at
10/31/2013 | | | Net Realized
Gain (loss)
11/1/2012 to
10/31/2013 | | | Dividend
Income
11/1/2012 to
10/31/2013 | |
| Lord Abbett Developing Growth Fund, Inc. – Class I | | 7,304,502 | | 702,379 | | | (674,729 | ) | | 7,332,152 | | $ | 236,095,290 | | | $ | 18,155,673 | (a) | | $ | — | |
| Lord Abbett Securities Trust – International Opportunities Fund – Class I | | 13,041,845 | | 1,751,973 | | | (1,416,392 | ) | | 13,377,426 | | | 230,760,597 | | | | (1,555,426 | ) | | | 3,776,082 | |
| Lord Abbett Securities Trust – Micro-Cap Growth Fund – Class I | | 5,771,909 | | 167,598 | | | (679,575 | ) | | 5,259,932 | | | 123,976,597 | | | | 1,746,192 | (b) | | | — | |
| Lord Abbett Securities Trust – Micro-Cap Value Fund – Class I | | 3,236,470 | | 144,724 | | | (234,712 | ) | | 3,146,482 | | | 112,549,670 | | | | (93,656 | ) | | | 58,968 | |
| Lord Abbett Equity Trust – Small-Cap Blend Fund – Class I | | 5,134,095 | | 1,235,138 | | | (6,369,233 | ) | | — | | | — | | | | 17,963,084 | (c) | | | 191,205 | |
| Lord Abbett Research Fund, Inc. – Small-Cap Value Fund – Class I | | 5,070,161 | | 555,036 | | | (326,746 | ) | | 5,298,451 | | | 229,263,987 | | | | 5,186,780 | (d) | | | 1,696,899 | |
| Lord Abbett Securities Trust – Value Opportunities Fund – Class I | | 5,316,888 | | 5,647,226 | | | (431,448 | ) | | 10,532,666 | | | 230,138,746 | | | | 1,633,102 | | | | — | |
| | | | | | | | | | | | | $ | 1,162,784,887 | | | $ | 43,035,749 | | | $ | 5,723,154 | |
| (a) | Includes $12,484,856 of distributed capital gains. |
| (b) | Includes $610,091 of distributed capital gains. |
| (c) | Includes $18,390,896 of distributed capital gains. |
| (d) | Includes $3,633,813 of distributed capital gains. |
139
Notes to Financial Statements (continued)
Each Fund is subject to the general risks and considerations associated with equity investing. The value of the Funds’ investments will fluctuate in response to movements in the equity securities markets in general and to the changing prospects of individual companies in which the Funds invest. If a Fund’s assessment of a company’s value or prospects for exceeding earnings expectations or market conditions is wrong, the Fund could suffer losses or produce poor performance relative to other funds, even in a rising market.
Large company stocks, in which Fundamental Equity Fund and Growth Leaders Fund invest, may perform differently than the market as a whole and other types of stocks, such as small company stocks. Small and mid-sized company stocks, in which Fundamental Equity Fund, Growth Leaders Fund, and Value Opportunities Fund invest, may be less able to weather economic shifts or other adverse developments than those of larger, more established companies.
In general, Growth Leaders Fund employs a growth investing style and Fundamental Equity Fund, International Dividend Income Fund and Value Opportunities Fund employ a value investing style. Growth stocks generally are more volatile than value stocks. The price of value stocks may lag the market for long periods of time.
International Core Equity Fund is subject to the risks of investing in foreign securities, the securities of large foreign companies, and derivatives. 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.
International Dividend Income Fund is subject to the risks of investing in foreign securities, dividend yielding stocks, and derivatives. Foreign securities may pose greater risks than domestic securities, including price fluctuations and higher transaction costs. These risks are generally greater for securities issued by companies in emerging market companies. Dividend paying stocks may be sensitive to changes in market interest rates, and the prices of such stocks may decline as rates rise. International Dividend Income Fund may be subject to the volatility of stocks that have high dividends per share due to recent decreases in their share prices. International Dividend Income Fund may invest a significant portion of its assets in small and mid-sized companies that may be less able to weather economic shifts or other adverse developments than larger, more established companies.
International Opportunities Fund is subject to the risks of investing in foreign securities, the securities of small-cap companies, and derivatives. 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 Strategy 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, small-cap companies, and derivatives.
Due to their investments in multinational and foreign companies, Fundamental Equity Fund, Growth Leaders Fund, Value Opportunities Fund, and Alpha Strategy Fund may experience increased market, liquidity, currency, political, information and other risks.
Each Fund is subject to the risks associated with derivatives, which may be different from and greater than the risks associated with investing directly in securities and other investments.
These factors can affect each Fund’s performance.
140
Notes to Financial Statements (continued)
| 13. | SUMMARY OF CAPITAL TRANSACTIONS |
Transactions in shares of beneficial interest were as follows:
| Alpha Strategy Fund | | Year Ended
October 31, 2013 | | | Year Ended
October 31, 2012 | |
| Class A Shares | | Shares | | | Amount | | | Shares | | | Amount | |
| Shares sold | | | 4,040,311 | | | $ | 116,424,981 | | | | 2,744,394 | | | $ | 65,776,411 | |
| Converted from Class B* | | | 74,530 | | | | 2,077,793 | | | | 98,618 | | | | 2,352,294 | |
| Reinvestment of distributions | | | 658,992 | | | | 16,033,279 | | | | 52,615 | | | | 1,177,003 | |
| Shares reacquired | | | (4,469,014 | ) | | | (122,207,395 | ) | | | (4,862,332 | ) | | | (114,861,666 | ) |
| Increase (decrease) | | | 304,819 | | | $ | 12,328,658 | | | | (1,966,705 | ) | | $ | (45,555,958 | ) |
| | | | | | | | | | | | | | | | | |
| Class B Shares | | | | | | | | | | | | | | | | |
| Shares sold | | | 19,812 | | | $ | 506,714 | | | | 26,108 | | | $ | 595,005 | |
| Reinvestment of distributions | | | 38,950 | | | | 881,431 | | | | 3,822 | | | | 80,274 | |
| Shares reacquired | | | (164,626 | ) | | | (4,195,477 | ) | | | (238,199 | ) | | | (5,402,978 | ) |
| Converted to Class A* | | | (80,333 | ) | | | (2,077,793 | ) | | | (105,294 | ) | | | (2,352,294 | ) |
| Decrease | | | (186,197 | ) | | $ | (4,885,125 | ) | | | (313,563 | ) | | $ | (7,079,993 | ) |
| | | | | | | | | | | | | | | | | |
| Class C Shares | | | | | | | | | | | | | | | | |
| Shares sold | | | 1,606,383 | | | $ | 41,943,101 | | | | 1,240,736 | | | $ | 27,780,678 | |
| Reinvestment of distributions | | | 345,504 | | | | 7,763,478 | | | | 26,850 | | | | 559,832 | |
| Shares reacquired | | | (1,858,485 | ) | | | (47,092,366 | ) | | | (2,045,175 | ) | | | (45,478,583 | ) |
| Increase (Decrease) | | | 93,402 | | | $ | 2,614,213 | | | | (777,589 | ) | | $ | (17,138,073 | ) |
| | | | | | | | | | | | | | | | | |
| Class F Shares | | | | | | | | | | | | | | | | |
| Shares sold | | | 1,992,990 | | | $ | 56,444,794 | | | | 2,147,676 | | | $ | 50,410,369 | |
| Reinvestment of distributions | | | 178,670 | | | | 4,352,396 | | | | 14,535 | | | | 325,435 | |
| Shares reacquired | | | (1,807,362 | ) | | | (48,878,560 | ) | | | (2,725,631 | ) | | | (65,356,755 | ) |
| Increase (decrease) | | | 364,298 | | | $ | 11,918,630 | | | | (563,420 | ) | | $ | (14,620,951 | ) |
| | | | | | | | | | | | | | | | | |
| Class I Shares | | | | | | | | | | | | | | | | |
| Shares sold | | | 644,435 | | | $ | 16,390,888 | | | | 172,714 | | | $ | 4,159,050 | |
| Reinvestment of distributions | | | 39,680 | | | | 974,536 | | | | 2,583 | | | | 58,300 | |
| Shares reacquired | | | (68,332 | ) | | | (1,897,817 | ) | | | (601,810 | ) | | | (14,841,437 | ) |
| Increase (decrease) | | | 615,783 | | | $ | 15,467,607 | | | | (426,513 | ) | | $ | (10,624,087 | ) |
| | | | | | | | | | | | | | | | | |
| Class R2 Shares | | | | | | | | | | | | | | | | |
| Shares sold | | | 49,663 | | | $ | 1,417,650 | | | | 56,946 | | | $ | 1,352,217 | |
| Reinvestment of distributions | | | 1,228 | | | | 29,461 | | | | 69 | | | | 1,514 | |
| Shares reacquired | | | (88,000 | ) | | | (2,402,170 | ) | | | (84,622 | ) | | | (2,041,694 | ) |
| Decrease | | | (37,109 | ) | | $ | (955,059 | ) | | | (27,607 | ) | | $ | (687,963 | ) |
| | | | | | | | | | | | | | | | | |
| Class R3 Shares | | | | | | | | | | | | | | | | |
| Shares sold | | | 410,985 | | | $ | 11,148,022 | | | | 436,089 | | | $ | 10,302,836 | |
| Reinvestment of distributions | | | 52,435 | | | | 1,261,081 | | | | 3,977 | | | | 88,040 | |
| Shares reacquired | | | (604,578 | ) | | | (16,262,275 | ) | | | (421,261 | ) | | | (9,977,820 | ) |
| Increase (decrease) | | | (141,158 | ) | | $ | (3,853,172 | ) | | | 18,805 | | | $ | 413,056 | |
141
Notes to Financial Statements (continued)
| Fundamental Equity Fund | | Year Ended
October 31, 2013 | | | Year Ended
October 31, 2012 | |
| Class A Shares | | Shares | | | Amount | | | Shares | | | Amount | |
| Shares sold | | | 30,638,968 | | | $ | 467,006,504 | | | | 39,985,762 | | | $ | 506,102,792 | |
| Converted from Class B* | | | 1,528,276 | | | | 22,367,689 | | | | 2,454,435 | | | | 31,130,048 | |
| Reinvestment of distributions | | | 3,274,788 | | | | 41,622,543 | | | | 4,400,057 | | | | 50,688,649 | |
| Shares reacquired | | | (41,933,843 | ) | | | (618,360,382 | ) | | | (52,610,694 | ) | | | (667,045,386 | ) |
| Shares issued in reorganization (See Note 14) | | | — | | | | — | | | | 2,156,271 | | | | 26,522,140 | |
| Decrease | | | (6,491,811 | ) | | $ | (87,363,646 | ) | | | (3,614,169 | ) | | $ | (52,601,757 | ) |
| | | | | | | | | | | | | | | | | |
| Class B Shares | | | | | | | | | | | | | | | | |
| Shares sold | | | 183,627 | | | $ | 2,627,100 | | | | 259,123 | | | $ | 3,094,646 | |
| Reinvestment of distributions | | | 71,129 | | | | 859,944 | | | | 210,371 | | | | 2,303,564 | |
| Shares reacquired | | | (913,655 | ) | | | (12,580,122 | ) | | | (1,491,769 | ) | | | (18,070,978 | ) |
| Converted to Class A* | | | (1,610,928 | ) | | | (22,367,689 | ) | | | (2,588,385 | ) | | | (31,130,048 | ) |
| Shares issued in reorganization (See Note 14) | | | — | | | | — | | | | 135,760 | | | | 1,581,601 | |
| Decrease | | | (2,269,827 | ) | | $ | (31,460,767 | ) | | | (3,474,900 | ) | | $ | (42,221,215 | ) |
| | | | | | | | | | | | | | | | | |
| Class C Shares | | | | | | | | | | | | | | | | |
| Shares sold | | | 9,749,771 | | | $ | 141,629,965 | | | | 9,592,080 | | | $ | 115,153,465 | |
| Reinvestment of distributions | | | 650,030 | | | | 7,819,879 | | | | 1,197,637 | | | | 13,066,217 | |
| Shares reacquired | | | (11,604,731 | ) | | | (159,338,405 | ) | | | (15,179,762 | ) | | | (183,197,750 | ) |
| Shares issued in reorganization (See Note 14) | | | — | | | | — | | | | 536,052 | | | | 6,223,563 | |
| Decrease | | | (1,204,930 | ) | | $ | (9,888,561 | ) | | | (3,853,993 | ) | | $ | (48,754,505 | ) |
| | | | | | | | | | | | | | | | | |
| Class F Shares | | | | | | | | | | | | | | | | |
| Shares sold | | | 12,908,404 | | | $ | 195,236,155 | | | | 22,401,344 | | | $ | 279,779,635 | |
| Reinvestment of distributions | | | 771,334 | | | | 9,749,668 | | | | 1,049,284 | | | | 12,014,305 | |
| Shares reacquired | | | (16,904,024 | ) | | | (247,895,162 | ) | | | (29,070,202 | ) | | | (369,441,214 | ) |
| Shares issued in reorganization (See Note 14) | | | — | | | | — | | | | 37,059 | | | | 453,972 | |
| Decrease | | | (3,224,286 | ) | | $ | (42,909,339 | ) | | | (5,582,515 | ) | | $ | (77,193,302 | ) |
| | | | | | | | | | | | | | | | | |
| Class I Shares | | | | | | | | | | | | | | | | |
| Shares sold | | | 7,705,300 | | | $ | 114,774,327 | | | | 17,857,696 | | | $ | 224,988,551 | |
| Reinvestment of distributions | | | 568,497 | | | | 7,248,343 | | | | 526,879 | | | | 6,085,451 | |
| Shares reacquired | | | (6,892,581 | ) | | | (99,800,482 | ) | | | (8,203,133 | ) | | | (107,105,769 | ) |
| Shares issued in reorganization (See Note 14) | | | — | | | | — | | | | 342,949 | | | | 4,238,850 | |
| Increase | | | 1,381,216 | | | $ | 22,222,188 | | | | 10,524,391 | | | $ | 128,207,083 | |
| | | | | | | | | | | | | | | | | |
| Class P Shares | | | | | | | | | | | | | | | | |
| Shares sold | | | 294,041 | | | $ | 4,363,701 | | | | 424,212 | | | $ | 5,277,811 | |
| Reinvestment of distributions | | | 36,924 | | | | 464,505 | | | | 59,153 | | | | 673,752 | |
| Shares reacquired | | | (904,792 | ) | | | (13,169,602 | ) | | | (848,069 | ) | | | (10,726,453 | ) |
| Shares issued in reorganization (See Note 14) | | | — | | | | — | | | | 1,089 | | | | 13,238 | |
| Decrease | | | (573,827 | ) | | $ | (8,341,396 | ) | | | (363,615 | ) | | $ | (4,761,652 | ) |
142
Notes to Financial Statements (continued)
| Fundamental Equity Fund | | Year Ended
October 31, 2013 | | | Year Ended
October 31, 2012 | |
| Class R2 Shares | | Shares | | | Amount | | | Shares | | | Amount | |
| Shares sold | | | 404,148 | | | $ | 5,966,907 | | | | 777,833 | | | $ | 9,731,475 | |
| Reinvestment of distributions | | | 16,786 | | | | 210,491 | | | | 23,061 | | | | 261,971 | |
| Shares reacquired | | | (640,733 | ) | | | (9,285,586 | ) | | | (687,844 | ) | | | (8,640,098 | ) |
| Shares issued in reorganization (See Note 14) | | | — | | | | — | | | | 851 | | | | 10,317 | |
| Increase (decrease) | | | (219,799 | ) | | $ | (3,108,188 | ) | | | 113,901 | | | $ | 1,363,665 | |
| | | | | | | | | | | | | | | | | |
| Class R3 Shares | | | | | | | | | | | | | | | | |
| Shares sold | | | 3,801,711 | | | $ | 56,599,242 | | | | 9,889,962 | | | $ | 123,846,562 | |
| Reinvestment of distributions | | | 369,357 | | | | 4,653,905 | | | | 386,918 | | | | 4,418,600 | |
| Shares reacquired | | | (5,665,744 | ) | | | (82,608,747 | ) | | | (3,992,062 | ) | | | (50,712,344 | ) |
| Shares issued in reorganization (See Note 14) | | | — | | | | — | | | | 20,100 | | | | 244,818 | |
| Increase (decrease) | | | (1,494,676 | ) | | $ | (21,355,600 | ) | | | 6,304,918 | | | $ | 77,797,636 | |
| | | | | | | | | | | | | | | | | |
| Growth Leaders Fund | | | Year Ended
October 31, 2013 | | | | Year Ended
October 31, 2012 | |
| Class A Shares | | | Shares | | | | Amount | | | | Shares | | | | Amount | |
| Shares sold | | | 4,844,632 | | | $ | 96,666,891 | | | | 827,488 | | | $ | 12,762,189 | |
| Converted from Class B* | | | 42,169 | | | | 798,084 | | | | | | | | | |
| Reinvestment of distributions | | | 2,867 | | | | 43,300 | | | | — | | | | — | |
| Shares reacquired | | | (1,236,681 | ) | | | (23,369,217 | ) | | | (356,168 | ) | | | (5,434,181 | ) |
| Shares issued in reorganization (See Note 14) | | | 4,278,452 | | | | 72,904,811 | | | | — | | | | — | |
| Increase | | | 7,931,439 | | | $ | 147,043,869 | | | | 471,320 | | | $ | 7,328,008 | |
| | | | | | | | | | | | | |
| | | | Period Ended
October 31, 2013† | | | | | | | | | |
| Class B Shares | | | Shares | | | | Amount | | | | | | | | | |
| Shares sold | | | 12,554 | | | $ | 241,966 | | | | | | | | | |
| Shares reacquired | | | (54,648 | ) | | | (1,031,590 | ) | | | | | | | | |
| Converted to Class A* | | | (42,288 | ) | | | (798,084 | ) | | | | | | | | |
| Shares issued in reorganization (See Note 14) | | | 461,335 | | | | 7,851,924 | | | | | | | | | |
| Increase | | | 376,953 | | | $ | 6,264,216 | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | | Year Ended
October 31, 2013 | | | | Year Ended
October 31, 2012 | |
| Class C Shares | | | Shares | | | | Amount | | | | Shares | | | | Amount | |
| Shares sold | | | 1,775,845 | | | $ | 35,706,887 | | | | 118,327 | | | $ | 1,815,979 | |
| Reinvestment of distributions | | | 261 | | | | 3,916 | | | | — | | | | — | |
| Shares reacquired | | | (293,894 | ) | | | (5,534,008 | ) | | | (4,025 | ) | | | (61,737 | ) |
| Shares issued in reorganization (See Note 14) | | | 1,536,103 | | | | 25,898,702 | | | | — | | | | — | |
| Increase | | | 3,018,315 | | | $ | 56,075,497 | | | | 114,302 | | | $ | 1,754,242 | |
143
Notes to Financial Statements (continued)
| Growth Leaders Fund | | Year Ended
October 31, 2013 | | | Year Ended
October 31, 2012 | |
| Class F Shares | | Shares | | | Amount | | | Shares | | | Amount | |
| Shares sold | | | 4,855,033 | | | $ | 100,539,077 | | | | 236,829 | | | $ | 3,656,780 | |
| Reinvestment of distributions | | | 1,270 | | | | 19,109 | | | | 17 | | | | 239 | |
| Shares reacquired | | | (278,285 | ) | | | (5,533,795 | ) | | | (399,733 | ) | | | (5,645,144 | ) |
| Shares issued in reorganization (See Note 14) | | | 245,384 | | | | 4,183,797 | | | | — | | | | — | |
| Increase (decrease) | | | 4,823,402 | | | $ | 99,208,188 | | | | (162,887 | ) | | $ | (1,988,125 | ) |
| | | | | | | | | | | | | | | | | |
| Class I Shares | | | | | | | | | | | | | | | | |
| Shares sold | | | 990,444 | | | $ | 18,179,829 | | | | 133,948 | | | $ | 2,032,231 | |
| Reinvestment of distributions | | | 6 | | | | 84 | | | | 2 | | | | 23 | |
| Shares reacquired | | | (274,695 | ) | | | (5,025,036 | ) | | | (90,997 | ) | | | (1,382,487 | ) |
| Shares issued in reorganization (See Note 14) | | | 1,446,353 | | | | 24,674,785 | | | | — | | | | — | |
| Increase | | | 2,162,108 | | | $ | 37,829,662 | | | | 42,953 | | | $ | 649,767 | |
| | | | | | | | | | | | | | | | | |
| Class R2 Shares | | | | | | | | | | | | | | | | |
| Shares sold | | | 753 | | | $ | 15,499 | | | | — | | | $ | — | |
| Reinvestment of distributions | | | 1 | | | | 21 | | | | — | | | | — | |
| Shares reacquired | | | — | (a) | | | (7 | ) | | | — | | | | — | |
| Shares issued in reorganization (See Note 14) | | | 618 | | | | 10,574 | | | | — | | | | — | |
| Increase | | | 1,372 | | | $ | 26,087 | | | | — | | | $ | — | |
| | | | | | | | | | | | | | | | | |
| Class R3 Shares | | | | | | | | | | | | | | | | |
| Shares sold | | | 99,039 | | | $ | 1,864,304 | | | | 302 | | | $ | 4,681 | |
| Reinvestment of distributions | | | 2 | | | | 24 | | | | — | | | | — | |
| Shares reacquired | | | (55,008 | ) | | | (1,068,148 | ) | | | (229 | ) | | | (3,644 | ) |
| Shares issued in reorganization (See Note 14) | | | 341,718 | | | | 5,829,710 | | | | — | | | | — | |
| Increase | | | 385,751 | | | $ | 6,625,890 | | | | 73 | | | $ | 1,037 | |
144
Notes to Financial Statements (continued)
| International Core Equity Fund | | Year Ended
October 31, 2013 | | | Year Ended
October 31, 2012 | |
| Class A Shares | | Shares | | | Amount | | | Shares | | | Amount | |
| Shares sold | | | 4,179,089 | | | $ | 52,372,669 | | | | 3,727,406 | | | $ | 41,287,807 | |
| Converted from Class B* | | | 246,857 | | | | 3,102,750 | | | | 176,957 | | | | 1,972,039 | |
| Reinvestment of distributions | | | 714,190 | | | | 8,348,885 | | | | 787,259 | | | | 8,030,039 | |
| Shares reacquired | | | (7,367,960 | ) | | | (91,339,225 | ) | | | (10,252,135 | ) | | | (113,126,489 | ) |
| Decrease | | | (2,227,824 | ) | | $ | (27,514,921 | ) | | | (5,560,513 | ) | | $ | (61,836,604 | ) |
| | | | | | | | | | | | | | | | | |
| Class B Shares | | | | | | | | | | | | | | | | |
| Shares sold | | | 57,509 | | | $ | 702,974 | | | | 41,508 | | | $ | 454,177 | |
| Reinvestment of distributions | | | 25,471 | | | | 294,950 | | | | 28,856 | | | | 291,736 | |
| Shares reacquired | | | (367,526 | ) | | | (4,457,485 | ) | | | (625,293 | ) | | | (6,835,933 | ) |
| Converted to Class A* | | | (249,937 | ) | | | (3,102,750 | ) | | | (179,135 | ) | | | (1,972,039 | ) |
| Decrease | | | (534,483 | ) | | $ | (6,562,311 | ) | | | (734,064 | ) | | $ | (8,062,059 | ) |
| | | | | | | | | | | | | | | | | |
| Class C Shares | | | | | | | | | | | | | | | | |
| Shares sold | | | 489,053 | | | $ | 6,064,348 | | | | 435,377 | | | $ | 4,753,980 | |
| Reinvestment of distributions | | | 67,697 | | | | 783,931 | | | | 68,444 | | | | 692,650 | |
| Shares reacquired | | | (1,155,029 | ) | | | (14,073,153 | ) | | | (1,872,058 | ) | | | (20,516,594 | ) |
| Decrease | | | (598,279 | ) | | $ | (7,224,874 | ) | | | (1,368,237 | ) | | $ | (15,069,964 | ) |
| | | | | | | | | | | | | | | | | |
| Class F Shares | | | | | | | | | | | | | | | | |
| Shares sold | | | 7,281,023 | | | $ | 90,030,649 | | | | 8,371,734 | | | $ | 90,303,015 | |
| Reinvestment of distributions | | | 336,329 | | | | 3,901,418 | | | | 187,398 | | | | 1,896,476 | |
| Shares reacquired | | | (10,695,675 | ) | | | (130,483,767 | ) | | | (2,457,327 | ) | | | (26,960,730 | ) |
| Increase (decrease) | | | (3,078,323 | ) | | $ | (36,551,700 | ) | | | 6,101,805 | | | $ | 65,238,761 | |
| | | | | | | | | | | | | | | | | |
| Class I Shares | | | | | | | | | | | | | | | | |
| Shares sold | | | 2,826,968 | | | $ | 35,159,843 | | | | 5,807,790 | | | $ | 60,866,395 | |
| Reinvestment of distributions | | | 214,728 | | | | 2,520,909 | | | | 430,129 | | | | 4,404,522 | |
| Shares reacquired | | | (1,278,761 | ) | | | (16,071,898 | ) | | | (16,582,054 | ) | | | (180,734,077 | ) |
| Increase (decrease) | | | 1,762,935 | | | $ | 21,608,854 | | | | (10,344,135 | ) | | $ | (115,463,160 | ) |
| | | | | | | | | | | | | | | | | |
| Class P Shares | | | | | | | | | | | | | | | | |
| Shares sold | | | 2,566 | | | $ | 32,242 | | | | 5,023 | | | $ | 55,967 | |
| Reinvestment of distributions | | | 430 | | | | 5,020 | | | | 591 | | | | 6,018 | |
| Shares reacquired | | | (7,851 | ) | | | (93,703 | ) | | | (22,920 | ) | | | (249,460 | ) |
| Decrease | | | (4,855 | ) | | $ | (56,441 | ) | | | (17,306 | ) | | $ | (187,475 | ) |
| | | | | | | | | | | | | | | | | |
| Class R2 Shares | | | | | | | | | | | | | | | | |
| Shares sold | | | 22,661 | | | $ | 270,915 | | | | 20,563 | | | $ | 221,494 | |
| Reinvestment of distributions | | | 465 | | | | 5,432 | | | | 323 | | | | 3,297 | |
| Shares reacquired | | | (10,612 | ) | | | (136,497 | ) | | | (29,013 | ) | | | (325,485 | ) |
| Increase (decrease) | | | 12,514 | | | $ | 139,850 | | | | (8,127 | ) | | $ | (100,694 | ) |
| | | | | | | | | | | | | | | | | |
| Class R3 Shares | | | | | | | | | | | | | | | | |
| Shares sold | | | 401,292 | | | $ | 4,915,880 | | | | 685,964 | | | $ | 7,557,743 | |
| Reinvestment of distributions | | | 33,749 | | | | 389,122 | | | | 24,704 | | | | 249,019 | |
| Shares reacquired | | | (533,054 | ) | | | (6,543,726 | ) | | | (323,827 | ) | | | (3,552,458 | ) |
| Increase (decrease) | | | (98,013 | ) | | $ | (1,238,724 | ) | | | 386,841 | | | $ | 4,254,304 | |
145
Notes to Financial Statements (continued)
| | | Year Ended | | | Year Ended | |
| International Dividend Income Fund | | October 31, 2013 | | | October 31, 2012 | |
| Class A Shares | | Shares | | | Amount | | | Shares | | | Amount | |
| Shares sold | | | 52,076,409 | | | $ | 441,764,050 | | | | 56,664,307 | | | $ | 434,591,248 | |
| Reinvestment of distributions | | | 3,822,035 | | | | 31,521,022 | | | | 2,852,503 | | | | 21,595,541 | |
| Shares reacquired | | | (30,427,162 | ) | | | (256,750,764 | ) | | | (15,575,692 | ) | | | (118,722,581 | ) |
| Increase | | | 25,471,282 | | | $ | 216,534,308 | | | | 43,941,118 | | | $ | 337,464,208 | |
| | | | | | | | | | | | | | | | | |
| Class C Shares | | | | | | | | | | | | | | | | |
| Shares sold | | | 7,948,307 | | | $ | 67,126,720 | | | | 7,586,498 | | | $ | 58,324,210 | |
| Reinvestment of distributions | | | 405,754 | | | | 3,319,844 | | | | 238,003 | | | | 1,789,711 | |
| Shares reacquired | | | (2,077,399 | ) | | | (17,460,886 | ) | | | (1,035,013 | ) | | | (7,783,211 | ) |
| Increase | | | 6,276,662 | | | $ | 52,985,678 | | | | 6,789,488 | | | $ | 52,330,710 | |
| | | | | | | | | | | | | | | | | |
| Class F Shares | | | | | | | | | | | | | | | | |
| Shares sold | | | 16,695,327 | | | $ | 141,923,067 | | | | 16,261,875 | | | $ | 126,253,262 | |
| Reinvestment of distributions | | | 685,047 | | | | 5,662,980 | | | | 409,351 | | | | 3,107,094 | |
| Shares reacquired | | | (8,748,119 | ) | | | (74,440,618 | ) | | | (3,646,404 | ) | | | (27,845,351 | ) |
| Increase | | | 8,632,255 | | | $ | 73,145,429 | | | | 13,024,822 | | | $ | 101,515,005 | |
| | | | | | | | | | | | | | | | | |
| Class I Shares | | | | | | | | | | | | | | | | |
| Shares sold | | | 32,937,926 | | | $ | 279,682,684 | | | | 51,100,305 | | | $ | 393,452,662 | |
| Reinvestment of distributions | | | 4,330,862 | | | | 35,818,881 | | | | 4,160,567 | | | | 31,622,657 | |
| Shares reacquired | | | (41,341,816 | ) | | | (350,548,156 | ) | | | (11,980,127 | ) | | | (92,074,620 | ) |
| Increase (decrease) | | | (4,073,028 | ) | | $ | (35,046,591 | ) | | | 43,280,745 | | | $ | 333,000,699 | |
| | | | | | | | | | | | | | | | | |
| Class R2 Shares | | | | | | | | | | | | | | | | |
| Shares sold | | | 66,483 | | | $ | 573,402 | | | | 59,977 | | | $ | 477,167 | |
| Reinvestment of distributions | | | 876 | | | | 7,347 | | | | 376 | | | | 2,913 | |
| Shares reacquired | | | (33,041 | ) | | | (287,458 | ) | | | (3,857 | ) | | | (29,286 | ) |
| Increase | | | 34,318 | | | $ | 293,291 | | | | 56,496 | | | $ | 450,794 | |
| | | | | | | | | | | | | | | | | |
| Class R3 Shares | | | | | | | | | | | | | | | | |
| Shares sold | | | 790,711 | | | $ | 6,747,660 | | | | 4,481,895 | | | $ | 34,454,066 | |
| Reinvestment of distributions | | | 166,296 | | | | 1,382,562 | | | | 148,376 | | | | 1,138,500 | |
| Shares reacquired | | | (4,595,309 | ) | | | (40,288,054 | ) | | | (467,185 | ) | | | (3,666,647 | ) |
| Increase (decrease) | | | (3,638,302 | ) | | $ | (32,157,832 | ) | | | 4,163,086 | | | $ | 31,925,919 | |
146
Notes to Financial Statements (continued)
| | | Year Ended | | | Year Ended | |
| International Opportunities Fund | | October 31, 2013 | | | October 31, 2012 | |
| Class A Shares | | Shares | | | Amount | | | Shares | | | Amount | |
| Shares sold | | | 1,273,195 | | | $ | 19,034,461 | | | | 571,200 | | | $ | 6,970,134 | |
| Converted from Class B* | | | 62,356 | | | | 905,413 | | | | 84,119 | | | | 1,031,741 | |
| Reinvestment of distributions | | | 105,974 | | | | 1,398,849 | | �� | | 48,282 | | | | 528,688 | |
| Shares reacquired | | | (1,309,087 | ) | | | (18,819,369 | ) | | | (1,902,468 | ) | | | (23,143,319 | ) |
| Increase (decrease) | | | 132,438 | | | $ | 2,519,354 | | | | (1,198,867 | ) | | $ | (14,612,756 | ) |
| | | | | | | | | | | | | | | | | |
| Class B Shares | | | | | | | | | | | | | | | | |
| Shares sold | | | 32,938 | | | $ | 465,800 | | | | 13,973 | | | $ | 163,791 | |
| Reinvestment of distributions | | | 6,350 | | | | 79,951 | | | | — | | | | — | |
| Shares reacquired | | | (124,324 | ) | | | (1,698,857 | ) | | | (207,503 | ) | | | (2,417,152 | ) |
| Converted to Class A* | | | (65,588 | ) | | | (905,413 | ) | | | (88,508 | ) | | | (1,031,741 | ) |
| Decrease | | | (150,624 | ) | | $ | (2,058,519 | ) | | | (282,038 | ) | | $ | (3,285,102 | ) |
| | | | | | | | | | | | | | | | | |
| Class C Shares | | | | | | | | | | | | | | | | |
| Shares sold | | | 270,618 | | | $ | 3,758,241 | | | | 133,306 | | | $ | 1,541,145 | |
| Reinvestment of distributions | | | 14,686 | | | | 183,426 | | | | 947 | | | | 9,818 | |
| Shares reacquired | | | (264,730 | ) | | | (3,613,092 | ) | | | (391,251 | ) | | | (4,492,730 | ) |
| Increase (decrease) | | | 20,574 | | | $ | 328,575 | | | | (256,998 | ) | | $ | (2,941,767 | ) |
| | | | | | | | | | | | | | | | | |
| Class F Shares | | | | | | | | | | | | | | | | |
| Shares sold | | | 1,126,942 | | | $ | 17,133,530 | | | | 27,200 | | | $ | 326,612 | |
| Reinvestment of distributions | | | 1,397 | | | | 18,284 | | | | 786 | | | | 8,537 | |
| Shares reacquired | | | (121,861 | ) | | | (1,833,797 | ) | | | (34,100 | ) | | | (422,407 | ) |
| Increase (decrease) | | | 1,006,478 | | | $ | 15,318,017 | | | | (6,114 | ) | | $ | (87,258 | ) |
| | | | | | | | | | | | | | | | | |
| Class I Shares | | | | | | | | | | | | | | | | |
| Shares sold | | | 2,085,716 | | | $ | 32,066,767 | | | | 668,608 | | | $ | 8,076,274 | |
| Reinvestment of distributions | | | 303,804 | | | | 4,098,308 | | | | 203,773 | | | | 2,278,186 | |
| Shares reacquired | | | (1,829,850 | ) | | | (25,981,438 | ) | | | (3,754,194 | ) | | | (46,866,735 | ) |
| Increase (decrease) | | | 559,670 | | | $ | 10,183,637 | | | | (2,881,813 | ) | | $ | (36,512,275 | ) |
| | | | | | | | | | | | | | | | | |
| Class P Shares | | | | | | | | | | | | | | | | |
| Shares sold | | | 8,534 | | | $ | 125,182 | | | | 9,237 | | | $ | 116,256 | |
| Reinvestment of distributions | | | 1,281 | | | | 17,170 | | | | 435 | | | | 4,835 | |
| Shares reacquired | | | (15,187 | ) | | | (248,551 | ) | | | (7,514 | ) | | | (94,510 | ) |
| Increase (decrease) | | | (5,372 | ) | | $ | (106,199 | ) | | | 2,158 | | | $ | 26,581 | |
| | | | | | | | | | | | | | | | | |
| Class R2 Shares | | | | | | | | | | | | | | | | |
| Shares sold | | | 5,711 | | | $ | 89,717 | | | | 1,414 | | | $ | 17,337 | |
| Reinvestment of distributions | | | 108 | | | | 1,418 | | | | 25 | | | | 268 | |
| Shares reacquired | | | (728 | ) | | | (10,649 | ) | | | (2,471 | ) | | | (29,392 | ) |
| Increase (decrease) | | | 5,091 | | | $ | 80,486 | | | | (1,032 | ) | | $ | (11,787 | ) |
| | | | | | | | | | | | | | | | | |
| Class R3 Shares | | | | | | | | | | | | | | | | |
| Shares sold | | | 217,652 | | | $ | 3,104,384 | | | | 230,198 | | | $ | 2,766,699 | |
| Reinvestment of distributions | | | 9,010 | | | | 117,316 | | | | 3,414 | | | | 36,875 | |
| Shares reacquired | | | (335,072 | ) | | | (4,838,878 | ) | | | (185,619 | ) | | | (2,225,383 | ) |
| Increase (decrease) | | | (108,410 | ) | | $ | (1,617,178 | ) | | | 47,993 | | | $ | 578,191 | |
147
Notes to Financial Statements (continued)
| | | Year Ended | | | Year Ended | |
| Value Opportunities Fund | | October 31, 2013 | | | October 31, 2012 | |
| Class A Shares | | | Shares | | | | Amount | | | | Shares | | | | Amount | |
| Shares sold | | | 12,913,117 | | | $ | 245,766,295 | | | | 16,555,751 | | | $ | 258,790,532 | |
| Converted from Class B* | | | 165,594 | | | | 3,323,304 | | | | 86,539 | | | | 1,336,917 | |
| Reinvestment of distributions | | | — | | | | — | | | | 211,564 | | | | 3,044,400 | |
| Shares reacquired | | | (16,275,089 | ) | | | (300,484,796 | ) | | | (20,683,779 | ) | | | (320,940,218 | ) |
| Shares issued in reorganization (See Note 14) | | | 12,737,871 | | | | 259,215,666 | | | | — | | | | — | |
| Increase (decrease) | | | 9,541,493 | | | $ | 207,820,469 | | | | (3,829,925 | ) | | $ | (57,768,369 | ) |
| | | | | | | | | | | | | | | | | |
| Class B Shares | | | | | | | | | | | | | | | | |
| Shares sold | | | 45,606 | | | $ | 849,898 | | | | 46,272 | | | $ | 697,395 | |
| Reinvestment of distributions | | | — | | | | — | | | | 3,513 | | | | 48,759 | |
| Shares reacquired | | | (141,381 | ) | | | (2,541,335 | ) | | | (164,436 | ) | | | (2,472,173 | ) |
| Converted to Class A* | | | (173,567 | ) | | | (3,323,304 | ) | | | (89,917 | ) | | | (1,336,917 | ) |
| Shares issued in reorganization (See Note 14) | | | 620,096 | | | | 12,042,273 | | | | — | | | | — | |
| Increase (decrease) | | | 350,754 | | | $ | 7,027,532 | | | | (204,568 | ) | | $ | (3,062,936 | ) |
| | | | | | | | | | | | | | | | | |
| Class C Shares | | | | | | | | | | | | | | | | |
| Shares sold | | | 2,819,467 | | | $ | 51,851,865 | | | | 3,511,263 | | | $ | 52,966,007 | |
| Reinvestment of distributions | | | — | | | | — | | | | 56,316 | | | | 781,663 | |
| Shares reacquired | | | (3,457,119 | ) | | | (60,656,560 | ) | | | (5,397,467 | ) | | | (81,438,102 | ) |
| Shares issued in reorganization (See Note 14) | | | 4,035,501 | | | | 78,369,425 | | | | — | | | | — | |
| Increase (decrease) | | | 3,397,849 | | | $ | 69,564,730 | | | | (1,829,888 | ) | | $ | (27,690,432 | ) |
| | | | | | | | | | | | | | | | | |
| Class F Shares | | | | | | | | | | | | | | | | |
| Shares sold | | | 7,203,022 | | | $ | 138,105,702 | | | | 13,711,141 | | | $ | 213,852,078 | |
| Reinvestment of distributions | | | — | | | | — | | | | 69,134 | | | | 998,292 | |
| Shares reacquired | | | (9,566,623 | ) | | | (171,347,690 | ) | | | (16,135,037 | ) | | | (253,947,633 | ) |
| Shares issued in reorganization (See Note 14) | | | 498,988 | | | | 10,229,257 | | | | — | | | | — | |
| Decrease | | | (1,864,613 | ) | | $ | (23,012,731 | ) | | | (2,354,762 | ) | | $ | (39,097,263 | ) |
| | | | | | | | | | | | | | | | | |
| Class I Shares | | | | | | | | | | | | | | | | |
| Shares sold | | | 5,206,790 | | | $ | 99,941,441 | | | | 12,381,658 | | | $ | 195,795,308 | |
| Reinvestment of distributions | | | — | | | | — | | | | 70,413 | | | | 1,025,918 | |
| Shares reacquired | | | (6,545,798 | ) | | | (126,234,212 | ) | | | (6,077,148 | ) | | | (95,981,797 | ) |
| Shares issued in reorganization (See Note 14) | | | 6,902,380 | | | | 143,017,314 | | | | — | | | | — | |
| Increase | | | 5,563,372 | | | $ | 116,724,543 | | | | 6,374,923 | | | $ | 100,839,429 | |
| | | | | | | | | | | | | | | | | |
| Class P Shares | | | | | | | | | | | | | | | | |
| Shares sold | | | 344,615 | | | $ | 6,944,887 | | | | 32,674 | | | $ | 507,505 | |
| Reinvestment of distributions | | | — | | | | — | | | | 795 | | | | 11,405 | |
| Shares reacquired | | | (270,850 | ) | | | (5,474,060 | ) | | | (200,514 | ) | | | (3,140,409 | ) |
| Shares issued in reorganization (See Note 14) | | | 2,405,239 | | | | 48,682,044 | | | | — | | | | — | |
| Increase (decrease) | | | 2,479,004 | | | $ | 50,152,871 | | | | (167,045 | ) | | $ | (2,621,499 | ) |
148
Notes to Financial Statements (continued)
| | | Year Ended | | | Year Ended | |
| Value Opportunities Fund | | October 31, 2013 | | | October 31, 2012 | |
| Class R2 Shares | | Shares | | | Amount | | | Shares | | | Amount | |
| Shares sold | | | 263,951 | | | $ | 4,882,338 | | | | 501,459 | | | $ | 7,801,233 | |
| Reinvestment of distributions | | | — | | | | — | | | | 1,329 | | | | 18,938 | |
| Shares reacquired | | | (334,001 | ) | | | (6,180,470 | ) | | | (389,132 | ) | | | (6,032,819 | ) |
| Shares issued in reorganization (See Note 14) | | | 28,699 | | | | 575,983 | | | | — | | | | — | |
| Increase (decrease) | | | (41,351 | ) | | $ | (722,149 | ) | | | 113,656 | | | $ | 1,787,352 | |
| | | | | | | | | | | | | | | | | |
| Class R3 Shares | | | | | | | | | | | | | | | | |
| Shares sold | | | 1,931,490 | | | $ | 35,939,093 | | | | 2,867,553 | | | $ | 44,674,892 | |
| Reinvestment of distributions | | | — | | | | — | | | | 17,214 | | | | 245,647 | |
| Shares reacquired | | | (2,210,758 | ) | | | (41,484,328 | ) | | | (1,715,112 | ) | | | (26,611,496 | ) |
| Shares issued in reorganization (See Note 14) | | | 977,805 | | | | 19,683,218 | | | | — | | | | — | |
| Increase | | | 698,537 | | | $ | 14,137,983 | | | | 1,169,655 | | | $ | 18,309,043 | |
| * | Automatic conversion of Class B shares occurs on the 25th day of the month (or, if the 25th day is not a business day, the next business day thereafter) following the eighth anniversary of the day on which the purchase order was accepted. |
| † | For the period February 11, 2013 (commencement of operations) to October 31, 2013. |
| (a) | Amount is less than 1 share. |
| (a) | Value Opportunities Fund–As of the close of business on July 19, 2013, Value Opportunities Fund acquired the net assets of Small Cap Blend Fund pursuant to a plan of reorganization approved by Small Cap Blend Fund’s shareholders on July 12, 2013. The reorganization permitted Small Cap Blend Fund shareholders to pursue substantially similar investment objectives and strategies, but as part of a larger fund with a lower expense ratio. The acquisition was accomplished by a tax-free exchange whereas holders of 36,215,715 shares of Small Cap Blend Fund outstanding on July 19, 2013 received 28,206,579 shares (valued at $571,815,180) of Value Opportunities Fund. Small Cap Blend Fund’s net assets at the date of the acquisition, including $23,692,658 of unrealized appreciation, $153,691 of distributions in excess of net investment income, and $225,271 of accumulated net realized losses, were combined with those of Value Opportunities Fund. The cost basis of securities received from Small Cap Blend Fund was carried forward. |
| | |
| | The total net assets of Value Opportunities Fund immediately before the transfer were $2,418,694,008. Total net assets of Small Cap Blend Fund immediately before the transfer were $571,815,180. Total net assets of Value Opportunities Fund immediately after the transfer were $2,990,509,188. |
| | |
| | The following table illustrates share conversion ratios of the reorganization on July 19, 2013: |
| | | Conversion |
| Class | | Ratio |
| A | | | 0.780590 | |
| B | | | 0.737817 | |
| C | | | 0.737013 | |
| F | | | 0.787551 | |
| I | | | 0.804508 | |
| P | | | 0.780904 | |
| R2 | | | 0.779278 | |
| R3 | | | 0.781351 | |
149
Notes to Financial Statements (continued)
| | Had the acquisition been completed on November 1, 2012, the beginning of the current reporting period of Value Opportunities Fund, the Fund’s condensed pro forma results of operations for the fiscal year ended October 31, 2013, would be as follows: |
| Net investment income | | $ | 578,086 | |
| Net realized and unrealized gain | | | 826,608,037 | |
| Net increase in net assets resulting from operations | | | 827,186,123 | |
| | The combined investment portfolios have been managed as a single integrated portfolio since the acquisition was completed. Revenue and earnings of Small Cap Blend Fund’s portfolio holdings have been included in Value Opportunities Fund’s Statement of Operations since the date of acquisition. |
| | |
| (b) | Growth Leaders Fund–As of the close of business on March 22, 2013, Growth Leaders Fund acquired the net assets of Stock Appreciation Fund pursuant to a plan of reorganization approved by Stock Appreciation Fund’s shareholders on March 15, 2013. The reorganization permitted Stock Appreciation Fund shareholders to pursue substantially similar investment objectives and strategies, but as part of a larger fund with greater investment flexibility and a lower total expense ratio. The acquisition was accomplished by a tax-free exchange whereas holders of 21,349,426 shares of Stock Appreciation Fund outstanding on March 22, 2013 received 8,309,963 shares (valued at $141,354,303) of Growth Leaders Fund. Stock Appreciation Fund’s net assets at the date of the acquisition, including $10,076,074 of unrealized appreciation, $25,276 of distributions in excess of net investment income, and $16,819,492 of accumulated net realized losses, were combined with those of Growth Leaders Fund. The cost basis of securities received from Stock Appreciation Fund was carried forward. |
| | |
| | The total net assets of Growth Leaders Fund immediately before the transfer were $31,440,888. Total net assets of Stock Appreciation Fund immediately before the transfer were $141,354,303. Total net assets of Growth Leaders Fund immediately after the transfer were $172,795,191. |
| | |
| | The following table illustrates share conversion ratios of the reorganization on March 22, 2013: |
| | | Conversion |
| Class | | Ratio |
| A | | | 0.395053 | |
| B | | | 0.363226 | |
| C | | | 0.366714 | |
| F | | | 0.400346 | |
| I | | | 0.404730 | |
| R2 | | | 0.400841 | |
| R3 | | | 0.391788 | |
| | Had the acquisition been completed on November 1, 2012, the beginning of the current reporting period of Growth Leaders Fund, the Fund’s condensed pro forma results of operations for the fiscal year ended October 31, 2013, would be as follows: |
| Net investment income | | $ | (196,058 | ) |
| Net realized and unrealized gain | | | 82,949,757 | |
| Net increase in net assets resulting from operations | | | 82,753,699 | |
150
Notes to Financial Statements (continued)
The combined investment portfolios have been managed as a single integrated portfolio since the acquisition was completed. Revenue and earnings of Stock Appreciation Fund’s portfolio holdings have been included in Growth Leaders Fund’s Statement of Operations since the date of acquisition.
| (c) | Fundamental Equity Fund–As of the close of business on June 15, 2012, Fundamental Equity Fund acquired the net assets of Large Cap Value Fund pursuant to a plan of reorganization approved by Large Cap Value Fund’s shareholders on May 18, 2012. The reorganization permitted Large Cap Value Fund shareholders to pursue substantially similar investment objectives and strategies, but as part of a larger fund with greater investment flexibility and a lower expense ratio. The acquisition was accomplished by a tax-free exchange whereas holders of 4,041,590 shares of Large Cap Value Fund outstanding on June 15, 2012 received 3,230,131 shares (valued at $39,288,499) of Fundamental Equity Fund. Large Cap Value Fund’s net assets at the date of the acquisition, including $3,457,796 of unrealized appreciation, $7,730 of distributions in excess of net investment income, and $14,876,070 of accumulated net realized losses, were combined with those of Fundamental Equity Fund. The cost basis of securities received from Large Cap Value Fund was carried forward. |
The total net assets of Fundamental Equity Fund immediately before the transfer were $4,619,436,391. Total net assets of Large Cap Value Fund immediately before the transfer were $39,288,499. Total net assets of Fundamental Equity Fund immediately after the transfer were $4,658,724,890.
The following table illustrates share conversion ratios of the reorganization on June 15, 2012:
| Class | | Conversion
Ratio |
| A | | 0.792366 |
| B | | 0.826215 |
| C | | 0.827692 |
| F | | 0.790408 |
| I | | 0.790558 |
| P | | 0.804581 |
| R2 | | 0.814447 |
| R3 | | 0.796634 |
Had the acquisition been completed on November 1, 2011, the beginning of the current reporting period of Fundamental Equity Fund, the Fund’s condensed pro forma results of operations for the year ended October 31, 2012, would be as follows:
| Net investment income | | $ | 28,890,815 | |
| Net realized and unrealized gain | | | 299,455,283 | |
| Net increase in net assets resulting from operations | | | 328,346,098 | |
The combined investment portfolios have been managed as a single integrated portfolio since the acquisition was completed. Revenue and earnings of Large Cap Value Fund’s portfolio holdings have been included in Fundamental Equity Fund’s Statement of Operations since the date of acquisition.
151
Notes to Financial Statements (concluded)
| 15. | RECENT ACCOUNTING STANDARD |
In December 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2011–11 “Disclosures about Offsetting Assets and Liabilities” (“ASU 2011–11”). This disclosure requirement is intended to help investors and other financial statement users better assess the effect or potential effect of offsetting arrangements on a fund’s financial position. ASU 2011–11 requires entities to disclose both gross and net information about both instruments and transactions eligible for offset in the statement of assets and liabilities; and disclose instruments and transactions subject to an agreement similar to a master netting agreement. In addition, in January 2013, FASB issued Accounting Standards Update No. 2013–01 “Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities” (“ASU 2013–01”), specifying exactly which transactions are subject to disclosures about offsetting. ASU 2011–11 and ASU 2013–01 are effective for public entities for interim and annual periods beginning on or after January 1, 2013. Management is currently evaluating the impact the adoption of ASU 2011–11 and ASU 2013–01 will have on the Funds’ financial statement disclosures.
152
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of Lord Abbett Securities Trust and the Shareholders of Lord Abbett Alpha Strategy Fund, Lord Abbett Fundamental Equity Fund, Lord Abbett Growth Leaders Fund, Lord Abbett International Core Equity Fund, Lord Abbett International Dividend Income Fund, Lord Abbett International Opportunities Fund and Lord Abbett Value Opportunities Fund:
We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of the Lord Abbett Alpha Strategy Fund, Lord Abbett Fundamental Equity Fund, Lord Abbett Growth Leaders Fund, Lord Abbett International Core Equity Fund, Lord Abbett International Dividend Income Fund, Lord Abbett International Opportunities Fund and Lord Abbett Value Opportunities Fund (collectively, the “Funds”), seven of the nine portfolios constituting the Lord Abbett Securities Trust (the “Trust”) as of October 31, 2013, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods presented. These financial statements and financial highlights are the responsibility of the Trust’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Trust is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Trust’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2013, by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each of the Funds as of October 31, 2013, the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended, and the financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America.
DELOITTE & TOUCHE LLP
New York, New York
December 23, 2013
153
Investments in Underlying Funds (unaudited)
Alpha Strategy Fund invests in Underlying Funds managed by Lord Abbett. As of October 31, 2013, Alpha Strategy Fund’s long-term investments were allocated among the Underlying Funds as follows:
| Underlying Fund Name | % of Investments |
| Lord Abbett Developing Growth Fund, Inc. - Class I | | | 20.30 | % |
| Lord Abbett Securities Trust - Lord Abbett International Opportunities Fund - Class I | | | 19.85 | % |
| Lord Abbett Securities Trust - Lord Abbett Micro-Cap Growth Fund - Class I | | | 10.66 | % |
| Lord Abbett Securities Trust - Lord Abbett Micro-Cap Value Fund - Class I | | | 9.68 | % |
| Lord Abbett Research Fund, Inc. - Lord Abbett Small Cap Value Fund - Class I | | | 19.72 | % |
| Lord Abbett Securities Trust - Lord Abbett Value Opportunities Fund - Class I | | | 19.79 | % |
The Ten Largest Holdings and the Holdings by Sector, as of October 31, 2013, for each Underlying Fund are presented below. Each Underlying Fund’s annual and semiannual reports, which are sent to shareholders and filed with the SEC, contain information about the Underlying Fund’s portfolio holdings, including a complete schedule of holdings. A complete schedule of holdings for each Underlying Fund is also filed with the SEC on Form N-Q as of the end of each respective Underlying Fund’s first and third quarters. In addition, on or about the first day of the second month following each calendar quarter-end, each Fund makes publicly available a complete schedule of its portfolio holdings as of the last day of each such quarter. The information for the most recently ended calendar quarter may be viewed at www.lordabbett.com or requested at no charge by calling Lord Abbett at 888-522-2388.
Lord Abbett Developing Growth Fund, Inc.
| Ten Largest Holdings | % of Investments |
| Buffalo Wild Wings, Inc. | | | 1.81 | % |
| PriceSmart, Inc. | | | 1.67 | % |
| LifeLock, Inc. | | | 1.61 | % |
| athenahealth, Inc. | | | 1.60 | % |
| United Natural Foods, Inc. | | | 1.58 | % |
| Acuity Brands, Inc. | | | 1.56 | % |
| Medidata Solutions, Inc. | | | 1.53 | % |
| SunPower Corp. | | | 1.53 | % |
| CARBO Ceramics, Inc. | | | 1.52 | % |
| Align Technology, Inc. | | | 1.52 | % |
| Holdings by Sector* | % of Investments |
| Consumer Discretionary | | | 9.48 | % |
| Consumer Staples | | | 5.54 | % |
| Energy | | | 6.34 | % |
| Financials | | | 10.42 | % |
| Health Care | | | 19.02 | % |
| Industrials | | | 14.51 | % |
| Information Technology | | | 30.82 | % |
| Materials | | | 0.82 | % |
| Repurchase Agreement | | | 3.05 | % |
| Total | | | 100.00 | % |
| * | A sector may comprise several industries. |
154
Investments in Underlying Funds (unaudited)(continued)
Lord Abbett Securities Trust – International Opportunities Fund
| Ten Largest Holdings | % of Investments |
| Arrow Global Group plc | | | 1.56 | % |
| Plastic Omnium SA | | | 1.55 | % |
| Aalberts Industries NV | | | 1.54 | % |
| Wincor Nixdorf AG | | | 1.52 | % |
| Ashtead Group plc | | | 1.50 | % |
| Mediaset Espana Comunicacion SA | | | 1.50 | % |
| Jupiter Fund Management plc | | | 1.49 | % |
| Playtech plc | | | 1.48 | % |
| Howden Joinery Group plc | | | 1.46 | % |
| EFG International AG | | | 1.45 | % |
| | | | | |
| Holdings by Sector* | % of Investments |
| Consumer Discretionary | | | 19.64 | % |
| Consumer Staples | | | 6.13 | % |
| Energy | | | 5.99 | % |
| Financials | | | 19.50 | % |
| Health Care | | | 5.97 | % |
| Industrials | | | 21.02 | % |
| Information Technology | | | 10.74 | % |
| Materials | | | 4.76 | % |
| Telecommunication Services | | | 0.67 | % |
| Utilities | | | 1.48 | % |
| Repurchase Agreement | | | 4.10 | % |
| Total | | | 100.00 | % |
| * | A sector may comprise several industries. |
Lord Abbett Securities Trust – Micro Cap Growth Fund
| Ten Largest Holdings | % of Investments |
| voxeljet AG ADR | | | 2.52 | % |
| Fluidigm Corp. | | | 2.49 | % |
| LifeLock, Inc. | | | 2.18 | % |
| RigNet, Inc. | | | 2.02 | % |
| Keryx Biopharmaceuticals, Inc. | | | 1.93 | % |
| Power Solutions International, Inc. | | | 1.89 | % |
| Xoom Corp. | | | 1.88 | % |
| Luxoft Holding, Inc. | | | 1.87 | % |
| eHealth, Inc. | | | 1.80 | % |
| Flotek Industries, Inc. | | | 1.71 | % |
| | | | | |
| Holdings by Sector* | % of Investments |
| Consumer Discretionary | | | 13.43 | % |
| Consumer Staples | | | 5.54 | % |
| Energy | | | 4.57 | % |
| Financials | | | 7.53 | % |
| Health Care | | | 23.37 | % |
| Industrials | | | 11.41 | % |
| Information Technology | | | 28.46 | % |
| Materials | | | 1.70 | % |
| Repurchase Agreement | | | 3.99 | % |
| Total | | | 100.00 | % |
| * | A sector may comprise several industries. |
155
Investments in Underlying Funds (unaudited)(continued)
Lord Abbett Securities Trust – Micro Cap Value Fund
| Ten Largest Holdings | % of Investments |
| Gentherm, Inc. | | | 2.27 | % |
| CoBiz Financial, Inc. | | | 2.17 | % |
| First Financial Holdings, Inc. | | | 1.95 | % |
| AMERISAFE, Inc. | | | 1.93 | % |
| Powell Industries, Inc. | | | 1.91 | % |
| Federal Agricultural Mortgage Corp. Class C | | | 1.89 | % |
| Renasant Corp. | | | 1.87 | % |
| Carmike Cinemas, Inc. | | | 1.82 | % |
| Invacare Corp. | | | 1.80 | % |
| Aceto Corp. | | | 1.79 | % |
| | | | | |
| Holdings by Sector* | % of Investments |
| Consumer Discretionary | | | 13.08 | % |
| Energy | | | 2.05 | % |
| Financials | | | 34.42 | % |
| Health Care | | | 6.13 | % |
| Industrials | | | 23.55 | % |
| Information Technology | | | 8.73 | % |
| Materials | | | 4.68 | % |
| Utilities | | | 2.94 | % |
| Repurchase Agreement | | | 4.42 | % |
| Total | | | 100.00 | % |
| * | A sector may comprise several industries. |
Lord Abbett Research Fund, Inc. – Small Cap Value Fund
| Ten Largest Holdings | % of Investments |
| Oshkosh Corp. | | | 2.48 | % |
| Mentor Graphics Corp. | | | 2.10 | % |
| PacWest Bancorp | | | 1.86 | % |
| Barnes Group, Inc. | | | 1.63 | % |
| Stifel Financial Corp. | | | 1.58 | % |
| Hanger, Inc. | | | 1.58 | % |
| Analogic Corp. | | | 1.55 | % |
| First Financial Holdings, Inc. | | | 1.48 | % |
| Western Alliance Bancorp | | | 1.43 | % |
| Coherent, Inc. | | | 1.41 | % |
| | | | | |
| Holdings by Sector* | % of Investments |
| Consumer Discretionary | | | 9.68 | % |
| Consumer Staples | | | 3.65 | % |
| Energy | | | 7.07 | % |
| Financials | | | 27.08 | % |
| Health Care | | | 9.92 | % |
| Industrials | | | 15.81 | % |
| Information Technology | | | 11.35 | % |
| Materials | | | 7.74 | % |
| Utilities | | | 5.01 | % |
| Repurchase Agreement | | | 2.69 | % |
| Total | | | 100.00 | % |
| * | A sector may comprise several industries. |
156
Investments in Underlying Funds (unaudited)(concluded)
Lord Abbett Securities Trust – Value Opportunities Fund
| Ten Largest Holdings | % of Investments |
| Jarden Corp. | | | 2.21 | % |
| Mohawk Industries, Inc. | | | 1.99 | % |
| CapitalSource, Inc. | | | 1.99 | % |
| Actavis plc | | | 1.71 | % |
| Hartford Financial Services Group, Inc. | | | 1.63 | % |
| HCC Insurance Holdings, Inc. | | | 1.55 | % |
| Reliance Steel & Aluminum Co. | | | 1.55 | % |
| American Water Works Co., Inc. | | | 1.54 | % |
| Rock-Tenn Co. Class A | | | 1.51 | % |
| NCR Corp. | | | 1.47 | % |
| | | | | |
| Holdings by Sector* | % of Investments |
| Consumer Discretionary | | | 14.15 | % |
| Consumer Staples | | | 3.44 | % |
| Energy | | | 8.05 | % |
| Financials | | | 26.47 | % |
| Health Care | | | 8.91 | % |
| Industrials | | | 9.70 | % |
| Information Technology | | | 11.71 | % |
| Materials | | | 7.28 | % |
| Utilities | | | 6.58 | % |
| Repurchase Agreement | | | 3.71 | % |
| Total | | | 100.00 | % |
| * | A sector may comprise several industries. |
157
Basic Information About Management
The Board is responsible for the management of the business and affairs of the Trust in accordance with the laws of the State of Delaware. The Board elects officers who are responsible for the day-to-day operations of the Funds and who execute policies authorized by the Board. The Board also approves an investment adviser to each Fund and continues to monitor the cost and quality of the services the investment adviser provides, and annually considers whether to renew the contract with the adviser. Generally, each Trustee holds office until his/her successor is elected and qualified or until his/her earlier resignation or removal, as provided in the Trust’s organizational documents.
Lord Abbett, a Delaware limited liability company, is the Trust’s investment adviser. Designated Lord Abbett personnel are responsible for the day-to-day management of the Funds.
Interested Trustee
Ms. Foster is affiliated with Lord Abbett and is an “interested person” of the Trust as defined in the Act. Ms. Foster is a director/trustee and officer of each of the 12 Lord Abbett-sponsored funds, which consist of 55 portfolios or series.
Name, Address and
Year of Birth | | Current Position and
Length of Service
with the Trust | | Principal Occupation and Other Directorships
During the Past Five Years |
Daria L. Foster
Lord, Abbett & Co. LLC
90 Hudson Street
Jersey City, NJ 07302
(1954) | | Trustee and President since 2006; Chief Executive Officer since 2012 | | Principal Occupation: Managing Partner of Lord Abbett (since 2007), and was formerly Director of Marketing and Client Service, joined Lord Abbett in 1990.
Other Directorships: None. |
Independent Trustees
The following Independent Trustees also are directors/trustees of each of the 12 Lord Abbett-sponsored funds, which consist of 55 portfolios or series.
Name, Address and
Year of Birth | | Current Position and
Length of Service
with the Trust | | Principal Occupation and Other Directorships
During the Past Five Years |
E. Thayer Bigelow
Lord, Abbett & Co. LLC
c/o Legal Dept.
90 Hudson Street
Jersey City, NJ 07302
(1941) | | Trustee since 1994; Chairman since 2013 | | Principal Occupation: Managing General Partner, Bigelow Media, LLC (since 2000); Senior Adviser, Time Warner Inc. (1998 - 2000). Other Directorships: Currently serves as director of Crane Co. (since 1984) and Huttig Building Products Inc. (since 1998). Previously served as a director of R.H. Donnelley Inc. (2009 - 2010). |
| | | | | |
Robert B. Calhoun, Jr.
Lord, Abbett & Co. LLC
c/o Legal Dept.
90 Hudson Street
Jersey City, NJ 07302
(1942) | | Trustee since 1998 | | Principal Occupation: Senior Advisor of Monitor Clipper Partners, a private equity investment fund (since1997); President of Clipper Asset Management Corp.(1991 - 2009). Other Directorships: Previously served as a director of Interstate Bakeries Corp. (1991 - 2008). |
158
Basic Information About Management (continued)
Name, Address and
Year of Birth | | Current Position and
Length of Service
with the Trust | | Principal Occupation and Other Directorships
During the Past Five Years |
Evelyn E. Guernsey Lord, Abbett & Co. LLC c/o Legal Dept.
90 Hudson Street
Jersey City, NJ 07302
(1955) | | Trustee since 2011 | | Principal Occupation: CEO, Americas of J.P. Morgan Asset Management (2004 - 2010). Other Directorships: None. |
| | | | | |
Julie A. Hill
Lord, Abbett & Co. LLC
c/o Legal Dept.
90 Hudson Street
Jersey City, NJ 07302
(1946) | | Trustee since 2004 | | Principal Occupation: Owner and CEO of The Hill Company, a business consulting firm (since 1998). Other Directorships: Currently serves as director of WellPoint, Inc., a health benefits company (since 1994). Previously served as a director of Lend Lease Corporation Limited, an international retail and residential property group (2006 - 2012). |
| | | | | |
Franklin W. Hobbs
Lord, Abbett & Co. LLC
c/o Legal Dept.
90 Hudson Street
Jersey City, NJ 07302
(1947) | | Trustee since 2001 | | Principal Occupation: Advisor of One Equity Partners, a private equity firm (since 2004). Other Directorships: Currently serves as director and Chairman of the Board of Ally Financial Inc., a financial services firm (since 2009), and as director of Molson Coors Brewing Company (since 2002). |
| | | | | |
James M. McTaggart
Lord, Abbett & Co. LLC
c/o Legal Dept.
90 Hudson Street
Jersey City, NJ 07302
(1947) | | Trustee since 2012 | | Principal Occupation: Independent management advisor and consultant (since 2012); Vice President, CRA International, Inc. (doing business as Charles River Associates), a global management consulting firm (2009 - 2012); Founder and Chairman of Marakon Associates, Inc., a strategy consulting firm (1978 -2009); and Officer and Director of Trinsum Group, a holding company (2007 - 2009). Other Directorships: Currently serves as director of Blyth, Inc., a home products company (since 2004). |
| | | | | |
James L.L. Tullis
Lord, Abbett & Co. LLC
c/o Legal Dept.
90 Hudson Street
Jersey City, NJ 07302
(1947) | | Trustee since 2006 | | Principal Occupation: CEO of Tullis-Dickerson and Co. Inc., a venture capital management firm (since 1990); CEO of Tullis Health Investors Inc. (since 2012). Other Directorships: Currently serves as director of Crane Co. (since 1998). Previously served as a director of Synageva BioPharma Corp., a biopharmaceutical company (2009 - 2011). |
159
Basic Information About Management (continued)
Officers
None of the officers listed below have received compensation from the Trust. All of the officers of the Trust also may be officers of the other Lord Abbett-sponsored funds and maintain offices at 90 Hudson Street, Jersey City, NJ 07302. Unless otherwise indicated, the position(s) and title(s) listed under the “Principal Occupation During the Past Five Years” column indicate each officer’s position(s) and title(s) with Lord Abbett.
Name and
Year of Birth | | Current Position
with the Trust | | Length of Service
of Current Position | | Principal Occupation
During the Past Five Years |
Daria L. Foster
(1954) | | President and Chief Executive Officer | | Elected as President in 2006 and Chief Executive Officer in 2012 | | Managing Partner of Lord Abbett (since 2007), and was formerly Director of Marketing and Client Service, joined Lord Abbett in 1990. |
| | | | | | | |
Robert I. Gerber
(1954) | | Executive Vice President | | Elected in 2005 | | Partner and Chief Investment Officer (since 2007), joined Lord Abbett in 1997 as Director of Taxable Fixed Income Management. |
| | | | | | | |
Todd D. Jacobson
(1966) | | Executive Vice President | | Elected in 2003 | | Partner and Portfolio Manager, joined Lord Abbett in 2003. |
| | | | | | | |
Deepak Khanna
(1963) | | Executive Vice President | | Elected in 2008 | | Partner and Portfolio Manager, rejoined Lord Abbett in 2007. |
| | | | | | | |
Thomas B. Maher
(1967) | | Executive Vice President | | Elected in 2008 | | Partner and Portfolio Manager, joined Lord Abbett in 2003. |
| | | | | | | |
Justin C. Maurer
(1969) | | Executive Vice President | | Elected in 2008 | | Partner and Portfolio Manager, joined Lord Abbett in 2001. |
| | | | | | | |
Vincent J. McBride
(1964) | | Executive Vice President | | Elected in 2003 | | Partner and Director, joined Lord Abbett in 2003. |
| | | | | | | |
F. Thomas O’Halloran, III
(1955) | | Executive Vice President | | Elected in 2003 | | Partner and Director, joined Lord Abbett in 2001. |
| | | | | | | |
Harold E. Sharon
(1960) | | Executive Vice President | | Elected in 2003 | | Partner and Director, joined Lord Abbett in 2003. |
| | | | | | | |
A. Edward Allinson
(1961) | | Vice President | | Elected in 2011 | | Portfolio Manager, joined Lord Abbett in 2005. |
| | | | | | | |
Sean J. Aurigemma
(1969) | | Vice President | | Elected in 2010 | | Portfolio Manager, joined Lord Abbett in 2007. |
| | | | | | | |
Joan A. Binstock
(1954) | | Chief Financial Officer and Vice President | | Elected in 1999 | | Partner and Chief Financial and Operations Officer, joined Lord Abbett in 1999. |
160
Basic Information About Management (concluded)
Name and
Year of Birth | | Current Position
with the Trust | | Length of Service
of Current
Position | | Principal Occupation
During the Past Five Years |
John K. Forst
(1960) | | Vice President and Assistant Secretary | | Elected in 2005 | | Partner and Deputy General Counsel, joined Lord Abbett in 2004. |
| | | | | | | |
Anthony W. Hipple
(1964) | | Vice President | | Elected in 2006 | | Portfolio Manager, joined Lord Abbett in 2002. |
| | | | | | | |
Lawrence H. Kaplan
(1957) | | Chief Compliance Officer, Vice President and Secretary | | Elected as Vice President and Secretary in 1997 and Chief Compliance Officer in 2013 | | Partner, General Counsel, and Chief Compliance Officer, joined Lord Abbett in 1997. |
| | | | | | | |
David J. Linsen
(1974) | | Vice President | | Elected in 2011 | | Partner and Director, joined Lord Abbett in 2001. |
| | | | | | | |
Steven M. Lipper
(1961) | | Vice President | | Elected in 2011 | | Director, Product Management, joined Lord Abbett in 2004. |
| | | | | | | |
A. Edward Oberhaus, III
(1959) | | Vice President | | Elected in 1993 | | Partner and Director, joined Lord Abbett in 1983. |
| | | | | | | |
Thomas R. Phillips
(1960) | | Vice President and Assistant Secretary | | Elected in 2008 | | Partner and Deputy General Counsel, joined Lord Abbett in 2006. |
| | | | | | | |
Lawrence B. Stoller
(1963) | | Vice President and Assistant Secretary | | Elected in 2007 | | Partner and Senior Deputy General Counsel, joined Lord Abbett in 2007. |
| | | | | | | |
Paul J. Volovich
(1973) | | Vice President | | Elected in 2011 | | Partner and Director, joined Lord Abbett in 1997. |
| | | | | | | |
Arthur K. Weise
(1970) | | Vice President | | Elected in 2011 | | Partner and Portfolio Manager, joined Lord Abbett in 2007. |
| | | | | | | |
Scott S. Wallner
(1955) | | AML Compliance Officer | | Elected in 2011 | | Assistant General Counsel, joined Lord Abbett in 2004. |
| | | | | | | |
Bernard J. Grzelak
(1971) | | Treasurer | | Elected in 2003 | | Partner and Director of Fund Administration, joined Lord Abbett in 2003. |
Please call 888-522-2388 for a copy of the statement of additional information, which contains further information about the Trust’s Trustees. It is available free upon request.
161
Householding
The Trust has adopted a policy that allows it to send only one copy of each Fund’s prospectus, proxy material, annual report and semiannual report to certain shareholders residing at the same “household.” This reduces Fund 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 888-522-2388 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 219336, Kansas City, MO 64121.
Proxy Voting Policies, Procedures and Records
A description of the policies and procedures that Lord Abbett uses to vote proxies related to each Fund’s portfolio securities, and information on how Lord Abbett voted each Fund’s proxies during the 12-month period ended June 30 are available without charge, upon request, (i) by calling 888-522-2388; (ii) on Lord Abbett’s Website at www.lordabbett.com; and (iii) on the Securities and Exchange Commission’s (“SEC”) Website at www.sec.gov.
Shareholder Reports and Quarterly Portfolio Disclosure
The Funds are required to file their complete schedule of portfolio holdings with the SEC for their first and third fiscal quarters on Form N-Q. Copies of the filings are available without charge, upon request on the SEC’s Website at www.sec.gov and may be available by calling Lord Abbett at 888-522-2388. You can also obtain copies of Form N-Q by visiting the SEC’s Public Reference Room in Washington, DC (information on the operation of the Public Reference Room may be obtained by calling 800-SEC-0330).
162
Tax Information
The percentages below reflect the portion of ordinary income distributions that are eligible for the corporate dividend received deduction (DRD) and qualified dividend income (QDI) for individual shareholders:
| Fund Name | DRD | | QDI | |
| Alpha Strategy Fund | — | | 100 | % |
| Fundamental Equity Fund | 100 | % | 100 | % |
| Growth Leaders Fund | 100 | % | 100 | % |
| International Core Equity Fund | — | | 100 | % |
| International Dividend Income Fund | — | | 92 | % |
| International Opportunities Fund | — | | 99 | % |
Additionally, of the distributions paid to shareholders during the fiscal year ended October 31, 2013, the following amounts represent long-term capital gains:
| Fund Name | | | |
| Alpha Strategy Fund | | $36,729,787 | |
| Fundamental Equity Fund | | 53,172,106 | |
International Core Equity Fund, International Dividend Income Fund and International Opportunities Fund intend to pass through foreign source income and foreign taxes as follows:
| Fund Name | | Foreign
Source Income | | | Foreign Taxes | |
| International Core Equity Fund | | | $ | 20,718,333 | | | $ | 2,145,438 | |
| International Dividend Income Fund | | | | 116,596,602 | | | | 10,877,781 | |
| International Opportunities Fund | | | | 7,661,889 | | | | 559,276 | |
163
 | | Lord Abbett Securities Trust Lord Abbett Alpha Strategy Fund
Lord Abbett Fundamental Equity Fund
Lord Abbett Growth Leaders Fund
Lord Abbett International Core Equity Fund
Lord Abbett International Dividend Income Fund
Lord Abbett International Opportunities Fund
Lord Abbett Value Opportunities Fund | |
| | | |
| 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. | | LST-2-1013
(12/13) |
2 0 1 3
L O R D A B B E T T
A N N U A L
R E P O R T
Lord Abbett
Micro Cap Growth Fund
Micro Cap Value Fund
For the fiscal year ended October 31, 2013
Table of Contents
Lord Abbett Securities Trust
Lord Abbett Micro Cap Growth Fund and Lord Abbett
Micro Cap Value Fund Annual Report
For the fiscal year ended October 31, 2013
Daria L. Foster, Trustee, President and Chief Executive Officer of the Lord Abbett Funds and E. Thayer Bigelow, Independent Chairman of the Lord Abbett Funds.
Dear Shareholders: We are pleased to provide you with this overview of the performance of the Funds for the fiscal year ended October 31, 2013. On this page and the following pages, we discuss the major factors that influenced fiscal year performance. For detailed and more timely information about the Funds, please visit our Website at www.lordabbett.com, where you also can access the quarterly commentaries that provide updates on each Fund’s performance and other portfolio related updates.
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,
Daria L. Foster
Trustee, President and Chief Executive Officer
Micro Cap Growth Fund
For the fiscal year ended October 31, 2013, the Fund returned 62.14%, reflecting performance at the net asset value (NAV) of Class A shares, with all distributions reinvested, compared to its benchmark, the Russell Microcap® Growth Index,1 which returned 42.08% over the same period.
Equity markets made considerable gains in the trailing 12-month period. Following the conclusion of the U.S. presidential election in November, and the last-minute resolution of the “fiscal cliff” in December, equity markets shook off challenges and marched significantly higher. By the end of the period in October,
1
broad market equity indexes had recently hit all-time highs.
We were pleased with the Fund’s outperformance during the period, which we attribute to our fundamentally driven process focusing on sound business models, capable management, competitive advantages, and favorable industry conditions.
Security selection within the information technology sector contributed the most to relative Fund performance during the period. Among notable contributors within the sector were solar energy companies that have benefited from growing global demand for alternative energy. SunPower Corporation, which designs solar power systems, saw its shares repeatedly rise to new 52-week highs during the period. The company saw a considerable increase in revenue from the United States as well as a surge in demand from Japan, as the country seeks alternatives to nuclear energy. Xoom Corp., a provider of customer-to-customer online money transfer services, also saw its shares rise since its initial public offering in February 2013. Earnings have exceeded expectations, supported by considerable growth from India. Xoom’s service is able to transfer money from the United States to India in less than four hours.
Security selection within the health care sector also contributed to relative Fund performance during the period. Biopharmaceutical company Celldex Therapeutics, Inc., which develops several immunotherapy technologies used in the treatment of cancer and other diseases, contributed the most within the sector. Shares of the company rose through much of the year, supported by five clinical-stage programs anticipated to add considerably to revenues in 2016 and beyond.
As the Fund enjoyed both strong absolute and relative performance, only a few segments of the Fund were significant detractors. There were two notable positions within the information technology sector that detracted from relative Fund performance. NQ Mobile, Inc. was among the largest such detractors. The provider of mobile Internet services saw its shares drop sharply during the period after an analyst report called into question the company’s transparency. Although the situation improved, we sold the position following the news. Shares of Velti plc, a global provider of mobile marketing and advertising technologies, also declined significantly. Shares slumped in the first month of the period following a quarterly earnings report that showed below consensus earnings and a surprise decision to divest assets. We sold our position in the company, thereby avoiding further declines in the second half of the period.
In addition, health care company Osiris Therapeutics, Inc. was among the biggest detractors from relative Fund performance during the period. Shares of the stem cell therapeutic company initially rose sharply in August 2013 following overwhelming support for the approval of a new treatment
2
for diabetics. After rising more than 150% in one day, shares corrected sharply, detracting from relative Fund performance.
Micro Cap Value Fund
For the fiscal year ended October 31, 2013, the Fund returned 31.00%, reflecting performance at the net asset value (NAV) of Class A shares, with all distributions reinvested, compared to its benchmark, Russell Microcap® Value Index2, which returned 36.65% over the same period.
In a period marred by a series of congressional showdowns culminating in a two-week governmental shutdown, an escalating Syrian civil war, fears of a slowing Asian economy, and an ongoing European debt crisis, domestic equity markets could have very easily experienced lackluster returns. Instead, positive investor sentiment driven by a continuation of global accommodative monetary policy and a rebounding U.S. housing market led to a significant broad market rally for the trailing 12-month period. Meanwhile, in an anemic economic recovery, investors favored small capitalization companies over large and, within the micro-cap space, growth companies over value.
Although the Fund exhibited a strong absolute return, stock selection, particularly within the industrials sector, was the main reason for relative underperformance during the period. Within the sector, notable detractors included Titan Machinery, Inc. and Performant Financial Corp. For Titan Machinery, investor concerns mounted following two consecutive lackluster earnings reports. Management of the operator of agricultural and construction equipment dealerships cited unseasonably cool weather and a challenging construction equipment market. In the case of Performant Financial, which provides technological services that aid in the identification and recovery of improper and delinquent payments, concerns regarding uncertainty in the renewal of the company’s recovery-audit-contractor (RAC) contract, a significant portion of Performant’s business, caused the firm’s shares to slide lower. These concerns acted as an overhang negating positive earnings results.
An additional significant detractor was SAExploration Holdings, Inc. The firm is a global provider of seismic data services to the oil and gas industry. Shares of the energy holding sold off after management released an operational update detailing issues that led to several project delays, which negatively affected earnings expectations.
Conversely, information technology (IT) was a significant positive in regards to the Fund’s relative performance as the top three contributors all hailed from this sector. The first, Electronics for Imaging, Inc., displayed consistent revenue growth aided by strength across multiple business segments. The provider of digital print products and solutions was able to capitalize on several significant original equipment manufacturers refreshing their product lines. A second top contributor, CTS Corp., finished the period with a return of more than 125%. The positive stock
3
performance can be attributed to management’s decision to reorganize and streamline the manufacture of electronic components and sensors businesses. A strategic acquisition, restructuring plan, and divesture of poor performing assets were all steps taken to boost profitability.
Virtusa Corp., a provider of IT outsourcing and consulting services, was the third major contributing information technology holding. The company experienced a combination of margin expansion and revenue growth fueling a steady but impressive rally in share price. In addition, a robust pipeline bolstered investors’ positive outlook.
Each Fund’s portfolio is actively managed and, therefore, its holdings and the weightings of a particular issuer or particular sector as a percentage of portfolio assets are subject to change. Sectors may include many industries.
1 The Russell Microcap® Growth Index measures the performance of the microcap growth segment of the U.S. equity market. It includes those Russell Microcap Index companies with higher price-to-book ratios and higher forecasted growth values.
2 The Russell Microcap® Value Index measures the performance of those Russell Microcap companies with lower price-to-book ratios and lower forecasted growth values.
Unless otherwise specified, indexes reflect total return, with all dividends reinvested. Indexes are unmanaged, do not reflect the deduction of fees or expenses, and are not available for direct investment.
Important Performance and Other Information
Performance data quoted in the following pages reflect past performance and are no guarantee of future results. Current performance may be higher or lower than the performance quoted. The investment return and principal value of an investment in each Fund will fluctuate so that shares, on any given day or when redeemed, may be worth more or less than their original cost. You can obtain performance data current to the most recent month end by calling Lord Abbett at 888-522-2388 or referring to www.lordabbett.com.
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 classes of shares with distinct pricing options. For a full description of the differences in pricing alternatives, please see each Fund’s prospectus.
During certain periods shown, expense waivers and reimbursements were in place. Without such expense reimbursements, the Funds’ returns would have been lower.
The annual commentary above discusses the views of the Funds’ management and various portfolio holdings of the Funds as of October 31, 2013. These views and portfolio holdings may have changed after this date. Information provided in the commentary is not a recommendation to buy or sell securities. Because the Funds’ portfolios are actively managed and may change significantly, the Funds may no longer own the securities described above or may have otherwise changed their positions in the securities. For more recent information about the Funds’ portfolio holdings, please visit www.lordabbett.com.
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 each Fund, please see each Fund’s prospectus.
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.
4
Micro Cap Growth Fund
Investment Comparison
Below is a comparison of a $10,000 investment in Class A shares with the same investment in the Russell Microcap® Index and the Russell Microcap® Growth Index, assuming reinvestment of all dividends and distributions. The performance of the other class will be greater than or less than the performance shown in the graph below due to different sales loads and expenses applicable to such class. The graph and performance table below do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. During certain periods, expenses of the Fund have been waived or reimbursed by Lord Abbett; without such waiver or reimbursement of expenses, the Fund’s returns would have been lower. Past performance is no guarantee of future results.
Average Annual Total Returns at Maximum Applicable
Sales Charge for the Periods Ended October 31, 2013
| | | 1 Year | | 5 Years | | 10 Years |
| Class A3 | | 52.78% | | 23.08% | | 12.92% |
| Class I4 | | 62.22% | | 24.80% | | 13.85% |
1 Reflects the deduction of the maximum initial sales charge of 5.75%.
2 Performance for each unmanaged index does not reflect any fees or expenses. The performance of each index is not necessarily representative of the Fund’s performance.
3 Total return, which is the percent change in net asset value, after deduction of the maximum initial sales charge of 5.75% applicable to Class A shares, with all dividends and distributions reinvested for the periods shown ended October 31, 2013, is calculated using the SEC required uniform method to compute such return.
4 Performance is at net asset value.
5
Micro Cap Value Fund
Investment Comparison
Below is a comparison of a $10,000 investment in Class A shares with the same investment in the Russell Microcap® Index and the Russell Microcap® Value Index, assuming reinvestment of all dividends and distributions. The performance of the other class will be greater than or less than the performance shown in the graph below due to different sales loads and expenses applicable to such class. The graph and performance table below do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. During certain periods, expenses of the Fund have been waived or reimbursed by Lord Abbett; without such waiver or reimbursement of expenses, the Fund’s returns would have been lower. Past performance is no guarantee of future results.
Average Annual Total Returns at Maximum Applicable
Sales Charge for the Periods Ended October 31, 2013
| | | 1 Year | | 5 Years | | 10 Years |
| Class A3 | | 23.45% | | 14.09% | | 10.22% |
| Class I4 | | 31.02% | | 15.69% | | 11.13% |
1 Reflects the deduction of the maximum initial sales charge of 5.75%.
2 Performance for each unmanaged index does not reflect any fees or expenses. The performance of each index is not necessarily representative of the Fund’s performance.
3 Total return, which is the percent change in net asset value, after deduction of the maximum initial sales charge of 5.75% applicable to Class A shares, with all dividends and distributions reinvested for the periods shown ended October 31, 2013, is calculated using the SEC required uniform method to compute such return.
4 Performance is at net asset value.
6
Expense Example
As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments (these charges vary among the share classes); and (2) ongoing costs, including management fees; distribution and service (12b-1) fees (these charges vary among the share classes); and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (May 1, 2013 through October 31, 2013).
Actual Expenses
For each class of each Fund, the first line of the tables on the following pages provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading titled “Expenses Paid During Period 5/1/13—10/31/13” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
For each class of each Fund, the second line of the tables on the following pages provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not each Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in each Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
7
Micro Cap Growth Fund
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads). Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| | | | Beginning
Account
Value | | | | Ending
Account
Value | | | Expenses
Paid During
Period† |
| | | | 5/1/13 | | | | 10/31/13 | | | 5/1/13 -
10/31/13 |
| Class A | | | | | | | | | | | | |
| Actual | | | $1,000.00 | | | | $1,342.70 | | | $ | 10.69 | |
| Hypothetical (5% Return Before Expenses) | | | $1,000.00 | | | | $1,016.09 | | | $ | 9.20 | |
| Class I | | | | | | | | | | | | |
| Actual | | | $1,000.00 | | | | $1,342.30 | | | $ | 10.69 | |
| Hypothetical (5% Return Before Expenses) | | | $1,000.00 | | | | $1,016.09 | | | $ | 9.20 | |
| † | For each class of the Fund, net expenses are equal to the annualized expense ratio for such class (1.81% for Classes A and I) multiplied by the average account value over the period, multiplied by 184/365 (to reflect one-half year period). |
Portfolio Holdings Presented by Sector
October 31, 2013
| Sector* | %** |
| Consumer Discretionary | 13.43 | % |
| Consumer Staples | 5.54 | % |
| Energy | 4.57 | % |
| Financials | 7.53 | % |
| Health Care | 23.37 | % |
| Industrials | 11.41 | % |
| Information Technology | 28.46 | % |
| Materials | 1.70 | % |
| Repurchase Agreement | 3.99 | % |
| Total | 100.00 | % |
| * | A sector may comprise several industries. |
| ** | Represents percent of total investments. |
8
Micro Cap Value Fund
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads). Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| | | | Beginning
Account
Value | | | | Ending
Account
Value | | | | Expenses
Paid During
Period† | |
| | | | 5/1/13 | | | | 10/31/13 | | | | 5/1/13 -
10/31/13 | |
| Class A | | | | | | | | | | | | |
| Actual | | | $1,000.00 | | | | $1,160.30 | | | | $9.69 | |
| Hypothetical (5% Return Before Expenses) | | | $1,000.00 | | | | $1,016.21 | | | | $9.05 | |
| Class I | | | | | | | | | | | | |
| Actual | | | $1,000.00 | | | | $1,160.20 | | | | $9.69 | |
| Hypothetical (5% Return Before Expenses) | | | $1,000.00 | | | | $1,016.21 | | | | $9.05 | |
| † | For each class of the Fund, net expenses are equal to the annualized expense ratio for such class (1.78% for Classes A and I) multiplied by the average account value over the period, multiplied by 184/365 (to reflect one-half year period). |
Portfolio Holdings Presented by Sector
October 31, 2013
| Sector* | %** |
| Consumer Discretionary | 13.08 | % |
| Energy | 2.05 | % |
| Financials | 34.42 | % |
| Health Care | 6.13 | % |
| Industrials | 23.55 | % |
| Information Technology | 8.73 | % |
| Materials | 4.68 | % |
| Utilities | 2.94 | % |
| Repurchase Agreement | 4.42 | % |
| Total | 100.00 | % |
| * | A sector may comprise several industries. |
| ** | Represents percent of total investments. |
9
Schedule of Investments
MICRO CAP GROWTH FUND October 31, 2013
| | | | | | Fair | |
| | | | | | Value | |
| Investments | | Shares | | | (000) | |
| COMMON STOCKS 96.85% | | | | | | | | |
| | | | | | | | | |
| Aerospace & Defense 0.82% | | | | | | | | |
| Astronics Corp.* | | | 22,388 | | | $ | 1,098 | |
| Astronics Corp. Class B* | | | 3,045 | | | | 147 | |
| Total | | | | | | | 1,245 | |
| | | | | | | | | |
| Air Freight & Logistics 0.24% | | | | | | | | |
| Echo Global Logistics, Inc.* | | | 20,062 | | | | 369 | |
| | | | | | | | | |
| Beverages 0.88% | | | | | | | | |
| Craft Brew Alliance, Inc.* | | | 82,303 | | | | 1,335 | |
| | | | | | | | | |
| Biotechnology 11.34% | | | | | | | | |
| Array BioPharma, Inc.* | | | 343,157 | | | | 1,723 | |
| Epizyme, Inc.* | | | 31,044 | | | | 1,190 | |
| Foundation Medicine, Inc.* | | | 45,770 | | | | 1,459 | |
| Genomic Health, Inc.* | | | 25,604 | | | | 766 | |
| Intercept Pharmaceuticals, Inc.* | | | 25,183 | | | | 1,366 | |
| InterMune, Inc.* | | | 53,401 | | | | 752 | |
| Keryx Biopharmaceuticals, Inc.* | | | 285,792 | | | | 2,958 | |
| KYTHERA Biopharmaceuticals, Inc.* | | | 33,897 | | | | 1,515 | |
| Onconova Therapeutics, Inc.* | | | 52,647 | | | | 829 | |
| Osiris Therapeutics, Inc.* | | | 49,985 | | | | 665 | |
| Raptor Pharmaceutical Corp.* | | | 176,910 | | | | 2,544 | |
| Sarepta Therapeutics, Inc.* | | | 19,613 | | | | 764 | |
| Verastem, Inc.* | | | 72,206 | | | | 722 | |
| Total | | | | | | | 17,253 | |
| | | | | | | | | |
| Building Products 1.66% | | | | | | | | |
| Trex Co., Inc.* | | | 35,976 | | | | 2,526 | |
| | | | | | | | | |
| Capital Markets 2.25% | | | | | | | | |
| HFF, Inc. Class A | | | 82,725 | | | | 2,031 | |
| Silvercrest Asset Management Group, Inc. Class A* | | | 94,366 | | | | 1,394 | |
| Total | | | | | | | 3,425 | |
| | | | | | Fair | |
| | | | | | Value | |
| Investments | | Shares | | | (000) | |
| Chemicals 1.72% | | | | | | | | |
| Flotek Industries, Inc.* | | | 122,478 | | | $ | 2,619 | |
| | | | | | | | | |
| Commercial Banks 1.29% | | | | | | | | |
| Pinnacle Financial Partners, Inc.* | | | 63,446 | | | | 1,967 | |
| | | | | | | | | |
| Commercial Services & Supplies 0.42% | | | | | | | | |
| MiX Telematics Ltd. ADR* | | | 14,599 | | | | 190 | |
| Performant Financial Corp.* | | | 45,832 | | | | 457 | |
| Total | | | | | | | 647 | |
| | | | | | | | | |
| Communications Equipment 1.38% | | | | | | | | |
| Infinera Corp.* | | | 112,099 | | | | 1,145 | |
| Oplink Communications, Inc.* | | | 52,568 | | | | 959 | |
| Total | | | | | | | 2,104 | |
| | | | | | | | | |
| Computers & Peripherals 0.60% | | | | | | | | |
| Cray, Inc.* | | | 40,965 | | | | 916 | |
| | | | | | | | | |
| Construction & Engineering 1.51% | | | | | | | | |
| MYR Group, Inc.* | | | 34,981 | | | | 925 | |
| Orion Marine Group, Inc.* | | | 110,204 | | | | 1,378 | |
| Total | | | | | | | 2,303 | |
| | | | | | | | | |
| Consumer Finance 1.28% | | | | | | | | |
| Encore Capital Group, Inc.* | | | 39,849 | | | | 1,947 | |
| | | | | | | | | |
| Diversified Consumer Services 2.19% | | | | | | | | |
| LifeLock, Inc.* | | | 207,640 | | | | 3,341 | |
| | | | | | | | | |
| Electrical Equipment 1.90% | | | | | | | | |
| Power Solutions International, Inc.* | | | 49,703 | | | | 2,896 | |
| | | | | | | | | |
| Electronic Equipment, Instruments & Components 3.97% | | | | | | | | |
| Fabrinet* | | | 53,974 | | | | 903 | |
| FARO Technologies, Inc.* | | | 38,481 | | | | 1,828 | |
| InvenSense, Inc.* | | | 72,180 | | | | 1,219 | |
| Methode Electronics, Inc. | | | 81,882 | | | | 2,095 | |
| Total | | | | | | | 6,045 | |
| 10 | See Notes to Financial Statements. |
Schedule of Investments (continued)
MICRO CAP GROWTH FUND October 31, 2013
| | | | | | Fair | |
| | | | | | Value | |
| Investments | | Shares | | | (000) | |
| Energy Equipment & Services 2.04% | | | | | | | | |
| RigNet, Inc.* | | | 84,057 | | | $ | 3,098 | |
| | | | | | | | | |
| Food & Staples Retailing 2.44% | | | | | | | | |
| Chefs’ Warehouse, Inc. (The)* | | | 59,881 | | | | 1,435 | |
| Natural Grocers by Vitamin Cottage, Inc.* | | | 56,968 | | | | 2,273 | |
| Total | | | | | | | 3,708 | |
| | | | | | | | | |
| Food Products 2.27% | | | | | | | | |
| Annie’s, Inc.* | | | 39,859 | | | | 1,883 | |
| Boulder Brands, Inc.* | | | 96,136 | | | | 1,576 | |
| Total | | | | | | | 3,459 | |
| | | | | | | | | |
| Health Care Equipment & Supplies 4.15% | | | | | | | | |
| Endologix, Inc.* | | | 131,144 | | | | 2,370 | |
| Novadaq Technologies, Inc. (Canada)*(a) | | | 96,898 | | | | 1,602 | |
| ZELTIQ Aesthetics, Inc.* | | | 181,383 | | | | 2,352 | |
| Total | | | | | | | 6,324 | |
| | | | | | | | | |
| Health Care Providers & Services 2.79% | | | | | | | | |
| ExamWorks Group, Inc.* | | | 89,496 | | | | 2,313 | |
| IPC The Hospitalist Co., Inc.* | | | 35,172 | | | | 1,927 | |
| Total | | | | | | | 4,240 | |
| | | | | | | | | |
| Health Care Technology 1.50% | | | | | | | | |
| HealthStream, Inc.* | | | 63,784 | | | | 2,278 | |
| | | | | | | | | |
| Hotels, Restaurants & Leisure 4.91% | | | | | | | | |
| Chuy’s Holdings, Inc.* | | | 52,403 | | | | 1,970 | |
| Fiesta Restaurant Group, Inc.* | | | 36,988 | | | | 1,568 | |
| Multimedia Games Holding Co., Inc.* | | | 23,375 | | | | 760 | |
| Red Robin Gourmet Burgers, Inc.* | | | 25,302 | | | | 1,927 | |
| Sonic Corp.* | | | 64,396 | | | | 1,243 | |
| Total | | | | | | | 7,468 | |
| | | | | | | | | |
| Household Durables 1.25% | | | | | | | | |
| iRobot Corp.* | | | 56,015 | | | | 1,897 | |
| | | | | | Fair | |
| | | | | | Value | |
| Investments | | Shares | | | (000) | |
| Information Technology Services 2.70% | | | | | | | | |
| EPAM Systems, Inc.* | | | 33,189 | | | $ | 1,244 | |
| Luxoft Holding, Inc.* | | | 98,016 | | | | 2,864 | |
| Total | | | | | | | 4,108 | |
| | | | | | | | | |
| Insurance 2.77% | | | | | | | | |
| eHealth, Inc.* | | | 64,926 | | | | 2,767 | |
| Hilltop Holdings, Inc.* | | | 83,533 | | | | 1,449 | |
| Total | | | | | | | 4,216 | |
| | | | | | | | | |
| Internet Software & Services 10.56% | | | | | | | | |
| Benefitfocus, Inc.* | | | 36,643 | | | | 1,836 | |
| comScore, Inc.* | | | 38,515 | | | | 1,029 | |
| Demandware, Inc.* | | | 21,298 | | | | 1,053 | |
| Envestnet, Inc.* | | | 67,685 | | | | 2,457 | |
| Marketo, Inc.* | | | 21,635 | | | | 730 | |
| Responsys, Inc.* | | | 92,230 | | | | 1,507 | |
| Rocket Fuel, Inc.* | | | 11,400 | | | | 582 | |
| Stamps.com, Inc.* | | | 42,838 | | | | 1,947 | |
| Textura Corp.* | | | 28,056 | | | | 1,075 | |
| Trulia, Inc.* | | | 24,147 | | | | 965 | |
| Xoom Corp.* | | | 97,011 | | | | 2,886 | |
| Total | | | | | | | 16,067 | |
| | | | | | | | | |
| Leisure Equipment & Products 0.46% | | | | | | | | |
| Arctic Cat, Inc. | | | 13,325 | | | | 698 | |
| | | | | | | | | |
| Life Sciences Tools & Services 2.51% | | | | | | | | |
| Fluidigm Corp.* | | | 121,231 | | | | 3,819 | |
| | | | | | | | | |
| Machinery 3.94% | | | | | | | | |
| Dynamic Materials Corp. | | | 39,851 | | | | 881 | |
| RBC Bearings, Inc.* | | | 18,241 | | | | 1,255 | |
| voxeljet AG ADR* | | | 113,400 | | | | 3,864 | |
| Total | | | | | | | 6,000 | |
| | | | | | | | | |
| Media 3.75% | | | | | | | | |
| Entravision Communications Corp. Class A | | | 259,290 | | | | 1,748 | |
| Nexstar Broadcasting Group, Inc. Class A | | | 30,851 | | | | 1,369 | |
| Rentrak Corp.* | | | 69,234 | | | | 2,596 | |
| Total | | | | | | | 5,713 | |
| | See Notes to Financial Statements. | 11 |
Schedule of Investments (continued)
MICRO CAP GROWTH FUND October 31, 2013
| | | | | | Fair | |
| | | | | | Value | |
| Investments | | Shares | | | (000) | |
| Oil, Gas & Consumable Fuels 2.58% | | | | | | | | |
| GasLog Ltd. (Monaco)(a) | | | 155,564 | | | $ | 2,315 | |
| Goodrich Petroleum Corp.* | | | 41,232 | | | | 964 | |
| Renewable Energy Group, Inc.* | | | 58,833 | | | | 642 | |
| Total | | | | | | | 3,921 | |
| | | | | | | | | |
| Pharmaceuticals 1.29% | | | | | | | | |
| Cadence Pharmaceuticals, Inc.* | | | 128,340 | | | | 633 | |
| Santarus, Inc.* | | | 56,842 | | | | 1,326 | |
| Total | | | | | | | 1,959 | |
| | | | | | | | | |
| Semiconductors & Semiconductor Equipment 3.75% | | | | | | | | |
| Canadian Solar, Inc. (Canada)*(a) | | | 65,378 | | | | 1,504 | |
| MagnaChip Semiconductor Corp. (South Korea)*(a) | | | 50,662 | | | | 947 | |
| Monolithic Power Systems, Inc. | | | 40,617 | | | | 1,293 | |
| Rubicon Technology, Inc.* | | | 66,065 | | | | 568 | |
| Trina Solar Ltd. ADR* | | | 95,249 | | | | 1,397 | |
| Total | | | | | | | 5,709 | |
| | | | | | | | | |
| Software 5.74% | | | | | | | | |
| Fleetmatics Group plc (Ireland)*(a) | | | 33,320 | | | | 1,058 | |
| Gigamon, Inc.* | | | 35,397 | | | | 1,089 | |
| Imperva, Inc.* | | | 19,007 | | | | 729 | |
| Proofpoint, Inc.* | | | 40,665 | | | | 1,287 | |
| PROS Holdings, Inc.* | | | 46,750 | | | | 1,653 | |
| Rally Software Development Corp.* | | | 54,566 | | | | 1,464 | |
| Silver Spring Networks, Inc.* | | | 66,633 | | | | 1,455 | |
| Total | | | | | | | 8,735 | |
| | | | | | | | | |
| Textiles, Apparel & Luxury Goods 0.99% | | | | | | | | |
| G-III Apparel Group Ltd.* | | | 26,446 | | | | 1,500 | |
| | | | | | | | | |
| Trading Companies & Distributors 1.01% | | | | | | | | |
| H&E Equipment Services, Inc.* | | | 61,151 | | | | 1,531 | |
Total Common Stocks
(cost $114,436,289) | | | | | | | 147,386 | |
| | | Principal | | | Fair | |
| | | Amount | | | Value | |
| Investments | | (000) | | | (000) | |
| SHORT-TERM INVESTMENT 4.02% | | | | | | | | |
| | | | | | | | | |
| Repurchase Agreement | | | | | | | | |
Repurchase Agreement dated 10/31/2013, Zero Coupon due 11/1/2013 with Fixed Income Clearing Corp. collateralized by $5,975,000 of U.S. Treasury Note at 2.125% due 12/31/2015; value: $6,246,635; proceeds: $6,120,056
(cost $6,120,056) | | $ | 6,120 | | | $ | 6,120 | |
Total Investments in Securities 100.87%
(cost $120,556,345) | | | | | | | 153,506 | |
| Liabilities in Excess of Cash and Other Assets (0.87)% | | | | | | | (1,320 | ) |
| Net Assets 100.00% | | | | | | $ | 152,186 | |
| ADR | | American Depositary Receipt. |
| * | | Non-income producing security. |
| (a) | | Foreign security traded in U.S. dollars. |
| 12 | See Notes to Financial Statements. |
Schedule of Investments (concluded)
MICRO CAP GROWTH FUND October 31, 2013
The following is a summary of the inputs used as of October 31, 2013 in valuing the Fund’s investments carried at fair value(1):
| | | Level 1 | | | Level 2 | | | Level 3 | | | | |
| Investment Type(2)(3) | | (000) | | | (000) | | | (000) | | | Total | |
| Common Stocks | | $ | 147,386 | | | $ | — | | | $ | — | | | $ | 147,386 | |
| Repurchase Agreement | | | — | | | | 6,120 | | | | — | | | | 6,120 | |
| Total | | $ | 147,386 | | | $ | 6,120 | | | $ | — | | | $ | 153,506 | |
| (1) | Refer to note 2(g) for a description of fair value measurements and the three-tier hierarchy of inputs. |
| (2) | See Schedule of Investments for fair values in each industry and identification of foreign issuers and/or geography. |
| (3) | There were no level transfers during the fiscal year ended October 31, 2013. |
| | See Notes to Financial Statements. | 13 |
Schedule of Investments
MICRO CAP VALUE FUND October 31, 2013
| | | | | | Fair | |
| | | | | | Value | |
| Investments | | Shares | | | (000) | |
| COMMON STOCKS 95.27% | | | | | | | | |
| | | | | | | | | |
| Aerospace & Defense 0.56% | | | | | | | | |
| Erickson Air-Crane, Inc.* | | | 46,000 | | | $ | 902 | |
| | | | | | | | | |
| Auto Components 5.00% | | | | | | | | |
| Dorman Products, Inc. | | | 21,900 | | | | 1,064 | |
| Drew Industries, Inc. | | | 43,910 | | | | 2,207 | |
| Gentherm, Inc.* | | | 155,300 | | | | 3,626 | |
| Tower International, Inc.* | | | 52,300 | | | | 1,110 | |
| Total | | | | | | | 8,007 | |
| | | | | | | | | |
| Building Products 1.27% | | | | | | | | |
| Patrick Industries, Inc.* | | | 65,200 | | | | 2,039 | |
| | | | | | | | | |
| Capital Markets 3.19% | | | | | | | | |
| Silvercrest Asset Management Group, Inc. Class A* | | | 169,732 | | | | 2,507 | |
| Westwood Holdings Group, Inc. | | | 48,700 | | | | 2,597 | |
| Total | | | | | | | 5,104 | |
| | | | | | | | | |
| | | | | | | | | |
| Chemicals 2.52% | | | | | | | | |
| Chase Corp. | | | 39,000 | | | | 1,180 | |
| KMG Chemicals, Inc. | | | 58,948 | | | | 1,178 | |
| Quaker Chemical Corp. | | | 22,000 | | | | 1,670 | |
| Total | | | | | | | 4,028 | |
| | | | | | | | | |
| Commercial Banks 21.78% | | | | | | | | |
| Bancorp, Inc. (The)* | | | 61,900 | | | | 1,001 | |
| Bank of Marin Bancorp | | | 44,600 | | | | 1,898 | |
| BNC Bancorp | | | 151,300 | | | | 1,983 | |
| Bryn Mawr Bank Corp. | | | 58,982 | | | | 1,643 | |
| CoBiz Financial, Inc. | | | 318,766 | | | | 3,459 | |
| First Financial Holdings, Inc. | | | 51,900 | | | | 3,110 | |
| Lakeland Financial Corp. | | | 79,900 | | | | 2,844 | |
| Northrim BanCorp, Inc. | | | 22,423 | | | | 563 | |
| Pacific Premier Bancorp, Inc.* | | | 157,200 | | | | 2,187 | |
| Park Sterling Corp. | | | 370,800 | | | | 2,414 | |
| Renasant Corp. | | | 104,200 | | | | 2,988 | |
| Sandy Spring Bancorp, Inc. | | | 90,600 | | | | 2,219 | |
| Southern National Bancorp of Virginia, Inc. | | | 151,600 | | | | 1,478 | |
| | | | | | Fair | |
| | | | | | Value | |
| Investments | | Shares | | | (000) | |
| Tristate Capital | | | | | | | | |
| Holdings, Inc.* | | | 174,645 | | | $ | 2,185 | |
| Union First Market Bankshares Corp. | | | 105,500 | | | | 2,545 | |
| Wilshire Bancorp, Inc. | | | 277,400 | | | | 2,349 | |
| Total | | | | | | | 34,866 | |
| | | | | | | | | |
| Commercial Services & Supplies 4.26% | | | | | | | | |
| McGrath RentCorp | | | 50,500 | | | | 1,801 | |
| Mobile Mini, Inc.* | | | 50,600 | | | | 1,828 | |
| Multi-Color Corp. | | | 72,500 | | | | 2,525 | |
| Performant Financial Corp.* | | | 67,505 | | | | 673 | |
| Total | | | | | | | 6,827 | |
| | | | | | | | | |
| Computers & Peripherals 1.31% | | | | | | | | |
| Electronics for Imaging, Inc.* | | | 61,000 | | | | 2,093 | |
| | | | | | | | | |
| Construction & Engineering 1.64% | | | | | | | | |
| Great Lakes Dredge & Dock Corp. | | | 322,400 | | | | 2,618 | |
| | | | | | | | | |
| Diversified Financial Services 0.96% | | | | | | | | |
| Marlin Business Services Corp. | | | 55,876 | | | | 1,540 | |
| | | | | | | | | |
| Electrical Equipment 2.78% | | | | | | | | |
| AZZ, Inc. | | | 31,100 | | | | 1,396 | |
| Powell Industries, Inc.* | | | 48,495 | | | | 3,047 | |
| Total | | | | | | | 4,443 | |
| | | | | | | | | |
| Electronic Equipment, Instruments & Components 2.45% | | | | | | | | |
| CTS Corp. | | | 151,025 | | | | 2,812 | |
| Measurement Specialties, Inc.* | | | 19,900 | | | | 1,109 | |
| Total | | | | | | | 3,921 | |
| | | | | | | | | |
| Energy Equipment & Services 0.64% | | | | | | | | |
| SAExploration Holdings, Inc. (Canada)*(a) | | | 143,900 | | | | 1,025 | |
| | | | | | | | | |
| Gas Utilities 1.63% | | | | | | | | |
| Chesapeake Utilities Corp. | | | 48,000 | | | | 2,612 | |
| 14 | See Notes to Financial Statements. |
Schedule of Investments (continued)
MICRO CAP VALUE FUND October 31, 2013
| | | | | | Fair | |
| | | | | | Value | |
| Investments | | Shares | | | (000) | |
| Health Care Equipment & Supplies 3.48% | | | | | | | | |
| Given Imaging Ltd. (Israel)*(a) | | | 134,200 | | | $ | 2,714 | |
| Invacare Corp. | | | 133,500 | | | | 2,866 | |
| Total | | | | | | | 5,580 | |
| | | | | | | | | |
| Health Care Providers & Services 2.62% | | | | | | | | |
| BioScrip, Inc.* | | | 119,000 | | | | 834 | |
| CorVel Corp.* | | | 62,540 | | | | 2,602 | |
| U.S. Physical Therapy, Inc. | | | 23,995 | | | | 766 | |
| Total | | | | | | | 4,202 | |
| | | | | | | | | |
| Hotels, Restaurants & Leisure 0.35% | | | | | | | | |
| Marcus Corp. (The) | | | 39,532 | | | | 568 | |
| | | | | | | | | |
| Information Technology Services 2.69% | | | | | | | | |
| Computer Task Group, Inc. | | | 88,435 | | | | 1,515 | |
| Virtusa Corp.* | | | 89,581 | | | | 2,784 | |
| Total | | | | | | | 4,299 | |
| | | | | | | | | |
| Insurance 3.58% | | | | | | | | |
| AMERISAFE, Inc. | | | 80,000 | | | | 3,080 | |
| HCI Group, Inc. | | | 60,300 | | | | 2,650 | |
| Total | | | | | | | 5,730 | |
| | | | | | | | | |
| Machinery 4.62% | | | | | | | | |
| Dynamic Materials Corp. | | | 92,500 | | | | 2,044 | |
| FreightCar America, Inc. | | | 87,500 | | | | 1,946 | |
| Lydall, Inc.* | | | 74,800 | | | | 1,363 | |
| Twin Disc, Inc. | | | 79,050 | | | | 2,045 | |
| Total | | | | | | | 7,398 | |
| | | | | | | | | |
| Media 1.82% | | | | | | | | |
| Carmike Cinemas, Inc.* | | | 127,000 | | | | 2,907 | |
| | | | | | | | | |
| Metals & Mining 1.40% | | | | | | | | |
| A. M. Castle & Co.* | | | 23,700 | | | | 339 | |
| Synalloy Corp. | | | 88,309 | | | | 1,421 | |
| Universal Stainless & Alloy | | | | | | | | |
| Products, Inc.* | | | 14,668 | | | | 474 | |
| Total | | | | | | | 2,234 | |
| | | | | | Fair | |
| | | | | | Value | |
| Investments | | Shares | | | (000) | |
| Oil, Gas & Consumable Fuels 1.40% | | | | | | | | |
| Triangle Petroleum Corp.* | | | 212,000 | | | $ | 2,241 | |
| | | | | | | | | |
| Paper & Forest Products 0.75% | | | | | | | | |
| Neenah Paper, Inc. | | | 29,375 | | | | 1,208 | |
| | | | | | | | | |
| Real Estate Investment Trusts 2.92% | | | | | | | | |
| AmREIT, Inc. | | | 64,200 | | | | 1,130 | |
| Parkway Properties, Inc. | | | 65,300 | | | | 1,183 | |
| Terreno Realty Corp. | | | 133,200 | | | | 2,368 | |
| Total | | | | | | | 4,681 | |
| | | | | | | | | |
| Road & Rail 2.10% | | | | | | | | |
| Marten Transport Ltd. | | | 100,578 | | | | 1,774 | |
| Roadrunner Transportation | | | | | | | | |
| Systems, Inc.* | | | 60,000 | | | | 1,590 | |
| Total | | | | | | | 3,364 | |
| | | | | | | | | |
| Semiconductors & Semiconductor Equipment 0.98% | | | | | | | | |
| FormFactor, Inc.* | | | 301,500 | | | | 1,574 | |
| | | | | | | | | |
| Software 1.28% | | | | | | | | |
| Tangoe, Inc.* | | | 107,163 | | | | 2,047 | |
| | | | | | | | | |
| Specialty Retail 4.38% | | | | | | | | |
| Asbury Automotive Group, Inc.* | | | 26,154 | | | | 1,257 | |
| Big 5 Sporting Goods Corp. | | | 58,200 | | | | 1,100 | |
| Lithia Motors, Inc. Class A | | | 19,700 | | | | 1,238 | |
| Shoe Carnival, Inc. | | | 60,300 | | | | 1,567 | |
| Stein Mart, Inc. | | | 72,300 | | | | 1,068 | |
| Tilly’s, Inc. Class A* | | | 53,500 | | | | 779 | |
| Total | | | | | | | 7,009 | |
| | | | | | | | | |
| Textiles, Apparel & Luxury Goods 1.49% | | | | | | | | |
| Culp, Inc. | | | 123,400 | | | | 2,388 | |
| | | | | | | | | |
| Thrifts & Mortgage Finance 1.88% | | | | | | | | |
| Federal Agricultural Mortgage Corp. Class C | | | 84,400 | | | | 3,012 | |
| | See Notes to Financial Statements. | 15 |
Schedule of Investments (concluded)
MICRO CAP VALUE FUND October 31, 2013
| | | | | | Fair | |
| | | | | | Value | |
| Investments | | Shares | | | (000) | |
| Trading Companies & Distributors 6.24% | | | | | | | | |
| Aceto Corp. | | | 178,600 | | | $ | 2,849 | |
| H&E Equipment | | | | | | | | |
| Services, Inc.* | | | 109,300 | | | | 2,736 | |
| Houston Wire & Cable Co. | | | 143,000 | | | | 1,983 | |
| Rush Enterprises, Inc. | | | | | | | | |
| Class A* | | | 84,400 | | | | 2,415 | |
| Total | | | | | | | 9,983 | |
| | | | | | | | | |
| Water Utilities 1.30% | | | | | | | | |
| Connecticut Water Service, Inc. | | | 64,700 | | | | 2,074 | |
Total Common Stocks
(cost $115,272,946) | | | | | | | 152,524 | |
| | | Principal | | | Fair | |
| | | Amount | | | Value | |
| Investments | | (000) | | | (000) | |
| SHORT-TERM INVESTMENT 4.40% | | | | | | | | |
| | | | | | | | | |
| Repurchase Agreement | | | | | | | | |
Repurchase Agreement dated 10/31/2013, Zero Coupon due 11/1/2013 with Fixed Income Clearing Corp. collateralized by $6,880,000 of U.S. Treasury Note at 2.125% due 12/31/2015; value: $7,192,779; proceeds: $7,051,642
(cost $7,051,642) | | $ | 7,052 | | | $ | 7,052 | |
Total Investments in Securities 99.67%
(cost $122,324,588) | | | | | | | 159,576 | |
| Cash and Other Assets in Excess of Liabilities 0.33% | | | | | | | 527 | |
| Net Assets 100.00% | | | | | | $ | 160,103 | |
| * | Non-income producing security. |
| (a) | Foreign security traded in U.S. dollars. |
The following is a summary of the inputs used as of October 31, 2013 in valuing the Fund’s investments carried at fair value(1):
| | | Level 1 | | | Level 2 | | | Level 3 | | | | |
| Investment Type(2)(3) | | (000) | | | (000) | | | (000) | | | Total | |
| Common Stocks | | $ | 152,524 | | | $ | — | | | $ | — | | | $ | 152,524 | |
| Repurchase Agreement | | | — | | | | 7,052 | | | | — | | | | 7,052 | |
| Total | | $ | 152,524 | | | $ | 7,052 | | | $ | — | | | $ | 159,576 | |
| (1) | Refer to note 2(g) for a description of fair value measurements and the three-tier hierarchy of inputs. |
| (2) | See Schedule of Investments for fair values in each industry and identification of foreign issuers and/or geography. |
| (3) | There were no level transfers during the fiscal year ended October 31, 2013. |
| 16 | See Notes to Financial Statements. |
Statements of Assets and Liabilities
October 31, 2013
| | | Micro Cap | | | Micro Cap | |
| | | Growth Fund | | | Value Fund | |
| ASSETS: | | | | | | | | |
| Investments in securities, at cost | | $ | 120,556,345 | | | $ | 122,324,588 | |
| Investments in securities, at fair value | | $ | 153,506,343 | | | $ | 159,575,904 | |
| Cash | | | 573,621 | | | | 660,937 | |
| Receivables: | | | | | | | | |
| Investment securities sold | | | 467,155 | | | | 665,053 | |
| Dividends | | | — | | | | 42,434 | |
| Capital shares sold | | | 21,153 | | | | 9,251 | |
| Prepaid expenses | | | 6,085 | | | | 14,106 | |
| Total assets | | | 154,574,357 | | | | 160,967,685 | |
| LIABILITIES: | | | | | | | | |
| Payables: | | | | | | | | |
| Investment securities purchased | | | 2,133,423 | | | | 602,662 | |
| Capital shares reacquired | | | — | | | | 223 | |
| Management fee | | | 193,913 | | | | 198,298 | |
| 12b-1 distribution fees | | | 203 | | | | 435 | |
| Trustees’ fees | | | 9,730 | | | | 12,256 | |
| Fund administration | | | 5,171 | | | | 5,288 | |
| To affiliate (See Note 3) | | | 11,052 | | | | 9,587 | |
| Accrued expenses | | | 34,594 | | | | 35,965 | |
| Total liabilities | | | 2,388,086 | | | | 864,714 | |
| NET ASSETS | | $ | 152,186,271 | | | $ | 160,102,971 | |
| COMPOSITION OF NET ASSETS: | | | | | | | | |
| Paid-in capital | | $ | 81,596,796 | | | $ | 104,764,263 | |
| Accumulated net investment loss | | | (519,748 | ) | | | (563,727 | ) |
| Accumulated net realized gain on investments | | | 38,159,225 | | | | 18,651,119 | |
| Net unrealized appreciation on investments | | | 32,949,998 | | | | 37,251,316 | |
| Net Assets | | $ | 152,186,271 | | | $ | 160,102,971 | |
| Net assets by class: | | | | | | | | |
| Class A Shares | | $ | 11,219,630 | | | $ | 32,009,871 | |
| Class I Shares | | $ | 140,966,641 | | | $ | 128,093,100 | |
| Outstanding shares by class (unlimited number of authorized shares of beneficial interest): | | | | | | | | |
| Class A Shares | | | 497,207 | | | | 921,414 | |
| Class I Shares | | | 5,980,893 | | | | 3,580,794 | |
| Net asset value, offering and redemption price per share (Net assets divided by outstanding shares): | | | | | | | | |
| Class A Shares-Net asset value | | | $22.57 | | | | $34.74 | |
| Class A Shares-Maximum offering price (Net asset value plus sales charge of 5.75%) | | | $23.95 | | | | $36.86 | |
| Class I Shares-Net asset value | | | $23.57 | | | | $35.77 | |
| | See Notes to Financial Statements. | 17 |
Statements of Operations
For the Year Ended October 31, 2013
| | | Micro Cap | | | Micro Cap | |
| | | Growth Fund | | | Value Fund | |
| Investment income: | | | | | | | | |
| Dividends (net of foreign withholding taxes of $390 and $0, respectively) | | $ | 260,789 | | | $ | 2,089,308 | |
| Interest | | | 181 | | | | 165 | |
| Total investment income | | | 260,970 | | | | 2,089,473 | |
| Expenses: | | | | | | | | |
| Management fee | | | 1,848,280 | | | | 2,101,206 | |
| 12b-1 distribution plan-Class A | | | 3,641 | | | | 11,495 | |
| Shareholder servicing | | | 27,627 | | | | 45,464 | |
| Professional | | | 43,250 | | | | 43,328 | |
| Reports to shareholders | | | 9,876 | | | | 10,577 | |
| Fund administration | | | 49,287 | | | | 56,032 | |
| Custody | | | 21,810 | | | | 13,899 | |
| Trustees’ fees | | | 4,190 | | | | 4,862 | |
| Registration | | | 28,544 | | | | 28,613 | |
| Subsidy (See Note 3) | | | 193,618 | | | | 186,131 | |
| Other | | | 8,674 | | | | 9,026 | |
| Gross expenses | | | 2,238,797 | | | | 2,510,633 | |
| Expense reductions (See Note 7) | | | (23 | ) | | | (44 | ) |
| Net expenses | | | 2,238,774 | | | | 2,510,589 | |
| Net investment loss | | | (1,977,804 | ) | | | (421,116 | ) |
| Net realized and unrealized gain: | | | | | | | | |
| Net realized gain on investments | | | 41,791,435 | | | | 23,346,871 | |
| Net change in unrealized appreciation/depreciation on investments | | | 20,439,764 | | | | 14,702,512 | |
| Net realized and unrealized gain | | | 62,231,199 | | | | 38,049,383 | |
| Net Increase in Net Assets Resulting From Operations | | $ | 60,253,395 | | | $ | 37,628,267 | |
| 18 | See Notes to Financial Statements. |
Statements of Changes in Net Assets
| | | Micro Cap Growth Fund |
| | | For the Year Ended | | | For the Year Ended | |
| INCREASE (DECREASE) IN NET ASSETS | | October 31, 2013 | | | October 31, 2012 | |
| Operations: | | | | | | | | |
| Net investment loss | | $ | (1,977,804 | ) | | $ | (1,814,689 | ) |
| Net realized gain on investments | | | 41,791,435 | | | | 1,219,638 | |
| Net change in unrealized appreciation/depreciation on investments | | | 20,439,764 | | | | 6,331,957 | |
| Net increase in net assets resulting from operations | | | 60,253,395 | | | | 5,736,906 | |
| Distributions to shareholders from: | | | | | | | | |
| Net realized gain | | | | | | | | |
| Class A | | | (87,341 | ) | | | (2,348,826 | ) |
| Class I | | | (648,390 | ) | | | (13,998,254 | ) |
| Total distributions to shareholders | | | (735,731 | ) | | | (16,347,080 | ) |
| Capital share transactions (See Note 11): | | | | | | | | |
| Net proceeds from sales of shares | | | 8,987,166 | | | | 4,579,643 | |
| Reinvestment of distributions | | | 696,469 | | | | 14,787,271 | |
| Cost of shares reacquired | | | (18,396,364 | ) | | | (16,580,478 | ) |
| Net increase (decrease) in net assets resulting from capital share transactions | | | (8,712,729 | ) | | | 2,786,436 | |
| Net increase (decrease) in net assets | | | 50,804,935 | | | | (7,823,738 | ) |
| NET ASSETS: | | | | | | | | |
| Beginning of year | | $ | 101,381,336 | | | $ | 109,205,074 | |
| End of year | | $ | 152,186,271 | | | $ | 101,381,336 | |
| Accumulated net investment loss | | $ | (519,748 | ) | | $ | (1,617,640 | ) |
| | See Notes to Financial Statements. | 19 |
Statements of Changes in Net Assets (concluded)
| | | Micro Cap Value Fund |
| | | For the Year Ended | | | For the Year Ended | |
| INCREASE IN NET ASSETS | | October 31, 2013 | | | October 31, 2012 | |
| Operations: | | | | | | | | |
| Net investment loss | | $ | (421,116 | ) | | $ | (183,858 | ) |
| Net realized gain on investments | | | 23,346,871 | | | | 3,480,033 | |
| Net change in unrealized appreciation/depreciation on investments | | | 14,702,512 | | | | 15,593,852 | |
| Net increase in net assets resulting from operations | | | 37,628,267 | | | | 18,890,027 | |
| Distributions to shareholders from: | | | | | | | | |
| Net investment income | | | | | | | | |
| Class I | | | (68,689 | ) | | | — | |
| Total distributions to shareholders | | | (68,689 | ) | | | — | |
| Capital share transactions (See Note 11): | | | | | | | | |
| Net proceeds from sales of shares | | | 12,074,048 | | | | 1,918,385 | |
| Reinvestment of distributions | | | 58,968 | | | | — | |
| Cost of shares reacquired | | | (17,063,863 | ) | | | (14,368,859 | ) |
| Net decrease in net assets resulting from capital share transactions | | | (4,930,847 | ) | | | (12,450,474 | ) |
| Net increase in net assets | | | 32,628,731 | | | | 6,439,553 | |
| NET ASSETS: | | | | | | | | |
| Beginning of year | | $ | 127,474,240 | | | $ | 121,034,687 | |
| End of year | | $ | 160,102,971 | | | $ | 127,474,240 | |
| Accumulated net investment loss | | $ | (563,727 | ) | | $ | (418,815 | ) |
| 20 | See Notes to Financial Statements. |
Financial Highlights
MICRO CAP GROWTH FUND
| | | Class A Shares |
| | | Year Ended 10/31 |
| | | 2013 | | | 2012 | | | 2011 | | | 2010 | | | 2009 | |
| Per Share Operating Performance | | | | | | | | | | | | | | | | | | | | |
| Net asset value, beginning of year | | | $14.03 | | | | $15.98 | | | | $15.47 | | | | $11.32 | | | | $9.07 | |
| Investment operations: | | | | | | | | | | | | | | | | | | | | |
| Net investment loss(a) | | | (.29 | ) | | | (.28 | ) | | | (.33 | ) | | | (.27 | ) | | | (.19 | ) |
| Net realized and unrealized gain | | | 8.94 | | | | .79 | | | | .84 | | | | 4.42 | | | | 2.44 | |
| Total from investment operations | | | 8.65 | | | | .51 | | | | .51 | | | | 4.15 | | | | 2.25 | |
| Distributions to shareholders from: | | | | | | | | | | | | | | | | | | | | |
| Net realized gain | | | (.11 | ) | | | (2.46 | ) | | | — | | | | — | | | | — | |
| Net asset value, end of year | | | $22.57 | | | | $14.03 | | | | $15.98 | | | | $15.47 | | | | $11.32 | |
| Total Return(b) | | | 62.14 | % | | | 4.86 | % | | | 3.30 | % | | | 36.66 | % | | | 24.81 | % |
| Ratios to Average Net Assets: | | | | | | | | | | | | | | | | | | | | |
| Expenses, excluding expense reductions and including management fee waived and expenses reimbursed | | | 1.85 | % | | | 2.09 | % | | | 2.07 | % | | | 2.10 | % | | | 2.09 | % |
| Expenses, including expense reductions, management fee waived and expenses reimbursed | | | 1.85 | % | | | 2.09 | % | | | 2.07 | % | | | 2.10 | % | | | 2.09 | % |
| Expenses, excluding expense reductions, management fee waived and expenses reimbursed | | | 1.85 | % | | | 2.09 | % | | | 2.07 | % | | | 2.11 | % | | | 2.30 | % |
| Net investment loss | | | (1.64 | )% | | | (1.92 | )% | | | (1.98 | )% | | | (2.03 | )% | | | (1.99 | )% |
| Supplemental Data: | | | | | | | | | | | | | | | | | | | | |
| Net assets, end of year (000) | | $ | 11,220 | | | $ | 11,484 | | | $ | 15,271 | | | $ | 13,779 | | | $ | 10,421 | |
| Portfolio turnover rate | | | 197.69 | % | | | 119.77 | % | | | 120.62 | % | | | 115.89 | % | | | 147.34 | % |
| (a) | Calculated using average shares outstanding during the year. |
| (b) | Total return does not consider the effects of sales loads and assumes the reinvestment of all distributions. |
| | See Notes to Financial Statements. | 21 |
Financial Highlights (concluded)
MICRO CAP GROWTH FUND
| | | Class I Shares |
| | | Year Ended 10/31 |
| | | 2013 | | | 2012 | | | 2011 | | | 2010 | | | 2009 | |
| Per Share Operating Performance | | | | | | | | | | | | | | | | | | | | |
| Net asset value, beginning of year | | | $14.64 | | | | $16.52 | | | | $15.96 | | | | $11.65 | | | | $ 9.31 | |
| Investment operations: | | | | | | | | | | | | | | | | | | | | |
| Net investment loss(a) | | | (.29 | ) | | | (.25 | ) | | | (.30 | ) | | | (.24 | ) | | | (.17 | ) |
| Net realized and unrealized gain | | | 9.33 | | | | .83 | | | | .86 | | | | 4.55 | | | | 2.51 | |
| Total from investment operations | | | 9.04 | | | | .58 | | | | .56 | | | | 4.31 | | | | 2.34 | |
| Distributions to shareholders from: | | | | | | | | | | | | | | | | | | | | |
| Net realized gain | | | (.11 | ) | | | (2.46 | ) | | | — | | | | — | | | | — | |
| Net asset value, end of year | | | $23.57 | | | | $14.64 | | | | $16.52 | | | | $15.96 | | | | $11.65 | |
| Total Return(b) | | | 62.22 | % | | | 5.10 | % | | | 3.57 | % | | | 37.00 | % | | | 25.13 | % |
| Ratios to Average Net Assets: | | | | | | | | | | | | | | | | | | | | |
| Expenses, excluding expense reductions and including management fee waived and expenses reimbursed | | | 1.81 | % | | | 1.84 | % | | | 1.82 | % | | | 1.85 | % | | | 1.85 | % |
| Expenses, including expense reductions, management fee waived and expenses reimbursed | | | 1.81 | % | | | 1.84 | % | | | 1.82 | % | | | 1.85 | % | | | 1.85 | % |
| Expenses, excluding expense reductions, management fee waived and expenses reimbursed | | | 1.81 | % | | | 1.84 | % | | | 1.82 | % | | | 1.86 | % | | | 2.05 | % |
| Net investment loss | | | (1.60 | )% | | | (1.68 | )% | | | (1.73 | )% | | | (1.78 | )% | | | (1.75 | )% |
| Supplemental Data: | | | | | | | | | | | | | | | | | | | | |
| Net assets, end of year (000) | | $ | 140,967 | | | $ | 89,897 | | | $ | 93,934 | | | $ | 90,033 | | | $ | 53,973 | |
| Portfolio turnover rate | | | 197.69 | % | | | 119.77 | % | | | 120.62 | % | | | 115.89 | % | | | 147.34 | % |
| (a) | Calculated using average shares outstanding during the year. |
| (b) | Total return assumes the reinvestment of all distributions. |
| 22 | See Notes to Financial Statements. |
Financial Highlights
MICRO CAP VALUE FUND
| | | Class A Shares |
| | | Year Ended 10/31 |
| | | 2013 | | | 2012 | | | 2011 | | | 2010 | | | 2009 | |
| Per Share Operating Performance | | | | | | | | | | | | | | | | | | | | |
| Net asset value, beginning of year | | | $26.52 | | | | $22.88 | | | | $23.33 | | | | $18.57 | | | | $16.94 | |
| Investment operations: | | | | | | | | | | | | | | | | | | | | |
| Net investment loss(a) | | | (.10 | ) | | | (.08 | ) | | | (.29 | ) | | | (.31 | ) | | | (.19 | ) |
| Net realized and unrealized gain (loss) | | | 8.32 | | | | 3.72 | | | | (.16 | ) | | | 5.07 | | | | 1.82 | |
| Total from investment operations | | | 8.22 | | | | 3.64 | | | | (.45 | ) | | | 4.76 | | | | 1.63 | |
| Net asset value, end of year | | | $34.74 | | | | $26.52 | | | | $22.88 | | | | $23.33 | | | | $18.57 | |
| Total Return(b) | | | 31.00 | % | | | 15.91 | % | | | (1.93 | )% | | | 25.63 | % | | | 9.62 | % |
| Ratios to Average Net Assets: | | | | | | | | | | | | | | | | | | | | |
| Expenses, excluding expense reductions and including management fee waived and expenses reimbursed | | | 1.82 | % | | | 2.05 | % | | | 2.04 | % | | | 2.06 | % | | | 2.10 | % |
| Expenses, including expense reductions, management fee waived and expenses reimbursed | | | 1.82 | % | | | 2.05 | % | | | 2.04 | % | | | 2.06 | % | | | 2.10 | % |
| Expenses, excluding expense reductions, management fee waived and expenses reimbursed | | | 1.82 | % | | | 2.05 | % | | | 2.04 | % | | | 2.06 | % | | | 2.22 | % |
| Net investment loss | | | (.34 | )% | | | (.32 | )% | | | (1.17 | )% | | | (1.48 | )% | | | (1.14 | )% |
| Supplemental Data: | | | | | | | | | | | | | | | | | | | | |
| Net assets, end of year (000) | | $ | 32,010 | | | $ | 30,512 | | | $ | 26,239 | | | $ | 30,139 | | | $ | 22,730 | |
| Portfolio turnover rate | | | 73.58 | % | | | 34.25 | % | | | 56.97 | % | | | 48.03 | % | | | 42.27 | % |
| (a) | Calculated using average shares outstanding during the year. |
| (b) | Total return does not consider the effects of sales loads and assumes the reinvestment of all distributions. |
| | See Notes to Financial Statements. | 23 |
Financial Highlights (concluded)
MICRO CAP VALUE FUND
| | | Class I Shares |
| | | Year Ended 10/31 |
| | | 2013 | | | 2012 | | | 2011 | | | 2010 | | | 2009 | |
| Per Share Operating Performance | | | | | | | | | | | | | | | | | | | | |
| Net asset value, beginning of year | | | $27.32 | | | | $23.50 | | | | $23.91 | | | | $18.98 | | | | $17.27 | |
| Investment operations: | | | | | | | | | | | | | | | | | | | | |
| Net investment loss(a) | | | (.09 | ) | | | (.02 | ) | | | (.24 | ) | | | (.27 | ) | | | (.15 | ) |
| Net realized and unrealized gain (loss) | | | 8.56 | | | | 3.84 | | | | (.17 | ) | | | 5.20 | | | | 1.86 | |
| Total from investment operations | | | 8.47 | | | | 3.82 | | | | (.41 | ) | | | 4.93 | | | | 1.71 | |
| Distributions to shareholders from: | | | | | | | | | | | | | | | | | | | | |
| Net investment income | | | (.02 | ) | | | — | | | | — | | | | — | | | | — | |
| Net asset value, end of year | | | $35.77 | | | | $27.32 | | | | $23.50 | | | | $23.91 | | | | $18.98 | |
| Total Return(b) | | | 31.02 | % | | | 16.21 | % | | | (1.67 | )% | | | 25.97 | % | | | 9.90 | % |
| Ratios to Average Net Assets: | | | | | | | | | | | | | | | | | | | | |
| Expenses, excluding expense reductions and including management fee waived and expenses reimbursed | | | 1.78 | % | | | 1.80 | % | | | 1.79 | % | | | 1.81 | % | | | 1.85 | % |
| Expenses, including expense reductions, management fee waived and expenses reimbursed | | | 1.78 | % | | | 1.80 | % | | | 1.79 | % | | | 1.81 | % | | | 1.85 | % |
| Expenses, excluding expense reductions, management fee waived and expenses reimbursed | | | 1.78 | % | | | 1.80 | % | | | 1.79 | % | | | 1.81 | % | | | 1.97 | % |
| Net investment loss | | | (.29 | )% | | | (.09 | )% | | | (.92 | )% | | | (1.23 | )% | | | (.90 | )% |
| Supplemental Data: | | | | | | | | | | | | | | | | | | | | |
| Net assets, end of year (000) | | $ | 128,093 | | | $ | 96,962 | | | $ | 94,796 | | | $ | 85,868 | | | $ | 57,977 | |
| Portfolio turnover rate | | | 73.58 | % | | | 34.25 | % | | | 56.97 | % | | | 48.03 | % | | | 42.27 | % |
| (a) | Calculated using average shares outstanding during the year. |
| (b) | Total return assumes the reinvestment of all distributions. |
| 24 | See Notes to Financial Statements. |
Notes to Financial Statements
Lord Abbett Securities Trust (the “Trust”) is registered under the Investment Company Act of 1940, as amended (the “Act”), as a diversified, open-end management investment company and was organized as a Delaware statutory trust on February 26, 1993. The Trust currently consists of nine funds. This report covers the following two funds (separately, a “Fund” and collectively, the “Funds”) and their respective classes: Lord Abbett Micro-Cap Growth Fund (“Micro Cap Growth Fund”), Class A and I shares and Lord Abbett Micro-Cap Value Fund (“Micro Cap Value Fund”), Class A and I 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 net asset value (“NAV”) for Class A shares. A contingent deferred sales charge (“CDSC”) may apply to certain redemptions of Class A shares purchased without a sales charge and redeemed before the first day of the month in which the one-year anniversary of the purchase falls (subject to certain exceptions as set forth in each Fund’s prospectus). Class I shares are not subject to any sales charges.
The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make certain 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–Under procedures approved by the Funds’ Board of Trustees (the “Board”), Lord, Abbett & Co. LLC (“Lord Abbett”), each Fund’s investment manager, has formed a Pricing Committee to administer the pricing and valuation of portfolio investments and to ensure that prices utilized reasonably reflect fair value. Among other things, these procedures allow the Funds to utilize independent pricing services, quotations from securities and financial instrument dealers and other market sources to determine fair value. |
| | |
| | Securities actively traded on any recognized U.S. or non-U.S. exchange or on The NASDAQ Stock Market LLC are valued at the last sale price or official closing price on the exchange or system on which they are principally traded. Events occurring after the close of trading on non-U.S. exchanges may result in adjustments to the valuation of foreign securities to reflect their fair value as of the close of regular trading on the New York Stock Exchange LLC. Each Fund may rely on an independent fair valuation service in adjusting the valuations of foreign securities. Unlisted equity securities are valued at the last quoted sale price or, if no sale price is available, at the mean between the most recently quoted bid and asked prices. |
| | |
| | Securities for which prices are not readily available are valued at fair value as determined by the Pricing Committee and approved by the Board. The Pricing Committee considers a number of factors, including observable and unobservable inputs, when arriving at fair value. The Pricing Committee may use related or comparable assets or liabilities, recent transactions, market multiples, book values and other relevant information to determine fair value of portfolio investments. The Board or a designated committee thereof regularly reviews fair value determinations made by the Pricing Committee and employs techniques such as |
25
Notes to Financial Statements (continued)
| | reviewing related market activity, reviewing inputs and assumptions, and retrospectively comparing prices of subsequent purchases and sales transactions to fair value determinations made by the Pricing Committee. |
| | |
| | Short-term securities with 60 days or less remaining to maturity are valued using the amortized cost method, which approximates fair 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 (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 as earned. Discounts are accreted and premiums are amortized using the effective interest method and are included in Interest income on the Statements of Operations. Withholding taxes on foreign dividends have been provided for in accordance with the applicable country’s tax rules and rates. Investment income is allocated to each class of shares based upon the relative proportion of net assets at the beginning of the day. |
| | |
| (d) | Income 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 taxable income and capital gains to its shareholders. Therefore, no income tax provision is required. |
| | |
| | Each Fund files U.S. federal and various state and local tax returns. No income tax returns are currently under examination. The statute of limitations on each Fund’s filed U.S. federal tax returns remains open for the fiscal years ended October 31, 2010 through October 31, 2013. The statutes of limitations on the Trust’s state and local tax returns may remain open for an additional year depending upon the jurisdiction. |
| | |
| (e) | Expenses–Expenses incurred by the Trust that do not specifically relate to an individual fund are generally allocated to the Funds within the Trust on a pro rata basis by relative net assets. Expenses incurred by the Funds, 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 class-specific expenses and fees relating to the Funds’ 12b-1 Distribution Plan. |
| | |
| (f) | Repurchase Agreements–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 by securities of the U.S. Government, its agencies, its instrumentalities, or U.S. Government sponsored enterprises having a value equal to, or in excess of, the value of the repurchase agreement (including accrued interest). If the seller of the agreement defaults on its obligation to repurchase the underlying securities at a time when the fair value of these securities has declined, a Fund may incur a loss upon disposition of the securities. |
| | |
| (g) | Fair Value Measurements–Fair value is defined as the price that each Fund would receive upon selling an investment or transferring a liability in an orderly transaction to an independent buyer in the principal or most advantageous market of the investment. A three- |
26
Notes to Financial Statements (continued)
| tier hierarchy is used to maximize the use of observable market data and minimize the use of unobservable inputs and to establish classification of fair value measurements for disclosure purposes. Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk - for example, the risk inherent in a particular valuation technique used to measure fair value (such as a pricing model) and/or the risk inherent in the inputs to the valuation technique. Inputs may be observable or unobservable. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability. Observable inputs are based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability. Unobservable inputs are based on the best information available in the circumstances. The three-tier hierarchy of inputs is summarized in the three broad Levels listed below: |
| • | Level 1 – | unadjusted quoted prices in active markets for identical investments; |
| | | |
| • | Level 2 – | other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.); and |
| | | |
| • | Level 3 – | significant unobservable inputs (including each Fund’s own assumptions in determining the fair value of investments). |
| A summary of inputs used in valuing each Fund’s investments as of October 31, 2013 and, if applicable, Level 1/Level 2 transfers and Level 3 rollforwards for the fiscal year then ended is included in each Fund’s Schedule of Investments. |
| Changes in valuation techniques may result in transfers into or out of an assigned level within the three-tier hierarchy. All transfers between different levels within the three-tier hierarchy are deemed to have occurred as of the beginning of the reporting period. The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. |
| 3. | MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES | |
Management Fee
The Trust has a management agreement with Lord Abbett, pursuant to which Lord Abbett supplies each Fund with investment management services and executive and other personnel, provides office space and pays for ordinary and necessary office and clerical expenses relating to research and statistical work and supervision of each Fund’s investment portfolio.
The management fee is based on each Fund’s average daily net assets at an annual rate of 1.50%, which was the Funds’ annualized effective management fee rate for the fiscal year ended October 31, 2013.
In addition, Lord Abbett provides certain administrative services to each Fund pursuant to an Administrative Services Agreement in return for a fee at an annual rate of .04% of each Fund’s average daily net assets.
For the twelve month period through February 28, 2013, Lord Abbett had contractually agreed to waive all or a portion of its management fee for each Fund and, if necessary, waive all or a portion of its administrative fee and reimburse each Fund’s other expenses to the extent necessary so that the total net annual operating expenses for each class, excluding 12b-1 fees, did not exceed an annualized rate of 1.85%. Effective March 1, 2013, the contractual waiver was discontinued.
27
Notes to Financial Statements (continued)
Each Fund, along with certain other funds managed by Lord Abbett (collectively, the “Underlying Funds”), has entered into a Servicing Arrangement with Lord Abbett Alpha Strategy Fund (the “Alpha Strategy Fund”) of the Trust, pursuant to which each Underlying Fund pays a portion of the expenses (excluding management fees and distribution and service fees) of Alpha Strategy Fund in proportion to the average daily value of the Underlying Fund shares owned by Alpha Strategy Fund. Amounts paid pursuant to the Servicing Arrangement are included in Subsidy expense on each Fund’s Statement of Operations and Payable to affiliate on each Fund’s Statement of Assets and Liabilities.
As of October 31, 2013, the percentages of Micro Cap Growth Fund’s and Micro Cap Value Fund’s outstanding shares owned by Lord Abbett Alpha Strategy Fund were 81.20% and 69.89%.
12b-1 Distribution Plan
Each Fund has adopted a distribution plan with respect to Class A shares pursuant to Rule 12b-1 under the Act, which provides for the payment of ongoing distribution and service fees to Lord Abbett Distributor LLC (the “Distributor”), an affiliate of Lord Abbett. Through December 31, 2012, the fees accrued daily at an annual rate of .25% based upon each Fund’s average daily net assets attributable to Class A shares. From January 1, 2013 through February 28, 2013, the Distributor voluntarily waived the fees. Effective March 1, 2013, the Board authorized a Class A 12b-1 fee rate of .00%.
Class I shares do not have a distribution plan.
A 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 for each fund. Taxable net realized gains from investment transactions, reduced by allowable capital loss carryforwards, if any, are declared and distributed to shareholders at least annually. The capital loss carryforward amount, if any, is available to offset future net capital gains. Dividends and distributions to shareholders are recorded on the ex-dividend date. The amounts 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 earnings and profits for tax purposes, are reported as a tax return of capital.
Subsequent to the Funds’ fiscal year ended October 31, 2013, distributions were declared on November 18, 2013 and paid on November 22, 2013 to shareholders of record on November 21, 2013. The approximate amounts were as follows:
| | Short-Term
Capital Gains | | Long-Term
Capital Gains |
| Micro Cap Growth Fund | $26,623,000 | | $12,468,000 |
| Micro Cap Value Fund | – | | 18,796,000 |
28
Notes to Financial Statements (continued)
The tax character of distributions paid during the fiscal years ended October 31, 2013 and 2012 was as follows:
| | | | | | Micro Cap
Growth Fund | | | | | | Micro Cap
Value Fund | |
| | | Year Ended
10/31/2013 | | | Year Ended
10/31/2012 | | | Year Ended
10/31/2013 | | | Year Ended
10/31/2012 | |
| Distributions paid from: | | | | | | | | | | | | | | | | |
| Ordinary income | | $ | — | | | $ | — | | | $ | 68,689 | | | $ | — | |
| Net long-term capital gains | | | 735,731 | | | | 16,347,080 | | | | — | | | | — | |
| Total distributions paid | | $ | 735,731 | | | $ | 16,347,080 | | | $ | 68,689 | | | $ | — | |
As of October 31, 2013, the components of accumulated gains on a tax-basis were as follows:
| | | Micro Cap
Growth Fund | | | Micro Cap
Value Fund | |
| Undistributed ordinary income - net | | $ | 26,623,497 | | | $ | — | |
| Undistributed long-term capital gains | | | 12,468,210 | | | | 18,796,333 | |
| Total undistributed earnings | | $ | 39,091,707 | | | $ | 18,796,333 | |
| Temporary differences | | | (519,748 | ) | | | (563,727 | ) |
| Unrealized gains - net | | | 32,017,516 | | | | 37,106,102 | |
| Total accumulated gains - net | | $ | 70,589,475 | | | $ | 55,338,708 | |
At each Fund’s election, certain losses incurred within the taxable year (Qualified Late-Year Losses) are deemed to arise on the first business day of the Fund’s next taxable year. Each Fund incurred and will elect to defer late-year ordinary losses during the fiscal 2013 as follows:
| Micro Cap Growth Fund | | $ | 510,018 | |
| Micro Cap Value Fund | | | 551,471 | |
As of October 31, 2013, the aggregate unrealized security gains and losses based on cost for U.S. federal income tax purposes were as follows:
| | | Micro Cap
Growth Fund | | | Micro Cap
Value Fund | |
| Tax cost | | $ | 121,488,827 | | | $ | 122,469,802 | |
| Gross unrealized gain | | | 34,106,822 | | | | 38,399,440 | |
| Gross unrealized loss | | | (2,089,306 | ) | | | (1,293,338 | ) |
| Net unrealized security gain | | $ | 32,017,516 | | | $ | 37,106,102 | |
The difference between book-basis and tax basis unrealized gains (losses) is attributable to the tax treatment of wash sales.
Permanent items identified during the fiscal year ended October 31, 2013 have been reclassified among the components of net assets based on their tax basis treatment as follows:
| | | Accumulated Net
Investment Loss | | | Accumulated
Net Realized
Gain | |
| Micro Cap Growth Fund | | | $3,075,696 | | | | $(3,075,696 | ) |
| Micro Cap Value Fund | | | 344,893 | | | | (344,893 | ) |
The permanent differences are attributable to the tax treatment of net operating losses and certain securities.
29
Notes to Financial Statements (continued)
| 5. | PORTFOLIO SECURITIES TRANSACTIONS |
Purchases and sales of investment securities (excluding short-term investments) for the fiscal year ended October 31, 2013 were as follows:
| | | Purchases | | | Sales | |
| Micro Cap Growth Fund | | | $238,878,725 | | | | $252,043,410 | |
| Micro Cap Value Fund | | | 100,535,924 | | | | 111,589,852 | |
There were no purchases or sales of U.S. Government securities for the fiscal year ended October 31, 2013.
The Trust’s officers and a Trustee, who are associated with Lord Abbett, do not receive any compensation from the Trust for serving in such capacities. Independent 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 Independent Trustees under which Independent 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 had been invested in the funds. 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 U.S. federal income tax purposes until such amounts are paid.
The Trust has entered into an arrangement with its transfer agent and custodian, whereby credits realized as a result of uninvested cash balances are used to reduce a portion of each Fund’s expenses.
During the fiscal year ended October 31, 2013, the Funds and certain other funds managed by Lord Abbett (the “participating funds”) participated in an unsecured revolving credit facility (“Facility”) with State Street Bank and Trust Company (“SSB”). The Facility is to be used for temporary or emergency purposes as an additional source of liquidity to fund redemptions of investor shares. The Board considers annual renewal of the Facility under terms that depend on market conditions at the time of the renewal. The amounts available under the Facility are (i) the lesser of either $250,000,000 or 33.33% of total assets per participating fund and (ii) $350,000,000 in the aggregate for all participating funds. The annual fee to maintain the Facility is .09% of the amount available under the Facility. Each participating fund pays its pro rata share based on the net assets of each participating fund. This amount is included in Other expenses on each Fund’s Statement of Operations. Any borrowings under this Facility will bear interest at current market rates as set forth in the credit agreement.
Effective July 1, 2013, the Funds and participating funds renewed the Facility through June 30, 2014 under the same terms as described above.
During the fiscal year ended October 31, 2013, a participating fund also managed by Lord Abbett utilized the Facility and fully repaid its borrowings on June 13, 2013. As of October 31, 2013, there were no loans outstanding pursuant to this Facility.
30
Notes to Financial Statements (continued)
| 9. | CUSTODIAN AND ACCOUNTING AGENT |
SSB is the Trust’s custodian and accounting agent. SSB performs custodial, accounting and recordkeeping functions relating to portfolio transactions and calculating each Fund’s NAV.
Each Fund is subject to the general risks and considerations associated with equity investing, as well as the particular risks associated with micro-cap and growth or value stocks. The value of an investment in each Fund will fluctuate in response to movements in the equity securities market in general and to the 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 Micro Cap Value Fund, the prices of value stocks in which it generally invests may lag the stock market for long periods of time if the market fails to recognize the company’s intrinsic worth.
These factors can affect each Fund’s performance.
| 11. | SUMMARY OF CAPITAL TRANSACTIONS |
Transactions in shares of beneficial interest were as follows:
| Micro Cap Growth Fund | | Year Ended
October 31, 2013 | | | Year Ended
October 31, 2012 | |
| Class A Shares | | Shares | | | Amount | | | Shares | | | Amount | |
| Shares sold | | | 15,804 | | | $ | 249,559 | | | | 80,587 | | | $ | 1,191,934 | |
| Reinvestment of distributions | | | 6,465 | | | | 86,378 | | | | 125,804 | | | | 1,593,934 | |
| Shares reacquired | | | (343,779 | ) | | | (4,680,702 | ) | | | (343,431 | ) | | | (4,640,849 | ) |
| Decrease | | | (321,510 | ) | | $ | (4,344,765 | ) | | | (137,040 | ) | | $ | (1,854,981 | ) |
| Class I Shares | | | | | | | | | | | | | | | | |
| Shares sold | | | 583,333 | | | $ | 8,737,607 | | | | 230,718 | | | $ | 3,387,709 | |
| Reinvestment of distributions | | | 43,734 | | | | 610,091 | | | | 1,000,253 | | | | 13,193,337 | |
| Shares reacquired | | | (787,625 | ) | | | (13,715,662 | ) | | | (774,017 | ) | | | (11,939,629 | ) |
| Increase (decrease) | | | (160,558 | ) | | $ | (4,367,964 | ) | | | 456,954 | | | $ | 4,641,417 | |
| Micro Cap Value Fund | | Year Ended
October 31, 2013 | | | Year Ended
October 31, 2012 | |
| Class A Shares | | Shares | | | Amount | | | Shares | | | Amount | |
| Shares sold | | | 7,698 | | | $ | 227,376 | | | | 25,487 | | | $ | 648,867 | |
| Shares reacquired | | | (236,705 | ) | | | (6,422,381 | ) | | | (21,988 | ) | | | (539,590 | ) |
| Increase (decrease) | | | (229,007 | ) | | $ | (6,195,005 | ) | | | 3,499 | | | $ | 109,277 | |
| Class I Shares | | | | | | | | | | | | | | | | |
| Shares sold | | | 387,101 | | | $ | 11,846,672 | | | | 50,766 | | | $ | 1,269,518 | |
| Reinvestment of distributions | | | 2,123 | | | | 58,968 | | | | — | | | | — | |
| Shares reacquired | | | (357,823 | ) | | | (10,641,482 | ) | | | (534,409 | ) | | | (13,829,269 | ) |
| Increase (decrease) | | | 31,401 | | | $ | 1,264,158 | | | | (483,643 | ) | | $ | (12,559,751 | ) |
31
Notes to Financial Statements (concluded)
| 12. | RECENT ACCOUNTING STANDARD |
In December 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2011-11 “Disclosures about Offsetting Assets and Liabilities” (“ASU 2011-11”). This disclosure requirement is intended to help investors and other financial statement users better assess the effect or potential effect of offsetting arrangements on a fund’s financial position. ASU 2011-11 requires entities to disclose both gross and net information about both instruments and transactions eligible for offset in the statement of assets and liabilities; and disclose instruments and transactions subject to an agreement similar to a master netting agreement. In addition, in January 2013, FASB issued Accounting Standards Update No. 2013-01 “Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities” (“ASU 2013-01”), specifying exactly which transactions are subject to disclosures about offsetting. ASU 2011-11 and ASU 2013-01 are effective for public entities for interim and annual periods beginning on or after January 1, 2013. Management is currently evaluating the impact the adoption of ASU 2011-11 and ASU 2013-01 will have on the Funds’ financial statement disclosures.
32
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of Lord Abbett Securities Trust and Shareholders of Lord Abbett Micro-Cap Growth Fund and Lord Abbett Micro-Cap Value Fund:
We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of the Lord Abbett Micro-Cap Growth Fund and Lord Abbett Micro-Cap Value Fund, two of the nine portfolios constituting the Lord Abbett Securities Trust (the “Trust”), as of October 31, 2013, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Trust’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Trust is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Trust’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2013, by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Lord Abbett Micro-Cap Growth Fund and Lord Abbett Micro-Cap Value Fund of the Lord Abbett Securities Trust as of October 31, 2013, the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.
DELOITTE & TOUCHE LLP
New York, New York
December 23, 2013
33
Basic Information About Management
The Board is responsible for the management of the business and affairs of the Trust in accordance with the laws of the State of Delaware. The Board elects officers who are responsible for the day-to-day operations of the Funds and who execute policies authorized by the Board. The Board also approves an investment adviser to each Fund and continues to monitor the cost and quality of the services the investment adviser provides, and annually considers whether to renew the contract with the adviser. Generally, each Trustee holds office until his/her successor is elected and qualified or until his/her earlier resignation or removal, as provided in the Trust’s organizational documents.
Lord Abbett, a Delaware limited liability company, is the Trust’s investment adviser. Designated Lord Abbett personnel are responsible for the day-to-day management of the Funds.
Interested Trustee
Ms. Foster is affiliated with Lord Abbett and is an “interested person” of the Trust as defined in the Act. Ms. Foster is a director/trustee and officer of each of the 12 Lord Abbett-sponsored funds, which consist of 55 portfolios or series.
Name, Address and
Year of Birth | | Current Position and
Length of Service
with the Trust | | Principal Occupation and Other Directorships
During the Past Five Years |
Daria L. Foster
Lord, Abbett & Co. LLC
90 Hudson Street
Jersey City, NJ 07302
(1954) | | Trustee and President since 2006; Chief Executive Officer since 2012 | | Principal Occupation: Managing Partner of Lord Abbett (since 2007), and was formerly Director of Marketing and Client Service, joined Lord Abbett in 1990. |
| | | | | Other Directorships: None. |
Independent Trustees
The following Independent Trustees also are directors/trustees of each of the 12 Lord Abbett- sponsored funds, which consist of 55 portfolios or series.
Name, Address and
Year of Birth | | Current Position and
Length of Service
with the Trust | | Principal Occupation and Other Directorships
During the Past Five Years |
E. Thayer Bigelow
Lord, Abbett & Co. LLC
c/o Legal Dept.
90 Hudson Street
Jersey City, NJ 07302
(1941) | | Trustee since 1994; Chairman since 2013 | | Principal Occupation: Managing General Partner, Bigelow Media, LLC (since 2000); Senior Adviser, Time Warner Inc. (1998 – 2000).
Other Directorships: Currently serves as director of Crane Co. (since 1984) and Huttig Building Products Inc. (since 1998). Previously served as a director of R.H. Donnelley Inc. (2009 – 2010). |
| | | | | |
Robert B. Calhoun, Jr.
Lord, Abbett & Co. LLC
c/o Legal Dept.
90 Hudson Street
Jersey City, NJ 07302
(1942) | | Trustee since 1998 | | Principal Occupation: Senior Advisor of Monitor Clipper Partners, a private equity investment fund (since 1997); President of Clipper Asset Management Corp. (1991 – 2009).
Other Directorships: Previously served as a director of Interstate Bakeries Corp. (1991 – 2008). |
34
Basic Information About Management (continued)
Name, Address and
Year of Birth | | Current Position and
Length of Service
with the Trust | Principal Occupation and Other Directorships
During the Past Five Years |
Evelyn E. Guernsey
Lord, Abbett & Co. LLC
c/o Legal Dept.
90 Hudson Street
Jersey City, NJ 07302
(1955) | | Trustee since 2011 | Principal Occupation: CEO, Americas of J.P. Morgan Asset Management (2004 – 2010).
Other Directorships: None. |
| | | | |
Julie A. Hill
Lord, Abbett & Co. LLC
c/o Legal Dept.
90 Hudson Street
Jersey City, NJ 07302
(1946) | | Trustee since 2004 | Principal Occupation: Owner and CEO of The Hill Company, a business consulting firm (since 1998).
Other Directorships: Currently serves as director of WellPoint, Inc., a health benefits company (since 1994). Previously served as a director of Lend Lease Corporation Limited, an international retail and residential property group (2006 – 2012). |
| | | | |
Franklin W. Hobbs
Lord, Abbett & Co. LLC
c/o Legal Dept.
90 Hudson Street
Jersey City, NJ 07302
(1947) | | Trustee since 2001 | Principal Occupation: Advisor of One Equity Partners, a private equity firm (since 2004).
Other Directorships: Currently serves as director and Chairman of the Board of Ally Financial Inc., a financial services firm (since 2009), and as director of Molson Coors Brewing Company (since 2002). |
| | | | |
James M. McTaggart
Lord, Abbett & Co. LLC
c/o Legal Dept.
90 Hudson Street
Jersey City, NJ 07302
(1947) | | Trustee since 2012 | Principal Occupation: Independent management advisor and consultant (since 2012); Vice President, CRA International, Inc. (doing business as Charles River Associates), a global management consulting firm (2009 – 2012); Founder and Chairman of Marakon Associates, Inc., a strategy consulting firm (1978 – 2009); and Officer and Director of Trinsum Group, a holding company (2007 – 2009).
Other Directorships: Currently serves as director of Blyth, Inc., a home products company (since 2004). |
| | | | |
James L.L. Tullis
Lord, Abbett & Co. LLC
c/o Legal Dept.
90 Hudson Street
Jersey City, NJ 07302
(1947) | | Trustee since 2006 | Principal Occupation: CEO of Tullis-Dickerson and Co. Inc., a venture capital management firm (since 1990); CEO of Tullis Health Investors Inc. (since 2012).
Other Directorships: Currently serves as director of Crane Co. (since 1998). Previously served as a director of Synageva BioPharma Corp., a biopharmaceutical company (2009 – 2011). |
35
Basic Information About Management (continued)
Officers
None of the officers listed below have received compensation from the Trust. All of the officers of the Funds also may be officers of the other Lord Abbett-sponsored funds and maintain offices at 90 Hudson Street, Jersey City, NJ 07302. Unless otherwise indicated, the position(s) and title(s) listed under the “Principal Occupation During the Past Five Years” column indicate each officer’s position(s) and title(s) with Lord Abbett.
Name and
Year of Birth | Current Position
with the Trust | Length of Service
of Current
Position | Principal Occupation
During the Past Five Years |
Daria L. Foster
(1954) | President and Chief Executive Officer | Elected as President in 2006 and Chief Executive Officer in 2012 | Managing Partner of Lord Abbett (since 2007), and was formerly Director of Marketing and Client Service, joined Lord Abbett in 1990. |
| | | | |
Robert I. Gerber
(1954) | Executive Vice President | Elected in 2005 | Partner and Chief Investment Officer (since 2007), joined Lord Abbett in 1997 as Director of Taxable Fixed Income Management. |
| | | | |
Todd D. Jacobson
(1966) | Executive Vice President | Elected in 2003 | Partner and Portfolio Manager, joined Lord Abbett in 2003. |
| | | | |
Deepak Khanna
(1963) | Executive Vice President | Elected in 2008 | Partner and Portfolio Manager, rejoined Lord Abbett in 2007. |
| | | | |
Thomas B. Maher
(1967) | Executive Vice President | Elected in 2008 | Partner and Portfolio Manager, joined Lord Abbett in 2003. |
| | | | |
Justin C. Maurer
(1969) | Executive Vice President | Elected in 2008 | Partner and Portfolio Manager, joined Lord Abbett in 2001. |
| | | | |
Vincent J. McBride
(1964) | Executive Vice President | Elected in 2003 | Partner and Director, joined Lord Abbett in 2003. |
| | | | |
F. Thomas O’Halloran, III
(1955) | Executive Vice President | Elected in 2003 | Partner and Director, joined Lord Abbett in 2001. |
| | | | |
Harold E. Sharon
(1960) | Executive Vice President | Elected in 2003 | Partner and Director, joined Lord Abbett in 2003. |
| | | | |
A. Edward Allinson
(1961) | Vice President | Elected in 2011 | Portfolio Manager, joined Lord Abbett in 2005. |
| | | | |
Sean J. Aurigemma
(1969) | Vice President | Elected in 2010 | Portfolio Manager, joined Lord Abbett in 2007. |
| | | | |
Joan A. Binstock
(1954) | Chief Financial Officer and Vice President | Elected in 1999 | Partner and Chief Financial and Operations Officer, joined Lord Abbett in 1999. |
36
Basic Information About Management (concluded)
Name and
Year of Birth | Current Position
with the Trust | Length of Service
of Current
Position | Principal Occupation
During the Past Five Years |
John K. Forst
(1960) | Vice President and Assistant Secretary | Elected in 2005 | Partner and Deputy General Counsel, joined Lord Abbett in 2004. |
| | | | |
Anthony W. Hipple
(1964) | Vice President | Elected in 2006 | Portfolio Manager, joined Lord Abbett in 2002. |
| | | | |
Lawrence H. Kaplan
(1957) | Chief Compliance Officer, Vice President and Secretary | Elected as Vice President and Secretary in 1997 and Chief Compliance Officer in 2013 | Partner, General Counsel, and Chief Compliance Officer, joined Lord Abbett in 1997. |
| | | | |
David J. Linsen
(1974) | Vice President | Elected in 2011 | Partner and Director, joined Lord Abbett in 2001. |
| | | | |
Steven M. Lipper
(1961) | Vice President | Elected in 2011 | Director, Product Management, joined Lord Abbett in 2004. |
| | | | |
A. Edward Oberhaus, III
(1959) | Vice President | Elected in 1993 | Partner and Director, joined Lord Abbett in 1983. |
| | | | |
Thomas R. Phillips
(1960) | Vice President and Assistant Secretary | Elected in 2008 | Partner and Deputy General Counsel, joined Lord Abbett in 2006. |
| | | | |
Lawrence B. Stoller
(1963) | Vice President and Assistant Secretary | Elected in 2007 | Partner and Senior Deputy General Counsel, joined Lord Abbett in 2007. |
| | | | |
Paul J. Volovich
(1973) | Vice President | Elected in 2011 | Partner and Director, joined Lord Abbett in 1997. |
| | | | |
Arthur K. Weise
(1970) | Vice President | Elected in 2011 | Partner and Portfolio Manager, joined Lord Abbett in 2007. |
| | | | |
Scott S. Wallner
(1955) | AML Compliance Officer | Elected in 2011 | Assistant General Counsel, joined Lord Abbett in 2004. |
| | | | |
Bernard J. Grzelak
(1971) | Treasurer | Elected in 2003 | Partner and Director of Fund Administration, joined Lord Abbett in 2003. |
Please call 888-522-2388 for a copy of the statement of additional information, which contains further information about the Trust’s Trustees. It is available free upon request.
37
Householding
The Trust has adopted a policy that allows it to send only one copy of each Fund’s prospectus, proxy material, annual report and semiannual report to certain shareholders residing at the same “household.” This reduces Fund 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 888-522-2388 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 219336, Kansas City, MO 64121.
Proxy Voting Policies, Procedures and Records
A description of the policies and procedures that Lord Abbett uses to vote proxies related to each Fund’s portfolio securities, and information on how Lord Abbett voted each Fund’s proxies during the 12-month period ended June 30 are available without charge, upon request, (i) by calling 888-522-2388; (ii) on Lord Abbett’s Website at www.lordabbett.com; and (iii) on the Securities and Exchange Commission’s (“SEC”) Website at www.sec.gov.
Shareholder Reports and Quarterly Portfolio Disclosure
The Funds are required to file their complete schedule of portfolio holdings with the SEC for their first and third fiscal quarters on Form N-Q. Copies of the filings are available without charge, upon request on the SEC’s Website at www.sec.gov and may be available by calling Lord Abbett at 888-522-2388. You can also obtain copies of Form N-Q by visiting the SEC’s Public Reference Room in Washington, DC (information on the operation of the Public Reference Room may be obtained by calling 800-SEC-0330).
| | |
| Tax Information | |
| | |
| Of the distributions paid by Micro Cap Growth Fund to shareholders during the fiscal year ended October 31, 2013, $735,731 represents long-term capital gains. | |
| | |
| 100% of the ordinary income distributions paid by Micro Cap Value Fund during the fiscal year ended October 31, 2013 is qualified dividend income. For corporate shareholders, 100% of Micro Cap Value Fund’s ordinary income distributions qualified for the dividends received deduction. | |
| | |
38
 | | | |
| | | | |
| 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 Securities Trust | |
| | | | |
| Lord Abbett mutual fund shares are distributed by LORD ABBETT DISTRIBUTOR LLC. | | Lord Abbett Micro-Cap Growth Fund
Lord Abbett Micro-Cap Value Fund | LAMCVF-2-1013
(12/13) |
| (a) | In accordance with applicable requirements, the Registrant adopted a Sarbanes-Oxley Code of Ethics on June 19, 2003 that applies to the principal executive officer and senior financial officers of the Registrant (“Code of Ethics”). The Code of Ethics was in effect during the fiscal year ended October 31, 2013 (the “Period”). |
| (c) | The Registrant has not amended the Code of Ethics as described in Form N-CSR during the Period. |
| (d) | The Registrant has not granted any waiver, including an implicit waiver, from a provision of the Code of Ethics as described in Form N-CSR during the Period. |
| (f) | See Item 12(a)(1) concerning the filing of the Code of Ethics. |
| Item 3: | Audit Committee Financial Expert. |
The Registrant’s board of trustees has determined that each of the following independent trustees who are members of the audit committee is an audit committee financial expert: E. Thayer Bigelow and Robert B. Calhoun Jr. Each of these persons is independent within the meaning of the Form N-CSR.
| Item 4: | Principal Accountant Fees and Services. |
In response to sections (a), (b), (c) and (d) of Item 4, the aggregate fees billed to the Registrant for the fiscal years ended October 31, 2013 and 2012 by the Registrant’s principal accounting firm, Deloitte & Touche LLP, the member firms of Deloitte Touche Tohmatsu and their respective affiliates (collectively, “Deloitte”) were as follows:
| | | Fiscal year ended: |
| | | 2013 | | 2012 |
| Audit Fees {a} | | $ | 363,000 | | | $ | 351,500 | |
| Audit-Related Fees | | | - 0 - | | | | - 0 - | |
| Total audit and audit-related fees | | | 363,000 | | | | 351,500 | |
| | | | | | | | | |
| Tax Fees {b} | | | 78,755 | | | | 77,513 | |
| All Other Fees | | | - 0 - | | | | - 0 - | |
| | | | | | | | | |
| Total Fees | | $ | 441,755 | | | $ | 429,013 | |
{a} Consists of fees for audits of the Registrant’s annual financial statements.
{b} Fees for the fiscal year ended October 31, 2013 and 2012 consist of fees for preparing the U.S. Income Tax Return for Regulated Investment Companies, New Jersey Corporation Business Tax Return, New Jersey Annual Report Form, U.S. Return of Excise Tax on Undistributed Income of Investment Companies, IRS Forms 1099-MISC and 1096 Annual Summary and Transmittal of U.S. Information Returns.
(e) (1) Pursuant to Rule 2-01(c) (7) of Regulation S-X, the Registrant’s Audit Committee has adopted pre-approval policies and procedures. Such policies and procedures generally provide that the Audit Committee must pre-approve:
| · | any audit, audit-related, tax, and other services to be provided to the Lord Abbett Funds, including the Registrant, and |
| · | any audit-related, tax, and other services to be provided to the Registrant’s investment adviser and any entity controlling, controlled by or under common control with the investment adviser that provides ongoing services to one or more Funds comprising the Registrant if the engagement relates directly to operations and financial reporting of a Fund, by the independent auditor to assure that the provision of such services does not impair the auditor’s independence. |
The Audit Committee has delegated pre-approval authority to its Chairman, subject to a fee limit of $10,000 per event, and not to exceed $25,000 annually. The Chairman will report any pre-approval decisions to the Audit Committee at its next scheduled meeting. Unless a type of service to be provided by the independent auditor has received general pre-approval, it must be pre-approved by the Audit Committee. Any proposed services exceeding pre-approved cost levels will require specific pre-approval by the Audit Committee.
(e) (2) The Registrant’s Audit Committee has approved 100% of the services described in this Item 4 (b) through (d).
(f) Not applicable.
(g) The aggregate non-audit fees billed by Deloitte for services rendered to the Registrant are shown above in the response to Item 4 (a), (b), (c) and (d) as “All Other Fees”.
The aggregate non-audit fees billed by Deloitte for services rendered to the Registrant’s investment adviser, Lord, Abbett & Co. LLC (“Lord Abbett”), for the fiscal years ended October 31, 2013 and 2012 were:
| | | Fiscal year ended: |
| | | 2013 | | 2012 |
| All Other Fees {a} | | $ | 180,602 | | | $ | 170,618 | |
{a} Consist of fees for Independent Services Auditors’ Report on Controls Placed in Operation and Tests of Operating Effectiveness related to Lord Abbett’s Asset Management Services (“SOC-1 Report”).
The aggregate non-audit fees billed by Deloitte for services rendered to entities under the common control of Lord Abbett for the fiscal years ended October 31, 2013 and 2012 were:
| | | Fiscal year ended: |
| | | 2013 | | 2012 |
| All Other Fees | | $ | - 0 - | | | $ | - 0 - | |
(h) The Registrant’s Audit Committee has considered the provision of non-audit services that were rendered to the Registrant’s investment adviser, and any entity controlling, controlled by or under common control with the investment adviser that provides ongoing services to the Registrant, that were not pre-approved pursuant to Rule 2-01 (c)(7)(ii) of Regulation S-X and has determined that the provision of such services is compatible with maintaining Deloitte’s independence.
| Item 5: | Audit Committee of Listed Registrants. |
Not applicable.
Not applicable.
| Item 7: | Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. |
Not applicable.
| Item 8: | Portfolio Managers of Closed-End Management Investment Companies. |
Not applicable.
| Item 9: | Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers. |
Not applicable.
| Item 10: | Submission of Matters to a Vote of Security Holders. |
Not applicable.
| Item 11: | Controls and Procedures. |
| (a) | Based on their evaluation of the Registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) as of a date within 90 days prior to the filing date of this report, 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 changes in the Registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) that occurred during the second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Registrant’s internal control over financial reporting. |
| (a)(1) | The Lord Abbett Family of Funds Sarbanes Oxley Code of Ethics for the Principal Executive Officer and Senior Financial Officers is attached hereto as part of Ex-99. CODEETH. |
| (a)(2) | Certification of each Principal Executive Officer and Principal Financial Officer of the Registrant as required by Rule 30a-2 under the Investment Company Act of 1940 is attached hereto as a part of EX-99.CERT. |
| (b) | 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 provided as a part of EX-99.906CERT. |
SIGNATURES
Pursuant to the requirements of the Securities 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 | |
| | | | |
| | By: | /s/ Daria L. Foster | |
| | | Daria L. Foster | |
| | | President and Chief Executive Officer | |
Date: December 18, 2013
| | By: | /s/ Joan A. Binstock | |
| | | Joan A. Binstock | |
| | | Chief Financial Officer and Vice President | |
Date: December 18, 2013
Pursuant to the requirements of the Securities 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.
| | By: | /s/ Daria L. Foster | |
| | | Daria L. Foster | |
| | | President and Chief Executive Officer | |
Date: December 18, 2013
| | By: | /s/ Joan A. Binstock | |
| | | Joan A. Binstock | |
| | | Chief Financial Officer and Vice President | |
Date: December 18, 2013
